Hale v. Big H Constr., Inc.

Decision Date12 October 2012
Docket NumberNo. 20100785–CA.,20100785–CA.
Citation719 Utah Adv. Rep. 17,288 P.3d 1046,2012 UT App 283
PartiesCharles F. HALE and Beverly I. Hale, Plaintiffs and Appellants, v. BIG H CONSTRUCTION, INC., and T. Dwayne Horsley, Defendants and Appellees.
CourtUtah Court of Appeals

OPINION TEXT STARTS HERE

Kathleen E. McDonald and Vincent C. Rampton, Salt Lake City, for Appellants.

John T. Anderson, Salt Lake City, for Appellees.

Before Judges THORNE, VOROS, and ROTH.

OPINION

VOROS, Judge:

¶ 1 This case involves a dispute over a cost-plus contract to build two high-end custom homes on adjacent lots. When the builder, Big H Construction, Inc., filed a mechanics' lien on one of the homes, the owners, Charles F. Hale and Beverly I. Hale, sued Big H and its president, T. Dwayne Horsley, for breach of contract and related claims. Big H counterclaimed for nonpayment of a ten percent builder's fee. After a bench trial, the trial court awarded Big H $172,100 plus attorney fees and costs. The Hales moved unsuccessfully for a new trial and to amend the findings pursuant to rules 52(b) and 59 of the Utah Rules of Civil Procedure. The Hales appeal. We affirm.

BACKGROUND 1

¶ 2 In February 2003, the Hales hired Big H to construct two custom homes on adjacent lots known as Lots 45 and 46. The parties agreed that Big H would construct the homes on a cost-plus basis with the Hales covering all reasonable costs (the Costs) plus a builder's fee equal to ten percent of the Costs. The project involved forty-seven separate subcontractors and suppliers, some of whom the Hales contracted with and paid directly over the course of construction.

¶ 3 Two of Dwayne Horsley's family members worked on the project in some capacity with Big H or the Hales or both. David Horsley, Dwayne's father and a licensed real estate agent, prepared Real Estate Purchase Contracts (REPCs) for the Hales' purchase of the Lots from the developer and their purchase of the homes from Big H. James Horsley, Dwayne's brother, negotiated the purchase of Lots 45 and 46 on the Hales' behalf and worked as a site foreman.

¶ 4 The Hales executed an REPC for the purchase of Lots 45 and 46 from Triple Crown Estates on February 25, 2003. The REPC provided for a three percent commission to the developer's agent. David Horsley was listed as the Hales' agent, but the REPC did not provide for a commission to him. That same day, the Hales executed two separate REPCs for the Lot 45 and Lot 46 homes, with Big H listed as seller. The REPCs listed no agents for either buyers (the Hales) or sellers (Big H) and mentioned no sales commissions.

¶ 5 By late 2004, Big H had largely completed construction on the Lot 45 home. However, the parties' working relationship had deteriorated. When the Hales refused to pay anything further, Big H left the project. Approximately three months later, Big H filed a mechanics' lien on the Lot 45 home in the amount of $165,000. Big H claimed this sum approximated its builder's fee. The Hales sued. Big H counterclaimed for breach of contract and foreclosure of its mechanics' lien.

¶ 6 At trial, Big H offered into evidence voluminous documentation, including stacks of invoices from dozens of vendors documenting expenses and copies of cancelled checks from the Hales documenting payments. The invoices for both homes totaled more than $2.7 million. Dwayne Horsley testified about the Costs and payments that he tracked on a spreadsheet over the course of the project; Big H's expert witness testified that the Costs were reasonable. By Big H's account, the Hales owed it roughly $172,000 (although that figure varied over the course of the litigation from $165,000 to $174,000).

¶ 7 The Hales advanced a different version of Costs incurred and payments made. They offered testimony from their accounting expert.The Hales' expert testified that he had reviewed all the records furnished by the Hales and Big H, and that the Hales had overpaid Big H by $116,994.77. His conclusion was based in part on “unsupported costs” and various alleged overpayments and underpayments. However, the trial court found much of the Hales' evidence—including their expert's testimony—unreliable, and relied instead mainly on the evidence offered by Big H. The trial court found that Costs of $1,721,000 had been incurred and paid for by the Hales on the Lot 45 home, entitling Big H to a builder's fee of $172,100.2

¶ 8 The trial court entered judgment for Big H in the amount of $172,100 for its builder's fee, $94,463 in prejudgment interest, and $342,240.84 in attorney fees and costs. It denied the Hales' subsequent motion for a new trial or to amend the court's findings of fact. The Hales timely appeal.

ISSUES AND STANDARDS OF REVIEW

¶ 9 First, the Hales contend that the trial court erred in ruling that Big H met its burden at trial because it relied on estimates rather than an actual accounting of Costs. “Whether the trial court calculated the damages award within the framework dictated by the [contract] ... is a question of law,” Traco Steel Erectors, Inc. v. Comtrol, Inc., 2009 UT 81, ¶ 21, 222 P.3d 1164, which we review for correctness, see State v. Pena, 869 P.2d 932, 936 (Utah 1994), holding modified by State v. Levin, 2006 UT 50, 144 P.3d 1096. However, “an appeal from the types of properly admitted evidence upon which the trial court applies” the damages formula is “an appeal from a question of fact,” Traco, 2009 UT 81, ¶ 33, 222 P.3d 1164. “In all actions tried upon the facts without a jury, ... [f]indings of fact ... shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.” Utah R. Civ. P. 52(a). A finding is clearly erroneous ‘only if the finding is without adequate evidentiary support or induced by an erroneous view of the law.’ State v. Walker, 743 P.2d 191, 193 (Utah 1987) (quoting Wright & Miller, Federal Practice & Procedure § 2585 (1971)). Therefore, we will not disturb a finding unless it is “against the clear weight of the evidence, or if [we] otherwise reach[ ] a definite and firm conviction that a mistake has been made.” Id.

¶ 10 Second, the Hales contend that the trial court included in its calculation other “improper and unreasonable costs,” including duplicate and mistaken invoices, and both overpayments and underpayments by Big H. This question involves a finding of fact that we review for clear error. See Traco, 2009 UT 81, ¶¶ 17, 33, 222 P.3d 1164.

¶ 11 Third, the Hales challenge the trial court's finding that the Hales were not entitled to an offset based on Big H's alleged failure to perform work in a good and workmanlike manner. This challenge presents a mixed question of law and fact. “It is therefore reviewed under a clearly erroneous standard for questions of fact and a correctness standard for questions of law.” Tooele Assocs. Ltd. Partnership v. Tooele City Corp., 2011 UT 04, ¶ 16, 247 P.3d 371.

¶ 12 Fourth, the Hales assert that the trial court erred by including the cost of the land in its calculation of the builder's fee, arguing that doing so runs afoul of the Utah Real Estate Licensing and Practices Act, seeUtah Code Ann. §§ 61–2–1 to –24 (Lexis Publishing 2000) (current version at id. §§ 61–2f–101 to –512 (LexisNexis 2011 & Supp. 2012)). 3 Determining whether inclusion of the cost of the land in calculating Big H's builder's fee violates the statute is a legal question of statutory interpretation that we review for correctness. See Sachs v. Lesser, 2008 UT 87, ¶ 9, 207 P.3d 1215.

¶ 13 Fifth, the Hales challenge the finding that they are not entitled to a credit from Big H for a $30,000 payment the Hales made to James Horsley. This issue turns on whether James Horsley had authority to act on behalf of Big H, a mixed question of law and fact. See Glew v. Ohio Sav. Bank, 2007 UT 56, ¶ 19, 181 P.3d 791. We review the court's legal conclusions for correction of error, see Tooele Assocs., 2011 UT 04, ¶ 16, 247 P.3d 371, but [w]e will not disturb the court's findings of fact unless they are clearly erroneous,” Glew, 2007 UT 56, ¶ 18, 181 P.3d 791. [I]n those instances in which the trial court's findings include inferences drawn from the evidence, we will not take issue with those inferences unless the logic upon which their extrapolation from the evidence is based is so flawed as to render the inference clearly erroneous.” Id. Furthermore, because the trial court's application of the equitable doctrine of apparent authority is “extremely fact-sensitive,” we grant significant deference” to the trial court. Id. ¶ 19.

¶ 14 Finally, the Hales challenge the trial court's conclusion that neither Big H nor Dwayne Horsley violated the Utah Mechanics' Lien statute, seeUtah Code Ann. § 38–1–25 (LexisNexis 2005). Whether Dwayne Horsley intentionally filed an inflated lien is a question of fact. Therefore, we review this claim for clear error. See Traco Steel Erectors, Inc. v. Comtrol, Inc., 2009 UT 81, ¶ 17, 222 P.3d 1164.

ANALYSIS

¶ 15 We note at the outset that the Hales face an uncomfortable reality on appeal: the trial court expressly determined that neither Charles Hale nor the Hales' expert was a credible witness. As to Charles Hale's credibility, the court found that he has little or none”:

On the important issue of [Charles] Hale's credibility, the Court determines that he has little or none, generally, and on several key points, specifically.... His testimony ... was not believable, was inherently implausible, was contradicted by his own deposition testimony, and/or was contradicted by other credible witnesses such as ... [Dwayne] Horsley.

The trial court was equally skeptical of the Hales' expert. It found that his Analysis and Report was “riddled with numerous flaws in the way that its figures [were] formatted, reported and analyzed.” This conclusion left the court with “little or no confidence that his Analysis and Report is reliable”; consequently, the court “decline[d] generally to accept...

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