L.H. Morris Elec. v. Hyundai Semiconuctor

• Decision Date: 07 December 2005
• Docket Number: 16-98-05206; A119475.
• Citation: 203 Or. App. 54,125 P.3d 1
• Parties: In the Matter of the Consolidated Hyundai Plant Litigation. L.H. MORRIS ELECTRIC, INC., Plaintiff, v. HYUNDAI SEMICONDUCTOR AMERICA, INC., a California corporation; Hyundai Electronics America, Inc., a California corporation; Hyundai America, Inc., a California corporation; The Chase Manhattan Bank USA, N.A., a national banking institution; Marshall Contractors, Inc., aka ADP Marshall, Inc.; ADP Marshall, Inc., an Arizona corporation, fka Marshall Contractors, Inc.; M+W/Marshall Joint Venture, a joint venture, aka Meissner+Wurst/Marshall Joint Venture; Meissner+Wurst U.S. Operations, Inc., a Delaware corporation, fka Meissner & Wurst GmbH & Co.-U.S. Operations, Inc., or Meissner+Wurst GmbH-U.S. Operations, Inc., and City of Eugene, an Oregon municipal corporation, Respondents, and Scott Co., a California corporation, aka Scott Company of California, Scott Co. of California, and Scott Company, Appellant.
• Court: Oregon Supreme Court

Page 1

125 P.3d 1

203 Or. App. 54

In the Matter of the Consolidated Hyundai Plant Litigation L.H. MORRIS ELECTRIC, INC., Plaintiff, v. HYUNDAI SEMICONDUCTOR AMERICA, INC., a California corporation; Hyundai Electronics America, Inc., a California corporation; Hyundai America, Inc., a California corporation; The Chase Manhattan Bank USA, N.A., a national banking institution; Marshall Contractors, Inc., aka ADP Marshall, Inc.; ADP Marshall, Inc., an Arizona corporation, fka Marshall Contractors, Inc.; M+W/Marshall Joint Venture, a joint venture, aka Meissner+Wurst/Marshall Joint Venture; Meissner+Wurst U.S. Operations, Inc., a Delaware corporation, fka Meissner & Wurst GmbH & Co.-U.S. Operations, Inc., or Meissner+Wurst GmbH-U.S. Operations, Inc., and City of Eugene, an Oregon municipal corporation, Respondents, and Scott Co., a California corporation, aka Scott Company of California, Scott Co. of California, and Scott Company, Appellant.

16-98-05206; A119475.

Court of Appeals of Oregon.

Argued and Submitted September 14, 2004.

Decided December 7, 2005.

COPYRIGHT MATERIAL OMITTED

Jeffrey M. Batchelor argued the cause for appellant. With him on the briefs were Markowitz, Herbold, Glade & Mehlhaf, P.C., and Kevin P. Donnelly and Dann & Meacham.

Arnold L. Gray, Portland, argued the cause for respondents Hyundai Semiconductor America, Inc., Hyundai Electronics America, Inc. Hyundai America, Inc., The Chase Manhattan Bank USA, N.A., Marshall Contractors, Inc., ADP Marshall, Inc., M+W/Marshall Joint Venture, and Meissner+Wurst U.S. Operations, Inc. With him on the brief were Robert Coleman, Portland, and Stewart Sokol & Gray, LLC, and Jeffrey K. Hanson, Portland, and Yazbeck, Cloran & Hanson, LLC.

Jeffery J. Matthews waived appearance for respondent City of Eugene.

Before EDMONDS, Presiding Judge, and WOLLHEIM and SCHUMAN, Judges.

WOLLHEIM, J.

In this construction dispute, defendant Scott Company of California appeals a judgment that, among other things, dismissed its construction lien against Hyundai Semiconductor America, Inc., awarded attorney fees, costs, and disbursements to the project's construction manager, and confirmed an arbitration award. Scott's appeal raises three issues: (1) Did the trial court err in dismissing Scott's lien claim against Hyundai in light of the arbitration award? (2) Did the trial court err in granting attorney fees in the lien proceeding not to the owner, but to the general contractor, M+W/Marshall? (3) Did the trial court err in the amount of prejudgment interest it awarded? As explained below, we conclude that the trial court correctly disposed of the lien claim and granted attorney fees, but erred in its calculation of prejudgment interest. Therefore, we reverse and remand for recalculation of prejudgment interest.

This appeal is one small piece of the complex litigation—the "Consolidated Hyundai Plant Litigation"—spawned by disputes that arose from the construction of a more than $1 billion microchip fabrication facility known as the Hyundai E-4 Fab Facility in Eugene, Oregon. Only some of the multitude of players involved in the consolidated litigation are involved in this particular dispute. Hyundai Semiconductor America, Inc., owned the real property on which the improvement took place. M+W/Marshall was Hyundai's "construction agent" and the construction manager for the construction of the facility.¹ M+W/Marshall entered into a subcontract with Scott Company of California under which Scott was to furnish and install certain mechanical systems (i.e., "HVAC, piping and process piping fabrication and installation") at the facility.

In July 1996, Scott began furnishing the labor and materials called for in its contract with M+W/Marshall. In the spring of 1998, Scott filed a construction lien for about $13.5 million against the Hyundai property. Disputes eventually arose, and in the consolidated litigation that followed completion of the facility, the various parties sought recovery from one another. Among other claims and cross-claims made by the parties, Scott filed three cross-claims against M+W/Marshall and Hyundai. In its first cross-claim, Scott alleged that M+W/Marshall had breached its contract with Scott. Scott claimed that it had agreed to perform its duties under the subcontract for $29,379,870; that M+W/Marshall had breached the contract; and that, as a result of the breach, Scott had suffered $13,393,549 in damages. In its second cross-claim, Scott asserted an alternative quantum meruit claim against—among others—M+W/Marshall (but not against Hyundai); it claimed damages in the same amount as it claimed under the contract. Finally, Scott asserted a lien foreclosure claim against Hyundai, its lender, and "any and all other named parties claiming any right, interest, title or lien in the Improvement or Property."² It alleged that it had filed the lien noted above in the amount of $13,536,548.51. It also asserted in its cross-claim that, "[a]fter the claim of lien was filed, Scott's damage summary was revised by its consultant to the amount of $13,393,548.99"—the same amount as the damages Scott claimed in its contract and quantum meruit claims against M+W/Marshall.

In May 1999, after Scott had filed its cross-claims, M+W/Marshall filed a demand to arbitrate Scott's contract and quantum meruit claims. Ultimately, the parties stipulated to the arbitration of all "contract and common law claims" that arose out of the construction of the fabrication facility. The remainder of this litigation—really just the lien claim—was stayed and the contract and quantum meruit claims were arbitrated. In February 2001, before the three-arbitrator panel had rendered its award, M+W/Marshall served Scott with a $6,350,000 offer of judgment. In that offer, which was made pursuant to ORCP 54 E, M+W/Marshall offered to "allow judgment to be taken against it by" Scott, "resolving all claims asserted by Scott" against—among others—Hyundai and M+W/Marshall.³ Scott rejected the offer.

In October 2001, after six weeks of hearings, the arbitration panel rendered its award. The net total award in favor of Scott, after deducting the backcharges determined in M+W/Marshall's favor, was $3,058,571.26. With the arbitration award in hand, M+W/Marshall returned to court and moved—in a motion purporting to have been filed "pursuant to ORCP 21"—to dismiss Scott's remaining cross-claims against it and Hyundai. Specifically, M+W/Marshall sought to have the lien claim dismissed. That motion was based on arguments that the arbitration award had preclusive effect on the lien claim and that the lien claim was grossly overstated. M+W/Marshall also moved—again, "pursuant to ORCP 21"—for an order granting it attorney fees. In support of its motions to dismiss the lien claim and for attorney fees, M+W/Marshall submitted the arbitration award, affidavits, and exhibits to the affidavits. Finally, M+W/Marshall moved for an order confirming the arbitration award. Scott did not object to having the arbitration award confirmed.

After extensive briefing and a hearing, the trial court entered an order that (1) granted M+W/Marshall's motion for attorney fees, remanding the matter to the chair of the arbitration panel to determine the amount of those fees; (2) dismissed Scott's remaining claims, specifically the lien claim; and (3) confirmed the arbitration award. After the amount of attorney fees was determined, the trial court entered a judgment awarding M+W/Marshall $1,138,000 in costs, disbursements, and attorney fees. The judgment also provided that Scott's lien against the Hyundai property was "released, dismissed, vacated and removed as encumbrances against the Property." It is from that judgment that Scott appeals.

On appeal, Scott makes three assignments of error. First, Scott asserts, the trial court erred in dismissing its lien claim. Second, Scott claims, the trial court erred in awarding M+W/Marshall attorney fees. Finally, Scott argues, the trial court "erred in denying Scott prejudgment interest from September 10, 2001 until entry of judgment." We address each assignment of error in turn.

I. DISPOSITION OF THE LIEN CLAIM

In its first assignment of error, Scott claims that the trial court erred in dismissing its lien claim against Hyundai. In the trial court, as noted, M+W/Marshall proffered two theories under which it was entitled to have the lien claim dismissed. M+W/Marshall first asserted that the lien claim was precluded because "[a]ll of Scott Co.'s claims set forth in its Amended Cross-Claims against the moving parties have been fully adjudicated in an arbitration hearing on the merits." Second, M+W/Marshall asserted, "Scott Co.'s lien in the amount of $13,536,548.51 was overstated because of Scott Co.'s gross and palpable negligence which is sufficient to raise a presumption of fraud and because the lien does not contain a `true statement of demand, after deducting all just credits and offsets' as required by ORS 87.035(3)." M+W/Marshall claimed that, "despite its knowledge that its lien amount was excessive and included non-lienable items such as alleged delay damages, Scott Co. made no efforts to amend or partially release its lien. Therefore, Scott Co.'s lien is invalid, and its lien foreclosure claim should be dismissed."

Following a hearing, the trial court made the following findings of fact and conclusions of law:

"9. Oregon case law interpreting ORS Chapter 87 provides that a lien may be invalidated if the lien is substantially overstated. See, A-C Construction, Inc. v. Bakke Corporation, 153 Or.App. 41, 47, 956 P.2d 219 (1998) and Brown v. Farrell, 258 Or. 348, 354, 483 P.2d 453 (1971).

"10. Scott Company's lien was recorded against Hyundai's Property and Project in 1998, in the principal amount of $13,536,548. The components of Scott's lien claim were identical to the components of its breach of contract and quantum meruit claims. After arbitrating its claims, Scott Company...