Tag: Idaho

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Idaho Supreme Court Upholds Damages Award For Architectural Services Rendered Without A Written Contract
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Court overturns City Rejection of Low Bidder based on alleged lack of Necessary Experience
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Prevailing Parties Denied Attorney Fees for Lack of a Public Works License
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Court Refuses to Apply Economic Loss Rule
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“Agreements to Agree” May Not be Enforceable
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Court Declines to Find Construction Company “Statutory Employer” of Injured Worker, Denies Construction Company’s Motion for Summary Judgment
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Idaho’s High Court Analyzes 15 Factors for Determining Whether a Worker is an Independent Contractor or an Employee
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Materialman Rewarded for Detailed Lien Despite “Open Account”
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Lenders Can Pull Financing if Borrower Cannot Show It Is Ready, Willing and Able to Perform All Conditions Required for Loan
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State Not Liable to Workers Who Also Recovered Under Workers’ Compensation System

Idaho Supreme Court Upholds Damages Award For Architectural Services Rendered Without A Written Contract

Farrell v. Whiteman, 152 Idaho 190, 268 P.3d 458 (2012)

Damien Farrell, an architect originally licensed only in Michigan, brought suit against developer, Kent Whiteman, for uncompensated architectural services rendered for Whiteman’s condominium project.  Whiteman counterclaimed, arguing that Farrell was not entitled to compensation because some of the services rendered were rendered before Farrell obtained his architectural license in the State of Idaho and because some of the services rendered were provided without a written contract.

The District Court found that an implied in fact contract existed between the parties and awarded Farrell damages on the theory of quantum meruit for services rendered after obtaining his Idaho license, and unjust enrichment damages for services rendered before obtaining his license. Whiteman appealed.

Upon review, the Supreme Court of Idaho upheld the district court’s decision, including consideration of the speed and quality of Farrell’s work, in determining the amount of damages to award under the quantum meruit theory.  The Court also awarded Farrell his attorney fees.

Court overturns City Rejection of Low Bidder based on alleged lack of Necessary Experience

Hillside Landscape Constr. Inc. v. City of Lewiston 151 Idaho 749, 264 P.3d 388 (2011)

The City of Lewiston received multiple bids on a public works project.  It rejected the low bidder’s offer on the ground that the low bidder lacked sufficient experience for the project.  The low bidder brought an action against the City for declaratory relief, injunctive relief, and damages.  The district court dismissed the complaint, and the low bidder appealed.

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Prevailing Parties Denied Attorney Fees for Lack of a Public Works License

Harris, Inc. v. Foxhollow Constr. & Trucking Inc., 151 Idaho 761, 264 P.3d 400 (2011)

Following work on a public project, a general contractor brought suit against a paving subcontractor and an excavation subcontractor alleging breach of contract, fraud and other claims.  The paving sub had a public works license for contracts up to $500,000, but the excavation sub had no license.  In what the district court called an “illegal ruse,” the subs agreed to submit a joint bid, using the paving sub’s license.  The total bid, including paving and excavation, exceeded $500,000.  After a trial to the court, the district court entered judgment for defendants, including an award of attorney fees to the paving subcontractor.  The general contractor appealed.

The Supreme Court of Idaho affirmed the judgment in favor of defendants, but reversed the award of attorney fees.  Under Idaho law, reasonable attorney fees are allowed in “any action to recover on a contract for services or in any commercial transaction.” I.C. § 12-120(3).  The Supreme Court found, however, that even if this was a commercial transaction, the contract was illegal because the licensed subcontractor engaged in a “flagrant disregard of the law” by teaming up with an unlicensed subcontractor.  As a result, the paving subcontractor was not entitled to recover its attorney fees despite having prevailed in a commercial transaction.

Court Refuses to Apply Economic Loss Rule

Brian & Christie, Inc. v. Leishman Elec., Inc., 2010 WL 4724264 (Idaho Nov. 24, 2010)

By:  Todd Reuter, K&L Gates, Spokane/Coeur D’Alene

Here, a restaurant owner sued a subcontractor for property damage resulting from a fire allegedly caused by defendant’s electrical work.  The electrical contractor argued that the “economic loss rule” barred the restaurant owner’s claim.  The economic loss rule is a principal of law that prohibits a plaintiff from recovering for purely monetary loss when he/she sues for a tort such as negligence.  This is distinguishable from cases in which the plaintiff sues for physical injury or property damage:  "Economic loss is recoverable in tort as a loss parasitic to an injury to person or property."  In other words, those kinds of harm are not purely economic losses, even though they are ultimately compensated for with money.  A purely economic loss might be, for example, lost profits caused by the defendant’s negligence.  While the law of negligence imposes no duty to pay for purely economic losses, this duty can be created by contract.  The Idaho Supreme Court refused to apply the rule because the restaurant owner sued for property damage, but the damage was not purely economic.

“Agreements to Agree” May Not be Enforceable

By: Todd Reuter, K&L Gates, Spokane/Coeur D’Alene

Spokane Structures, Inc. v. Equitable Inv., LLC, 148 Idaho 616, 226 P.3d 1263 (2010)

"Agreements to agree" may not be enforceable.  Here, a contractor signed a one-page document entitled “Design/Build Agreement” that provided that the contractor would “design, engineer, and draft plans in preparation of all documents/drawings required to enable the owner and contractor to agree on a final design and cost of construction to be performed.”  The contractor presented a final design plan to the landowner, but the landowner decided not to follow through with the project.  The contractor sued for specific performance, trying to force the owner to pay him for work.

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Court Declines to Find Construction Company “Statutory Employer” of Injured Worker, Denies Construction Company’s Motion for Summary Judgment

Baugh v. Gale Lim Holdings, Inc., 2009 WL 33149 (D. Idaho Jan 5, 2009)

In this case, Gale Lim Construction contracted with the State of Idaho to repair portions of the Tin Cup Highway.  Lim contacted Silver Star Communications before excavating, as required, and Silver Star then sent its employee, John Baugh, to the jobsite to mark its fiber optic cable.  Baugh was injured and brought a tort action against Lim.

Lim filed a motion for summary judgment claiming that worker’s compensation law made it a "statutory employer" of Baugh and therefore immune from tort claims.  Baugh defended the motion by arguing that immunity was not applicable in this case where there was no contract between Lim and Silver Star.  Holding that a question of fact remained as to the existence of a contract, the court denied the motion.

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Idaho’s High Court Analyzes 15 Factors for Determining Whether a Worker is an Independent Contractor or an Employee

Excell Constr., Inc., v. Idaho Dep’t of Commerce and Labor, 145 Idaho 783, 186 P.3d 639 (2008)

This appeal arises out of an Idaho Industrial Commission finding that certain sheetrock workers hired by Excell Construction were employees rather than independent contractors.  At issue was whether Excell would be required to pay $6,353 in unemployment insurance taxes and penalties.  On appeal, the Idaho Supreme Court held the workers were independent contractors and reversed the Commission’s finding.

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Materialman Rewarded for Detailed Lien Despite “Open Account”

BMC West Corp.  v. Horkley, 144 Idaho 890, 174 P.3d 399 (2007)

BMC West provided materials to contractor Davies for work on Horkley’s commercial structure.  All sales were on an open account.  Davies did not fully pay BMC, so BMC filed liens “on the land on which the buildings were located, and on the buildings themselves.”  BMC then sued Horkley for payment and to foreclose the liens.  Horkley asserted the “open account defense,” which applies when a materialman “relies exclusively on the general credit of the purchaser, and does not look to the land, structure or building as additional security for the materials sold on credit.”  To avoid the defense and make the lien valid, the materials “must be furnished with special reference to their use in a particular building.”

Because BMC had tracked the materials sold to Davis for use on Horkley’s building, it was not relying on Davies’ general credit alone.  Since BMC was able to track the materials used to a specific project, the court granted summary judgment in favor of BMC.  The Idaho Supreme Court affirmed, including an award of attorney fees.
 

Lenders Can Pull Financing if Borrower Cannot Show It Is Ready, Willing and Able to Perform All Conditions Required for Loan

Boise Tower Assocs. LLC v. Wash. Capital Joint Master Trust, 2007 WL 1035158 (D. Idaho Apr. 2, 2007)

In this case, the federal court sitting in Boise applied Washington law in delivering a win for a lender who refused to lend to the plaintiff developer.  The lender agreed to provide financing, but only if four conditions precedent were met, including an agreement to use union labor.  The developer agreed, but later took steps to have his contractor use non-union labor.  The lender refused to loan, prompting a lawsuit by the developer.  The court held that the lender was entitled to refuse because the developer had not demonstrated that it was willing and able to perform the conditions precedent.  A party, here the developer, that claims to have been damaged by a repudiation must show that it was ready, willing and able to perform its obligations under the contract before the repudiation, and that it would have rendered the agreed performance if the defendant had not repudiated.  The developer could not do so here, so the court excused the lender from making the loan.

State Not Liable to Workers Who Also Recovered Under Workers’ Compensation System

Fuhriman v. Idaho Dept. of Transp., 143 Idaho 800, 153 P.3d 480 (2007)

Idaho law provides that workers’ compensation benefits are the exclusive remedy for workplace injuries.  Idaho Code §72-223, however, contains an exception to that "exclusive remedy."  The exception allows a finding of liability against a third party, even where the injured employee has received worker’s compensation benefits, if the third party is legally liable for damages.  This exception to the exclusive remedy rule does not apply, however, to employers described in §72-216, which includes third party that has expressly or impliedly hired or contracted the services of another, including contractors and subcontractors, and the third party is liable to pay workers’ compensation benefits if the direct employer, the contractor or subcontractor, does not.

In a February 2007 opinion, the Idaho Supreme Court held that the Idaho Department of Transportation was not subject to the exception (that is, it was protected by the exclusive remedy rule).  The State was using workers employed by a contractor.  Those workers were killed on the job.  Their families received workers’ compensation benefits and sued the State.  The Court rejected the claims, however, because the State would have been liable for the worker’s compensation benefits if the contractor/employer failed to pay those benefits.  The exception therefore did not apply.

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