Opinion
No. 60117-2-I.
July 21, 2008.
Appeal from a judgment of the Superior Court for King County, No. 05-2-33756-7, William L. Downing, J., entered May 21, 2007.
Affirmed by unpublished opinion per Agid, J., concurred in by Schindler, C.J., and Lau, J.
In this dispute between real estate development partners, the trial court found an enforceable contract providing that a third party was entitled to perform construction services for an agreed rate of compensation. The court found that appellants, Woodinville Business Center No. 1 (WBC) and its managing partner, Albert L. Dykes, breached that contract and Dykes breached his fiduciary duty to respondent Ned C. Lumpkin. Dykes and WBC appeal the trial court's judgment and its award of damages and prejudgment interest. The trial court's findings are supported by substantial evidence, and we affirm.
FACTS
In 1980, Dykes, Lumpkin, John Kloster, and Robert Sheppard, III, formed WBC, a Washington limited partnership, to purchase property in Woodinville, construct four commercial buildings on the property, lease and operate the buildings, and then sell the property and buildings. The duties and rights of Dykes, Lumpkin, and Kloster in the Woodinville Project were similar to their roles in six other projects. The parties understood Lumpkin invested in the projects because it was agreed that his company, Lumpkin, Inc., would do the construction work and receive a 10 percent fee. Of the six projects, Lumpkin, Inc., had completed the improvements on four and received its 10 percent fee. One of the remaining projects was sold before any construction was done, and the other is the Woodinville Project.
The details of the Woodinville Project and the agreement of WBC's general partners were memorialized in two written documents which were circulated to potential investors and real estate brokers. The documents reflect that the parties agreed to the following terms: Lumpkin would provide the majority of the funding to purchase the project property; Lumpkin, Inc., would construct the four buildings over approximately two years for a 10 percent fee; Marcol (which was owned by Dykes and Kloster) would receive five percent of the construction costs as an administrative fee; Marcol would manage the Woodinville Project for a five percent management fee; and Dykes would receive a sale commission. Regarding Lumpkin, Inc.'s right to construct the Woodinville Project buildings, the offering materials state:
Lumpkin Inc. will act as the general contractor in the construction of this project. Ned Lumpkin, owner of Lumpkin Inc., is also one of the general partners. As general contractor, Lumpkin Inc. will receive a fee of ten percent (10%) on direct construction costs. This fee is within industry norms.
After the parties acquired the property and raised capital, Lumpkin, Inc., constructed Buildings 1 and 2 of the Woodinville Project and received its 10 percent fee.
In 1989, Dykes had solicited bids to construct Buildings 3 and 4 of the Woodinville Project. Lumpkin maintains that he was not informed of this and thus did not submit a bid. Dykes claims that Lumpkin was informed and that he submitted a bid, though Dykes never produced evidence to that effect.
In May 2003, WBC hired MRJ Construction to review the plans for Buildings 3 and 4 and to perform value engineering by identifying potential cost saving alternatives. In June 2003, WBC paid MRJ to prepare structural drawings for a metal roof that would be cheaper than the wood roof called for in the plans, which MRJ submitted along with a preliminary proposal and a firm proposal to construct Buildings 3 and 4. Dykes did not include information regarding MRJ's drawings and June 2003 bid in his July 2003 status report to the WBC partners. Nor did Dykes inform Lumpkin or Lumpkin, Inc., that he had solicited or received bids from MRJ to construct Buildings 3 and 4.
In August 2003, MRJ submitted two revised bids to construct Buildings 3 and 4. When Lumpkin learned from others about the MRJ bids, he demanded that Lumpkin, Inc., construct Buildings 3 and 4 for the agreed 10 percent fee. Dykes later allowed Lumpkin, Inc., to submit a bid, but he did not disclose the existence of MRJ's revised roof plans, so they were not incorporated into the Lumpkin, Inc.'s bid.
In the Spring of 2004, Dykes hired architect Mark Travers to review the bids for constructing Buildings 3 and 4. When Travers recommended the Woodinville Project be rebid, Dykes instructed Travers not to let Lumpkin, Inc., participate in the rebidding process. When Lumpkin learned of the rebid, he again asserted that Lumpkin, Inc., was entitled to do the construction. Lumpkin also demanded the opportunity to update Lumpkin, Inc.'s bid, and Dykes reluctantly allowed it. Dykes then told Travers not to give Lumpkin, Inc., the MRJ roof drawings or other project plans. MRJ did not submit a revised bid. Rather, it only informed Travers their costs would increase.
Travers recommended the MRJ bid be accepted, though he concluded that Lumpkin, Inc.'s second bid contained no irregularities and indicated a sound bid preparation methodology. Dykes accepted MRJ's bid on August 19, 2004.
On October 12, 2005, Lumpkin and Lumpkin, Inc., filed the present action against WBC and Dykes, claiming breach of contract. WBC and Dykes denied that there was a contract to give Lumpkin, Inc., the right to construct Woodinville Project Buildings 3 and 4 and that the claim was barred by the applicable statute of limitations, laches, or estoppel.
After a three-day bench trial, the trial court entered extensive findings of fact and conclusions of law determining that: (1) Lumpkin, Inc., was an intended third-party beneficiary; (2) Lumpkin, Inc., was denied its agreed-upon right to construct Buildings 3 and 4 of the Woodinville Project and receive its 10 percent fee; (3) neither Lumpkin nor Lumpkin, Inc., acted in a manner that would terminate their rights; and (4) Dykes breached his fiduciary duty to Lumpkin. The trial court then awarded damages and prejudgment interest to Lumpkin, Inc., WBC and Dykes appeal.
Dykes and WBC also suggest that the trial court erred in denying their motion to amend the findings or for a new trial, but they fail to properly support the claim with argument and authority. Thus, we will not consider it. RAP 10.3; Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992).
DISCUSSION
I. Standards of Review
When the trial court has weighed the evidence, we review the trial court's factual findings for substantial evidence to support them. We must then determine whether the findings support the conclusions of law and judgment. Substantial evidence is evidence sufficient to persuade a fair-minded person of the truth of the declared premise. There is a presumption in favor of the trial court's findings, and the party claiming error has the burden of showing that a finding of fact is not supported by substantial evidence. This court defers to the trier of fact for purposes of resolving conflicting testimony and evaluating the persuasiveness of the evidence and credibility of the witnesses. In determining the sufficiency of evidence, this court need only consider evidence favorable to the prevailing party. Whether a claim is time-barred is a legal issue, which this court reviews de novo.
Brin v. Stutzman, 89 Wn. App. 809, 824, 951 P.2d 291, review denied, 136 Wn.2d 1004 (1998).
Id. (quoting Bosley, 118 Wn.2d at 819).
Fisher Props., Inc. v. Arden-Mayfair, Inc., 115 Wn.2d 364, 369, 798 P.2d 799 (1990).
Boeing Co. v. Heidy, 147 Wn.2d 78, 87, 51 P.3d 793 (2002).
Bland v. Mentor, 63 Wn.2d 150, 155, 385 P.2d 727 (1963).
Goodman v. Goodman, 128 Wn.2d 366, 373, 907 P.2d 290 (1995).
II. Breach of Contract
Dykes and WBC first contend that the trial court erred in finding that there was an enforceable contract providing that Lumpkin, Inc., a third party, was entitled to perform all of the Woodinville Project construction for a 10 percent fee. Conversely, Lumpkin maintains that the trial court correctly found that substantial evidence, in the form of writings and the parties' actions, evidenced a binding contract including those terms.
In Washington, enforceable agreements require an offer, acceptance, and consideration. "Generally people have the right to make their agreements entirely oral, entirely in writing, or partly oral and partly in writing." But for an enforceable agreement to exist there must be mutual assent to its essential terms. Not every detail of an agreement is considered an "essential term." Even if some of the terms are indefinite, when the parties appear to have tried to reach an agreement expressing their intentions, "[c]ourts should, whenever possible, resist destruction of contracts because of indefiniteness or uncertainty." The intent of the parties to a particular agreement may be determined not only from the actual language of the agreement but also from "'viewing the contract as a whole, the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties.'" Thus, "[t]he existence of mutual assent may be deduced from the circumstances, including the ordinary course of dealing between the parties."
Yakima County (W. Valley) Fire Prot. Dist. No. 12 v. City of Yakima, 122 Wn.2d 371, 389-90, 858 P.2d 245 (1993).
Lopez v. Reynoso, 129 Wn. App. 165, 171, 118 P.3d 398 (2005), review denied, 157 Wn.2d 1003 (2006).
Jacob's Meadow Owners Ass'n v. Plateau 44 II, LLC, 139 Wn. App. 743, 765, 162 P.3d 1153 (2007).
See McEachren v. Sherwood Roberts, Inc., 36 Wn. App. 576, 579-80, 675 P.2d 1266 (question of control of hay field was not essential term), review denied, 101 Wn.2d 1010 (1984); accord Urban Dev., Inc. v. Evergreen Bldg. Prods., LLC, 114 Wn. App. 639, 651, 59 P.3d 112 (2002) (signatures are not essential terms), aff'd sub nom. Fortune View Condo. Ass'n v. Fortune Star Dev. Co., 151 Wn.2d 534, 90 P.3d 1062 (2004); Foelkner v. Perkins, 197 Wash. 462, 466-67, 85 P.2d 1095 (1938) (time of performance is not an essential term); Bremerton Concrete Prods. Co. v. Miller, 49 Wn. App. 806, 809, 745 P.2d 1338 (1987) (upholding agreement to build floats even when it lacked discussion of the size of the floats or the number to be constructed).
Janzen v. Phillips, 73 Wn.2d 174, 178, 437 P.2d 189 (1968).
Scott Galvanizing, Inc. v. Nw. EnviroServices, Inc., 120 Wn.2d 573, 580-81, 844 P.2d 428 (1993) (quoting Berg v. Hudesman, 115 Wn.2d 657, 667, 801 P.2d 222 (1990)).
See Jacob's Meadow Owners Assoc, 139 Wn. App. at 765 (citation omitted).
The creation of a third-party beneficiary agreement requires the parties intend, at the time they enter into the agreement, that the promisor assume a direct obligation to the beneficiary. "'If the terms of the contract necessarily require the promisor to confer a benefit upon a third person, then the contract, and hence the parties thereto, contemplate a benefit to the third person.'" "[T]he test of intent is an objective one; the key is not 'whether the contracting parties had an altruistic motive or desire to benefit the third party, but rather, whether performance under the contract would necessarily and directly benefit' that party." "The contracting parties' intent is determined by construing the terms of the contract as a whole, in light of the circumstances under which it is made."
Lonsdale v. Chesterfield, 99 Wn.2d 353, 361, 662 P.2d 385 (1983).
Id. (internal quotation marks omitted) (quoting Vikingstad v. Baggott, 46 Wn.2d 494, 496-97, 282 P.2d 824 (1955).
Postlewait Constr., Inc. v. Great Am. Ins. Cos., 106 Wn.2d 96, 99, 720 P.2d 805 (1986) (footnote omitted) (quoting Lonsdale, 99 Wn.2d at 362).
Id. at 99-100.
The trial court found the following facts were established on this issue:
2. The partners had a clear agreement or understanding among them as to what the role of each was to be. Dykes and Kloster (through a d/b/a called "Marcol", evidently named for their wives Margaret and Colleen) would gather investors to fund the development; Lumpkin, through his construction company, Lumpkin, Inc., would construct the project; Dykes would thereafter manage the project. For these efforts, it was agreed that Marcol would be paid an "acquisition and development" fee of 5% of total project costs as well as, later, a 5% management fee while Lumpkin, Inc. would receive 10% of direct construction costs as its fee for serving as general contractor. Each of the partners knew of the others' expectations and of each other's reliance upon these expectations. There was mutual assent to the promises each was making and the promises being made in return as consideration.
3. In order to gather investors to further the agreed upon plans of the partners, written offerings were disseminated to certain individuals and brokers. These writings memorialized the partnership's agreements as to the roles and anticipated compensation of each of the General Partners. Unequivocal language was used. For instance, these writings specified that "Marcol will be responsible for the ongoing property management on behalf of the partnership at a cost not to exceed five percent of the gross income received by the Partnership." It was neither stated nor hinted that a bidding process might periodically be used to determine, on behalf of the investors, what property management provider would be most economical and beneficial for them. Rather, the agreement of the General Partners was given effect and the investors could either buy in on those terms or not. Similarly, as to the construction of the project, it was clearly stated: "Lumpkin Inc. will act as the general contractor in the construction of this project. Ned Lumpkin, owner of Lumpkin, Inc., is also one of the general partners. As general contractor, Lumpkin, Inc. will receive a fee of ten percent based on direct construction costs. This fee is within industry norms." The "Phasing Cost Summary" prepared and disseminated at this time reflected estimates of these project costs through the planned construction of buildings 1, 2, 3 and 4.
. . . .
5. Not long after a successful fundraising effort was completed, buildings 1 and 2 were constructed on the project site. Per the agreement of the partners, the construction was done by Lumpkin, Inc. There was no competitive bidding done to win the contract. Lumpkin, Inc. received its agreed upon 10% fee for doing this work. As with other, similar investment/construction/management projects in which these gentlemen had engaged, things went smoothly according to their agreements as to their respective roles and compensations.
All of these findings of fact are supported by substantial evidence in the record, and the trial court's conclusions of law on this issue are supported by its findings. They are:
2. The plaintiffs have established that there existed an enforceable contract between them and the Woodinville Business Center No. 1 Partnership. The terms of that contract spring from an oral agreement among business colleagues but thereafter they were sufficiently memorialized in a written document. In addition, the course of dealings between the gentlemen (on this project and on other similar ones) constitutes admissible extrinsic evidence of the terms of their agreement.
3. Partner Ned Lumpkin's construction company, Lumpkin, Inc., was an intended third party beneficiary of that contract. It had the contractual right to perform specified construction services and to be compensated for that work.
4. Certainly Lumpkin, Inc. and Mr. Lumpkin did not have carte blanche to behave egregiously or to dictate outrageous terms for a construction contract. The Court has found that this did not occur and, therefore, it and he retained their contractual rights.
(Emphasis omitted.)
Dykes and WBC attempt to refute these findings with contrary evidence and testimony that was rejected by the trial court. But during the trial, "[t]he trial court heard and saw the witnesses, and was thus afforded an opportunity, which is not possessed by this court, to determine the credibility of the witnesses." The trial court's credibility determinations and its resolution of the truth from conflicting evidence will not be disturbed on appeal. In addition, the written offerings and course of conduct are strong evidence that these parties intended exactly the result the trial court settled on. We affirm the trial court's finding that the parties had a binding contract, under which Lumpkin Inc., was entitled to perform construction services for a 10 percent fee.
Garofalo v. Commellini, 169 Wash. 704, 705, 13 P.2d 497 (1932).
Id. (credibility); Du Pont v. Dep't of Labor Indus., 46 Wn. App. 471, 479, 730 P.2d 1345 (1986) (resolving truth from conflicting evidence).
III. Breach of Fiduciary Duty
Dykes and WBC also assign error to the trial court's finding that Dykes breached his fiduciary duty to Lumpkin when he concealed material information from him about the construction of Buildings 3 and 4. Appellants first argue that Lumpkin did not properly plead breach of fiduciary duty. We disagree, as that position is contrary to the liberal posture taken in this state toward motions and pleadings. Lumpkin and Lumpkin, Inc., properly pled breach of fiduciary duty under notice pleading rules. The complaint discusses the partnership, lists Dykes' actions which Lumpkin alleged were a breach of fiduciary duty, and specifically names Dykes in his capacity as managing partner of the partnership as a defendant in the action. This is sufficient to put the defendant on notice that Lumpkin claims a breach of fiduciary duty.
See Reichelt v. Johns-Manville Corp., 107 Wn.2d 761, 767-68, 733 P.2d 530 (1987).
Dykes and WBC also argue that the record does not support the trial court's finding that Dykes breached his fiduciary duty to his partner, Lumpkin. Under RCW 25.05.165(2)(b), partners must "refrain from dealing with the partnership in the conduct or winding up of the partnership business as or on behalf of a party having an interest adverse to the partnership." Further, partners must refrain "from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law." Finally, partners must discharge all duties to the partnership and other partners "consistently with the obligation of good faith and fair dealing."
RCW 25.05.165(4); Bishop of Victoria Corp. Sole v. Corporate Bus. Park, LLC, 138 Wn. App. 443, 456, 158 P.3d 1183 (2007), review denied, 163 Wn.2d 1013 (2008).
The trial court's findings of fact on this issue were as follows:
7. In 2003, Mr. Dykes hoped to begin construction of buildings 3 and 4 in the fall. Through the project architect, Ed McHugh, Mr. Dykes made contact with MRJ Construction where Mr. McHugh's son Patrick worked. Things clicked and there grew — among those aware of these dealings — an expectation that MRJ would likely get the job of building the project. In the early summer, Mr. Dykes signed a contract with MRJ to perform pre-construction services. In June, MRJ made a preliminary proposal to do the work for $1,754,519. In August, MRJ submitted a formal bid for the work. Their total price was $1,632,307 which included a 5% general contractor's fee. Mr. Dykes met with MRJ personnel in a discussion of the various alternates and exclusions and indicated some preferences, including a money saving steel joist and girder system for the roof structure. Six days later, on August 18, 2003, MRJ submitted a revised bid of $1,619,082.
8. Partner Ned Lumpkin was unaware of the above discussions involving Mr. Dykes who had deliberately not informed him. (No mention of the discussions was contained in the July, 2003 "Status Report" Mr. Dykes distributed to the investors and partners.) When he did learn what was going on, Mr. Lumpkin sought through counsel to assert his rights. Also acting through counsel, Mr. Dykes in early September provided Mr. Lumpkin with the current plans and specifications and with "an invitation to bid on the project".
9. Of the opinion that he did not need to "bid" on this job, Mr. Lumpkin avoided that term and characterized his October 15, 2003 submission to his partner Mr. Dykes as an "estimate" of the costs of construction of the planned buildings 3 and 4. His proposal, on behalf of Lumpkin, Inc., was to do the work for $1,714,000 which would include the 10% general contractor's fee.
10. Mr. Dykes testified that he had expected and intended that, per the agreement to which all had mutually assented, Lumpkin, Inc. would construct all four buildings in the project. He asserts that changing circumstances led him to conclude that his fiduciary duties to the investors compelled him to change his plans. Specifically, he stated that it was Mr. Lumpkin's "immoral, unethical padding of his bills" for constructing buildings 1 and 2 that compelled him to conclude, on behalf of the investors, that he could no longer allow his partner to continue in his previously agreed role. The Court does not accept this factual contention. Rather, it finds the more credible evidence to be that Mr. Lumpkin's demands for overdue payments to him on a different partnership project (Edmonds Shopping Center) led to the discord between the two men and to this retaliatory action.
. . . .
12. In an ostensible effort to balance these potentially conflicting duties, in the spring of 2004, Mr. Dykes retained the services of architect Mark Travers to act as an intermediary to aid in determining who would get the construction contract for buildings 3 and 4. Mr. Travers quickly decided that it would be best to solicit new bids. He contacted two new contractors and invited their bids and Mr. Dykes advised MRJ but nobody told Lumpkin. In fact, Mr. Dykes advised Mr. Travers that he did not want to have Lumpkin rebid. Again after involvement of counsel, it was agreed that Lumpkin's proposal would be updated and it would be considered. The Lumpkin "estimate" had grown to $1,882,000. MRJ did not update their bid but informally indicated their price would be a bit higher than it had been the previous August.
14. In crafting its new proposal or "estimate", Lumpkin, Inc. was not provided with certain partnership information to which MRJ had access. For instance, although in late 2003 the project architect had submitted and received Woodinville's approval for revised plans including the less expensive roof design, Lumpkin, Inc. was not given these plans. Nor did Lumpkin, Inc. receive the copies of the project structural engineer's drawings of the new roof support system although these were incorporated in the above plans and had been paid for by the Partnership no later than February of 2004. In addition, when Mr. Travers distributed a couple [of] addenda to the contract documents to "all bidders", at the direction of Mr. Dykes, these were not given to Lumpkin, Inc.
All of the above findings of fact are supported by substantial evidence in the record, and as with the first issue, the trial court's conclusions of law were supported by its findings. They are:
5. The contract was breached when Lumpkin, Inc. was denied the opportunity to construct buildings 3 and 4 and to be compensated for this work at the agreed upon rate.
6. As managing partner, Mr. Dykes had a fiduciary duty to his partner Ned Lumpkin. Knowing of Mr. Lumpkin's reasonable expectations under their agreement, it was a breach of that fiduciary duty to conceal material information from him rather than according him the full candor and good faith dealing that were required.
We find no error. Dykes owed Lumpkin a fiduciary duty to provide him with all the information in WBC's possession relevant to the design of Buildings 3 and 4 when Lumpkin, Inc., was preparing its bids. The trial court found that Dykes deliberately concealed information that was material to those bids, and that finding is supported by substantial evidence in the record.
IV. Statute of Limitations
Dykes and WBC also argue that Lumpkin and Lumpkin, Inc.'s claims were time-barred because they should have known that Dykes was reviewing other construction bids on the project in 1989. Whether a claim is time-barred is a legal question, which this court reviews de novo. A statutory period begins to run when the plaintiffs' cause of action accrues. Generally, the statute of limitations in a contract action begins to run at the time of breach.
Goodman, 128 Wn.2d at 373.
RCW 4.16.005; Malnar v. Carlson, 128 Wn.2d 521, 529, 910 P.2d 455 (1996).
Wm. Dickson Co. v. Pierce County, 128 Wn. App. 488, 495, 116 P.3d 409 (2005).
Lumpkin testified that he did not know of Dykes' 1989 bid solicitation until 2004, and the trial court found him credible. Dykes and his counsel stated at trial they could produce a copy of a 1989 bid from Lumpkin, Inc., but they never did so. Appellants also contend that because WBC contracted with other entities for tenant improvements, Lumpkin, Inc., waived its right to construct Buildings 3 and 4, or was on notice for purposes of the statute of limitations. But Lumpkin, Inc., never claimed a right to construct tenant improvements, and the trial court found that Lumpkin constantly asserted his company's right to construct Buildings 3 and 4.
The trial court therefore properly determined that Dykes and WBC failed to produce any evidence in support of their claim that Lumpkin should have been aware of his cause of action in 1989. Accordingly, we affirm the trial court's conclusion that appellants' timeliness and waiver arguments fail.
V. Prejudgment Interest
Finally, WBC and Dykes contend that the trial court erred in awarding Lumpkin, Inc., prejudgment interest. Prejudgment interest may be awarded when: (1) an amount claimed is "liquidated" or (2) when the amount of an "unliquidated" claim is for an amount due upon a specific contract for the payment of money, and the amount due may be determined by computation with reference to a fixed standard contained in the contract without reliance on opinion or discretion. A "liquidated" claim is "one where the evidence furnishes data which, if believed, makes it possible to compute the amount with exactness, without reliance on opinion or discretion."
Scoccolo Const., Inc. v. City of Renton, 158 Wn.2d 506, 519, 145 P.3d 371 (2006) (citing Prier v. Refrigeration Eng'g Co., 74 Wn.2d 25, 33, 442 P.2d 621 (1968)).
Prier, 74 Wn.2d at 32.
The court explained the award in its findings of fact:
19. Plaintiff Lumpkin, Inc. had the right to perform the construction work for buildings 3 and 4 and to collect its general contractor's fee of 10% as agreed. As to a damages calculation, the Court would take the $2,200,000 total cost paid and back out MRJ's 5% fee. This produces a construction cost of $2,090,000. Ten percent of this would be $209,000. Being of the view that certain overhead and other costs were avoided by Lumpkin, Inc. in not overseeing this construction, the Court will reduce that figure by a further 10%. This produces a net damages amount of $188,100 which the Court finds to be the amount of money needed to put the plaintiff in as good a position as it would have been in if both parties had performed all of their promises under the contract. These damages were the reasonably foreseeable result of the defendants' breach of the contract.
Lumpkin, Inc.'s damages are clearly liquidated. At trial, it offered ample evidence of its 10 percent fee and the ultimate construction costs required to determine that fee. The amount due Lumpkin, Inc., was liquidated by a process of computation without reliance on opinion or discretion, and there was no dispute that it did not receive any of its fee. Accordingly, we affirm the trial court's award of prejudgment interest.
If the court did exercise any discretion, it was to reduce the amount of Lumpkins, Inc.'s damages for costs it avoided. This did not change the process by which the court determined damages based on the contract terms and the costs to construct Buildings 3 and 4.
For all of the reasons stated above, the trial court's decision is affirmed.