Mount Mariah Baptist Church Inc. v. Pannell's Associated Electric, Inc.

• Decision Date: 20 December 2002
• Docket Number: No. 36,361-CA.,36,361-CA.
• Citation: 835 So.2d 880
• Parties: MOUNT MARIAH BAPTIST CHURCH, INC., Plaintiff-Appellee, v. PANNELL'S ASSOCIATED ELECTRIC, INC. and Acstar Insurance Company, Defendants-Appellants.
• Court: Court of Appeal of Louisiana — District of US

Page 880

835 So.2d 880

MOUNT MARIAH BAPTIST CHURCH, INC., Plaintiff-Appellee, v. PANNELL'S ASSOCIATED ELECTRIC, INC. and Acstar Insurance Company, Defendants-Appellants.

No. 36,361-CA.

Court of Appeal of Louisiana, Second Circuit.

December 20, 2002.

Rehearing Denied January 23, 2003.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Larry English, Shreveport, Calvin Lester, for Appellants.

Robert E. Plummer, Mansfield, for Appellee.

Before WILLIAMS, GASKINS and PEATROSS, JJ.

GASKINS, J.

The defendants, Pannell's Associated Electric, Inc. and Acstar Insurance Company, appeal from a trial court judgment ordering them to pay the plaintiff, Mount Mariah Baptist Church, Inc., $148,620.04 arising from a dispute over a building contract. For the following reasons, we affirm in part and amend in part the trial court judgment.

FACTS

In 1998, Mount Mariah Baptist Church, Inc., "the church" decided to renovate their existing building and add a new sanctuary. The church hired Jeron Rogers, an engineer, to draw the plans. Amos Hines bid $497,000.00 to build according to the plans. The church secured financing with Hibernia Bank. The bank required that the church have a licensed and bonded contractor to oversee the project. Hines did not meet this qualification. Negotiations were entered into with Pannell's Associated Electric (Pannell's) which was licensed and bonded. The church insisted that Hines be the foreman on the project.

On February 8, 1999, the church entered into a contract with Pannell's to do the work for $497,000.00. The parties had reviewed cost estimates made by Hines and by Pannell's for the various components of the construction. In the contract, Nathan Holden was designated as the architect. The contract contemplated that the architect would oversee work performed by Pannell's and would authorize periodic payments to the company. The document also provided that the project would be built according to plans and specifications. Any changes from the plans would cost extra. The contract required that the defendant start work within 30 days of the contract, with substantial completion within 180 days of the date of commencement.

Financing was not complete until April 1999, when Acstar Insurance Company (Acstar) issued a performance bond in the amount of $497,000.00. Construction began within 30 days of obtaining financing. The plans furnished by the church were lacking in detail. Generally, the architect hired by the owner would be consulted throughout the construction process regarding lack of detail or other problems with the plans. In this case, the architect sought payment from Pannell's. However, Pannell's contended that the architect was to be paid by the church. Apparently, due to nonpayment, the architect ceased work on the project. It appears that Pannell's was then forced to consult directly with representatives of the church regarding the lack of specificity in the plans.

The church then began making oral changes to the plans without change orders and without paying for the changes. Due to the failure to pay the architect, there was no review of the changes. The changes included the alteration of the thickness of the concrete slab, deletion of classrooms, changes to the balcony, change of the size of the pulpit area, and changes to the choir area. Two bathrooms were deleted and a lounge was added to the entry area. Other changes were made to use more expensive materials than originally called for. Wood paneling was placed behind the choir area of sheetrock and more expensive stained glass windows were added. Different and more extensive lighting was installed.

These changes were made by the church's pastor, Johnny Baylor, and/or one of the deacons, Robert Boyd. The changes were implemented by Hines, often without any consultation with Pannell's.

In October 1999, the church presented Pannell's with a bill for more than $18,000.00 for a sound system that was not included in the plans. The preliminary cost allowances provided $4,000.00 for a sound system. Pannell's refused to pay the bill or to pay for any more changes without a change order. The parties reached an impasse at this point and the church contacted Acstar on the performance bond, claiming that Pannell's had stopped work on the project. The problem was temporarily worked out and Pannell's continued to work.

Pannell's insisted that the church owed approximately $58,964.00 for changes made to the plans. When an agreement as to this amount could not be reached, the church locked Pannell's off the job site, refusing to let the company continue with the work. Subcontractors, who had not been paid, filed liens against the church.

Due to the changes in the original plans, which increased the seating capacity of the sanctuary, the fire marshal changed the building's classification from "Class C" to "Class A." This required extensive modifications to the fire alarm, sprinkler, air conditioning and electrical systems. The fire marshal would not allow the building to be occupied without the modifications.

On April 5, 2000, the church filed suit against the defendants, basically asserting a claim for breach of contract. The church claimed that Pannell's failed to complete the renovation and construction in accordance with the design and specifications. The church also alleged that Pannell's failed to pay invoices for labor and materials resulting in numerous liens. The church asserted that Pannell's departed from the design for the work resulting in a different classification by the fire marshal and requiring extensive additional work to meet fire code regulations. The church attached a list of deficiencies in the building to its pleadings and sought to recover for unpaid claims for labor and materials, the expense of having another contractor complete the work, costs of performing the work required by the fire marshal, costs to redo unsatisfactory work performed by Pannell's, sums due for breach of contract by Pannell's, additional costs for material, labor, and engineering, and additional architectural fees, legal fees, and costs.

The defendants answered and filed a reconventional demand against the church, the members of the building committee, and the pastor. According to the defendants, the church breached the contract by failing to retain an architect or engineer to oversee the work and in making numerous changes to the original plan without paying for them. The defendants sought $112,555.00, which included the cost of the changes, the amount necessary to perform work required by the fire marshal, costs associated with any increase in bond premiums, lost profits, costs associated with lien filings, and attorney fees and costs. Pannell's also complained that the church refused to allow the company to finish the project.

The pastor and building committee members filed an exception of no cause of action which was granted by the trial court. The matter was tried and on November 13, 2001, a judgment was filed, ordering the defendants to pay the church $136,850.04 together with $11,770.00 in expert witness fees.

In written reasons for judgment, the court found that this was a suit for breach of contract, redhibition, and quantum merit. The court noted that the project cost more than anticipated and the church was not satisfied with the quality of the work. Also, some of the labor and materials were not paid for by Pannell's.

The court denied the church's redhibition claim, finding that the church was using the facility and was largely satisfied with it. However, because many aspects of the construction were substandard, the court found that a reduction in price was warranted.

The court found that the church was entitled to reimbursement for five liens against the property totaling $46,249.45. The court then went through a list of deficiencies in materials and construction and set forth the amounts due the church for these items. The church was also awarded a credit for the cost of a metal roof originally contemplated in the plans. The court allowed a credit to the church for the amount needed to complete the project. The court further found that the church was entitled to recover expert witness fees. The total amount the court found due to the church was $183,823.04.¹

The court then found that this amount was subject to an offset for items due to the defendants. The court found that the church had to pay for a thicker slab than specified in the plans. Pannell's was also granted recovery for the cost of the sound system not included in the plans, but paid for out of the contract price. The court found that a final payment under the contract was owed to Pannell's.²

The court noted that the plans for the project were inadequate, and that the church did not provide an engineer or architect as required by the contract. The court denied Pannell's claim for lost profits due to the church's action in seeking to enforce the performance bond. According to the court, although the church erroneously believed that the bond was an additional source of funding, the quality of the work was substandard. Therefore, the church was entitled to seek enforcement of the performance bond. The total amount of the set-off allowed to the defendants was $35,203.00. Therefore, the judgment awarded to the church was $148,620.04. The defendants appealed, asserting numerous assignments of error.

JUDGMENT AGAINST DEFENDANTS

The defendants argue that the trial court erred in rendering judgment against them. They contend that it was the church that breached the contract and caused the damages by failing to retain the services of an architect and/or engineer, in making modifications to the plans without paying for the changes, in failing to communicate with Pannell's, and in refusing to allow Pannell's access to the project. They contend that by January or February 2000, the project was substantially completed and that the church was responsible for all...