WATKINS, Senior District Judge.
This is an action for the balance claimed to be due on a contract price and for the claimed value of extra work performed in the construction of a shopping center. Plaintiff, Glassman Construction Company, is a District of Columbia corporation, with its principal place of business in a state other than the State of Maryland. Defendant, Maryland City Plaza, Inc., is a Maryland corporation; and defendants, Herbert H. Haft and Gloria Haft, are the owners of Maryland City Plaza and are citizens of the State of Maryland.
This Court has jurisdiction in the matter under 28 U.S.C. § 1332(a), by way of diversity of citizenship of the parties and the amount claimed.
On April 13, 1967, having learned that bids were being received on a shopping center to be constructed for defendant, plaintiff, through its president, Stanley Glassman, met with defendant, Herbert Haft, to discuss the possibility of a partnership agreement. At this meeting only vague reference was made to the existing leases for the stores to be built; however, defendant did mention that he would want a "turn-key" job. A preliminary figure of $1,050,000 for construction costs was mentioned by plaintiff.
Plaintiff then took the existing plans and specifications in order to prepare a firm estimate. After review of these plans, and upon initial receipt of some subcontractor bids, plaintiff determined that the center could not be constructed for the proposed price, and, as a consequence of this, a second meeting occurred. At this meeting the parties agreed to enter into a general contractor arrangement, rather than a partnership, if a price could be agreed upon. A subsequent figure of $1,225,000 was reached and agreed to.
Defendant's attorney drafted the contract; and, on May 1, 1967, the parties met to sign the instrument. Glassman claims this was the first time he saw the contract [although, apparently, a draft copy had been delivered to plaintiff's attorney earlier, for review]. At the meeting, several minor changes were made in the contract; however, there was no discussion concerning the leases or their content. The contract was then signed by the parties.
Among the provisions of the contract was the following clause:
On May 8, plaintiff received from defendant copies of the leases as they then existed, with an accompanying letter that stated:
Plaintiff apparently never read the leases, either before signing the contract or upon their receipt on May 8. Glassman claims that he felt the requirements of the leases would be reflected within the plans and specifications he had been given at the original meeting. Upon receipt of the leases a week after signing the letter he claims he still considered the leases to be of no particular significance since he felt all of the lease requirements were incorporated within the plans. It was not until several months later, as revisions to the plans began to arrive, that plaintiff claims to have become aware that not all of the lease requirements were reflected within the plans. As plaintiff attempted to charge defendant for "extras" resulting from these changes and additions, it was discovered that defendant's concept of turn-key meant that the contract price also included subsequent negotiations between the owner and the tenants. From this point on plaintiff did all of its work under protest.
The contract on its face favors defendant's interpretation. In addition to article 8.7, which called for the requirements of the leases to be met, article 8.8 states:
Defendant argues that plaintiff's reliance solely upon the plans and specifications used for the estimates was unjustified because article 8.2 of the contract had a blank space for the insertion of dates and descriptions of drawings, plans and specifications, and no plans, drawings or similar documents were enumerated within this space, thus indicating that the plans were not final.
Plaintiff contends, however, that the contract should be limited to the plans received at the first meeting. Plaintiff further argues that the defendant had adequate time after the signing of the leases to incorporate the lease requirements into the plans used for estimating purposes, and, that defendant never gave any indication that these plans were incomplete. Plaintiff therefore argues it was justified in relying on the original plans as the final plans, and, plaintiff now claims $160,672.36 for work beyond that called for in the original plans, on the theory that this is "extra" beyond the contract price.
Defendant early in the negotiations stated that he wanted a "turn-key" job; neither party throughout the preliminary stages sought or gave a definition to this term. Defendant apparently understood the term to mean a job whereby a flat fee was to be set and the contractor was to do all work required without additional charge. However, the trade usage of the term is not nearly so broad. As defined, a turn-key job is "a job or contract in which the contractor agrees to complete the work of building and installation to the point of readiness for operation or occupancy." Webster's Third International Dictionary 2468 (1963 ed.). In essence, this means a project in which all the owner need do is "turn the key" in the lock to open the building with nothing remaining to be done and all risks to be assumed
Article 8.4, which immediately precedes the provisions covering the turn-key concept, states that "[n]otwithstanding any other provisions of this Agreement and General Conditions to the contrary, the Contractor, Owner and Architect shall be bound by the following terms and provisions." This does not mean that the provisions of articles 8.4 through 8.11 should not be read in connection with the remainder of the contract, and where possible the contract should be read as a whole. Kelley Construction Co. v. Washington Suburban Sanitary Commission, 247 Md. 241, 230 A.2d 672 (1967); Restatement, Contracts § 235(b) (1932). Article 1.1.2 of the General Conditions states that the "Contract Documents form the Contract," and that the "Contract may be amended or modified only by a Modification as defined in Subparagraph 1.1.1." Article 1 of the contract states that the contract documents consist of "this Agreement, Conditions of the Contract . . ., Drawings, Specifications, all Addenda issued prior to execution of this Agreement and all Modifications issued subsequent thereto." Modification is defined as a written amendment signed by both parties, a change order, a written interpretation issued by the architect or a written order for a minor change in the work issued by the architect. In the standard AIA contract used by the parties article 12 provides for change orders; however, this article was excised with a notation to see articles 8.4 through 8.9. These articles were provisions inserted by the parties, and there was no provision within these articles for change orders. The only reference to change is article 8.4, which provides the method for changes by the contractor without the owner's permission.
In the absence of ambiguity, an objective test of determining the meaning of a contract by its terms, irrespective of the parties' individual subjective intents, should be applied. Slice v. Carozza Properties, Inc., 215 Md. 357, 137 A.2d 687 (1958). This objective intent is measured by the meaning a reasonably intelligent person with knowledge of the circumstances prior to and contemporaneously with the making of the integration, other than oral statements, would place upon it. Katz v. Pratt Street Realty Co., 257 Md. 103, 262 A.2d 540 (1970); Slice v. Carozza Properties, Inc., supra. The defendant's interpretation that the contractor must pay for all changes in the project, including those negotiated or agreed to subsequent to the contract date, is not revealed in the language of the contract. Reading the instrument as a whole, the contract is limited to the date of signing, with no provision for the owner to enlarge its requirements. The leases would be incorporated by reference as part of the contract, Ray v. Eurice, 201 Md. 115, 93 A.2d 272 (1952); 4 Williston on Contracts § 628 (3d ed. 1961). But subsequent agreements and changes between the landlord-owner
Plaintiff has charged defendant for a multitude of items it claims to be "extras," or items not on the original plans and specifications from which plaintiff made its bid.
Clearly, plaintiff would be obligated as to items falling within the first three categories. The fact that plaintiff did not read the leases would not excuse plaintiff from performance. See Ray v. Eurice, 201 Md. 115, 93 A.2d 272 (1952). The contract stated that the tenants' lease requirements were to be met. Plaintiff entered into this contract with his eyes wide open, with all the then existing facts available to him. Plaintiff has been in the construction trade for a number of years, and entered into this agreement as an experienced businessman. The Court cannot now rewrite the contract under the guise of interpretation because of the unilateral mistake as to the plain meaning of the words used. Weber v. Crown Central Petroleum Corp., 214 Md. 115, 132 A.2d 857 (1957). Plaintiff would be responsible under the contract for only the requirements of the leases that were agreed to as of May 1. As to category two, plaintiff is held to those items that, through logical implication, would follow from the plans, although not shown. In instances where plaintiff was in the process of performing according to these inferences, but not to the quality or exact specifications that defendant desired, the change would be extra work for which defendant is obligated to compensate. For all essential purposes defendant did prepare this contract, and, therefore, any ambiguity that does exist in the contract is to be strongly construed against him. Kelley Construction Co. v. Washington Suburban Sanitary Commission, 247 Md. 241, 230 A.2d 672 (1967).
As for categories four and five, plaintiff would not be responsible for items
A major extra, not falling within the above five categories, is the extension of the sewer line. At the time the contract was signed the path of the sewer was not known. The proposal was for two lines crossing an adjoining road. The pipe sizes were indicated as forty-two and thirty-six inch diameters. An extension of this sewer system was necessary but it was not known how far it would extend. Defendant stated that he wanted the price settled although the length of the line was not known. The two parties discussed the problem and after consultation by defendant with his engineer it was agreed that twenty dollars a foot was a "fair price" for any extension.
With regards to the claimed extras, therefore, plaintiff would be entitled to the fair value of the work performed on those extras to which it is entitled. This fair value would include reasonable overhead and profit. See Arthur N. Olive Co. v. United States, 297 F.2d 70, 73 (1 Cir. 1961); Continental Casualty Co. v. Schaefer, 173 F.2d 5, 8 (9 Cir. 1949).
Defendant seeks, by counterclaim, damages incident to delay. Article 4 of the contract stated:
Within the General Conditions of the Contract for Construction, completion is
Plaintiff contends that the delay was due to defendant's actions and inactions. Plaintiff had commenced performance prior to the contract date; however, building permits, to be obtained by defendant, were slow in coming and as a consequence work was delayed. The first building permit was not delivered until two and one-half months after the project was started, and the last permit was not received until over four and one-half months after the work began. This slowness had a definite delaying effect on the work. Under article 4.7.1 of the General Conditions of the Contract, the owner was to acquire and pay for the permits. The delay in the location of the sewer line prevented plaintiff from paving the parking lot; as a result much of the work had to be done in the mud. The natural consequence of this was a bogging effect that impeded performance. Finally, the continual flow of revisions from the architect had an additional dampening on plaintiff's punctual performance.
5 Williston on Contracts § 789, p. 765 (3d ed. 1961), quoting United States v. United Engineering & Contracting Co., 234 U.S. 236, 242, 34 S.Ct. 843, 58 L.Ed. 1294 (1914).
As a result of this delay, plaintiff is also seeking damages it sustained. It is an implied provision of every contract that the other party promises to co-operate and failure to do so is a breach. 11 Williston on Contracts §§ 1296, 1316 (3d ed. 1968). See also George A. Fuller Co. v. United States, 69 F.Supp. 409 (Ct.Cl.1947). And, where a construction contract is breached by delay, the other party is entitled to recover the additional expenses occasioned thereby. Satine v. Koier, 223 Md. 417, 164 A.2d 913 (1960).
Therefore, it is held that defendant's delays breached the contract, and prevented
Defendant has also counter-claimed for various defects that allegedly occurred in the work performed by plaintiff.
Besides the defects, defendant further seeks compensation for work performed by a tenant, allegedly to enable completion by the tenant's planned opening day. Giant Food was a major tenant of the shopping center. Defendant states that upon an inspection of the site Giant felt there were not enough electricians present to complete the electrical work in the store in time for the planned opening date, and that plaintiff agreed to compensate Giant for any work Giant would perform to effect completion. Plaintiff, however, claims no knowledge of such agreement; that there were sufficient electricians on the site; and that the Giant electricians appeared approximately the same day the fixtures arrived for installation (such installation being Giant's responsibility to perform). Giant billed defendant for the work it performed, but apparently no mention of this billing was raised with plaintiff until two years later, as this litigation was developing. There has been no proof of an agreement between plaintiff and Giant, that it was necessary for Giant to do this work, or even that the work performed was work within plaintiff's responsibility. Therefore, again defendant has failed to carry its burden.
Costs and Attorney Fees
Plaintiff seeks an award of costs and attorney fees. In diversity actions the principles as to the allowance of costs deal with procedural matters and state law in and of itself is not controlling. Brown v. Consolidated Fisheries Co., 18 F.R.D. 433 (D.Del.1955); Barrett v. Rosecliff, 9 F.R.D. 597 (S.D. N.Y.1950). Federal rule 54(d)
As for plaintiff's claim for attorney fees, the procedure is different, and in the absence of countervailing equitable principles, in a diversity action a federal court will apply state law with regard to the allowance of attorney fees. Travelers Indemnity Co. v. Rosedale Passenger Lines, Inc., 55 F.R.D. 494 (D.Md.1972). See also 6 Moore's Federal Practice ¶ 54.77 , p. 1712-13 (2d
Plaintiff, however, claims that defendant's counterclaims
Although defendant has not been successful in its counterclaims that does not mean its actions were spurious and foundationless. Although not heavily weighted in defendant's favor, there was disagreement as to the issues and there was justification for litigation. Thus, plaintiff is not entitled to attorney fees under Maryland law.
Under equity principles a federal court may award attorney fees even if state procedural rules do not permit it. This is because state law is not applicable to federal "equity" court procedure, and federal courts are therefore free to develop their own principles. Forest Laboratories, Inc. v. Formulation, Inc., 320 F.Supp. 211 (E.D.Wisc. 1970). This federal equity principle to award attorney fees is applied only in "exceptional cases and for dominating reasons of justice." Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939). The facts of the instant action do not fall within this sphere of exceptional cases, and plaintiff is not entitled to attorney fees as a matter of equity.
It is ordered that plaintiff is entitled to the $28,869 remaining due on the contract price, plus interest accruing from September 25, 1968. Plaintiff is also entitled to interest on the sum of $96,704 for the period of September 25, 1968, to May 18, 1972. Lastly, plaintiff is entitled to the fair value of the sewer addition (less the $15,980 previously paid), the fair value of "extra" work as earlier defined in this opinion, and to damages, if any, that it can prove resulted due to the delay, occasioned by defendant, in completion of the shopping center.
Rule 54(d) Fed.R.Civ.P.