Hawkins/Korshoj v. State Bd. of Regents

Decision Date29 June 1977
Docket NumberNo. 2-59060,2-59060
Citation255 N.W.2d 124
PartiesHAWKINS/KORSHOJ, a joint venture consisting of Hawkins Construction Company and Korshoj Construction Company, Inc., Appellee, v. STATE BOARD OF REGENTS, an Agency of the State of Iowa, Appellant.
CourtIowa Supreme Court

Richard C. Turner, Atty. Gen., Elizabeth Nolan, Asst. Atty. Gen., and Arthur O. Leff, Sp. Counsel, Iowa City, for appellant.

Lee H. Gaudineer and John G. Black, of Austin, Myers, Peterson & Gaudineer, Des Moines, Thomas J. Monaghan, Omaha, Neb., and Leland C. White, Harlan, for appellee.

Heard by MOORE, C. J., and MASON, REES, UHLENHOPP and HARRIS, JJ.

MOORE, Chief Justice.

Defendant appeals trial court judgment entered in plaintiff's favor which sustained an arbitration award of $83,887.02. We affirm.

The case was submitted below on stipulated facts. In October 1969, plaintiff contractor entered into a contract with defendant Board of Regents to build a dental science building at the University of Iowa by October 1971 for $5,068,311. Construction was eventually completed in the fall of 1972 and acceptance made by the Board in January 1973.

Pursuant to the contract plaintiff periodically submitted "periodic estimates for partial payment" and was paid without incident accordingly. On February 26, 1973 plaintiff submitted its final estimate of $261,031.93. Defendant paid $226,031.93 of this amount in March but withheld $35,000 to cover damage sustained to the project "until such time" as the party or parties responsible for a 1972 break in the water main at the building could be ascertained.

On May 11, 1973 plaintiff filed a demand with defendant later amended on June 6, 1973, for $518,849.11 for additional items received and expenses resulting from delays in construction. Plaintiff had on August 26, 1972 notified defendant such claims would be made.

In October 1973, defendants commenced an action in Johnson County District Court against plaintiff and two other contractors to determine responsibility for a broken water main. Plaintiff meanwhile, in December 1973, filed a "notice of intent to arbitrate" its claim pursuant to the contract arbitration clause which provided:

"7.10.1 All claims, disputes and other matters in question arising out of, or relating to, this Contract or the breach thereof, * * * except for claims which have been waived by the making or acceptance of final payment as provided by Subparagraphs 9.7.5 and 9.7.6, shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. This agreement so to arbitrate shall be specifically enforceable under the prevailing arbitration law. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.

"7.10.2 Notice of the demand for arbitration shall be filed in writing with the other party to the Contract and with the American Arbitration Association, and a copy shall be filed with the Architect. The demand for arbitration shall be made within * * * a reasonable time after the claim, dispute or other matter in question has arisen, * * *.

"7.10.3 The Contractor shall carry on the Work and maintain the progress schedule during any arbitration proceedings, unless otherwise agreed by him and the Owner in writing."

In the Johnson County litigation the parties entered into a stipulation that only the water main damage issue would be adjudicated therein and any other claims plaintiff made against defendant were to be arbitrated. The stipulation provided in relevant part:

"There is expressly reserved to Hawkins and Korshoj and State of Iowa and State Board of Regents the right to resolve by arbitration proceedings all other claims, disputes and matters in question arising out of or relating to the October 24, 1969, contract between said parties.

"That Hawkins/Korshoj's claim against the Regents shall be and is to be arbitrated in accordance with the demand for arbitration heretofore filed by Hawkins/Korshoj and pursuant to the provisions of Paragraph 7.10 Arbitration, Article VII, miscellaneous provisions, of the general conditions of the contract for construction and entered into by Regents and Hawkins/Korshoj on October 24, 1969."

Subsequently in April 1974 defendant paid plaintiff $31,126.15 on condition its insurance carrier agree to pay any judgment ultimately entered when the liability issue was resolved. In oral argument the parties indicated the matter was still pending.

An arbitration hearing was finally held on plaintiff's claim on December 9, 1974. Prior to the reception of evidence defendant raised an objection to the arbitrability of plaintiff's claim. The basis of this objection was section 9.7.6 of the construction contract which provided:

"The acceptance of final payment shall constitute a waiver of all claims by the Contractor except those previously made in writing and still unsettled."

At the close of the evidence and before final submission defendant renewed its objection. In both instances it specifically asserted it was not waiving the objection by proceeding with the arbitration. After due consideration the arbitrators awarded plaintiff.$82,976. Subsequently the American Arbitration Association directed defendant to pay plaintiff an additional $911.02 for costs previously advanced by plaintiff.

Plaintiff thereafter filed a petition in Polk County District Court praying for judgment in the amount of the arbitration award and costs which defendant had refused to pay. Defendant in its answer affirmatively alleged plaintiff's claim was not arbitrable under the construction contract and thus the award was null and void.

In sustaining the arbitration award trial court concluded defendant waived any rights it had pursuant to the original contract by entering into the stipulation filed in the Johnson County water main damage suit. Defendant has appealed.

I. While this controversy is not governed by either Federal labor laws or the Federal Arbitration Act, Title 9, United States Code, we believe recent decisions rendered in those areas provide guidance in resolving our commercial arbitration problem. Hanes Corp. v. Millard, 174 U.S.App.D.C. 253, 531 F.2d 585, 599; National R. R. Passenger Corp. v. Missouri Pacific R. R. Co., 8th Cir., 501 F.2d 423, 427, 428.

Similarly, although Iowa has not adopted the Uniform Arbitration Act, we believe cases decided by sister states which have adopted that Act may properly be considered in our ultimate determination whether the arbitration award should be enforced pursuant to our Code chapter 679.

II. Defendant first contends trial court erred in its determination error was not preserved on the arbitrability issue. For the reasons hereinafter set forth we agree.

Trial court reasoned that defendant by entering into the Johnson County stipulation waived any rights it may have had under sections 7.10 and 9.7.6 of the construction contract to bar plaintiff's damage claim. We do not believe a fair reading of the stipulation can support this conclusion.

In construing stipulations the court should always attempt to ascertain and give effect to the intention of the parties. 83 C.J.S. Stipulations § 11a, page 26. This can only be accomplished by interpreting the stipulation with reference to its subject matter and in light of the surrounding circumstances and whole record including the state of the pleadings and issues involved. Bartels v. Hennessey Brothers, Inc., Iowa, 164 N.W.2d 87, 91; Norman v. Dougan, 201 Iowa 923, 927, 208 N.W. 366, 368; 83 C.J.S. Stipulations § 11b, page 29.

We believe the stipulation here reveals the parties did no more than limit the scope of the Johnson County litigation to the sole issue of liability for the water main damage. By stating that plaintiff contractor's claims were governed entirely by the contract arbitration provisions the parties merely recognized all rights and defenses of the parties would ultimately be determined by reference to that agreement.

III. Before proceeding to a discussion of the merits we feel we must briefly address and reject plaintiff's contention that defendant, by participating on the merits of the dispute after the arbitrators' decision in favor of arbitrability, forfeited its right to contest arbitral jurisdiction in a judicial forum. Although some cases have found a waiver in this situation, we believe the preferable rule is that a timely objection to arbitrability preserves the right to challenge the award after participating in the arbitration preceding. Local 719, American Bakery & C. Wkrs. v. National Biscuit Co., 3d Cir., 378 F.2d 918, 921, 922; Titan Enterprises, Inc. v. Armo Construction, Inc., 32 Cal.App.3d 828, 832, 833, 108 Cal.Rptr. 456, 458; Board of Ed., Com. U. Sch. D. No. 4 v. Champaign Ed. Ass'n, 15 Ill.App.3d 335, 341, 304 N.E.2d 138, 143...

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  • Johnson Controls, Inc. v. City of Cedar Rapids, Iowa, 82-1412
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • August 2, 1983
    ...arbitration agreement or from arbitrating disputes such as the one present in this case. See, e.g., Hawkins/Korshoj v. State Board of Regents, 255 N.W.2d 124, 128 (Iowa 1977) (enforcing a common law arbitration clause against a state entity in a construction contract dispute). At most, ther......
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    ...the agreement. The assent of the parties to the contract for arbitration was obvious and uncontested. In Hawkins/Korshoj v. State Board of Regents, 255 N.W.2d 124, 127-28 (Iowa 1977), we not only pointed out that "(a) party cannot be required to submit to arbitration any dispute which he ha......
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    ...is a legal issue that is to be determined by interpretation and construction of the parties' contract. Hawkins/Korshoj v. State Board of Regents, 255 N.W.2d 124, 127 (Iowa 1977). Because arbitration is favored as a means of settling civil disputes without the expense and delay of litigation......
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