Hill Bros. Constr. Co. v. Miss. Transp. Comm'n
| Docket Number: | 2009-CA-00053-SCT Linked Case(s): 2009-CA-00053-SCT |
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| Oral Argument: | 03-16-2010 | |
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| Supreme Court: | Opinion Link Opinion Date: 06-17-2010 Opinion Author: Dickinson, J. Holding: Reversed and remanded |
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| Additional Case Information: |
Topic: Contract - Authority of Commission - Computation of price adjustments - Section 31-7-13(i) Judge(s) Concurring: Waller, C.J., Carlson, P.J., Kitchens, Chandler and Pierce, JJ. Dissenting Author : Graves, P.J., Dissents With Separate Written Opinion Dissent Joined By : Lamar, J. Concurs in Result Only: Randolph, J. Procedural History: Summary Judgment Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 12-12-2008 Appealed from: Hinds County Circuit Court Judge: William F. Coleman Disposition: Following a hearing, the trial court found that the FAC as written, interpreted, and applied by the Commission was not ambiguous, contrary to the statute, or unconscionable. The court found there were no genuine issues of material fact and therefore, the Commission was entitled to summary judgment as a matter of law. Case Number: 251-07-153CIV |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Hill Brothers Construction Company, Inc. |
WILLIAM R. PURDY, RALPH B. GERMANY, JR., JUSTIN JOHN PETERSON |
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| Appellee: | Mississippi Transportation Commission | ALAN M. PURDIE, BETTY RUTH FOX, JAMES T. METZ, MICHAEL EDWIN D’ANTONIO, JR., DION JEFFERY SHANLEY | ||
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| Topic: | Contract - Authority of Commission - Computation of price adjustments - Section 31-7-13(i) |
| Summary of the Facts: | The Mississippi Transportation Commission awarded D. B. Johnson Construction Company, Inc. a contract for construction of approximately 6.25 miles of highway. After Johnson defaulted, the Commission called upon Johnson’s bonding company, Traveler’s Casualty and Surety Company of America, to complete the contract. Travelers and Hill Brothers Construction Company, Inc. entered into a completion agreement that incorporated all the contract documents and special provisions contained in the contract between Johnson and the Commission. Special Provision #907-109-01 entitled “Measurement & Payment for Changes in Costs of Construction Materials (Fuel and Asphalt),” required certain monthly cost-adjustments for the purposes of reimbursing Hill Brothers for diesel fuel and asphalt used in the project. The provision established a fuel base price to be used during the bidding process so that all contractors bidding on the project would have a level playing field with regard to pricing fuel costs into their bids. Actual reimbursements during the contract period would be determined by comparing the base price to a cost index published monthly by the Mississippi Department of Transportation and, where the difference exceeded five percent, reimbursement rates would be adjusted accordingly. With respect to adjustments in reimbursement rates after the contract period, the FAC provided that after the expiration of contract time, including all extensions, adjustments will be computed using fuel and material prices that are in effect at the expiration of the contract time. At the time of the completion agreement, Hill Brothers estimated that the work defaulted upon and left unperformed on the Johnson contract would take more than two years to finish, even though less than a month of allowable contract time remained. The Commission extended the contract to March 13, 2004. Hill Brothers completed the contract on March 13, 2006, two years past the expiration of the contract time. Prior to the expiration of the contract time, the Commission, through its subordinate and operating entity, the Mississippi Department of Transportation, calculated monthly payments for designated pay items affected by oil prices by adjusting the baseline price of petroleum products (established when the contract was originally awarded). The amount of adjustment was controlled by then-current prices as reflected in the index published monthly by MDOT. When the contract time expired on March 13, 2004, and the work was not completed, the Commission began to make monthly adjustment payments. Hurricane Katrina struck the Mississippi Gulf Coast, causing the price of petroleum products to skyrocket. Because the Commission interpreted the contract provision to mean that all reimbursements would be determined using prices in effect at the end of the contract period, Hill Brothers received reimbursements which were far less than amounts actually expended for petroleum products. According to Hill Brothers, the Commission’s interpretation cost them nearly $500,000 in unreimbursed petroleum costs. Travelers and Hill Brothers both protested the application of this provision to no avail. Hill Brothers filed suit against the Commission, asserting the Commission breached its contract by improperly applying the FAC and underpaying Hill Brothers. The Commission moved for summary judgment. Hill Brothers moved for partial summary judgment. The court denied Hill Brothers’ motion for partial summary judgment. The court found that the Commission was entitled to summary judgment as a matter of law. Hill Brothers appeals. |
| Summary of Opinion Analysis: | The parties sharply dispute the interpretation of the provision governing how adjustments were to be computed “at the expiration of contract time.” The clear language of the provision supports the trial court’s decision that the Commission’s interpretation of the provision was correct. However, the provision exceeds the scope of authority granted to the Commission by section 31-7-13(i). Powers legislatively granted to and exercised by an administrative agency are limited to and must not exceed the authority prescribed by the legislative enactment. In inserting a fuel-adjustment clause into its contract, the Commission was bound to follow the statutory requirements. The last sentence of the FAC contravenes this mandate by basing the fuel adjustments on the price of fuel on an arbitrary date unrelated to the date the fuel was purchased, and unrelated to the actual cost of the fuel to the contractor. Thus, the price adjustment was not “in relation to the cost of the contractor.” Rather, the adjustment was fixed arbitrarily based on the prices of petroleum products on the day the contract expired. The last sentence of the FAC, locking in reimbursements to Hill Brothers based on the price of petroleum as of the expiration of contract time, contravenes the requirements of section 31-7-13(i) and thus must be struck from the agreement. |
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