Hawkins/Korshoj v. State Bd. of Regents
Decision Date | 29 June 1977 |
Docket Number | No. 2-59060,2-59060 |
Citation | 255 N.W.2d 124 |
Parties | HAWKINS/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. |
Court | Iowa 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.
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:
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:
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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...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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