Ken Hood Construction Co. v. Pacific Coast Construction, Inc.

120 P.3d 6, 201 Or. App. 568, 2005 Ore. App. LEXIS 1226
CourtCourt of Appeals of Oregon
DecidedSeptember 21, 2005
DocketC010645CV; A119153
StatusPublished
Cited by33 cases

This text of 120 P.3d 6 (Ken Hood Construction Co. v. Pacific Coast Construction, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ken Hood Construction Co. v. Pacific Coast Construction, Inc., 120 P.3d 6, 201 Or. App. 568, 2005 Ore. App. LEXIS 1226 (Or. Ct. App. 2005).

Opinion

*571 ORTEGA, J.

This case arose after a deal to build a restaurant in Washington County fell apart. A subcontractor, Ken Hood Construction Co. (Ken Hood), originally asserted claims against the general contractor, Pacific Coast Construction (Pacific Coast); the developer, Fong Holdings, LLC and Peter Fong (Fong); and a real estate holding company. Among the various claims asserted by the parties, Pacific Coast and Fong asserted cross-claims against each other. Only those claims were at issue at the bench trial. After the trial, the trial court entered a judgment and a supplemental judgment that, among other things, (1) found in favor of Fong on Pacific Coast’s breach .of contract claim (though it found in favor of Pacific Coast on its claims against Fong for quantum meruit and unjust enrichment); (2) found in favor of Pacific Coast on Fong’s claims for timber trespass; (3) found in favor of Fong on Pacific Coast’s lien foreclosure claim; (4) awarded attorney fees to Pacific Coast as the prevailing party on Fong’s timber trespass claim; and (5) awarded attorney fees to Fong on Pacific Coast’s contract and lien foreclosure claims, but in an amount that was 75 percent lower than what Fong had requested. On appeal, Fong makes four assignments of error; Pacific Coast makes two assignments of error on cross-appeal. For the reasons explained below, we affirm on Fong’s appeal and reverse on Pacific Coast’s cross-appeal. We also reverse one award of attorney fees.

Except where noted, the underlying facts are undisputed. In 1999, Fong bought property in Washington County to develop a restaurant. An economist by training, Fong had no real estate development experience before buying the Washington County property. He retained the Scott/ Edwards Architecture firm (Scott/Edwards) to design the restaurant, and the project was put out to bid in the summer of 2000. As is customary in the industry, the bid package included a form of contract; both that contract and the bid instructions were standard documents published by the American Institute of Architects (AIA). Pacific Coast’s project manager, Josh Komp, testified that it is customary in competitively bid contracts to include all the terms and conditions in the bid package, leaving nothing open to negotiation. On the “Bid Form,” the following language appeared:

*572 “Notwithstanding any delay in the preparation of the formal Contract Agreement, the undersigned agrees to commence work on the Project within ten (10) days following receipt of written notice of acceptance of bid from Owner.
“The undersigned, if awarded the Contract by the Owner shall, within five (5) days after notice of award and receipt of Construction Contract Agreement Forms from the Owner, sign and deliver to the Owner all required copies.”

Those are commonly used provisions and were intended to require the contractor who is awarded the work to proceed with the work while the written contract is being finalized. Although the form of contract included some blanks, most of the data that went into the blanks could be found elsewhere in the project manual.

In early September, about a month after Pacific Coast submitted its bid, Fong sent Pacific Coast a letter accepting that bid (the award letter):

“It is my pleasure to inform you that your company has been chosen over tough competition to build the restaurant. It is my intention to sign a contract with you based on our verbal agreement that the price of the project is increased to $1,259,888.00 which reflects your obligation to provide a performance bond and payment bond on the project.”

Both Komp and Pacific Coast’s president, Jeff Espedal, believed that the parties had a contract for the project at that point. Fong, on the other hand, testified that he intended by his letter to inform Pacific Coast that he would enter into negotiations with it, rather than with another bidder. Fong also testified, however, that he intended to enter into a written contract with Pacific Coast based on the documents that were put out to bid. A provision in the bid package stated, “After the Owner determines that a contract is to be awarded, the contract will be awarded at his discretion” on the basis of a number of factors.

The day after sending the award letter, Fong met with Komp, Espedal, and representatives of Scott/Edwards at the Scott/Edwards offices. Several necessary permits had yet to be obtained, but most or all were ready to be picked up from the various agencies and the parties agreed that Fong would be responsible for doing that. The parties also agreed *573 that work should begin on anything that could be done before permits were obtained, because time had been lost in the bidding process and the excavation and concrete work needed to be done before the winter weather set in. 1 Komp and Espedal testified that Fong did not object or express any concern with proceeding in that fashion, and Andy Kraus of Scott/Edwárds also testified that Fong was clear that trees could be removed from the site before the permits were official. According to Komp, the parties specifically discussed going ahead with tree removal; Pacific Coast would mark the trees to be removed, and Fong would come to the property and verify that the right trees had been identified. Two Scott/Edwards representatives, Kelly Edwards and Andy Kraus, on the other hand, recalled the discussion of marking the trees but did not believe Fong gave Pacific Coast authorization to cut the trees. Fong, likewise, indicated that he did not authorize tree removal at the meeting.

Edwards presented a draft of the written contract (with all blanks filled in) at the meeting and encouraged the parties to review it with their attorneys. Fong had not decided whether he or one of his companies would be designated as the owner in the contract and specifically wanted to consult with his lawyer on that issue. Espedal and Edwards both testified that it is not unusual to begin work on a construction project before a written contract is signed.

Confident that it had a contract with Fong, despite the lack of a written contract, Pacific Coast subcontracted the tree removal and site preparation to Ken Hood. However, several days later, Komp told Fong by telephone that Pacific Coast would not proceed without a written contract. Fong responded that he was fine with that, because he had not yet obtained the permits or consulted his attorney about the written contract. Nevertheless, the next day he went to the site as agreed and confirmed that the correct trees had been identified for cutting.

*574 Komp followed up with another phone call and a fax stating that the tree clearing was scheduled to begin on September 19, adding, “I need to have a signed contract before I proceed with this clearing. Please contact me on [September 18] to see if we can schedule a meeting to sign the contracts.” Fong responded again in the phone conversation that he had not as yet been able to contact his lawyer. He testified that he told Pacific Coast to stop all work, but, according to Komp, Fong did not instruct Pacific Coast to hold off on the tree removal.

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Bluebook (online)
120 P.3d 6, 201 Or. App. 568, 2005 Ore. App. LEXIS 1226, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ken-hood-construction-co-v-pacific-coast-construction-inc-orctapp-2005.