Enterprise, Inc. v. Nampa City, 11278

• Court: United States State Supreme Court of Idaho
• Writing for the Court: McQUADE
• Citation: 536 P.2d 729,96 Idaho 734
• Parties: ENTERPRISE, INC., dba Nampa Sanltary Service, Plaintiff-Appellant, v. NAMPA CITY, a Municipal Corporation, and the Mayor and City Council of Nampa City, consisting of Ernest Starr, et al., Defendants and Respondents, and Thos. Y. Gwilliam, for himself and all other persons similarly situated, litervenor.
• Docket Number: No. 11278,11278
• Decision Date: 10 June 1975

Page 729

536 P.2d 729 96 Idaho 734 ENTERPRISE, INC., dba Nampa Sanltary Service, Plaintiff-Appellant,
v.
NAMPA CITY, a Municipal Corporation, and the Mayor and City Council of Nampa City, consisting of Ernest Starr, et al., Defendants and Respondents,
and Thos. Y. Gwilliam, for himself and all other persons similarly situated, litervenor. No. 11278. Supreme Court of Idaho. June 10, 1975.

[96 Idaho 735]

Page 730

M. Allyn Dingel, Jr., of Elam, Burke, Jeppesen, Evans & Boyd, Boise, for plaintiff-appellant.

Leon R. Weeks, of Weeks, Yost & White, P. A., Nampa, for defendants-respondents.

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[96 Idaho 736] McQUADE, Chief Justice.

This action was brought by plaintiff-appellant Enterprise, Inc., doing business as Nampa Sanitary Service, (hereinafter appellant) against defendants-repondents City of Nampa, a municipal corporation, and the mayor and city council of Nampa, (hereinafter respondents) for damages resulting from an alleged breach of a municipal garbage and refuse service contract. Thos. Y. Gwilliam, as intervenor, is not a party to this appeal.

Appellant, an Idaho corporation organized to engage in the business of trash and garbage collection and hauling, entered into a contract on April 17, 1967, with respondent city to provide garbage and refuse service. The contract awarded an exclusive right and privilege for a term of five years to appellant to collect, transport and dispose of all garbage, rubbish and trash from premises designated by the respondent city. Appellant was given the option of renewing the contract for two five year terms. A schedule of rates for appellant's services was made part of the contract. It provided that the rates set out in the contract could be modified, but that no change could be made until approved by the respondent city council.

During the term of the contract there were numerous complaints from the citizens of Nampa city concerning the quality of appellant's service. In an attempt to develop solutions to these problems, numerous official and unofficial meetings were held between appellant's officers and the mayor and city council of respondent city. A continuous contention of appellant was that the rates were inadequate. A rate increase was granted at appellant's request on or about April 20, 1970. This was found by the trial court to be the first time a formal request was made for a rate increase.

On or about August 3, 1970, appellant filed a petition in the Federal Court for a declaration of bankruptcy under Chapter XI of the Federal Bankruptcy Act. A receiver in bankruptcy was appointed to take over appellant's operations. The receiver entered into negotiations with respondents for a rate increase for the purpose of continuing the contract and securing additional financing. The respondent city council did grant a substantial portion of the requested increase, with a stipulation that the increase was only for ninety days subject to a showing to the council's satisfaction that service had improved. This was not acceptable to the receiver. A counter offer was made by the receiver that an impartial board be appointed to determine if the service had improved. This was rejected by the respondent city council.

Negotiations between the receiver and the respondent city broke down on or about August 19, 1970. The receiver thereupon stopped the collection of refuse and garbage. The respondent city employed another refuse collector to perform this service. On August 20, 1970, the receiver petitioned the Federal District Court to terminate the operation of appellant's business. Pursuant to an order of the Federal District Court dated August 21, 1970, operation of the business was terminated due to a lack of funds to operate and a failure to receive a rate increase from the respondent city. On September 9, 1970, the referee in bankruptcy dismissed the bankruptcy proceedings. No order was entered adjudicating appellant bankrupt.

On September 8, 1970, respondents served a notice upon appellant that a public hearing would be held on October 5, 1970, at which time appellant would be given an opportunity to appear and be heard to show cause why its contract with respondent city should not be forfeited as of August 20, 1970, because of repeated violations of the terms of the contract by appellant. Four alleged contractual violations were set forth in this notice to show cause. An amended notice to show cause was served upon appellant on September 11, 1970, incorporating an additional alleged violation of the contract.

[96 Idaho 737]

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A public hearing was held on Octobern 5, 1970, at which time appellant was afforded an opportunity to make a showing concerning the alleged violations of the contract as set out in the notice and amended notice to show cause. The trial court found that appellant declined to show at this hearing that the alleged breaches had not occurred. On or about October 13, 1970, the respondents mayor and city council adopted a resolution terminating the contract retroactively as of August 20, 1970, for the violations set forth in the notice and amended notice to show cause.

Appellant filed this action on October 22, 1970, for damages due to breach of contract and for specific performaces of the contract. The alleged breaches involve: in Count I, that the respondents mayor and city council arbitrarily and capriciously refused to grant requested rate increases; in Count II, that the respondents mayor and city council acted maliciously and with a wanton disregard for appellant's reputation in withholding rate increases, thus warranting the awarding of punitive damages; in Count III, that breach of the contract by respondents prevented the appellant from performing, causing a loss of profits; in Count IV, that respondents' termination of the contract tract without compensating appellant for the loss of its routes and rights to operate amounted to a confiscation of appellant's property without due process; and in Count V that respondents failed to pursue the contract procedure for declaring a forfeiture that respondents should therefore be ordered to: (1) terminate any agreement with any trash haulers operating in Nampa, (2) rescind the ordinance purporting to void the contract with appellant, and (3) allow appellant to continue to operate within the city. By stipulation, the parties agreed that the specific performance aspect of Count V of the complaint would be dropped. Respondent city counterclaimed for damages it alleged it suffered as a result of appellant's cessation of operation on August 19, 1970.

The trial court dismissed the action against respondent city of Nampa. It found that the complaint did not allege, nor was any proof offered at the time of trial that any notice of claim was served upon respondent city as required under I.C. § 50-219. The trial court dismissed Count III of the complaint as against respondents mayor and city council, but did, however, address itself to the merits of appellant's other claims as against these officials. Its conclusions can be summarized as follows: respondents mayor and city council did not act in an arbitrary and capricious manner in failing to grant rate increases to appellant; the termination of the contract was a result of appellant's breach, and was not done with a malicious or wanton disregard for the reputation of appellant; respondents did not breach the contract and any loss of contract benefits suffered by appellant was not a ground for relief; appellant was not entitled to compensation for the value of the contract because of its own abandonment; termination of the contract was justified due to a substantial and material breach by appellant, and termination was exercised in accordance with the contractual terms. The trial court also dismissed respondents' counterclaim, as no evidence was offered in support of it. Judgment was entered ordering and adjudging that appellant take nothing and that its action be dismissed upon the merits. It is from this judgment that appellant brings this appeal. We affirm.

In its first assignment of error, appellant argues that the sixty days notice of claim provision in I.C. § 50-219 does not apply to the case at bar because this is an action for breach of contract, and the provision in issue applies only to tort claims against a city. Alternatively, appellant insists that even if the notice of claim provision is applicable, it was substantially complied with and therefore the trial court committed error in dismissing its claim against the city of Nampa.

We cannot accept the restrictive interpretation appellant would place upon the [96 Idaho 738]

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applicability of I.C § 50-219. The statute reads as follows:

'Damage claims.-All claims for damages against a city must be filed with the city clerk within sixty (60) days after the time when such claim for damages shall have occurred; specifying the time, place and probable cause of said damage. No action shall be maintained against the city for any claim for damages until the same has been presented to the city council, and until sixty (60) days shall have elapsed after such presentation. The payment of any and all damage claims by the city shall be by resolution, and not otherwise.'

The trial court found that compliance with I.C. § 50-219 was not alleged in appellant's complaint, nor was...