Title: Paduano v. JC Boespflug Constr. Co.
Citation: 403 P.2d 841, 66 Wash. 2d 527
Docket Number: 37892
State: Washington
Issuer: Washington Supreme Court
Date: June 24, 1965

66 Wn.2d 527 (1965) 403 P.2d 841 NED PADUANO, Respondent and Cross-appellant, v. J.C. BOESPFLUG CONSTRUCTION COMPANY, Appellant, ROSE PADUANO, Respondent and Cross-appellant.[*] No. 37892. The Supreme Court of Washington, Department One. June 24, 1965. OTT, J. J.C. Boespflug Construction Company, a corporation (hereinafter referred to as the construction company), was awarded a $3,000,000 prime contract for the construction of a building project known as Providence Heights College, in King County. The construction company had previously requested Ned Paduano to submit a bid, as a prospective subcontractor, for "clearing and grubbing and site excavation and building excavation, putting footings and excavation, backfilling, stripping and respreading topsoil." After the prime contract was obtained, the construction company awarded Paduano the subcontract for specified excavation work in the sum of $67,509. Paduano commenced work on December 3, 1958, and continued until October 31, 1959. During this time, Paduano had also performed extra work resulting from change orders which increased the amount of the subcontract to $81,036.05. The project architect, by October 31, 1959, had approved payment to Paduano of $68,636.10, his subcontract then being nearly 88 per cent performed. From the approved payment, the sum of $6,500 was withheld as the retained percentage authorized by § 17 of the subcontract. October 31, 1959, Paduano left the project, with the knowledge and consent of the construction company, conditioned upon his returning and finishing the work when the construction company requested further performance. In July, 1960, Paduano was requested to return to complete the subcontract. When he arrived at the job site, construction had not proceeded far enough for Paduano to finish his subcontract. August 8, 1960, Paduano again returned with his men and equipment and, on September 19, 1960, while he was attempting to complete the work, the construction company declared Paduano in default and removed him from the job site. The construction company thereafter completed the subcontract. *529 Ned Paduano commenced this action to recover the balance due him on the subcontract, contending that the construction company had been arbitrary and capricious in terminating it. The construction company denied the material allegations of the complaint and that any sum was due, and, by counterclaim, affirmatively alleged that Paduano was indebted to the construction company in the sum of $31,055.79. The cause was tried to the court. The trial court found that the construction company's action in declaring Paduano in default under the subcontract was arbitrary and capricious. It awarded Paduano judgment for $15,471.73, composed of the following items: Retained funds of $6,500; admitted or proved extras of $1,280.75; equipment and operator rental during 1960 of $6,288.49; employees' wages during 1960 of $1,402.49. No loss of profit was awarded to Paduano by the trial court. The court awarded the construction company a setoff of $8,225.38 against Paduano for labor and equipment rental incurred by the construction company in connection with earth moving on the job site prior to September 19, 1960. The court did not allow a setoff for charges incurred in completion of the project after the construction company had declared Paduano in default, and made no finding as to the cost of completing the subcontract. From the judgment entered, the construction company appeals and Paduano cross-appeals. The appellant construction company contends that the court erred in finding that it was arbitrary and capricious in declaring respondent Paduano in default. The default was declared under § 15 of the subcontract which provided: *530 The reason appellant gave for declaring the respondent in default was respondent's alleged failure to have sufficient manpower and equipment on the job to insure timely completion of the work in an acceptable manner. The appellant contends that its action was not arbitrary or capricious since there was room for two opinions relative to the cause of the delay, and its action was exercised honestly even though an erroneous decision may have been reached. Lillions v. Gibbs, 47 Wn.2d 629, 633, 289 P.2d 203 (1955), and case cited. In its oral decision, the court stated: There was further testimony by appellant's witness, John F. Boespflug, that a series of strikes during the period of construction caused delays and necessitated an extension of time for completion of the project. From this evidence, the court entered its finding of fact No. 5 as follows: *531 The evidence at the trial was conflicting as to the cause of the delay in the completion of the project. The trial court did not accept appellant's version that respondent caused the delay. [1] There is substantial evidence to support the trial court's finding that the appellant was arbitrary and capricious in declaring the default; therefore, the finding must be affirmed. Choate v. Swanson, 54 Wn.2d 710, 715, 344 P.2d 502 (1959), and cases cited; Williams Tilt-up Contractors, Inc., v. Schmid, 52 Wn.2d 429, 430, 326 P.2d 41 (1958), and case cited. Appellant next assigns error to the following conclusions of law: Appellant contends that these conclusions of law are predicated upon an erroneous measure of damages. Appellant asserts, in its brief, that its cost, after September 19, 1960, to correct respondent's errors and complete his subcontract was $40,342.32, and that respondent was not damaged by the declaration of default because the cost of completing the subcontract far exceeded $9,677.10, the remainder to be earned under the subcontract. [2] The rule is stated in Longenecker v. Brommer, 59 Wn.2d 552, 558, 368 P.2d 900 (1962), as follows: In Restatement, Contracts § 346, comment g at 578, it is stated: The appellant's cost of completing the subcontract is not an element in determining respondent's damages. The proper element is respondent's cost of completion. Appellant did not prove that it would have cost respondent $40,342.32 to complete the contract. [3] It is well established that actual expenditures to the date of a breach of contract are compensable in damages. Platts v. Arney, 50 Wn.2d 42, 47, 309 P.2d 372 (1957), and cases cited; Lloyd v. American Can Co., 128 Wash. 298, 308, 222 Pac. 876 (1924); McCormick on Damages § 165, p. 642. In determining respondent's damages, the court did not err in allowing the retained sum for work performed, plus such expenditures as the court allowed to the date of the breach and the approved extras. [4] Respondent has cross-appealed, assigning error to the allowance to appellant of the counterclaim of $8,225.38. The court concluded that "Plaintiff [Paduano] was required *533 to perform all [specified] earth moving processes at the Providence Heights College job site." Conclusion of Law No. 2, supra. After 88 per cent of the earth moving work was completed, it was agreed that respondent could leave the job site with his equipment. This concession was solely for the benefit of the respondent. He was away from the job site for a period of 9 months. The trial court determined that the appellant did perform earth moving work during the 9 months' period that should have been performed by the respondent, and that, when the appellant performed this service for respondent, it acted in good faith. The respondent was enriched to the extent of the reasonable cost entailed in appellant's performance of this portion of respondent's subcontract. The evidence supports the trial court's award to appellant of $8,225.38, upon the theory of quantum meruit. Finally, respondent contends that the court erred in failing to allow interest from the scheduled date for completion of the subcontract to the date of judgment, upon sums earned under the subcontract. Section 17 of the subcontract provided: [5] Section 17 authorized the prime contractor (appellant) to withhold up to 10 per cent of the partial payments for work completed. Appellant retained $6,500 of the amount earned by respondent prior to October 31, 1959, which was computed by a standard fixed in the subcontract. *534 This liquidated sum bears interest from the scheduled date for completion of the subcontract to the date of judgment. Boespflug v. Wilson, 58 Wn.2d 333, 336, 362 P.2d 747, (1961), and cases cited; Mall Tool Co. v. Far West Equip. Co., 45 Wn.2d 158, 169, 273 P.2d 652 (1954), and cases cited. The remainder of the court's award to respondent of $8,971.73 was subject to the deduction of the setoff (§ 17 of the subcontract) in the sum of $8,225.38. These amounts are not liquidated sums for the reason that neither the remainder of the award to respondent nor the setoff to appellant was determinable with exactness from any standard fixed in the subcontract. Each amount was ascertainable only by the introduction of evidence to determine reasonable value of the services rendered and the expenses incurred. Boespflug v. Wilson, supra; Hopkins v. Ulvestad, 46 Wn.2d 514, 282 P.2d 806 (1955). The judgment of the trial court is modified by allowing respondent interest on $6,500 at 6 per cent from September 28, 1960 (when the subcontract was to have been completed) to the date of judgment. As so modified, the judgment is affirmed. Respondent will recover costs. ROSELLINI, C.J., HUNTER and HALE, JJ., and BRADFORD, J. Pro Tem., concur. [*] Reported in 403 P.2d 841.