Bouten Constr. Co. v. HF Magnuson Co.
| Citation | 133 Idaho 756,992 P.2d 751 |
| Decision Date | 15 November 1999 |
| Docket Number | No. 23681., No. 22707 |
| Parties | BOUTEN CONSTRUCTION COMPANY, Plaintiff-Respondent, v. H.F. MAGNUSON COMPANY, Defendant-Appellant, and M & L Land Company, an Idaho corporation; The Wallace Inn, Inc., an Idaho corporation; The Trustees of Washington-Idaho-Montana Carpenters-Employers Retirement Trust Fund; The Trustees of Washington-Idaho-Laborers-Employers Pension Trust Funds; The Trustees of Washington-Idaho Cement Masons-Employers Retirement Trust Fund; The Trustees of Washington-Idaho-Montana Carpenters-Laborers Retirement Trust Fund; Johnson Masonry, Inc., a Washington corporation; Associated Terrazzo & Ceramics, Inc., a Washington corporation; Richard Doering and Jane Doe Doering, husband and wife, residents of Kootenai County, State of Idaho, d/b/a Division Eight; Aztech Electric, Inc., a Washington corporation; Sun Contracting of Spokane, Inc., a Washington corporation; Viking Automatic Sprinkler Company, an Idaho corporation; Performance Contracting, Inc., a Kansas corporation; Robert K. Monroe and Jodie Monroe, husband and wife, residents of Spokane County, State of Washington, d/b/a Design Wall Covering; Dupree Building Specialties, a Washington sole proprietorship; and McClintock & Turk, Inc., a Washington corporation, Defendants. Bouten Construction Company, Plaintiff-Respondent, v. The Trustees of Washington-Idaho-Montana Carpenters Employers Retirement Trust Fund; The Trustees of Washington-Idaho Cement Masons Employers Retirement Trust Fund; The Trustees of Washington-Idaho-Montana Carpenters Laborers Retirement Trust Fund; and The Trustees of Washington-Idaho-Montana Carpenters Laborers Retirement Trust Fund, Defendants-Appellants, and M & L Land Company, an Idaho corporation and H.F. Magnuson Company; The Wallace Inn, Inc., an Idaho corporation; Johnson Masonry, Inc., a Washington corporation; Associated Terrazzo & Ceramics, Inc., a Washington corporation; Richard Doering and Jane Doe Doering, husband and wife, residents of Kootenai County, State of Idaho, d/b/a Division Eight; Aztech Electric, Inc., a Washington corporation; Sun Contracting of Spokane, Inc., a Washington corporation; Viking Automatic Sprinkler Company, an Idaho corporation; Performance Contracting, Inc., a Kansas corporation; Robert K. Monroe and Jodie Monroe, husband and wife, residents of Spokane County, State of Washington, d/b/a Design Wall Covering; Dupree Building Specialties, a Washington sole proprietorship; and McClintock & Turk, Inc., a Washington corporation, Defendants. |
| Court | United States State Supreme Court of Idaho |
Evans, Keane, Kellogg; Fred M. Gibler, Kellogg; John F. Magnuson, Coeur d'Alene, for appellants. Fred M. Gibler and John F. Magnuson argued.
McCormick, Dunn & Black, P.S., Sandpoint, Idaho and Spokane, Washington. Joel C. McCormick III argued.
The parties dispute the interpretation of a construction contract and an award of both pre- and post-judgment interest. The contractor and the owner agreed to a "cost plus" construction contract for the Wallace Inn in Wallace, Idaho, with a set maximum price. Because of changes made by the owner during construction, the costs greatly exceeded the maximum price, and upon completion, the owner refused to pay the difference. The district court and the Court of Appeals found for the contractor and awarded most of the costs as well as pre- and post-judgment interest on the award. The owner appeals the judgments on both the award and the interest. We affirm in part and reverse in part.
Bouten Construction Company (Bouten) entered into an agreement to build the Wallace Inn (Inn) for H.F. Magnuson Company (Magnuson) on land owned by M & L Land Company (M & L) in Wallace, Idaho. The contract, signed on June 17, 1988, was a "cost plus" agreement with a set "Guaranteed Maximum Price" (GMP). However, because detailed plans for the Inn had not been prepared by Magnuson's architect prior to the signing of the contract, the amount of the GMP was left open when the contract was signed. The contract specified that a GMP would be required when the design development drawings had been completed.
Bouten, however, did not wait for the detailed plans to be completed, and three days after the contract was signed, sent Magnuson a letter setting a GMP of $1,790,643. Bouten based this price on its experience in the construction business and on the architect's representations that the Inn would be of similar quality as the "Best Western" motelchain standards. Bouten was familiar with Best Western motels because it was completing a remodeling project on a Best Western motel in the area.
The full agreement between the parties consisted of three documents: (1) the "Standard Form of Agreement Between Owner and Contractor," executed on June 17, 1988, (2) the "General Conditions of the Contract for Construction," also dated June 17, 1988, and (3) a letter from Bouten to Magnuson setting a GMP of $1,790,643, dated June 20, 1988.
The contract contained provisions for modifying the GMP, which allowed the GMP to be "adjusted up to 5% based upon final contract documents being furnished by the architect." The contract further provided that "[i]f changes are greater than a five percent (5%) add, the scope of the work will be negotiated downward to a mutually agreeable Guaranteed Maximum Price with the changes directed by the owner." The change orders were required to be in writing and issued by the architect.
Throughout the construction process, Magnuson ordered that changes in the original design drawings be made. Since the architect was having difficulty producing the plans in a timely fashion, at some point Magnuson told the architect to concentrate on the plans and not to worry about the change orders.
When the Inn was completed in May of 1989, Bouten sought to collect from Magnuson the amount of the excess in the GMP that was attributable to the changes in the plans made periodically by Magnuson during construction. When Magnuson refused to pay, Bouten sued Magnuson for breach of contract and M & L for foreclosure of Bouten's lien on the property. Suit was filed on August 29, 1989.
Following a court trial, the district court held that there had been a contract and that Bouten should recover for some of its increased costs. Further, the district court found that while Magnuson had agreed to changes without requiring change orders, Magnuson had not waived or abandoned the GMP. The court's memorandum opinion was dated March 5, 1991.
Bouten appealed the 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 meaningful GMP from being set. Id. at 964, 877 P.2d at 935. The Court of Appeals also upheld the district court's factual finding that while Magnuson had not abandoned the GMP, it had indirectly agreed to increase the price due to the changes in the plans. Id. at 965, 877 P.2d at 936. Magnuson argued that since the required procedures had not been followed, it was not liable for the additional costs of the changes. The Court of Appeals did not find this argument persuasive however, since it was Magnuson who told the architect to concentrate on the plans and not to prepare any more change orders. Id. at 967, 877 P.2d at 938.
The Court of Appeals remanded the case to the district court with instructions that it allow Bouten to prove the amounts expended due to the changes in the plans. Id. at 974, 877 P.2d at 945. On remand, Bouten had the burden of proving: (1) that particular changes had been made, (2) that the changes were more costly, (3) the amount of the increased costs, and (4) that each increased cost was reasonable. Id. at 968, 877 P.2d at 939. The district court was permitted, but not required, to hear additional evidence. Id.
On December 5, 1995, the district court issued its first supplemental judgment, finding in favor of Bouten. The court heard no new evidence, and based its findings on the evidence previously admitted. The district court awarded Bouten $298,609.54 for additional costs of construction. This amount was nunc pro tunc back to April 1, 1991, the date of the original judgment, which provided Bouten with interjudgment interest.
The district court also awarded Bouten pre-judgment interest at the statutory rate from July 21, 1989, to April 1, 1991, because it found the damages were liquidated. Additionally, the district court awarded Bouten $28,037.86 for fees and costs associated with Bouten's having to prove the additional amounts under the contract, and awarded post-judgment interest on the entire award of $388,482.60 from April 1, 1991, until the award was paid in full. Finally, the court determined that Bouten's lien was inferior to the other lien claimants on the M & L property.
On January 23, 1997, the district court entered a second supplemental judgment on remand. This judgment awarded Bouten attorney fees calculated at $126,716.64. This figure was based on a 20% contingent fee agreement between Bouten and its attorneys following the trial. The district court further awarded Bouten continuing post-judgment interest on the $388,482.60 from April 1, 1991, until paid in full. Each of the awards of interest was made pursuant to the statutory interest rate as set forth in I.C. § 28-22-104(2). The district court further modified its prior judgment and ruled that Bouten's lien claim should be superior to all other lien claimants. Magnuson appeals the decision of the district court on remand.
The factual findings of a trial court will not be set aside unless they are clearly erroneous. Hunter v. Shields, 131 Idaho 148, 151, 953 P.2d 588, 591 (1998). Findings of fact which are based...
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