Construction Law Insights

Appalachian Power Co. v. Wagman Heavy Civil, Inc., 2018 U.S. Dist. LEXIS 201259, 2019 WL 6188303 (W.D. Va. Nov. 20, 2019)

Wagman Heavy Civil, Inc. (“Wagman”) and the Virginia Department of Transportation (“VDOT”) contracted for the design and construction of a highway interchange project (the “Project”). Wagman and the Appalachian Power Company (“APCO”) entered into a written contract (the “Written Contract”) for APCO to remove and relocate its utility structures (the “Work”) in order to facilitate construction for the Project.

APCO filed suit against Wagman for payment pursuant to the contract. In response, Wagman filed a counterclaim alleging $1,039,074.20 in delay damages resulting from APCO’s breach of its obligations under the Written Contract to use its best efforts to perform the Work within a reasonable period. Wagman alternatively asserted damages resulting from APCO’s breach of an unwritten contract (the “Unwritten Contract”). APCO moved to dismiss the lawsuit on the grounds that the Written Contract lacked a “time is of the essence” clause or a schedule for performance, and that the delay damages alleged in the counterclaim were “special” damages that required allegation with specificity. APCO additionally moved to dismiss the claim for breach of an unwritten contract, on the grounds it was not plead with adequate specificity.

The Court rejected APCO’s argument that the Written Contract’s lack of a “time is of the essence” clause precluded a finding that APCO’s alleged delay in performing its Work constituted a breach of the Written Contract. In Virginia, even if a contract does not contain a time is of the essence clause, a delay in performance may still be deemed a breach of contract, justifying payment of damages. When a contract is silent as to the time within which an act is to be performed, the law implies a reasonable time. What constitutes a reasonable time is generally an issue to be decided by a properly instructed jury, under all of the circumstances of the case.

The Court also rejected APCO’s argument that Wagman’s damages were “special” damages that needed to be specifically stated pursuant to Rule 9(g) of the Federal Rules of Civil Procedure. Special damages are those that are not the ordinary result of the conduct alleged. Wagman alleged that its damages were the result of incurred delay costs, other damages foreseeably resulting from APCO’s acts and omissions, and the direct and proximate result of APCO’s breach. Nothing in Wagman’s counterclaim suggested that it plead anything other than ordinary damages.

As to Count II, for breach of the Unwritten Contract, the Court acknowledged that alternative pleadings are permitted and then rejected APCO’s argument that Wagman had to plead the terms of the Unwritten Contract with more specificity. In support of its argument, APCO cited the Supreme Court of Virginia’s remark in Smith v. Farrell that “an agreement, in order to be binding, must be reasonably certain, definite, and complete to enable the parties and the court to give the agreement exact meaning.” 199 Va. 121, 98 S.E.2d 3, 7 (1957). The Court noted, however, that the cited material refers not to what a claimant must plead, but to what it must prove. Wagman’s Counterclaim alleged a bargained-for exchange that resulted in a legally enforceable agreement, that APCO’s acts or omissions constituted a breach of its obligations, and that Wagman suffered delay damages as a direct and proximate result of APCO’s breach. The Court found that Wagman’s Counterclaim pled enough facts to state a claim for relief that was plausible on its face.

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