Sbp Lllp v. Hoffman Construction Company

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 30, 2023
• Docket: 22-35150
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 30 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

SBP LLLP, an Idaho limited liability limited No. 22-35150 partnership; JRS PROPERTIES III LP, an Idaho limited partnership; and J.R. D.C. No. 1:19-cv-00266-DCN SIMPLOT FOUNDATION, INC., an Idaho corporation MEMORANDUM * Plaintiffs-Appellees,

v.

HOFFMAN CONSTRUCTION COMPANY OF AMERICA, an Oregon corporation,

Defendant-Appellant.

Appeal from the United States District Court for the District of Idaho David C. Nye, District Judge, Presiding

Argued and Submitted August 23, 2023 Portland, Oregon

Before: BENNETT, VANDYKE, and H.A. THOMAS, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Hoffman Construction Company contracted with Appellees—three affiliated

companies of agribusiness J.R. Simplot Company (collectively, Simplot)—to build

Simplot a headquarters in Boise, Idaho. A dispute arose concerning reimbursement

of costs Hoffman incurred during construction delays, and after Simplot repeatedly

declined to mediate the dispute, Hoffman initiated arbitration proceedings seeking

roughly $4.7 million for alleged breach of contract. Simplot sued in state court to

stay arbitration, and Oregon-based Hoffman removed the case to federal court.

The parties’ contracts are modified versions of two American Institute of

Architects (AIA) contract templates (A121 and A133) that incorporate by reference

a separate AIA form of general contract terms and conditions (A201). The main

question on appeal is whether the contracts, as modified, incorporate A201’s

standard arbitration provisions. The district court concluded that they do not,

ultimately basing its conclusion on parol evidence. It entered judgment for Simplot

and awarded Simplot attorneys’ fees and costs. Hoffman timely appealed both the

judgment and the fee and costs awards.

Hoffman makes a four-step argument on appeal. First, section 1.2 of each

signed contract incorporates the entirety of the modified A201 form the parties

attached to each contract when it was signed. Second, the parties made other

modifications to those A201 forms, but never removed the standard arbitration

clauses from them. Third, because section 1.2 of the signed contracts therefore

2 unambiguously incorporates those arbitration clauses, the district court erred when

it based its conclusion to the contrary on parol evidence from the contracts’ drafting

history. Fourth, even if the court did consider parol evidence, in the aggregate that

evidence compels a conclusion that the parties agreed to arbitrate disputes.

A determination whether the parties’ contracts contain valid arbitration

agreements is reviewed de novo under Idaho law, with the burden on Hoffman as

the party that argues they do. Reichert v. Rapid Invs., Inc., 56 F.4th 1220, 1226–27

(9th Cir. 2022) (per curiam). Determining whether a contract provides for arbitration

begins with a contract’s plain terms, and it ends there unless the language at issue is

ambiguous. Burns Concrete, Inc. v. Teton Cnty., 529 P.3d 747, 754 (Idaho 2023).

If a court concludes an ambiguity exists, it must try to resolve it first by analysis of

other language in the executed contract before finally turning to parol evidence as a

last resort. Steel Farms, Inc. v. Croft & Reed, Inc., 297 P.3d 222, 229 (Idaho 2012).

Section 1.2 of the contracts Hoffman and Appellees signed incorporates a

modified A201 form. It is undisputed that the modified A201 forms were attached

to two of the contracts at the time they were signed. For the third contract, while the

modified A201 form may not have been physically attached to the contract at the

time of signing, Simplot’s own representative testified that trial exhibit number

2017, which included a modified A201 form, was the final third contract. Thus, it

is undisputed that the third contract incorporated by reference the modified A201

3 that appeared in trial exhibit number 2017. And no party disputes the terms of the

three modified A201 forms. Each of those modified A201 forms contains the

following two sections:

§ 4.6.1 Any Claim arising out of or related to the Contract, except Claims relating to aesthetic effect and except those waived as provided for in Sections 4.3.10, 9.10.4 and 9.10.5, shall, after decision by the Architect or 30 days after submission of the Claim to the Architect, be subject to arbitration. …

§ 4.6.2 Claims not resolved by mediation shall be decided by arbitration which, unless the parties mutually agree otherwise, shall be in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect.

Simplot does not dispute that the modified version of the A201 forms (which we

have determined were incorporated by reference) contained those terms.

Rather than dispute that the modified A201 forms require arbitration, Simplot

instead argues that those forms are not what section 1.2 of the signed contracts is

referencing when it expressly incorporates “the AIA A201 … General Conditions as

modified.” Simplot seems to take the position that the “modified” A201 conditions

incorporated by section 1.2 are some unwritten set of conditions created by the

parties’ negotiations, but apparently never memorialized into a final writing.

As an initial matter, Simplot’s position is difficult to reconcile with the fact

that, for the first two contracts, Simplot itself provided a set of modified A201

conditions attached to the contracts when it sent the contracts (and attached

conditions) to Hoffman to sign. If those were not the “modified” conditions

4 referenced in the contract, then why send them with the contract? But even beyond

that, Idaho law requires that incorporated terms in a contract be both “adequately

identified” and “readily available for inspection by the parties” when the contract is

signed. City of Meridian v. Petra Inc., 299 P.3d 232, 242 (Idaho 2013) (citing

Harris, Inc. v. Foxhollow Constr. & Trucking, Inc., 264 P.3d 400, 416 (Idaho 2011)).

For the first two contracts, the modified A201 conditions that Simplot sent to

Hoffman along with the contracts to be signed easily fit those requirements.

Although there was no evidence showing that the modified A201 was transmitted

along with the third contract for signing, the undisputed evidence shows that the

modified A201, which was incorporated by reference into the third contract, also fit

those requirements. Indeed, Simplot’s representative testified that he received the

modified A201 as part of the final signed contract. In contrast, Simplot’s ambiguous

unwritten conditions clearly don’t meet the incorporation-by-reference

requirements. The written A201 forms “as modified” by the parties are the ones

referenced and incorporated by section 1.2 of the signed contracts.

The lack of ambiguity in the arbitration provisions of those written forms is

dispositive for determining whether the parties agreed to arbitrate disputes and

whether that agreement to arbitrate extends to the dispute Hoffman has with Simplot.

Under Idaho law, no amount of parol evidence can contradict any unambiguous term

of a writing that the parties intended to be a final, complete, and exclusive statement

5 of their agreement. Idaho Code § 28-2-202. And this conclusion is strengthened by

Idaho’s strict standards for using parol evidence when a contract has a merger clause,

see Steel Farms, 297 P.3d at 230, as the parties agree each of the contracts between

Hoffman and Simplot does. Here, the arbitration provisions that remained in the

A201 forms “as modified” by the parties required the parties to arbitrate this dispute,

and the district court erred in concluding otherwise.

Upon remand, the district court shall enter an order pursuant to Section 3 of

the Federal Arbitration Act, “stay[ing] the trial … until … arbitration has been had

in accordance with the terms of the” parties’ three agreements. 9 U.S.C. § 3. The

district court may also enter any further orders consistent with this disposition,

including dissolving or modifying any of its prior orders staying arbitration and

granting attorneys’ fees and costs, or entering new orders regarding attorneys’ fees

and costs.

REVERSED AND REMANDED.