122 F. Supp. 3d 247
D. Maryland2015Background
- C.B. Structures entered a purchase order with Pepco to build pole barns; the purchase order listed a line item "Premium $68,220.00."
- A Proposal Letter from C.B. Structures to Pepco’s engineering consultant explained the base schedule (substantial completion by Feb, final by Mar 31, 2013) and stated that "for a premium of $68,220.00" C.B. Structures would "substantially complete the buildings by 12-31-12."
- The Proposal described the premium as covering incurred expenses (overtime, temporary staff, subs’ overtime premiums, temporary heat/materials) needed to accelerate completion.
- Pepco refused to pay the Premium because C.B. Structures did not finish by 12/31/12; C.B. Structures sued for breach and sought a declaratory judgment; Pepco counterclaimed.
- Parties filed cross-motions for summary judgment limited to the meaning of "Premium." The court found the purchase order ambiguous and considered the Proposal Letter as admissible extrinsic evidence.
- The court held that the Premium was an advance mobilization/accelerated-schedule charge (part of the contract price), not a conditional bonus payable only upon completion by 12/31/12.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of "Premium" listed in purchase order | Premium is part of the contract price — an added charge to cover costs to accelerate work (not conditional on date) | Premium is ambiguous but parol evidence shows it was an incentive/bonus payable only if C.B. Structures substantially completed by 12/31/12 | Premium is an advance mobilization/acceleration cost included in the total contract price, not a conditional incentive |
Key Cases Cited
- Dumbarton Imp. Ass’n, Inc. v. Druid Ridge Cemetery Co., 73 A.3d 224 (Md. 2013) (cardinal rule: give effect to parties’ intent; apply objective interpretation; unambiguous written language governs)
- SG Homes Assocs., LP v. Marinucci, 718 F.3d 327 (4th Cir. 2013) (a document referenced in a writing is interpreted as part of the writing)
- John L. Mattingly Const. Co. v. Hartford Underwriters Ins. Co., 999 A.2d 1066 (Md. 2010) (ambiguities in contract language are resolved against drafter)
- Pacific Indemnity Co. v. Interstate Fire & Cas. Co., 488 A.2d 486 (Md. 1985) (contract construction is an issue of law where language is unambiguous; extrinsic evidence may be used if ambiguous)