Harris, Inc. v. Foxhollow Constr.
| Decision Date | 02 November 2011 |
| Docket Number | No. 36601.,36601. |
| Citation | 264 P.3d 400,151 Idaho 761 |
| Parties | HARRIS, INC., an Idaho corporation, Plaintiff–Counterdefendant–Appellant, v. FOXHOLLOW CONSTRUCTION & TRUCKING, INC., an Idaho corporation, L.N. Johnson Paving, LLC, a limited liability company, Defendants–Respondents, and David Egan, an individual, Ferguson Farms, d/b/a Ferguson Trucking, D. Kym Ferguson, an individual, and Michael Ferguson, an individual, Defendants–Counterclaimants–Respondents. |
| Court | Idaho Supreme Court |
Norman G. Reece, Jr., P.C., Chubbuck, argued for appellant.
Cox, Ohman & Brandstetter, Idaho Falls, for respondent L.N. Johnson Paving, LLC. John M. Ohman argued.
William H. Mulberry, Ririe, argued for respondent Fergusons.
David Egan, Idaho Falls, respondent pro se.
This case involves an action for breach of contract and attendant claims of breach of the covenant of good faith and fair dealing, unjust enrichment, fraud, and indemnification. After a bench trial, Harris, Inc. (Harris), the plaintiff, lost on all claims. We affirm the district court's judgment, except for its attorney fee awards, which we vacate.
In early 2002, David Egan, a business manager for Foxhollow Construction and Trucking, Inc.1 (Foxhollow), met with Wayne Johnson (Wayne) of L.N. Johnson Paving, LLC (Johnson) to discuss a bid for excavation and paving work for a new public high school in Fremont County (the Fremont Project). Egan wanted to bid on the Fremont Project on behalf of Foxhollow, but Foxhollow lacked the requisite public works license. Johnson had a public works license for contracts up to $500,000.00. Wayne thought Johnson's license could cover Foxhollow if Johnson and Foxhollow submitted a single bid in Johnson's name. So, Egan submitted a subcontract bid in Johnson's name to Harris, a general contractor, for the Fremont Project's excavation, filling, grading, culvert, and asphalt paving work. Wayne and Egan planned for Johnson to handle the paving work and for Foxhollow to do the excavation, filling, grading, and culvert work.
Foxhollow and Johnson had a relationship with Harris before the Fremont Project. Both companies worked on the Midway Middle School project in Rigby under an arrangement similar to the one they planned for the Fremont Project. Foxhollow also was working independently for Harris on a separate contract for a water and sewer project in Jefferson County (the Jefferson Project). Johnson had worked independently on the Jefferson Project as well.
Johnson was the successful bidder for Harris' paving and excavation subcontract on the Fremont Project. Egan, Wayne, and Scott Harris (Scott), acting for Harris, met at Harris' offices in Chubbuck to discuss the bid and the subcontract. Egan and Wayne, despite placing a single bid, asked Scott to write out separate contracts for Foxhollow and Johnson—the "site work portion" in Johnson's name, and the "structural excavation of the building" in Foxhollow's name. In mid-June 2003, Fremont County Joint School District awarded Harris the construction contract for the Fremont Project. Harris started work on the Fremont Project soon thereafter. In late June 2003, Egan, acting on Johnson's behalf, signed a contract with Harris for excavation, filling, grading, culvert, and paving work on the Fremont Project. Under that contract, Harris agreed to pay Johnson $409,363.00, much of which was earmarked for Foxhollow's excavation, filling, grading, and culvert work. Demian Egan, as Foxhollow's president, signed a separate contract with Harris in July 2003 for $245,705.00 for excavation, filling, grading, and culvert work. The ultimate contractual arrangement and division of work between Foxhollow and Johnson is unclear because both companies had written agreements describing much of the same work.2 But, it is clear that Harris paid Johnson for work on the Fremont Project and Johnson forwarded those payments to Foxhollow. In addition, Harris paid some of Foxhollow's payroll to avoid Foxhollow's potential mismanagement of its cashflows.3 Egan was one of the Foxhollow employees that Harris paid directly.
Egan requested progress payments for billing, payroll, and other incurred expenses, near the end of each month while Foxhollow and Johnson were involved with the Fremont Project. Melvin Voss, a Foxhollow employee, kept track of the rented equipment Foxhollow used on the Fremont Project. Foxhollow's equipment suppliers sent invoices to Voss. In turn, Voss submitted the invoices to Tony Robles, a Harris employee. Harris would not make progress payments until all materialmen and equipment suppliers were paid. Harris issued payments based on communications with Egan and Voss.
In early August 2002, Harris agreed to a change order, which added $16,500.00 to Johnson's subcontract. With this change, Johnson's subcontract totaled $425,863.00. Then, in September 2002, Harris agreed to a second change order, which added $41,983.20 to Johnson's subcontract, for a new total of $467,846.20. Shortly after the second change order, in mid-September 2002, Scott received letters from two equipment suppliers demanding payment for rental equipment Foxhollow used on the Fremont Project. Pro–Rentals & Sales, Inc. demanded $7,781.014 and Western States, Inc. demanded $51,000.00. At the same time, Foxhollow owed Ferguson Farms, in which Kym Ferguson (Kym) was a partner,5 about $75,000.00 for leased equipment.
Neither Johnson nor Foxhollow notified Harris of any accounts owing for any rental equipment. In late September 2002, Scott did receive a letter from Foxhollow's lawyers stating that Foxhollow had paid all equipment suppliers except Western States and that Foxhollow was not in default on its obligations on the Fremont Project. Harris, relying on this letter, sent no payment to Pro–Rentals. Rather, Harris issued another round of payroll checks to Foxhollow employees for work on the Fremont Project. Then, just one week later, on September 27, 2002, Scott sent a letter to Wayne notifying him that Johnson and Foxhollow were in default on the Fremont Project. Scott apparently proposed a schedule to cure the default. Johnson never responded to Scott's letter. In late September 2002, Ferguson Farms took its equipment off the Fremont Project. The trial court was unable to discern which party, Foxhollow or Johnson, defaulted on specific aspects of the agreement because the contracts with Harris had no clear division of work. Johnson itself did not perform any work on the Fremont Project. In early October 2002, Scott and Kym agreed that Ferguson Farms would return Ferguson's equipment to the Fremont Project and Harris would pay Ferguson Farms directly, rather than through Foxhollow. Ferguson Farms worked on the Fremont Project for the most part in October 2002. Harris paid Ferguson Farms for work in March 2004, after Ferguson Farms threatened Harris with a lawsuit.
In mid-December 2002, despite the apparent default, Harris sent Johnson a check, payable to Johnson and L & M leveling, for $8,000.00 for some of Foxhollow's work on the Fremont Project. Johnson's lawyer returned the check with a letter denying that Johnson ever had a contract with Harris for the Fremont Project and denying any knowledge of L & M Landleveling.6
Harris subsequently brought this action, alleging that (1) Foxhollow, Johnson, and the Fergusons (Kym, Michael and Ferguson Farms) breached their subcontracts with Harris; (2) the defendants were unjustly enriched as a result of their unsatisfied obligations; (3) the defendants breached duties of good faith and fair dealing owed to Harris under the contracts; (4) the defendants made fraudulent representations to Harris; and (5) Harris is entitled to indemnification from Foxhollow and Johnson for an earlier judgment entered against Harris. Egan filed a counterclaim for indemnification from Harris. The Fergusons filed a counterclaim alleging that Harris breached an equipment rental contract that Harris had with them.
The district court dismissed Foxhollow as a party for lack of proof of notice because there was no indication that Foxhollow was ever served. After a bench trial, the court held that Harris had abandoned its claims against the Fergusons for breach of contract, breach of the covenant of good faith and fair dealing, and indemnification. The court granted Harris' motion for "directed verdict" as to Egan's counterclaim, and it granted Harris summary judgment as to the Fergusons' counterclaim. Finally, the court concluded that Harris failed to prove any of its remaining claims against any of the defendants and therefore was not entitled to relief. The court denied Harris' motion for a new trial. The court also awarded fees and costs to Johnson and the Fergusons. Harris timely appealed.
Harris now argues that the district court: (1) erred in concluding Harris failed to prove contract damages; (2) erred in concluding that no defendant was unjustly enriched; (3) erred in concluding that no defendant is liable for fraud; (4) erred in concluding that Harris was not entitled to indemnity; (5) abused its discretion in denying Harris' motion to amend findings and conclusion; (6) abused its discretion in granting fees and costs to Johnson and the Fergusons; and (7) abused its discretion in denying Harris' motion for a new trial.
Although Harris asserts numerous claims of error, the main thrust of its argument is that the district court erred in concluding the evidence it submitted regarding damages was insufficient. The district court observed that Harris was likely entitled to damages against Johnson for breach of contract but that Harris had failed to adequately establish any specific amount of damages attributable to Johnson's breach. We find no error in the district court's conclusion.
We review a district court's bench trial decisions to determine "whether the evidence supports the findings of fact, and whether the findings of fact support the...
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