C. Norman Peterson Co. v. Container Corp. of America

C. Norman Peterson Co. v. Container Corp. of America (1984) 172 Cal. App. 3d 628, involved a paper mill project. There, the Court of Appeal affirmed a judgment in favor of the contractor plaintiff. The court held, "As there was substantial evidence that change orders and extra work imposed by the Owner upon the Contractor were of such magnitude as to change the scope of the work originally contemplated under the contract, the record supports the court's findings and conclusions that the parties had abandoned the original contract. The contractor was therefore entitled, under the factual circumstances of this case, to recover the reasonable value of the work it performed on a quantum meruit basis, without being limited by the original contract amount." (Id. at p. 639.) The Peterson court noted, "There was evidence of hundreds of changes, many of them significant, resulting in extra work having to be performed by plaintiff. As in Opdyke, the requirement for written change orders was ignored during most of the project period, and it was completely abandoned during the critical shutdown stage." (C. Norman Peterson Co. v. Container Corp. of America, supra, 172 Cal. App. 3d at p. 641.) The court recited at some length the evidence leading it to agree with the trial court that the contract had been abandoned. It stated: "The extra costs incurred by plaintiff were actually greater, both in absolute terms and on a percentage basis, than in Daugherty. By the time the Santa Clara project had ended, plaintiff had expended $ 8,194,713.02 in direct labor and material costs, not including profit or overhead. This was $ 3,405,713.02 more than the original contract amount of $ 4,789,000. There was also expert testimony by a consultant who had participated in over 250 construction disputes in behalf of both owners and contractors. In his experience he had never been exposed to a situation where there had developed a need for prolonged drawing reviews such as were held in this case. Further, among projects put out to competitive bid, he had never seen one that required as much redesign work as did this one. The court found that defendant had expended a total of 16,414 hours of redesign time on the project after plaintiff began its work, the project was poorly engineered, and there were an extensive number of changes which were beyond the contemplation of the parties when the contract was first executed. Many of these changes were made without following the procedures provided for in the written contract. We conclude the trial court in this case properly found the contract had been abandoned." (Id. at p. 641.)