Murdock-Bryant Const., Inc. v. Pearson, MURDOCK-BRYANT

• Decision Date: 05 April 1984
• Docket Number: No. 1,CA-CIV,MURDOCK-BRYANT,1
• Citation: 703 P.2d 1206,146 Ariz. 57
• Parties: CONSTRUCTION, INC., an Arizona corporation; and Sentry Indemnity Company, a foreign corporation, Plaintiffs-Appellees, v. Taylor PEARSON, dba Taylor Pearson Construction Company; Robert Wilbur individually and jointly; University Industries, individually and jointly; and Insurance Company of North America, a corporation, Defendants-Appellants. 5630.
• Court: Arizona Court of Appeals

Page 1206

703 P.2d 1206

146 Ariz. 57

MURDOCK-BRYANT CONSTRUCTION, INC., an Arizona corporation; and Sentry Indemnity Company, a foreign corporation, Plaintiffs-Appellees, v.Taylor PEARSON, dba Taylor Pearson Construction Company; Robert Wilbur individually and jointly; University Industries, individually and jointly; and Insurance Company of North America, a corporation, Defendants-Appellants.

No. 1 CA-CIV 5630.

Court of Appeals of Arizona Division 1, Department A.

April 5, 1984.

Jennings, Kepner & Haug by William F. Haug, Phoenix, Tolley, Fisher & Verwys by Peter R. Tolley, Grand Rapids, Mich., Mangum, Wall, Stoops & Warden by Daniel J. Stoops, Flagstaff, for Murdock-Bryant Const., Inc. and Sentry Indemnity Co.

Meyer, Vucichevich & Cimala, P.C. by Ronald H. Cimala, Rad L. Vucichevich, Phoenix, for Taylor Pearson dba Taylor Pearson Const. Co. and Ins. Co. of North America.

Black, Robertshaw, Frederick, Copple & Wright, P.C. by Richard A. Black, Phoenix, for Robert Wilbur and University Industries.

OPINION

EUBANK, Judge.

This appeal arises out of a subcontract for site excavation work on a shopping center construction project located in Flagstaff, Arizona.Following a three month trial to an advisory jury, the court awarded appellee-subcontractor damages in quantum meruit, together with attorney's fees.Appellant-contractor appeals from the judgment.We affirm the judgment as to appellant contractor and surety, but reverse as to appellantsRobert Wilbur and University Industries.

The relevant facts are as follows.On July 27, 1977, appellantTaylor Pearson, dba Taylor Pearson Construction Company(Taylor Pearson), entered into a contract to develop and construct the University Plaza Shopping Center (University Plaza) in Flagstaff, Arizona.In early July of 1977Taylor Pearson's construction manager, Tom Short(Short), discussed the excavation and site work for the University Plaza project with Bill Murdock(Murdock) of appelleeMurdock-Bryant Construction, Inc.(Murdock-Bryant).Short suggested that Murdock-Bryant bid the job at plan plus one elevation, ¹ and on July 15, 1977 Short gave Murdock the site plan and indicated that he wanted Murdock-Bryant's bid right away.

After looking at the site, Murdock-Bryant decided not to submit a bid because they did not have the time to properly estimate the quantities of rock that would have to be blasted.On July 18, 1977 Murdock told Short of this decision, and Short offered to provide Murdock with the rock quantities.Short then gave Murdock the rock quantities, which included a figure of 34,000 cubic yards of blast rock, and told him that the figures agreed, within two to five percent, with the quantities estimated by the other contractors who had bid on the job, and with the Engineering Testing Laboratories' (ETL) seismic report.Murdock-Bryant asserted at trial that Short knew, at the time he made this representation, that the quantities he supplied to Murdock-Bryant were in fact considerably different from and substantially less than the quantities of rock estimated by the other bidders.

Using Short's quantities, Murdock-Bryant signed a subcontract with Taylor Pearson on August 1, 1977 providing for the blasting of 34,000 cubic yards of blast rock at a total price of $299,285.The work was to be completed by September 23, 1977.Murdock-Bryant arrived at the site the next day, and after some delays (which appear from the record to have been caused by Taylor Pearson) full-scale operations began on August 19, 1977.By August 30, 1977 all the dirt and "rippable" rock that could be removed without blasting had been removed from the site.Murdock-Bryant, in order to meet its deadline, worked continuously at the site utilizing day and night shifts, using lights, paying additional hourly rent on equipment, and paying overtime to employees.

On September 12, 1977, ETL sent a soil report to Taylor Pearson which indicated that a great deal more rock existed on the site than had been indicated on the original ETL seismic report.Neither Murdock nor Murdock-Bryant received a copy of this report, and they continued to work overtime, encountering vast quantities of rock.

On November 9, 1977, Robert Eason(Eason), Taylor Pearson's project superintendent, discovered, after reviewing survey sheets prepared by Taylor Pearson's surveyor Darrel Edwards(Edwards), that 18,000 cubic yards of rock that had been surveyed had not been included in Taylor Pearson's calculations of the quantity of rock blasted to date, and that Murdock-Bryant had blasted 18,000 cubic yards of rock more than they had billed for.Eason concluded, together with Larry Bryant, that there existed substantially more blast rock on the project than the 34,000 cubic yards quantity upon which the original bid was based, and that this fact explained why the job was progressing so slowly.Murdock-Bryant then requested a meeting with Taylor Pearson representatives.

At the November 14, 1977 meeting, Murdock-Bryant sought assurances that it would be paid for any rock blasted over the five percent variance provided for in the subcontract.After Taylor Pearson refused to give those assurance, Murdock-Bryant walked off the site and filed suit on November 16, 1977 for breach of contract and, alternatively, for rescission and damages in quantum meruit.

The complaint demanded payment for the additional rock which had been blasted and removed, the existence of which plaintiffs contended was known or should have been known to Taylor Pearson and which Taylor Pearson concealed from Murdock-Bryant.Since plaintiffs elected to rescind and recover in equity, the jury verdict awarding plaintiffs $392,615, which was in excess of the maximum sum alleged due, was deemed an advisory jury verdict by the trial court.Following the trial, the trial court entered judgment for plaintiffs, on the theories of fraud, negligent or innocent misrepresentation, mutual mistake and lack of mutuality, and awarded damages in quantum meruit for $273,042, together with costs and attorney's fees of $135,000.This appeal followed.

Appellants raise four issues on appeal:

1) No reasonable person could find the evidence to be clear and convincing that Murdock-Bryant blasted an additional 18,000 cubic yards of rock;

2) No evidence supports the trial court's holding that Robert Wilbur and University Industries are liable for the acts of Taylor Pearson either as joint venturers or on a ratification theory;

3) There was not sufficient evidence to support an award of damages of $273,042.37, which included 10% lost profits of $42,049.30;

4) Murdock-Bryant was improperly awarded attorney's fees pursuant to A.R.S. § 12-341.01.

We will discuss these issues in the same order in which they were raised.

STANDARD OF APPELLATE REVIEW

The parties agree that the standard of proof for the equitable remedy of rescission in a civil fraud action is one of clear and convincing evidence.Appellants contend, however, that where the trial court's burden of proof is by clear and convincing evidence, the reviewing court has the duty to review the evidence and determine if that higher standard was met.In support of their proposition that the standard of appellate review is also by clear and convincing evidence, they cite Poley v. Bender, 87 Ariz. 35, 347 P.2d 696(1959), andIn re Lamfrom's Estate, 90 Ariz. 363, 368 P.2d 318(1962).

Appellants both misunderstand the above cases, and confuse the level of proof required to convince the trier of fact with the standard of review on appeal.In Hopper v. Industrial Commission, 27 Ariz.App.732, 734, 558 P.2d 927, 929(1976), this court observed:

The purpose of the "clear and convincing" standard is to guide the trier of fact in the consideration of the evidence.It is not a test to be applied by an appellate court in passing on the sufficiency of the evidence.Beeler v. American Trust Co., 24 Cal.2d 1, 147 P.2d 583(1944).Therefore the finding of the trier of fact should be sustained if the evidence furnishes reasonable or substantial support therefor.Murillo v. Hernandez, 79 Ariz.1, 281 P.2d 786(1955);Brown v. Karas, [73 Ariz. 62, 237 P.2d 799(1951) ];King v. Uhlmann, 103 Ariz.136, 437 P.2d 928(1968)[Footnote omitted].Even where the more stringent "beyond a reasonable doubt" standard is imposed as a guide for the trier of fact, questions concerning the credibility of the witnesses and the weight and value to be given to the testimony are considered as questions exclusively for the jury, State v. Pieck, 111 Ariz. 318, 529 P.2d 217(1974), and the appellate court in reviewing the sufficiency of the evidence is only concerned with whether there is substantial evidence in support of the verdict.State v. Childs, 113 Ariz. 318, 553 P.2d 1192(1976).

See also, Associated Grocers v. Industrial Commission, 133 Ariz. 421, 652 P.2d 160(App.1982).

On review, therefore, the quantum of probative evidence required to support the trial court's judgment is the same regardless of what burden of proof was required in the trial court.To hold otherwise would abuse the appellate function, for, as this court recently stated:

If an appellate court were to apply different standards of review depending on the burden of proof required for the particular proceeding, it would be substituting its resolution of factual issues for that of the trier of fact.Therefore, no matter what the burden of proof required in the proceedings below, we can only review the evidence to determine if there is substantial evidence to support the conclusion of the trier of fact.

Matter of Appeal in Maricopa County, Etc., 132 Ariz. 486, 488, 647 P.2d 184, 186(App.1982).

SUFFICIENCY OF THE EVIDENCE TO SUPPORT A FINDING THAT MURDOCK-BRYANT BLASTED AN ADDITIONAL18,000 CUBIC YARDS OF BLAST ROCK

We hold that there was sufficient evidence to support the trial court's finding that Murdock-Bryant blasted an additional 18,000 cubic yards of blast rock.The...