Opinion
C.A. No. 04C-01-001-RFS.
Submitted: February 13, 2006.
March 30, 2006.
ORDER
This 30th day of March, 2006, it appearing to the Court following trial and considering the positions of the parties, that:
1. Plaintiff, Robert L. Thornton (hereafter "Thornton") signed a written contract on or about October 25, 2001 for the performance of certain engineering services with Meridian Consulting Engineers, LLC (hereafter "Meridian").
2. The written contract was prepared by Roger A. Gross, (hereafter "Gross"). At that time, Gross was a Delaware licensed professional engineer and vice-president and director of engineering for Meridian.
3. Gross was authorized to act on Meridian's behalf and to bind Meridian to the terms of the contract. Thornton sent the contract to Meridian, and Meridian performed services under its terms.
4. Under the contract, Meridian was to obtain engineering approvals/permits for lots 325-341 of part of a development known as Silver Woods. Further, Meridian was to provide a re-subdivision plan for approval by the Sussex County Planning and Zoning Commission for that part of the development.
5. Under the contract, the total price for the professional engineering services was a lump sum of $33,400. It was not an estimate. A draw schedule divided payment of the fee into percentages, 20%, $6,680 upon acceptance, 30%, $10,020 upon submission of construction plans to various regulatory agencies, 30%, $10,020 upon final approval of construction plans, and 20%, $6,680, upon final re-subdivision plan approval by Sussex County Planning and Zoning Commission.
6. A clerical error was made by Meridian in the draw schedule which noted that the second draw of $10,020 had been paid at the time the contract was signed. However, this payment had not been paid.
7. Thornton paid $6,680, the 20% due upon acceptance of the contract by cash payment to Meridian.
Thornton actually paid $6,700 but later deducted $20 from a subsequent invoice on March 6, 2002 to reflect the correct amount.
8. From October 25, 2001 through June 30, 2003, Thornton paid Meridian a total of $40,383 under the contract and for additional work.
A total of $16,425 was paid from 11/7/01 through 12/11/02. A $7,000 payment was made on 2/23/03. $28 was paid on 4/22/03. $250 was paid on 3/17/03. The last payment made was $10,000 on 6/30/03. The invoices generated by Meridian were not itemized.
9. Gross was the project manager and worked on the contract from October of 2001 until about April 10, 2002.
Gross' initials appeared on the invoices as the project manager from 11/7/01-4/3/02. Later invoices deleted any reference to a project manager to him.
10. After April 10, 2002, Jessica Nichols was the primary person at Meridian who worked on the contract until its termination in July of 2003. At that time, Nichols was not a licensed professional engineer. She was an engineer in training and obtained her profession al engineering license in June of 2004. The profession al engineer was Darin Lockwood (hereafter "Lock wood") who was her supervisor.
11. Lockwood became a Delaware licensed engineer in June of 2002.
12. Lock wood was a principal of Meridian owning one-third of the company. His brother and father were the other owners.
13. Gross left Meridian in November of 2002 and joined Merestone Consultants, Inc. (hereafter "Merestone"). Merestone was a civil engineering firm and provided services similar to Meridian.
14. The Meridian contract is a fixed price con tract. The terms are clear and a re not ambiguous. The price is fixed at $33,400 with a change order clause for additional or extra work. Meridian drafted the contract and the drafter, Gross, understood it to be for a fixed price as did Thornton. Lockwood met with Thornton in October of 2001. Lockwood understood and accepted Thornton's requirement to have a firm price to eliminate surprises about expenses. Nevertheless, Meridian claims its engagement was based on time and materials to perform the work. An open ended arrangement of this nature was not contemplated by the parties, and the contract cannot objectively be read in this way. Furthermore, Meridian did not keep or maintain reliable time and material records to support a claim that the contract was on this basis. Meridian did not prove that the contract was modified or changed from a fixed price. Moreover, Meridian did not show that any alleged modification was supported by consideration from Thornton. It is true that Meridian's billings deviated from the draw schedule. However, the billing practices of Meridian were haphazard, disorganized, and poorly managed. Lockwood acknowledged this problem at trial and admitted fault for Meridian's internal confusion. Yet the billing was solely Meridian's responsibility, and its deficiencies did not modify a fixed price contract to a time and materials engagement.
As indicated, Meridian has the burden and failed to show the contract was modified by a preponderance of the evidence. There is no written modification so any change must be oral. In this regard, Delaware law places a "high evidentiary burden" on parties alleging oral modification of contracts. Continental Ins. Co. V. Rutledge Co., 750 A.2d 1219, 1230 (Del.Ch. 2000). Alleged changes must be shown with "specificity and directness." Reeder v. Sanford Sch., Inc., 397 A.2d 139, 141 (Del. 1979). Mutual assent and consideration must support any claimed amendment, whether written or oral. DeCecchis v. Evers, 174 A.2d 463, 464 (Del. 1961). Thornton's evidence is more credible that no change was made from a fixed price to a time and materials basis.
15. Under the Meridian contract, Meridian substantially performed all of the services called for in paragraphs 1-4(a) of the scope of services section. However, the re-subdivision work referenced in paragraph 4(b) was not performed. It had an allocated price of $6,680 (20%). Meridian argued that work of this nature for the smaller portion of the development was worth no more than $1,000. According to Meridian, it was an "over the counter" exercise. However, the contract reserved 20% or $6,680 for this work. The allocation is not so great to show an obvious mistake. Nor would Thornton understand that the effort would be almost routine. As the drafter of the contract with professional experience, Meridian cannot complaint about this allocation. This work was not done.
16. To save money, Thornton decided that a pump station plan be developed rather than to a gravity line fed system. Thorn ton directed Nichols to prepare appropriate plans in August of 2002. This would save construction costs by reducing the depth of the pipe. However, Sussex County disliked pump stations. If it accepted the station, the County would incur higher maintenance costs. Further, the pump station work was beyond the original contract. Nichols agreed to do the work on behalf of Meridian at Thornton's request. Nichols did not agree to perform this work under the fixed contract price of $33,400. Nichols and Meridian did not agree that the plans for the pumping station and related work would be completed by the late summer of 2002.
17. On or about February 26, 2003, Lockwood and Thornton met to discuss payment including work done on the pump station. Lockwood demanded $20,650 for this work and other claimed extra charges. Thornton did not agree to pay the price for the pump station or other claimed extra charges but paid $7,000 to keep work going on the project.
18. Pump station drawings were delivered to Sussex County on or about March 1, 2003. They were approved on or about June 26, 2003. The plans were stamped by Lockwood as a professional civil engineer.
19. Meridian's work was appropriate and adequate for the intended purposes. The parties understood that time was not of the essence nor could a firm date be promised as governmental approvals were required. The contract made no guarantees about obtaining them. Therefore, a reasonable time for completion is implied. After October of 2001, Meridian obtained approval from Sussex County under the original concept on April 22, 2002. At that time, Thornton was advised that Public Works Division requirements were met, and he received a notice to proceed with construction in accord with approved plans. Before then, there were comments from interested agencies with revisions made by Meridian. This time frame is reasonable. In addition, the time from Thornton's request that Meridian perform pump station work in August, 2002 to approval of the concept on January 13, 2003 was reasonable. The County was against this concept for economic reasons as revealed by the Assistant County Engineer's letter of August 9, 2002. Nevertheless, Meridian was successful in its efforts. The time from August to January is reasonable. On February 25, 2003 the design drawings were submitted under the changed concept. They were approved on June 26, 2003. This time is reasonable. In this process, Meridian revised the plans four times to satisfy County comments. There is nothing remarkable about making multiple revisions in this context.
20. Under the Meridian contract, Meridian is due $26,720 ($33,400-$6,680) together with additional fees for extras: $10,000 for the pump station work, $860 for wetland delineation, $1,320 for surveying stakeout, and $28 for reproduction expenses. I find $10,000 is a reasonable figure as testified by Gross for the pump station design and approval work. A March 17, 2003 invoice from Meridian references a $250 item for meeting with DelDot in connection with the sewer plan. This would be part of the $10,000 fee. Concerning charges claimed in Meridian's February 23, 2003 invoice, the wetland delineation ($860) and surveying stakeout ($1,320) charges are excluded from the contract's scope of services under paragraphs 2 and 3 of the contract exclusions. As Gross testified, these would be extra items under the contract; the work was done. However, as Gross also testified, it is too difficult to say whether a $3000 charge for additional field surveying was an extra. Further, the February 23, 2003 invoice claims $2,068 is due for "client meeting/site recon" and $1,485 for "sanitary sewer conceptual." These items are within the scope of services provisions of the contract in paragraphs 1 and 3. Meridian did not sustain its burden to show these charges were extras. Consequently, the amount due Meridian is $26,720 plus $12,208 for extra work totaling $38,928.
21. Thornton paid $40,383 to Meridian and was overcharged $1,455.
22. Meridian, through Lockwood, knew Thornton's need to obtain the approved plans to continue with the Silver Woods project. After June 26, 2003, it withheld the sealed drawings to leverage payment from Thornton despite his demand to obtain them. Meridian, through Lockwood, knew the claimed price of $20,650 for the pump station work could not be justified. On June 30, 2003, Thornton attempted to secure the plans by making a good faith payment of $10,000 but he did not agree with Meridian's position about additional fees.
23. Because Meridian withheld the plans, Thornton had to retain Merestone, through Gross, to redo work which was necessary for him to proceed. The Merestone contract was for the design of a gravity sanitary sewer, force main and pump station plans and specifications for Silver Woods. The work was essentially the same Thornton had paid Meridian to do. Merestone's fee was $13,500. Merestone obtained approval on October 12, 2003. The Merestone contract provided for a bonus of $3,375 if the plans were submitted to Sussex County for review before August 22, 2003 which Merestone accomplished. Gross did not use any plans developed by Meridian. It was reasonable for Merestone not to use them. If it had, Meridian could claim its work was being exploited. Litigation was not a farfetched possibility given the obviously strained relations between Lockwood and Meridian and Thornton and Gross.
24. After employing Merestone, Thornton claimed that aspects of the pump station plans were defective. Meridian's plans called for three manholes. Only one was necessary. However, Merestone's drawings did not rely on Meridian's information, and they provided for one manhole. Further, the argument was presented that the pump head design could not satisfy the Sussex County standard to protect against peak flows. The standard was 120 gpm for 165 units (divided between building lots and townhouses). The testimony of Meridian's expert, Brian Carbaugh, is more persuasive. Meridian satisfied design standards. Also, Thornton suffered no damage for the extra manholes as Merestone did not provide for them nor for the alleged under-design as Merestone upgraded the system.
29. When stamping the drawings on the Meridian project, Lockwood had the responsibility of a profession al engineer that the drawings complied with reasonable professional standards. The performance of professional services through a limited liability company entity does not protect an engineer for personal responsibility for inadequate professional services. As Lockwood testified, a licensed professional engineer is in a similar position as a lawyer admitted to the Bar. However, administrative and business decisions are distinct from professional services. The $1,455 in overcharges represents a calculation of what is due after an accounting is made to work (THIS DOESN'T SEE M RIGHT) and payments. The withholding of the plans is a business or administrative decision, to attempt to secure payment, not a professional service. If the plans we re defective, Lockwood would have personal responsibility notwith standing his employment by a limited liability company. As indicated before, Lockwood's professional services were adequate.
35. Thornton seeks recovery of? interest payments for financing of the Silver Woods development. Thornton chose not to market lots for weather related or other personal reasons in October of 2003. Thornton withdrew any claim for lost lot sales. Over 8 months after approval of Meres tone's work, Thornton obtained Sussex County permission to proceed to sell lots on July 7, 2004. Thornton has failed to show by the preponderance of the evidence that these carrying costs would not have been incurred but for Meridian's actions. He has not shown that the 4-month delay from July — October, 2003 made any real difference. In this circumstance, any award of damages would be speculative and uncertain.
Considering the fore going, it is here by ordered that:
1) On Count I, alleging Breach of Contract, Judgment is entered against Meridian by its failure to deliver the signed plans to Thornton on and after June 30, 2003, in the amount of $18,330 ($16,875 for the Merestone work and $1,455 for overcharges under the Meridian contract). Interest will accrue from June 30, 2003 and costs are assessed against Meridian.
2) On Count II, alleging Negligence of Meridian, Judgment is not entered against Meridian.
3) On Count III, alleging negligence of Lockwood, judgment is not entered against Lockwood.
4) Judgment is entered against Meridian in its counterclaim as no money is due from Thornton.
5) No attorneys fees are awarded. Generally, litigants bear these expenses unless there is a basis to award them by contract or statute which factors are not present here.