Construction / Commercial Litigation / Business & Employment Law

Woolford Kanfer GC Client Defeats Owner’s Attempt To Have Million Dollar Differing Site Conditions Claim Thrown Out

Woolford Kanfer recently guided a large Central PA general contractor to a lucrative settlement of a differing site conditions claim against a Fortune 500 owner. The client was a general contractor who had been hired by an owner, the Kroger Co., to build a large warehouse. The site work included a large retaining wall. Our GC client believed that it had the right to use “ML soils” for use in backfilling the retaining wall. This was based on the geotechnical report indicating that ML soils should be suitable for use as backfill. The GC also appended a list of Qualifications/Clarifications to the Contract. The list included a provision stating it assumed ML soils were satisfactory for use as “fill.”

Kroger and its engineers later determined that ML soils could not be used as backfill for the retaining wall. This required the GC to incur substantial additional costs to remove unsuitable ML soils from the site and to crush bedrock to use as replacement fill for the retaining wall. The GC requested an equitable adjustment of $1.1 million for this additional work. The owner rejected the claim. Among other things, Kroger argued that the reference to fill in the Contract’s Qualifications/Clarifications pertained to other fill, not fill in the reinforced-soil fill zone of the retaining wall. It argued that the retaining wall specification should be interpreted as prohibiting the use of ML soils as backfill for the retaining wall. Kroger filed a motion for summary judgment arguing the claim was barred by the terms of the Contract and that the GC should have known ML soils could not be used to backfill the retaining wall.

The judge denied Kroger’s motion and ruled that it would be up to the jury to decide what the parties intended with the various contract provisions concerning fill, backfill and the retaining wall. Up to that point, Kroger had steadfastly refused to negotiate a resolution of the claim, believing that the court would dismiss it as barred by the Contract. When Kroger’s arguments were rejected and the court announced the case would proceed to a jury trial, Kroger quickly offered a substantial settlement to the GC, thereby ending the litigation. The federal court’s decision was the subject of a feature article in a national construction publication. Click here to read the article in Construction Claims Monthly, August 2017.