Wright, McGowan and MacKinnon, Circuit Judges.
UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
Co., Third Party Defendant
Nos. 22813, 22814, 22836, 22837 1970.CDC.129
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MACKINNON
MacKINNON, Circuit Judge:
This is an appeal in a breach of contract case brought by John W. Johnson, Inc., a painting subcontractor, against Basic Construction Co., the prime contractor, and Edward Durell Stone, the architect. The project involved the construction of several buildings for the State University of New York at Albany. Basic Construction Company (hereinafter Basic) contracted to construct these buildings for a compensation of approximately $25 million, and subcontracted out the painting and wall-covering work to John W. Johnson, Inc. (hereinafter Johnson), a Washington, D.C. corporation, for $375,000. The architect, Edward Durell Stone (Stone) was the agent of the owner, the State University Construction Fund (hereinafter the Fund), and was in charge of supervising the construction. Jurisdiction is vested in this court by D.C.Code §§ 11-101 and 11-521. The amount in controversy exceeds $10,000 exclusive of interest and costs.
Johnson commenced work under its subcontract in April of 1965. By September, some peeling of the paint on the ceilings in the Biology Building had been observed, and by October the condition had worsened to the point where Johnson was directed to stop painting all the ceilings. *fn1 At this time no one knew the cause of the peeling. The architect called in a research firm which eventually determined that the peeling was caused by the presence of stearic acid on the ceiling. Stearic acid had been employed by Basic as a release agent in removing the temporary molds used in forming the concrete arches which constituted the ceilings. The research firm recommenced that either the stearic acid be removed or that a primer coat of paint be applied which would permit a secure bond for the two final coats. Because the stearic acid was difficult to remove, the architect after some time spent in experimenting adopted the solution of removing the peeling paint and then applying the additional coat of primer paint. However, on December 20, 1965 he ordered that Basic bear this cost on the ground that it was its responsibility under its contract to remove foreign substances from the ceilings before painting. Basic disputed this liability and appealed to the Fund under a Disputes Clause in the prime contract; meanwhile on December 22nd it ordered Johnson to proceed with the application of the additional paint in accordance with the architect's directive. *fn2 The architect's directive stated the work was "in lieu of, not in addition to, original contract requirements" and that "No extra to contract will be approved by this office, for this work." Johnson denied any responsibility for the failure, on request submitted an estimate as to the cost of the extra painting, requested a change order or other definite assurance of payment it claimed it was entitled to under its contract, and started the painting under protest without relinquishing its right to compensation. Basic did agree to advance Johnson $1,500 a month to assist the latter to meet some of the cost of the additional painting. However, Basic expressly conditioned its advances with the reservation that same did not constitute an acknowledgment of liability to Johnson for the disputed painting work.
The Fund then on January 10, 1966 rendered its decision upon the appeal by Basic. It determined that the stearic acid had been used with the architect's knowledge and approval, that the removal of the stearic acid by means of "exotic" cleaning compounds was not anticipated under its contract with Basic, *fn3 and that the Fund would therefore bear the cost of the additional coat of primer. However, apparently as a compromise with Basic, the Fund held that Basic was responsible for removing the defective coat of paint on the ground that it should have tested the adhesiveness of the paint before commencing the painting operations. Although Basic denied this liability, it nevertheless agreed to continue work and to resolve the matter at a later date. *fn4
In summary, there was at this point an unresolved three-way dispute as to who should bear the cost of removing the original coat of paint. The Fund had ruled that Basic should bear the cost; this was disputed by Basic who contended the responsibility should lie on the Fund. Johnson was caught in this cross fire -- it had denied liability entirely and was interested primarily in receiving some assurance of payment for the extra work it was being directed to perform and of being absolved from liability for the expense of removing the paint in the peeling areas.
Another element was then injected into this unstable situation. Painting had been stopped, first for strikes in July and August, and secondly since early October while the cause of the peeling was being determined, and the Fund thereafter became increasingly upset over the slow progress being made in the painting due to the fact that Johnson was not employing what the Fund considered to be an adequate number of painters to meet completion deadlines. The Fund put pressure on Basic to speed up the work and Basic in turn warned Johnson that more painters would be needed to meet the approaching completion deadlines. During this time Johnson was complaining that he had not received the change orders required by his subcontract before he could be assured of payment for the extra work, that he had not been absolved of responsibility for the cost of removing the ceiling paint in the Biology Building and that to accelerate the work by adding the additional workmen being required by the Fund would decrease their efficiency and substantially increase his cost, for which he should also receive some assurance that he would be compensated. A temporary working arrangement was reached between Johnson and Basic to gradually build up the painting crews, but apparently this was not enough to satisfy the architect, Edward Stone, who recommended to the Fund that Johnson's contract be cancelled. The Fund agreed, and on February 9, 1966, the architect Stone wrote Basic directing it to cancel its subcontract with Johnson and advising that no extension of time would be granted for this cancellation. *fn5
Basic, however, was reluctant to discharge Johnson. Basic did notify Johnson by telephone of the February 9th directive it had received to cancel his contract but recommended that Johnson come in to discuss the matter. This Johnson refused to do, and the next day informed Basic that unless it received an assurance of payment for the extra work, it would quit the job.
Again on February 12th, Johnson, according to Basic's memorandum of a telephone conversation, demanded that Basic send him a telegram or letter "canceling his contract if that was what he intended to do." Later in the day, Johnson's attorney orally informed Basic that Johnson was not financially able, even if he so desired, to carry the burden of increasing the number of painters to 60 or 80 without some help and agreed that Johnson would submit information as to the extra cost for the third coat of paint and for escalating of the work. On February 14th Basic wrote the Fund and requested them to conform to the contract and to state they had determined that Johnson was "incompetent, careless or uncooperate [uncooperative]", if they had so determined. Basic also stated that Johnson had 35-38 painters working and informed the Fund that Johnson was claiming the extra work which was being directed was not caused by any fault of Basic or Johnson and that it entailed an acceleration of work not contemplated by the original contract and for which additional compensation should be paid. Johnson also submitted the requested additional information to Basic in detailed form on February 14th *fn6 which estimated (without prejudice) the cost for the extra work at $98,000 and $42,000 additional for the escalation. *fn7 On February 16th Basic informed Johnson by telephone that such demands "were completely unacceptable to us and that we could not go along with them." Basic also at that time refused to state its position to Johnson as to whether they were going to wire him canceling his contract and Johnson then hung up. The architect's direction to Basic to cancel the contract had been dated February 9th and under the contract the architect's decision was "final, binding and conclusive" unless the contractor appealed within five days. Basic did not within such period appeal the decision.
Johnson's problem was largely one of financing the additional work that was being demanded of him on an accelerated basis. This was aggravated by the fact that he had not been paid for some past expenditures he claimed were due him. The assurances Johnson demanded were not forthcoming, and Johnson on February 17, 1966 pulled his men off the job.
Upon the above facts Johnson brought suit against Basic and Stone for damages resulting from breach of contract alleging that Basic refused to issue change orders and make payments in accordance with the contract and wrongfully terminated Johnson's subcontract in order to conform to Stone's wrongful direction and thereby made it impossible for Johnson to perform his subcontract. The court below held for Johnson against Basic and entered damages in the amount of $66,399.68 in payment for work done by Johnson before it abandoned the job, and for $5,367.57 in payment for certain material left at the job site by Johnson which was seized by Basic after Johnson abandoned work and Basic's counterclaim for damages for breach was also denied. John W. Johnson, Inc. v. Basic Construction Co., 292 F. Supp. 300 (D.D.C.1968). Basic is here appealing this decision. On Johnson's suit against the architect, Stone, for canceling its subcontract, the trial court held for the architect on the ground that Johnson had abandoned the work because it had not received assurance of payment rather than because of the architect's cancellation of its subcontract. Johnson is here appealing this decision. We affirm both decisions below, and turn first to Johnson's suit against Basic. I Appellant's brief asserts that the first issue is:
Whether Basic was required to give Johnson a commitment for payment for the extra painting when it had received none from the Fund and when it had received no definite statement from Johnson of the amount claimed?
The subcontract contained two references to Extra Work. The first was a sentence at the bottom of Exhibit ...