Clearwater Const. & Engineering, Inc. v. Wickes Forest Industries, a Div. of the Wickes Corp.
| Decision Date | 23 January 1985 |
| Docket Number | No. 14169,14169 |
| Citation | 697 P.2d 1146,108 Idaho 132 |
| Court | Idaho Supreme Court |
| Parties | CLEARWATER CONSTRUCTION & ENGINEERING, INC., Plaintiff-Counter-defendant, Appellant-Cross-Respondent, v. WICKES FOREST INDUSTRIES, A DIVISION OF THE WICKES CORPORATION, Defendant-Counterclaimant, Cross-Appellant, and WICKES FOREST INDUSTRIES, A DIVISION OF THE WICKES CORPORATION, Third-Party Plaintiff, Counterdefendant-Respondent, Cross-Appellant, v. AMERICAN FIDELITY FIRE INSURANCE COMPANY, a New York corporation, Third-Party Defendant, Counterclaimant-Cross-Respondent. |
Paul Thomas Clark, of Clark and Feeney, Lewiston, and Robert G. Taylor, and Mary E. O'Brien, of Taylor & Bryan, Seattle, Wash., for appellant and cross-respondent, Clearwater Const. & Engineering, Inc.
R.B. Kading, Jr., James R. Gillespie, and T.A. Banducci, and Mary S. Hobson, of Eberle, Berlin, Kading, Turnbow & Gillespie Chartered, Boise, for respondent and cross-appellant, Wickes Forest Industries.
Michael E. McNichols, Lewiston, for cross-respondent, American Fidelity Fire Ins. Co.
On August 20, 1975, Clearwater Construction & Engineering, Inc., (Clearwater) and Wickes Forest Industries (Wickes) entered into a road construction contract for the construction of two Forest Service roads. The roads were identified as road # 221.3 (Grangeville-Salmon Road) and road # 2202 (Van Buren Road). The entire undertaking is referred to by the parties as the "Van Buren Project." The contract ran until December 31, 1976. It provided for bi-monthly progress payments to Clearwater less a 10% retainage as security for performance.
Clearwater began work in September of 1975. By the end of the 1975 season, Clearwater's operation had become "log bound." This meant that Clearwater could not efficiently continue its road construction because log decks on the right-of-way impeded further excavation and culvert work.
When Clearwater began work in September, 1976, very few logs had been removed. Road excavation proceeded with Clearwater moving the logs back and forth across the right-of-way whenever they blocked construction. The project was not completed by the December 31, 1976, termination date.
On February 1, 1977, the parties executed a second contract which purported to cancel the earlier contract. The contract extended the completion date on the Van Buren Project until December 31, 1977. It also added a six-mile "spur road" to the construction requirements. In addition, it required that Clearwater execute a $160,000.00 performance bond and provided for liquidated damages at a rate of $200 per day for each day of work past the new 1977 completion date. The liquidated damage provision excepted Clearwater from liability where delays resulted from Wickes' failure to remove right-of-way logs.
The work under the new contract was to be completed for the remainder of the progress payments owed under the 1975 contract, and an additional $51,000.00 for construction of the spur road. After Clearwater obtained the required performance bond, Wickes released the retainage earned through the 1976 season. Clearwater began work under the new contract on June 20, 1977. Clearwater again experienced difficulties completing the project. Clearwater attributes those difficulties primarily to Wickes' failure to remove the right-of-way logs. Wickes, on the other hand, cites a number of contributing factors, including: poor weather conditions, inefficient manpower, and equipment breakdowns. Relations between the parties deteriorated and, in letters dated September 30, 1977, each party notified the other that it was claiming default under the February 1, 1977 contract. At that time $63,000.00 of the contract price remained unpaid. Wickes had the project completed by another contractor at a cost of approximately $71,000.00.
On May 22, 1978, Clearwater filed suit for damages arising out of the alleged breach of contract by Wickes. American Fidelity Fire Insurance Company, surety for Clearwater, was joined as a third-party defendant. The case was tried to a jury and a verdict awarding Clearwater $398,538.00 in direct contract damages and $238,215.00 in consequential damages was entered on October 16, 1980. The consequential damages included $118,541.00 for losses on other projects, $111,674.00 for losses on involuntary equipment liquidations and $8,000.00 for attorney fees owed to Valley Bank. Clearwater was also awarded attorney fees of $125,212.00 and costs of $4,102.97.
Wickes moved for a judgment notwithstanding the verdict. The court ruled that the evidence was insufficient to support the jury's award of consequential damages for losses on other projects and equipment liquidations and reduced the judgment by $230,215.00.
Clearwater moved for pre-judgment interest. The court entered an order allowing interest only from the date of the verdict, and specifically denying any pre-judgment interest.
Clearwater filed this appeal objecting to the trial court's decision reducing its consequential damage award and denying its motion for pre-judgment interest. Wickes cross-appealed asserting that the trial court erred (1) in submitting Clearwater's damage proof to the jury; (2) in allowing the jury to consider whether the 1977 contract was the product of unlawful duress; (3) in denying Wickes' motion for directed verdict on the issue of the cancellation of the 1975 contract; (4) in failing to grant a judgment notwithstanding the verdict on the $8,000.00 in attorney fees owed to Valley Bank; and (5) in awarding Clearwater attorney fees.
We hold that, because the trial judge improperly submitted the duress issue to the jury, the judgment must be reversed and this case remanded for a new trial.
At trial, Clearwater made alternative arguments with regard to the 1977 contract. Clearwater argued that the contract was either a valid and binding agreement which Wickes had breached or that it was invalid as the product of unlawful duress. Wickes contends that it was prejudicial error for the court to allow the jury to consider the duress question. It asserts that the evidence overwhelmingly demonstrated that the 1977 contract was validly negotiated and assented to, and that Clearwater treated the contract as a binding obligation on both parties. Wickes submits that the trial court's failure to grant a directed verdict on the issues of duress and ratification prejudiced Wickes on the merits of its argument that the 1977 contract, by its terms, canceled the 1975 contract. In addition, Wickes submits that the duress argument allowed Clearwater to obscure the true contractual relationship between the parties and to introduce testimony and argument which were irrelevant and prejudicial to Wickes.
The prerequisites for establishing the defense of "economic duress" or "business compulsion" were set out by this Court in Lomas & Nettleton Co. v. Tiger Enterprises, 99 Idaho 539, 585 P.2d 949 (1978). In that case, we stated that there are three elements common to all situations where economic duress has been found to exist: (1) that one side involuntarily accepted the terms of the other; (2) that circumstances permitted no other alternative; and (3) that said circumstances were the result of coercive acts of the opposite party. Lomas, supra, at 542, 585 P.2d at 552. We further stated that in order to substantiate an allegation of economic duress, the plaintiff must show more than a reluctance to accept or financial embarrassment. ...
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