*1 INDEMNITY INDUSTRIAL COMPANY, Appellant,
v. COMPANY, WICK CONSTRUCTION Appellee. COMPANY, KENAI GLASS INC., Appellant,
v. COMPANY, CONSTRUCTION WICK Appellee. 6012/6759, Nos. 6059/6758. Supreme Court of Alaska. 2, 1984.
March
HOI *3 Holmes, An- Waggoner, Biss & Paul W. appellant, chorage, for Industrial Indemni- ty Co. Erwin, Erwin, Gar-
Robert C. Smith & nett, Anchorage, appellant, Kenai for Glass Co. Banfield, Faulkner, Feeney,
Lawrence T. Juneau, Holmes, Herman S. Doogan & Holcomb, Seattle, Siqueland Siqueland, & appellee, Co. Wick Construction C.J., BURKE, Before and RABINOW- COMPTON, ITZ, MATTHEWS, MOORE, JJ.
OPINION MATTHEWS,Justice. appeals arise of a
These consolidated out contract awarded to Wick Construction Company construction the Ju- building. Ap- neau courthouse and office pellants Company Kenai Glass and Indus- Indemnity Company raise numerous on appeal. issues February In the Alaska State Housing (ASHA) Authority awarded the contract to the Juneau court and construct building office Construction Com- pany. work Wick subcontracted all relat- ing to the fabrication and erection curtainwall, glass an aluminum and struc- enclosing building, ture to Kenai Glass Company. performance was se- cured bond issued
Indemnity Company. Industrial reasons,
For building various completed accepted In- late. principal asmuch as cause for the appeared to be Kenai’s failure to install the winter, curtainwall before the onset of payment Wick withheld the final due Kenai under the subcontract. Kenai sued for the counterclaimed, retamage. and, (4) alleging panel; delay in installing tainwall components. Kenai breached the subcontract various failing to fabricate and install the curtain- court lower found that Wick had timely in a wall manner. Wick also filed a types suffered three distinct of harm as a against ASHA, party complaint third alleg- result Kenai’s failure to install the cur- ing that specifications architectural (1) timely tainwall in a manner: direct dam- entity provided by that were defective and age, consisting costs, of increased labor some, all, cause of delay. overhead, job extended unabsorbed home proceeded against ASHA in turn its archi- overhead, unanticipated office winter tects, CCC/HOK. costs; protection (2) damage in indirect form of delay damages paid to August 1980, In Wick settled with ASHA state; (3) indirect in the party complaint third was dis- *4 delay damages form of paid owing or to error, to missed. Due a clerical notice of the other project. subcontractors on the the settlement communicated to $765,654.00 Wick was awarded in total 28, Kenai until October 1980. On Novem- damages, including profits on its increased 17, Kenai to ber moved continue the De- excluding costs but and attorney’s interest 1 trial date. The cember motion was de- fees. prevailed Wick nied. at trial. argument Kenai advances an with Kenai then moved for a new on the respect First, to each element of damage. grounds evidence; newly of discovered argues it that the subcontract limits Wick’s motion was denied. Kenai and Industrial recovery for its direct to $400.00 Indemnity separate appeals, filed alleging per day delay.1 Second, argues of trial, numerous errors in the conduct of the actually Wick did pay [appeal 6012 Subsequently, nos. and 6059]. damages to the state and thus cannot re Indemnity Kenai and Industrial also moved the liquidated damages cover amount from judgment for relief from under Alaska Finally, argues Kenai. it is 60(b). Rule Civ.P. These motions were de- obligation indemnify under no to Wick for appealed and [appeal nied the movants nos. damages paid owing to the various sub The 6758 cases have been 6759]. injured by contractors Kenai’s breach. argument solidated for and decision. Subsidiary damage issues include the $360,000 lower court’s failure to offset the I. DAMAGE ISSUES against in received settlement from ASHA A. Introduction judgment against returned Kenai Glass proper prejudgment and the amount of in- delay The lower court found that’ Kenai’s terest. fabricating erecting in the eurtainwall day accounted 264 of the 414 Liquidated B. Damages. specific delay. The court isolated four (a) (1) provides Clause delay: ordering the subcontract causes part: (aluminum relevant mullions and muntins extru- eurtainwall); forming part (2) sions So far as the SUBCONTRACT work is requesting permission change to concerned, to SUBCONTRACTORshall as- (3) two-piece mullion; a in manufac- sume toward the all CONTRACTOR the turing testing sample obligations a insulated cur- responsibilities which the argues liquidated damages argument 1. Wick de- thé makes same waiver with fense is an defense and respect affirmative that Kenai’s appeal. to several other issues on With plead precludes failure raising the defense from exception of the ASHA settlement offset appeal. findings the issue The of fact however, question, procedural arguments these however, law, and conclusions of indicate that lack merit. actually litigated the matter was and conse- quently point Kenai is entitled to address appeal. 15(b). Alaska R.Civ.P. 1104 clearly within the ambit toward the assumed CONTRACTOR protections” afforded owner, “privileges to all shall be entitled liquidation provision granted by protections ASHA. privileges and owner, liability for by limits Wick’s CONTRACTOR stipulated contract, amount incurred ASHA to ... main precludes recov per day thus $400 (a) is is known a what as Clause damages in excess ery by of actual ASHA Cushman, or conduit clause. R. down flow amount, proved. The same of that even Formbook, Industry The Construction liability limitation § designed are Such clauses 5.08 from through the conduit clause passes pro those into the subcontract incorporate pro the subcontract prime contract into contract relevant to general visions This result Wick. tect Kenai performance. If a con the subcontractor’s jurisdictions in accord cases other with used, rights “the same duit clause is damage limitation clause in wherein equally flow from owner duties should incorporated into the prime contract was through general contractor to the down through conduit clause subcontract flowing subcontractor, well as from the liability for protect the subcontractor from through general con up actual incurred parties to Id. The
tractor to the owner.” See, McDaniel v. Ashton- e.g., contractor. assume the correla thus subcontract (9th F.2d 516-17 Mardian & parties position tive *5 Cir.1966); Dupont Eng. R. v. Walter Dib, Agreements Cliffe Forms and contract. A. (D.Del.1924); F. 649 Coast Contractors, Architects, Engineers and for Company Door v. Strom Con Sash and §7, (1979). Chap. 1[1] 279, 396 65 Wash.2d Company, struction (a) incorporates argues that clause P.2d 803 provision damages liquidated that the con- argues Wick to the effect The prime contract into the subcontract. incorporates only the duit clause substan- specified liquidated damages figure in the relating aspects prime contract tive prime to the con- supplementary provisions work, as portion of the such to Kenai’s day delay.2 According- per tract is of $400 building specifications, and not remedi- liability for ly, Kenai asserts that its direct interpre- It provisions. al asserts by is restricted to damages incurred Wick urged by bring Kenai would clause tation delay for per day of which $400 (c), (k), (a) into conflict with clauses responsible. agree. We (m), negates an inference that which (a) of the subcontract con Clause interpretation. an parties intended such “privileges fers all of the on Kenai find no merit in Wick’s contentions. We prime protections” against Wick that as inconsistency against is as ASHA. no between contract confers on Wick There (c), (k), damages (a) or liquidation delay any The in the clause of clauses damages damages any applicable delay clause are be in 2. The such utilized lieu general provisions prime delay damages. liqui- tained in In this contract a actual 26(b). is It reads as follows: sup- clause damages was set forth in the dated clause right plementary general provisions. provides: If the owner does not terminate It proceed provided para- (Reference the Contractor to LIQUIDATED SGP8 DAMAGES: hereof, graph a. the Contractor shall continue 26) general provisions Articles 25 and he work which event and his sureties Liquidated Damages will be assessed in in the amount set shall be liable to the owner day per $400.00 amount of for each calendar accompanying specifications forth in the papers or day beyond completion for time stated fixed, agreed, liquidated for dam- any the Construction Contract or extensions day delay ages for each calendar until may granted thereof that be until the work is accepted, liquidat- completed if work is or or by Contracting to be determined Officer fixed, damages any not dam- ed ages are so actual Substantially Completed Occupancy. No for by delay. such occasioned granted extension of time will be for winter clause, therefore, makes it clear that This shutdown. damages liquidated a set there is clause forth (c) (m).3 merely explicit delayed, Clause makes Ke- the contractor can terminate Ke- if, liability right perform nai’s compromis- account of nai’s without by Kenai, liquidated damages any ing against claim other- against pursu- are assessed delay damages. ASHA wise has for To the extent respective ant to the contract. The that such are they liquidated damage explic- governed amounts that are are liquidated damage implicit it in incorporated contract and in the amount in the subcontract necessarily subcontract are through (a). Further, identical. clause all such inconsistency is There no necessarily between clauses will be dam- (a) (c). ages. perform A may fail to job early replaced by and be another regard In relationship be is complete subcontractor who able to (a) (k), tween clauses and Wick is correct in time, job on higher price. but at a that, asserting pursuant (k), to clause if the general damage contractor’s claim contractor believes the “subcontrac the first subcontractor in such case would performance delayed, tor’s behind sched a damages. claim for Clause ule, may the contractor terminate the sub (a) patently compatible (k). with clause right proceed contractor’s with the work may (m) itself take over Clause is a indemnifica work, subcontract prejudice provision ... ‘without covering possible tion a myriad of to the CONTRACTOR’S other rights or losses or other might that Wick of, “arising remedies loss or with, sus incur out in connection ” (emphasis Br.). Appellee’s tained.’ performance. incident to” Kenai’s It is not 6-7). (Appellee’s Br. at Wick’s conclusion provision inconsistent with such a to fur provision this parties’ stipulate indicates the ther amount with re liability delayed intention that Kenai’s spect particular to a type damage, such would not be limited damage. precisely This is what liquidated damage clause, however, parties (a). is a have done in clause Al *6 sequitur. (k) non purport though Clause does not Wick can seek actual on scope to define the of the any contractor’s “oth cause of action has Kenai rights (k) er or remedies.” merely Clause other than that which accrued to as that, provides if Kenai’s delayed is result of Kenai’s performance, its Paragraph provided any 3 the Subcontract that the CONTRACTORshall at time be of the payment in consideration of of the opinion Subcontract that is SUBCONTRACTOR not amount, agreed: proceeding diligence with and in such a man- by 3. To be bound satisfactorily complete PROVISIONSPRINT- ner to said work HEREOF, ON ED THE REVERSE SIDE time, required within the then that hereby incorporated by which are herein ref- right, event the CONTRACTOR shall have part erence made of this Subcontract. notice, after reasonable said to take over work complete the and to same at cost (c) give CONTRACTOR shall to SUBCON- SUBCONTRACTOR, expense of the without TRACTOR reasonable notice desired start- prejudice rights to the CONTRACTOR’Sother ing time. SUBCONTRACTORshall start work any damage or remedies for loss or sustained. CONTRACTOR, by on date named complete portions shall the several and the (m) The CONTRACTORand SUBCONTRAC- sublet, whole of the work herein at such times agree indemnify TOR to and save harmless fully as will enable CONTRACTORto com- suits, against any each from and other and all owner, ply with the contract with the and be claims, actions, losses, costs, penalties and provisions bound in the main contract nature, damages of whatsoever kind or in- liquidated damages, with the owner for fees, of, cluding attorney’s arising out in con- SUBCONTRACTOR. with, to, party’s per- nection or incident each particular portion of his formance this (k) SUBCONTRACTORshall commence and parties may agree tract. The to arbitration on, carry perform complete at all times pursuant procedures adopted by to the subcontract, this to the full and sat- Architects, American Institute of the Ameri- specif- isfaction of the ically It CONTRACTOR. is Society applicable can Arbitration law. agreed understood that in the event
1106 recovering for the twice resulted Wick particular is limited cause recovery on that (a) injury. is not same liquidated amount. Clause (m). clause inconsistent with point is be responds that this language support in the find no We thus appeal. We first time on ing raised for the whole, subcontract, as a for the read appellant contravenes that neither note (a) was not intended proposition that clause not the matter was assertion Wick’s liqui- incorporate in to the subcontract Ac attention. brought the trial court’s provision prime con- of the dated the issue cordingly, conclude we sup- authority has cited no tract. Wick appeal. See considered should not be obligations port but its contention Building Simpson Alaska v. University rights remedies not the 1976); (Alaska 1317 Supply 530 P.2d through the conduit clause passed contract (Alaska Knight, 394 P.2d Mitchell v. subcontract, and we have found into 1964). Indeed, has noted one commentator none. for the patently unreasonable is “[i]t attempt to bind contractor to Prejudgment Interest. D. gen- provisions the trial court erred Kenai maintains that general contractor contract while the eral calculating prejudgment amount of corresponding rights, give not does retainage on the contract allowed interest remedies, to the subcontrac- and redress pay an Wick did offset. Cushman, In- The Construction tor.” R. payment due the subcontract. final under § Formbook, dustry 5.08 The lower court ruled that Kenai was liquidation We hold that the of de payment until entitled its final lay in the incor owner, payment final from received its porated in hold fur the subcontract. We not receive its final As Wick did ASHA. liquidated damage provision ther that the 28, 1980, July payment ASHA until from in the subcontract subsumes both direct obligation to court ruled that Wick’s and indirect incurred August pay Kenai 1980. Con- arose unnecessary to Wick.4 It is therefore con sequently, prejudgment interest was calcu- arguments respect sider with from that date. lated particular direct dam elements of Wick’s ages, costs profits viz. on increased dispute focus of this clause liq unabsorbed home office overhead. The (d) pro clause subcontract. That provision uidated establishes- as vides, payment shall part: “Final It is liability. well as limits Kenai’s also *7 five CONTRAC made within after unnecessary to whether consider Kenai complete has his final or TOR received indemnify otherwise be liable to would involving payment SUBCONTRACTOR’S Wick for assessed contingent portion pay of work.” Such payments by or to ASHA for Wick other industry. ment clauses are common in the injured by subcontractors “the notes that subcontractor Cushman by Kenai. if getting paid payment runs risk contingent upon is to C. The ASHA Offset. payment to con owner Cushman, Kenai contends that the trial court tractor.” R. The Construction § $360,000 Formbook, Industry 5.04 should have offset the received Given against finding, on judg- unchallenged appeal, settlement from ASHA the court’s 1980, July 28, against paid Kenai Glass. Kenai that Wick was not until ment returned payment the court’s failure to offset Kenai not entitled to until reasons that was its language previously, liquidated pra. reasonably 4. As noted under This can be most “any interpreted encompass the damages are in lieu of actual all occa- delay." by delay, Note 2 su- occasioned ... sioned direct or indirect. 3, expects plain- accrues August prove 1980 and interest from states: “Wick that tiff supply that date forward. breached its curtainwall
erection subcontract by failing ... to com- THE DENIAL OF KENAI’S MO- II. plete specific portions that work thereof THE TRIAL
TION TO CONTINUE at reasonable such times would have DATE enabled Wick to the other work contract_” required under 1980, August In Wick settled with ASHA Further: respect against with to Wick’s claim clerk, claiming in Wick is if Through of the court alternative that state. error liable ASHA is not to defendant notice the settlement was not communi- Wick above, alleged, 27, plaintiff then cated to Kenai’s counsel until October liable all of direct and delay 1980. Kenai to continue the Decem- costs moved time, project.... of the entire At this ber 1 trial date on November 14. The appears such liability alternative motion was denied. approximate would be in the sum of following arguments Kenai advanced the $1,425,000.00.... support of its motion: added.) (Emphasis Id. at 7-8. (1) originally Wick had asserted that the delay in construction was attributable pleadings pretrial Given and the specifications, specifica- to defective memorandum, we conclude that Kenai was provided by tions ASHA. Kenai’s de- might pursue on notice that Wick a claim rested fense Wick on defective against majority it for the specification ground; damages. agree We with the trial court predicament essentially that Kenai’s (2) settling pursuing In with ASHA and consequence neglect. of its The lower alone, against claims did not its denying court abuse discretion in changed the nature of the Kenai’s motion to continue trial date. “surprise”; (3) direction, change in Given this Ke- acquire
nai’s counsel needed time to III. CONTRACT AMBIGUITY ITAS acquaint other counsel and counsel RELATES TO RE- TESTING QUIREMENTS with the facts issues. ASHA, When Wick settled with the na- approximately The lower court attributed
ture trial and Kenai’s role therein eight months of to Kenai’s failure to changed considerably. had intended fabricate and test an insulated curtainwall bystander to be a while Wick and ASHA panel. drawings shop Kenai received the litigated specification the various defective 1973, 17, April yet sample did test a essence, In relying claims. Kenai was defense, panel May until In specification Wick to establish the defective argues provisions govern- the contract and, doing, against claim the state so conflict, ing testing are in that the contract establish Kenai’s defense Wick. necessarily ambiguous, am- ASHA, however, Once Wick settled with biguity performance. excuses prepare Kenai was forced to its own defec- Initially, it should noted that even *8 specifications tive defense. accept argument, we Kenai’s the result be- clear, however, It is unchanged. that Kenai has low would remain The trial grounds upon surprise. no delayed eight which to claim court found Kenai that had fabricating testing pan- Count 5 of Wick’s counterclaim states that months in and the els, Kenai “breached its subcontract with de ordering three and one-half months in Company by muntins, fendant Construction four one-half months in failing required mullion, changing two-piece the work there to a and sever- timely pretrial under in a fashion.” Wick’s al in assembling months the whole. All 7, memorandum, 2, told, however, dated March 1980 at respon- the court held Kenai 1108 FOR A NEW TRIAL days delay; of half of the V. THE MOTION 264 only
sible delay itemized above. cumulative argues that the low- Indemnity Industrial challenge denying does in er court abused its discretion concerning delay in findings court’s argues that a trial. It the motion for new assembling purchasing the mullions light brought new the ASHA settlement Indeed, it uncontro- went and muntins. might alter the outcome which evidence delay much of the was below that verted granted. Briefly summa- were new shortage compo by a of various rized, this relates to ASHA’s evidence mullions).5 What Kenai (principally nents panel aluminum curtainwall viction that an acknowledge delay is that the fails to thus according fabricated could ordering installing the mullions and in specifi- specifications and that supports finding that muntins alone The evi- were therefore defective. cations days delay. of As a caused 264 testimony of Lou dence contradicts result, consequence no that it is of Casseta, architect, panels ASHA’s that may about the have been mistaken court according specifi- could be fabricated fabricating panels. testing in glassweld panel and that a cations solely money speed to save substituted ADEQUACY OP THE FIND- THE IV. up production. OF FACT INGS Indemnity argues that the tri- Industrial Indemnity Industrial contends its delegated al to Wick’s counsel court trial, that, granted develop a new it could facts and issue con- obligation to find the impossibility concerning an defense law, comply of and thus did not clusions panel fabrication based the additional with Alaska Rule of Civil Procedure Presumably, this defense would evidence. Indemnity that Industrial concludes fabricating in in excuse so case should be remanded that court above, stalling panels. As noted how may independently the record. consider ever, Indemnity if Industrial were to even of Alaska Rule Civil Procedure defense, the result establish such below 78(a) provides part for the “counsel unchanged. inescapable remain would party proceeding successful to an action or fact remains attributable findings prepare writing shall ... all ordering installing the aluminum ex ” law Rule fact conclusions of .... [and] (delay findings fact trusions reflected 78(a) delegate to was not intended to coun unchallenged on appeal) more than ac duty finding sel the the facts. court’s counts for the 264 held Builders, Fairbanks Inc. v. Morton Deli A against Kenai. new trial will not be (Alaska 1971). ma, Inc., 194, P.2d 197 483 granted newly on the basis discovered is, however, adopt A trial court entitled proba evidence unless the evidence would findings prepared by and conclusions coun change bly the result on a new trial. sel, they long so reflect court’s inde Thomas, Montgomery Ward v. 394 P.2d pendent weight view of the evidence. (Alaska 1964). 774 adopt A may attorney-prepared court find above, For the reasons we stated affirm ings jurisdictions lacking a even in rule judgment part below in and reverse it 78(a). equivalent e.g., to Rule See Jesko v. part. superior We remand to the court 786, 89 N.M. Chemical Stauffer for calculation of in accordance (App.1976). are not P.2d 58-59 We opinion. Prejudgment with this persuaded interest the lower court failed to independently attorney’s fees find the in the case at will also be recalculat- facts bar. ed. taming plausibly argue panels.
5. We note Kenai could not Our review record *9 ordering entirely delayed delays that it the mullions and indicates that the were unrelat- anticipated in ob- muntins because it ed. part, part AFFIRMED in REVERSED in
and REMANDED. William SUMNER Aviation d/b/a Alaska, Appellant, BURKE, Justice, Chief with whom v. COMPTON, Justice, joins, dissenting in FEL-AIR, INC., Appellee. part. No. 5487. respectfully disagree I with the conclu-' Supreme Court of Alaska. sion that Wick’s claim Ke- nai must be measured liquidated March damages provision prime contract. damages Wick suffered as a result
of Kenai’s bear no relationship damages willing accept being ASHA had been delayed occupying the courthouse. delay damages Whereas ASHA’s arose solely delayed from occupancy, Wick’s delay damages liqui-
claim for included the damages dated assessed ASHA under contract, materials, increased la- bor and overhead costs of Wick’s business contractor,
operations money dam- ages owed Wick to other subcontractors who suffered as a result of untimely performance. And, contrast to delayed ASHA’s occupancy, Wick’s actual attribut-
able to Kenai’s breach easily were both readily forseeable and calculable. reasons, For these I conclude that Wick adopt liqui- and Kenai did not intend to damages figure dated as the measure of damages for the agree- breach of their contrary,
ment. I incorpo- On the read the incorporating only ration clause as the sub- provisions stantive governing building specifications and the Thus,
like. I would hold that Wick is enti- tled to seek actual for the harm it
suffered aas result of Kenai’s breach.