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United States ex rel. TBH & Assocsiates, LLC v. Wilson Construction Co.

United States District Court, D. Oregon

August 8, 2013

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

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[Copyrighted Material Omitted]

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

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

OPINION

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ORDER ON DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT

Dennis James 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. 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

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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.A. 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 Ore.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 Ore.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 Ore.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 Ore.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 Ore.App. at 301, 157 P.3d at 1198.

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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 Ore. 358, 361, 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 Ore. at 363, 937 P.2d at 1022. In 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 Wn.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 Wn.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 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 properly can be decided on summary judgment. Kidder Mathews & Segner, Inc. v. Harbor Marine Maint. & Supply, Inc., 2013 WL 1337626, at *4 (citations omitted).

The court finds the Oregon and Washington approaches, though somewhat different, ultimately would reach similar results. In both states, the courts first will look to the language of the contract itself. Although, in Washington, the parties may offer extrinsic evidence to place the contract in context, and to assist the court in determining the meanings of particular words or phrases, such evidence is not accepted for purposes of contradicting the express language of the contract. The courts of both states will examine extrinsic evidence of the parties' intent to interpret an ambiguous contract provision. Thus, the court finds no material differences

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between the relevant laws of Oregon and Washington, and will apply Oregon law to interpret the subcontract between TBH and Wilson.

DISCUSSION

Factual Background

As noted above, this lawsuit concerns a dispute over payment for TBH's work on Phase II of the Project. The Project was constructed in two phases, each of which involved the construction of approximately 180 towers and 720 footings. TBH's work on Phase II involved " preparing foundations and footings for electrical transmission towers from mile 42 to 79[.]" Dkt. #46, p. 2 (citing Dkt. #47-1, Agreement No. 5376SC-TBH-2, p. 1). Wilson describes the work as follows:

Each tower required four separate footings - one for each leg of the tower. The various types of footings used during Phase II included concrete shafts, grillages, and plates. As the name suggests, concrete shaft footings consist of a cylindrical shaft of concrete poured into the earth to a specified depth. Grillage and plate footings are different. Instead of augering a cylindrical hole with a drill, an excavator is used to dig a rectangular hole to accommodate either a steel plate or a grill which acts as the foundation for the tower.

Dkt. #46, p. 2.

In his deposition, Peter Tapio, TBH's " Managing Member and President," testified TBH agreed to be paid by the lineal foot for the drilling of concrete shafts. For those locations requiring grillage or plate footings, TBH looked at the foundation detail that was available for each tower location, calculated the excavation required, and then set a fixed per-unit price for each plate and each grillage footing based on those calculations. TBH's calculations were made based on information TBH had in January 2010, months five or six months prior to " the official release of Phase 2." Dkt. #48-1, pp. 4-8, Tapio Depo. at 100, 125, & 225-26.

According to Tapio, the geological characteristics of the terrain for the two phases of the Project differed considerably. Phase I was located " in the vicinity of Plymouth, WA, from Mile 2 and proceeded west to Mile 42." Dkt. #55, Tapio Decl., ¶ 5. The terrain on the Phase I site was fairly consistent geologically, comprised of flat, sandy gravels and cobbles over rock. Id . Phase II was located " approximately 15 miles east of Roosevelt, WA, proceeding west from about Mile 42 to Mile 79[.]" Id . The geological characteristics of the terrain on Phase II " varied dramatically from flat to steep," and ranging " from basalt to basalt flows overlaid with soil to cemented sands, gravels, cobbles and areas of high groundwater. Phase II subsurface conditions were complex." Id .

TBH and Wilson entered into a fixed-price subcontract (the " Subcontract" ) dated June 1, 2009, setting forth the terms and conditions of TBH's work on Phase II. Dkt. #47-1, Subcontract. The Subcontract required TBH to " furnish all labor, transportation, supervision, equipment and materials necessary for Phase II Foundation Work Segment Miles 42-79, Materials Management and Pad Construction per the plans and specifications." Id., p. 1. Under the terms of the Subcontract, TBH was expressly responsible for:

o Assembly and delivery to tower sites of all BPA provided footing parts. Offloading, receiving, inspection, inventory, storage and security by others.
o Staking of footings from BPA control points at each footing
o Reinforcing steel, miscellaneous metal, concrete, grout and sand bedding

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o Drilling for deformed bars on rock footings (grouted type)
o Planning for structural excavation, shoring, dewatering, backfill and removal of spoils. Dust control and management of site conditions.
o Access pads from BPA built road

Id . Expressly not included under the Subcontract were:

o Access road construction
o All blasting and associated work
o All work specified and incidental to the Mitigation Implementation Table
o Vehicle Wash Stations and operation of the same
o All site, crop and land owner restoration
o Premium costs of BPA inspection outside the specified work hours
o All costs of bonds, testing, inspections, certifications and warranties

Id., pp. 1-2.

Under the terms of the Subcontract, TBH also agreed to " comply fully with all provisions of the Prime Contract" between Wilson and BPA. Id., p. 3 ¶ 1. The Subcontract also set out procedures for Wilson to make changes to the work to be performed by TBH. See id., pp. 3-4 ¶ 12.

BPA Supplemental Technical Specification for the Project, dated March 23, 2009, provided, among other things, that BPA had " conducted a field geotechnical investigation." Dkt. #55-1, p. 4, ยง 01.01.08 " Geotechnical Report." Under " Report Detail," ...


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