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State v. Ross Bros. & Co., Inc.

Court of Appeals of Oregon

January 14, 2015

ROSS BROS. & CO., INC., an Oregon corporation; and Safeco Insurance Company of America, a Washington corporation, Defendants-Respondents Cross-Appellants and KT CONTRACTING CO., INC., an Oregon corporation, Plaintiff-Appellant Cross-Respondent,

Argued and Submitted September 13, 2013

Marion County Circuit Court. 09C13172. Joseph C. Guimond, Judge.

Judgment reversed and remanded on appeal, affirmed on cross-appeal; supplemental judgment affirmed on appeal and cross-appeal.

Hunter B. Emerick argued the cause for appellant - cross-respondent. With him on the briefs was Saalfeld Griggs PC.

Ryan P. Hunt argued the cause for respondents - cross-appellants. With him on the briefs were Gordon R. Hanna and Garrett Hemann Robertson P.C.

Before Ortega, Presiding Judge, and Sercombe, Judge, and Hadlock, Judge.


Page 1027

[268 Or.App. 440] ORTEGA, P. J.

This appeal and cross-appeal arise out of a public works contract dispute between a subcontractor (KT), a general contractor (Ross), and the general contractor's labor and materials bond surety (Safeco). KT

Page 1028

brought claims under the " Little Miller Act," ORS 279C.380 to 279C.625, against Safeco for payment on the bond, and claims against Ross for breach of contract and quantum meruit. Ross and Safeco counterclaimed against KT for breach of contract and sought liquidated damages.[1] After a bench trial, the trial court ruled that KT could recover in quantum meruit against Ross, but refused KT's request to enter judgment against Safeco on the bond claims. The court concluded that, because KT brought its quantum meruit claim against Ross only, it was not entitled to a judgment against Safeco on its bond claims. The trial court entered a general judgment and a supplemental judgment against Ross. KT appeals, and defendants cross-appeal, both judgments.

On appeal, KT raises three assignments of error. Because it is dispositive, we address only KT's first assignment: that the trial court erred by not entering judgment against Safeco on the bond claims. Ultimately, we conclude that it did, and reverse the trial court's judgment. We also conclude that Ross failed to preserve its assignment of error on cross-appeal challenging the trial court's determination that KT could recover in quantum meruit even though the parties had a valid and enforceable contract.

The following background facts are undisputed. In February 2003, the Oregon Department of Transportation (ODOT) awarded a contract to Ross for the renovation of the Depot Street Bridge on Interstate 5 in Jackson County. The contract specified a completion date of December 31, 2005, for the project. Pursuant to public contracting laws, see ORS 279C.380(1)(b), Ross obtained a labor and materials payment bond fro Safeco to protect parties that provided " labor or materials for the performance of the work provided for in" [268 Or.App. 441] the public contract.[2] Ross executed a subcontract with KT to provide temporary traffic signs and markers, traffic control devices, and a pedestrian rail on the bridge for $319,000. As relevant to the parties' dispute, the subcontract contained a " pay when paid" provision that KT would not be paid for work " not approved and accepted by [ODOT]," and a provision that KT's subcontractors must first be paid before KT could secure payment from Ross. In addition, a provision of the subcontract provided that any claim for " additional compensation" had to be presented to Ross within 30 days of the " occurrence," and that written and oral notice of additional compensation had to be given to the project manager.

The bridge renovation ran into substantial delays, and was not completed until about two years after the scheduled completion date. Ross continued to use KT's temporary traffic control devices on the construction site during the delay. In October 2007, Ross sent a letter asking KT to submit any claims for additional costs. KT submitted a formal claim for over $80,000 in additional compensation for the extended use of its traffic control devices. Ross refused to pay, and KT initiated this action.

KT filed a complaint against Ross and Safeco seeking $245,134 for unpaid work and additional costs. KT asserted a " Little Miller Act" claim against Safeco and a breach of contract claim against Ross. Defendants counterclaimed for breach of contract, alleging that KT had failed to complete its work in a timely and agreed upon manner, had failed to follow the claim procedures under the subcontract, and that Ross had performed all of its contractual ...

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