Burras v. Canal Const. and Design Co.

• Decision Date: 20 November 1984
• Docket Number: No. 1-483,1-483
• Parties: George BURRAS and Millicent Burras, Defendants-Appellants, v. CANAL CONSTRUCTION AND DESIGN COMPANY, Plaintiff-Appellee. A 103.
• Court: Indiana Appellate Court

Page 1362

470 N.E.2d 1362

George BURRAS and Millicent Burras, Defendants-Appellants, v. CANAL CONSTRUCTION AND DESIGN COMPANY, Plaintiff-Appellee.

No. 1-483 A 103.

Court of Appeals of Indiana First District.

Nov. 20, 1984.

R. Wayne Greeson, Noblesville, for defendants-appellants.

John P. Price, Donald L. Jackson, Robert D. MacGill, Bingham, Summers, Welsh & Spilman, Indianapolis, for plaintiff-appellee.

RATLIFF, Judge.

STATEMENT OF THE CASE

This is an action for the breach of a construction contract. At trial, Canal Construction and Design (Canal) was awarded $9,864.07 in damages and $12,000 in fees based on the Burras' breach of the contract. The Burrases were awarded $7,970.00 on their counterclaim against Canal for defective performance and breach of Warranty but denied relief on certain other theories in their counterclaim. This denial together with the trial court's award of compensatory damages and its refusal to award the Burrases punitive damages form the basis of their appeal. The Burrases also challenge the propriety of the $12,000 attorney fee award. We affirm in part and reverse in part.

FACTS

On August 25, 1980, the parties to the present action entered into a construction contract. Canal agreed to act as general contractor supervising the construction of a home for the Burrases in Noblesville, Indiana. The Burrases had previously received bids from other general contractors but became interested in hiring Canal after its second bid was approximately $30,000 less than the first bid. As further inducement, Canal presented a home in Eagle Creek as a model of work they had done in the past. Steve Miller, one of the principals of Canal, took the Burrases on a tour of the inside of the home, representing that Canal had managed its construction and done the trim carpentry and finishing work. Shortly thereafter, the contract for the construction of the Burras home was executed and Canal began work on the project about September 1, 1980.

A few months after construction began, differences arose between the parties. The house was to be substantially completed in 180 days. However, delays occurred and each side blamed the other for the delays. The contract price was set at $152,735, but by May of 1981, the Burrases had spent more than this amount and were dissatisfied with Canal's work. The dissatisfaction involved Canal's performance under the general contract and also trim carpentry which Canal was doing pursuant to a separate agreement executed with the Burrases in March, 1981.

On April 25, 1981, Canal received a letter from the Burrases stating that they felt compelled to alter the payment scheme originally set out in the general contract. Instead of submitting bills for material and labor to the Burrases for immediate payment on a weekly basis, payment would be made only after the Burrases were satisfied the work had been completed. On May 7, the Burrases received a letter in reply stating that such a modification was unacceptable to Canal and unless payments were made as originally provided in the contract, they would consider the Burrases in default. After receiving this letter, Mrs. Burras went to the construction site and told Steve Miller that Canal would receive no more payments until the house was completely finished. At this point, Canal walked off the job and soon afterward sued the Burrases for breach of contract. The Burrases filed a counterclaim alleging that Canal had breached both the general and trim contracts by walking off the job and breached its express warranty regarding labor. The counterclaim alleged violation of Indiana Code section 32-8-1-2, slander of title, fraud, and conversion and requested punitive damages. The trial court entered a general verdict finding the Canal liable for breach of warranty and defective performance. The trial judge dismissed the claims based on Indiana Code section 32-8-1-2, slander of title, fraud, and conversion.

ISSUES

Due to our decision the issues presented for review are as follows:

1. Was there sufficient evidence to support the trial court's finding that the Burrases breached the construction contract?

2. Was the trial court's finding that the Burrases should receive damages for defective performance and breach of warranty inconsistent with the finding that the Burrases breached the construction contract?

3. Did the trial court err by involuntarily dismissing the Burrases counterclaims for:

(a) Conversion

(b) Fraud

(c) Slander of title

(d) Relief under Indiana Code section 32-8-1-2?

4. Was the damage award to the Burrases for Canal's defective performance and breach of warranty inadequate?

5. Was the trial judge's award of $12,000 in attorney fees to Canal excessive?

6. Was it proper for the trial court to award attorney fees incurred by Canal on appeal?

DISCUSSION AND DECISION

Issue One

The Burrases argue that the trial court erred in finding that they breached the contract. The general verdict by the trial judge states:

"Comes now the Court and being duly advised now enters judgment for Plaintiff and against defendants on Paragraph 1 of plaintiff's complaint for breach of contract in the principal sum of $9864.07 with prejudgment interest in the sum of $1183.69 and attorney fees in the sum of $12,000.00 and the Court being duly advised now enters judgment for defendants and against plaintiff on defendant's counterclaims for defective performance and breach of warranty in the sum of $7970.90."

Record at 290.

The Burrases' argument is that the evidence is insufficient to support a finding that they breached the contract. Our standard on review of claims that the evidence is insufficient to support the trial court's judgment is clear.

"In reviewing the sufficiency of evidence in a civil case, we will decide whether there is substantial evidence of probative value supporting the trial court's judgment. We neither weigh the evidence nor judge the credibility of witnesses but consider only the evidence most favorable to the judgment along with all reasonable inferences to be drawn therefrom. Only if there is a lack of evidence or evidence from which a reasonable inference can be drawn on an essential element of plaintiff's claim will we reverse a trial court."

Martin v. Roberts, (1984) Ind., 464 N.E.2d 896, 904.

In viewing the evidence most favorable to the judgment it appears that Burrases attempt to alter the payment scheme clearly constituted a breach of the construction contract. The provision in the contract regarding payment indicates unambiguously that the Burrases agreed to pay for material and labor when these bills were presented to them by Canal.

"5. Payments to Contractor. On a weekly basis, Contractor shall submit to Owner and Owner's lender, all bills, invoices, schedules for payment, and other records submitted to Contractor for work done hereunder or materials delivered pursuant hereto. Upon delivery of such, Owner, or Owner's lender shall pay said amount, plus ten percent of such amount to Contractor. (Emphasis supplied.)"

Record at 351-63. The Burrases' letter to Canal dated April 25, 1981, attempting to alter the contractual provision stated in pertinent part as follows:

"[W]e feel compelled to alter our past payment routine. [T]he new payment process we feel would be fair to all concerned. It will be within accepted business practice. It will assure us of a comeback to contractors who, in our opinion, have not lived up to our expectations.

Therefore, the following payment procedure will be followed:

(1) Upon completion of all work by a given contractor, we will arrange for an inspection by both of us and the bank, with a subcontractor.

(2) If all items inspected are done satisfactorly [sic], arrangement for payment will be made within a reasonable time.

(3) If certain items are not completed to our satisfaction, notice will be given to the subcontractor who will make arrangement to complete or change the work in question. When this work is completed, arrangement will be made for payments within a reasonable time.

(Emphasis supplied.)"

Record at 376-77. Clearly, this letter represents an attempt by the Burrases to modify a term in the existing contract. The modification of a contract, since it also is a contract, requires all the requisite elements of a contract. 17 Am.Jur.2d Contracts Sec. 465 at 935 (1964); cf. Fort Wayne Bank Bldg., Inc. v. Bank Bldg. & Equipment Corp. of America, (1974) 160 Ind.App. 26, 309 N.E.2d 464. Therefore, the modification requires the assent of both parties. 17 Am.Jur.2d Contracts Sec. 465 at 935 (1964). In the case at bar Canal quickly rejected the proposed modification and put the Burrases on notice that it would hold them to the original contract provisions regarding payment.

However, instead of complying with the original agreement, Mrs. Burras told Steve Miller Canal would not receive payment until the house was completely finished. At this point, the Burrases' refusal to comply with the provisions of the contract motivated Canal to walk off the job. The appellants argue that Canal's action constituted a breach of the contract. However, the particularly unequivocal acts by the Burrases indicate they repudiated the contract first and Canal was justified in suspending performance of its obligations under the contract.

"In accordance with the rule adopted by a majority of jurisdictions with respect to contracts generally, where a party to a building or construction contract announces his intention not to perform, the other party thereto may treat the contract as broken and sue at once for breach without waiting for the time fixed for performance."

13 Am.Jur.2d Building Contracts Sec. 73 at 73 (1974); see also Hammond Hotel & Improvement Co. v. Williams, (1931) 95 Ind.App. 506, 523-24, 176 N.E. 154, trans. denied (1933). When Canal was faced with the acts of the Burrases prior to May 7, 1981, it could choose to treat the contract as terminated and sue for...