L.K. Comstock & Co. v. United Engineers & Constructors Inc.

880 F.2d 219, 14 Fed. R. Serv. 3d 348
CourtCourt of Appeals for the Ninth Circuit
DecidedJuly 21, 1989
DocketNo. 87-2502
StatusPublished
Cited by27 cases

This text of 880 F.2d 219 (L.K. Comstock & Co. v. United Engineers & Constructors Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
L.K. Comstock & Co. v. United Engineers & Constructors Inc., 880 F.2d 219, 14 Fed. R. Serv. 3d 348 (9th Cir. 1989).

Opinion

TANG, Circuit Judge:

I. Factual Background

In order to comply with a New Mexico air quality control regulation, the Arizona Public Service Company (“APS”) arranged for the construction of a particulate removal project (“PRP”). Specifically, on or about April 1, 1979, APS entered into a contract with general contractor United Engineers & Constructors, Inc. (“UE & C”) in which UE & C agreed to construct the PRP.

UE & C then set out to arrange for subcontractors. A & M Electric Co. and L.K. Comstock & Co., Inc. formed a joint venture, A & M/Comstock (“A & M/C”), to submit a bid to UE & C. On July 13, 1981, UE & C entered into a subcontract with A & M/C whereby the latter was to install the electrical systems in the PRP. The subcontract is a lengthy document which also incorporates various appendices and attachments. The subcontract provides that Arizona law is to apply.

On June 23, 1982, UE & C cancelled the subcontract, claiming that A & M/C had failed to use its “Best Efforts” to complete the work in time to meet the PRP completion date. On June 24th, UE & C replaced A & M/C with another electrical subcontractor, Gardner-Zemke.

II. Procedural History

On July 2, 1982, A & M/C filed a Complaint against UE & C in district court seeking damages for UE & C’s alleged breaches and for wrongful cancellation of the subcontract. UE & C filed a counterclaim seeking damages for A & M/C’s alleged breaches. A & M/C’s Motion for Partial Summary Judgment was denied and the matter proceeded to trial.

The parties stipulated that the proceedings would be bifurcated, with the liability issues considered in one trial, and the dam[221]*221ages issues considered in a second trial, if necessary. After a bench trial on the liability issues, the district court ruled that UE & C’s cancellation of the subcontract was proper and that UE & C was entitled to recover from A & M/C the excess costs of reprocurement associated with the hiring of Gardner-Zemke. The parties later stipulated that judgment should be entered in favor of UE & C in the amount of $1,950,-000 (including attorney’s fees) plus interest, subject to the outcome of this appeal. We have jurisdiction under 28 U.S.C. § 1291.

III. Standards of Review

The “clearly erroneous” standard applies to findings of fact. F.R.Civ.P. 52(a); Cataphote Corp. v. DeSoto Chem. Coatings, Inc., 356 F.2d 24 (9th Cir.), cert. denied, 385 U.S. 832, 87 S.Ct. 71, 17 L.Ed.2d 67 (1966). Issues of law are reviewed de novo. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en bane), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984).

The question of what standard of review applies to contract matters is not always so clearcut because “[t]he interpretation of a contract and the determination as to its breach are a mixed question of fact and law.” Libby, McNeill, and Libby v. City Nat’l Bank, 592 F.2d 504, 512 (9th Cir.1978). In general, factual findings as to what the parties said or did are reviewed under the “clearly erroneous” standard while principles of contract interpretation applied to the facts are reviewed de novo. Id.

In Culinary and Serv. Employees Union, AFL-CIO Local 555 v. Hawaii Employee Benefit Admin., Inc., 688 F.2d 1228 (9th Cir.1982), we stated that if “the district court relies upon extrinsic evidence to interpret an ambiguous contract, that interpretation is a factual determination reversible only if the district court’s construction is clearly erroneous or if the court applied an incorrect legal standard.” Furthermore, In re U.S. Fin.Sec.Litig., we held that

[t]he determination of whether contract language is ambiguous is a matter of law_ When the interpretation includes a review of factual circumstances surrounding the contract, the principles of contract interpretation applied to those facts present issues of law which this court can freely review. Libby. When the inquiry extends beyond the words of the contract and focuses on related facts, however, the trial court’s consideration of extrinsic evidence is entitled to great deference and its interpretation of the contract will not be reversed unless it is clearly erroneous. Culinary.

729 F.2d 628, 632 (9th Cir.1984).

More recently, in Kern Oil & Ref. Co. v. Tenneco, we again discussed the standard of review for contract cases:

Our standard of review in matters of this kind is not simple. Our position is as follows: “When the district court’s decision is based on an analysis of the contractual language and an application of the principles of contract interpretation, that decision is a matter of law and reviewable de novo. When the inquiry focuses on extrinsic evidence of related facts, however, the trial court’s conclusions will not be reversed unless they are clearly erroneous. The question of waiver of a contractual right is also a question of fact and subject to the clearly erroneous standard.”

840 F.2d 730, 736 (9th Cir.), cert. denied, — U.S. -, 109 S.Ct. 378, 102 L.Ed.2d 367 (1988) (citations omitted).

It is clear that when a district court interprets a contract without using extrinsic evidence, the standard of review is de novo. But:

[wjhen the inquiry focuses on extrinsic evidence of related facts, ... the trial court’s consideration of extrinsic evidence will not be reversed unless they are clearly erroneous.

Kern Oil, 840 F.2d at 736. Thus, if the contract interpretation includes a review of factual extrinsic evidence, the findings of fact themselves are reviewed under the “clearly erroneous” standard, Libby, 592 F.2d at 512, but the principles of contract law applied to those facts are reviewed de novo. U.S. Financial Securities, 729 F.2d at 632.

[222]*222IV. Is the District Court’s Decision “Procedurally Inadequate?”

A & M/C argues that the judgment of the district court should be vacated and remanded because its decision is “procedurally inadequate.” To support this contention, A & M/C makes two arguments: that the district court’s findings are skeletal and conclusory, and that the district court’s “wholesale adoption” of the prevailing party’s proposed findings was improper.

A. Alleged Skeletal and Conclusory Nature of District Court Findings

In Unt v. Aerospace Corp., we observed that

[t]he district court’s findings certainly are not well done. They consist mainly of mere conclusions, preceded only by an unhelpful chronology of events.

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Bluebook (online)
880 F.2d 219, 14 Fed. R. Serv. 3d 348, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lk-comstock-co-v-united-engineers-constructors-inc-ca9-1989.