Western Indus. and Environmental Services, Inc. v. Kaldveer Associates, Inc.

• Decision Date: 23 December 1994
• Docket Number: No. 20764,20764
• Citation: 887 P.2d 1048,126 Idaho 541
• Parties: WESTERN INDUSTRIAL AND ENVIRONMENTAL SERVICES, INC., a Minnesota corporation, Plaintiff-Appellant, v. KALDVEER ASSOCIATES, INC., a Washington corporation, and Jeffrey A. Arneberg, Defendants-Respondents. Boise, September 1994 Term
• Court: Idaho Supreme Court

Page 1048

887 P.2d 1048

126 Idaho 541

WESTERN INDUSTRIAL AND ENVIRONMENTAL SERVICES, INC., a Minnesota corporation, Plaintiff-Appellant, v. KALDVEER ASSOCIATES, INC., a Washington corporation, and Jeffrey A. Arneberg, Defendants-Respondents.

No. 20764.

Supreme Court of Idaho,

Boise, September 1994 Term.

Dec. 23, 1994.

Ellis, Brown & Sheils Chtd., Boise, for appellant. Allen B. Ellis argued.

Salladay, Harrigfeld & Day, Boise, for respondents. G. Lance Salladay argued.

TROUT, Justice.

I. BACKGROUND AND PRIOR PROCEEDINGS

This case arose out of a contractual dispute between Western Industrial and Environmental Services, Inc. (Western), and Hagadone Hospitality Company (Hagadone). Western had been hired by Hagadone to dredge the bottom of Lake Coeur d'Alene so that Hagadone's golf course "floating green" would be able to be moved across the water without the mechanical devices hitting the lake bottom. The contract between Western and Hagadone called for Western to dredge the lake bottom by a certain date so the floating green could be constructed and ready for the grand opening of the Coeur d'Alene golf course. The contract provided that time was of the essence. As part of the agreement, Hagadone was required to provide a holding pond for the dredged water and refuse from the lake bottom. The purpose of the holding ponds and infiltration system was to satisfy environmental laws which prohibited repumping the water and refuse directly back into the lake. Hagadone constructed the holding pond by converting a golf course water hazard according to a design furnished by Kaldveer Associates.

Western commenced work on February 25, 1991. In order to meet the contract completion date of March 17, 1991, Western worked around the clock. There were many delays during the dredging operation. These were caused in part by the inadequate equipment furnished by Western. Another factor which caused delay was the necessity of modifying the holding ponds and infiltration system. Hagadone and Western renegotiated the contract completion date twice and eventually moved it back until March 28, 1991. On March 28, after two extensions, the job was far from being completed and Hagadone notified Western to cease operations and dismissed Western from the job.

Western filed an action against Hagadone claiming breach of the contract between Hagadone and Western, and pursuant to a clause in that contract the case was sent to binding arbitration. Western asserted in its arbitration claim that Hagadone had breached the contract with Western by negligently designing and constructing a defective and inadequate holding pond and infiltration bed causing Western to be unable to perform under the contract, and that Hagadone had breached the contract by wrongfully terminating Western from the project without allowing due time to complete. During the course of the arbitration Western sought damages permitted by the contract for mobilization and demobilization of dredging equipment, 107 hours of down time, pump repairs, job overhead, labor, materials and lost profits on the project. Hagadone counterclaimed as part of the arbitration proceeding seeking damages incurred as a result of Western's breach.

The arbitrator found that Western had breached its contract with Hagadone without any excuse and that, even with the alleged failure of the holding pond and infiltration system, Western would have been unable to complete the contract within the terms of the contract due to its own delays and inadequacies.

[126 Idaho 543] Thus, the arbitrator made an award for Hagadone of $130,065.51 on its counterclaim based upon the finding that Western had breached its contract with Hagadone. The arbitrator also made an offsetting award to Western of $68,442.52 based exclusively on the express terms of the contract.

Following the arbitration, Western stipulated to the entry of judgment in district court for the difference between the two awards in the sum of $61,622.99. Immediately following the entry of judgment, Western filed a civil lawsuit against Kaldveer. Western alleged professional malpractice and negligence in the design of the holding pond and infiltration beds and sought damages identical to those which had been previously sought against Hagadone in arbitration with an additional amount for attorney fees and damages paid to Hagadone.

In the district court, Kaldveer moved to dismiss the case and alternatively for summary judgment on the grounds that Western's claims were barred by the doctrines of res judicata and collateral estoppel, and that the claimed economic damages were not recoverable under a claim of negligence or professional malpractice. The district court granted Kaldveer's motion for summary judgment finding that both collateral estoppel (issue preclusion) and res judicata (claim preclusion) barred the suit. The district court also found that purely economic damages were not recoverable in a professional negligence case. The suit was thereafter dismissed and it is from that order that Western now appeals.

II. STANDARD OF REVIEW

This Court, when reviewing the grant of summary judgment, reviews all the pleadings, depositions and admissions on file together with the affidavits, if any, to determine whether there is a genuine issue as to any material fact, and whether the moving party is entitled to a judgment as a matter of law. Harris v. Department of H & W, 123 Idaho 295, 298, 847 P.2d 1156, 1159 (1992); I.R.C.P. 56(c). In doing so we construe all facts liberally in favor of the party opposing the motion, and will draw all reasonable inferences from the record in favor of the non-moving party. Id.

III. ISSUES PRESENTED

Western presents the following issues for our determination on appeal:

(1) Were defendants agents of Hagadone so as to justify the invocation of res judicata as a defense?

(2) In the alternative, is Western's status as an agent or independent contractor a material issue of fact not amenable to summary adjudication?

(3) Are "economic damages" a recoverable element of damage in an action arising out of the professional negligence of an engineer?

In the statement of the issues Western does not distinguish between the doctrines of res judicata and collateral estoppel, which have decidedly different applications. See Diamond v. Farmers Group, Inc., 119 Idaho 146, 804 P.2d 319 (1990); Aldape v. Akins, 105 Idaho 254, 668 P.2d 130 (Ct.App.1983). In its briefing, however, Western discusses both doctrines and it is clear that the district court concluded that both applied and both would bar this suit. Because we conclude that the district court was correct in granting summary judgment for Kaldveer on the basis of collateral estoppel, we need not address the other issues presented.

IV. A JUDGMENT BASED UPON AN ARBITRATION AWARD IS A FINAL JUDGMENT

Western contends that because an arbitration proceeding lacks the formal elements of an adjudicatory proceeding, an arbitration award cannot be a final judgment for collateral estoppel purposes and, therefore, Kaldveer may not assert collateral estoppel here as a bar. Under the particular circumstances presented in this appeal, we conclude that there has been a final judgment for the purposes of a collateral estoppel analysis.

The Uniform Arbitration Act is found at I.C. §§ 7-901-922. In particular it provides that upon application of a party to an arbitration, the court shall confirm an arbitration award. I.C. § 7-911. Thereafter, § 7-914 provides in pertinent part that, "[U]pon the granting of an order confirming, modifying or correcting an award, judgment or decree shall be entered in conformity therewith and be enforced as any other judgment or decree." While we have not been called upon previously to determine the binding effect of an arbitration award for the purposes of res judicata or collateral estoppel, we believe that issue is easily determined in this instance based upon a plain reading of the statute. I.C. § 7-914 clearly...