Lincoln Construction, Inc. v. Thomas J. Parker & Associates, Inc.

JOSEPH, J. In this action for breach of contract defendant ipeals from a judgment in favor of plaintiff. The trial urt, sitting without a jury, made a general finding in vor of plaintiff on its complaint and a general find-g for plaintiff on defendant’s counterclaim and warded plaintiff $75,765 in damages, plus $22,500 in tomey’s fees. Defendant had a contract with Weyerhaeuser for e construction of roads which Weyerhaeuser was ligated to construct under a timber sale contract it d entered into with the United States Forest Serv- }. Defendant subcontracted with plaintiff to perform at portion of the contract requiring blasting, crush- % and stockpiling of aggregate material (rock) neces-cy to construct the roads. Defendant’s contract with Weyerhaeuser provided part: "* * * Weyerhaeuser will pay Contractor during the term hereof, at the later to occur of two-week intervals or within ten (10) days after receipt of an invoice from Contractor, an amount equal to 90% of the value, proportionate to the total amount of the contract, of labor expended and material purchased and incorporated into the work, less the aggregate amount of previous payments, but subject to satisfactory completion or partial completion of a road, roads or crushing of rock; either documented by the United States Forest Service (U.S.F.S.) 'Report of Pirn-chaser’s Credit for Specified Road Construction’ or a statement of work completed furnished by Weyer-haeuser representatives.” defendant’s subcontract with plaintiff provided: "* * * Contractor agrees to pay and subcontract,rr. agrees to perform the work described hereú? ? ■>>■ ■ sum of Three and 10/100 ($3.10) per yarJ ured and determined in accordance with agreements. [210] "Payment is to be made as set forth in the attached agreements, including the ten percent (10%) deductions, and upon full compliance with the terms of this agreement and the attached agreements said ten percent (10%) reserve shall be paid to subcontractor. (Paragraph IV) "It is agreed that Subcontractor shall fully perform that portion of both said contracts fully and completely as it relates to the work described herein. (Paragraph II).” (Emphasis supplied.) The "attached agreements” referred to in the subcontract were the contract documents for the agreement between defendant and Weyerhaeuser. Both contracts were executed in August, 1976, and plaintiff commenced its performance under the subcontract in September of that year. In May, 1977, plaintiff determined that it had crushed and stockpiled rock in excess of the estimated requirements specified in the contract documents between defendant and Weyerhaeuser and thereupon removed its equipment from the site. Plaintiff sought payment from defendant for the difference between the amount it had already received in periodic payments and the contract price per cubic yard times the estimated requirements specified in the contract documents, that is, 81,451 cubic yards. Weyerhaeuser did not agree that the required quantity of rock had been crushed, and when defendant refused to pay plaintiff according to plaintiff’s demand, plaintiff filed a "construction lien” against the property. Shortly thereafter, Weyer-haeuser terminated its contract with defendant. Subsequently, defendant and Weyerhaeuser negotiated a settlement of their dispute as to what was owing to defendant by Weyerhaeuser, and in doing so they jointly hired an independent surveyor from Klamath Falls to determine the quantity of rock plaintiff had crushed and stockpiled. The surveyor determined that 60,118 cubic yards was then stockpiled, and defendant and Weyerhaeuser added to that volume 6,300 cubic yards of rock which had been put [211] i place to determine what Weyerhaeuser owed ifendant for this portion of the contract. Defendant sed that measurement in offering to settle with laintiff. Plaintiff was advised of the fact that the idependent surveyor would be measuring the stock-le, but it refused to participate in the supervision of is measurement. Instead, plaintiff employed its own expert, who itermined that plaintiff had crushed and stockpiled tore than the estimated contract requirement. It then immenced this lawsuit. Defendant contends that its contract with plaintiff provided that plaintiff was to be paid for the rock it ushed and stockpiled as measured and determined r Weyerhaeuser (or the Forest Service), and therefore aintiff was not entitled to rely upon the measure-ent made by it or by experts employed by it. Generly, contracts which provide that determinations are be made by a third party are valid and binding on e contracting parties. Mayer v. Eastside Logging Co., 30 Or 341, 278 P 957 (1929); Annot, 110 ALR 137. hen payment is conditioned upon the certificate of l engineer, an architect or other party the judgment that person is conclusive upon the contracting parties, Gillespie Land and Irrigation Co. v. Hamilton, 43 Ariz 102, 29 P2d 158 (1934), unless the determination is ade in bad faith or there is fraud. State Highway Comm. v. Heintz Constr. Co., 245 Or 530, 423 P2d 175 (1967); Friberg v. Elrod, 136 Or 186, 296 P 1061 (1931). the absence here of bad faith or fraud, the plaintiff is bound under these rules by the words of the levant documents. The trial court erred by failing to force the contract as written. Defendant’s counterclaim was based on a conten-in that plaintiff’s filing of a lien against Weyer-euser and the Forest Service caused Weyerhaeuser terminate its contract with defendant. Defendant limed both compensatory and punitive damages, ere was evidence at trial from which the trier of fact [212] could have found that Weyerhaeuser terminated its agreement with defendant for other reasons. Therefore, we cannot disturb the trial court’s general finding in favor of plaintiff on defendant’s counter-claim. The judgment is reversed insofar as it awarded plaintiff damages and attorney’s fees, affirmed as to defendant’s counter-claim and remanded for such further proceedings as may be appropriate. Affirmed in part; reversed in part; and remanded.