By: Katz & Stone law firm
In order to maintain a suit for breach of contract based upon a change order, contractors must ensure that their change orders satisfy the requisite contractual requirements. And depending upon the jurisdiction, contractors must also ensure that their change orders meet certain additional statutory requirements. As the case of Davis Brothers Construction Co., Inc. v. City of Richmond, 70 Va. Cir. 409 (2006) demonstrates, a contractor’s failure to obtain the required signatures on a change order can bar a contractor’s breach of contract claim.
In Davis Brothers, a general contractor contracted with the city to perform stabilization work upon a historically valuable building within city limits. After work had commenced upon the project, the parties realized that further work would be required to stabilize the building in a proper manner. This additional work was beyond the scope of work for the original contract. Although the general contractor submitted two change orders to the city, the general contractor began such work prior to the execution of the second change order by all of the city representatives. Ultimately, the city became dissatisfied with the general contractor’s performance and terminated the general contractor without compensation for the extra work.
Alleging that the city had breached the change orders, the general contractor sued for damages. In response, the city argued that the second change order was unenforceable due to the fact that the change order lacked the signatures of two key city personnel. Specifically, the city code required the signature of the city manager on large changes to the contract. The circuit court found that the general contractor’s breach of contract claim (for the change order) was barred because the statutory requirement requiring certain signatures was not satisfied. Notwithstanding, the general contractor was still allowed to maintain its quantum meruit claim (an equitable claim for damages based upon the value of the services rendered where there is no enforceable contract) against the city.
Davis Brothers illustrates the long-standing doctrine in Virginia that a contractor must obtain the requisite signatures on a change order in order to maintain a breach of contract suit against the non-paying party. For example, in Trustees of Asbury United Methodist Church v. Taylor & Parrish, Inc., 249 Va. 144 (1995), the Supreme Court of Virginia upheld the trial court’s determination that a general contractor’s failure to have the appropriate person sign a change order barred an otherwise valid breach of contract claim.
As the cases of Davis Brothers and Trustees of Asbury United Methodist Church demonstrate, a contractor should not proceed with any change order work (even when directed by the owner’s personnel) without first making a determination as to whether any statutory or contractual provisions place specific change order authorization requirements on the contractor. Such a determination is necessary in order to ensure that a change order will be valid and binding.
Even though a contractor may still be able to recover damages under the doctrine of quantum meruit where it fails to comply with statutory/contractual change order requirements, the contractor should make its best effort to comply with these requirements in order to maximize its chances of full recovery.
About the authors: This article was is reprinted with permission of Gerald Katz, Esq. It was originally published in the Katz and Stone law firm newsletter. Access to all the firm’s newsletters is available able at the Katz & Stone Website, http://www.katzandstone.com. The firm is located at 8230 Leesburg Pike, Suite 600 ; Vienna , VA 22182 . 703-761-3000.
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