Great Plains Equipment, Inc. v. Northwest Pipeline Corp.

• Decision Date: 29 March 1999
• Docket Number: Nos. 22762,V-1,22973,s. 22762
• Citation: 979 P.2d 627,132 Idaho 754
• Court: Idaho Supreme Court
• Parties: GREAT PLAINS EQUIPMENT, INC., a foreign corporation; Michetti Pipe Stringing; Beard Oil Petroleum, Inc., a Foreign Corporation; Atlas Copco Rental, Inc., a foreign corporation; CRC-evans Pipeline International, Inc., a foreign corporation; Courtesy Ford Lincoln Mercury, Inc., an Idaho corporation; Cowboy Oil Co., an Idaho Corporation; Darby Enterprises, Inc., a foreign corporation; Hartford Insurance Company/Pickard Tate & Allen, a Connecticut Company; Rasmussen Equipment Company, a Utah corporation; Rocky Mountain Machinery Company, a foreign corporation;Oil Company, an Idaho corporation; Valley Office Systems, Inc., an Idaho corporation; Cate-Idaho Equipment Co., Inc., an Idaho corporation B.D. Holt & Company, Inc., d/b/a Holt Company of Texas, a foreign corporation, Plaintiffs-Respondents-Cross Appellants, v. NORTHWEST PIPELINE CORPORATION, a foreign corporation, Defendant-Appellant-Cross Respondent Kirkpatrick & O'Donnell Construction Equipment Co., Plaintiff-Appellant. v. Northwest Pipeline Corporation, a foreign corporation, Defendant-Respondent. Boise, March 1998 Term

Page 627

979 P.2d 627

GREAT PLAINS EQUIPMENT, INC., a foreign corporation; Michetti Pipe Stringing; Beard Oil Petroleum, Inc., a Foreign Corporation; Atlas Copco Rental, Inc., a foreign corporation; CRC-evans Pipeline International, Inc., a foreign corporation; Courtesy Ford Lincoln Mercury, Inc., an Idaho corporation; Cowboy Oil Co., an Idaho Corporation; Darby Enterprises, Inc., a foreign corporation; Hartford Insurance Company/Pickard Tate & Allen, a Connecticut Company; Rasmussen Equipment Company, a Utah corporation; Rocky Mountain Machinery Company, a foreign corporation;V-1 Oil Company, an Idaho corporation; Valley Office Systems, Inc., an Idaho corporation; Cate-Idaho Equipment Co., Inc., an Idaho corporation B.D. Holt & Company, Inc., d/b/a Holt Company of Texas, a foreign corporation, Plaintiffs-Respondents-Cross Appellants, v. NORTHWEST PIPELINE CORPORATION, a foreign corporation, Defendant-Appellant-Cross Respondent Kirkpatrick & O'Donnell Construction Equipment Co., Plaintiff-Appellant. v. Northwest Pipeline Corporation, a foreign corporation, Defendant-Respondent.

Nos. 22762, 22973.

Supreme Court of Idaho,

Boise, March 1998 Term.

March 29, 1999.

Rehearing Denied May 20, 1999.

Hawley, Troxell, Ennis & Hawley, Boise and Pocatello, for appellant (case no. 22762) and respondent (case no. 22973), Northwest Pipeline Corporation. Ronald E. Bush and Thomas B. Chandler argued.

Racine, Olson, Nye, Cooper & Budge, Pocatello, for respondents in case no. 22762, Hartford Insurance/Pickard, Tate & Allen Craig W. Christensen, Ctd., Pocatello, argued for respondent B.D. Holt & Co., Inc.

                Company, Great Plains Equipment, Valley Office Systems, V-1 Oil Company, Cowboy Oil Company, Courtesy Ford, Darby Enterprises, Rasmussen Equipment, Atlas Copco, CRC Evans Pipeline International, Beard Oil, Rocky Mountain Machinery Company and Michetti Pipe Stringing, and appellant Kirkpatrick & O'Donnell in case no. 22973.   Louis F. Racine, Jr., and John R. Goodell argued
                

Lowell N. Hawkes, Pocatello, argued for respondent Cate-Idaho Equipment Co. Inc.

WALTERS, Justice

NATURE OF THE CASE

This is an appeal from a judgment in favor of several claimants involved in the construction of a natural gas transmission pipeline. The construction contract was entered into by Northwest Pipeline Corporation (NWP) and Great Plains Pipeline Construction, Inc. (GPPC), and required GPPC to build a new pipeline, compressor pumping stations and related facilities between Pocatello and Burley, Idaho. Delays in the completion of the contract forced GPPC to quit the job, leaving numerous subcontractors, equipment lessors, insurance providers, and other vendors unpaid. GPPC eventually was forced into involuntary bankruptcy, and the subcontractors filed liens against NWP for the unpaid amounts. All but seventeen of these subcontractors settled with NWP before trial. Following trial in the district court, sixteen of the remaining seventeen subcontractors were awarded judgment against NWP on all or a substantial portion of their claims on alternative legal theories based on Idaho's mechanic's lien statute, Utah's bond statute and alleged unjust enrichment. The final judgment and decree against NWP in favor of the successful claimants collectively exceeded $3 million.

NWP timely appealed from the judgment, and the subcontractors cross-appealed for the purpose of challenging the trial court's decision not to allow recovery of any punitive damages. In addition, the remaining subcontractor-claimant, Kirkpatrick & O'Donnell Construction Equipment Co. (K & O), separately appealed from the district court's order granting summary judgment to NWP against K & O. The appeals were consolidated for disposition. For the following reasons, we affirm in part, and vacate in part.

I. FACTUAL BACKGROUND

NWP, a regulated utility company, distributes natural gas to customers from New Mexico to the pacific northwest and Canada. In 1992, after review of its customers' needs, NWP applied to the Federal Energy Regulatory Commission (FERC), for a permit to expand its mainstream transmission line capacity. The entire expansion project consisted of 378 miles of new pipeline loops on NWP's existing mainline and lateral systems, together with ten new compressor stations, modifications at thirteen more compressor stations, and construction of or additions to thirty-five communication sites. The system expansion was divided into seven different "spreads." Spread 2 covered a span of seventy-six miles beginning south of Pocatello in Bannock County and running west across Power County to Burley in Cassia County, Idaho. Due to environmental concerns, the FERC approval required construction on Spread 2 to occur during the off-irrigation season.

After NWP invited bids to construct Spread 2, GPPC of Lubbock, Texas, submitted the lowest bid. Although NWP initially was concerned because GPPC's bid was significantly lower than any of the other bids, NWP's concerns were resolved on further investigation when NWP concluded that GPPC had sufficient assets to complete the job as bid. The contract between NWP and GPPC was entered into in Utah and explicitly required the application of Utah law. Utah has a bond statute (Utah Code § 14-2-2) that operates parallel to a mechanic's lien law. NWP did not require GPPC to post a bond under the Utah statute, thus waiving the requirement and reducing the contract costs by the sum of $160,000 representing the bond premium.

The construction was to begin in October of 1992, but FERC's notice to proceed was not issued until November 16, 1992, three weeks later than expected. At that time GPPC began the mobilization of men and equipment, and actual construction started in early December of 1992.

In January of 1993, GPPC notified NWP that Spread 2 could not be completed as originally bid due to delays in starting, extreme weather conditions, and underestimations in the cost of the project. NWP obtained bids to complete construction from several other contractors, but elected to have GPPC complete the job since GPPC's cost to complete the project was far less than the other contractors' bids. Thereafter, NWP and GPPC renegotiated the contract, and construction continued through April of 1993. However, in May of 1993, GPPC halted construction, leaving subcontractors, equipment lessors, insurance providers, and other vendors unpaid in amounts exceeding $6 million. NWP refused to make further payments to GPPC, but did pay Precision Blasting and Smackover Pressure Testing from the retainage.

II. PROCEDURAL BACKGROUND

Thereafter, GPPC filed a claim of lien against NWP and the pipeline and informed the subcontractors to do the same, because GPPC was unable to pay them. Approximately fifty subcontractors, equipment lessors, insurance providers, and other vendors filed claims of lien against NWP. In addition, on May 8, 1993, NWP filed suit against GPPC in Utah state court for breaching the prime contract. In July of 1993, the subcontractors, equipment lessors, insurance providers and vendors, including GPPC, filed complaints against NWP in the district court in Idaho in Bannock County in the Sixth Judicial District. Those actions included foreclosure of mechanics' liens, claims under Utah's bond statute, and allegations of unjust enrichment.

On August 5, 1993, GPPC was dismissed from the Idaho suit; however, the other various claims remained in Idaho and were consolidated into the present litigation regardless of the county in which the work on Spread 2 may have been accomplished. The case was eventually removed to federal court where GPPC was forced by NWP into involuntary bankruptcy. Some of the pending claims were settled in the bankruptcy action. In January of 1994, the Idaho and Utah state court actions were removed to federal district court, but in August of 1994, the federal court remanded the subcontractors' claims to the Idaho state court.

On September 16, 1994, following remand to the state court, the district court in Bannock County issued a memorandum decision determining several of the initial, controlling issues. The district court held that NWP's waiver of the Utah bond requirement allowed the subcontractors and vendors to invoke the Utah private payment bond statute as a remedy. The district court also held that Idaho's mechanic's lien statutes applied to those claimants who had supplied tools and equipment, and who had supplied rental equipment and machinery but did not apply to those claimants who had supplied repair parts. In a later memorandum decision, the district court also held that suppliers of insurance have a lien claim under I.C. §§ 45-501 to -524 and a claim under Utah Code § 14-2-2.

Consistent with its memorandum decisions, the district court granted NWP summary judgment on March 13, 1995, as to K & O's lien claim for repair parts. Thereafter, the district court dismissed K & O's Utah bond statute claim, and eventually dismissed K & O's unjust enrichment claim as a matter of law.

After most of the claims against NWP were settled and K & O's action dismissed, sixteen claimants remained. Of those sixteen, fourteen were represented by Louis Racine, Jr. (Racine Subcontractors). ¹ Subsequently The trial on the remaining bond and lien claims lasted from April 27, 1995, to June 23, 1995. On June 26, 1995, the jury returned a special verdict on the sixteen claims under the Utah payment bond statute theory and found in favor of thirteen claimants. Cowboy Oil, V-1 Oil, and GPE did not recover from the jury on the bond statute theory. The district court reserved decision on the lien claims.

the district court bifurcated the claims, holding that the Idaho lien claims and the unjust enrichment claims were equitable in nature and thus were not proper for determination by a jury. The district court concluded that the bond claims would be tried to a jury, but because the bond and lien claims were identical both would be tried together...