117 Wash. App. 157 | Wash. Ct. App. | 2003
Diamond “B” Constructors, Inc. (Diamond) appeals from summary judgment dismissal of its complaint, arguing the trial court should have granted summary judgment in its favor because the only reasonable interpretation of the parties’ construction contract supports its position that the contract does not require it to use a specific equipment installer. We agree that, although the Granite Falls School District (District) could have specified an installer, it failed to do so. Because its insistence that Diamond use a more expensive installer caused Diamond to lose money on the contract, the District is liable to Diamond for the additional costs it incurred. We therefore reverse and remand with directions to the trial court to enter judgment for Diamond.
In September 2000, the District received competitive bids for modernization work on two schools (the project). It awarded the general contract to the low bidder, Allied Construction Associates, Inc. (Allied). On October 10, 2000, Allied entered into a subcontract with Diamond to perform mechanical and electrical work for the project.
On behalf of Diamond, Allied submitted a claim for additional compensation that is the subject of this appeal. The basis of the claim is that Diamond had latitude under the contract to use anyone qualified to install Honeywell temperature control equipment and that its bid was properly based on using Sound Energy, an approved Honeywell installer, which quoted an installation price of $212,219. After Allied and Diamond signed a contract based on Diamond’s low bid from Sound Energy, the District announced that it would require Diamond to use Honeywell Mercer Island as both manufacturer and installer of the Honeywell equipment, asserting the contract required both. Honeywell Mercer Island charged Diamond $265,000 for installation. Diamond requested compensation from the District for the $52,718 difference plus markups as a change to its subcontract.
The District denied the claim. Allied and Diamond executed a Claim Submission Agreement by which Allied assigned its claim to Diamond and authorized it to prosecute the claim directly against the District. Ruling that the District properly interpreted the contract, the trial court granted summary judgment dismissing Diamond’s complaint. This appeal followed.
DISCUSSION
The trial court granted summary judgment because it agreed with the District’s interpretation of the contract that only Honeywell Mercer Island could be used to install the Honeywell equipment. Summary judgment is
“ ‘The cardinal rule with which all interpretation begins is that its purpose is to ascertain the intention of the parties.’ ”
I. Paragraph 1.06:
The central issue on appeal is whether paragraph 1.06 of the contract allows Diamond to contract with installers other than Honeywell Mercer Island to install the Honeywell equipment. The paragraph provides:
1.06 SYSTEM MANUFACTURER
A. System provided by Honeywell (local branch office in Mercer Island) as an extension of the existing system, no substitute.[
The District relies on the contract definition of “provide” to support its position that only Honeywell Mercer Island could install the equipment:
Furnish, Install, Provide: The terms “Furnish” or “Install” or “Provide,” unless specifically limited in context mean: furnishing and incorporating a specified item, product or material in the work, including all necessary labor, materials, equipment to perform the work required, ready for use.
It also relies on paragraph 1.01, which provides in part:
Where the word “provide” is used, it means “furnish and install complete and ready for use”.
At first reading, these definitions appear to create an ambiguity. While they could be interpreted to require that Honeywell Mercer Island provide and install the equipment, upon closer inspection the only viable interpretation is that they provide only that a specified item be furnished and installed, not that a specific installer be used. There are many reasons for this conclusion. First, because the broad definition of “provide” depends on the context in which it is used, it is reasonable to interpret its purpose as ensuring that the District receives the specified item, Honeywell temperature control equipment, and that the equipment is
II. Definitions are Neither Complete nor Exclusive The definitions section of the contract provides that
Definitions and explanations contained in this section are not necessarily either complete or exclusive, but are general for the work to the extent they are not stated more explicitly in another element of the contract documents.
As such, the definition of “provide” on which the District relies was a general definition more explicitly defined in paragraph 1.06 and in the specific definition of installer.
III. Definitions are Specifically Limited in Context
The District’s reliance on the general definition of “Furnish, Install, Provide” is further undermined by its own language:
Furnish, Install, Provide: The terms “Furnish” or “Install” or “Provide,” unless specifically limited in context mean: furnishing and incorporating a specified item, product or material in the work, including all necessary labor, materials, equipment to perform the work required, ready for use.[12 ]
Diamond contends that paragraph 1.06 is the “context” specifically limiting the definition. We agree.
Paragraph 1.06 should be construed to allow installers other than Honeywell Mercer Island because the plain language of the paragraph title, “SYSTEM MANUFACTURER,” indicates the provision pertains only to the company that manufactures the temperature control equipment, not the installer.
The District asserts the title is meaningless because the contract states that “[t]he section title is descriptive only and not intended to limit the meaning or content of a section or to be completely descriptive of requirements specified therein.” It also asserts that Diamond’s interpretation of the title is incorrect because Honeywell Mercer Island has never been a “manufacturer” of automatic temperature controls. Neither argument is persuasive.
First, the provision the District relies on provides that the “section title is descriptive only.”
An examination of the contract as a whole establishes that the District included three separate definitions to ensure that it, as the project owner, received complete, installed equipment from its contractors. This is the same concern reflected in the definition of “provide” in paragraph 1.01.
V. A Separate Definition for “Installer”:
The District’s reliance on the definition of “Furnish, Install, Provide” is further undermined by the contract’s separate definition of “Installer”:
the entity (person or firm) engaged by Contractor or its subcontractor or sub-subcontractor for performance of a particular unit of work at the project site, including installation, erection, application and similar required operations. It is a general requirement that such entities (installers) be expert in operations they are engaged to perform.
Where the contract provides a general and a specific term, the specific controls over the general.
VI. Extrinsic Evidence:
Diamond’s project manager, William Parker, telephoned the District’s engineer on bid day and spoke with Vern Ennes to clarify the requirements of paragraph 1.06. This led to a series of telephone conversations and voice mails before bid submission. Parker described the exchanges in his deposition. He said that Ennes told him he would speak with the project engineer, Peter Niu, and get back to him. Ennes left a voice mail message to the following effect: “[H]e [Mr. Ennes] had contacted Peter Niu and that he had indicated Granite Falls School District preferred not to have
[W]e thought from reading the specifications it only specified the materials to be used and that the installer as long as they were a licensed Honeywell installer could be anybody as well as other mechanical contractors would utilize whose ever price was lowest for the bid.
Diamond therefore believed that although it was not the preferred installer, Sound Energy could be included in the bid. The District responds that Ennes’ message does not constitute implicit approval of Sound Energy. The District’s response is beside the point. Ennes’ message neither disqualified Sound Energy nor required Diamond to use Honeywell Mercer Island. By stating only a “preference,” not a requirement, Ennes’ message clearly did not rule out Sound Energy.
VII. Course of Conduct:
The course of conduct between the District and Diamond also supports Diamond’s interpretation. In an earlier similar contract on the same school, Diamond used Sound Energy to install Honeywell equipment. That contract also included a requirement that Diamond “provide” Honeywell equipment as “an extension of the existing Honeywell, Inc. system (Excel) as installed by Honeywell, Inc.” Even though that contract contains the same, or arguably a more specific specification as the one at issue here requiring Diamond to “provide” Honeywell equipment, the District now argues the clause has additional meaning: that Honeywell Mercer Island can be the only allowed installer.
The District asserts that prior negotiations and contract terms have no bearing on the intent of the parties to the current contract and, even if they did, they are irrelevant because Sound Energy had performed poorly in the past. The District’s arguments are not persuasive. First, the court may look to the course of dealing between
VIII. The District’s Arguments:
The District makes two additional arguments. First, it contends Diamond submitted its bid without reading the definitions in the contract and therefore cannot assert an after-the-fact interpretation because the proper inquiry is the intent of the parties at the time of contracting. The District also argues Diamond made a unilateral mistake and assumed the risk that Sound Energy would not be allowed to install the equipment. We reject both arguments.
First, we do not know whether Diamond read the contract or not. Even if Parker did not read the contract in its entirety, he is only one of four members of the committee reviewing the bid documents in preparing Diamond’s bid. In any case, whether anyone read the definitions in the contract does not determine what it means. Diamond’s interpretation of the contract has been consistent. It believed at the time of contract that while only Honeywell equipment was allowed, it could use any qualified installer. This is confirmed by the telephone calls the parties made when Diamond was submitting its bid on the current contract.
Second, the District’s claim that Diamond made a unilateral mistake and assumed the risk that Sound Energy would be disqualified is misplaced. The District apparently makes this argument as a corollary to its characterization of Diamond’s claim as an action for reformation of the contract. It asserts Diamond should have interpreted the engineer’s telephone message that Sound Energy was not a “preferred” installer as clarification of paragraph 1.06. We disagree. First, if the District intended to clarify the con
We reverse and remand to the superior court for entry of summary judgment for Diamond.
Cox, A.C.J., and Coleman, J., concur.
In addition to maintaining that the trial court’s ruling is correct, the District argues Diamond lacks standing to bring its cause of action and Diamond’s complaint fails to state a claim upon which relief can be granted. We reject both arguments. Diamond has standing because the general contractor, Allied, assigned its claim against the District to Diamond in the claim submission agreement. Diamond’s complaint states a claim upon which relief can be granted because it seeks equitable adjustment under Article 7 of the contract.
CR 56(c).
Trimble v. Wash. State Univ., 140 Wn.2d 88, 92-93, 993 P.2d 259 (2000).
Hall v. Custom Craft Fixtures, Inc., 87 Wn. App. 1, 10, 937 P.2d 1143 (1997).
Berg v. Hudesman, 115 Wn.2d 657, 663, 801 P.2d 222 (1990) (quoting Arthur L. Corbin, The Interpretation of Words and the Parol Evidence Rule, 50 Cornell L. Quar. 161, 162 (1965)).
Id. at 667.
Id. (citing Stender v. Twin City Foods, Inc., 82 Wn.2d 250, 254, 510 P.2d 221 (1973)).
Id. at 667-68.
Lynott v. Nat'l Union Fire Ins. Co., 123 Wn.2d 678, 684, 871 P.2d 146 (1994) (quoting Dwelley v. Chesterfield, 88 Wn.2d 331, 335, 560 P.2d 353 (1977)).
Hall, 87 Wn. App. at 9 (citation omitted).
(Emphasis added.)
(Emphasis added.)
(Emphasis added.)
Part 1.01, titled “WORK INCLUDED,” provides in part: “Where the word ‘provide’ is used, it means ‘furnish and install complete and ready for use’.”
Waste Mgmt. of Seattle, Inc. v. Utils. & Transp. Comm’n, 123 Wn.2d 621, 630, 869 P.2d 1034 (1994).
City of Seattle v. Dep’t of Labor & Indus., 136 Wn.2d 693, 698, 965 P.2d 619 (1998).
(Emphasis added.)
See, e.g., Puget Sound Fin., L.L.C. v. Unisearch, Inc., 146 Wn.2d 428, 47 P.3d 940 (2002); Morgan v. Stokely-Van Camp, Inc., 34 Wn. App. 801, 808-09, 663 P.2d 1384 (1983); Restatement (Second) of Contracts § 223 (1981).
General Conditions 1.1.1 and 1.1.2.