L.R. Foy Construction Co. v. Spearfish School District 40-2

341 N.W.2d 383, 14 Educ. L. Rep. 1116, 1983 S.D. LEXIS 437
CourtSouth Dakota Supreme Court
DecidedDecember 14, 1983
Docket14130
StatusPublished
Cited by21 cases

This text of 341 N.W.2d 383 (L.R. Foy Construction Co. v. Spearfish School District 40-2) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
L.R. Foy Construction Co. v. Spearfish School District 40-2, 341 N.W.2d 383, 14 Educ. L. Rep. 1116, 1983 S.D. LEXIS 437 (S.D. 1983).

Opinions

DUNN, Justice.

This is an appeal from a judgment of the circuit court affirming the decision of an arbitrator and denying a motion to vacate the arbitration award. We affirm.

On February 23,1978, appellant L.R. Foy Construction Company, Inc. (Foy) entered into a contract with appellee Spearfish School District # 40-2 (School District) for the construction of a new high school building. The contract provided for a fixed sum to be paid to Foy for the work. During the spring and summer of 1978, the South Dakota Cement Plant, which supplied cement to Foy for the project, experienced a cement shortage. This shortage caused time delays and additional costs on the part of Foy. Foy notified School District of these problems but continued to work on the project.

On August 23, 1978, Foy made a claim to School District for extension of time and the additional costs, but School District, meeting on September 14, 1978, denied the request for extra costs. Thereafter, Foy submitted a demand for arbitration, claiming School District owed it additional costs of $316,326.01. A hearing was held on September 10, 1981, before arbitrator Floyd Matthew, following the American Arbitration Association Construction Industry Arbitration Rules.

After presentation of testimony, exhibits, and briefs, the arbitrator denied Foy’s claim for the additional costs. The reasons given for the denial were: 1) the contract did not provide for payment of additional costs caused by delays, shortages, etc.; and 2) Foy could not adequately show that School District agreed to waive the contract provisions and pay the additional costs. This result was within the guidelines of the Arbitration Rules. The circuit court affirmed the arbitrator’s decision.

Foy raises three issues on appeal: 1) Did the arbitrator violate SDCL 21-25A-24(4) when he did not allow certain testimony by Foy’s project manager? 2) Should Foy recover the additional costs from the School District on the theory of estoppel? 3) Were the trial court’s findings clearly erroneous and against the clear preponderance of the evidence?

Foy’s initial claim is that the arbitrator’s decision should be vacated on the basis of SDCL 21-25A-24(4), which states:

Upon application of a party, the court shall vacate an award where:
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(4) The arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of §§ 21-25A-11 to 21-25A-17, inclusive, as to prejudice substantially the rights of a party ....

Foy maintains that this provision was violated because the arbitrator never allowed testimony from Charles Arterburn, Foy’s project manager on the Spearfish high school job. Arterburn’s testimony would have been to the effect that School District, at various times, indicated to Arterburn that they would compensate Foy for the additional costs of the project. Foy claims that it did not have Arterburn available to testify because it never anticipated that an issue as to contract documents and the intent of the parties would surface at the hearing. We disagree with Foy’s claim.

Courts which have examined the issue of exclusion of evidence at arbitration [386]*386hearings have stated that the primary concern of the courts should be whether the parties received a full and fair hearing. While a complete omission of critical evidence by the arbitrator would justify vacating the result, the award should not be overturned if the evidence in question was heard in one form or another. Allstate Insurance Company v. Fioravanti, 451 Pa. 108, 299 A.2d 585 (1973). There is no need for the arbitrator to hear evidence that would merely be cumulative. Atlas Floor Covering v. Crescent House & Garden, Inc., 166 Cal.App.2d 211, 333 P.2d 194 (1958); Zinger v. Rolling Hills Realty Corp., 224 N.Y.S.2d 40 (1961). As long as the evidence is heard in some form by the arbitrator, the parties have received a full and fair hearing. Allstate Insurance Co., supra.

The facts show that even though Arter-burn did not testify at the hearing, the content of his testimony was heard and considered by the arbitrator. The following testimony was given by Lyle R. Foy, president of Foy:

Q. Did he [Arterburn] indicate to you that the School Board said they didn’t want the job shut down, that they wanted you to proceed with the work?
A. Yes, that’s right, and he said, he told us that they were wanting to continue immediately, that they were going to pay the difference in cost.

Later in the hearing the arbitrator said that a statement from Arterburn was unnecessary because “I understand what he understood he was relating to you apparently that he thought you were going to be reimbursed for the extra costs.” Foy even admits in its brief that the arbitrator understood and considered the substance of Arterburn’s testimony in reaching his decision.

Since the evidence which Arterburn would have testified to was heard and considered by the arbitrator, we find no violation of SDCL 21-25A-24(4). The testimony of Arterburn would merely have been cumulative. In addition, the record does not support Foy’s contention that it failed to have Arterburn at the hearing merely because it was “taken by surprise” when new issues surfaced. The only new issue raised at the hearing concerned interpretation of certain provisions of the actual contract document. Arterburn’s proposed testimony would not have gone to the contract document, but only to School District’s alleged representations to him about payment of additional costs. This issue of payment of additional costs was raised both in Foy’s demand for arbitration and at the prehearing conferences. Thus, if Foy deemed Arterburn’s testimony to be crucial on this issue, it should have had Arterburn at the hearing. Consequently, the rights of Foy were not substantially prejudiced and the trial court properly upheld the arbitrator’s decision.

Foy’s next contention is that even though the written contract between the parties did not call for School District to pay any additional costs, the doctrine of estoppel should allow Foy to recover the $316,-326.01. Foy maintains that by its actions, inactions, representations and misrepresentations, School District led Foy to believe that it would pay the additional costs. Foy’s claim is based upon the alleged comments made by School District to Arter-burn about payment of additional costs, School District’s rejection of the option to shut down the project, and School District’s failure to accept or reject Foy’s claim for additional costs until September 14, 1978.

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L.R. Foy Construction Co. v. Spearfish School District 40-2
341 N.W.2d 383 (South Dakota Supreme Court, 1983)

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Bluebook (online)
341 N.W.2d 383, 14 Educ. L. Rep. 1116, 1983 S.D. LEXIS 437, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lr-foy-construction-co-v-spearfish-school-district-40-2-sd-1983.