Fox v. Mountain West Elec., Inc.

• Decision Date: 06 June 2002
• Docket Number: No. 26289.,26289.
• Court: Idaho Supreme Court
• Parties: Rodney W. FOX, dba State Fire & Safety Systems, Plaintiff-Appellant, v. MOUNTAIN WEST ELECTRIC, INC., Defendant-Respondent.

52 P.3d 848

137 Idaho 703

Rodney W. FOX, dba State Fire & Safety Systems, Plaintiff-Appellant, v. MOUNTAIN WEST ELECTRIC, INC., Defendant-Respondent.

No. 26289.

Supreme Court of Idaho, Boise, May 2002 Term.

June 6, 2002.

Rehearing Denied August 1, 2002.

Wright, Wright & Johnson, PLLC, Idaho Falls, for appellant. David A. Johnson argued.

Baker & Harris, Blackfoot, for respondent. Dwight E. Baker argued. WALTERS, Justice.

This is a contract dispute between Mountain West Electric, Inc. ("MWE") and Rodney Fox, doing business as State Fire and Safety Systems. The principal dispute arose over the procedure for the compensation of change orders. A resolution was not reached by the parties, and this lawsuit ensued. The district court found that an implied-in-fact contract existed between the parties, using the industry standard's flow-down method of compensation. We affirm.

FACTS AND PROCEDURAL BACKGROUND

Lockheed Martin Idaho Technical Company ("LMITCO") requested bids for a comprehensive fire alarm system in its twelve buildings located in Idaho Falls. At a pre-bid meeting, MWE and Fox met and discussed working together on the project. MWE was in the business of installing electrical wiring, conduit and related hookups and attachments. Fox provided services in designing, drafting, testing and assisting in the installation of fire alarm systems, and in ordering specialty equipment necessary for such projects. The parties concluded that it would be more advantageous for them to work together on the project than for each of them to bid separately for the entire job, and they further agreed that Fox would work under MWE. The parties prepared a document defining each of their roles entitled "Scope and Responsibilities."

Fox prepared a bid for the materials and services that he would provide, which was incorporated into MWE's bid to LMITCO. MWE was the successful bidder and was awarded the LMITCO fixed price contract. In May 1996, Fox began performing various services at the direction of MWE's manager. During the course of the project, many changes and modifications to the LMITCO contract were made.

A written contract was presented to Fox by MWE on August 7, 1996. A dispute between MWE and Fox arose over the procedure for the compensation of the change orders. MWE proposed a flow-down procedure, whereby Fox would receive whatever compensation LMITCO decided to pay MWE. This was unacceptable to Fox. Fox suggested a bidding procedure to which MWE objected. On December 5, 1996, Fox met with MWE to discuss the contract. No compensation arrangement was agreed upon by the parties with respect to change orders. Fox left the project on December 9, 1996, after delivering the remaining equipment and materials to MWE. MWE contracted with Life Safety Systems ("LSS") to complete the LMITCO project.

Fox filed a complaint in July 1998 seeking monetary damages representing money due and owing for materials and services provided by Fox on behalf of MWE. MWE answered and counterclaimed seeking monetary damages resulting from the alleged breach of the parties' agreement by Fox.

Following a court trial, the district court found that an implied-in-fact contract existed between the parties based on the industry standard's flow-down method of compensation. The court found in favor of MWE and awarded fees to MWE under Section 12-120(3) of the Idaho Code. Fox appeals.

ISSUES PRESENTED ON APPEAL

1. Did the district court err in finding an implied-in-fact contract containing a flow-through or flow-down basis of compensation?

2. Did the district court err in failing to consider previous drafts of the proposed contract between the parties to determine the terms of the parties' agreement?

3. Did the district court err in finding that Mountain West had not breached the parties' agreement, including its obligation of good faith and fair dealing with Fox?

4. Did the district court err in awarding damages, attorney fees and costs to Mountain West?

5. Is either party entitled to attorney fees and costs on appeal?

STANDARD OF REVIEW

Appellate review of the district court's decision is limited to ascertaining whether the evidence supports the findings of fact, and whether the findings of fact support the conclusions of law. A district court's findings of fact in a bench trial will be liberally construed on appeal in favor of the judgment entered, in view of the district court's role as trier of fact. It is the province of the district judge acting as trier of fact to weigh conflicting evidence and testimony and to judge the credibility of the witnesses. We will not substitute our view of the facts for the view of the district court. Instead, where findings of fact are based on substantial evidence, even if the evidence is conflicting, those findings will not be overturned on appeal. We exercise free review over the lower court's conclusions of law, however, to determine whether the court correctly stated the applicable law, and whether the legal conclusions are sustained by the facts found.

Nampa & Meridian Irr. Dist. v. Washington Federal Sav., 135 Idaho 518, 521, 20 P.3d 702, 705 (2001) (citations omitted).

DISCUSSION

Fox presents an argument although not specified as an issue on appeal, that the district court erred by adopting MWE's proposed findings and conclusions nearly verbatim. This Court has admonished the bench and bar that the best procedure following a bench trial is to request proposed findings and conclusions from both parties and to use those in the drafting of the court's own findings and conclusions. Rodriguez v. Oakley Valley Stone, Inc., 120 Idaho 370, 375, 816 P.2d 326, 331 (1991); Cheney v. Jemmett, 107 Idaho 829, 693 P.2d 1031 (1984); Marshall Bros. Inc. v. Geisler, 99 Idaho 734, 737 n. 1, 588 P.2d 933, 936 n. 1 (1978); Compton v. Gilmore, 98 Idaho 190, 194, 560 P.2d 861, 865 (1977). This Court has cautioned trial courts against adopting one party's findings and conclusions verbatim, unless the court has given guidance as to how the findings and conclusions should be drafted. Marshall Bros, at id.; see also Campbell v. Campbell, 120 Idaho 394, 398, 816 P.2d 350, 354 (Ct. App.1991)

. However, this Court has held even if the trial court adopts one party's proposed findings without change, it is not reversible error unless the findings are clearly erroneous, that is, not supported by substantial, competent evidence. See id.

This Court holds that the district court did not err in modeling its findings and conclusions based upon those submitted to the court by MWE. The findings are supported by substantial and competent, yet conflicting evidence.

I.

Implied-in-Fact Contract

Fox contends that the district court erred by finding that an implied-in-fact contract containing a flow-down basis of compensation for change orders existed between the parties. Fox argues that when the court interprets contracts, it is to ascertain the mutual intent of the parties and, here, there was no meeting of the minds on the change order compensation procedure. Fox further asserts that the standard in the fire alarm industry was a bidding process rather than a flow-down method. Fox argues that the parties' course of dealing establishes that he should have been compensated based upon the bids he submitted rather than through the flow-down procedure. Fox asserts that the parties entered into a series of fixed price contracts for the change orders and the district court abused its discretion in finding a flow-down procedure of compensation for change orders.

MWE acknowledges the evidence as to which basis for compensation of change order was conflicting and that no procedure was agreed upon by the parties. MWE contends that Fox's argument that the parties had established a course of dealing with respect to change order compensation is not supported by the record. MWE argues that it did not consider Fox's pricings as a binding contract and that Fox understood that he would receive a fixed price under the LMITCO contract and that he would receive the change order amounts allowed by LMITCO.

This Court has recognized three types of contractual relationships:

First is the express contract wherein the parties expressly agree regarding a transaction. Secondly, there is the implied in fact contract wherein there is no express agreement but the conduct of the parties implies an agreement from which an obligation in contract exists. The third category is called an implied in law contract, or quasi contract. However, a contract implied in law is not a contract at all, but an obligation imposed by law for the purpose of bringing about justice and equity without reference to the intent or the agreement of the parties and, in some cases, in spite of an agreement between the parties. It is a non-contractual obligation that is to be treated procedurally as if it were a contract, and is often refered (sic) to as quasi contract, unjust enrichment, implied in law contract or restitution.

Continental Forest Products, Inc. v. Chandler Supply Co., 95 Idaho 739, 743, 518 P.2d 1201, 1205 (1974) (citations omitted).

"An implied in fact contract is defined as one where the terms and existence of the contract are manifested by the conduct of the parties with the request of one party and the performance by the other often being inferred from the circumstances attending the performance." Farnworth v. Femling, 125 Idaho 283, 287, 869 P.2d 1378, 1382 (1994) (citing Clements v. Jungert, 90 Idaho 143, 153, 408 P.2d 810, 815 (1965)). The implied-in-fact contract is grounded in the parties' agreement and tacit understanding. Kennedy v. Forest, 129 Idaho 584, 587, 930 P.2d 1026, 1029 (1997). "The general rule is that where the conduct of the parties allows the dual inferences that one performed at the other's request and that the requesting party promised payment, then the court may find a contract implied in fact." Homes by Bell-Hi, Inc. v. Wood, 110 Idaho 319, 321, ...