Scherer Const., LLC v. Hedquist Const., No. 00-106
Citation | 2001 WY 23,18 P.3d 645 |
Decision Date | 01 March 2001 |
Docket Number | No. 00-106, No. 00-107. |
Parties | SCHERER CONSTRUCTION, LLC, a Wyoming limited liability company, Appellant (Defendant), v. HEDQUIST CONSTRUCTION, INC., a Wyoming corporation, Appellee (Plaintiff). Hedquist Construction, Inc., a Wyoming corporation, Appellant (Defendant), v. Scherer Construction, LLC, a Wyoming limited liability company, Appellee (Plaintiff). |
Court | United States State Supreme Court of Wyoming |
Representing Scherer Construction, LLC: Mark W. Gifford, Casper, WY. Argument by Mr. Gifford.
Representing Hedquist Construction, Inc.: John H. Robinson, Casper, WY. Argument by Mr. Robinson.
Before LEHMAN, C.J., and THOMAS1, GOLDEN, HILL, and KITE, JJ.
[¶ 1] These consolidated cases concern a dispute arising out of a subcontractor agreement. In case No. 00-106, the subcontractor, Scherer Construction, LLC, (Scherer) appeals the district court's grant of summary judgment on its claim for breach of contract including the implied covenant of good faith and fair dealing by the main contractor, Hedquist Construction, Inc. (Hedquist), in soliciting and obtaining a change order from the City of Casper. In Case No. 00-107, Hedquist appeals from the district court's determination that it had failed to fully compensate Scherer for work actually performed under the subcontract and denying Hedquist a set-off. We reverse that portion of the district court's decision in Case No. 00-106 relating to Scherer's claim for breach of the implied covenant of good faith and fair dealing. In Case No. 00-107, we conclude that the district court's findings and conclusions are not clearly erroneous and affirm.
[¶ 2] In Case No. 00-106, Scherer presents the following issue for consideration:
Did the trial court err in granting summary judgment in favor of [Hedquist] and against [Scherer] with respect to [Scherer's] claim for breach of contract, including its claim for breach of the implied covenant of good faith and fair dealing?
Hedquist responds with the following statement:
Whether the trial court committed reversible error in granting summary judgment where the undisputed facts supported Hedquist's contention that no breach of contract had occurred, and where Scherer submitted no facts or evidence supporting a cause of action for breach of the implied covenant of good faith and fair dealing.
In Case No. 00-107, Hedquist presents a single issue for consideration:
Was the trial court's finding that Hedquist failed to give Scherer reasonable notice to repair its defective work, clearly erroneous or incorrect as a matter of law, considering the parties' unambiguous contract provisions regarding Scherer's duty to perform its work in a timely and workmanlike manner, and the undisputed evidence regarding numerous requests for Scherer to repair said defective work?
Scherer counters with a short statement of the issue in the form of a question:
Did the trial court commit clear error in awarding a judgment in favor of Scherer on its claim for amounts due for work performed on the Project?
[¶ 3] Pursuant to our standard of review for summary judgments, the recitation of facts is from the vantage point most beneficial to the party who opposed the motion, awarding that party all favorable inferences that may be drawn from those facts. S & G Investors, LLC v. Blackley, 994 P.2d 941, 943 (Wyo.2000).
[¶ 4] Hedquist was the main contractor for the City of Casper's East Second Street Reconstruction Project (the Project). Scherer was the successful bidder for the paving subcontract. The Project's specifications called for the use of "performance graded" asphalt, which was a special rubberized asphalt. Approximately $340,000.00 of Scherer's total $443,802.43 bid was related to the costs associated with the special rubberized asphalt. Pursuant to the requirements of the Project, Scherer expended in excess of $35,000.00 on special equipment and materials. [¶ 5] The contract between Hedquist and the City of Casper (the Main Contract) contained the following clauses:
The subcontract agreement between Hedquist and Scherer, which was entered into on April 8, 1998, contains parallel language:
[¶ 6] At the start of the Project, the use of concrete instead of asphalt had not been considered because of the presumed higher costs associated with concrete. However, shortly before the paving phase of the Project was to commence, discussions regarding a possible switch to concrete took place between Hedquist, the City of Casper, and the Project Engineer. According to a representative of the City, Hedquist initiated the discussions. The parties concluded that concrete would not, in fact, be cost prohibitive. On June 3, 1998, Hedquist sent a letter to the Project Engineer detailing a cost comparison between concrete and asphalt. On the same day, the Project Engineer sent a letter to the City detailing Hedquist's proposal. In a June 12 letter, Hedquist stated that it felt "that the concrete paving alternate would be a positive partnering/value-engineering concept for this project."
[¶ 7] On June 19, 1998, the City Engineer and Public Services Director recommended the issuance of a change order pursuant to the Main Contract allowing the substitution of concrete for asphalt paving on the Project. A change order for the substitution was approved by the City on the same day. The net effect of the change from asphalt to concrete paving was to reduce the value of Scherer's subcontract from $448,240.45 to $105,093.81. In addition, the specialized materials and equipment Scherer had already purchased in anticipation of asphalt paving were rendered superfluous by the change.
[¶ 8] On July 10, 1998, Scherer filed this action against Hedquist. Among other causes of action not relevant to this appeal, Scherer claimed that Hedquist breached the subcontract and an implied covenant of good faith and fair dealing. In response, Hedquist moved for summary judgment. In opposition to Hedquist's motion, Scherer made three arguments in support of its action. First, Scherer contended, pursuant to § 205 of the Restatement (Second) of Contracts (1981), that there is an implied covenant of good faith and fair dealing in every contract. Scherer argued that Hedquist's active solicitation of the change order breached that implied covenant. Second, Scherer urged the adoption of the cardinal change doctrine, which recognizes that extraordinary changes can constitute a breach of contract despite the presence of a changes clause. See, e.g., Allied Materials & Equipment Company v. United States, 215 Ct.Cl. 406, 569 F.2d 562 (1978)
. Finally, Scherer contended that summary judgment was inappropriate because Hedquist's motion was supported by a perjurious affidavit. Scherer alleged that the vice president of Hedquist's affidavit made untrue statements regarding Hedquist's role in soliciting the change order. Scherer concluded that the motion for summary judgment should be denied since it was largely based on the statements put forth in that affidavit.
[¶ 9] On July 21, 1999, the district court issued a decision letter granting Hedquist's motion for summary judgment based on the following conclusions:
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