Gilbert v. City of Caldwell

• Decision Date: 29 January 1987
• Docket Number: No. 15990,15990
• Citation: 732 P.2d 355,112 Idaho 386
• Parties: Bill GILBERT and M. Maxine Gilbert, husband and wife, Plaintiffs-Appellants and Cross-Respondents, v. CITY OF CALDWELL, A Municipal Corporation of the State of Idaho, Defendant- Respondent, and Tony Russell Construction, Inc., a foreign corporation authorized to do business within the State of Idaho, Defendant-Respondent and Cross-Appellant.
• Court: Idaho Court of Appeals

Page 355

732 P.2d 355

112 Idaho 386

Bill GILBERT and M. Maxine Gilbert, husband and wife, Plaintiffs-Appellants and Cross-Respondents, v. CITY OF CALDWELL, A Municipal Corporation of the State of Idaho, Defendant- Respondent and Tony Russell Construction, Inc., a foreign corporation authorized to do business within the State of Idaho, Defendant-Respondent and Cross-Appellant.

No. 15990.

Court of Appeals of Idaho.

Jan. 29, 1987.

Wayne E. Davis and Ronald P. Rainey (argued) (Alexanderson, Davis, Rainey, Whitney & Kerrick), Caldwell, for plaintiffs-appellants and cross-respondents, Gilbert.

Charles A. Smyser, Boise, for defendant-respondent, City of Caldwell.

Richard C. Boardman (argued) and Paul S. Penland (Penland & Munther, Chartered), Boise, for defendant-respondent and cross appellant, Tony Russell Construction, Inc.

WALTERS, Chief Judge.

Bill and Marie Gilbert of Caldwell granted an easement to the City of Caldwell to permit a new sewer main to cross their commercial property. They were not satisfied with the reconstruction of the site following installation. Nor were they satisfied with the damages awarded by the district court following trial. Their appeal raises the following issues: (1) whether the district court erred in finding the city was not bound by any promise to restore the Gilberts' property to "as good or better" condition; (2) whether the district court's finding that the Gilberts did not rely upon any such promise is contrary to the evidence; (3) whether the district court erred in characterizing a view of the site by the court as "evidence;" (4) whether only the promisor of a contract is liable to a third-party beneficiary; (5) whether the cost of repairs which would satisfy the intent of the contract, but not comply with contract specifications, was available to the court as a measure of damages in this case; and (6) whether the court erred by denying certain consequential damages and costs. On cross appeal, the contractor--Tony Russell Construction, Inc.--presents an additional issue: whether, for purposes of Idaho's offer of judgment rule, I.R.C.P. 68, the offers of multiple defendants should be compared individually or collectively to the plaintiff's recovery. We affirm the district court's judgment with respect to liability, but remand for a redetermination of certain damages. We affirm the district court's award to the Gilberts of costs accrued after the offers of judgment.

In pursuing the East Cleveland Sewer Project, the City of Caldwell determined that easements across private property were needed. City officials sought the support of the Chamber of Commerce and others for this project. As a result, V.E. Graves, a private citizen, contacted Mr. Gilbert and other property owners to request the donation of certain easements. After making further inquiries of city officials and obtaining special consideration, the Gilberts granted the easement as requested.

The Gilberts' commercial property bordered a thoroughfare in Caldwell. The proposed easement ran along a portion of the front of their property. Although an open drainage ditch lay between the easement and the street on this part of the frontage, the Gilberts were concerned that the construction would interfere with access and parking for businesses then leasing the site from the Gilberts. They also were concerned that the construction might impair future development of the property.

To appease the Gilberts, the city added certain terms to its contract with Tony Russell Construction, Inc. (TRC), the construction contractor. These provisions included limiting construction on the Gilberts' property to non-business hours and to a nine-day period. The city notified the Gilberts that these terms would be included in the city's contract with TRC. After commencing construction TRC determined that construction during non-business hours was impractical. TRC then independently contracted with the Gilberts to permit construction during business hours. Pursuant to this contract, TRC posted a $5000 performance bond with the Gilberts and proceeded with the project. The sewer line was laid in a v-shaped trench approximately five-hundred feet long, twenty feet deep and twelve feet wide at the surface. Approximately one-half of the length of the line lay under a paved access and parking area. The remainder was under an area where one of the Gilberts' tenants, an automobile salvage operation, stored some of its vehicles.

Following installation of the sewer line, the Gilberts were not satisfied with TRC's reconstruction of the site and filed this action. They contended that the backfill in the sewer trench was not compacted as agreed, that the value of their property was reduced, and that they were entitled to additional compensation pursuant to their agreement to permit work during business hours. The Gilberts initially sought over $160,000 in damages on contract and tort theories. The tort claims were voluntarily dismissed, leaving their claims on contract theories of approximately $111,000.

Following a non-jury trial, the district judge found TRC liable for deficiencies in the fill condition. TRC and the city were found jointly and severally liable for interruption of business. The court awarded $4989 to the Gilberts for defective construction and $2000 for construction during four business days beyond the ten days covered by the performance bond. Litigation costs also were awarded to the Gilberts. Finding the damages award unsatisfactory, the Gilberts have appealed.

The Gilberts contend that the city and its contractor breached three separate contracts. The first was a contract between the city and the Gilberts, part oral and part written, which allegedly arose from statements made by Graves and city officials, and from letters and memoranda delivered to the Gilberts by the city (City-Gilbert contract). The second was a written project contract between the city and TRC with benefits running to the Gilberts as third-party beneficiaries (TRC-City contract). The third contract was a written agreement between TRC and the Gilberts permitting construction during business hours (TRC-Gilbert contract).

The district court found that Graves was not an agent of the city, that in any case the Gilberts did not rely on any oral promises, and that any such statements were of a general nature and did not rise to the level of contractual promises. Therefore, the court denied recovery on the alleged oral part of the City-Gilbert contract. The trial court held the city was liable only on its written promises, specifically its promise to limit its contractor to a nine-day period of non-business hours on the site. The court found in favor of the Gilberts on their TRC-City and TRC-Gilbert contract theories. We address each of the Gilberts' contract theories in turn.

I

A. The City--Gilbert Contract

We must first determine the particulars of any contract existing between the city and the Gilberts. The Gilberts contend that Graves, Mayor McCluskey, and other agents of the city, guaranteed that the property would be restored to "as good or better" condition after laying the sewer line. They argue that the easement was granted in reliance upon or as consideration for performance of this promise. The Gilberts also contend that a written report prepared by the city engineer, which accompanied a letter from the mayor's administrative assistant, included promises to limit the construction period and hours, and to replace natural gas lines, fences and pavement.

Uncontradicted evidence indicates that the construction disturbed a layer of "hardpan," a highly compacted bed of soil located below the surface. The parties' experts agreed that such a layer can be created only by geologic processes and cannot be recreated by man. The Gilberts assert that the replacement fill is not as suitable for present or contemplated uses of the site as were the natural soils.

The district court found that Graves was a volunteer, not an agent of the city, and thus the city would not be bound by any statement or guarantee made by Graves. The court rejected a promissory estoppel theory urged by the Gilberts, finding no reliance on Graves' statements by the Gilberts. In addition, the court found that any "as good as" statements by the mayor or by others were of a general nature and were not contractual commitments. The court therefore limited liability under the City-Gilbert contract to damages arising from those promises made by city officials and reduced to writing.

i. Authority of Graves

The Gilberts contend the court erred in concluding that Graves was a volunteer, rather than an agent of the city. We believe this issue is subsumed into the question next to be addressed. That is, whether the Gilberts' contract with the city included oral promises made either by Graves or by city officials, or whether that contract was expressed solely by written documents. If, as we do conclude, the writings--rather than oral promises--express the terms of the contract, then it is immaterial whether Graves was an agent of the city.

ii. Oral statements by Graves and by city officials

The mayor and other city officials were clearly agents of the city possessing actual authority to enter into contracts. But proving the authority of an agent does not by itself establish the existence of a contract. Formation of the contract must also be proved.

There must be a meeting of the minds of the parties for a contract to be formed. Pierson v. Sewell, 97 Idaho 38 539 P.2d 590 (1975). Whether there was a meeting of the minds as to the essential terms of the contract is a determination for the trier of fact. Rasmussen v. Martin, 104 Idaho 401, 659 P.2d 155 (Ct.App.1983). To be enforceable, a contract must embody a distinct understanding of the parties. Dursteler v. Dursteler, 108 Idaho 230, 697 P.2d 1244 (Ct.App.1985). The city contended, and the district court found, that the city officials'...