the court held that the duty to investigate language relied on by
the County was insufficient to put Ames on notice of an alleged
duty to inquire further beyond the County’s nine cfs representation.
Instead, the contractor had to have been on notice of the
inaccuracy of the owner’s figures in order to be required to further
investigate, which was not the case on this project. Without
a requirement that the contractor independently corroborate the
figures provided by the Owner (such as explicit language requiring
the contractor to perform a site investigation or familiarize itself
with the conditions to be encountered), the contractor had no duty
to investigate.
Notably, though, the court held that despite the County’s superior
knowledge of the flooding, the situation did not amount to a
cardinal change finding that there was no substantial change to
Ames’ work, even though the water control issues made it more
difficult and costly to perform. The court also held that the County
did not breach the implied warranty of plans and specifications
because the owner only gave a performance specification in this
instance and did not mandate the means and methods. As a result,
a number of Ames’ claims were dismissed and only Ames’ claims
for breach of contract and negligent misrepresentation survived
the County’s initial efforts to dismiss Ames’ claims.
Extra excavation in Texas
D2 Excavating Inc. v. Thompson Thrift Constr., Inc., 2020 U.S. App.
LEXIS 28055
An unbalanced site forced the excavation subcontractor to
remove far more dirt site than estimated. A topographical survey
of the site and the planned final elevations were included in the
general contractor’s bid solicitation packet. Though the subcontract
stated “this is a balanced site” it also contained a representation
that the subcontractor visited the site and “evaluated and
satisfyied itself as to the conditions and limitations under which
the work is to be performed.” The subcontract also warned “c
hange orders for import/export will not be accepted.”
However, the facts showed that the contractor never visited the
site and never actually determined whether the site was a balanced
site; but the subcontractor also declined a site visit and instead
relied on a computer program relying upon the contractor’s topographical
survey to analyze the amount of soil.
Liability for the costs was disputed. Initially, the contractor
orally agreed that it would pay for the added removal, however, the
contractor later refused to make such a payment, leading to the
subcontractor abandoning the project.
The subcontractor ultimately lost the lawsuit based upon a judicial
finding that the contract language at issue failed to shift the
burden to the contractor. Relying on a century-old decision under
Texas law, the court held that “the party doing the work bears the
risk that it will end up being more difficult than anticipated unless
the contract shifts that risk to the buyer of the services.” A subcontract’s
silence on who bears the risk is not sufficient to shield
the subcontractor from liability – the subcontract language must
explicitly shift the burden back on the contractor.
The contractor’s own representation that the site was balanced
was also not actionable. Under Texas law, only statements regarding
the plans and specifications of the project qualify as affirmative
representations upon which a subcontractor can rely.
Lastly, the court noted that the contractor’s oral promise to
pay was not binding because it lacked consideration. Similar to
the cardinal change analysis from Ames, the Court stated that the
subcontractor was already under contract to remove the dirt for
the agreed upon contract price, so the subcontractor’s continued
performance of that scope of work could not form the basis of a
claim for additional sums.
Takeaways from these two recent decisions
Review your contracts carefully and know what you are agreeing
to, especially concerning the most critical contractual clauses.
Who bears the risk for differing conditions? Did you unknowingly
agree to undertake your own independent investigation of the site?
If so, any future claims may be waived. Ames may have benefitted
RISK MANAGEMENT
Who bears the risk for differing
conditions? Did you unknowingly
agree to undertake your own
independent investigation of the site?
86 | ISSUE 5 2020 www.piledrivers.org
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