Bott v. Idaho State Building Authority

Citations: 835 P.2d 1282; 122 Idaho 471; 1992 Ida. LEXIS 142Docket: 18540

Court: Idaho Supreme Court; August 7, 1992; Idaho; State Supreme Court

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In a breach of contract case, architects Bott, Berg, and Hoar (BBH) sued the Idaho State Building Authority after being terminated from a project to expand the Idaho State School for the Deaf and Blind. BBH had entered into a contract in January 1985, which stipulated a payment of 7.75% of the total construction cost plus a 10% incentive fee for keeping costs under $8.2 million. BBH was dismissed before completing the construction phase and sought compensation for their completed design work. 

At trial, the jury unanimously found that BBH had substantially performed under the contract and that the Authority had breached it, awarding BBH $199,292 in damages, which included payments for schematic design, an incentive bonus, and additional services. The Authority filed several post-judgment motions, including a request for judgment notwithstanding the verdict (n.o.v.) and motions for a new trial, claiming insufficient evidence for the damages awarded and alleging that the damages were excessive due to passion or prejudice. The district court denied the n.o.v. motion but granted a new trial solely on the issue of damages, stating it could not determine damages based on the existing record. BBH subsequently requested costs, attorney fees, and prejudgment interest, while the Authority opposed this request.

The district court delayed its ruling on a motion to await the results of a new trial it had ordered. BBH appealed, and the Authority cross-appealed, raising several key issues: (I) whether the district court incorrectly denied the Authority's request for judgment n.o.v. (notwithstanding the verdict); (II) whether it erred in granting a new trial solely on damages, rather than on liability; (III) whether either party is entitled to attorney fees at trial or on appeal; and (IV) the appropriateness of prejudgment interest.

Regarding the motion for judgment n.o.v., the district court found substantial evidence supporting the jury's conclusion that BBH had substantially performed the contract and suffered damages from wrongful termination. The appellate court must evaluate this determination without deference to the trial court and review the evidence favorably for BBH. The appellate court identified that the trial court misinterpreted the Authority's n.o.v. motion, particularly its assertion of insufficient evidence for BBH's damages claims, focusing only on liability rather than on the adequacy of damages evidence. As a result, the appellate court remanded the case for the trial court to reconsider the Authority's n.o.v. motion.

On the motion for a new trial, the trial court granted a new trial on damages alone, recognizing that substantial evidence can still permit a new trial if deemed necessary to correct a perceived injustice. The trial court holds broad discretion to assess witness credibility and testimony, while appellate review is more limited and does not involve weighing evidence. The appellate court will only reverse a new trial order if there is a clear abuse of discretion by the trial court.

In Sun Valley Shopping Ctr. v. Idaho Power, the Idaho Supreme Court established a three-part test for determining whether a trial court has abused its discretion: 1) the court's recognition of the issue as one of discretion; 2) whether the court acted within its discretionary boundaries and adhered to applicable legal standards; and 3) whether the decision was reached through reasoned analysis. The trial court ruled that the jury's damage award lacked evidentiary support and found substantial errors in the computations, concluding that the jury was likely influenced by prejudice. The court highlighted that the contract explicitly allowed reimbursement for additional services at an hourly rate and denied any basis for an incentive bonus, which was contingent on total construction costs.

However, the court's reasoning for granting a new trial was unclear, as it did not specify which grounds under Rule 59(a) were relied upon, leaving ambiguity regarding the applicable legal standards. This lack of clarity prevents the appellate court from assessing whether the trial court abused its discretion. The appellate court emphasized the importance of understanding the rationale behind the trial court's decision-making process rather than merely the outcome. Consequently, the appellate court remanded the case for clarification of the trial court's reasoning regarding the new trial on damages. Additionally, the court noted that its review of jury instructions is limited to whether they collectively and adequately present the issues and applicable law.

The jury instructions provided at trial were deemed accurate and appropriately stated the applicable law, with any errors identified being non-prejudicial. The court examined the challenged instructions, focusing on the Authority's request for a specific instruction related to BBH's contractual duties under the Architect Agreement. The trial court declined this request, instead providing an instruction that conveyed the essence of "substantial performance," indicating that deviations from the contract did not preclude the receipt of essential benefits by the Idaho State Building Authority. The given instruction mirrored the standard Idaho Jury Instruction 609, with a minor addition that did not alter its meaning. 

The agreement itself detailed the parties' obligations, making the proposed instruction unnecessary. Specific duties outlined in the contract, such as providing complete plans and a detailed cost estimate, were adequately covered in the evidence presented. Additionally, requirements for timely performance and approval by the Authority were inherent in the agreement, with the jury having already been instructed on these points. Overall, the trial court's refusal to provide the Authority's requested instruction was justified as the substance was sufficiently addressed in the instructions given.

The Authority sought an additional jury instruction regarding architects' duties, citing the case Nave v. McGrane, where the architect failed to deliver a workable plan. The Nave court determined the plans were not definite or compliant with engineering standards. In contrast, the plans from BBH in the current case were accepted and utilized by the Authority, indicating that BBH substantially performed and provided the essential benefits of the contract. The Authority's argument for the instruction, based on testimony from an unrelated architect about incomplete construction documents, was deemed unfounded. The architect clarified that omitting certain dimensions, such as beam lengths, was standard practice, as these measurements are determined by a steel fabricator after assessing the actual construction.

Furthermore, the Authority challenged the jury instruction on waiver, asserting it was prejudicial since waiver was not an issue at trial. However, no prejudice occurred because the jury did not consider waiver in its verdict. Unlike the case Everton v. Blair, where a waiver instruction could have influenced the jury's decision, here the jury found no waiver, eliminating the risk of reliance on the instruction. The Authority also argued that BBH improperly referenced the waiver instruction in closing arguments regarding set-off damages, but this did not affect the overall verdict. The trial court's refusal to provide the Authority's requested instruction was therefore upheld as correct, with the existing instruction accurately reflecting the law.

No prejudice was demonstrated regarding the jury’s decision, which awarded set-off damages to the Authority, indicating that they did not find a waiver of the right to set-off. Although the jury instructions contained unnecessary language about waiver, the essential definition sufficed to inform the jury adequately. In future trials, a waiver instruction should only be given if evidence supports a finding of waiver concerning set-off damages. The instruction requested by BBH regarding waiver due to breach of agreement is inaccurate and should not be provided in a retrial.

The Authority contested the trial court's decision to grant a new trial solely on damages, arguing that liability should also be retried. However, without knowledge of the specific grounds for the new trial, further discussion on this matter is premature.

Regarding attorney fees, BBH seeks fees under Idaho Code (I.C.) 12-120, while the Authority argues for the applicability of I.C. 12-117 due to its status as a state agency, as defined by I.C. 67-5201(1). The Authority claims that applying I.C. 12-120 would violate contractual obligations established prior to recent amendments. If deemed a state agency, the Authority would only be liable for attorney fees if BBH's lawsuit lacked a reasonable factual or legal basis. Our evaluation includes whether the Authority qualifies as a state agency under the relevant statutes, noting that the title "Idaho State Building Authority" does not fit the legislative definition of an agency, which excludes certain entities from the definition. Furthermore, the legislature has not granted the Authority the power to determine contested cases.

The definition of agency in this case hinges on the phrase "authorized by law to make rules," as defined in I.C. 67-5201(7). A "rule" is characterized as a general agency statement that implements or interprets law for the public, excluding internal agency management that does not impact private rights. I.C. 67-6409 outlines the Authority's powers, including adopting by-laws and regulations, but these powers do not equate to legislative intent to classify the Authority as an "agency" under I.C. 12-117(1), which would limit liability for attorney fees. The Authority's creation aimed to provide government facilities affordably, with broad powers to contract and manage but without authority to create rules that implement or interpret law. This differentiates the Authority from a true state agency.

Regarding attorney fees, I.C. 12-120(3) applies to the current case as it involves a "contract for services" and "commercial transactions," qualifying the parties as defined by the statute. The Authority contends that applying I.C. 12-120(3) would impair contractual obligations unconstitutionally, given that relevant amendments occurred after its enactment. However, Idaho Code 73-101 states that statutes are not retroactive unless explicitly declared so. The precedents from Griggs v. Nash and Myers v. Vermaas indicate that mandatory attorney fees should not apply retroactively. The court clarified that the focus should be on the time of filing rather than when the cause of action arose. Since the suit was filed on July 28, 1987, after the amendments, applying I.C. 12-120(3) is not retroactive. The Authority's reliance on Penrose v. Commercial Travelers Ins. Co. is deemed unpersuasive in this context.

An insurance statute previously addressed in Penrose permitted attorney fee awards exclusively to policyholders but was deemed inapplicable to pre-existing contracts, as it would impose new liabilities outside the policy's terms. In contrast, Idaho Code 12-120(3) is party-neutral, allowing fee awards to prevailing parties without favoring any party, thereby making the rationale in Penrose irrelevant to the current case. The case of Eriksen v. Blue Cross of Idaho establishes that attorney fees may be awarded under I.C. 12-120(3) even when the contract predates amendments, as long as the lawsuit postdates them. BBH requested attorney fees on appeal under various statutes, but the Court found no basis for awarding fees due to the lack of frivolous or unreasonable action. Consequently, neither BBH nor the Authority was deemed the prevailing party on appeal, resulting in no awarded fees or costs. Additionally, prejudgment interest was deemed inappropriate due to unresolved damages issues. The Court remands the case to the district court for reconsideration of the Authority's motion for judgment n.o.v. regarding damages and clarification on the new trial order, while affirming the trial court's decision not to grant the Authority's requested jury instructions. BAKES, C.J., JOHNSON and McDEVITT, JJ., and REINHARDT, J. Pro Tem., concur.