Subcontractors frequenly deal with change orders. These cause original estimates to rise, and cause the prices on contracts to increase. Recently, the North Carolina court of appeals dealt with a change-order case. In Southern Seeding Services, Inc. v. W.C. English, Inc., et al, COA12-63,6, there was a contract dispute between subcontractors on a construction project on a loop of Interstate 40 in Greensboro. The general contractor hired W.C. English, Inc. (“English”) for grading, erosion control, and grassing services. English then hired Plaintiff Southern Seeding Services, Inc. (“Southern Seeding”) for the grassing services. The contract between English and Southern Seeding provided that if the completion of the work is delayed beyond the contract time without fault by Southern Seeding, the quoted prices shall be equitably adjusted to compensate for increased cost. Through no fault of Southern Seeding (but partially due to English's delayed erosion work), Southern Seeding's work went on for almost a year after the initial contract completion date. After completion of work, Southern Seeding sent multiple correspondences to English regarding the additional costs owed due to the equitable adjustment of the quoted costs for work completed after the completion date. Southern Seeding calculated that the amount owed to them was $194,941.39. English, however, offered only $77,440.80, which Southern Seeding rejected.
At trial, the court ruled against Southern Seeding, but Southern Seeding prevailed on appeal. On remand, the trial court found for Southern Seeding in the amount of $194,941.39 (based on the evidence and calculations offered by Southern Seeding's president) plus attorney's fees.
Since the term “equitable adjustment” was not defined in the contract and the parties' definition differed, the court looked to treatises in the subject area for a definition. The Court of Appeals agreed with the trial court's finding that “equitable adjustment” means “a breach of contract remedy ascertained via a factual analysis of the actual costs to the contractor of the additional or un-contracted-for work, including overhead and a reasonable profit.”