HORSFIELD CONSTRUCTION, INC. , Plaintiff - Appell ant , vs. CITY OF DYERSVILLE , Defendant - Appell ee .
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IN THE COURT OF APPEALS OF IOWA
No. 8-710 / 07-1419
Filed October 15, 2008
HORSFIELD CONSTRUCTION, INC.,
Plaintiff-Appellant,
vs.
CITY OF DYERSVILLE,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Dubuque County, Monica L.
Ackley, Judge.
Contractor appeals from the dismissal of its declaratory judgment action
against city with whom it had contracted. AFFIRMED.
Todd J. Locher of Locher & Locher, Farley, for appellant.
Michael Coyle and William N. Toomey of Fuerste, Carew, Coyle, Juergens
& Sudmeier, P.C., Dubuque, for appellee.
Considered by Sackett, C.J., and Miller and Potterfield, JJ.
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POTTERFIELD, J.
Dissatisfied with work done by Horsfield Construction, Inc. (HCI), on a
“Downtown Streetscape Project,” the City of Dyersville withheld final payments
amounting to $197,553.31. The City further voted to assess liquidated damages
of $100 per day, beginning September 7, 2005.
HCI responded by filing a
petition for declaratory judgment seeking a declaration that (1) liquidated
damages could not be assessed because the project was substantially
completed, (2) the warranty period for the project begins when the work is placed
into use, and (3) the contract was one of adhesion and, therefore, a mandatory
arbitration clause contained therein was unenforceable.
The district court later granted the City’s motion for summary judgment. It
concluded the contract was not one of adhesion and that the parties must “follow
the [arbitration] requirements as set forth in the contract entered into between the
parties.”
HCI appeals from this ruling.
rejecting its adhesion-contract claim.
It first maintains the court erred in
Moreover, it argues the City waived
arbitration by threatening litigation and failing to make a timely motion to compel
arbitration. Finally, it contends the proper procedure would have been to move to
compel arbitration pursuant to Iowa Code section 679A.2(3) (2007), not to move
for summary judgment.
Summary judgment rulings are reviewed for correction of errors of law.
Hallett Constr. Co. v. Meister, 713 N.W.2d 225, 229 (Iowa 2006). “To obtain a
grant of summary judgment on some issue in an action, the moving party must
affirmatively establish the existence of undisputed facts entitling that party to a
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particular result under controlling law.” Interstate Power Co. v. Ins. Co. of N.
Am., 603 N.W.2d 751, 756 (Iowa 1999).
We first address whether the contract between the City and HCI was an
adhesion contract, thus invalidating the arbitration clause.
See Iowa Code
§ 679A.1(2)(a) (providing an arbitration contract is enforceable, unless it is
contained in an adhesion contract).
A contract of adhesion is described as one that is “drafted
unilaterally by the dominant party and then presented on a take-itor-leave-it basis to the weaker party who has no real opportunity to
bargain about its terms.”
Penn Life Ins. Co. v. Simoni, 641 N.W.2d 807, 813 (Iowa 2002) (quoting
Restatement (Second) of Conflict of Laws § 187 cmt. b, at 135 (1988)). “The
determination of whether a contract is a contract of adhesion involves the issue
of unconscionability.” Hofmeyer v. Iowa Dist. Court, 640 N.W.2d 225, 230 (Iowa
2001).
Our case law has long defined insurance contracts as adhesive.
Insurance policies are considered contracts of adhesion “due to the inherently
unequal bargaining power between the insurer and insured.” Dolan v. Aid Ins.
Co., 431 N.W.2d 790, 794 (Iowa 1988). Here, we have no such disparity and no
dominant/weaker party distinction.
As HCI admits, it has a “vast amount of
experience in bidding public projects . . . .” It is an experienced contractor,
“specializ[ing] in concrete paving, constructing underground utilities and
excavation on both public and private projects . . . .” Nothing forced HCI to bid
on or accept the terms of this contract. Furthermore, our law favors arbitration as
an alternative to civil litigation. Clinton Nat’l Bank v. Kirk Gross Co., 559 N.W.2d
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282, 283 (Iowa 1997). In light of these considerations, we affirm the district
court’s conclusion that this case does not involve a contract of adhesion.
We next address HCI’s claim that the City waived its contractual right to
arbitration. The essential test for waiver of arbitration requires conduct or activity
inconsistent with the right to arbitration and prejudice to the party claiming
waiver. Id. at 284. Factors relevant to an assessment of prejudice include the
delay in the moving party’s request for arbitration and the extent of the moving
party’s trial-oriented activity. See id. Prejudice can be shown by “lost evidence,
duplication of efforts, or the use of discovery methods unavailable in arbitration.”
Id. Our supreme court has stated that evidence of waiver must be compelling.
See id.
In particular, HCI asserts the City waived arbitration by threatening
litigation1 and by participating in discovery. We first note the City did not initiate
the lawsuit for which discovery was conducted. Moreover, HCI does not offer
any facts or argument to support that it suffered any prejudice by the City’s
course of action. Without some factual dispute on this issue, HCI’s claim of
waiver was properly subject to summary adjudication.
Finally, we address HCI’s claim that the City employed improper
procedure in moving for summary judgment rather than in moving to compel
arbitration. Iowa Code section 679A.2(3) provides that “[i]f an issue referable to
arbitration under the alleged agreement is involved in an action or proceeding
pending in a district court, [an application to compel discovery] shall be made to
1
Before HCI initiated this lawsuit, the City’s engineer for the project, John Wandsnider,
sent a letter to HCI advising that if HCI did not comply with the requirements of the
contract, the City reserved the option to, among other things, “initiate legal action.”
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that court.” We find nothing indicating the procedure provided for in this section
is the exclusive remedy for a party to an arbitration contract.
summary judgment was an appropriate procedural response.
Moving for
Nothing now
precludes HCI from attempting to assert its perceived rights in a future arbitration
proceeding. Thus, HCI was not prejudiced in any fashion by the City’s election to
move for summary judgment rather than moving to compel arbitration under
section 679A.2(3).
AFFIRMED.
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