Opinion
Civil No. 2:98CV-252PGC
May 14, 2003
AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW AND ORDER DENYING MOTION TO STRIKE
This matter came before the court for a bench trial on October 2-4, 2002. Plaintiff and Third-Party Defendant BCFM, Inc. dba Z-Rock ("Z-Rock") was present and represented by D. Scott Crook of Smith Hartvigsen, PLLC. Defendants and Third-Party Plaintiffs Stimpel Wiebelhaus Associates and Reliance Insurance Company ("SWA") were represented by Stanford P. Fitts of Beesley, Fairclough Fitts. On February 24, 2003, the court entered Findings of Fact and Conclusions of Law in this matter and directed the clerk of the court to enter judgment in favor of Z-Rock, in the amount of $2,014.43. On March 17, 2003, SWA filed a motion to reconsider and amend the court's judgment. The court GRANTS the motion to reconsider and enters the following Amended Findings of Fact and Conclusions of Law and Order Denying Motion to Strike.
Z-Rock's Motion to Strike
Before entering its findings of fact and conclusions of law, the court will address Z-Rock's motion to strike SWA's reply brief. Z-Rock's motion arises out of some confusion regarding the court's order on post-trial briefing. The court ordered each party to submit an opening brief not exceeding fifty (50) pages and a reply brief not exceeding twenty (20) pages. However, since the court did not specify whether these page limitations excluded the statement of facts, there was some confusion and Z-Rock's reply brief is a total of twenty (20) pages, while SWA's reply brief is twenty (20) pages of legal argument plus a statement of facts. Accordingly, Z-Rock filed a motion to strike SWA's reply brief for exceeding the page limit and for addressing a new argument in its reply brief (that the purchase order at issue in this case limits acceptance to the terms of the purchase order).
See Transcript of Trial at 486-87.
See id.
While it is not clear from the record whether the page limitation excluded facts, the court DENIES Z-Rock's motion to strike. In absence of a clear and direct order to the contrary, the court will apply the local, rule and custom that page limitations exclude the statement of facts. Further, the court finds that SWA substantially met its obligation to address its principle arguments in its opening brief, and the additional argument regarding Section 2 of the purchase order did not cause the type of prejudice to Z-Rock that would warrant striking SWA's reply brief. Accordingly, the court DENIES Z-Rock's motion to strike and will consider all post-trial briefing in making its findings of facts and conclusions of law.
See Rules 7-1(3) and 56-1(b) of Rules of Practice of the United States District Court for the District of Utah.
See Weilert v. Health Midwest Development Group, 95 F. Supp.2d 1190, 1193 (D. Kan. 2000).
BACKGROUND
This action arises out of a Federal Highway Administration ("FHWA") construction project known as the Wolf Creek Project near Francis, Utah (the "Project"). SWA was the prime contractor on the Project and Z-Rock was a subcontractor who supplied certain aggregate materials (rock, sand and gravel products) to SWA. While both parties acknowledge that a contract was formed between Z-Rock and SWA, they dispute the terms of the contract. Further, both parties argue that it has been damaged by the other's breach of the contract. Z-Rock originally brought this action, claiming that SWA breached the contract by failing to pay Z-Rock's final invoice of $42,096.98 for Project materials, plus $98,405.83 in accrued interest, plus attorneys' fees and costs. SWA counterclaimed, asking the court to find that Z-Rock breached the contract by providing aggregates which did not comply with the Project specifications, resulting in $33,506.77 in net damages to SWA.
FINDINGS OF FACT
After reviewing the parties' stipulations, the trial testimony, the documentary evidence, and the parties' briefs, the court now enters the following findings of fact and conclusions of law pursuant to Federai Rule of Civil Procedure 52(a).
In 1995, Z-Rock obtained a lease and permit to operate a gravel pit operation near Francis, Utah ("Francis Pit"). Zabriskie is the General Manager and Director of Z-Rock. which sells a variety of aggregates from its Francis Pit. Z-Rock has the ability to perform qualitative tests such as hardness tests, LA Abrasion tests, and sulfate tests to determine if material is suitable for its customers.
See Transcript of Trial at 27, 81-82, 141.
On or about September 28, 1995, SWA entered into a written contract with the United States Department of Transportation, for construction of the Project. Z-Rock was aware of the Project as of June 1995. Specifically, Mr. Zabriskie was aware that it was a Federal Highway Project and that the Federal Highway Administration had Standard Published Specifications for such projects. Z-Rock knew and understood that there are always specifications that define the requirements for the aggregate products for the project. Prior to the bid opening in September of 1995, Z-Rock received several calls from contractors who were bidding on the Project, including SWA and LeGrand Johnson Construction, regarding prices for aggregate materials for the Project.
See Stipulated Facts, ¶ 1.
Exhibit D, ¶¶ 1, 10.
See Stipulated Facts, ¶ 5; Transcript of Trial at 75-76.
See Transcript of Trial at 76.
See id. at 31; Stipulated Facts ¶ 4.
Mr. Zabriskie understood that each project has specifications which define what the aggregate materials would be for the Project. Z-Rock's normal practice is to ask contractors for specifications and quantities for a project in order to know what the project requirements are and to determine what prices to quote for the aggregates. A bidder needs to know in advance what the specifications are in order to know what it is agreeing to provide. This is an understanding in the gravel industry.
See Transcript of Trial at 76.
See id.
See id. at 383.
Transcript of Trial at 383.
On August 25, 1995, LeGrand Johnson Construction provided Z-Rock with a copy of the Project specifications for the aggregates to be provided for the Project. Mr. Zabriskie received and read the aggregate specifications. On or about September 11, 1995, SWA contacted Zabriskie to solicit a bid to provide aggregates for the Project. On September 13, 1995, Zabriskie submitted a bid to SWA for specific materials required for the Wolf Creek Road Project. Z-Rock's bid was to provide the specific aggregate products identified in the Project Specifications as Specification Items 30101E (Roadbase), 30104A (Subbase), and 40101DBD (Asphalt aggregates or "3-bin mix").
See Stipulated Facts, ¶ 4; Exhibit 2.
See Stipulated Facts ¶ 4; Transcript of Trial at 82.
See Stipulated Facts, ¶ 6.
See Stipulated Facts, ¶¶ 7, 8; T. 85; Exhibit 1.
See Transcript of Trial at 78, 82-83; Exhibit 2, p. 3.
Zabriskie read the specifications for the aggregates before giving Z-Rock's bid to SWA. The aggregate specifications were the normal type of specifications he was used to seeing and there was nothing unusual in the specifications. Zabriskie intended the bid prices to be for materials that would meet the Wolf Creek Project specifications. This is the customary understanding in the industry. Phil George, SWA's Senior Engineer with extensive experience with bidding and aggregates on highway projects, established that it is understood in the industry that when an aggregate supplier bids to provide aggregates on a project it is expected that the aggregates will meet all the project specifications for the aggregates. Z-Rock's bid for the asphalt aggregates was to provide materials which could be mixed to meet the asphalt concrete specifications.
See Transcript of Trial at 80, 82; Exhibit 2.
See Transcript of Trial at 82.
See id. at 77.
See id. at 384.
See Transcript of Trial at 87; Exhibit N, p. 44.
The aggregate specifications include requirements that the aggregates meet certain "gradations." The gradation requirements address the size and shape of the granules in the aggregates. The gradation requirements relate to the aspects controlled by the screens that grade the material, such as the size and shape of the aggregates. The size and shape of the granules is determined and controlled by how Z-Rock processes the material through Z-Rock's crushing plant.
See Exhibit 2.
See Transcript of Trial at 131.
See id. at 130-131.
The Project Specifications for the aggregates establish a procedure for acceptance of the aggregates on the Project. The Specifications provide that "statistical acceptance procedures" apply to the gradations for the aggregate products. The gradation tables in the aggregate specifications set forth specific "Target Value Ranges" for the aggregates and the "allowable deviations . . . from the target values." The statistical acceptance procedures set forth in the aggregate specifications are implemented by "pay factors" which are used to determine either increased or reduced payment depending on the consistency and uniformity of the aggregate gradations within specified target value ranges. Materials are accepted on the Project subject to these procedures and pay factors. If the aggregate gradations do not meet the specifications, or fail to meet the specified level of uniformity and consistency within a specified range of target values, then payment is reduced for that material item. In other words, if the gradations deviate more than the "allowable deviations . . . from the target values" set forth in the specifications, then a pay factor reduction occurs. The range within which the gradations must fall are set forth in the aggregate specifications.
See Exhibits 2, 5.
Transcript of Trial at 80, 81, 210, 442; Exhibit 2, Tables 703-2, 703-3, 703-6. 442.
Transcript of Trial at 444; Exhibit 2, Tables 703-2 and 703-3.
See Transcript of Trial at 80-81, 195, 210, 442, 390; Exhibits 2, 5, 72, pp. 21-34.
See Exhibit 2, 5, 72, p. 23.
See Transcript of Trial at 210, 390.
Transcript of Trial at 211, 390; Exhibit 2.
See Transcript of Trial at 226, 271; Exhibit 2.
At the time of Z-Rock's bid, Zabriskie was aware of and understood the statistical acceptance procedures, the target values and how they worked. Zabriskie understood that if the gradation of Z-Rock's materials fell outside a specified range from the target value, then the payment for that item would be reduced. Zabriskie also understood that the pay factors and statistical acceptance was determined by the Federal Highway Administration. Because of Zabriskie's familiarity with the Project, SWA reasonably relied upon Z-Rock's bid prices and submitted its bid to FHWA for the Wolf Creek Project based upon Z-Rock's bid prices for the aggregates.
See Transcript of Trial at 470-471.
See id. at 40.
See id. at 92.
See Stipulated Facts ¶ 9; Transcript of Trial at 88, 190.
The Purchase Order
On January 22, 1996, after SWA was awarded the prime contract for the Project, SWA sent Z-Rock a written Purchase Order Agreement No. 212-002 (the "Purchase Order") for the materials to be provided by Z-Rock on the Project. The Purchase Order incorporated the prices bid by Z-Rock for the items of materials and quantities specified in the Project specifications. The Purchase Order contained standard provisions pertaining to the Project.After Zabriskie received the Purchase Order, he called SWA's Gary Spinetti to discuss the Purchase Order. Zabriskie expressed a concern that the times for delivery of the materials might conflict with permissible hours found in Z-Rock's permit for the pit operation. On February 10, 1996, after discussing Z-Rock's concerns with Spinetti, Zabriskie sent a letter to SWA regarding the Project and requesting a provision that delivery times would be in accordance with the regulations and permits governing operation of Z-Rock's gravel pit. The letter states:
See Stipulated Facts, ¶ 13.
See Transcript of Trial at 193.
See Transcript of Trial at 38, 90, 193; Stipulated Facts, ¶ 14; Exhibit 4.
Re: Wolf Creek Road Project Purchase Order No. 212-002
Dear Gary:
Please add to Section 6 Delivery:
Delivery shall be required or performed only within the restrictions, limitations and times allowed by all Federal, State and local agencies governing the operation of the Francis Gravel Pit.
Exhibits 3, 4.
Exhibits 3, 4.
Zabriskie signed the letter and communicated no other concerns regarding the Purchase Order. The court finds that the February 10, 1996 letter was not a material change to the Purchase Order because the Purchase Order already included a provision providing what Z-Rock requested. Specifically, the Purchase Order contains the following language in Section 11, Compliance:
Exhibit 4.
Seller's performance shall in all ways strictly conform with all applicable laws, regulations, safety orders, labor agreements and working conditions to which it is subject. . . .
Exhibit 3; Transcript of Trial at 366.
Exhibit 3; Transcript of Trial at 366.
After the February 10, 1996 letter, Z-Rock did not raise any other concerns about the Purchase Order.
See Transcript of Trial at 193-194, 213, 215-216.
On February 14, 1996, Spinetti sent Z-Rock a fax with a copy of § 106 of the specifications, regarding "Acceptance of Work" and the statistical acceptance procedures referenced in the aggregate specifications which Zabriskie had before bidding. Zabriskie never said he had a problem with the pay factors and never objected to the pay factor provisions. After receiving § 106, Zabriskie does not recall any further communication with SWA regarding concerns or objections about those provisions.
See id. at 39, 212, 213, 225.
See id. at 95.
Shortly after SWA's February 14, 1996 fax was sent, SWA's Phil George discussed the Purchase Order with Zabriskie. Mr. George discussed the correspondence between the parties regarding the Purchase Order and the provision requested by Mr. Zabriskie regarding compliance with Z-Rock's permit. Mr. George noted that the Purchase Order already required compliance with permits and applicable law and told Zabriskie there was no need to worry about the delivery time issues. Zabriskie still wanted the exact language from his February 10, 1996 letter, and Mr. George hand wrote the exact language requested by Z-Rock on SWA's copy of the Purchase Order, told Zabriskie that he had done so, and Zabriskie said "OK." Zabriskie does not dispute that this conversation occurred. Further, Zabriskie never told anyone at SWA that he was not going to operate under the Purchase Order or that the Purchase Order did not apply to Z-Rock. Accordingly, the court finds that Zabriskie agreed to the Purchase Order with that change, and the Purchase Order formed a binding contract between the parties.
See id. at 365.
See Transcript of Trial at 366; Exhibits 4, 7.
See Transcript of Trial at 366.
Transcript of Trial at 367-368, Exhibit 3.
See Transcript of Trial at 471.
See id. at 101.
Z-Rock's Performance Under the Purchase Order
As further evidence that the Purchase Order formed a binding contract, in June 1996, Z-Rock began providing materials specified in the Purchase Order. Z-Rock continued providing materials for the Project through approximately October 1997. When materials were needed on the Project site, Tom Adams, SWA's Project Manager, would call Z-Rock and ask that a specified material be loaded into trucks operated by independent truckers sent to Z-Rock's pit. The materials requested by SWA were selected by Z-Rock. Specifically, when the trucks arrived at Z-Rock's pit, they pulled onto Z-Rock's scales to determine the "tare" weight (empty weight) of each truck. Z-Rock personnel then directed the trucks where to go to be loaded. SWA did not have any employees assigned to weigh trucks, select material to be loaded, or direct Z-Rock's operation of producing, stockpiling or loading material. The material was selected and loaded by Z-Rock representatives. The trucks would then go to Z-Rock's scales to be weighed. Z-Rock would give the truck driver a weigh ticket identifying the weight and type of material requested by SWA and the truck would then leave for the Project site. The truck drivers had no authority to bind SWA to any provisions listed on the weigh tickets, including the interest provisions that Z-Rock relies on to assert its interest claims.
See Stipulated Facts, ¶ 19.
See Transcript of Trial at 46, 104, 232, 233.
See id. at 101-102, 232.
See id. at 102-103, 341.
See Stipulated Facts, ¶ 20.
The aggregates were received and accepted on the Project in accordance with, and subject to, the statistical acceptance procedures or pay factors set forth in the gradation specifications for the aggregates. The Standard Specifications provide that materials are "accepted and paid for at a final pay factor when all inspection or test results are completed and evaluated." The statistical acceptance and pay factors were determined by FHWA.
See Transcript of Trial at 341; Exhibits 2, 5, 72, p. 23.
See Exhibit 5, 72, p. 23.
See Transcript of Trial at 92.
Z-Rock's weigh tickets and invoices to SWA identified and described the aggregates by the Project specification numbers set forth in the Project Specifications and in the Purchase Order (i.e. 30101E, 30104A, 40101BDB) and charged the prices set forth in the Purchase Order. Z-Rock used the Project Specification item numbers to identify and distinguish the type of material.
See Exhibits 2, 3, 18-20, 23, 24, L.
See Transcript of Trial at 54, 22.
Purchase Order Change Order
On July 23, 1996, Z-Rock received a Purchase Order Change Order that further indicates that both parties understood that the Purchase Order, and all its terms, formed a binding contract. The Purchase Order Change Order was a result of the Federal Highway Administration's determination to make changes in the scope of the Wolf Creek Road Project, including reductions in the quantities of Specification Items 30101E (Aggregate Base) and 40101BDB (Asphalt Concrete Aggregates) to be provided by Z-Rock. Specifically, it added "Item 15101 — Mobilization" which provided an additional lump sum payment of $28,500 to Z-Rock to compensate Z-Rock for having its fixed costs allocated to fewer quantities of materials under the Purchase Order.The Purchase Order Change Order specifically references the Purchase Order, stating that it modifies the quantities in Purchase Order 212-002 and that except for the changes described in the Purchase Order Change Order, "ALL TERMS AND PROVISIONS OF THE PURCHASE ORDER REMAIN IN FULL FORCE AND EFFECT." Z-Rock never objected to the Purchase Order Change Order. Instead, Z-Rock sent SWA an invoice for the payment provided in the Purchase Order Change Order. On or about January 3, 1997, SWA paid Z-Rock the $28,500 provided in the Purchase Order Change Order for "Item 15101 — Mobilization." SWA did not receive any aggregates in return for the $28,500 mobilization payment under the Purchase Order Change Order.
Exhibit 8.
See Transcript of Trial at 105.
See Transcript of Trial at 48; Exhibits 8, 9.
See Stipulated Facts, ¶ 24; Transcript of Trial at 106; Exhibits 11, 8, 9.
See Transcript of Trial at 113.
Billing for Materials Stockpiled at Z-Rock's Pit
Z-Rock billed SWA for stockpiled materials, which is another indication that both Z-Rock and SWA understood they were bound by the Purchase Order. Specifically, on November 15, 1996, Z-Rock invoiced SWA for "materials on hand" which were produced and stockpiled at Z-Rock's gravel pit, but not yet delivered to SWA. On or about January 3, 1997, SWA paid Z-Rock $45,106.72 for "materials on hand," which paid for materials Z-Rock did not deliver to SWA until about six months later. Z-Rock did not ordinarily bill for stockpiled materials and only did this because of the Purchase Order and incorporated provisions of the prime contract. There was no basis for making payment to Z-Rock for the materials on hand at Z-Rock's pit without the Purchase Order. SWA paid to Z-Rock the entire amount SWA received from FHWA for the materials on hand. SWA had no mark-up on the materials on hand and the full benefit of the payment was passed on to Z-Rock. SWA retained no benefit or part of the payment.Z-Rock Accepted Payment with Pay Factor Reductions
As further evidence that the Purchase Order, including the pay factors, formed a binding contract, on October 7, 1997 Z-Rock accepted $51,809.17 from SWA, which was calculated by deducting anticipated pay factors. Zabriskie was given a copy of the Subcontractor's Progress Estimate reflecting the calculation and pay factor reduction pursuant to the Purchase Order. The amount paid to Z-Rock was calculated based upon pay factor reductions pursuant to the Purchase Order, and Z-Rock accepted and negotiated the check. For all the above reasons, the court finds that the Purchase Order, including its pay factor penalties, formed a binding contract between SWA and Z-Rock.Z-Rock Failed to Provide Aggregates that Conformed with the Project Specifications
Given this contract, the court finds that the Aggregate Base and Subbase materials from Z-Rock failed to fully comply with the Project specifications regarding gradations and statistical acceptance procedures, in breach of its contract with SWA. The court further finds that this breach resulted in $27,794.72 in pay factors imposed by FHWA because of the excessive variability in the gradations of Z-Rock's aggregates.
See Transcript of Trial at 236, 237, 380-381, 419.
During the Project, SWA notified Z-Rock of problems regarding the variability and inconsistency in the gradations in aggregate base and subbase materials provided by Z-Rock. These problems were ongoing and SWA was working with Z-Rock to correct them. While SWA notified Z-Rock that pay factor penalties apply to non-conforming materials, it did not actually assess them against Z-Rock until the Project neared completion, since pay factors are constantly changing. This delay was proper, since the Standard Specifications provide that materials "will be accepted and paid for at a final pay factor when all inspection or test results are completed and evaluated." Further, until the pay factors were finally determined by FHWA on December 15, 1997, SWA did not know the exact amount to assess against Z-Rock. When SWA learned of the pay factor/statistical acceptance problems, Tom Adams met with Mr. Zabriskie as soon as possible, usually within a day or so, to discuss the problem and how to correct the problem with Z-Rock's materials. SWA notified Z-Rock of the problem with the aggregates, discussed the pay factors and what could be done to correct the problem. Again, Z-Rock never objected to being subject to the pay factors.
See Transcript of Trial at 301.
See id. at 352.
See Transcript of Trial at 301, 352; Exhibits F, G.
See Exhibit 5, 72, p. 23.
See Transcript of Trial at 353-354.
See id. at 240-241, 261, 315.
See id. at 342.
Part of the problem with the gradations in Z-Rock's materials was Z-Rock's method of stockpiling the material which caused it to segregate, creating variability and inconsistency. The gradations are caused by how Z-Rock operates its crusher and are within Z-Rock's control, as evidenced by the fact that after Z-Rock took actions to address the pay factors, they did improve. Nevertheless, despite this improvement, the inconsistency in the gradations of Z-Rock's aggregates resulted in the pay factor reductions imposed by FHWA. Specifically, on December 15, 1997, FHWA assessed pay factor reductions for Item 30101E Aggregate Base of $22,444.31 and Item 30104A Subbase Grading A of $5,350.41. These payment reductions resulted from the deficiencies in the gradations in the aggregates produced by Z-Rock. Therefore, the court finds that Z-Rock's Aggregate Base and Subbase aggregates failed to meet the consistency requirements of the gradation specifications, as set forth in Trial Exhibits F and G and cross-checked by SWA, resulting in liability for pay factor reductions of $27,794.72.
See id. at 240-242, 299, 386-390.
See id. at 300.
See Transcript of Trial at 242.
See Transcript of Trial at 243-244, 255; Exhibit 77, p. 11; Exhibits F and G.
See Transcript of Trial at 244-245.
See id. at 246-249, 252, 253, 255-256, 281-281.
See Transcript of Trial at 243-245, 255; Trial Exhibits F G.
Excess Costs to SWA
The court further finds that by failing to provide suitable asphalt aggregates, Z-Rock caused SWA to incur $45,801.54 in excess costs. Since Z-Rock's asphalt aggregates could not be mixed to obtain an acceptable asphalt for the Project, SWA incurred these excess costs for testing, mix design analysis, and increased costs to purchase and transport materials from an alternate source.When the Project progressed to the point of asphalt paving, the FHWA attempted to mix Z-Rock's asphalt aggregates to obtain an acceptable asphalt mix within the Project specifications. FHWA was unable to do so. FHWA informed SWA of the problem and recommended that SWA contact Jim Fife, a leading expert in aggregates and asphalt mix designs. Jim Fife confirmed that Z-Rock's asphalt aggregates could not be mixed to achieve an acceptable asphalt concrete in compliance with the Project specifications. There were two deficiencies in the asphalt aggregates produced by Z-Rock. First, Z-Rock's sand had too much material in the size 200 gradation. This problem relates to the gradations on Chart No. 6 on page 578 of the aggregate specifications. Second, Z-Rock's intermediate aggregate was deficient because it had excessive flat and elongated shaped particles. Both problems adversely affect the stability of the asphalt concrete and fail to meet the Project specifications. Further, both problems could have been solved by Z-Rock, since Z-Rock admits that the size and shape of the material and the manner in which it is produced are gradation issues within Z-Rock's control. As a result of Z-Rock's breach, the final approved asphalt mix used only coarse aggregates from Z-Rock and the remaining materials were from other sources. No sand was used from Z-Rock.
See id. at 165-166, 395-396.
See id. at 165-168, 171, 175.
See Transcript of Trial at 121, 172-175, 265; Exhibit 2.
See Transcript of Trial at 173; Exhibit 2.
See Transcript of Trial at 120-121, 172, 175.
See Transcript of Trial at 173-175; Exhibit 2.
See Transcript of Trial at 131.
See id. at 266.
Because the asphalt aggregates produced by Z-Rock could not be used to meet the specifications, SWA had to import asphalt aggregates from Bingelli Rock Products in Heber City. SWA looked at three to four alternate sources to get the best price for the asphalt aggregates used to substitute for Z-Rock's deficient aggregates. Z-Rock did not object to SWA obtaining substitute materials. Zabriskie understood that if Z-Rock did not provide all the required material, Z-Rock would be liable for excess costs of obtaining substitute material.
See Transcript of Trial at 266, 306.
See Transcript of Trial at 120.
See id. at 71; Exhibit D.
After reviewing the exhibits and hearing trial testimony on these excess costs, the court finds that SWA's representations regarding its excess costs are credible and accurate with one exception: the claim for $2,007.49, which is improperly included in the itemization of the investigation and consulting fees," since SWA admitted at trial that SWA did not incur any additional salary costs to these employees because of Z-Rock's breach. While SWA is correct that loss of productivity and services of salaried employees may at times be included as damages, the court finds that SWA did not meet its burden of establishing that the employees here actually lost productivity. Therefore, the court deducts the $2,007.49 for employee salaries and finds that as a result of Z-Rock's breach, SWA incurred excess costs of $45,801.54.
See Transcript of Trial at 408-411; Exhibit 71; Memorandum in Support of SWA's Motion to Reconsider and Amend Findings Under Rule 52(b) and to Amend Judgment Under Rule 59(e) ("Memo in Support of Reconsideration") at 2-3.
See Transcript of Trial at 349-350.
See Memo in Support of Reconsideration at 4; Higgins v. City of Fillmore, 639 P.2d 192, 194 (Utah 1981).
Z-Rock did riot Overcharge SWA
Despite SWA's contention that Z-Rock overcharged it $12,475.32 for asphalt concrete aggregates (item #40101), the court finds that there was no overcharge. For one thing, SWA's Tom Adams testified that SWA's method for determining the alleged overcharge was flawed. In particular, Mr. Adams admitted that the Bingelli weigh tickets, which SWA relies on to determine the alleged overcharge, are not accurate because material was lost when the product was transported. Also, SWA's allegation of an overcharge contradicts a half-dozen invoices presented to Z-Rock over the course of six months, as well as Mr. George's sworn testimony early in this case. Accordingly, the court finds that Z-Rock did not overcharge SWA.
See Transcript of Trial at 306-07.
See Trial Exhibits 15, 31-35.
See Trial Exhibit 26, at 12.
Z-Rock's Principal Claim is $61,561.12
Thus far, the court has found that under the Purchase Order, SWA was damaged $73,596.26 ($27,794.72 in pay factor reductions and $45,801.54 in excess costs) by Z-Rock's breach and that Z-Rock did not overcharge SWA. However, both parties agree that SWA's damages must be offset by Z-Rock's principal claim, which is the value of materials which SWA received but did not pay for. The parties not only disagree about the amount of Z-Rock's principal claim, but this dispute is complicated by the fact that each party admits its own documents reflecting the amount are inaccurate. For the reasons explained below, the court finds that Z-Rock's principal claim is properly valued at $61,561.12.
See Z-Rock's Post-Trial Brief at 30; SWA's Response to Z-Rock's Post-Trial Brief at 22.
After reviewing all relevant documents and hearing the trial testimony on this issue, the court finds that SWA's Subcontractor's Progress Report ("Exhibit 35") is the most accurate statement of the amount of product that Z-Rock provided to SWA. Exhibit 35 is the final pay estimate signed by Roscoe Slade for SWA, and reflects the total amount of product that SWA admits to having received. Exhibit 35 was signed and approved by Roscoe Slade, on behalf of SWA, on April 10, 1998. Further, the court rejects SWA's argument that Z-Rock's original claim of $42,096.98 must be used because to use Exhibit 35 "substantially prejudices SWA's due process right to be notified of the extent of Z-Rock's claims prior to trial." To be sure, Z-Rock should not be permitted to surprise SWA by asserting new evidence on damages in post-trial briefing. However, in this case, Exhibit 35 was a stipulated exhibit that was put into evidence at the trial. Further, SWA is not merely a defendant, but a counterclaimant. As a party asserting its own damages, SWA bears the burden of proving those damages. Therefore, the court is not unfairly prejudicing SWA by relying on Exhibit 35, particularly in light of the fact that this document was created by SWA. However, the court will carefully consider SWA's evidence and arguments supporting its contention that Exhibit 35 contains errors, and will adjust its findings accordingly.
See Transcript of Trial at 344-48.
See Memo in Support of Reconsideration at 4.
Exhibit 35 provides that SWA received $350,975.31 of material for the Project. Of that, both parties agree that $50,028.94 must be removed because it represents the total value of the asphalt concrete aggregate, of which Z-Rock only provided a portion. After excluding the amounts for the asphalt concrete aggregate, the total amount of aggregate provided to SWA is calculated to be worth $300,948.47. Adding back in Z-Rock's claim for $29,644.98 of the asphalt concrete aggregate provides a total of $330,593.45. of this, the parties stipulated that SWA only paid Z-Rock $266,980.20. SWA contends that even if the court accepts these numbers, the court should deduct $413.38 for incorrectly calculated sales-tax on the total pay items and another $1,638.75 for mistakenly including sales tax on a mobilization item which is not subject to sales tax. Although SWA does not cite evidentiary support for these numbers, Z-Rock has not argued that these numbers are manifestly inaccurate. The court will therefore deduct both the $413.38 and the $1,638.75 in sales tax from the numbers listed in Exhibit 35. Accordingly, for purposes of calculating damages to SWA, the court finds that Z-Rock's principal claim against SWA is $61,561.12.
See Stipulated Facts at ¶ 26.
See Memo in Support of Reconsideration at 9.
See id.
Therefore, after SWA's damages ($73,596.26) are offset by Z-Rock's principal claim ($61,561.12) Z-Rock owes SWA $12,035.14.
CONCLUSIONS OF LAW
Based on the above findings of facts and the following conclusions of law, the court concludes that Z-Rock is liable to SWA in the amount of $12,035.14.
A. Purchase Order No. 212-002. Including the Pay Factor Penalty Provisions, Formed an Enforceable Contract Between Z-Rock and SWA.
The court finds that the Purchase Order, including the pay factors, formed a binding contract between Z-Rock and SWA. Z-Rock claims it is not bound by the Purchase Order because it did not sign the actual Purchase Order. However, Z-Rock's signature is not necessary where Z-Rock otherwise manifested its assent by signing and authoring other documents relating solely to the Purchase Order and accepted benefits arising solely under the Purchase Order. Z-Rock's argument that it is not bound by the Purchase Order because it did not sign it is overly simplistic, since a signature on the Purchase Order is not necessary where the parties' conduct indicates assent. In Commercial Union Associates v. Clayton, the court recognized that "it is axiomatic that a party may become bound through its performance to a contract that it has not signed." The Court continued:
See Commercial Union Associates v. Clayton, 863 P.2d 29, 34 (Utah App. 1993); City County of Denver v. Adolph Coors Co., 813 F. Supp. 1476, 1477 (D. Colo. 1993); UTAH CODE ANN. § 70A-2-204, -203, -207.
863 P.2d 29, 34 (Utah App. 1993).
It is well settled that a signature is not required for a binding contract to exist. It is a fundamental contract law that the parties may become bound by the terms of a contract even though they did not sign the contract, where they have otherwise indicated their acceptance of the contract, or let the other parties to so believe that they have accepted the contract.
Id. at 34; City County of Denver, 813 F. Supp. at 1477.
Id. at 34; City County of Denver, 813 F. Supp. at 1477.
The Utah Supreme Court has also held that if a party acts in such a way "as to justify others in supposing that the writing is assented to by him, he will be bound both at law and in equity even though he supposes the writing is an instrument of an entirely different character." Similarly, under Utah Code Ann. § 70A-2-204, a contract may be formed "in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract."
John Call Engineering, Inc. v. Manti City Corp., 743 P.2d 1205, 1208 (Utah 1987).
The above principles have been followed by other courts. In City County of Denver v. Adolph Coors Co., the Court held that although the parties had not signed a written contract, the parties' correspondence relating to the contract reflected that the parties had agreed to the material terms and conditions of the agreement. The court held that a party claiming it did not intend to be bound until the written document was signed bears the burden of proving such intent.
In Roberts Schaefer Co. v. Merit Contracting, Inc., the Court held that a purchase order was enforceable even though the subcontractor had not signed the purchase order where the subcontractor performed under the purchase order. The Court held that "an offeree may manifest acceptance of an offer by performing under the contract." The Court held that the non-signing party was bound by the terms of the written purchase order where the parties' conduct indicated performance under the purchase order, the non-signing party had received payment under the purchase order, the non-signing party's conduct suggested an assent to the purchase order, and the correspondence between the parties reflected negotiation of the purchase order but did not reflect any objection to the purchase order. It is well accepted that all that is required for an unsigned contract to be binding is some form of assent. Where, as in this case, a written draft is presented and accepted as a contract, the written contract is binding even if it is not signed. Further, Utah Code Ann. § 70A-2-207 provides that conduct by the parties which recognizes the contract is sufficient to form a contract. The terms of the contract include those terms on which the writings of the parties agree. The Restatement 2d of Contracts, § 19, provides that "a manifestation of assent maybe made wholly or partly by written or spoken words or by other acts or by failure to act."
99 F.3d 248, 252 (7th Cir. 1996), cert. denied, 520 U.S. 1167 (1997).
Id. at 252 (citations omitted).
Id. at 253.
See Pohl v. United Airlines, Inc., 110 F. Supp.2d 829, 837 (S.D. Ind. 2000); Amato v. U.S., 94 F. Supp.2d 1081, 1085 (D.Idaho 1999).
See Coffey v. Mann, 585 N.W.2d 518, 523-524 (Neb.App. 1998).
In addition to Z-Rock's conduct, the documents passing between the parties also reflect mutual assent to the Purchase Order. Although Z-Rock did not sign the Purchase Order, Z-Rock did sign and author a number of other documents regarding the Purchase Order which manifest assent and intent that the Purchase Order is contractually binding on the parties. The courts have long recognized that a contract can be evidenced by more than one writing. Therefore, the court concludes that the Purchase Order, Z-Rock's February 10, 1996 letter, the Purchase Order Change Order, and Z-Rock's invoice and acceptance of payment pursuant to the Purchase Order Change Order create a binding contract.
See Sacramento Baseball Club, Inc. v. Great Northern Baseball Co., 748 P.2d 1058, 1060 (Utah 1987).
Further, Z-Rock's conduct and correspondence manifest that the Purchase Order was a binding contract between the parties. This includes the following: (1) Z-Rock's September 13, 1995 bid to furnish specified aggregates for the Wolf Creek Project; (2) the Purchase Order; (3) Z-Rock's February 10, 1996 letter signed by Zabriskie accepting the Purchase Order; (4) Z-Rock's invoices describing the aggregates by reference to Specification item numbers; (5) Z-Rock's acquiescence in the Purchase Order Change Order providing additional "mobilization" compensation in the amount of $28,500; (6) Z-Rock's invoice to SWA and acceptance of payment for the additional $28,500 compensation provided under the Purchase Order Change Order; (7) Z-Rock's acceptance of payment with pay factor reductions under the Purchase Order; and (8) Z-Rock's invoice and acceptance of payment for stockpiled materials pursuant to the Purchase Order. Therefore, the court concludes that the Purchase Order and its terms, including the pay factors, formed an enforceable contract between Z-Rock and SWA under which Z-Rock was obligated to provide aggregated materials for the Project in accordance with the Project specifications.
B. Z-Rock is Bound by Express and Implied Warranties to Provide Materials Meeting the Project Specifications for the Aggregates.
Even without the Purchase Order, Z-Rock is bound by express and implied warranties that the aggregates would meet the Project specifications. Z-Rock knew that the materials were for a particular project and had an obligation to provide the materials ordered by SWA. Z-Rock's bid was for particular specification items, and Zabriskie intended the bid to be for materials that would meet the Wolf Creek Road Project specifications. When SWA called Z-Rock's pit and asked that the trucks be loaded with a particular material for the Wolf Creek Road Project, Z-Rock had an obligation to load the trucks with materials meeting the Project specifications.
See Pacfic Marine Schwabacher, Inc. v. Hydroswift Corp.,
525 P.2d 615 (Utah 1974).
Z-Rock, in providing materials for the Project, was obligated to provide materials within the Project specifications. Indeed, Zabriskie testified that Z-Rock's prices were based upon the quantities needed and the specifications on the Wolf Creek Road Project. A supplier of materials on a construction project is bound to provide materials that meet the specifications for the Project and cannot substitute other materials which do not meet the specifications. Furthermore, Z-Rock's weigh tickets and invoices reference the Project specification numbers, which constitutes an express warranty under Utah Code Ann. § 70A-2-313 that the materials would comply with the Project specifications. Z-Rock was also bound by implied warranties that the materials it provided for the Wolf Creek Project would meet the Project specifications for the materials. Z-Rock knew the requested materials were for a specific project and Z-Rock impliedly warranted the suitability of the materials for the Project. Z-Rock was also bound by a warranty of merchantability that the materials would run within permitted variations of quality. When SWA requested these materials, Z-Rock was obligated to provide materials meeting the Project specifications and within the permitted gradation variations. Z-Rock's failure to do so was a breach of these obligations and warranties.
See 13 Am.Jur.2d Building, Etc. Contracts § 11.
See Utah Lumber Co. v. James, 71 P. 986 (Utah 1903).
See Pacfic Marine Schwabacher, Inc., 525 P.2d at 615; Nielson v. Hermansen, 166 P.2d 536 (Utah 1946).
See Jones v. Allen, 318 P.2d 637 (Utah 1957).
See UTAH CODE ANN. § 70A-2-315.
C. 7-Rock Breached its Contract by Furnishing Aggregates that did not Conform with the Project Specifications.
The court concludes that Z-Rock breached its contract by failing to furnish all the required materials in conformance with the Project specifications. Consequently, as explained in more detail above, SWA suffered damages for pay factor reductions from the FHWA of $27,794.72 and excess costs of $45,801.54. Therefore, SWA's total damages, before offsetting them against Z-Rock's principal claim, are $73,596.26.
D. Damages, Attorneys' Fees and Costs
Although SWA was damaged by Z-Rock's breach in the amount of $73,596.26, Z-Rock is entitled to offset its principal balance claim of $61,561.12 against these damages. After this offset, Z-Rock is liable SWA for $12,035.14. However, after hearing the trial of this matter and reviewing all the evidence, the court finds that neither party in this litigation is a "prevailing party" for purposes of awarding attorneys' fees and costs. "[S]tate law controls the interpretation of Miller Act subcontracts to which the United States is not a party." Under Utah law, the courts recognize that the determination of "which party prevails in complicated cases involving multiple claims and parties [requires] a flexible and reasoned approach." Accordingly, this court is instructed to consider several factors, including the importance of the various claims relative to each other and "their significance in the context of the lawsuit considered as a whole" as well as the dollar amounts awarded.
U.S. ex rel. Leno v. Summit Const. Co., 892 F.2d 788, 792 (9th Cir. 1989) (citations omitted).
See R. T. Nielson Co. v. Cook, 40 P.3d 1119, 1126 (Utah 2002) (citing Mountain States Broadcasting Co. v. Neale, 783 P.2d 551, 556 n. 7-10 (Utah Ct.App. 1989).
See id. at 1127.
See id.
In this case, although SWA was awarded some damages, the court finds that attorneys' fees are not appropriate. Both Z-Rock and SWA prevailed and lost on a number of issues in the claims and counterclaims in this case. For example, while SWA prevailed on a key issue of whether the contract between the parties included the pay factor penalty provisions, SWA's victory was undermined by the court's ruling in favor of Z-Rock on both the amount of Z-Rock's principal claim and that Z-Rock did not overcharge SWA for asphalt concrete aggregates. The court also awarded SWA only a fraction of the damages it sought: $12,035.14 out of $33,506.77. Further, it appears that the fees spent on both sides of this litigation are well in excess of the underlying amount of money at issue. The court is not sufficiently confident about why this litigation apparently spiraled out of control, but a fee award might be almost punitive given the size of the fees expended relative to the amount in controversy. Therefore, given the unusual disposition of this case, the court uses its discretion to find that neither party prevailed in this action and each party must bear its own attorneys' fees and costs.
Accordingly, the court DENIES the motion to strike (Doc. #127-1), and GRANTS SWA's motion to reconsider (Doc. #133-1). The court further GRANTS in part SWA's motion to amend the judgment (Doc. #133-2) and directs the clerk of the court to VACATE the prior judgment in favor of Z-Rock, entered on March 3, 2003, and to enter judgment in favor of SWA and against BCFM, Inc., dba Z-Rock, in the amount of $12,035.14, with each party to bear its own attorneys' fees and costs. The clerk of the court is further directed to close this matter.