Little Rock Wastewater Utility v. Larry Moyer Trucking, Inc.

902 S.W.2d 760, 321 Ark. 303, 1995 Ark. LEXIS 505
CourtSupreme Court of Arkansas
DecidedJuly 10, 1995
Docket94-1455
StatusPublished
Cited by39 cases

This text of 902 S.W.2d 760 (Little Rock Wastewater Utility v. Larry Moyer Trucking, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Little Rock Wastewater Utility v. Larry Moyer Trucking, Inc., 902 S.W.2d 760, 321 Ark. 303, 1995 Ark. LEXIS 505 (Ark. 1995).

Opinion

Robert H. Dudley, Justice.

The Arkansas State Highway Commission decided that Baseline Road in Pulaski County should be widened from two lanes to five lanes, and it knew that appellant, Little Rock Wastewater Utility, owned sewer lines that were located where the construction would take place. In anticipation of the earthwork and construction involved in widening the road, the Commission, acting through the Arkansas Highway and Transportation Department, entered into a contract with the Little Rock Wastewater Utility to relocate Utility’s sewer lines. In this agreement, dated August 12, 1988, and styled “The Relocation Agreement,” Utility was to relocate its facilities when notified to do so by the Department. Upon notice, it was to act with diligence, begin the relocation work within thirty days, complete the work within 150 days thereafter “in a manner as will result in no avoidable interference or delay in the construction work,” and adjust the sewer facilities as required by the construction work. After the contract was executed, Utility was given notice and started its work. By the spring of 1991, Utility had completed most of its relocation work. On March 5, 1991, the Department entered into a separate contract with Southern Pavers, Inc. to widen the roadway and surface the road. That same day, Southern Pavers, the prime contractor, entered into a subcontract with Larry Moyer Trucking, Inc. to clear and grub for widening the road and to install drainage and related facilities. The subcontractor, appellee Moyer Trucking, started its work.

In the performance of its subcontract with Southern Pavers, Moyer Trucking experienced delays. It contends the delays were caused by Utility’s failure to perform its contract with the Department and that it suffered damages as a result of these delays. Moyer Trucking filed this suit in which it alleged it was a third-party beneficiary of the Relocation Agreement and it suffered damages as a result of Utility’s failure to perform that agreement satisfactorily. Upon trial, a jury returned a $62,563.49 verdict in Moyer Trucking’s favor. Utility appeals, and Moyer Trucking cross-appeals. We affirm on direct appeal and reverse and remand on cross-appeal.

Utility’s first point on direct appeal is that there is no legal basis for Moyer Trucking’s claim that it was a third-party beneficiary of the relocation contract between the Department and Utility. The presumption is that parties contract only for themselves, and a contract will not be construed as having been made for the benefit of third parties unless it clearly appears that such was the intention of the parties. Howell v. Worth James Constr. Co., 259 Ark. 627, 535 S.W.2d 826 (1976). However, a contract is actionable by a third party where there is substantial evidence of a clear intention to benefit that third party. Id. at 629, 535 S.W.2d at 828. It is not necessary that the person be named in the contract, and if he is otherwise sufficiently described or designated, he may be one of a class of persons if the class is sufficiently described or designated. Id. at 630, 535 S.W.2d at 829.

Both Utility and Moyer Trucking agree that Howell is the leading case on third-party beneficiary contracts in this State, but each contends the case supports its argument in this appeal. In Howell, the appellee contractor, Worth James Construction Co., constructed water lines for the appellant subdivision, Tall Timber Development Corp. Id. at 638, 535 S.W.2d at 827. Appellant subdivision contracted separately with co-appellant, Howell, for co-appellant to do trenching. Id. Howell damaged the water lines during trenching, and the appellee utility contractor, Worth James, sued for damages based upon a provision in the contract between the subdivision and the trenching contractor. Id., 535 S.W.2d at 827-28. The appellant subdivision argued that the contract sued upon was for the benefit of the subdivision and the trenching contractor only. Id. at 629, 535 S.W.2d at 828. We held that a provision in the contract by which the subdivision retained forty percent of the contract price as a bond for the trenching contractor evidenced its intent to be a surety for it and that the utility contractor was an intended beneficiary. Id. at 630, 535 S.W.2d at 829.

In the case at bar, Utility argues that, since there was no retainage provision in the relocation contract, this case does not come within the ambit of Howell. The argument is not persuasive. It is not necessary that there be a retainage provision in order for there to be third-party beneficiary of a contract. Other factors may demonstrate that a third party was in the class of persons intended to be a beneficiary of the contract.

Here, the language of the Relocation Agreement shows that the relocation work to be performed by Utility was to be practically completed before the earthwork and surfacing contract would be let by the Department. In the pertinent parts, the Relocation Agreement states:

[A]s part of the necessary work of such improvements [Utility] must relocate certain of its existing utility facilities and/or secure “Department’s” approval of the construction and location of certain proposed facilities on the right of way of said highway project. . . .
* * *
The proposed highway improvement necessitates the adjustment, relocation, and/or “Department’s” approval of the proposed locations of certain facilities of [Utility] as described in the following description of work and such adjustment, relocation, or construction being shown in detail in [Utility’s] plans, sketches, estimate of costs, and specifications (when applicable) which are attached hereto and made a part hereof ....
* * *
[Utility] shall not begin the adjustment work until authorized by “Department” and shall exercise due diligence to begin work within 30 calendar days and to complete such work within 150 calendar days thereafter and in a manner as will result in no avoidable interference or delay to the “Department’s” construction work or in the adjustment of [Utility’s] facilities.

(Emphasis added.)

Larry Moyer, the president of appellee Moyer Trucking, testified that, when making Moyer Trucking’s bid for the sub-contract, he relied on the fact that Utility essentially had completed its work and would coordinate the remaining work with the Department while construction on the roadway was in progress. Randy McNulty, president of Southern Pavers, testified that he relied on this fact when he made the primary bid and that he bid less because the relocation of the utilities would be almost complete, there would be less interference, and it would cost less to complete the construction job. Billy Morgan, superintendent for Southern Pavers, testified that he understood that the utility moving had been done before the job was started, but, as it turned out, the moving had not been done, and the work done by Moyer Trucking was significantly impaired.

In determining whether Moyer Trucking was in the class to be benefitted by the contract, the reasoning underlying cases from other jurisdictions is helpful. In Moore Constr. Co. v.

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Bluebook (online)
902 S.W.2d 760, 321 Ark. 303, 1995 Ark. LEXIS 505, Counsel Stack Legal Research, https://law.counselstack.com/opinion/little-rock-wastewater-utility-v-larry-moyer-trucking-inc-ark-1995.