Court Opinion

ID: 9535041
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:44:54.917383+00
Date Added: 2024-06-11T13:33:09.663345
License: Public Domain

ROONEY, Chief Justice,
dissenting, with whom BROWN, Justice, joins.
THE DISPUTES CLAUSE OF THE CONTRACT SHOULD BE ENFORCED
The majority opinion is 180 degrees contrary to our regularly held propositions relative to contract construction. This contract has a disputes clause. The language of it is plain, it definitely expresses the intent and purpose of the parties, and its spirit and tenor cannot be misunderstood.
The contract is identical to those previously executed by Brasel & Sims Construction Co., Inc. (hereinafter appellee) and under which it has often performed. It provides for final dispute determination or final arbitration, subject only to one well-defined appeal within the purview of the Wyoming Administrative Procedure Act, § 16-3-101, et seq., W.S.1977, concerning a due process hearing.
Although the majority opinion acknowledges the propriety of finality in a disputes resolution clause, it lamely attempts to ascribe a lack of specified finality in this clause. This, of course, is contrary to the rules of statutory construction looking toward ascertainment of the intent of the parties; and it disregards the finality of an arbitration award, except for specified purposes, as recognized by the legislature in the Uniform Arbitration Act, § 1-36-101, et seq., W.S.1977.
We have long recognized the law in support of the foregoing. The rules of contract construction in this respect were summarized in Amoco Production Company v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463, 465 (1980):
“Our basic purpose in construing or interpreting a contract is to determine the intention and understanding of the parties. Fuchs v. Goe, 62 Wyo. 134, 163 P.2d 783 (1945); Shellhart v. Axford, Wyo., 485 P.2d 1031 (1971); Oregon Short Line Railroad Company v. Idaho Stockyards Company, 12 Utah 2d 205, 364 P.2d 826 (1961). If the contract is in writing and the language is clear and unambiguous, the intention is to be secured from the words of the contract. Pilcher v. Hamm, Wyo., 351 P.2d 1041 (1960); Fuchs v. Goe, supra; Hollabaugh v. Kolbet, Wyo., 604 P.2d 1359 (1980); Wyoming Bank and Trust Company v. Waugh, Wyo., 606 P.2d 725 (1980). And the contract as a whole shall be considered, with each part being read in light of all other parts. Shepard v. Top Hat Land & Cattle Co., Wyo., 560 P.2d 730 (1977); Rossi v. Percifield, Wyo., 527 P.2d 819 (1974); Shellhart v. Axford, supra; Quin Blair Enterprises, Inc. v. Julien Construction Company, Wyo., 597 P.2d 945 (1979). The interpretation and construction is done by the court as a matter of law. Hollabaugh v. Kolbet, supra; Bulis v. Wells, Wyo., 565 P.2d 487 (1977); Shepard v. Top Hat Land & Cattle Co., supra.
“If the contract is ambiguous, resort may be had to extrinsic evidence. J.W. Denio Milling Co. v. Malin, 25 Wyo. 143, 165 P. 1113 (1917); Kilbourne-Park Corporation v. Buckingham, Wyo., 404 P.2d 244 (1965). An ambiguous contract ‘is an agreement which is obscure in its meaning, because of indefiniteness of expression, or because a double meaning is present.’ Bulis v. Wells, supra, 565 P.2d at 490. Ambiguity justifying extraneous evidence is not generated by the subsequent disagreement of the parties con*883cerning its meaning. Homestake-Sapin Partners v. United States, 10th Cir.1967, 375 F.2d 507.”
Article VII of the contract is plain in providing that:
“VII. Any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Engineer, * * *. The decision of the Engineer shall be final and conclusive unless, within 30 days from the date of receipt of such conclusion, the Contractor mails or otherwise furnishes the Wyoming State Highway Commission written appeal. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of his appeal.” (Emphasis added.)
The entire disputes procedure with reference to finality is there set forth. The engineer’s decision is final, subject only to any change made by the commission on appeal.
The same is true under Section 105.17 of the Wyoming Highway Department Specifications for Road and Bridge Construction (1974). Within 60 days from the date of a claim for extra work or material
“ * * * the Department will render to the Contractor a judgment in writing. This judgment shall be final and binding upon both parties to the contract unless the Contractor files within thirty (30) days of the date of said judgment a written notice of appeal with the Secretary of the Highway Commission. Subsequent to the filing of the notice of appeal, the claim will be pursued according to the Contractor’s Claim Procedure adopted by the Highway Commission.” (Emphasis added.)
The intent to settle the dispute without recourse to the courts (other than for fraud, lack of due process, etc.) is manifest, and appellee well knew it to be so when it entered into the agreement. Appellee has been in the business for a long time. This disputes resolution procedure is essentially the same as in other construction contracts. Abadou v. Trad, Alaska, 624 P.2d 287 (1981); G.L. Rugo & Sons, Inc. v. Town of Lexington, 338 Mass. 746, 157 N.E.2d 521 (1959); State Highway Department v. MacDougald Const. Co., 189 Ga. 490, 6 S.E.2d 570, 137 A.L.R. 520 (1939).
“With respect to claims arising under the typical government contract, the contractor has agreed in effect to convert what otherwise might be claims for breach of contract into claims for equitable adjustment. The changes clause, for example, permits the Government to make changes in contract specifications. Such changes are not breaches of contract. They do give rise to claims for equitable adjustments which the Government agrees to make, if the cost of performance is increased or the time for performance changed. But whether and to what extent an adjustment is required are questions to be answered by the methods provided in the contract itself. The contractor must present his claim to the contracting officer, whose decision is final unless appealed for final action * * (Emphasis added.) Crown Coat Front Co. v. United States, 386 U.S. 503, 511, 87 S.Ct. 1177, 1182, 18 L.Ed.2d 256 (1967).
In speaking of dispute clauses, the United States Supreme Court said in United States v. Joseph A. Holpuch Co., 328 U.S. 234, 239, 66 S.Ct. 1000, 1003, 90 L.Ed. 1192 (1946), a dispute clause is
“something more than a dead letter to be revived only at the convenience or discretion of the contractor. It is a clear, unambiguous provision applicable at all times and binding on all parties to the contract. No court is justified in disregarding its letter or spirit. * * * ” (Emphasis added.)
This “unjustified action” is now being taken by this court.
Should there be any question about the intent of the parties as expressed in the plain words of the contract, such intent is *884obvious from the contract as a whole and from the recognition that both an administrative trial and a judicial trial are a waste of state money. If the disputes clause is useless at any time the contractor decides to go to court, why have it? The highway department does have it. It was not intended to be a useless thing. Appellee and other contractors know that they are subject to it when they bid and when they enter into the contract. The intent of all parties is to use the disputes clause in a final fashion. The holding of the majority opinion makes use of the clause a waste of time. Eight or nine days were spent in the commission hearing alone. Although the intent was to have the clause mean something, the majority opinion completely disregards this manifest intent. The department might well do away with the clause and burden the court system with the problems intended by the parties to be handled under the clause.
If there is any doubt as to the intent, it should be resolved in favor of arbitrability. Oil, Chemical and Atomic Workers International Union, Local 2-124. v. American Oil Company, 528 F.2d 252, 254 (10th Cir. 1976). There is a national policy that doubts should be resolved in favor of arbitration, and parties should not be required to litigate disputes which are subject to arbitration. American National Bank of Denver v. Cheyenne Housing Authority, Wyo., 562 P.2d 1017, 1020 (1977).
“ ‘ * * * It is true that the intention of parties to submit their contractual disputes to final determination outside the courts should be made manifest by plain language. [Citation.] But this does not mean that hostility to such provisions can justify blindness to a plain intent of parties to adopt this method for settlement of their disputes. Nor should such an agreement of parties be frustrated by judicial “interpretation” of contracts. If parties competent to decide for themselves are to be deprived of the privilege of making such anticipatory provisions for settlement of disputes, this deprivation should come from the legislative branch of government.’ * * *
“It seems clear that it is the ‘clear intent’ of the parties that ‘any dispute concerning * * * this contract’ should be decided by the Contracting Officer. * * * ‘ * * * j^0 couri is justified in disregarding its letter or spirit. [The] [disputes clause] * * * creates a mechanism whereby adjustments may be made and errors corrected on an administrative level, thereby permitting the Government to mitigate or avoid large damage claims that might otherwise be created. * * * And in the absence of some clear evidence that the appeal procedure is inadequate or unavailable, that procedure must be pursued and exhausted before a contractor can be heard to complain in a court.’ [Citation.]” (Emphasis added.) Moran Towing and Transportation Co. v. United States, 192 F.Supp. 855, 858, 859 (S.D.N.Y.1960).
The trial court erred in not recognizing the disputes clause of the contract. The action should have been dismissed.1
DAMAGES
Damages were awarded under the “total-cost” method. The majority opinion acknowledges that the “total-cost” method is “generally disfavored” by the courts, but it accepts a one-two-three-four test set forth in WRB Corporation v. The United States, 183 Ct.Cl. 409 (1968), and contends that the facts in this case meet that test. The facts in this case are not nearly as favorable for the test as were they in the WRB Corporation case. They were found insufficient in that case. The WRB Corporation court said at pages 426-427:
*885“For claims 22 and 26, plaintiffs submission is the ‘total cost’ standard (the difference between actual expenses and bid or estimated costs). This theory has never been favored by the court and has been tolerated only when no other mode was available and when the reliability of the supporting evidence was fully substantiated. See Turnbull, Inc. v. United States, 180 Ct.Cl. 1010, 1025-26, 389 F.2d 1007, 1015 (1967); J.D. Hedin Construction Co. v. United States, 171 Ct.Cl. 70, 86-87, 347 F.2d 235, 246-47 (1965); River Construction Corp. v. United States, supra, 159 Ct.Cl. [254] at pages 270-71 [1962]; Oliver-Finnie Co. v. United States, 150 Ct.Cl. 189, 200, 279 F.2d 498, 505-06 (1960); F.H. McGraw & Co. v. United States, 131 Ct.Cl. 501, 510-12, 130 F.Supp. 394, 399-400 (1955). The acceptability of the method hinges on proof that (1) the nature of the particular losses make it impossible or highly impracticable to determine them with a reasonable degree of accuracy; (2) the plaintiffs bid or estimate was realistic; (3) its actual costs were reasonable; and (4) it was not responsible for the added expenses. See J.D. Hedin Construction Co. v. United States, supra, 171 Ct.Cl. at pages 86-87, 347 F.2d at pages 246-47; Oliver-Finnie Co. v. United States, supra, 150 Ct.Cl. at pages 197, 200, 279 F.2d at pages 505-06; F.H. McGraw & Co. v. United States, supra, 131 Ct.Cl. at page 511, 130 F.Supp. at page 400.
“This case clearly fails some of these tests. A large measure of our present uncertainty is due to the plaintiffs complete failure to maintain accurate cost records during performance. The only excuse for this lack of diligence was that plaintiff did not expect to become embroiled in litigation over the Fort Hood project. That is feeble justification for taking refuge in the total-cost approach. Cf. Commerce Int’l Co. v. United States, 167 Ct.Cl. 529, 543 n. 10, 338 F.2d 81, 89 n. 10 (1964). Equally telling is the failure to rebut the Government’s evidence that the increased costs were, in some part, due to plaintiffs fault. The record clearly shows that it had a great deal of trouble keeping its subcontractors in line. In any event, we would hesitate before concluding that plaintiff sufficiently proved the reasonableness of its estimates or its actual costs. Among other things, it did not produce a reliable breakdown of its overall estimates and the cost of its concrete and carpentry operations. And since we deny (see Part II infra) significant aspects of claims 22 and 26, the plaintiffs total-cost argument, geared to each claim in its entirety, has little utility.” (Emphasis added.)
Here, too, the bid was for an entire job. The claim was for increased costs in only nine areas. The trial court allowed recovery in only five of these areas. However, the damage figure allowed resulted from subtracting the total payments made on the entire project from the total cost of the entire project. Obviously, appellee should not receive reimbursement for losses on the other parts of the project which resulted from expenses in excess of its bid on them. As the WRB Corporation court said, in such instances the “total-cost” argument “has little utility.”
Although the one-two-three-four test is set out in WRB Corporation, it is preceded by the basic requirement that the “reliability of the supporting evidence was fully substantiated.” Appellee’s own witnesses testified that supporting evidence was lacking, one reason being the failure to realize at the time the adverse consequences thereof. Repeating the quotation from WRB Corporation, supra, “that is feeble justification.”
Another deterrent to use of the “total-cost” method, as stated in WRB Corporation, supra, is “the failure to rebut the Government’s evidence that the increased costs were, in some part, due to plaintiff’s fault.” Such rebuttal is completely lacking here. For example, it seems well established that the leaks in the water line installed by appellee contributed to the addi*886tional expense resulting from transportation of water.
This being a dissenting opinion, it will serve no purpose to further specify wherein the one-two-three-four test requirements for use of the “total-cost” method were not met in this case. We should not remake the contract for the parties by turning a standard bid-acceptance contract into a cost-plus contract. Wyoming Machinery Company v. United States Fidelity and Guaranty Company, Wyo., 614 P.2d 716 (1980); Laird v. Laird, Wyo., 597 P.2d 463 (1979). Appellee failed to properly establish its damages.

. Reference is made to my dissent in Brasel & Sims Construction Co., Inc. v. State Highway Commission of Wyoming, Wyo., 655 P.2d 265 (1982), reflecting a proper resolution of this matter.