Jerry Bennett Masonry v. Crossland Const.

• Decision Date: 20 September 2005
• Docket Number: No. 26456.,26456.
• Parties: JERRY BENNETT MASONRY, INC., Appellant, v. CROSSLAND CONSTRUCTION CO., INC., and Fireman's Insurance Company of Newark, New Jersey, Respondents.
• Court: Missouri Supreme Court

171 S.W.3d 81

JERRY BENNETT MASONRY, INC., Appellant, v. CROSSLAND CONSTRUCTION CO., INC., and Fireman's Insurance Company of Newark, New Jersey, Respondents.

No. 26456.

Missouri Court of Appeals, Southern District, Division Two.

July 28, 2005.

Motion for Rehearing or Transfer Denied August 22, 2005.

Application for Transfer Denied September 20, 2005.

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Steven E. Marsh, Hulston, Jones & Marsh, Springfield, for appellant.

Jason J. Higdon, Spencer, Scott & Dwyer, P.C., Atty., Joplin, for Resp. Crossland Const. Co., Joplin.

Robert A. Babcock, Baker, Sterchi, Cowden & Rice, LLC, Jefferson City, Atty., for Respondent Firemen's Ins. Co. ROBERT S. BARNEY, Judge.

This appeal arises from a dispute relating to a subcontract agreement for masonry work entered into between Appellant Jerry Bennett Masonry Contractor, Inc., ("Subcontractor") and Respondent Crossland Construction Co., Inc., ("Contractor"), in connection with the construction of a school building ("the project") for Webb City R-7 School District ("the District") in Jasper County, Missouri.¹ Contractor was the primary contractor for the project.²

The genesis of the present dispute arose from Contractor's 10% "retainage" of $67,057.50, which was otherwise due Subcontractor upon completion of Subcontractor's portion of the project under the terms of the parties' contract. Contractor asserted it was necessary to retain the $67,057.50 because Subcontractor maintained an insufficient number of masonry personnel at the project site which caused delays in completing the project and necessitated extra work by Contractor in order to prevent its being assessed liquidated damages under its contract with the District.³

Subcontractor countered that any delays were caused by weather, soil conditions at the site, other subcontractors, such as roofing and electrical subcontractors, and Contractor's own errors. Additionally, Subcontractor maintained it completed its work by December 16, 1998, in compliance with the third schedule agreed upon by Contractor and Subcontractor the previous month.

Subcontractor ultimately brought a third amended petition in five counts against Contractor and Firemen's. In Count I, Subcontractor sought judgment under section 34.057, the Prompt Payment Act (sometimes referred to as the "Missouri Public Works Prompt Payment Act"), and under section 431.180 (sometimes referred to as the "Private Prompt Payment Act") for the $67,057.50 "retainage" withheld by Contractor together with attorney's fees and interest at the rate of 18% per annum, and "other and further relief as the Court may deem just and proper;" Counts II and III were alternative claims against Contractor in the amount of $67,057.50, together with a request for such attorney's fees and interest allowed by contract or law; Count IV sought payment from Firemen's in the amount of $67,057.50 per the terms of the payment and performance bond, and requested attorney's fees and interest allowed by contract or law; and, Count V sought damages in the amount of $67,057.50 due to Firemen's unreasonable and vexatious refusal to pay the amount of $67,057.50 per the terms of the performance and payment bond, together with "pre-judgment interest . . . interest, penalties and attorney's fees . . . pursuant to [s]ection 375.296 . . . and/or [s]ection 375.420. . . ." Contractor counterclaimed, seeking damages in the total amount of $171,140.00, alleging Subcontractor breached the subcontract due to inordinate delays in completing its masonry work.

In its judgment, the trial court found both Contractor and Subcontractor at fault due to "poor management decisions . . . regarding manpower staffing" and "inadequate planning during some phases of the project." It awarded Subcontractor damages against Contractor on Count I of its third amended petition in the amount of $67,057.50, due to Contractor's "mistakes in planning on the project;" but determined Contractor was entitled to a set-off, per its counterclaim, in the amount of $33,496.00, as a result of Subcontractor's "failure to adequately provide manpower for the timely completion of the project."

Additionally, the trial court found in favor of Firemen's on Subcontractor's claim for vexatious refusal to pay, and sustained Firemen's request for a partial summary judgment on Subcontractor's claim for vexatious refusal to pay. It also granted judgment in favor of Subcontractor against Firemen's on Count V of its claim for payment under the performance bond but only "to the extent that [Contractor] is unable to satisfy this judgment." Neither Contractor nor Firemen's appeals.

Subcontractor now brings nine points on appeal, discussed below. We affirm in part and reverse and remand in part.

The standard of review in a court-tried case is governed by Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). The court of appeals will affirm the judgment unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Id. Although the reviewing court defers to the trial court's findings of fact, the court does not defer to the trial court's determinations of law. City of Kansas City v. Hon, 972 S.W.2d 407, 409 (Mo.App.1998). "`Substantial evidence is that which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case.'" Kenney v. Wal-Mart Stores, Inc., 100 S.W.3d 809, 814 (Mo. banc 2003) (citation omitted). The weight of the evidence is determined by its effect in inducing belief. White River Dev. Co. v. Meco Sys., Inc., 806 S.W.2d 735, 737 (Mo.App.1991). A judgment should be set aside as being against the weight of the evidence only with caution and with a firm belief that the judgment is wrong. Id.

Rule 73.01(c) provides that "[a]ll fact issues on which no specific findings are made shall be considered as having been found in accordance with the result reached." "In reviewing evidence, the factual findings of the trial court are to be accorded great deference and are to be upheld if there is any evidence to support them." Harris v. Mo. Dep't of Conservation, 895 S.W.2d 66, 71 (Mo.App.1995). "The admissibility of evidence lies within the sound discretion of the trial court and will not be disturbed absent abuse of discretion." Nelson v. Waxman, 9 S.W.3d 601, 603 (Mo. banc 2000).

In its first point, Subcontractor maintains the trial court erred in failing to assess 18% interest pursuant to section 34.057.1(7) or, alternatively, 9% interest pursuant to section 408.020, on the amount of damages awarded Subcontractor. Subcontractor argues the trial court awarded it damages in the amount of $67,057.50 under Count I of its third amended petition; accordingly, since there was no question or dispute about the amount of $67,057.50 owed Subcontractor under its subcontract with Contractor—being a 10% retainage amount—this sum of money constituted a "liquidated" amount to which the foregoing, alternative rates of interest applied.

Contractor asserts, however, that in its award the trial court entered judgment in favor of Subcontractor under Count I of Subcontractor's claim, being a claim under the Missouri Public Prompt Payment Act, yet made no award of interest. Contractor contends the trial court implicitly determined that Contractor had not withheld the retainage amount in bad faith and without reasonable cause, a prerequisite to an entitlement of 18% interest under section 34.057.1(7).⁴ Contractor also argues that Subcontractor's exclusive claim under the Prompt Payment Act negated a claim of interest by Subcontractor under the provisions of section 408.020.⁵

We initially note that the "Prompt Pay[ment] Act promotes timely payment of contractors, subcontractors, and suppliers on contracts with public owners for public works construction projects." Leo Journagan Constr. Co. v. City Utils., 116 S.W.3d 711, 724 (Mo.App.2003). "This law requires public owners and contractors to make prompt payments and limits amounts withheld as retainage." Envtl. Prot., Inspection, Consulting, Inc. v. City of Kansas City, 37 S.W.3d 360, 369 (Mo.App.2000). "The Prompt Pay[ment] Act is considered a remedial statute and therefore requires liberal interpretation." Journagan, 116 S.W.3d at 725. "The threshold requirements of the act are the payment due dates, which are the events that trigger the remedies available for untimely payment." Id.

For our current purposes, it will be sufficient to note that the statute requires a contractor to pay the subcontractors and material suppliers within fifteen days after the contractor receives payment from the public owner. If the contractor does not make such payment in full within fifteen days after receipt of its payment, and if such payment is withheld without reasonable cause, the contractor shall be liable not only for the amount of the due payment, but also for penalty interest in the amount of one and one-half percent per month.

City of Independence for Use of Briggs v. Kerr Const. Paving Co., Inc., 957 S.W.2d 315, 320 (Mo.App.1997); see also § 34.057.1(7).

"The language of [section] 34.057.6 indicates that `a court of competent jurisdiction' is to decide whether the withholding was done in `good faith for reasonable cause.'" Briggs, 957 S.W.2d at 321 (quoting § 34.057.6). "In any litigation about these provisions, the court may, in its discretion also award attorney's fees to the prevailing party." Id. at 320-21. We also note that a bad faith determination is a question of fact to be decided by the trier of facts. City of Kansas City, 37 S.W.3d at 371.

In the instant matter, the trial court made no express determination in its judgment that Contractor acted in bad faith without reasonable cause in withholding payments from Subcontractor. As discussed in point two below, there was sufficient...