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Driver Pipeline Company2/13/2002
This is an appeal by Driver Pipeline Company, Inc. (Driver) and Mustang Pipeline Company, Inc. (Mustang) from a judgment in a lawsuit for breach of contract. Seaboard Surety Company, the insurer that provided a performance bond for Driver, is before this court as a cross-appellee.
Mustang wanted to build a gas pipeline from Longview to Diboll to Mount Belview (near Houston), a 200-mile stretch of pipeline. Mustang divided the work into the north spread and the south spread, each 100 miles long. After going through a bidding process, Mustang hired Driver to dig the trenches and lay the pipe for the north 100 miles of pipeline. Because Mustang wanted to finish the pipeline by a specific deadline, it prepared a contract stating that the prices were based on eleven hours per day and seven days a week to meet a fourteen-week schedule (ninety-eight construction days), and specifying that the final completion of the pipeline within that time was of "great importance to the Company."
And then the rains came. At the end of fifty-eight days, Driver had finished only fifteen miles of the pipeline and had laid off some of its crews and suspended operations. Driver proposed that Mustang give it additional time and money to finish the project. Driver took the position that rain delayed its work and that all parties understood that his bid was based on no weather delays. The owner of the company, James Driver, testified by deposition that his bid took into account a fifteen percent contingency for rain days. At trial, however, Driver testified that this was a "best-time" contract with no rain days included and that he relied on a clause allowing (but not requiring) Mustang to give them extra time in the event of weather delays. There is evidence that the builder of the south portion of the line sought and received a thirty-day extension on its construction.
The contract does contain provisions explaining how the crews and welds were to be protected when working in the rain, which suggests that they expected Driver to work through at least some inclement weather rather than shutting down. Also, Driver was several days late in starting work and could have started earlier. The reasons are disputed.
When the rains came, there was testimony that Driver kept part of its crews working, but refused to move any operations to drier areas of the line to continue work. Driver offered testimony that such a move would have been a useless act because the entire length of the proposed pipeline was soaked. The evidence also shows that the rain in that time period of 1997 was above average, but within the five-year range for the area.
After several meetings, at which Driver's representatives and owner demanded more time and money because the pipeline could not be finished under the conditions of the contract, Mustang declared a breach.
Mustang had already been testing the waters with other construction companies, and after declaring a breach, it hired one of the original bidders, Sunland Construction. Mustang requested that Sunland finish as close to the original schedule as possible. Sunland hired a second crew, moved in, worked through the mud, and completed the remaining eighty-five miles of pipeline within eleven weeks.
Mustang sued Driver for breach of contract, seeking costs to complete the project, lost profits, and attorney's fees. Driver countersued for wrongful termination, seeking damages for termination, lost profits, and attorney's fees.
Mustang sought damages of $4,065,286 because it cost that much more than the original contract price with Driver to complete the pipeline.
The Verdict
At
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