Case Title: Emulsified Asphalt, Inc. of Wyoming v. Transportation Com'n of Wyoming

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1998-12-21T00:00:00Z

Document:
Emulsified Asphalt, Inc. of Wyoming v. Transportation Com'n of Wyoming1998 WY 163970 P.2d 858Case Number: 97-296Decided: 12/21/1998Supreme Court of Wyoming

EMULSIFIED ASPHALT, INC. OF WYOMING, a Wyoming corporation, 
Appellant (Plaintiff),

v.

TRANSPORTATION COMMISSION OF WYOMING, an agency of 
the State of Wyoming, Appellee (Defendant).

 

Appeal from the District Court, 
Converse County, Barton R. Voigt, J.

 

Rex O. Arney of Brown, Drew, 
Massey & Sullivan, Casper, Wyoming, for 
Appellant.

William U. Hill, Attorney 
General; Michael L. Hubbard, Deputy Attorney General; Ron Arnold, Senior 
Assistant Attorney General; Clinton D. Beaver, Senior Assistant Attorney 
General, for Appellee. Argument by Mr. Beaver.

 

Before LEHMAN, C.J., and MACY, GOLDEN, TAYLOR,* JJ., 
and PRICE, D.J.

 * Chief Justice at time of oral argument; retired 
November 2, 1998.

 

GOLDEN, 
Justice.

 [¶1] This case presents the question whether an 
earlier specific statutory provision, WYO. STAT. § 24-2-101(e), consenting to 
the Transportation Commission's exposure to contract actions, has been impliedly 
repealed by a later general statutory provision in the Wyoming Governmental 
Claims Act, WYO. STAT. § 1-39-104(a), permitting any governmental entity to 
assert contract action immunity in any of the entity's properly executed 
contracts made pursuant to the entity's granted powers. Appellant Emulsified 
Asphalt, Inc. (Emulsified) brought suit against the Transportation Commission of 
Wyoming (Commission) on a contract the parties had entered into for highway 
construction. The Commission moved to dismiss the suit on grounds of sovereign 
immunity as provided for in the contract. The district court granted that motion 
and dismissed Emulsified's complaint.

 

[¶2] We hold that the later 
enacted Wyoming Governmental Claims Act impliedly repealed the earlier enacted 
consent to suit provision in WYO. STAT. § 24-2-101(e), thus allowing the 
Commission to insert an immunity provision in its contract. In this case, 
however, the contractual immunity provision is ambiguous and ineffective against 
Emulsified. We reverse the dismissal and remand for further 
proceedings.

 

                                             
ISSUES

 

[¶3] Emulsified presents 
these issues for our review:

 

Whether the district court erred in its construction 
and interpretation of the contract at issue?

 

Whether the sovereign immunity defense applies to a 
contract entered into between the Transportation Commission of Wyoming and a 
highway contractor?

 

[¶4] The Commission believes 
the issues are:

 

1. 
Did the contract retain the state's sovereign immunity pursuant to WYO. STAT. § 
1-39-104(a) for all contract claims?

 

2. Should the Court abolish the doctrine of sovereign 
immunity for contract actions in Wyoming?

 

3. 
If the district court does have subject matter jurisdiction, is the court 
nevertheless precluded from enforcing an "agreement to 
agree"?

 

                                              
FACTS

 

[¶5] According to its 
complaint, Emulsified entered into a contract on December 7, 1995, with the 
Commission to reconstruct 10.4 miles of highway U.S. 87 for the State of 
Wyoming. This project was designated as the "Glenrock/Casper Project" (the 
contract). The parties also entered into two additional contracts, the McKinnon 
Road Project and the Newcastle Project. At the time that Emulsified bid on the 
contract it relied on the plans and specifications of the Commission and 
intended to substantially complete, and contends that it could have 
substantially completed, all three projects in 1996. At the time of bidding on 
the contract, Emulsified anticipated finishing the paving on the McKinnon Road 
Project before beginning the paving on the contract and also planned to finish 
the paving on the contract in time to complete the paving on the Newcastle 
Project before September 15, 1996. Emulsified contends that it was capable of 
performing and could have performed all the contracts in the allotted time if 
the plans and specifications furnished by the Commission on the contract had 
been correct.

 

[¶6] When Emulsified began 
working on the Glenrock/Casper Project, it was discovered there were substantial 
material errors in the plans and specifications relating to the contract. The 
original planned quantity of unclassified excavation on the contract had been 
518,700 cubic yards. The Commission re-estimated the quantity of unclassified 
excavation and determined that the new planned quantity was 815,000 cubic yards 
of unclassified excavation. As a result of the revised computations by the 
Commission, Emulsified and the Commission entered into a change order, Change 
Order # 4, which increased the quantity of unclassified excavation by 296,300 
cubic yards. Emulsified claims that as a result of the increased excavation 
required on the Glenrock/Casper Project, it was required to bring additional 
equipment to the project that could and was intended to have been used on the 
McKinnon and Newcastle Projects in order to complete the 
excavation.

 

[¶7] It became apparent at 
that time that Emulsified would have to change the sequence of work on the three 
projects so that it would complete the Glenrock/Casper Project first, complete 
the Newcastle Project second, then return to the McKinnon Project and complete 
all of the McKinnon Project except for the chip/seal portion of the project 
during the construction season of 1996. At this point in time, it was still 
feasible for Emulsified to complete all three projects in the 1996 construction 
season as contemplated, although in a different order. After Change Order # 4 
was executed and during the summer of 1996 while excavation was going on, areas 
of unsuitable material were encountered which were not anticipated by the 
parties or shown on the plans and specifications.  This unsuitable material had to be 
excavated and wasted and replaced with suitable matter which increased the 
unclassified excavation under the contract for a second time from the 815,000 
cubic yards shown on Change Order # 4 to 1,015,000 cubic yards, an increase of 
200,000 cubic yards of excavation. At that time, Emulsified anticipated it would 
be impossible for it to complete the Glenrock/Casper project and the other two 
projects as originally planned in the construction season of 
1996.

 

[¶8] Emulsified and the 
Commission entered into a second change order, Change Order # 8, involving 
unclassified excavation. Change Order # 8 compensated Emulsified for the 
increased amounts to be excavated, but left for later determination the 
compensation to be paid to Emulsified for the adverse impact on the other 
projects caused by the changes in the contract. Emulsified contends that it was 
not possible at that time to determine the amount of those 
damages.

 

[¶9] Emulsified requested 
payment from the Commission for the additional impact costs caused by the 
changes in the contract.  Emulsified 
sought compensation in the amount of $714,991.38 and for continuing impact 
damages for the McKinnon Project which could not be determined as of December 
10, 1996, the date of Emulsified's claim. The principal continuing impact cost 
to Emulsified on the McKinnon Project is a penalty charged by the Commission in 
the amount of $950 per day for time overruns on the McKinnon Project. The 
Commission offered to pay $271,961.84 and refused to pay for any liquidated 
damages caused by time overruns.

 

[¶10] Emulsified rejected 
this offer and followed the administrative appeal procedure of paragraph seven 
of the contract, viz., the district engineer reviewed the resident engineer's 
decision, the director of the Transportation Department reviewed the district 
engineer's decision, each affirming that the first offer was final. The 
Commission's decision letter informed Emulsified that, under the contract, if it 
contested this decision, its next option was to file an action in district court 
within a thirty-day period beginning the date it received this 
letter.

 

[¶11] Because the parties 
were unable to agree on the appropriate amount to be paid for the change orders, 
Emulsified did follow the Commission's instructions and the provisions of 
paragraph seven of the contract and filed an action in district court. The 
Commission responded with a motion to dismiss on grounds of sovereign immunity 
as provided for in paragraph ten of the contract. Relying on the wording of the 
contract, the district court agreed that the complaint should be dismissed 
because of sovereign immunity. This appeal followed.

 

                                           
DISCUSSION

 

[¶12] Paragraph Seven of the 
contract states (emphasis added):

 

VII. Any dispute concerning a question of fact 
arising under this contract which is not disposed of by agreement shall be 
decided by the Resident Engineer, who will reduce his decision to writing and 
mail a copy forthwith to the Contractor. Within thirty days from the date of 
receipt of such decision, the Contractor may appeal by mailing or otherwise 
furnishing to the District Engineer, a written appeal addressed to the office of 
the District Engineer. On appeal, the District Engineer will, within thirty 
days, promptly convene an informal meeting of the parties to the dispute for 
negotiation of any and all areas in conflict. Within thirty days of this 
meeting, a written decision will be forwarded to  the Contractor. If the Contractor 
disagrees with this decision, he shall, within thirty days, appeal that decision 
to the Director, who will convene an informal meeting of the Contractor, the 
Resident Engineer, and the District Engineer to negotiate a resolution to the 
problem. The Director will, within thirty days of this meeting, issue a written 
decision which will be forwarded by certified mail, return receipt requested, to 
the Contractor. The Contractor may, within thirty days of the receipt of the 
decision of the Director, file an action in the District Courts of this State 
pursuant to the Wyoming Rules of Civil Procedure. If no such action is filed, or 
no such appeals are taken with the time provided herein, the decision of the 
Department will be final and conclusive. Pending final resolution of a 
dispute hereunder, the Contractor shall proceed diligently with the performance 
of the contract in accordance with the Resident Engineer's decision. The 
negotiations required by this section are a condition precedent to filing an 
action in the District Courts of this State and shall be conducted in good faith 
toward a reasonable resolution of any matters in dispute between the Contractor 
and the Department.

 

[¶13] Paragraph Ten states 
(emphasis in original):

 

X. 
THE DEPARTMENT DOES NOT WAIVE SOVEREIGN IMMUNITY BY ENTERING INTO THIS 
CONTRACT.

 

The Parties' Arguments

 

  [¶14] Although Emulsified has submitted a 
constitutional argument, it contends that this case can be resolved by 
principles of contract interpretation. In its response, the Commission relies 
upon the Wyoming Governmental Claims Act, WYO. STAT. § 1-39-104(a), for  authority to assert sovereign immunity as 
an affirmative defense. Emulsified's reply brief identifies the Commission's 
enabling statute as containing language conflicting with that sovereign immunity 
assertion.

 

[¶15] The statute which 
creates the Commission and sets out its powers is WYO. STAT. § 24-2-101. 
Subsection (e) of that statute states:

 

(e) The commission shall maintain offices at the 
state capital. The commission is empowered to sue in the name of the 
"Transportation Commission of Wyoming", and may be sued by that name in 
the courts of this state and in no other jurisdiction upon any contract 
executed by it. The attorney general is the legal advisor of the commission 
and shall prosecute and defend all actions and shall also appear in all 
proceedings in any federal department in which the commission is a party or is 
interested.

 

WYO. STAT. § 24-2-101(e)(1997) (emphasis 
added).

 

[¶16] The Wyoming 
Governmental Claims Act says this about contract actions:

 

(a) . . . Any immunity in actions 
based on a contract entered into by a governmental entity is waived except to 
the extent provided by the contract if the contract was within the powers 
granted to the entity and was properly executed.  The claims procedures of W.S. 1-39-113 
apply to contractual claims against governmental entities.

 

WYO. STAT. § 1-39-104(a) 
(1997).

 

[¶17] Although we agree that 
contract construction could easily resolve this dispute, because the district 
court dismissed Emulsified's complaint on the basis of sovereign immunity, and 
because the Commission asserts it as a statutory right rather than as a matter 
of contract construction, we find that the issue whether sovereign immunity is 
available as an affirmative defense to the Commission must be 
addressed.

 

SOVEREIGN IMMUNITY

 

[¶18] In 1978, this Court 
distinguished between local governmental immunity and sovereign immunity and 
judicially abrogated local governmental immunity from suit in tort. Oroz v. Bd. 
of County Comm'rs, 575 P.2d 1155, 1158 n. 6 (Wyo. 1978); White v. State, 784 P.2d 1313, 1319-20 (Wyo. 1989). The legislative and executive branches of 
government then enacted and signed into law the Wyoming Governmental Claims Act 
which reestablished the tort immunity of a "governmental entity" subject to 
certain enumerated exceptions. Hurst v. State, 698 P.2d 1130, 1132 (Wyo. 1985). 
Before that law went into effect in July of 1979, this Court considered whether 
or not sovereign immunity in tort existed by virtue of the statutory adoption of 
the common law as it existed in 1607 or by virtue of Art. 1, Sec. 8 of the 
Wyoming Constitution. Worthington v. State, 598 P.2d 796, 799-801 (Wyo. 1979); 
Oroz, 575 P.2d  at 1157. Worthington presented the opportunity to this Court to 
determine if sovereign immunity was adopted by our state constitution while 
permitting the legislature the option of allowing suit or if the state 
constitution assumed that there was no sovereign immunity but allowed the legislature to control some aspects 
of suit against the state. If sovereign immunity was not constitutionally based, 
the court would then have had to consider whether sovereign immunity was 
legislatively enacted in WYO. STAT. § 8-1-101, which adopted the common law of 
England as the rule of decision in Wyoming. Sovereign immunity was part of the 
common law of England in 1607 and, therefore, would have become the law of 
Wyoming under the statute. Worthington decided that sovereign immunity was 
constitutionally based. Worthington, 598 P.2d  at 801 (citing Hjorth Royalty Co. 
v. Trustees of University, 30 Wyo. 309, 222 P. 9 (1924)); Algirdas Mykolas 
Liepas, The Doctrine of Sovereign Immunity in Wyoming: Current Status of the 
Doctrine and Arguments for Abrogation, 20 LAND & WATER L.REV. 221, 225 
(1985). From that decision arose our rule that there can be no suit against the 
state without its express consent. Oyler v. State, 618 P.2d 1042, 1045 (Wyo. 
1980); Biscar v. Univ. of Wyoming Bd. of Trustees, 605 P.2d 374, 375 (Wyo. 
1980).

 

[¶19] The Wyoming 
Governmental Claims Act reimposed governmental immunity in tort. In 1980, the 
legislature amended the Act to waive immunity on a contract by a governmental 
entity. 1980 Wyo. Sess. Laws Ch. 46. The amendment states in pertinent 
part:

 

Any immunity in actions based on a contract entered 
into by a governmental entity is waived except to the extent provided by the 
contract if the contract was within the powers granted to the entity and was 
properly executed.

 

WYO. STAT. § 1-39-104(a) 
(1997) (emphasis added). Based on this amended language, the Commission asserts 
here that it has the power to place a sovereign immunity provision in any 
contract and may then raise it as an affirmative defense. This assertion, 
however, conflicts with the specific statutory language creating the Department 
of Transportation and establishing the powers of the 
Commission.

 

[¶20] In 1919, when the 
legislature created the Commission, it empowered the Commission to sue and 
stated that the Commission "may be sued . . . upon any contract executed by it." 
1919 Wyo. Sess. Laws Ch. 132; WYO. STAT. § 24-2-101(e) (1997). This Court 
recognized that this language was an express consent to sue the Commission. Utah 
Constr. Co. v. State Highway Comm'n, 45 Wyo. 403, 415, 19 P.2d 951 (1933). The 
United States Supreme Court also characterized this language as an express 
consent to suit.  State Highway 
Comm'n v. Utah Constr. Co., 278 U.S. 194, 199, 49 S. Ct. 104, 106, 73 L. Ed. 262 
(1929). Our other decisions, while deciding issues of claims procedures and 
proper review, have acknowledged that the Commission may be sued upon one of its 
contracts. See Rissler & McMurry Co. v. Wyoming Highway Dept., 582 P.2d 583 
(Wyo. 1978); State Highway Comm'n v. Brasel & Sims Constr. Co., 688 P.2d 871 
(Wyo. 1984). Despite this long recognition that the Commission can be sued on 
one of its contracts, the Commission now asserts that the Governmental Claims 
Act has impliedly repealed the express consent to suit language of WYO. STAT. § 
24-2-101(e) and allows the Commission to place a sovereign immunity provision in 
its contracts. The Commission relies upon Longacre v. State, 448 P.2d 832 (Wyo. 
1968), for this assertion.

 

                                     
Statutory Repeal by Implication

 

[¶21] In Longacre, this 
Court considered the validity of an Alcoholic Beverages Act, § 12-20, W.S. 1957, 
(1967 Cum.Supp.) which stated:

 

No 
female shall be employed as a bartender in a room holding a retail liquor 
license.

 

Longacre, 448 P.2d  at 832. 
Statutory validity was at issue because of the subsequent enactment of the Fair 
Employment Practices Act1 which prohibited gender-based 
employment discrimination. Id. at 833. The obvious conflict between the two 
statutes raised the issue of legislative intent. Usually, this Court resolves 
these conflicts with the rules of statutory construction which, in Longacre, 
would have caused the specific Alcoholic Beverages statute to have prevailed 
over the more general fair employment practices statute. Haines v. Territory, 3 
Wyo. 167, 172, 13 P. 8, 11 (Wyo. 1887). Statutory construction also required the 
two statutes to be read together in a way to let both stand; however, the two 
were so repugnant to each other that we held it was the manifest legislative 
intent that the general statute have universal application and repeal by 
implication the earlier specific statute.  
Longacre, 448 P.2d  at 834.

 

[¶22] Although Longacre was 
one of our rare decisions finding repeal by implication, nothing we said in that 
decision diminishes the strength of our longstanding rule that repeals by 
implication are not favored and will not be indulged if there is any other 
reasonable construction. Id. at 834; see also Town of Pine Bluffs v. State Bd. 
of Equalization, 79 Wyo. 262, 283-85, 333 P.2d 700, 707-709 (Wyo. 1958). The 
party asserting implied repeal bears the burden of demonstrating beyond question 
that the legislature intended that its later legislative action evinced an 
unequivocal purpose of effecting a repeal. Nehring v. Russell, 582 P.2d 67, 73 
(Wyo. 1978). It must be shown that the later statute is so repugnant to the 
earlier one that the two cannot logically stand together, or that the whole 
subject of the earlier statute is covered by the later one having the same 
object, clearly intending to prescribe the only rules applicable to the subject. 
Id.; see Town of Pine Bluffs, 79 Wyo. at 283-84, 333 P.2d  at 
709.

 

[¶23] In the instant case, 
conflict exists between the later general Governmental Claims Act allowing a 
governmental entity to insert an immunity provision in its contract and the 
earlier Commission statute which does not expressly grant the Commission the 
power to insert an immunity provision in its contract. In the earlier specific 
statute, the legislature articulates an unqualified waiver of sovereign immunity 
upon any contract executed by the Commission, which statute was enacted decades 
ago and has not been revised or abandoned in the decades since the later 
enactment of the Governmental Claims Act. The original waiver plainly evinced an 
intent that those who contract with the Commission may have confidence that 
obligations under the terms of the contract will be honored, and not be 
subjected to the possibility of an arbitrary and capricious dishonor by the 
Commission, shielded by the doctrine of sovereign 
immunity.

 

[¶24] The two statutory 
provisions interrelate to the extent that both waive immunity under a contract 
executed by a governmental entity but are irreconcilable on the issue of 
inserting an immunity provision in the contract. The statutory construction rule 
requiring the two be harmonized might resolve the issue if we were to decide the 
Commission's powers to contract included the power to insert an immunity 
provision in its contracts. This harmony cannot be achieved because the 
legislature did not expressly grant the Commission the authority to contract for 
sovereign immunity and only those powers expressly conferred by the legislature 
are granted to an administrative agency. Brasel & Sims Const. Co. v. State 
Highway Comm'n., 655 P.2d 265, 267 (Wyo. 1982). We must follow Longacre and 
decide that, plainly, the later general statute was intended to address the 
entire subject of sovereign immunity and replace the earlier specific 
statute.

 

[¶25] Contracts entered into 
by the Commission for the benefit of the state are deemed contracts with the 
State of Wyoming. WYO. STAT. § 1-35-103(b) (1997). Our holding that the 
Governmental Claims Act has repealed by implication the portion of the 
Commission's statute consenting to suit allows enforcement of the sovereign 
immunity provision of this contract in this case if it complies with general 
principles of contract law. Whether it does comply with those contract 
principles is the next issue addressed.

 

Immunity Provision

 

[¶26] The purpose of 
interpretation or construction of any contract is to ascertain the true intent 
of the parties. State v. Pennzoil Co., 752 P.2d 975, 978 (Wyo. 1988). Unless the 
terms of the contract are ambiguous, the language used in the contract expresses 
and controls the intent of the parties. Id. A contract is ambiguous if it is 
obscure in its meaning because of indefiniteness or expression or because it 
contains a double meaning. Mountain View/Evergreen Improvement and Service Dist. 
v. Casper Concrete Co., 912 P.2d 529, 532 (Wyo. 1996). Whether a contract 
contains an ambiguity is a question of law for the reviewing court which may be 
independently determined by this Court. Id. Ambiguous contracts are construed 
against the drafter. Id.

 

[¶27] The Commission argues 
that paragraph ten allows it to unilaterally prevent Emulsified from resorting 
to the courts to enforce the contract. Emulsified argues that the Commission 
cannot be immune from suit if paragraph seven, drafted by the Commission, allows 
the specific right to resort to the courts for resolution of factual disputes. 
In its view, Emulsified believes that the Commission's interpretation of the 
contract allows it to adjudicate its own contract disputes. We held in Brasel 
that the Commission was prohibited from adjudicating its own contract disputes. 
Brasel, 688 P.2d  at 875.

 

[¶28] The inconsistency of 
these two provisions creates an ambiguous double meaning, and it will be 
construed against the drafter, the Commission. Paragraph seven entitles 
Emulsified to bring an independent legal action in the courts to resolve factual 
disputes. We do not decide that Emulsified's complaint constitutes a claim under 
paragraph seven, nor do we say that this decision limits Emulsified to just 
those causes of action to which paragraph seven applies and all others are 
precluded by paragraph ten's preservation of sovereign immunity. The plain 
meaning of paragraph ten is not apparent as to whether the parties' intent was 
to permit sovereign immunity as a defense to all disputes arising from the 
contract, tort immunity, or both. By itself, paragraph ten is ambiguous and is 
to be construed against the Commission.

 

DUE PROCESS

 

[¶29] Because we have 
decided that sovereign immunity as provided for in this contract does not 
deprive Emulsified of pursuing a remedy in court, it is not necessary to address 
this issue.

 

AGREEMENT TO AGREE

 

[¶30] Finally, the 
Commission contends that Change Order # 8 is missing the essential term of how 
to determine the amount of consideration and must, therefore, be considered 
nothing more than an agreement to agree. According to Emulsified, the change 
order provided for Emulsified to provide additional excavation services because 
of the Commission's errors and the Commission agreed to compensate Emulsified 
for this additional excavation and pay for the impact costs and time overruns 
caused by the additional excavation which could not be determined until the end 
of the construction season. The record does not provide us with the change order 
and we cannot construe it, but we will note that the agreement induced 
Emulsified to perform and it did perform the additional excavation. At the end 
of the construction season, Emulsified calculated that it was entitled to an 
additional $714,991.38.  The 
Commission calculated that the amount was only $271,961.84. We do not have a 
sufficient record to determine how these calculations were arrived at, but we do 
not believe that their existence indicates a mere agreement to agree, rather, 
their existence proves agreement.

 

                                           
CONCLUSION

 

[¶31] The Wyoming 
Governmental Claims Act governs sovereign immunity in this state and where a 
statutory provision in the Commission's enabling statute conflicts with it, the 
latter is repealed by implication. Under the Act, the Commission was authorized 
to insert an immunity provision in its contract with Emulsified; however, that 
provision in the context of the Emulsified contract is ambiguous and is to be 
construed against the Commission. Emulsified is entitled to sue the Commission 
in district court on its complaint. We reverse the order dismissing the 
complaint and remand for further proceedings consistent with this 
decision.

           

FOOTNOTES

  1WYO. STAT. §§ 27-257 to 27-264 
(1967).