MasTec North America, Inc. v. El Paso Field Services, L.P.

The caselaw demonstrates that a contractor is not precluded, as a matter of law, from recovering against an owner, under a breach of contract theory, for defective specifications, notwithstanding lump-sum and pre-bid investigation provisions in the contract, if the owner was in a better position to know whether its specifications were sufficient for its intended scope of work and the contract evidences that the owner made positive assurances concerning the reliability of those specifications. Even when the contract places the risk of differing or unexpected site conditions on the contractor, the contractor is not, as a matter of law, required to bear the risk that the bid documents misrepresent the nature and amount of the work to be performed. Houston's 1st Court of Appeals, No. 01-07-00319-CV, 05-10-2010

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OPINION ON REHEARING

This is a breach of contract dispute brought by appellants, MasTec North America, Inc., and MasTec, Inc. (collectively, “MasTec”), against appellees, El Paso Field Services, L.P. and Gulfterra South Texas, L.P., f/k/a El Paso South Texas, L.P. (collectively, “El Paso”). El Paso engaged MasTec to replace a butane pipeline for a lump sum of$3.6million, known as the “Butane Shuttle Replacement Project” (“Project”). MasTec submitted its bid on the Project based on information in El Paso’s bid package, which included, inter alia, the “Station and Land Pipeline Construction Contract” (“Contract”) and El Paso’s specifications, which were incorporated into the Contact. In the Contract specifications, El Paso asserted that it used due diligence in locating any “foreign crossings”*fn1 in the pipeline right-of-way and that there were 280 such crossings. During construction, however, MasTec encountered 794 foreign crossings, which required additional construction measures and increased its costs substantially. MasTec sued El Paso to recoup the additional expenses. A jury found that El Paso breached the due diligence provision of the Contract specifications and awarded $4,763,890 in damages to MasTec. Subsequently, on the motion of El Paso, the trial court granted judgment notwithstanding the verdict (“JNOV”) in favor of El Paso, concluding that the lump-sum provisions of the Contract allocated the risk of unidentified foreign crossings to MasTec and holding that MasTec take nothing by its claims. MasTec appeals.

In its sole issue, MasTec contends that the trial court erred by granting JNOV in favor of El Paso because the trial court’s interpretation of the Contract improperly rendered the due diligence provision a nullity and shifted the risk of costs associated with unidentified foreign crossings to MasTec. In the alternative, MasTec contends that (a) the Contract is ambiguous and must be strictly construed against El Paso, or (b) that MasTec is entitled to recover under its quantum meruit theory.

MasTec North America, Inc. v. El Paso Field Services, L.P.

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