Procedural Posture

Appellant building owner challenged a decision from the Superior Court of the City and County of San Francisco (California), which awarded judgment to respondent contractors for an alleged breach of a contract for the construction of a building.

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Overview

The contractors alleged that they were prevented from completing their job, and were awarded the value of their partial construction with interest, and the estimated loss of profits. The parties' contract specified that the architect's decision was final and conclusive, and concrete furnished by the contractors had been rejected by the owner's architect. The court reversed and held that where the contract either expressly or impliedly showed that it was the intention that the architect was to have been the final arbiter in approving or disapproving the work as required in the contract, or in passing upon questions relating thereto, then in the absence of fraud, bad faith or mistake, the architect's decision was conclusive and binding on the parties. Therefore, upon rejection by the architect, it was the duty of the contractors to remove the defective work and then seek arbitration of the dispute. The contractors were not entitled to payment before the work was finished, and the respective contract rights of the parties could be determined, as well as any contract price offsets to the owner.

Outcome

The court reversed the judgment awarded to the contractor.

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