Court Opinion

ID: 9613646
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:18:59.959186+00
Date Added: 2024-06-11T18:03:30.757166
License: Public Domain

MATTHEWS, Justice,
with whom RABINOWITZ, Chief Justice, joins, dissenting.
Under our case law, progress payments can be withheld only when clearly warranted by the circumstances. Arctic Contractors, Inc. v. State, 564 P.2d 30, 43 (Alaska 1977). The parties modified their contract on September 20, 1988. A little more than three weeks later Sealaska decided to withhold a payment which it had promised to make under the agreement as modified. The trial court found that this was justified
based on the information then available to [Sealaska]. Sealaska knew that the equipment Ferguson had available was too light for the work, that there was not enough of it, that most of the equipment available at either site was not operable and that very little progress had been *1064made during the last pay period so that the work remained behind even the new schedule.
None of these reasons were the reasons given by Sealaska’s decision maker, Loescher, for withholding the payment.1 Importantly, Loescher indicated that the late September measure-up monitoring Ferguson Construction’s progress “seemed to go okay.” Withholding of progress payments is justified only if the withholding party actually relies on the circumstances which clearly warrant that action. United States v. Heyward-Robinson Co., 430 F.2d 1077, 1085-86 (2d Cir.1970). (In that case, the appeals court upheld an instruction requiring that the jury find the prime contractor actually relied on the reason which the court found justified withholding payment.). I conclude, therefore, that the findings made by the trial court do not support its conclusion that the withholding of the payment by Sealaska was justified. Accordingly, I would reverse the judgment.

. Loescher described three reasons for his decision:
(1) Coady’s statement that Ferguson had told him that Ferguson was quitting the job;
(2) Ferguson had let the performance bonds lapse; and
(3)Ferguson would have owed Sealaska more money than was owed to Ferguson had the payment been made.