U.S. District Court in Georgia Holds Written Change Order Requirement Waived By Course of Conduct

Circle Y Construction, Inc. v. WRH Realty Services, Inc.
2010 U.S. Dist. LEXIS 67812 (N.D. Ga. July 8, 2010)

Circle Y Construction, Inc. contracted with WRH Hidden Colony to perform certain renovation work at nine unoccupied apartment units. The contract designated Brown, vice president of construction services for WRH Realty Services, as the person responsible for administering the contract on behalf of WRH Hidden Colony and stated that Brown was the only person authorized to approve changes to the scope of work. The contract further provided that “all extra or changed work shall be authorized by a written change order.”

During the course of the work, Brown requested that Circle Y perform renovation work in unit 2B, which was not included in the parties’ written contract. Brown also instructed Circle Y to install a furnace in unit 22, which was also not part of the parties’ contract. Neither Brown nor anyone else at WRH Hidden Colony requested that Circle Y submit a written change order in connection with this extra work. Nevertheless, WRH Hidden Colony paid Circle Y for the additional work.

Brown also orally requested that Circle Y repair a ceiling that had collapsed in unit 7C. This work was not part of the parties’ contract. Brown neither requested nor required that Circle Y submit a written change order, but instead instructed Circle Y to submit an invoice for the repair.

At a certain point, Brown designated another employee, Sanchez, as the person in charge of directing Circle Y’s work. Thereafter, Sanchez verbally ordered Circle Y to perform additional work. Sanchez also directed Circle Y to follow the instructions of two other employees, Young and Phillips. Phillips and Young verbally directed Circle Y to perform substantial additional work.

At the conclusion of the project, Circle Y sent an invoice for the extra work that was verbally requested. WRH Hidden Colony refused to pay based on the contract’s requirement that change orders be written and that Brown was the only employee authorized to order additional work. Circle Y, thus, commenced a breach of contract action.

The Court held that Circle Y submitted sufficient evidence to show that the parties waived the requirement of a written change order by their course of conduct. Specifically, the court found that the addition of and payment for unit 2B and the furnace in unit 22, and Brown’s oral request to complete drywall and ceiling work in unit 7C, all without requiring a written change order, supported its conclusion that the parties’ course of conduct waived the requirement of a written change order. The court also held that the conduct of WRH Hidden Colony waived the contract provision requiring Brown to authorize all change orders.

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