Borah v. McCandless

• Decision Date: 02 April 2009
• Docket Number: No. 34756.,34756.
• Citation: 147 Idaho 73,205 P.3d 1209
• Parties: Brenda BORAH, Plaintiff-Respondent, v. Dana McCANDLESS, d/b/a The Great Snake River Log Home Company, Defendant-Appellant.
• Court: Idaho Supreme Court

205 P.3d 1209

147 Idaho 73

Brenda BORAH, Plaintiff-Respondent, v. Dana McCANDLESS, d/b/a The Great Snake River Log Home Company, Defendant-Appellant.

No. 34756.

Supreme Court of Idaho, Boise, November 2008 Term.

April 2, 2009.

Dunn Law Offices, Rigby, for appellant. Robin Dunn argued.

Gery W. Edson, Boise, for respondent.

HORTON, Justice.

This appeal arises from a contract for the sale of logs to be used in the construction of a cabin. Following a bench trial, the district court concluded that Appellant Dana McCandless breached the contract by failing to deliver the logs within a reasonable time and awarded damages and attorney fees to Respondent Brenda Borah. We affirm and award attorney fees on appeal.

I. FACTUAL AND PROCEDURAL BACKGROUND

In March 2004, Borah contacted McCandless, who operated under the name Great Snake River Log Home Company, to discuss the possibility of purchasing logs to build a cabin on a lot she owns in Camas County, Idaho. Borah intended to build the cabin with the help of relatives rather than buying a pre-built home or having a contractor build it. Borah and McCandless discussed what Borah would need from McCandless to complete her cabin, including logs, ridge beam, and purlins. In an email sent to Borah on March 31, 2004, McCandless indicated one truck load should be sufficient to deliver the entire cabin package. On April 21, 2004, McCandless, via email, indicated to Borah that he could deliver the cabin package to her in July 2004 if she ordered it by the end of April.

McCandless sent Borah a pre-printed contract dated April 29, 2004, with a stated price of $24,250 for the cabin package. Borah received the contract in early May and requested McCandless to sell her additional logs for the gable and sides of the cabin. These additions raised the price to $27,100, and Borah changed the written document to reflect that increase. The contract called for an initial deposit of $16,975, and the terms were FOB Grangeville, Idaho, with Borah to pay for shipping to the Camas County site. No date for delivery was set in the document. Borah signed the contract on August 12, 2004, and McCandless signed it on September 22, 2004. The contract does not contain a merger clause; however, it does contain an arbitration clause.

On June 3, 2004, McCandless accepted a check from Borah for the full amount of the deposit. At that time, McCandless indicated that he would probably deliver the logs in early August, 2004, but possibly sooner. McCandless, however, delivered three loads of logs, on September 17, 2004, September 23, 2004, and October 30, 2004. The logs from these three deliveries left Borah well short of the total logs called for by the contract. The logs were worth $12,986.32.

After the October 30, 2004 delivery, weather prevented Borah from completing construction of the cabin until the following spring. Borah was obliged to winterize the part of the cabin which had been delivered at a cost of $632.79.

In November 2004, Borah proposed a final delivery date of June 1, 2005 for the remaining logs. McCandless responded in March 2005 and indicated he could deliver the remaining logs by May 15, 2005. McCandless failed to deliver on May 15, 2005, and the parties continued to discuss delivery dates. McCandless testified that he was willing and able to make final delivery by the end of June 2005 but that he declined to do so after receiving a letter from Borah's attorney on June 24, 2005. Borah apparently expected the delivery, as she rented equipment in early July 2005 in order to prepare for delivery of the logs. Borah's attorney sent another letter to McCandless, dated July 21, 2005, demanding final delivery. Still McCandless did not deliver and, in August 2005, Borah entered into a contract with Western Spirit Log Homes to purchase the logs necessary to construct the remainder of the cabin. Borah filed suit on August 31, 2005.

The district court found that McCandless had breached the contract without excuse by failing to deliver the logs within a reasonable time. The court found that the concept of cover applied and awarded Borah $3,208.56 for her cover damages. Both parties moved the court to reconsider this award. Upon recalculation, the court awarded Borah $15,199.80 in cover damages. The court also awarded Borah damages for the winterization costs and the July 2005 equipment rental. The court found Borah was the prevailing party and awarded her costs and attorney fees. McCandless timely appealed to this Court.

II. STANDARD OF REVIEW

Review of a trial court's conclusions following a bench trial is limited to ascertaining whether the evidence supports the findings of fact, and whether the findings of fact support the conclusions of law. Benninger v. Derifield, 142 Idaho 486, 488-89, 129 P.3d 1235, 1237-38 (2006) (citing Alumet v. Bear Lake Grazing Co., 119 Idaho 946, 949, 812 P.2d 253, 256 (1991)). Since it is the province of the trial court to weigh conflicting evidence and testimony and to judge the credibility of witnesses, this Court will liberally construe the trial court's findings of fact in favor of the judgment entered. Rowley v. Fuhrman, 133 Idaho 105, 107, 982 P.2d 940, 942 (1999). This Court will not set aside a trial court's findings of fact unless the findings are clearly erroneous. Ransom v. Topaz Mktg., L.P., 143 Idaho 641, 643, 152 P.3d 2, 4 (2006); I.R.C.P. 52(a). If the trial court based its findings on substantial evidence, even if the evidence is conflicting, this Court will not overturn those findings on appeal. Benninger, 142 Idaho at 489, 129 P.3d at 1238. Additionally, this Court will not substitute its view of the facts for that of the trial court. Ransom, 143 Idaho at 643, 152 P.3d at 4. This Court exercises free review over matters of law. Bolger v. Lance, 137 Idaho 792, 794, 53 P.3d 1211, 1213 (2002) (citing Bouten Constr. Co. v. H.F. Magnuson Co., 133 Idaho 756, 760, 992 P.2d 751, 755 (1999)).

III. ANALYSIS

As a preliminary matter, we must decide whether the district court had jurisdiction in light of the arbitration clause in the contract. If jurisdiction was proper, we must next examine whether the trial court erred in finding McCandless breached the contract without excuse. If we find he did so breach, we must then decide whether the trial court properly applied and calculated damages and whether its award of attorney fees to Borah was proper. Finally, we must decide if either party is entitled to attorney fees on appeal.

A. The district court properly exercised jurisdiction notwithstanding the arbitration clause.

The contract signed by the parties contained the following arbitration clause:

G. ARBITRATION

All claims or disputes between the parties shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect unless the parties mutually agree otherwise. The award rendered by the arbitrator shall be final, and judgement [sic] may be entered upon it in accordance with the applicable law in any court of competent jurisdiction. In the event of arbitration or suit, the prevailing party shall be entitled to recover its costs of arbitration or suit including, but not limited to, reasonable attorney fees.

In the proceedings before the district court, McCandless did not seek to compel arbitration nor did he plead the arbitration clause as an affirmative defense in his answer to Borah's complaint. Indeed, at no point during the proceedings below did McCandless alert the district court to the existence of the arbitration clause. Rather only after unsuccessfully defending this action before the district court did McCandless first raise the issue before this Court.

Generally, appellate review is limited to those issues raised in the lower court and this Court will not decide issues presented for the first time on appeal. Barbee v. WMA Securities, Inc., 143 Idaho 391, 397, 146 P.3d 657, 663 (2006) (citing Balser v. Kootenai County Bd. of Comrs., 110 Idaho 37, 40, 714 P.2d 6, 9 (1986)). The question of jurisdiction is an exception to this general rule; this Court will address questions of jurisdiction, even if raised for the first time on appeal. Nycum v. Triangle Dairy Co., 109 Idaho 858, 862, 712 P.2d 559, 562 (1985); Warren v. Sharp, 139 Idaho 599, 602, 83 P.3d 773, 776 (2003).

McCandless concedes he did not raise this issue below, but argues that the arbitration clause in the contract deprived the district court of subject matter jurisdiction. Although he advances this argument, McCandless has not supported his assertion by citation to legal authority that supports the proposition that a district court lacks subject matter jurisdiction to resolve a claim of breach of contract simply by reason of the existence of an arbitration clause.

In Hansen v. State Farm Mut. Auto. Ins. Co., 112 Idaho 663, 735 P.2d 974 (1987), we had occasion to consider the effect of a party's delay of ten months between the initiation of litigation and a motion to compel arbitration. We noted that "`[a]rbitration generally offers an inexpensive and rapid alternative to prolonged litigation. It also serves to alleviate crowded court dockets.' The policy underlying the enforcement of arbitration agreements or provisions in a written contract is rendered meaningless when the parties to such agreements proceed with the litigation process." Id. at 670, 735 P.2d at 981 (quoting Loomis, Inc. v. Cudahy, 104 Idaho 106, 108, 656 P.2d 1359, 1361 (1982)). We concluded that a party waives the right to compel arbitration "by submitting to the jurisdiction of the district court and proceeding with litigation in that court...." Id. In Hansen, we implicitly recognized that a district court has subject matter jurisdiction when a party has waived the benefit of an arbitration clause.

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