Weston County Hosp. Joint Powers Bd. v. Westates Const. Co.

• Decision Date: 20 November 1992
• Docket Number: No. 90-99,90-99
• Citation: 841 P.2d 841
• Parties: WESTON COUNTY HOSPITAL JOINT POWERS BOARD, Appellant (Plaintiff), v. WESTATES CONSTRUCTION COMPANY, Appellee (Defendant).
• Court: Wyoming Supreme Court

Page 841

841 P.2d 841

WESTON COUNTY HOSPITAL JOINT POWERS BOARD, Appellant (Plaintiff), v. WESTATES CONSTRUCTION COMPANY, Appellee (Defendant).

No. 90-99.

Supreme Court of Wyoming.

Nov. 20, 1992.

Raymond B. Hunkins, Jones, Jones, Vines & Hunkins, Wheatland, for appellant.

Joseph E. Hallock, Banks, Johnson, Wolfe & Hallock, Gillette, and John J. Delaney, Banks, Johnson, Johnson, Colbath & Huffman, Rapid City, S.D., for appellee.

Before MACY, C.J., and THOMAS, CARDINE, URBIGKIT ^* and GOLDEN, JJ.

THOMAS, Justice.

The set of questions that the court must determine in resolving this appeal is:

1. Whether a joint powers board, created pursuant to the provisions of the Wyoming Joint Powers Act, Wyo.Stat. §§ 16-1-102 to -109 (1990), is a "political subdivision" as to which the requirements of Article 16, Section 7 of the Constitution of the State of Wyoming must be met before a bill, claim, account or demand can be audited, allowed, or paid?

2. Whether a joint powers board is a "governmental entity" so that a claimant must satisfy the provisions of Wyo.Stat. § 1-39-113 (1988)?

3. Whether, assuming that a joint powers board is a "political subdivision" or a "governmental entity," the record demonstrates satisfaction of the constitutional or statutory requirements?

The trial court ruled that the joint powers board was not a "political subdivision;" there had been no violation of the provisions of Wyo.Stat. § 1-39-113 (1988) because the conduct of arbitration proceedings was a condition precedent to the accrual of any claim; the requirements of § 1-39-113 were substantially satisfied; and the award of the arbitrators should be confirmed. Consistently with the trial court, we hold that a joint powers board is not a "political subdivision;" a joint powers board is a "governmental entity" and the provisions of § 1-39-113 must be satisfied; in the circumstances of this case in which the action was instituted by the joint powers board, a waiver of compliance with the notice requirements must be acknowledged; and the award of the arbitrators appropriately and correctly was confirmed. We affirm the decision of the trial court.

Weston County Hospital Joint Powers Board (Board), as appellant, frames these issues for this appeal:

I. Whether the district court had jurisdiction to confirm an arbitration award on a claim against a Wyoming governmental entity where the claimant neglected and refused to comply with the requisite procedures mandated by the Wyoming Constitution and the Wyoming Governmental Claims Act?

II. Whether the district court erred in confirming an arbitration award against a Wyoming public entity where the claimant failed to provide documentation sufficient for the public entity to examine the claim by means of a constitutionally contemplated and court-ordered audit?

III. Whether the district court erred in confirming an arbitration award which contained manifest mistakes of, and disregard for, Wyoming law, resulting in an award which exceeded the arbitration panel's powers?

IV. Whether the district court erred in failing to modify the arbitration award to incorporate the installment payment provisions of the Wyoming Governmental Claims Act?

Westates Construction Company (Westates), as appellee and the defendant in the court below, sets forth this statement of the issues:

I. Whether the district court had jurisdiction to confirm an arbitration award in favor of a contractor and against a joint powers board?

A. Whether compliance with Article 16, Section 7, of the Wyoming Constitution, pertaining to political subdivisions, is a prerequisite to the arbitration of a contractor's claim against a hospital joint powers board?

B. Whether the 1984 Wyoming Governmental Claims Act, W.S. § 1-39-101, et seq., prohibits arbitration of damage claims between a contractor and a joint powers board even though contract documents prepared by the joint powers board require arbitration to resolve such claims?

C. Whether Westates' claims were timely filed?

II. Whether the district court erred in confirming the arbitration award?

III. Whether the district court erred in refusing to modify the award to incorporate the installment provisions of the Governmental Claims Act?

The Board was created pursuant to the provisions of the Wyoming Joint Powers Act, Wyo.Stat. §§ 16-1-102 to -109 (1990), by the towns of Upton and Newcastle together with Weston County. There is no dispute that these three entities all are "political subdivisions." Westates, a privately owned Wyoming corporation, in August of 1984, entered into an agreement with the Board pursuant to which Westates was to construct a public hospital in Newcastle. The contract, which was drafted by the Board, provided that Westates was to pursue any and all disputes arising from the contract through arbitration proceedings before being allowed access to the courts.

The hospital construction project was substantially completed in May of 1986 and, in October of that year, Westates sought additional compensation of $682,369.59. Westates presented its claim for this amount in an unverified and unsigned letter that was sent by its attorney to a member of the Board. The claim for additional compensation was refused, and Westates, pursuant to the agreement, sought arbitration through the American Arbitration Association.

Within a short time, the Board filed an action in the district court seeking to quash further proceedings. The Board contended that the provisions of the Wyoming Governmental Claims Act, Wyo.Stat. §§ 1-39- 101 to -120 (1988), inhibited the enforcement of the arbitration clause incorporated in the contract. The district court, after considering the arguments of the parties, ruled that the Wyoming Governmental Claims Act did not prevent enforcement of the arbitration clause and that arbitration was appropriate under the circumstances. The Board appealed that ruling to this court, but its appeal was dismissed in June of 1988 on the ground that the order of the district court was not a final order, as defined in Wyo.R.App.P. 1.05.

After dismissal of its appeal, the Board requested an audit of Westates' records. When Westates refused, the Board filed an "Application for Order Authorizing Conduct of an Audit" in the district court. The district court, in accordance with the stipulation presented by the parties, incorporated that request into an order, and the Board's independent auditor accomplished the audit. The end result of the audit was that all but $4,000 of the additional compensation demanded by Westates was rejected.

The arbitration proceedings were conducted in February and May of 1989. After its case-in-chief was completed, Westates presented a revised, and diminished, summary of its claim so as to conform it to the evidence. Immediately following the Board's argument in the arbitration proceedings, Westates adjusted the claim once again. The final product of the arbitration was an award of $99,905 in favor of Westates. Promptly thereafter, Westates filed its "Motion for Order Confirming Arbitration Award" with the district court. The Board, sometime later, filed its "Application to Vacate, Modify or Correct Arbitration Award." On March 1, 1990, the district court, after ruling that the Board was not a "political subdivision" and that Westates' claim first accrued when the American Arbitration Association entered its award, denied the Board's motion. The court entered a judgment for Westates in the amount determined by the arbitration. The Board has appealed from that order.

The major premise for the Board's argument is found in its contention that the district court was without jurisdiction to rule in the case because Westates had not followed the process established by Wyo.Const. art. 16, § 7 as it was required to do. Article 16, Section 7 of the Constitution of the State of Wyoming provides as follows:

Payment of public money.

No money shall be paid out of the state treasury except upon appropriation by law and on warrant drawn by the proper officer, and no bills, claims, accounts or demands against the state, or any county or political subdivision, shall be audited, allowed or paid until a full itemized statement in writing, certified to under penalty of perjury, shall be filed with the officer or officers whose duty it may be to audit the same (emphasis added).

Concretely, the Board asserts that Westates had a duty to present a "full itemized statement in writing, certified to under penalty of perjury," to the Board's officer or officers, whose duty it was to audit the same in accordance with the requirements of Wyo. Const. art. 16, § 7, before proceeding to arbitration. The Board then contends that Westates is now foreclosed from any remedy by the inherent statute of limitations found in § 1-39-113, because more than two years have passed since the hospital project was completed, and no such document has been presented. Cf. Dee v. Laramie County, 666 P.2d 957 (Wyo.1983) (court lacks jurisdiction in action against government entity when no claim has been filed pursuant to § 1-39-113). The Board couples to this argument a contention that the only effective forum in which Westates could have pursued its rejected claim was the district court of the Sixth Judicial District in and for Weston County, and that any resolution offered by virtue of the arbitration proceedings was inefficacious because the arbitration award was confirmed by a court lacking jurisdiction. The concomitant of this argument is that the arbitration clause included in the contract, even though it was fully complied with, is not binding upon the Board.

The Board was established pursuant to the Wyoming Joint Powers Act, Wyo.Stat. §§ 16-1-102 to -109 (1990), and, being neither the State nor a county, the Board must be a "political subdivision" in order to insist upon compliance with the requirements of the constitution. If the Board is not a "political subdivision," it must...