Spradlin Rock Prods., Inc. v. Pub. Util. Dist. No. 1 of Grays Harbor Cnty.

• Decision Date: 01 November 2011
• Docket Number: No. 40415–0–II.,40415–0–II.
• Citation: 266 P.3d 229,164 Wash.App. 641
• Parties: SPRADLIN ROCK PRODUCTS, INC., a Washington corporation, Respondent, v. PUBLIC UTILITY DISTRICT NO. 1 OF GRAYS HARBOR COUNTY, a municipal corporation, Appellant.
• Court: Washington Court of Appeals

164 Wash.App. 641

266 P.3d 229

SPRADLIN ROCK PRODUCTS, INC., a Washington corporation, Respondent,

v.PUBLIC UTILITY DISTRICT NO. 1 OF GRAYS HARBOR COUNTY, a municipal corporation, Appellant.

No. 40415–0–II.

Court of Appeals of Washington, Division 2.

Nov. 1, 2011.

Catherine Wright Smith, Smith Goodfriend PS, Seattle, WA, Arthur Abram Blauvelt III, Ingram Zelasko & Goodwin LLP, Richard A. Pitt, Grays Harbor PUD, Aberdeen, WA, for Appellant.

Jon Charles Parker, Attorney at Law, Hoquiam, WA, Kenneth Wendell Masters, Shelby R. Frost Lemmel, Masters Law Group PLLC, Bainbridge Island, WA, for Respondent.

VAN DEREN, J.

[164 Wash.App. 645] ¶ 1 The Grays Harbor County Public Utilities District (PUD) appeals a partial summary judgment order and a subsequent jury award in excess of $4 million in favor of Spradlin Rock Products, Inc. The PUD contends that the trial court erred in (1) prohibiting the PUD from challenging rates and charges on Spradlin's invoices at trial; (2) preventing it from presenting evidence contradicting the rates and charges on Spradlin's invoices at trial; (3) giving a jury instruction reiterating the trial court's summary judgment order; (4) denying its motion to dismiss Spradlin's lost profits claim; (5) denying its request for a special verdict form identifying the jury's award on each of Spradlin's claims; and (6) awarding Spradlin prejudgment interest. Because the trial court properly ordered partial summary judgment and the PUD's other contentions lack merit, we affirm.

FACTS

I. Background

¶ 2 Tim and Terese Spradlin own Spradlin,¹ a company that hauls rocks and builds roads in Grays Harbor County. Spradlin has performed work for the PUD since 2000. In December 2006, Spradlin entered into a small works contract ² with the PUD. The small works contract provided that Spradlin would “furnish labor, material and equipment to provide trenching, backfilling, and excavation, etc. within the district service area, during the years 2007 and 2008, for a total cost not to exceed $200,000.00.” Clerk's Papers (CP) at 397 (capitalization omitted). In exchange for these services, the PUD agreed to pay Spradlin $52.90 “weighted cost per hour.” CP at 397.

¶ 3 The small works contract listed four pieces of Spradlin's equipment with set hourly rates that included the equipment operator costs. If a small works project required use of equipment not included in the contract, Spradlin and the PUD agreed to negotiate rates for that equipment. Tim and Supervisor Kirk Anderson were the only Spradlin employees that operated equipment for the small works projects; both were salaried employees, exempt from prevailing wage laws.

[164 Wash.App. 647] ¶ 4 On December 2, 2007, a massive windstorm struck Grays Harbor County, leaving 98 percent of its residents without electricity. The PUD requested that Spradlin begin work clearing roads to provide repair crews access to damaged power lines. The parties did not specify Spradlin's compensation, but the PUD orally agreed to cover Spradlin's expenses plus a reasonable profit. Spradlin had already reached its $200,000 limit for small works projects before this December 2007 storm.

¶ 5 Spradlin immediately began work clearing timber, building access roads, and delivering rock. Because of the scope of the emergency work, Spradlin had to hire additional drivers and equipment operators and lease additional trucks and equipment. After clearing roads in the Grays Harbor area for approximately three days, the PUD asked Spradlin to begin work on the Think of Me Hill and Aberdeen Lake access roads. Spradlin completed work at Aberdeen Lake in late December 2007 and completed work at Think of Me Hill on March 9, 2008.

¶ 6 On December 10, 2007, the PUD passed Resolution No. 4325, declaring an emergency under RCW 39.04.280(1)(c), (1)(e), (2)(b) ³ and allowing the PUD to bypass the notice and competitive bidding requirements for public works projects under former RCW 54.04.070.⁴ In late January 2008, while Spradlin was still working at Think of Me Hill, the PUD requested that Spradlin also begin work on a project in the Neilton Point area. ⁵ It appears that the PUD did not submit the Neilton project through the notice and bidding requirements of former RCW 54.04.070 before awarding the project to Spradlin.

¶ 7 On February 4, 2008, Spradlin submitted its first three invoices, all dated January 31, for storm cleanup performed between December 3 and December 16, 2007 on Powell and Highline Roads, the area around the city of Grays Harbor, and Think of Me Hill. The PUD rejected these Spradlin invoices and, because it was seeking reimbursement from the Federal Emergency Management Agency (FEMA), it requested that Spradlin resubmit the three invoices in a different format. The PUD provided sample invoices from other contractors to aid Spradlin in reformatting its invoices to comply with FEMA requirements and it also requested that Spradlin charge the small works rates for the four pieces of equipment listed in Spradlin's small works contract, which Spradlin agreed to do. The PUD did not raise any other issues with the invoices or with the work Spradlin performed.

¶ 8 Spradlin adjusted its rates for the four pieces of equipment listed on the small works contract and submitted a more detailed set of three invoices to the PUD. The PUD again rejected the Spradlin invoices for lack of detail and PUD Operations Manager Ed Pauley met with Tim to discuss proper invoice formatting. In mid-February 2008, Spradlin submitted four invoices to the PUD, consolidating the Spradlin work performed from December 3 to December 16 into the first two invoices and adding two more billing invoices for the periods December 17 through December 23 and December 24 through December 30.

[164 Wash.App. 649] ¶ 9 In the third submission of a set of four invoices, Spradlin listed each piece of equipment Spradlin used, the number of hours it used each piece of equipment, and the hourly rate Spradlin charged the PUD for the equipment. The third submission of invoices also listed the number of hours each employee worked and the hourly labor rate being charged to the PUD, including regular time, overtime, and double time rates. Additionally, the invoices indicated that Spradlin charged the PUD a “[f]uel [s]urcharge” and a “24/7 [o]perating [e]x[p]enses and [o]verhead” charge. CP at 64–65.

¶ 10 The PUD approved the third submission of invoices and paid Spradlin on February 27, 2008, February 29, 2008, and March 10, 2008 a total sum of $1,578,051.12. The PUD paid these invoices with the understanding that it could review additional documentation to check for any mistakes in Spradlin's billing, but the PUD did not object to Spradlin's labor rates, equipment rates, fuel surcharge, or operating expenses surcharge listed on the invoices. At Pauley's deposition, Spradlin's trial attorney asked:

Question: All right. So did you approve [Spradlin's January 31, 2008; February 22, 2008; and February 27, 2008 invoices] with the understanding that any backup material that he had would be provided upon request ?

Answer: Yes, as—because of—my understanding was—I guess his wife does the bookkeeping and he was—I don't know. Yes.

Question: So whatever concern you had about amounts, what did you do about it?

Answer: Again, like I said, without the bills being broken down or itemized with the backup, I figured it is one of those things, if somebody made a mistake, it could go back and forth.

Question: But you didn't question the amount. You didn't tell them this is too much, did you ?

Answer: No, because if he supplies the right documentation, it should come out what he says or won't, I mean bottom line.

CP at 164–65 (emphases added) (footnotes omitted).

¶ 11 On March 17, 2008, FEMA denied the PUD's claims for reimbursement. On March 21, Pauley wrote “[d]d not pay” on all Spradlin unpaid invoices. CP at 140. The PUD terminated its contract with Spradlin on April 3, 2008, without paying any remaining outstanding invoices. CP 151.

II. Procedural Facts

¶ 12 On October 9, 2008, Spradlin filed a breach of contract claim against the PUD in Grays Harbor County Superior Court. Spradlin moved for partial summary judgment, which the trial court granted on February 10, 2010. The summary judgment order stated:

1. Following the December 2, 2007 storm [Spradlin] and [the PUD] entered into a contract under which [Spradlin] was to restore, build, and repair roads so that [the PUD] and its agents could restore electricity to the Grays Harbor County area. [Spradlin]'s crews provided crews seven days a week around the clock for more than 120 days for the [PUD] on various projects relating to storm damage. At the beginning of the work[,] the price terms for the work were left open.

2. It is undisputed that [the PUD] later paid invoices submitted by [Spradlin] for work performed and that the invoices contained a detailed breakdown of the charges for equipment, labor, materials, overhead, fuel surcharges, and sales tax. At no time did the [PUD] complain about or dispute the rates or quality of work done by Spradlin ... before the termination of the contract.

3. As evidenced by the negotiation, modification, and subsequent payment of invoices [ ] a valid contract existed between [Spradlin] and [the PUD] at the prices and rates detailed in the paid written invoices. The charges, and rates contained in the written invoices were in effect during the entire period of [Spradlin]'s performance.

4. [The PUD] has not presented evidence of any genuine issue of material fact regarding course of dealing and/or trade usage. No reasonable fact-finder could determine that the parties intended to rely upon a course of dealing on the small works contracts with regard to the incredible situation that occurred in December 2007.

CP at 329–30.

¶ 13 The trial court also indicated that its partial summary judgment order prevented the PUD from arguing that Spradlin's billed rates...