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IN THE COURT OF APPEALS OF IOWA No. 2-143 / 11-1183 Filed June 27, 2012

SENECA WASTE SOLUTIONS, INC., Plaintiff-Appellee, vs. SHEAFFER MANUFACTURING CO., L.L.C., and SHEAFFER PEN CORPORATION, A Division of BIC USA, INC., Defendants-Appellants. ________________________________________________________________

Appeal from the Iowa District Court for Lee County, John M. Wright, Judge.

Defendants appeal a district court judgment for money damages in excess of a stated not-to-exceed contract price. AFFIRMED.

Benjamin P. Roach of Nyemaster, Goode, West, Hansell & O'Brien, P.C. , Des Moines, for appellants. Brenda L. Myers-Maas, Clive, for appellee.

Heard by Vaitheswaran, P.J., and Doyle and Danilson, JJ.

2 VAITHESWARAN, P.J. Sheaffer Manufacturing and Sheaffer Pen Corporation appeal a district court judgment for money damages in excess of a stated not-to-exceed contract price. I. Background Facts and Proceedings Sheaffer1 decided to shut down its pen manufacturing facility in Fort Madison. In connection with the closure, the company solicited bids to have the facility cleaned and decontaminated. Seneca Waste Solutions, Inc. submitted the successful bid. The parties subsequently executed a contract and, in an attachment identified as "Exhibit A," detailed the "scope of work" and the "project cost estimate." The contract specified that the work would be charged on a time and materials cost basis "at the rates quoted by contractor in Exhibit A." The contract also specified that the work would not exceed "One Hundred Seventy Thousand Dollars ($170,000), inclusive of all taxes, subcontractor fees, and any and all other surcharges, costs and expenses." This became known as the "notto-exceed price." Seneca anticipated that the clean-up process would generate wastewater, most of which would be handled through an on-site wastewater treatment plant. Seneca assumed that only the wastewater generated in cleaning and dismantling this plant would have to be handled at an off-site facility. It subcontracted with Heritage Environmental Services to treat approximately 4000 gallons of wastewater, and identified a charge to Sheaffer of "cost plus 15%." It included a
1

We will refer to defendants Sheaffer Manufacturing Co., L.L.C. and Sheaffer Pen Corporation as "Sheaffer."

3 provision stating the estimate was "subject to change based on waste analysis and volume." Shortly after Seneca began its clean-up work, Sheaffer shut down the onsite waste water treatment plant and directed Seneca to have all the wastewater treated by the off-site facility. As a result, Heritage ended up handling 18,000 gallons of waste water rather than the 4000 gallons originally contemplated. Heritage billed Seneca $66,689.65 for its services. The original subcontracted cost for the disposal of 4000 gallons was to be $34,325.85, including Seneca's 15% mark-up. Seneca sent Sheaffer invoices totaling $211,599.47. Sheaffer paid

Seneca $145,980.87 and tendered payment of $24,019.13, to bring its total payment up to the not-to-exceed price of $170,000. Seneca rejected the

tendered payment and filed a damage suit for the outstanding invoiced amount. All the parties moved for summary judgment. The district court granted Sheaffer's motion and dismissed Seneca's case in its entirety, concluding that the not-to-exceed price was controlling and Seneca could not recover more than that amount. Seneca appealed the summary judgment ruling. The Iowa Supreme Court considered the appeal and found a genuine issue of material fact as to whether Sheaffer modified the contract. The court reversed and remanded the case for trial. See Seneca Waste Solutions, Inc. v. Sheaffer Mfg. Co. , 791 N.W.2d 407, 412

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