Welcome to 2021! As often happens here at Construction Law Musings, the year starts with a few posts on notable construction law cases that dropped in the past year or so. Not only does this review hopefully help you keep up, but helps me keep up with the latest developments (one of the reasons why I keep blogging).
The first of these cases is Appalachian Power Co. v. Wagman Heavy Civil, Inc. out of the Western District of Virginia federal court. In this case, 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”).
Needless to say, APCO filed a Motion to Dismiss both counts of the counterclaim. As to the first count, APCO claimed that the delay damages claim was without merit because there was no schedule of performance or “time is of the essence” clause in the Written Contract and because delay damages are “special damages” that are not ordinarily anticipated. As to the second count, APCO claimed that Wagman did not plead the terms of the Unwritten Contract with the required specificity.
The Court denied the Motion to Dismiss Count I stating that neither ground stated was adequate for dismissal. As to the delay claims, the Court stated as follows:
[t]he Court will refrain from determining whether they should be analyzed in light of the merger clause or as a subsequent modification to the Written Contract. The Written Contract itself is silent as to the schedule for performance, and it has long been established under Virginia law that “when a contract is silent as to the time within which an act is to be performed, the law implies a reasonable time.” And, as the Supreme Court of Virginia has indicated, “what constitutes a reasonable time is generally an issue to be decided by a properly instructed jury, under all circumstances of the case.” Id. (ruling that the trial court erred in sustaining demurrer). At least at this stage in the litigation, contrary to APCO’s contention, Wagman need not provide additional allegations as to the schedule for performance in order to adequately plead its claim.
As to the oral contract claim, the Court simply stated that the specifics were a matter of proof and not pleading.
In short, and despite the fact that contracts are king here in the Commonwealth of Virginia, the courts occasionally read reasonableness into a contract where the contract is silent like in this case. Would Wagman and APCO have been better off to have a time is of the essence clause? Of course. It is always better to set the terms of the deal in writing. This case simply adds an argument for your local Virginia construction attorney in the event there is a timing hole in the contract.
As always I recommend that you read the case for yourself and that you let me know if you have any thoughts.
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