Road & Highway Builders, LLC v. Northern Nevada Rebar, Inc.
128 Nev. 384
| Nev. | 2012Background
- Builders contracted with NDOT for a 2.3-mile freeway project requiring substantial rebar and RCBs; NNR bid based on NDOT plans.
- Builders contemplated using precast RCBs and began change approvals without informing NNR, while still using NNR’s bid for the project.
- A Subcontract was executed reserving Builders’ right to order changes and establishing a fixed unit price with final quantities to match NDOT unless written otherwise.
- Builders sought precast RCBs from another supplier; NDOT approved substitutions for about 80% of poured-in-place RCBs after Subcontract execution.
- Disputes over changes led NNR to seek equitable adjustment and payment; Builders ceased payments and terminated NNR, causing delays and increased costs.
- Jury found for NNR on counterclaims, awarding $700,000 in compensatory damages and $300,000 in punitive damages; district court denied post-trial motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud in inducement if contract terms contradict | NNR contends Builders induced reliance by promising full rebar under contract terms. | Builders argues fraud cannot lie where contract terms permit changes and quantities. | Fraud claim fails as a matter of law; contract terms control. |
| Proper basis for compensatory damages | NNR seeks damages for labor, materials, and lost profits under breach of contract and implied covenant. | Damages limited to actual costs given at-will termination; profits not recoverable. | Compensatory damages affirmed; recoveries for costs and lost profits supported by contract/implied covenant. |
| Punitive damages when fraud claim fails | Punitive damages justified by fraud and breach independent of contract. | Punitive damages improper where claim sounds in contract and no tort basis. | Punitive damages reversed; no basis to award punitive damages. |
Key Cases Cited
- Tallman v. First Nat. Bank, 66 Nev. 248, 208 P.2d 302 (Nev. 1949) (fraud cannot arise from promises contrary to written terms)
- Brinderson-Newberg v. Pacific Erectors, 971 F.2d 272 (9th Cir. 1992) (integrated contract bars parol promises conflicting with terms)
- Sherrodd, Inc. v. Morrison-Knudsen Co., 815 P.2d 1135 (Mont. 1991) (fraud exception to parol rule when not directly contradicting contract terms)
- Hilton Hotels v. Butch Lewis Productions, 109 Nev. 1043, 862 P.2d 1207 (Nev. 1993) (contractual covenant of good faith and fair dealing informs damages/tort distinction)
- Amoroso Const. v. Lazovich and Lazovich, 107 Nev. 294, 810 P.2d 775 (Nev. 1991) (punitive damages not available for pure contract breaches)
- Dalton Properties, Inc. v. Jones, 100 Nev. 422, 683 P.2d 30 (Nev. 1984) (at-will termination and lost profits analysis for unearned profits)