Beco Corp. v. Roberts & Sons Const. Co., Inc.

• Decision Date: 01 April 1988
• Docket Number: No. 16575,16575
• Citation: 760 P.2d 1120,114 Idaho 704
• Court: Idaho Supreme Court
• Parties: BECO CORPORATION, an Idaho corporation, Plaintiff-Respondent-Cross Appellant, v. ROBERTS & SONS CONSTRUCTION COMPANY, INC., Defendant-Appellant-Cross Respondent, and Edward C. Roberts, dba Roberts & Sons Construction Company, and Continental Casualty Insurance Company, Defendants-Cross Respondents.

Page 1120

760 P.2d 1120

114 Idaho 704

BECO CORPORATION, an Idaho corporation, Plaintiff-Respondent-Cross Appellant, v. ROBERTS & SONS CONSTRUCTION COMPANY, INC., Defendant-Appellant-Cross Respondent and Edward C. Roberts, dba Roberts & Sons Construction Company, and Continental Casualty Insurance Company, Defendants-Cross Respondents.

No. 16575.

Supreme Court of Idaho.

April 1, 1988.

Rehearing Denied Sept. 21, 1988.

Webb, Burton, Carlson, Pederson & Webb, Twin Falls, for defendant-appellant-cross respondent. Lloyd J. Webb and Curtis Webb, argued.

Fuller & Carr, Idaho Falls, for plaintiff-respondent-cross-appellant. Mark R. Fuller, argued.

BISTLINE, Justice.

Beco Corporation is an Idaho corporation based in Idaho Falls whose sole stockholder is Doyle H. Beck. Roberts & Sons Construction Company, Inc., is a Utah corporation located in Pleasant Grove, Utah. Edward C. Roberts and his wife own all the stock. In the past, Roberts & Sons had been licensed to do business as a foreign corporation in Idaho and had done construction work previously in Idaho. However, during the time relevant to this appeal, Roberts & Sons was no longer registered with the Secretary of State.

In December of 1983, Beco contracted with Roberts & Sons to haul topsoil in Arizona. Roberts & Sons was the prime contractor on a highway project for the State of Arizona. The purpose of the contract was to relandscape and reseed the area around four overpasses which had suffered severe erosion. Beco's subcontract required it to haul topsoil necessary for the reseeding.

In late 1983 Kurt Anderson, an agent of Roberts & Sons, sought prices from potential subcontractors. At trial, testimony did not establish definitively whether Anderson initiated the contact with Doyle Beck. Negotiations ensued as Beck and Ed Roberts discussed the terms of the subcontract over the phone. Beck drafted the agreement in Idaho Falls on a standard form produced by the Idaho branch of the Associated General Contractors of America. Beck signed it and mailed the contract to Ed Roberts who signed and mailed it back to Beck in Idaho Falls.

In late December 1983, Beco began work on the construction site in Arizona. Beco's drivers discovered that after crossing the site several times their equipment bogged down in mud beneath the dry, cracked surface. Previous inspections by both parties prior to executing the contract, gave no warning of the subsurface water.

Beco notified Roberts & Sons and the State of Arizona of the muddy conditions. Roberts & Sons obtained permission from the state to stop work to allow the ground to dry out. Beco removed its equipment from the site and never returned. When the job site had dried, Roberts & Sons completed Beco's contract performance at its own expense prior to the time specified in the subcontract when Beco's complete performance was due.

Roberts & Sons paid Beco the agreed contract price for the topsoil it hauled. Beco then brought this action alleging it was entitled to additional compensation from Roberts & Sons because of the unforeseen Defendants moved to dismiss for lack of jurisdiction over the person. This motion was denied by Judge George. Pursuant to leave granted by the court, defendants amended their answers to add a counterclaim for their expense in completing Beco's contractual obligations on the highway project.

[114 Idaho 706] expenses resulting from the muddy conditions. Continental Casualty Insurance Company, Roberts & Sons' surety on the project, was joined as a defendant in an attempt to collect against the payment bond.

A jury trial was held on May 15 to May 19, 1986. Judge George denied the defendant's motion to dismiss for lack of jurisdiction over the person and denied their motion for a directed verdict made at the close of Beco's case. The jury reached a verdict for Beco on its claim and against Roberts & Sons on its counterclaim. Roberts & Sons requested that the court return the jury to deliberate on the ground that the verdict was inconsistent. Judge George denied the request.

Roberts & Sons filed motions for a new trial, judgment n.o.v., and to amend the judgment. At trial, Beco's evidence was directed entirely at Roberts & Sons Construction Company. The motion to amend the judgment was to alter the party against whom the judgment was entered, from Ed Roberts, the individual, to Roberts & Sons Construction Company. Judge George denied Roberts & Sons' motion for a new trial or for a judgment notwithstanding the verdict and granted the motion to amend the judgment. Notices of appeal and cross appeal were timely filed.

Roberts & Sons' appeal requires us to address the following issues:

1. Did the Idaho court have in personam jurisdiction over Roberts & Sons Construction Co., a Utah corporation?

2. Was Beco Corporation's work removing its trucks from the mud something necessarily required in the performance of the contract and, therefore, work for which no additional compensation is required?

3. Is a summary admissible under Idaho Rule of Evidence 1006, if the proponent of the summary fails to make the underlying materials on which the summary is based available to the opposing party for inspection?

4. Is a verdict which awards damages on the contract and holds that the contract has been rescinded inconsistent?

Both parties seek attorney fees on appeal. In addition, Beco is seeking attorney fees at the trial level based upon language in the performance bond issued by Continental Casualty Insurance Co.

I.

Roberts & Sons moved for a directed verdict based on lack of jurisdiction at the close of Beco's case and for a judgment notwithstanding the verdict following trial. The question of the existence of personal jurisdiction over a non-resident defendant is one of law which we review freely.

The question poses a two part analysis. First, Roberts & Sons actions must fall within the terms of our "long arm" statute, I.C. § 5-514. Second, Roberts & Sons must have had minimum contacts with Idaho such that assertion of Idaho jurisdiction will not violate defendant's right to due process of law guaranteed by the Fourteenth Amendment of the United States Constitution. Schwilling v. Horne, 105 Idaho 294, 297, 669 P.2d 183, 186 (1983); See International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Idaho Code § 5-514 provides in relevant part as follows:

Acts subjecting persons to jurisdiction of courts of state.--

(a) The transaction of any business within this state which is hereby defined as the doing of any act for the purpose of realizing pecuniary benefit or accomplishing or attempting to accomplish, transact or enhance the business purpose or objective or any part thereof of such person, firm, company, association or corporation; I.C. § 5-514(a) (1979) (emphasis added).

The first question is whether the conduct of Roberts & Sons falls within the terms of this very broadly worded statute.

The legislation is designed to provide a forum for Idaho residents, and, as remedial legislation of the most fundamental nature, is to be liberally construed. Doggett v. Electronics Corp. of America, 93 Idaho 26, 454 P.2d 63 (1969). But even without the rule of liberal construction, it is evident that the statute applies.

The statute itself defines "transaction of any business within this state" as "the doing of any act for the purpose of realizing pecuniary benefit." Roberts & Sons conduct of negotiating a contract price with Beco, agreeing that Doyle Beck should draft the agreement, executing the document over Beck's signature, and mailing the contract back to Idaho Falls certainly falls within the broad statutory language. ¹ The fact that Roberts & Sons maintained no physical presence in Idaho does not affect the applicability of the statute. Southern Idaho Pipe & Steel Co. v. Cal-Cut Pipe & Supply, Inc., 98 Idaho 495, 567 P.2d 1246 (1977).

The closer question is whether Roberts & Sons had sufficient minimum contacts with Idaho such that the assertion of jurisdiction would be fair. Since the legislature in adopting I.C. § 5-514 intended to exercise all the jurisdiction available to the State of Idaho under the due process clause of the United States Constitution, Doggett, supra, 93 Idaho 26, 30, 454 P.2d 63, 67, we must turn to our federal cases for guidance while bearing in mind that the minimum contacts test is not susceptible of mechanical application and each case requires an ad hoc analysis of the jurisdictional facts. Schwilling v. Horne, 105 Idaho 294, 298, 669 P.2d 183, 187 (1983).

The leading case involving a contract dispute is the recent Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Burger King Corporation sued Rudzewicz, a franchisee residing in Michigan, in Florida for breach of franchise obligations and trademark infringement. The court ruled that the assertion of jurisdiction by a Florida court did not offend due process even though Rudzewicz and his partner had done business mainly, although not exclusively, with the Michigan office of Burger King.

Reviewing prior cases, Justice Brennan reasoned that the minimum contacts required by International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), are supplied if the defendant "purposefully directs" his activities at residents of the forum state and the litigation arises out of or relates to those activities. Id. 105 S.Ct. at 2182. In contracts cases, those who reach out beyond one state and create continuing relationships and obligations with citizens of another state are subject to suit in the other state for the consequences of their activities. Id.

If minimum contacts exist, the analysis takes one further step:

Once it had been decided that a defendant purposefully established minimum contacts within the forum State, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would...