Evco Sound & Electronics, Inc. v. Seaboard Surety Co.

223 P.3d 740, 148 Idaho 357, 2009 Ida. LEXIS 215
CourtIdaho Supreme Court
DecidedNovember 27, 2009
Docket34898-2008
StatusPublished
Cited by2 cases

This text of 223 P.3d 740 (Evco Sound & Electronics, Inc. v. Seaboard Surety Co.) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Evco Sound & Electronics, Inc. v. Seaboard Surety Co., 223 P.3d 740, 148 Idaho 357, 2009 Ida. LEXIS 215 (Idaho 2009).

Opinion

EISMANN, Chief Justice.

This is an appeal from a judgment holding a surety liable for sums owed to a sub-subcontractor under a payment bond issued pursuant to Idaho Code § 54-1927. The surety contends that there was insufficient evidence to find that the subcontractor and sub-subcontractor had entered into an express contract and that the district court erred in holding that the sub-subcontractor gave timely written notice of its claim under the bond and timely filed this lawsuit. We affirm the judgment of the district court and award the sub-subcontractor attorney fees on appeal.

*359 I. FACTS AND PROCEDURAL HISTORY

Ormund Builders, Inc., (General Contractor) is a large building contractor specializing in the construction of commercial, public, and industrial buildings. It desired to submit a bid to construct a public high school in Rathdrum, Idaho.

Cedar Street Electric and Control, Inc., (Subcontractor) is an electrical contractor principally located in Sandpoint, Idaho. It desired to submit a bid to General Contractor to provide all of the electrical work on the construction project.

Evco Sound and Electronics, Inc., (Sub-subcontractor) is a low-voltage electrical supply and installation company principally located in Spokane, Washington. On March 3, 2004, it submitted a bid to Subcontractor offering to perform the low-voltage electrical work on the project by supplying the labor and materials for the fire alarm, intercom, telephone, and television media for the sum of $165,850. The bid identified the work to be done as “Section 16721 Fire Alarm,” “Section 16760 Intercom CLK Telephone,” “Section 16771 Sound Systems,” and “Section 16780 TV Distribution.” The sections referenced were portions of the “General Conditions of the Contract for Construction, Division-16 Basic Electrical Materials and Methods,” for the construction project, which described in detail the electrical work to be done on the project.

At the request of Subcontractor, Sub-subcontractor submitted a revised bid dated March 10, 2004, in which it included the Idaho use tax of 6%. Subcontractor used Sub-subcontractor’s bid in preparing and submitting a bid to General Contractor.

The bid opening was on March 10, 2004. General Contractor was the low bidder on the project, but its bid exceeded the school district’s budget for the construction project. In order to reduce the amount of its bid, General Contractor met with its architect and several subcontractors who had submitted bids, including Subcontractor, to identify changes in the design, the work to be done, and/or the materials or equipment to be used that it could suggest to the school district in order to reduce the cost of the project. This process was called “value engineering.” During that process, Subcontractor consulted with Sub-subcontractor as to what parts of the low-voltage work could be deleted or modified and the cost reduction that would result from those changes.

Ultimately, General Contractor entered into a contract with the school district to construct the high school. Seaboard Surety Company (Surety) is licensed to issue surety bonds in Idaho, and it issued a payment bond pursuant to Idaho Code § 54-1927 guaranteeing payment to those who furnished labor or material or supplied equipment in constructing the school. On April 7, 2004, General Contractor entered into a subcontract with Subcontractor to perform the electrical work on the project for the sum of $565,500.

On June 14, 2004, Subcontractor sent Sub-subcontractor a fax marked urgent in which Subcontractor stated: “Please accept this fax as our intent to enter into a contract with [Sub-subcontractor] for this project (Contract to follow). We need back cans for wall mount clock + speakers — ASAP.” In response to this fax, Sub-subcontractor went to work on the construction project, and it completed all of the work it had agreed to do, with the changes later agreed upon by the parties.

On June 22, 2004, Subcontractor sent Sub-subcontractor a fax stating as follows:

Kevin, in order for us to be on the same page the following valued eng 1 items have been accepted. Could you please provide me with your amounts again.
Delete sound system from gym (32,000)
Delete media retrieval system ( 1,400)
Delete system input jacks ( 1,530)
Change system wire to riser from plenum ( )
Also pis review sub-contract.

Sub-subcontractor responded in a writing dated June 29, 2004, which showed the revised contract price based upon the changes agreed to by the school district. The writing restated Sub-subcontractor’s bid as it had been set out in the March 3, 2004, writing, with the following deductions:

*360 Delete Sound system except speaker wire and speaker back boxes $ 32,000.00
Delete Media Retrieval system $ 1,400.00
Delete TV input plates $ 1,530.00
Convert wire to non Plenum TV and Intercom $ 1,490.00
Total deductions $ 36,420.00
Revised contract price $129,430.00

The writing dated June 29, 2004, also included an additional sum for the Idaho use tax, but the Sub-subcontractor typed on the bottom of the document that it could be deleted if Subcontractor wanted to handle it. The parties later agreed that the Subcontractor would pay the use tax.

On June 23, 2004, Subcontractor had sent Sub-subcontractor a proposed sub-subcontract agreement, but that agreement did not define the scope of work to be done by Sub-subcontractor. Subcontractor had prepared the agreement by copying provisions from its subcontract agreement with General Contractor. When doing so, Subcontractor copied verbatim the scope of work it was to perform under its subcontract agreement with General Contractor, which was all of the electrical work on the project, not just the low-voltage electrical work. The proposed subcontract also left blank the contract price. Neither Subcontractor nor Sub-subcontractor signed the proposed sub-subcontract agreement.

The school building was substantially completed on January 28, 2005. Subcontractor was paid all but about $3,000 to $3,500 of its $565,500 subcontract price, but it did not make any payments to Sub-subcontractor. However, General Contractor made two payments to Sub-subcontractor totaling $53,325, with the last payment being made on March 30, 2005.

The last work performed by Sub-subcontractor in connection with the construction project was providing training to the school district on April 15, 2005; installing part of the television system on April 26, 2005; and preparing as-built drawings which it completed on June 15, 2005.

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Related

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296 P.3d 400 (Idaho Supreme Court, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
223 P.3d 740, 148 Idaho 357, 2009 Ida. LEXIS 215, Counsel Stack Legal Research, https://law.counselstack.com/opinion/evco-sound-electronics-inc-v-seaboard-surety-co-idaho-2009.