415 F.2d 882 (10th Cir. 1969), 9753, Cox v. Fremont County Public Bldg. Authority

Docket Nº:9753.
Citation:415 F.2d 882
Party Name:Ross E. COX, General Contractor, and Fidelity and Deposit Co. of Maryland, a Maryland corporation, Appellants, v. The FREMONT COUNTY PUBLIC BUILDING AUTHORITY, a Colorado corporation, the County of Fremont By and Through the Board of County Commissioners of Fremont County, and the First National Bank of Florence, Trustee, Appellees.
Case Date:September 03, 1969
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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415 F.2d 882 (10th Cir. 1969)

Ross E. COX, General Contractor, and Fidelity and Deposit Co. of Maryland, a Maryland corporation, Appellants,

v.

The FREMONT COUNTY PUBLIC BUILDING AUTHORITY, a Colorado corporation, the County of Fremont By and Through the Board of County Commissioners of Fremont County, and the First National Bank of Florence, Trustee, Appellees.

No. 9753.

United States Court of Appeals, Tenth Circuit.

September 3, 1969

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Thomas W. Whittington and John H. Tippit, Denver, Colo., and John A. F. Wendt, of Clark & Wendt, Aspen, Colo., for appellants.

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John J. Hanlon and Charles F. Brega, of Hindry, Erickson & Meyer, Denver, Colo., for appellees.

Before JONES, [a1] Senior Circuit Judge, and BREITENSTEIN and HOLLOWAY, Circuit Judges.

HOLLOWAY, Circuit Judge.

This appeal seeks reversal of a judgment on a jury verdict for damages against a building contractor and his surety. The damages were awarded in a diversity suit for breach of a contract for construction of a courthouse in Fremont County, Colorado, and for sums expended to mitigate damages to the building. Leaking and breakage of glass in a skylight in the courthouse roof is the center of the controversy involved on this appeal.

Appellant Cox is the contractor found liable and appellant Fidelity and Deposit Co. of Maryland (Fidelity hereafter), the surety on his performance bond, was also held liable. Appellee Fremont County Public Building Authority (the Authority hereafter) made the contract with Cox for the work. Appellee County of Fremont (the County hereafter) created the Authority as the agency to have the building constructed. Appellee The First National Bank of Florence, Colorado (the Trustee hereafter) is an obligee on the performance bond due to its position as trustee under an indenture of mortgage securing the holders of the bonds issued to finance the construction.

In general the undisputed facts are as follows. In May, 1958, the County decided to build a new courthouse. The plan was to create the Authority and to lease to it the land on which the building was to be erected. The Authority would contract for the work and the completed courthouse and the land would be leased back to the County. This procedure was chosen because of restrictions in the Colorado Constitution on bonded indebtedness.

The Authority was incorporated in 1959 and in July of that year it executed the Construction Agreement with Cox. Other contract documents which are incorporated by reference are A.I.A. Form A2, described as the General Conditions; the Supplementary General Conditions; and the Specifications and Drawings. Fidelity's liability was grounded on its performance bond.

Construction began in August, 1959. After some delay in completion of the work the County occupied the new courthouse in September, 1961. During the latter part of September the skylight in the center of the building was leaking, as had been noticed earlier. Complaints were made to Cox in September, 1961, about the skylight and other problems. The Authority and the County also made complaints to Cox about the leaking and glass breakage in 1962. In August, 1962, Cox agreed to do remedial work on a number of problems at the courthouse including the skylight. Cox also agreed to furnish a five-year guarantee against leakage of the skylight. The architect testified that a guarantee was furnished but was not honored because the subcontractor furnishing it was not paid by Cox.

The record is somewhat unclear about the 1962 remedial work. 1 In any event the record does not show work by Cox himself after 1962. It shows no reply by Cox to complaints to him by the

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architect in January, 1963, about leaks and other defects in the skylight, and by the Authority on March 7, 1963, about uncompleted work. The architect testified that leaking occurred after testing of the remedial work. This suit was brought in August, 1963. The verdict awarded $30,000 on the skylight claim and $1,500 on other claims. Cox and Fidelity appeal the judgment on the verdict.

Appellants' principal contention is that the contract documents made arbitration a condition precedent to suit and that appellees' failure to arbitrate precludes this recovery by them. The trial court held that the arbitration provisions do not apply in these circumstances. 2 We conclude also that the arbitration provisions do not bar recovery for reasons that follow.

The contract documents provide for arbitration in the General Conditions. Appellants point to Articles 20 and 40 in particular, which are set out in the margin. 3 There the parties agreed that 'disputes, claims or questions' subject to arbitration under the contract would be submitted to arbitrators whose decision would be a condition precedent to legal action. Such common-law arbitration agreements have long been favored in Colorado and legal actions may not be brought to settle disputes where arbitration has been agreed upon. Ezell v. Rocky Mountain Bean & Elevator Co., 76 Colo. 409, 232 P. 680 (1925); McClelland v. Hammond, 12 Colo.App. 82, 54 P. 538 (1898) .

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We conclude, however, that the circumstances involved here did not oblige appellees to invoke arbitration. For a dispute, claim or question to be present within the meaning of the contract, a difference between the parties was required. 'If no difference should arise, there would be no question to submit.' Fravert v. Fesler, 11 Colo.App. 387, 53 P. 288, 290 (1898). There is no dispute requiring arbitration until a matter of fact or law is asserted by one side and denied by the other. Gold Uranium Mining Co. v. Chain O'Mines Operators, 128 Colo. 399, 262 P.2d 927 (1953)...

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