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BROOKS & CO. GEN. CONT., INC. v. RANDY ROBINSON CONT., INC. (59828)


BROOKS & CO. GEN. CONT.,
INC.

v.

RANDY ROBINSON CONT., INC.


February 26, 1999
Record No. 980953

BROOKS & COMPANY GENERAL CONTRACTORS, INC.

v.

RANDY ROBINSON CONTRACTING, INC.

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Melvin R. Hughes, Jr., Judge
Present: All the Justices
OPINION BY CHIEF JUSTICE HARRY L. CARRICO


This building construction case involves a
controversy between Brooks & Company General Contractors,
Inc. (Brooks) and Randy Robinson Contracting, Inc. (Robinson)
over whether the agreement between them included a requirement
that disputes should be submitted to arbitration. When a dispute
arose and Brooks demanded arbitration, Robinson moved the trial
court for a stay pursuant to Code Sect. 8.01-581.02(B).
[1] From an order staying arbitration permanently, we
awarded Brooks this appeal.

The controversy relates to the construction of
the Swift Creek Presbyterian Church in Chesterfield County. In
October 1995, Brooks was in the process of submitting a bid to
become the general contractor on the project and Randy Robinson
Contracting submitted a written bid to Brooks in hopes of
becoming the sitework subcontractor
[2]

Because the owner was not prepared to begin
construction immediately, commencement of the project was delayed
until the spring of 1996. In May of that year, after Brooks was
selected as the general contractor, it contacted Robinson to
ascertain whether Robinson’s October 1995 bid was still
good. When Robinson indicated that the bid was still good,
Brooks’ representative, Rick Griffith, advised Robinson that
it would be given the work. Griffith marked on his copy of
Robinson’s bid document: "$ confirmed by Randy Robinson
5/17/96." Griffith testified below that he told Randy
Robinson a written contract would be sent to Robinson. However,
Randy Robinson testified that he did not recall such a statement.

Two weeks later, Brooks sent Robinson an
American Institute of Architects (AIA) "Standard Form of
Agreement Between Contractor and Subcontractor." The form
contained numerous terms not found in Robinson’s bid
documents and not previously discussed by the parties, including
a clause requiring arbitration of disputes.

Brooks had not executed the AIA form contract.
Griffith testified that Brooks did not execute contract documents
before mailing them to subcontractors because of the possibility
that subcontractors might mark changes on the documents.

Robinson received the AIA form contract but did
not sign it or return it to Brooks. Randy Robinson testified that
he did not agree with the AIA form contract and that his refusal
to sign was purposeful, although he did not communicate his
disagreement to Brooks. Griffith testified that Randy Robinson
promised several times to sign the AIA form contract and that
once, at the beginning of Robinson’s work, he, Griffith,
went to the job site to get a signed copy of the AIA form
contract and Randy Robinson stated he had left his copy at home.
In his testimony, Randy Robinson denied making these statements.

Robinson began work on the project on June 26,
1996, and continued working until July 15, 1996. On the latter
date, Randy Robinson used a front-end loader to demolish
Brooks’ job-site trailer and then left the site. Robinson
performed no further work on the project.

Brooks completed the work Robinson left
unfinished and, citing the arbitration clause in the AIA form
contract, filed a demand with the American Arbitration
Association for arbitration and for an award of damages for
Robinson’s failure to complete the work. Robinson then filed
its motion to stay arbitration, denying that the AIA form
contract represented any portion of the agreement between the
parties. Brooks argued in response that the AIA form contract set
forth the terms of the agreement between the parties and that
Robinson had accepted those terms by performance. After hearing
the testimony of Rick Griffith and Randy Robinson, the trial
court found that "there was never a meeting of the minds as
contained in the AIA form contract and the parties are not bound
by it." The court then ordered a permanent stay of
arbitration.

On appeal, Brooks stakes its case on the
proposition that Robinson accepted the terms of the AIA form
contract by performance. Brooks acknowledges that the
"question in any case in which a contract is asserted by one
party and denied by the other is whether there has been a meeting
of the minds." However, Brooks asserts that the
determination whether there has been a meeting of the minds
always depends upon the intention of the parties "as
objectively manifested." See Snyder-Falkinham v.
Stockburger
, 249 Va. 376, 381, 457 S.E.2d 36, 39 (1995); Montagna
v. Holiday Inns, Inc.
, 221 Va. 336, 346, 269 S.E.2d 838, 844
(1980). Here, Brooks says, "not only was there no objective
manifestation of disagreement, but to the contrary, [Randy] Robinson actually began the work after having received the
contract without indicating in any way that he disagreed with the
written contract documents."

Nor does it make any difference, Brooks
maintains, that Robinson "did not sign the contract
documents." Brooks states that "[w]hen a party
undertakes the performance of a contract according to its terms,
acceptance by performance results, even if the party failed to
sign the final contract."

Robinson argues, on the other hand, that the
doctrine of acceptance by performance is inapplicable here
because the sole agreement between the parties consisted of an
oral contract entered into prior to the delivery of the AIA form
contract by Brooks to Robinson. The oral contract arose, Robinson
maintains, when Brooks contacted Robinson in May of 1996 to
inquire if the October 1995 bid was still good, Robinson answered
in the affirmative, and Brooks advised that Robinson would be
given the work. And its "performance on the project,"
Robinson insists, "was completely in accordance with the
terms of that parol contract."

In support of its argument that Robinson
accepted the terms of the AIA form contract by performance,
Brooks cites Galloway Corp. v. S.B. Ballard Construction Co.,
250 Va. 493, 464 S.E.2d 349 (1995). Galloway involved a
dispute between a general contractor and several of its
subcontractors, including Empire Granite Corporation (Empire).
The president of Empire, through apparent oversight, had failed
to sign the final contract documents as proposed by the general
contractor. We held that, "[a]s Empire undertook to perform
the contract according to its terms, an acceptance by performance
resulted. The absence of an authorized signature does not defeat
the existence of the contract . . . ." 250
Va. at 505, 464 S.E.2d at 356.

In Galloway, however, the final contract
documents, although not signed by Empire, had been signed by the
general contractor, objectively manifesting its intention to be
bound by the documents, and this was the contract we said Empire
had accepted by performance. Here, no objective manifestation of
Brooks’ intention appears. Brooks did not sign the AIA form
contract it sent to Robinson, and Griffith, Brooks’
representative, testified this was the firm’s practice
because it expected subcontractors to make changes in the
documents.

Furthermore, there was no issue in Galloway
concerning whether Empire had performed pursuant to a preexisting
parol contract rather than the written document it had failed to
sign. Here, Robinson makes the preexisting parol contract the
pivotal element in the case, saying it was the sole agreement
between the parties and the one under which it performed.

During oral argument, Brooks conceded there was
"an oral contract" between the parties but stated
Brooks "indicated by sending this written document that the
intention was to replace the oral contract with a written
contract." Brooks also conceded that Robinson was under no
duty to reject the modifications contained in the AIA form
contract, but maintained that because Robinson started work
"without objection, . . . that’s acceptance
by performance."

We disagree with Brooks. While Brooks may have
intended that the AIA form contract would replace the oral
contract, there is nothing in the record indicating that Brooks
ever conveyed that intention to Robinson or that Robinson shared
the intention. A form letter of transmittal accompanying the AIA
form contract was checked only in a box labeled "[f]or
approval." And although Rick Griffith testified that Randy
Robinson promised to sign the AIA form contract, Randy Robinson
contradicted Griffith’s testimony, and the trial court
resolved the conflict in Robinson’s favor when it awarded
Robinson a stay of arbitration.

This case reduces itself, therefore, to the
proposition that a valid and binding oral contract existed
between the parties after Robinson said it stood by its October
1995 bid and Brooks said Robinson would be given the work, that
Brooks simply failed to show there was a meeting of the minds on
the modifications that later appeared in the AIA form contract,
and that, without such a showing, it cannot be said that Robinson
accepted the terms of the modified contract by performance.
Hence, as Robinson maintains, the oral contract was the sole
subsisting agreement between the parties, and it did not require
arbitration in the event of a dispute.

For these reasons, we will affirm the trial
court’s permanent stay of arbitration.

Affirmed.

 

 

FOOTNOTES:

[1] Code Sect. 8.01-581.02(B)
provides, in pertinent part, that "[o]n application, the
court may stay an arbitration proceeding commenced or threatened
on a showing that there is no agreement to arbitrate."

[2] At the time this bid was submitted in
October 1995, Randy Robinson apparently operated as a sole
proprietorship under the name of Randy Robinson Contracting but
incorporated as Randy Robinson Contracting, Inc. in March 1996.

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