Brant Const. Co., Inc. v. Lumen Const. Co.

• Decision Date: 23 November 1987
• Docket Number: No. 37A03-8702-CV-43,37A03-8702-CV-43
• Citation: 515 N.E.2d 868
• Parties: BRANT CONSTRUCTION COMPANY, INC., and United States Fidelity and Guaranty Company, Appellants (Plaintiffs Below), v. LUMEN CONSTRUCTION, INC., Appellee (Defendant Below).
• Court: Indiana Appellate Court

Page 868

515 N.E.2d 868

BRANT CONSTRUCTION COMPANY, INC., and United States Fidelity and Guaranty Company, Appellants (Plaintiffs Below), v. LUMEN CONSTRUCTION, INC., Appellee (Defendant Below).

No. 37A03-8702-CV-43.

Court of Appeals of Indiana Third District.

Nov. 23, 1987.

Rehearing Denied Jan. 14, 1988.

Stephen M. Maish, Patrick A. Mysliwy, Maish & Mysliwy, Hammond, Edward P. McNeela, McNeela & Griffin, Ltd., Chicago, Ill., for appellants.

Gordon A. Etzler, F. Joseph Jaskowiak, Mark E. Schmidtke, Valparaiso, for appellee.

HOFFMAN, Judge.

Brant Construction Company, Inc. (Brant) and United States Fidelity and Guaranty Company (USF & G) appeal from judgments entered in favor of Lumen Construction, Inc. (Lumen) in the Jasper Superior Court. The facts of this case, as found by the trial court, are as follows:

In 1982, the City of Valparaiso requested bids on a waste water treatment plant expansion project, E.P.A. Project No. C18075302. Brant's bid of approximately $20,000,000.00 was the low bid. The project was to be paid for with funds paid 75% by the Environmental Protection Agency (E.P.A.), 15% by the City of Valparaiso (City) and 10% by the State of Indiana (State). As a condition under the grant whereby the City was to receive the federal funding for the project, the City agreed to comply with the Minority Business Enterprise (MBE) requirements of the E.P.A. These requirements called for the City to use good faith efforts to obtain MBE contractors to perform at least 10% of the project and impose similar obligations on all its contractors.

Brant was notified by the City that it was the apparent low bidder and Brant was then required to provide information to the City regarding MBE contractors who would perform work on the project. Unless Brant had 10% MBE participation, Brant would forfeit its rights to the contract.

On March 8, 1982, the day that Brant was required to provide the City with MBE documentation, James Hough of Region Construction received a telephone call from Brant officers asking if Hough could find a MBE within a half hour. Hough was told that if he could not find a MBE to work on the project in that time, Brant stood a chance of losing the contract with the City. Louis Villasenor, the owner of MBE Lumen Construction, was at this time remodeling James Hough's bathroom. Hough asked Villasenor if he was interested in a joint venture project and, when Villasenor responded in the affirmative, Hough informed Brant that he had the necessary MBE and to add Lumen to the list of subcontractors for the project. Region Construction, James Hough's company, subsequently prepared a $1,500,000.00 bid on the excavation work for the project which was later reduced to $1,200,000.00. The bid was submitted in Lumen Construction's name although Lumen had no material participation in the negotiations of the contract.

On July 9, 1982, the City contracted with Brant to be the prime contractor for the project. Brant, as principal, and USF & G, as surety, executed performance and payment bonds in the amount of $19,403,666.00 to guarantee the completion and payment for all persons, subcontractors and corporations furnishing material for or pertaining to labor provided for in the contract between the City and Brant.

The excavation work on the project done in 1982, which included work required by Lumen on the contract, was performed by Region Construction with Region's equipment, operators, supervisors and with James Hough as superintendent. The exclusion of Lumen and Louis Villasenor was done with Brant's knowledge and participation. Lumen's attempts to participate in the project, including the setting up of an accounting/management procedure, attempts to obtain financing, and hiring of employees to participate in work on this project, were initially unsuccessful because of resistance to Lumen's involvement by Brant and Region. Lumen finally acquired control over its own work on the project and at Brant's instruction performed extra work, including construction and maintenance of temporary roads, valued at over $400,000.00.

On August 12, 1983, Lumen was removed from the project by Brant because of Lumen's inability to pay its suppliers, which failure the trial court found to be directly attributable to Brant's "heavy-handed" control over the funds which Lumen was to receive.

The dispute regarding the dealings between Lumen and Brant was resolved in Lumen's favor by the Jasper Superior Court on October 30, 1986 in a 27-page judgment following a 13-day bench trial. The trial court found that there was no enforceable contract between Brant and Lumen and awarded damages to Lumen based on the equitable theory of quantum meruit. The trial court also found that Brant had violated Lumen's civil rights and awarded Lumen loss of profit damages, punitive damages, attorneys' fees, expenses and expert fees. On March 4, 1987, the trial court entered an order granting Lumen's Motion to Enforce a Settlement Agreement between Lumen and USF & G. USF & G's appeal from that order is consolidated with Brant's appeal from the trial court's judgments in favor of Lumen.

Brant and USF & G present eight issues, as consolidated and restated, for review:

(1) whether the trial court erred in awarding Lumen recovery based on quantum meruit;

(2) whether there was sufficient evidence to support the trial court's award of quantum meruit damages to Lumen;

(3) whether the trial court erred in finding that Lumen had a cause of action against Brant under 42 U.S.C. Sec. 1981 and 42 U.S.C. Sec. 1983;

(4) whether there was sufficient evidence to support the trial court's finding that Brant violated Lumen's civil rights;

(5) whether the trial court erred in awarding Lumen punitive damages;

(6) whether Brant and USF & G are entitled to full or partial satisfaction of judgment for consideration Lumen received from Region Construction and the City of Valparaiso;

(7) whether the trial court erred in finding that USF & G and Lumen entered into a settlement agreement; and

(8) whether there was sufficient evidence to support the trial court's award of damages for Brant's violation of Lumen's civil rights.

Brant first argues that the trial court erred in awarding Lumen a recovery based on quantum meruit because a subcontract agreement existed between Brant and Lumen. The trial court, however, ruled that the contract was invalid and had no legal effect because there was no meeting of minds between Brant and Lumen. Brant and Lumen had previously stipulated that a valid contract existed and Brant argues that the trial court's finding was in error because it contravened the stipulation between the parties. However, the trial court was not bound by the stipulation. The enforceability of a contract is a question of law, see Hybarger v. American States Ins. Co. (1986), Ind.App., 498 N.E.2d 1015, 1019, and parties may not stipulate to a question of law. App v. Class (1947), 225 Ind. 387, 396, 75 N.E.2d 543, 548. See also, Wireman v. Fairchild (1983), Ind.App., 450 N.E.2d 1011, 1012.

Sufficient evidence was introduced to support the trial court's determination that no enforceable contract between Brant and Lumen existed because there was no "meeting of the minds." In order for a contract to be enforceable, there must be a "meeting of the minds" between the parties. Wagoner v. Joe Mater & Associates, Inc. (1984), Ind.App., 461 N.E.2d 706, 708. The evidence showed that Lumen neither negotiated nor prepared the agreements that Brant sought to rely on. The evidence further showed that this agreement literally called for Lumen to do work constituting nearly the entire project, a result that none of the parties here intended. Because the decision of the trial court that no enforceable contract existed is upheld, there is no need to address Brant's arguments that Lumen breached said subcontract agreement or that Brant is entitled to delay damages, costs, attorneys' fees and pre-judgment interest pursuant to that agreement.

Brant next argues that there was insufficient evidence to support the trial court's award of quantum meruit damages to Lumen. The standard of review for a damage award is that no reversal will occur if the award is within the scope of evidence before the trial court; if the award of damages is supported by the record, the determination of damages is within the sound discretion of the trial court. Indiana U. v. Indiana Bonding & Sur. (1981), Ind.App., 416 N.E.2d 1275, 1288.

The law in Indiana conforms to the equitable theory of quantum meruit; where one accepts valuable services from another the law implies a promise to pay for those services. Silverthorne v. King (1979), 179 Ind.App. 310, 314, 385 N.E.2d 473, 476. Brant first challenges some of the evidence of work done introduced by Lumen at trial, including Lumen's "job logs" from the company's work on the project and the testimony of expert witnesses James Satterlee and James Hough regarding the value of the extra work performed by Lumen. Brant's argument that the "job logs" do not come under the business record exception to the law against hearsay is not persuasive. Business records made in the regular course of business are admissible when properly identified. In re Mental Commitment of M.P. (1986), Ind.App., 500 N.E.2d 216, 220. Brant's claim that the "job log" was prepared in anticipation of trial and thus not admissible under the business record exception to the hearsay rule is unsupported and is also refuted by the testimony of Thomas Govert, who made the entries in Lumen's "job log," that the entries were made on the days the work was performed and that keeping a "job log" was standard procedure for every construction job he had worked on.

Brant's challenge to the testimony of James Satterlee and James Hough focuses on the fact that both witnesses relied upon the "job logs" in testifying regarding the extra work performed by Lumen. It being already established that...