Case Title: WESTERN MUNICIPAL CONSTRUCTION OF WYOMING, INC. V. BETTER LIVING, LLC

Citation: 

Docket Number: S-09-0116

State: wyoming

Court: Wyoming Supreme Court

Date: 2010-06-29T00:00:00Z

Document:
WESTERN MUNICIPAL CONSTRUCTION OF WYOMING, INC. V. BETTER LIVING, LLC2010 WY 92Case Number: S-09-0116Decided: 06/29/2010NOTICE:  This opinion is subject to formal revision before publication in Pacific Reporter Third.  Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be made before final publication in the permanent volume.
APRIL 
TERM, A.D. 2010

 
 
WESTERN 
MUNICIPAL CONSTRUCTION OF WYOMING, 
INC.,Appellant(Plaintiff),v.BETTER LIVING, 
LLC,Appellee(Defendant).

 
 
Appeal 
from the District Court of Sheridan County

The 
Honorable John G. Fenn, Judge

 
 

Representing 
Appellant:

Raymond 
W. Martin and Kristin M. Nuss of Sundahl, Powers, Kapp & Martin, LLC, 
Cheyenne, WY.  Argument by Mr. 
Martin.

 
 

Representing 
Appellee:

Anthony 
Todd Wendtland of Wendtland & Wendtland, Sheridan, WY.

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, 
JJ.

 
 

HILL, 
Justice.

 
 
[¶1]      Appellant, 
Western Municipal Construction (Western), challenges the district court's order 
granting summary judgment in favor of the Appellee, Better Living, LLC (Better 
Living).  We will reverse and remand 
for entry of summary judgment in favor of Western.

 
 
ISSUE

 
 
[¶2]      Western states 
this issue:

 
 
            
Did the district court improperly grant summary judgment for [Better 
Living] by failing to review the Settlement Agreement and improperly 
superimposing the Project Contract's dispute procedures?

 
 
Better 
Living restates the issue thus:

 
 
            
Did the trial court properly grant Better Living's motion to dismiss 
Western's complaint for declaratory judgment based on Western's undisputed 
failure to comply with an express condition precedent in the parties' 
contract?

 
 
FACTS 
AND PROCEEDINGS

 
 
[¶3]      This appeal 
arises out of the dismissal of a Complaint for Declaratory Judgment.  That complaint sought to declare the 
parties' rights under a settlement agreement resulting from a mediated dispute 
concerning a construction contract.  
Western is a Wyoming corporation which was the contractor for a 
residential infrastructure construction project in Sheridan.  Better Living is a Wyoming LLC which was 
the owner of the project.  A dispute 
arose concerning two items:  (1) the 
amount of liquidated damages, for which Better Living had assessed a $345,000.00 
deduction against the $1.4 million contract price, and (2) the amount due under 
a "Force Account" bid item.  The 
parties agreed to mediate that dispute and eventually they reached a settlement 
agreement.

 
 
[¶4]      On December 3, 
2008, Western filed a Complaint for Declaratory Judgment asking the district 
court to review the parties' Settlement Agreement and enter an order enforcing 
the unambiguous language of that agreement to the effect that Better Living owed 
Western $250,000.00 as full and complete compensation for any and all amounts 
owed on the project.  Western also 
asked that it be awarded its fees and costs for bringing this action, as 
provided for in the contract between the parties.  Both parties filed motions for summary 
judgment.  On May 1, 2009, the 
district court entered summary judgment in favor of Better Living on the bases 
set out in its Decision Letter filed of record on April 14, 
2009.

 
 
[¶5]      Prior to these 
proceedings, the parties had submitted the disputes between them to a mediator 
for resolution.  The results of that 
mediation were memorialized in this agreement which was executed on September 
29, 2008:

 
 
SKEELS 
ST/POPLAR GROVE PHASE I STREET AND UTILITY

PROJECT 
CONTRACT

AMENDMENT 
TO SETTLE DISPUTES REGARDING LIQUIDATED

DAMAGES 
CLAIMS AND FORCE ACCOUNT BID ITEM

 
 
            
WHEREAS, the Parties, Better Living, LLC ("Owner") and Western Municipal 
Construction of Wyoming, Inc. ("Contractor") mutually desire to resolve their 
legal and equitable disputes arising under the above referenced Contract in the 
most timely and cost effective manner available to them; 
and

            
WHEREAS, the parties have participated in mediation in Casper, Wyoming, 
with their respective legal counsel and mediator Mark Gifford, Esq.; 
and

            
WHEREAS, the parties have agreed through mediation to settle their 
existing disagreements concerning amounts to be paid by Owner to Contractor 
under paragraph 3.2 of the June 11, 2007 Agreement for the Project and otherwise 
under the Project contract documents and concerning Project bid item #145 on 
Schedule G of the Alternate 1 Project Contract Bid package and otherwise under 
the Project contract documents; and

            
WHEREAS, the parties desire to resolve these two items of dispute under 
the existing Project contract documents only as set forth herein and to 
otherwise go forward pursuant to the existing Project contract without any other 
amendments thereto.

            
WHEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1.    
Owner 
agrees to pay Contractor a final amount of $250,000.00 as full and complete 
compensation for any and all amounts owed to Contractor for work performed on 
the Project, including without limitation retainage and bid item amounts 
including Schedule G, Bid item #145 "Force Account" work.  Contractor expressly agrees to accept 
said amount as the proper and agreed full and final amount owed by Owner to 
Contractor for all "Force Account" work and materials.  Contractor hereby expressly releases 
Owner from claims to any other or further claims concerning any "Force Account" 
work and materials and expressly waives and releases any claims, liens, or any 
similar claims against Owner or any Project property or improvements concerning 
liquidated damages payments or credits for delay in completion of the Project 
pursuant to paragraph 3.2 of the June 11, 2007 Agreement for the Project and 
otherwise under the Project contract documents.

2.    
 It shall be an express condition 
precedent to the effectiveness and enforceability of the compromise promises set 
forth in paragraph 1 above that the Contractor shall cooperate in good faith 
with the Owner and HKM Engineering, Inc., to complete all punch list work on the 
Project on or before October 14, 2008 and shall otherwise comply with the 
Project contract requirements concerning the proper and timely application for 
Final Payment.  If the Contractor 
does not complete all punch list work and submit timely, complete, proper, and 
fully executed Final Payment application paperwork pursuant to the Project 
contract, on or before October 14, 2008, then liquidated damages shall accrue at 
the rate of $600.00 per day as provided in the Project contract documents.  Contractor will stipulate to the entry 
of judgment in favor of Owner and against Contractor for such liquidated damages 
accrual.

3.    
The 
parties' existing June 11, 2007 Project Contract shall otherwise remain in full 
force and effect.  This agreement 
does not constitute any amendment of any terms in the parties' existing Project 
Contract other than those expressly set forth in paragraphs 1 and 2 
above.

4.    
This 
agreement shall not constitute any release or waiver of any kind by any party of 
any rights or claims arising out of the Project Contract or the Project other 
than those expressly set forth in paragraphs 1 and 2 
above.

5.    
All 
parties executing this agreement do so knowingly, voluntarily, and with the full 
advice of counsel.  This agreement 
shall be governed by the laws of the State of Wyoming in all 
respects.

6.    
This 
agreement shall be binding upon and shall inure to the benefit of the respect 
assigns, successors, heirs, agents, employees, officers and members of the 
parties.

 
 
[¶6]      The record is not 
clear as to the date that Western submitted its request for the final payment, 
but it is not disputed that it was submitted before October 14, 2008.  Indeed, it had to have been submitted 
before October 14, 2008, because it is also undisputed that HKM Engineering, 
Inc., sent out a "Memorandum" to both Western and Better Living on October 6, 
2008, containing these very limited bits of information.  The reference line of the memo informs 
us that its subject is "Poplar Grove/Skeels Street Force Account, Pay Request 
#5, Final Completion":

 
 
Enclosed 
please find a New Periodic Application for Progress Payment to Contractor form 
for Pay Request #5.  This Pay 
Request reflects the discussions and agreement from the September 29, 2008 
mediation hearing.  Please replace 
the pay request #5 and Final Change Order submitted on August 29, with this pay 
request.

 
 
Also, 
I have revised the Final Change Order for this project to include the adjustment 
in the Force Account amount as well as releasing $107,683.73 of liquidated 
damages to give a total final payment including all retainage of 
$250,000.00.  Once the Final Change 
Order is signed and other required Final Completion documentation is received, 
we can proceed with Final Completion and issue Final Payment for this 
project.

 
 
We 
have also in good faith started the required advertisement for this project as 
soon as possible.  The attached 
advertisement document was first published Saturday, October 4, and if all 
Contract requirements are met, states a final payment date of November 14th, 2008.

 
 
Please 
contact me if you have any questions with this final pay request and change 
order, or any of the other documentation required for Final 
Completion.

 
 
Skeels 
Street/Poplar Grove Phase I Streets and Utilities

Pay 
Estimate #5

 
 
Force 
Account Work through Pay Estimate #5

 
 


Item

Cost

Pay 
      Request

Description

 
 
Rock 
      Excavation

 
 
$    
      447.32

 
 
#2

Rock 
      excavation needed

for 
      Phase I sanitary sewer line.

Dry 
      Utility Conduits at

entrance 
      to subdivision

 
 
$ 
      6,520.00

 
 
#4

Conduits 
      installed across 

subdivision 
      entrances.

 
 
Dry 
      Utilities

 
 
$33,086.12

 
 
#4

Dry 
      Utilities installed from

2-25-08 
      to 4-22-08.

 
 
Additional 
      to Dry Utilities

 
 
$  4,120.84

 
 
#5

Added 
      after review of WMC

and 
      HKM documentation.

 
 

Final 
Payment Reconciliation

Total 
Retainage withheld on this project

(includes 
retainage from PR#5 work)                        
            
$138,607.51

 
 
Work 
done on Pay Request #5 (minus

retainage 
for PR #5 work)                                            
$    
3,708.76

 
 

Liquidated 
Damages back to WMC                
            
$107,683.73

Final 
payment Amount                                     
            
$250,000.00

Retainage 
previously released         
              
            
$  54,999.32

Full 
and final payment for PR#5                                
$195,000.68

 
 
[¶7]      The crux of the 
dispute at hand is the "Retainage previously released" item included in Pay 
Estimate #5.  Western said that sum 
was encompassed in the mediation process and could not be deducted from the 
$250,000.00 settlement amount.  
Better Living takes the opposite position.  Western also contends that the materials 
in the record of this case describe "Retainage previously released" as "what had 
been paid prior to the mediation," and that that was not a matter discussed at 
the mediation.  What is meant by 
"Force Account" work is not discussed other than to use those words.  However, that phrase usually refers to 
change order work.  See 2 Bruner & O'Connor on Construction § 
6:84 (2010);Wayne Knorr, Inc. v. 
Department of Transportation, 973 A.2d 1061, 1066, fn.1 (Pa. Comm. 2009) 
also see pages 28-29 of  the 
Standard General Conditions of the Construction Contract.

 
 
[¶8]      On October 29, 
2008, it is undisputed that Western sent this e-mail to Better Living:  "Per the settlement agreement, if you 
will refer to Paragraph 1 and Paragraph 3, the final settlement amount is 
$250,000.00.  If you do not agree 
with that we will have to go back to the attorneys and mediator for 
clarification."

 
 
[¶9]      If there were any 
further communications between the parties about this disagreement, they are not 
a matter of record.  However, on 
December 3, 2008, Western filed a "Complaint for Declaratory Judgment" seeking 
to enforce the exact terms of the September 29, 2008 agreement, which is set out 
in detail above.  On January 6, 
2009, Better Living filed a motion to dismiss or in the alternative for summary 
judgment.  Western then filed a 
response containing about the same contentions that we are called upon to 
address in this appeal.  The 
district court opted to dismiss Western's complaint after noting that the 
parties agreed there were no genuine issues of material fact and that Better 
Living was entitled to judgment as a matter of law because Western had not 
complied with "the condition precedent prerequisite to a right to sue and is 
therefore barred from seeking judicial relief for their 
claim."

 
 
DISCUSSION

 
 
Standard 
of Review

 
 
[¶10]   When we review a summary judgment, 
we have before us the same materials as did the district court, and we follow 
the same standards which applied to the proceedings below.  The propriety of granting a motion for 
summary judgment depends upon the correctness of the district court's dual 
findings that there is no genuine issue of material fact and that the prevailing 
party is entitled to judgment as a matter of law.  Reed v. Miles Land and Livestock Co., 
2001 WY 16, ¶ 9, 18 P.3d 1161, 1163 (Wyo. 2001).  Moreover, 

 
 
Our 
primary focus in construing or interpreting a contract is to determine the 
parties' intent, and our initial inquiry centers on whether the language of the 
contract is clear and unambiguous.  
If the language of the contract is clear and unambiguous, then we secure 
the parties' intent from the words of the agreement as they are expressed within 
the four corners of the contract.  
Wolter v. Equitable Resources 
Energy Company, 979 P.2d 948, 951 (Wyo. 1999).  Common sense and good faith are leading 
precepts of contract construction.  
Polo Ranch Company v. City of 
Cheyenne, 969 P.2d 132, 136 (Wyo. 1998).  The interpretation and construction of 
contracts is a matter of law for the courts.  Mathis v. Wendling, 962 P.2d 160, 163-64 
(Wyo. 1998).

 
 

Id.

 
 
[¶11]   When we apply these principles to 
the contract dispute at hand, we conclude that the language of the settlement 
agreement is unambiguous and the language of the underlying "Standard Conditions 
of the Construction Contract" need not, and should not, be consulted in 
construing the language of the settlement agreement.  Superimposing a requirement here that, 
if Western objected to receiving a payment for less than $250,000.00, then it 
must make that claim in accordance with Article 10.05 of the construction 
contract defies the purpose and intent of the settlement agreement and it adds 
words to that agreement which have the effect of nullifying it.  Our precedents guide us in resolving the 
scope of the instant settlement agreement:

 
 
This 
Court has on several occasions addressed the theory of "compromise and 
settlement."   In Parsley v. Wyoming Automotive Co., 395 P.2d 291, 295 (Wyo. 1964), we described the general rule of compromise and 
settlement as being "that the settlement of a bona fide dispute or a doubtful or 
unliquidated claim, if made fairly and in good faith, is a sufficient 
consideration for a compromise based thereon."  We have defined a compromise as " 'an 
agreement between two or more persons who, to avoid a lawsuit, amicably settle 
their differences on such terms as they can agree on.' "  Peters Grazing Ass'n v. Legerski, 544 P.2d 449, 456 n. 3 (Wyo. 1975) (quoting 15A C.J.S. Compromise and Settlement § 1 at 
170).  A settlement agreement is a 
contract and, therefore, subject to the same legal principles that apply to any 
contract.  In re Estate of Maycock, 2001 WY 103, ¶ 
10, 33 P.3d 1114, 1117 (Wyo.2001); Matter 
of Estate of McCormick, 926 P.2d 360, 362 (Wyo. 1996).  The elements are the same as the 
elements of any contract:  offer, 
acceptance, and consideration, and establishment of the existence of these 
elements leads courts to conclude that mutual assent has occurred.  Matter of Estate of McCormick, 926 P.2d  
at 362.  A compromise and settlement 
agreement is, also like other contracts, subject to construction as a matter of 
law.  Ludvik v. James S. Jackson Co., Inc., 
635 P.2d 1135, 1143 (Wyo. 1981).

 
 
A 
contract made in settlement of claims is valid even if the claims settled are of 
doubtful worth....This means that this court will not look behind a settlement 
agreement to see who would have prevailed in a dispute out of which the 
settlement agreement arises.  If the 
settlement agreement itself meets contractual requirements, it will be 
enforced.

 
 

Kinnison 
v. Kinnison, 
627 P.2d 594, 596 (Wyo. 1981).

 
 

Mueller 
v. Zimmer, 
2005 WY 156, ¶ 18, 124 P.3d 340, 350 (Wyo. 2005) (emphasis in 
original).

 
 

CONCLUSION

 
 
[¶12]   We conclude that the district court 
erred in failing to order Better Living to comply with the settlement 
agreement.  We are also not 
persuaded by Better Living' contentions that by cooperating in executing the 
closeout documents, Western thereby waived its entitlement to the $250,000.00 
settlement amount or that it thereby ratified Better Living's efforts to 
unilaterally modify the settlement agreement.  Western was entitled to a payment in the 
amount of $250,000.00.  If there are 
other disputes Better Living saw in this case, it was the one burdened with 
filing a claim, which it did not do.  
The district court's order is reversed and this matter is remanded to the 
district court for entry of an order consistent with this opinion.  Western is also entitled to the fees and 
costs due it under W.R.A.P. 10.04.