Ray Bell Construction Company, Inc. v. State of Tennessee, Tennessee Department of Transportation
2011 Tenn. LEXIS 1143
Tenn.2011Background
- Ray Bell Construction contracted with TDOT on May 28, 2003 to reconstruct the I-240/I-40 interchange, with completion originally due by December 15, 2006.
- The contract included an incentive of $10,000 per day (up to $2,500,000 total) for completing all work by December 15, 2006 and a disincentive for days beyond that date.
- Extension provisions allow time extensions for delays caused by conditions beyond the contractor’s control, governed by the Standard Specifications; an Order of Precedence clause gives Special Provisions control over Standard Specifications.
- TDOT proposed Supplemental Agreement 24 extending the completion and disincentive dates by 137 days but keeping the incentive date at December 15, 2006; Ray Bell refused.
- Engineer's post-completion determination found the contract substantially complete on December 17, 2006; TDOT later offered a 137-day extension for completion and disincentive but not the incentive date.
- Claims Commission awarded Ray Bell the maximum incentive and other relief based on latent ambiguity; Court of Appeals affirmed; the Tennessee Supreme Court reversed, holding the contract unambiguous and not permitting an incentive-date extension.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the incentive date extension authorized by the contract? | Ray Bell argued ambiguity requiring extrinsic evidence to permit extension of the incentive date. | TDOT argued the contract unambiguously limits the incentive date to December 15, 2006. | Incentive date extension is not permitted; contract unambiguous. |
| Does the Extension Provision permit extending the incentive date when time is extended for conditions beyond the contractor's control? | Ray Bell contends extensions may extend all relevant dates, including the incentive date. | TDOT contends Extension Provision extends only completion and disincentive dates. | Extension Provision extends completion and disincentive dates, not the incentive date. |
| What is the effect of the contract's order-of-precedence on the dispute? | Ray Bell relies on ambiguity to justify extrinsic evidence and broader interpretations. | TDOT relies on the plain, controlling language of the Special Provision over Standard Specifications. | Special Provision (Completion) governs over Standard Specifications (Extension); contract is unambiguous. |
Key Cases Cited
- Maggart v. Almany Realtors, Inc., 259 S.W.3d 700 (Tenn. 2008) (courts interpret contracts to avoid rendering provisions meaningless)
- Allstate Ins. Co. v. Watson, 195 S.W.3d 609 (Tenn. 2006) (initial task is to determine ambiguity in contract language)
- Planters Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885 (Tenn. 2002) (determine whether contract language is ambiguous)
- Whitehaven Cmty. Baptist Church v. Holloway, 973 S.W.2d 592 (Tenn. 1998) (contract interpretation within four corners if unambiguous)