Opinion
CIVIL ACTION NO. 03-3326
March 23, 2004
MEMORANDUM
This action involves a dispute over the amount due to Philips Brothers Electrical Contractors, Inc. ("Philips Brothers") under an oral contract with TJR Enterprises, Inc. ("TJR"). Philips Brothers has sued Great American Insurance Company, Inc. ("Great American"), TJR's surety, pursuant to the Miller Act, 40 U.S.C. § 3131 et seq. and also TJR for state law breach of contract. See 28 U.S.C. § 1367. TJR has counterclaimed against Philips Brothers, alleging that its heavy trucks damaged sections of a sidewalk during the performance of the contract. This action was tried without a jury. Our findings of fact and conclusions of law follow.
Most of the facts in this case are not in dispute. On May 28, 2002, TJR was installing new sewer lines at the Veterans Affairs Medical Center ("VAMC") in Coatsville, Pennsylvania, under a contract with the U.S. Department of Veterans Affairs ("DVA"). While using heavy machinery to dig a ditch, TJR's crew accidentally struck a conduit containing high voltage electricity cables. Several of the cables were severed. TJR ceased its work and, after consulting with staff at the VAMC, contacted Philips Brothers because of its emergency response capabilities. Philips Brothers sent its employee Van Wilder to the site on the afternoon of May 28 to assess the situation. After three hours at the site, Mr. Wilder reported the information he was able to gather to John Philips, the President of Philips Brothers.
In the late afternoon or early evening of May 28, John Philips had a conference call with Joseph Rios, the President of TJR, and a few other TJR employees. Mr. Rios asked Mr. Philips to send a Philips Brothers crew to the site early the next morning to replace the damaged cables and Mr. Philips agreed. While there is no real dispute as to what was to be done, the parties disagree about what was to be charged for the work. Mr. Rios contends that he was to pay approximately $10,000. It was Mr. Philips' testimony that he estimated to Mr. Rios that the project would cost "in excess of" $10,000, that the job would ultimately be charged on a time and materials basis, and that Mr. Rios agreed. We find that Mr. Philips' testimony was credible.
A Philips Brothers crew appeared at the work site early the next morning and, by all accounts, restored the damaged electricity cables to proper working order on May 31, 2002. Soon thereafter, Philips Brothers forwarded an invoice to TJR in the amount of $24,034.99. TJR does not dispute that some money is due Philips Brothers. However, it refused to pay the bill on the ground that it far exceeded the $10,000 price which John Philips had allegedly quoted. As noted above, the parties never agreed to such a ceiling.
We find that the charges for all of the items in the invoice, except the $11,033.44 for Pirelli jacketed concentric neutral ("JCN") electric cable, to be fair and reasonable. The amount of time spent by Philips Brothers employees at the site, as well as their hourly rate are consistent with the standard charges in the industry.
The only item in the detailed invoice that TJR seriously challenges is the $11,033.44 for the JCN cable. Philips replaced the damaged cable with cable of significantly higher quality and expense. Implicit in the oral contract was the provision that Philips Brothers would install new cable of the same basic quality as that which had been damaged.
The $11,033.44 charge for the higher quality cable was two-and-a-half times the wholesale cost of the appropriate replacement cable. Dividing $11,033.44 by 2.5, we find that Philips Brothers could have obtained the latter for $4,413.38. Allowing Philips Brothers its usual and not unreasonable 75 percent markup on the cost of materials for emergency projects, we find that the allowable charge for the cable was $7,723.42. Replacing $11,033.44 in the original invoice with $7,723.42, we find that the proper contractual pre-tax total of Philips Brothers' invoice should have been $19,364.50, or $3,310.02 less than the $22,674.52 billed.
We next turn to the question of the damaged sidewalk. In light of the evidence presented at trial, we find that Philips Brothers' trucks cracked the concrete slabs by driving over them in the course of the repair work. An implied element of the oral contract between Mr. Rios and Mr. Philips was that Philips Brothers would not cause damage to the DVA's property. The damage clearly was avoidable. Furthermore, TJR had a contractual duty to DVA to repair the sidewalk, because Philips Brothers was acting as its subcontractor on the work site. It is undisputed that the amount expended by TJR to repair the sidewalk, $2,629.77, was reasonable. Therefore, we will reduce the pre-tax total of the Philips Brothers invoice by an additional $2,629.77. Subtracting $2,629.77 from $19,364.50, we arrive at a figure of $16,734.73. Applying Pennsylvania's six percent sales tax to $16,734.73, Philips Brothers is due $17,738.81 before the addition of prejudgment interest.
Philips Brothers proposes that we calculate the prejudgment interest on this post-tax amount, using an interest rate of 5.25% compounded monthly for eighteen (18) months. See 31 U.S.C. § 3905(b). The defendants have not disputed this method of calculation. Under these circumstances, we find that the interest is $1450.11, for a total amount due of $19,188.92. Great American, as the surety, owes Philips Brothers this amount and TJR, in turn, is liable over to Great American.
ORDER
AND NOW, on this ___ day of March, 2004, based on the foregoing findings of fact and conclusions of law, it is hereby ORDERED that:(1) judgment is entered in favor of plaintiff Philips Brothers Electrical Contractors, Inc. and against defendant Great American Insurance Company in the amount of $19,188.92; and
(2) judgment is entered in favor of defendant Great American Insurance Company and against defendant TJR Enterprises, Inc. in the amount of $19,188.92.