Crest Inc. v. Costco Wholesale Corp., 53364-9-I.
| Decision Date | 05 July 2005 |
| Docket Number | No. 53364-9-I.,53364-9-I. |
| Citation | 115 P.3d 349,128 Wn. App. 760 |
| Court | Washington Supreme Court |
| Parties | CREST INCORPORATED, a Washington corporation, Appellant/Cross-Respondent, v. COSTCO WHOLESALE CORPORATION, a Washington corporation, Respondent, and Barclay Dean Construction Services, Inc., a Washington corporation, Respondent/Cross-Appellant. |
Richard A. Davis, Michelle D. Losie, Chmelik Sitkin & Davis PS, Bellingham, WA, for Counsel for Appellant/Cross-Respondent.
Mark G. Jackson, Athan E. Tramountanas, Preston Gates & Ellis LLP, Seattle, WA, for Counsel for Respondent and Respondent/Cross-Appellant.
¶ 1 Damages recoverable for a breach of contract are those which
may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.[1]
This corresponds with the general rule governing damages for breach of contract: that the aggrieved party should be put in the same economic position it would have attained had the contract been performed. Here, the trial court correctly determined that under the contract Crest Incorporated (Crest) failed to properly cure the cement slab, which resulted in a material breach. Costco Wholesale Corporation (Costco) had a protected expectation interest in attaining the benefit of its bargain, and must be put in as good a position as it would have been had Crest properly performed. The decision of the trial court regarding the liability for the removal and replacement of the concrete slab is affirmed.
¶ 2 In determining the amount of attorney fees to be awarded to the prevailing party, the proper method for calculating a reasonable award of attorney fees is the lodestar method. The lodestar approach sets fees by multiplying a reasonable hourly rate by the number of hours reasonably spent on the lawsuit. A trial court must consider a number of factors and articulate its decision in writing. Here, the trial court limited fee recovery to the amount customarily charged in Whatcom County. Although local fees are one factor in determining the reasonableness of the fee, there are other factors which should be considered and addressed by the trial court. The trial court abused its discretion by failing to provide a written basis for the limitation sufficient for this court to accomplish proper review. The award of attorney fees must be reversed and remanded for proper consideration.
¶ 3 This case involves a construction subcontract between general contractor Barclay Dean Construction (BD) and subcontractor Crest for work on the expansion of the Costco's Bellingham store. Under the contract, Crest provided supervision, materials, labor, supplies, and equipment for installation of concrete work, specifically for the pouring of concrete slab floors for the expansion.
¶ 4 In late June 2001, BD and Crest entered into a contract where Crest agreed to pour cement slabs in three separate phases for the Costco store addition. After the pour of the phase II slab, BD deemed the slab to be defective and ordered removal and replacement.
¶ 5 Crest poured the original phase II slab on September 11, 2001. A few hours after the pour, Crest began cutting control joints in the slab, to control the location of shrinkage cracks. This process usually makes most cracking occur within the joints and not on the slab surface. However, random cracking began to appear on the slab shortly after Crest completed the work. Under the contract, Crest was not to add water to the concrete once it arrived on the project site. Crest was aware of this requirement, but some water was added to at least one truckload. The contract required Crest to employ an "early entry saw cut" system for the control joints, specifically calling this a "[g]reen cut." Crest used a conventional cut, attempting to cut 1-inch deep joints, something BD's expert claimed was done too late and not deep enough. The contract required Crest to align the control joints, which was not accomplished and was called sloppy and not workmanlike by BD's expert. The contract required the work done by Crest to reflect the best possible workmanship. Six out of a total of 20 panels of concrete cracked, a number reputed to be 10 times the industry standard.
¶ 6 BD rejected the slab and ordered Crest to remove it and replace it with a properly poured slab. Crest argued that the slab exceeded strength standards and could be fixed without the expense of tearing it out and replacing it. But BD demanded that a new one be poured.
¶ 7 The parties disagree whether the contract required Crest to water cure the slab. Part of the disagreement stemmed from the fact that BD's own on-site superintendent suggested using a chemical cure at the time of the pour or shortly thereafter. However, contrary to its argument, Crest failed to use either a water cure or a proper chemical cure. Crest used a chemical sealer in an attempt to cure the concrete. The contract required Crest to water cure the slab. Even the owner and president of Crest admitted the contract called for a water cure.
¶ 8 Crest conceded it deviated from the exact contract specifications but argued that any of the deviations did not affect either the serviceability or the appearance of the slab. Negotiations about whether the slab could be properly repaired so Costco would be pleased with the result followed. Crest offered to repair the cracks according to its view of the specifications, but BD and Costco refused.
¶ 9 After attempts at negotiations, with Crest exhausting efforts to avoid full replacement of the original slab, Crest removed and replaced the original slab. Shortly thereafter Crest completed its work; however, BD refused to make its final payment to Crest, indicating that BD required the releases called for by the contract before it would make the final payment.
¶ 10 Crest sued for breach of contract and to foreclose a lien it recorded against the Costco property. Crest sought total damages of approximately $85,000, including $43,510.53 for the removal and replacement of the slab; $26,918 for the final payment, and $14,418.24 for other items in dispute. A pretrial stipulation was entered setting forth that the cost of removal and replacement of the slab and a few other items were in dispute, but that the final payment was not in dispute, and BD refused to pay due to the lack of a release.
¶ 11 At the end of the bench trial, the court granted judgment for Crest for the unpaid balance of the contract, with prejudgment interest, and for change orders, for a total of $45,368.61. However, the trial court did not award Crest the damages it sought for removal and replacement of the original slab, holding that BD prevailed in defending that claim. The trial court found that Crest varied from the specifications creating deviations, but that these deviations in themselves were not material. However, the trial court concluded that Crest was obligated to properly "cure" the cement slab and that its failure to properly cure the slab was a material breach.
¶ 12 The contract between BD and Crest included a litigation costs paragraph that provides for reasonable attorney fees. The trial court awarded fees in proportion to the time spent on the issues of the case as tried. Without carving up the various theories of the "pour" issue, the court found that "by far the most time in the case dealt with the concrete slab issue," and because BD prevailed on the issue it was entitled to 90 percent of its fees and costs. Those fees amounted to $108,148.80. The trial court ordered that "the attorneys fees are to be calculated using Whatcom County rates — i.e., that the highest hourly rate is $180.00, and the other billers' hourly rates are to be proportionally reduced." After the awards were offset, BD received a net judgment of $62,780.19.
¶ 13 Crest claims the trial court erred in determining that it materially breached the contract and that BD was justified in ordering Crest to remove and replace the concrete slab without additional payment.
¶ 14 Initially, Crest argues the trial court erred in concluding that the contract required Crest to apply a water cure to the original slab. We disagree. Crest claims that specification section 3320, not section 3300, governs the pouring of the original slab. The record provides an abundance of evidence indicating that both sections pertain to, and are related to each other, and govern the pour. Section 3320 incorporates section 3300 by reference. Even Crest acknowledges that American Institute of Architect's (AIA) Document A201 required it to perform to the requirements of the contract drawings even if the requirements are not set forth in the specifications. The subcontract incorporated the fact that the entire project was to be done in accordance with the main contract between Costco and BD, including the drawings and specifications. The contract unequivocally required Crest to water cure the slab. A water cure was not done.
¶ 15 But Crest asserts that even if the contract required it to water cure the slab, there was no material defect in the poured slab and there was insufficient evidence to find that the original slab did not properly cure or cure at all. We disagree. The expert witnesses regarding cement matters, Eugene Dale, the expert called by BD, and Alan Kramer, the expert called by Crest, testified that proper curing occurs by either a water or chemical cure. Dale testified that neither of the processes took place on this slab. Kramer testified that the slab cured on its own with little defects.
¶ 16 There was conflicting evidence regarding whether the slab exhibited traits of an improperly cured slab, and there was evidence in the...
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