United States, for the United Statese & Benefit of TBH & Assocs., LLC v. Wilson Constr. Co.

• Decision Date: 08 August 2013
• Docket Number: No. 12–cv–00133–HU.,12–cv–00133–HU.
• Citation: 965 F.Supp.2d 1215
• Parties: UNITED STATES of America, for the use and benefit of TBH & ASSOCIATES, LLC, a Washington limited liability company, Plaintiff, v. WILSON CONSTRUCTION CO., an Oregon corporation; and Western Surety Company, a South Dakota corporation; Defendants.
• Court: U.S. District Court — District of Oregon

965 F.Supp.2d 1215

UNITED STATES of America, for the use and benefit of TBH & ASSOCIATES, LLC, a Washington limited liability company, Plaintiff,

v.WILSON CONSTRUCTION CO., an Oregon corporation; and Western Surety Company, a South Dakota corporation; Defendants.

No. 12–cv–00133–HU.

United States District Court, D. Oregon.

Aug. 8, 2013.

Joseph A. Tripi, The Law office of Joseph A. Tripi, P.C., Portland, OR, for Plaintiff.

Paul C. Berg, David P. Morrison, Cosgrave Vergeer Kester LLP, Portland, OR, for Defendants.

ORDER ON DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT

HUBEL, United States Magistrate Judge:

This contract dispute relates to construction of the McNary–John Day Transmission Line (the “Project”) by the Bonneville Power Administration (“BPA”). The defendant Wilson Construction Co. was general contractor for the Project. The defendant Western Surety Company issued a surety bond for Wilson relating to the Project. (The defendants are referred to collectively herein as “Wilson.”) TBH & Associates (“TBH”) was a subcontractor of Wilson's for purposes of “preparing foundations and footings for the transmission towers on both Phase I and Phase II of the Project.” Dkt. # 36, p. 1. TBH alleges Wilson failed to pay certain sums owed to TBH for work performed on Phase II of the Project. See Dkt. # 1.

The case is before the court on Wilson's motion for partial summary judgment. Dkt. # 45. Wilson seeks a judgment that it is not liable for amounts TBH claims it is owed under Change Orders 8, 14, 15, and 16, and summary judgment dismissing TBH's quantum meruit claim. Id. The motion is fully briefed. The court heard oral argument on the motion on June 13, 2013.

SUMMARY JUDGMENT STANDARDS

Summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c)(2). In considering a motion for summary judgment, the court “must not weigh the evidence or determine the truth of the matter but only determine whether there is a genuine issue for trial.” Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th Cir.2002) (citing Abdul–Jabbar v. General Motors Corp., 85 F.3d 407, 410 (9th Cir.1996)).

The Ninth Circuit Court of Appeals has described “the shifting burden of proof governing motions for summary judgment” as follows:

The moving party initially bears the burden of proving the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof at trial, the moving party need only prove that there is an absence of evidence to support the non-moving party's case. Id. at 325, 106 S.Ct. 2548. Where the moving party meets that burden, the burden then shifts to the non-moving party to designate specific facts demonstrating the existence of genuine issues for trial. Id. at 324, 106 S.Ct. 2548. This burden is not a light one. The non-moving party must show more than the mere existence of a scintilla of evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The non-moving party must do more than show there is some “metaphysical doubt” as to the material facts at issue. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In fact, the non-moving party must come forth with evidence from which a jury could reasonably render a verdict in the non-moving party's favor. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. In determining whether a jury could reasonably render a verdict in the non-moving party's favor, all justifiable inferences are to be drawn in its favor. Id. at 255, 106 S.Ct. 2505.

In re Oracle Corp. Securities Litigation, 627 F.3d 376, 387 (9th Cir.2010).

CHOICE OF LAW

Portions of Wilson's motion for partial summary judgment require examination of the language of the contract between TBH and Wilson. The prime contract between Wilson and BPA is governed by federal contract law, which applies traditional common law principles. See, e.g., Minidoka Irr. Dist. v. U.S. Dept. of Interior, 154 F.3d 924, 926 (9th Cir.1998) (citing First Interstate Bank v. S.B.A., 868 F.2d 340, 343 n. 2 (9th Cir.1989)); Sam Macri & Sons, Inc. v. U.S. ex rel. Oaks Constr. Co., 313 F.2d 119, 124 n. 1 (1963) (citing, inter alia, Ivanhoe Irr. Dist. v. McCracken, 357 U.S. 275, 289, 78 S.Ct. 1174, 1182, 2 L.Ed.2d 1313 (1958)).

However, “a subcontract, being between private parties, is governed by state law[.]” Sam Macri & Sons, 313 F.2d at 124 n. 1. But which state's law should the court apply? TBH is a Washington corporation, while Wilson is an Oregon corporation. See Dkt. # 1, ¶¶ 2 & 3. The Project ran from BPA's McNary Substation in Oregon, across the Columbia River, and ending at BPA's John Day Substation in Washington. The subcontract between TBH and Wilson does not appear to contain a choice-of-law provision, and is not clear from the subcontract, which only specifies “Segment Miles 42–79,” whether TBH's work was performed only in Oregon, only in Washington, or in both states. See Dkt. # 47–1, the Subcontract.

Judge Anna Brown of this court explained how the court approaches this type of choice-of-law issue in Home Poker Unlimited, Inc. v. Cooper, 2009 WL 5066653 (D.Or. Dec. 15, 2009):

“When a federal court sitting in diversity hears state law claims, the conflicts laws of the forum state are used to determine which state's substantive law applies.” 389 Orange St. Partners v. Arnold, 179 F.3d 656, 661 (9th Cir.1999). Under Oregon conflict-of-law rules, the Court must determine as a threshold issue whether there is a material difference between Oregon substantive law and the law of the other forum. Waller v. Auto–Owners Ins. Co., 174 Or.App. 471, 475, 26 P.3d 845 (2001). If there is a material difference, the Court must determine whether both states have substantial interests in having their laws applied. Pulido v. United States Parcel Serv. Gen. Servs. Co., 31 F.Supp.2d 809, 813 (D.Or.1998) (citing Dabbs v. Silver Eagle Mfg. Co., 98 Or.App. 581, 583–84, 779 P.2d 1104 (1989)). Finally, if “both states have substantial interests, the Oregon Supreme Court has adopted the ‘most significant relationship’ approach of the Restatement (Second) Conflict of Laws.” Id. (citation omitted).

Home Poker, 2009 WL 5066653, at *3;see Spirit Partners, LP v. Stoel Rives LLP, 212 Or.App. 295, 301, 157 P.3d 1194, 1198 (2007) (“The threshold question in a choice-of-law problem is whether the laws of the different states actually conflict.”). If there is no material difference between the law of the forum state—here, Oregon—and the substantive law of the other state in question—here, Washington—then the law of the forum state applies. See Angelini v. Delaney, 156 Or.App. 293, 300, 966 P.2d 223, 227 (1998) (citations omitted). If a party proposes application of the law of a state other than the forum state, then that party must identify material differences between the law of the forum state and the law of the other forum. See Spirit Partners, 212 Or.App. at 301, 157 P.3d at 1198.

In the present case, neither party argues Washington law should be applied. Wilson simply declares that Oregon law controls TBH's breach-of-contract claim, Dkt. # 36, p. 7, and TBH apparently agrees, citing Oregon case law in support of its arguments, see Dkt. # 53, p. 10. The Oregon and Washington courts approach contract interpretation somewhat differently.

In Oregon, the court first looks to see if the language of the contract is clear on its face, considering both the text in question and its context within the contract. If so, then no further analysis is needed. See Yogman v. Parrott, 325 Or. 358, 937 P.2d 1019, 1021 (1997). If the contract provision at issue is ambiguous, then the court examines extrinsic evidence of the parties' intent. Id., 325 Or. at 363, 937 P.2d at 1022. the absence of extrinsic evidence of intent, the court turns to basic common-law tenets of contract construction. Id.

Washington courts take the view that “the meaning of a writing can almost never be plain except in a context.” Hearst Comms., Inc. v. Seattle Times Co., 154 Wash.2d 493, 502, 115 P.3d 262, 266 (2005) (internal quotation marks, citations omitted). Thus, in Washington, the court may consider ab initio the representations made and circumstances surrounding execution of the contract, the parties' subsequent conduct and course of dealing, usages of trade, and other extrinsic evidence, but only “to determine the meaning of specific words and terms used and not to show an intention independent of the instrument or to vary, contradict or modify the written word.” Id., 154 Wash.2d at 503, 115 P.3d at 267 (emphasis in original; internal quotation marks, citations omitted); Spectrum Glass Co. v. Public Utility Dist. No. 1 of Snohomish Cty., 129 Wash.App. 303, 311, 119 P.3d 854, 858 (2005). “Such evidence is admissible regardless of whether the contract language is deemed ambiguous.” Spectrum Glass, 129 Wash.App. at 311, 119 P.3d at 858. Nevertheless, Washington courts still focus on the language of the contract itself, “follow[ing] the objective manifestation theory of contracts ..., [and] attempt[ing] to determine the parties' intent by focusing on the objective manifestations of the agreement, rather than on the expressed subjective intent of the parties.” Id. “[T]he subjective intent of the parties is generally irrelevant if the intent can be determined from the actual words used.... We do not interpret what was intended to 4 be written but what was written.” Id., 154 Wash.2d at 504, 115 P.3d at 267 (citations omitted).

Importantly, if interpretation of the contract does not depend upon extrinsic evidence, or if “the extrinsic evidence leads to only one reasonable inference,” then interpretation of the contract provision at issue is a matter of law that...