City of Meridian v. PETRA Inc.
154 Idaho 425
| Idaho | 2013Background
- Meridian sued Petra for breach of contract related to Meridian’s City Hall project; CMA governed Petra’s fees with a base fee, reimbursables, and potential equitable adjustments for changes; CMA incorporated A201 and A101 and expressly referenced Architect’s contract, forming the four-document agreement (CMA, A201, A101, Architect’s Professional Services Agreement).
- Project expanded beyond initial budget and scope due to city-directed changes including basement addition, upgraded finishes, and complex systems; final project cost exceeded $21.4 million.
- Petra sought an equitable adjustment (4.7%) for extra services as the project grew; City denied the request (Feb 2009), mediation failed, and suit was filed April 2009.
- District court found Petra entitled to equitable adjustment, awarded Petra $324,808 in damages plus costs and fees; Court offset some overcharges by $52,000; City appealed.
- Court held Petra validly entitled to equitable adjustment, used a 4.7% metric consistent with prior dealings, rejected several City arguments, and affirmed most of the district court’s rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Petra is entitled to an equitable adjustment for increased services | Meridian contends CMA requires pre-approval for fee changes before any extra services | Petra argues CMA allows equitable adjustment when changes affect services and require notice/approval; City approval presumed for City-initiated changes | Yes; Petra entitled to equitable adjustment under CMA. |
| Whether a 4.7% percentage-based adjustment is proper | City argues a hours-based calculation should apply per CMA 6.2.2 and that 4.7% is arbitrary | 4.7% reflects prior dealings and contract practice; Court can determine reasonable adjustment where explicit method absent | Yes; percentage-based adjustment proper. |
| Whether Section 7 or Section 8 governs claims for equitable adjustments | City contends Section 8 claims procedure bars Petra’s adjustment | Section 7 controls adjustments; Section 8 is general claims process; Section 7 prevails for adjustments | Section 7 governs; Section 8 does not bar Petra’s counterclaim. |
| Whether ITCA bars Petra’s counterclaim | City asserts ITCA notice period runs from wrongful act (denial of request) | Petra says ITCA clock begins at denial and mediation notice within 180 days; discovery not needed | No; ITCA did not bar Petra’s counterclaim. |
| Whether Petra was a fiduciary of the City | City argues CMA’s ‘trust and confidence’ language creates fiduciary duty | No fiduciary relationship; relationship was arm’s-length commercial transaction | Petra was not the City’s fiduciary. |
Key Cases Cited
- Howard v. Perry, 141 Idaho 139 (2005) (integration/merger of contract; extrinsic evidence)
- Shawver v. Huckleberry Estates, L.L.C., 140 Idaho 354 (2004) (contract interpretation; no rewriting for equity)
- Potlatch Educ. Ass’n v. Potlatch Sch. Dist. No. 285, 148 Idaho 630 (2010) (unspecified; contract interpretation guidance)
- Beaudoin v. Davidson Trust Co., 151 Idaho 701 (2011) (fiduciary relationship framework)
- Borah v. McCandless, 147 Idaho 73 (2008) (breach and material breach standards; trial deference)
- Magnuson Properties P’ship v. City of Coeur d’Alene, 138 Idaho 166 (2002) (ITCA timing and denial-trigger rule)
- Twin Lakes Vill. Prop. Ass’n, Inc. v. Crowley, 124 Idaho 132 (1993) (specific controls over general contract terms)
- Farrell v. Whiteman, 146 Idaho 604 (2009) (illegal contract distinctions for bonding statute)
- Shore v. Peterson, 146 Idaho 903 (2009) (standards of review for contract and factual findings)