Bouten Const. Co. v. M & L Land Co.
| Decision Date | 13 July 1994 |
| Docket Number | No. 19564,19564 |
| Citation | 877 P.2d 928,125 Idaho 957 |
| Court | Idaho Court of Appeals |
| Parties | BOUTEN CONSTRUCTION COMPANY, Plaintiff-Appellant-Cross Respondent, v. M & L LAND COMPANY, an Idaho corporation, Defendant-Respondent-Cross Appellant, and The Wallace Inn, Inc., an Idaho corporation; H.F. Magnuson Company, an Idaho corporation; Defendants-Respondents. |
McCormick, Dunn & Black, Coeur d'Alene, for appellant. Joel C. McCormick, III, argued.
Evans, Keane, Koontz, Boyd, Simko & Ripley, Kellogg, for respondents, M & L Land Co., The Wallace Inn, Inc., H.F. Magnuson Co. Fred M. Gibler, argued.
This case involves a dispute between property owners and a contractor over the construction of a restaurant and motel in Wallace, Idaho. Bouten Construction Company, of Spokane, Washington (hereinafter "BCC"), is the contractor. M & L Land Company ("M & L") owned the land where the dual project was built. H.F. Magnuson Company (hereinafter "Magnuson") owns the motel, the Wallace Inn. A third company owns the restaurant, and alleged disputes regarding construction of that facility were settled before trial. BCC completed the work on the Wallace Inn, but its costs exceeded the amount BCC received from the owners. BCC brought actions for breach of contract and lien foreclosure in district court against Magnuson for money BCC claimed was due for building the Wallace Inn and against M & L for site work BCC had performed in conjunction with the Wallace Inn and the restaurant project. Several subcontractors who had filed liens against the Wallace Inn prevailed in this action below, but they are not parties to this appeal.
The district court granted judgment in favor of BCC against M & L and against Magnuson. The court also awarded costs and fees in favor of Magnuson and M & L against BCC for defense of the subcontractors' lien claims under I.C. § 45-511. On other claims, the court apportioned attorney fees and costs among the parties according to the extent each prevailed upon the claims.
BCC only recovered about eight percent of its claims against Magnuson and BCC appeals. Broadly stated, BCC contends that the district court erred in finding that the parties' contract contained a guaranteed maximum price which limited the amount of construction costs recoverable by BCC. BCC also contends that the court erred in making BCC, rather than Magnuson, liable under I.C. § 45-511 for payment of all attorney fees and costs connected with the foreclosure of the subcontractors' liens. Moreover, BCC contends the statute is unconstitutionally vague. Finally, BCC contends that the court did not award adequate attorney fees for the claims on which BCC prevailed.
M & L cross-appeals contending that the court should not have awarded BCC additional money for the site work because BCC failed to prove that its claimed costs for such work were reasonable.
We affirm the judgment in part, vacate in part and remand the case for further proceedings consistent with this opinion.
On June 17, 1988, Magnuson and BCC signed a contract for the construction of the Wallace Inn on the site owned by M & L. In the contract, BCC agreed to construct the Wallace Inn on a "cost plus" basis with a "Guaranteed Maximum Price" (GMP). When signed, the contract did not recite the amount of the GMP although the contract stated how the GMP would be established by the parties, and if they could not agree upon the amount of the GMP, "this entire Agreement becomes null and void." The parties discussed figures supplied by BCC comprising its estimated costs for the work but no GMP was agreed upon on June 17. However, on June 20, BCC sent a letter to Magnuson indicating BCC's willingness to commit to a "Guaranteed Maximum Price" of $1,790,643.
The $1,790,643 GMP was BCC's estimated total cost to build the Wallace Inn, plus its fee. In preparing its estimate, BCC relied upon the preliminary drawings of Magnuson's architect; these were not the detailed plans and specifications necessary to construct the project. BCC also relied upon its forty years of experience in the construction business and upon other information it had gathered about the project. BCC's owner, Frank Bouten (hereinafter "Bouten"), had met with the architect on several occasions to obtain information and details about the project. The architect led Bouten to believe that the quality level of the project would be comparable to the "Best Western" motel-chain standards. Bouten was generally familiar with these standards because at the time BCC was completing remodeling work on a Best Western motel in the area. In addition, BCC contacted numerous suppliers and potential subcontractors to obtain their estimates of costs of materials and work which they might be asked to provide if BCC was given the job by Magnuson. Thus, BCC entered into a written "cost plus" contract with Magnuson containing a guaranteed maximum price of $1,790,643. 1
As the district court found, three documents comprised the parties' contract to build the Wallace Inn: the "Standard Form of Agreement Between Owner and Contractor," signed on June 17, 1988; "General Conditions of the Contract for Construction;" and the letter written by Bouten to Magnuson on June 20, agreeing to a $1,790,643 GMP. We will generally refer to the three documents as "the contract." Bouten prepared the first document on a standard AIA printed form containing the following provisions. The language in bold type Bouten added to the form before it was signed.
5.2.1 The sum of the Cost of the Work and the Contractor's Fee is guaranteed by the Contractor not to exceed _____ Dollars ($_____), subject to additions and deductions by Change Order as provided in the Contract Documents. Such maximum sum is referred to in the Contract Documents as the Guaranteed Maximum Price. Costs which would cause the Guaranteed Maximum Price to be exceeded shall be paid by the Contractor without reimbursement by the Owner.
A Guaranteed Maximum Price will be established as soon as design development drawings are complete. Any savings will be reverted in full to the owner.
5.2.1A The Guaranteed Maximum Price may be adjusted up to five percent (5%) based upon final contract documents being furnished by the Architect. If changes are greater than a five percent (5%) add, then the scope of work will be negotiated downward to a mutually agreeable Guaranteed Maximum Price with changes directed by the Owner.
5.2.2 The Guaranteed Maximum Price is based upon the following alternates, if any, which are described in the Contract Documents and are hereby accepted by the Owner.
[Here, in small italicized type, the printed form had these instructions:]
[In the space below this instruction, Bouten inserted:]
A Guaranteed Maximum Price will be provided by the Contractor after completion of the design and development documents and then become a part of this Agreement. The Contractor's fee will be included in the Guaranteed Maximum Price.
If the Owner and Contractor do not agree upon a Guaranteed Maximum Price, this entire Agreement becomes null and void.
If a contingency amount is included in the Guaranteed Maximum Price, it will be used for changes approved by the Owner. Any unused amount of the contingency will be returned in full to the Owner.
In a subsequent Article, the contract categorized the costs which the contractor could recover for performing the work. It also enumerated expenses of the contractor which would not be considered "costs". In this category the contract--as modified by Bouten--recited:
8.1 The Cost of the Work shall not include:
....
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any, to be exceeded, except where changes required by the Owner occur that add to the Guaranteed Maximum Price and any costs necessitated by City, State, or Federal requirements not incorporated in the working drawings and specifications at the time the Guaranteed Maximum Price is established.
BCC contends that the district court erred in finding that the parties initially agreed to a "cost plus" contract with a GMP of $1,790,643. BCC further contends that the court misconstrued the contract language dealing with establishment of a GMP and that the court ignored certain language which is critical to carrying out the intent of the parties. BCC argues that the language must be read in the context of the circumstances existing when the contract was signed on June 17, 1988, and the circumstances which both parties contemplated would follow in the course of events. We will address these arguments in turn.
It is undisputed that the design of the Wallace Inn was far from complete when the contract was signed on June 17, 1988. Magnuson's architect for this project had produced "design development drawings" but these did not contain the structural, mechanical and electrical details necessary to build the project or to obtain subcontractor bids. Nevertheless, it is clear that BCC and Magnuson were willing to begin construction on a "fast track" basis even before the plans were complete. The parties expected that the architect would produce detailed plans and specifications necessary for subcontractor bids by July 15 and that he would provide other necessary drawings and specifications before they were needed in the course of construction. These expectations were soon dashed by delays and changes in the...
To continue reading
Request your trial
-
Bouten Constr. Co. v. HF Magnuson Co.
...decision of the district court, and the Court of Appeals affirmed in part and remanded in part. Bouten Constr. Co. v. M & L Land Co. (Bouten I), 125 Idaho 957, 877 P.2d 928 (Ct.App. 1994). The Court of Appeals found that the delay in the creation of the architect's plans prevented a meaning......
-
Agstar Fin. Servs. v. Nw. Sand & Gravel, Inc.
...set but later increased due to changes made by the project manager during construction. See Bouten Const. Co. v. M & L Land Co. , 125 Idaho 957, 974, 877 P.2d 928, 945 (Ct. App. 1994) ( Bouten I ). Bouten sued for breach of contract, seeking an amount in excess of the originally quoted maxi......
-
Agstar Fin. Servs., ACA v. Nw. Sand & Gravel, Inc.
...been set but later increased due to changes made by the project manager during construction. See Bouten Const. Co. v. M & L Land Co. , 125 Idaho 957, 974, 877 P.2d 928, 945 (Ct. App. 1994) ( Bouten I ). Bouten sued for breach of contract, seeking an amount in excess of the originally quoted......
- State v. Doe, 27967.