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Florida Court Rules That General Contractor Failed To Adequately Specify The Scope Of Its Subcontract Resulting In Unexpected Payout To Subcontractor

In Paschen v. B&B Site Development, Inc., the parties to a subcontract disagreed over the scope of work required for the project. 2021 WL 359487 (Fla. App. Ct. 2021). Plaintiff F.H. Paschen, S.N. Nielson & Associates (“Paschen”) worked as the general contractor for the United States Postal Service to perform construction work at a post office in Okeechobee, Florida. Paschen’s contract with the Postal Service required it to “verify all dimensions shown of existing work” and to report any discrepancies prior to submitting a price proposal.

Paschen entered into a subcontract with B&B Site Development, Inc. (“B&B”) that required B&B to perform demolition and paving work for the parking lot at the post office. When soliciting bids from subcontractors, the description of what was to be demolished and removed was inconsistent. Various documents interchangeably used the terms “pavement,” “cement concrete pavement,” “existing Portland cement concrete pavement,” and “existing PCC pavement.”

A portion of the post office’s parking lot was asphalt that had been poured about three years prior. B&B determined that the asphalt was in good condition and did not need replacing. B&B submitted a bid based upon replacing the concrete portion, but not the asphalt portion of the parking lot. Paschen failed to perform a pre-bid site walk to verify the area of concrete to be demolished. Assuming that the entire parking lot was concrete, Paschen submitted a proposal to the Postal Service for removal of the entire parking lot, including the asphalt portion.

The subcontract between Paschen and B&B described the project as “USPS Okeechobee FL MPO—Replace Pavement” and provided that B&B would demolish “the existing concrete pavement.” B&B likewise submitted a job sequencing narrative to Paschen that did not include demolition or repaving of the asphalt area.

Nearing completion of the project, Paschen maintained that replacement of the asphalt was within the scope of the subcontract. Paschen requested a price proposal for the demolition and replacement of the asphalt portion. B&B submitted a proposed work order “to match existing contracted work” to remove and replace 561 square yards of asphalt. The proposed work order was estimated to cost $33,386.80.

Because Paschen believed that the asphalt replacement was within the scope of the subcontract, it believed the asphalt replacement was included in B&B’s original contract price. To avoid delays, B&B performed the demolition and replacement of the asphalt area, still anticipating payment from Paschen. Ultimately, Paschen denied B&B’s request for the additional compensation. A dispute arose over whether B&B was due compensation for the additional work it performed related to demolition and replacement of the existing asphalt.

“When the language of a contract is clear and unambiguous, courts must give effect to the contract as written and cannot engage in interpretation or construction as the plain language is the best evidence of the parties’ intent.” Talbott v. First Bank Fla., 59 So. 3d 243, 245 (Fla. 4th DCA 2011). A court must interpret a contract “in a manner that accords with reason and probability,” endeavoring to “avoid an absurd construction.” Katz v. Katz, 666 So. 2d 1025, 1028 (Fla. 4th DCA 1996).

The Court held that the only reasonable interpretation of the subcontract is that the scope of the work did not include the removal and replacement of the asphalt. It held that “asphalt” and “concrete” are not synonymous. The Court acknowledged that nothing in the subcontract stated that B&B was required to remove asphalt from the lot. Nor did it require B&B to remove pavement from the “entire” parking lot. Further, the subcontract did not specify the square footage of pavement that B&B was to remove.  The Court held that the subcontract was specific in what material was to be removed from the parking lot: Portland cement concrete.

General contractors must carefully specify the scope of projects, and closely analyze subcontracts to confirm they represent the general contractor’s intent. To do otherwise, may result in unexpected payouts to subcontractors.