LR FOY CONSTR. v. Professional Mech. Contr.

766 P.2d 196, 13 Kan. App. 2d 188
CourtCourt of Appeals of Kansas
DecidedDecember 22, 1988
Docket62,268
StatusPublished

This text of 766 P.2d 196 (LR FOY CONSTR. v. Professional Mech. Contr.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
LR FOY CONSTR. v. Professional Mech. Contr., 766 P.2d 196, 13 Kan. App. 2d 188 (kanctapp 1988).

Opinion

13 Kan. App. 2d 188 (1988)
766 P.2d 196

L.R. FOY CONSTRUCTION CO., INC., Appellant,
v.
PROFESSIONAL MECHANICAL CONTRACTORS, et al., Appellees.

No. 62,268

Court of Appeals of Kansas.

Opinion filed December 22, 1988.

William L. Mitchell, of Mitchell and Henry, of Hutchinson, for the appellant.

Wyatt A. Hoch, of Foulston, Siefkin, Powers & Eberhardt, of Wichita, for the appellees.

Before DAVIS, P.J., JACK L. BURR, District Judge, assigned, and DANIEL L. HEBERT, District Judge, assigned.

DAVIS, J.:

L.R. Foy Construction Company, Inc., (Foy) a general contractor, brought this action against Professional Mechanical Contractors (PMC), its subcontractor, and PMC's surety, the Universal Surety Company, seeking both compensatory and punitive damages for PMC's alleged negligence in performing its contractual duties. The trial court granted PMC summary judgment, holding that Foy's claims were barred by a final arbitration award resolving all contractual disputes between Foy and PMC. We affirm.

In the spring of 1983, Foy contracted with the City of Hutchinson to renovate and expand the Hutchinson Waste Water Treatment Plant (the "project"). Foy subcontracted much of the piping and mechanical work on the project to PMC. Article II of the Foy-PMC subcontract provided:

"All disputes and claims of every kind whatsoever, shall be submitted to arbitration in accordance with the provisions as contained in the by laws and rules of the American Arbitration Association for Construction."

Article XII of the subcontract required PMC to furnish a bond for performance and for payment of labor and material. PMC obtained its bond from the Universal Surety Company.

PMC began work on June 6, 1983. Because of Foy's nonpayment of construction progress payments, PMC stopped work on March 18, 1985. On April 10, 1985, PMC filed a demand for arbitration against Foy. C. Robert Bell, a Wichita attorney, Harry R. Rutledge, a Hutchinson architect, and Robert E. Smith, a Wichita architect, were appointed as arbitrators in May 1985.

Foy answered PMC's arbitration demand and filed a counterclaim against PMC. Foy alleged that it had incurred more than $600,000 in "expenses, damages, and delays because PMC failed to do its work in a good workmanlike manner." Foy also alleged that it was "entitled to punitive damages for [PMC's] willful and *190 wanton actions in the conduct of its work and attempts to cover up deficiencies in its work." In the alternative, Foy alleged that PMC had "negligently and grossly negligently [sic] conducted its work," and that Foy was therefore entitled to $600,000 in compensatory damages and $500,000 in punitive damages.

On July 15, 1985, Foy filed suit on the performance bond against Universal Surety in Reno County. Foy acknowledged that the PMC-Foy dispute had been "duly submitted to arbitration which is now pending before the American Arbitration Association," but it took the position that an action against the surety was proper since the surety was not a party to the arbitration proceedings. Universal replied that it was not a party to arbitration because its interests were identical to PMC's. It admitted that under Kansas law, it would be bound by the result of the PMC-Foy arbitration. Universal moved to stay the action against it until the PMC-Foy arbitration had been completed. The record reveals no further activity in this case until August 1987.

On December 18, 1985, before the arbitrators had conducted any evidentiary hearings, Foy filed an action against PMC, the American Arbitration Association, the three arbitrators, and three other subcontractors on the project. Foy alleged that its counterclaim in the arbitration proceeding

"claims, among other claims, damages for the negligent acts of PMC, the grossly negligent acts of PMC and punitive damages and that the other subcontractors have indicated to plaintiff that they will claim damages against the plaintiff [Foy] because of the various actions and non-actions of PMC, but that the AAA and its arbitrators are unable to hear such claims, have disallowed their presence in the arbitration proceedings, thus preventing the plaintiff from having a full and complete hearing on all issues involving PMC, the sureties on the project and the other subcontractors on the Project."

Foy also repeated its allegations in the arbitration proceeding that PMC had "failed to do its work in a good workmanlike manner," or alternatively, that PMC had "negligently or grossly negligently [sic] conducted its work," and that Foy was entitled to $600,000 in compensatory damages and $500,000 in punitives. Foy sought a permanent injunction against arbitration, but otherwise asserted no claims against the other defendants. A temporary restraining order was issued the same day.

On January 2, 1986, PMC filed a motion to vacate the restraining order, to compel arbitration, to dismiss, and to assess *191 sanctions. At a hearing on January 10, 1986, the court vacated the restraining order and ordered Foy back to arbitration.

On January 31, 1986, PMC filed its answer to Foy's petition. PMC alleged that it had ceased work because Foy had breached the contract by refusing to pay PMC over $260,000 in progress payments due and owing. PMC also denied Foy's allegation that the arbitrators were unable to address all of the issues in the PMC-Foy dispute, stating:

"The arbitration panel has agreed to address all issues raised in PMC's arbitration demand and Foy's counterclaim, except for the question of punitive damages, which Foy has waived by agreeing to arbitrate all claims and disputes between the parties."

The arbitrators held evidentiary hearings on the PMC-Foy dispute on January 20-23, January 31, and February 1, 1986. On February 28, 1986, the arbitrators rendered a decision in favor of PMC against Foy and its surety. The arbitrators found:

"2. The scope of the work to be undertaken by PMC is set forth as clearly as may be in the sub-contract and the attachment thereto of PMC, however, there existed considerable confusion at all times in the mind of all the FOY witnesses and of the engineer from WILSON & COMPANY, as to the exact scope of the work contracted to be performed by FOY.
"3. The Arbitrators find that there was no effective scheduling of the work by FOY....
"4. The Arbitrators find that the applications for payment by PMC were duly submitted at the times and in the amounts as set forth on Plaintiffs Exhibit 8 and that the payments as set forth on said Schedule were received at said time. The Arbitrators further find that payments were made by the owner to FOY, which included allowance for said amounts, but which were not transmitted by FOY to PMC in a timely fashion.

....

"7.... The Arbitrators specifically find that the witness, L.R. FOY, estimate of the amount of delay caused by the activities of PMC overall is inherently incredible and unsupported by the evidence and there is no other means provided by which the Arbitrators can calculate any delay days attributable to any materials slowness or any other activity on the part of PMC.
"8. The Arbitrators specifically find that the testimony of the witness, COOK [Foy's project supervisor], was confusing and so full of demonstrable errors and omissions as to be unreliable and totaling [sic

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L.R. Foy Construction Co. v. Professional Mechanical Contractors
766 P.2d 196 (Court of Appeals of Kansas, 1988)

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Bluebook (online)
766 P.2d 196, 13 Kan. App. 2d 188, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lr-foy-constr-v-professional-mech-contr-kanctapp-1988.