MORRIS ELEC. v. Hyundai Semiconductor

• Decision Date: 20 March 2003
• Citation: 66 P.3d 509,187 Or. App. 32
• Parties: L.H. MORRIS ELECTRIC, INC., et al., Plaintiff, v. HYUNDAI SEMICONDUCTOR AMERICA, et al., Defendants, and M+W/Marshall, a joint venture, aka Meissner + Wurst/Marshall Joint Venture; Meissner + Wurst U.S. Operations, Inc., a Delaware corporation; and ADP Marshall, Inc., an Arizona corporation, Respondents, and Samwoo Naewoe Emc, Co., Ltd., and Samwoo America Management, Ltd., Appellants.
• Court: Oregon Court of Appeals

66 P.3d 509

187 Or. App. 32

L.H. MORRIS ELECTRIC, INC., et al., Plaintiff, v. HYUNDAI SEMICONDUCTOR AMERICA, et al., Defendants, and M+W/Marshall, a joint venture, aka Meissner + Wurst/Marshall Joint Venture; Meissner + Wurst U.S. Operations, Inc., a Delaware corporation; and ADP Marshall, Inc., an Arizona corporation, Respondents, and Samwoo Naewoe Emc, Co., Ltd., and Samwoo America Management, Ltd., Appellants.

16-98-05206; A113858

Court of Appeals of Oregon.

Argued and Submitted April 30, 2002.

Decided March 20, 2003.

Wm. Randolph Turnbow, Eugene, argued the cause for appellants. With him on the briefs was Hershner, Hunter, Andrews, Neill & Smith, LLP.

Jeffrey K. Hanson argued the cause for respondents. With him on the brief were R. Miles Stanislaw, Stanislaw Ashbaugh, Seattle, Washington, and Allen, Yazbeck, O'Halloran & Hanson, P.C.

Before EDMONDS, Presiding Judge, and ARMSTRONG and KISTLER, Judges.

ARMSTRONG, J.

Samwoo Naewoe (SN), a Korean corporation, and Samwoo America (SA), its American subsidiary, were named as parties in this complex litigation involving the foreclosure of construction liens recorded against real property and improvements constructed by M + W/Marshall (M+W/M) for Hyundai Semiconductor America, Inc., in Eugene, Oregon. SN and SA appeal from a judgment dismissing their cross-claims against M + W/M as alleged in their answer, which sought recovery of damages based on a contract between SN and M + W/M. The trial court dismissed the claims under ORCP 21 for failure to state a claim, based on its conclusion that the pleading shows that the contract was a construction contract subject to the provisions of ORS chapter 701 and that SN and SA are barred from recovery pursuant to ORS 701.065 because they were not licensed contractors.

We review the grant of a motion to dismiss under ORCP 21 for failure to state a claim as a matter of law. Granewich v. Harding, 329 Or. 47, 51, 985 P.2d 788 (1999). We assume the truth of all allegations in the pleading, as well as any inferences that may be drawn from them, and view the allegations and inferences in the light most favorable to the nonmoving party. Id. We agree with SA and SN that the trial court erred in concluding that the pleading fails to state a claim and therefore reverse.

We state the facts alleged in the answer. In approximately February 1997, SN entered into a contract with M + W/M under which SN would provide and install "clean room wall panels" for a price of $1,865,734. At the time, SN intended to hire a subcontractor to install the panels. The agreement initially provided that SN would provide "air return walls" and "equipment partition walls." On or about February 19, 1997, the parties agreed to amend the contract to add "wallskin" panels at an additional price of $559,266. In April 1997, SN's installation subcontractor abandoned the project, and SN and M + W/M modified the contract to remove all labor from SN:

"It is understood and agreed that the installation work is being deleted from the scope of the work strictly for the convenience of the Subcontractor. Furthermore, the Subcontractor remains fully responsible for all coordination and supervision required for a complete installation."

That document is referred to as Amendment 1. The pleading alleges that M + W/M then entered into a separate contract with SA for the installation of the wall panels only, for a price of $660,000. The pleading alleges that, as a result of the amendment to the contract and the creation of a new contract with SA, M + W/M's contract with SN was for materials only, and the contract with SA was for labor only. The pleading alleges, in the cross-claim for reformation, that in May or June 1997 the parties executed a document memorializing the February 19, 1997, agreement to add additional wallskins for a price of $559,266. That document is referred to as Amendment 2.

For its first cross-claim, SN and SA allege that SN has performed its obligation under the contract and that M + W/M has refused to pay it approximately $300,000.

For its second cross-claim, entitled "accord and satisfaction," SN seeks to enforce an alleged agreement by M + W/M to pay it $242,226 for the amount owing on the contract.

For its third cross-claim, SN seeks to reform Amendment 2, which described SN's obligation as including installation as well as supplying of the additional wallskins. SN asserts that the obligation for installation was mistakenly included, because SN's agreement with M + W/M was only to supply the wall panels.

The fourth cross-claim is brought by SA for breach of an agreement to pay its obligations under its subcontract for the installation of the wallskins.

The fifth cross-claim acknowledges that neither SN nor SA was licensed as a contractor with the Oregon Construction Contractors Board (CCB). It seeks a declaration that, as alleged in the pleading, neither SN nor SA was or is a "contractor" as defined in ORS 701.005(3) or was or is "doing work as a contractor" so as to bring it within the licensing requirements of ORS chapter 701 because: (1) SN was a mere supplier of materials and (2) the panels installed by SA were not attached to the real property. In the alternative, SN and SA assert that, if they were contractors, their failure to be licensed is excused under ORS 701.065 because they were unfamiliar with the licensing requirement; because language difficulties prevented them from understanding the legal requirements of their agreements or the applicable law; because M + W/M led SA and SN to believe that they would be paid despite the lack of a contractor's license; and because SA and SN provided substantial materials and labor for which they might not be paid and which it would be manifestly unfair to allow M + W/M to retain without payment. The sixth cross-claim asserted a right to attorney fees under the contract.

A claim that seeks a declaratory judgment, such as SN and SA's fifth cross-claim, states a claim unless it fails to allege facts that show that the parties have a justiciable dispute. See, e.g., Burks v. Lane County, 72 Or.App. 257, 260, 695 P.2d 1373 (1985)

. Here, SN and SA seek a...