Clark's Pork Farms v. Sand Livestock Systems, Inc.

• Decision Date: 10 December 1990
• Docket Number: No. 06A01-8906-CV-201,06A01-8906-CV-201
• Citation: 563 N.E.2d 1292
• Parties: CLARK'S PORK FARMS, Donald R. Clark, Virginia Clark, and Gene Clark, Appellants (Defendants), v. SAND LIVESTOCK SYSTEMS, INC., Appellee (Plaintiff).
• Court: Indiana Appellate Court

Page 1292

563 N.E.2d 1292

CLARK'S PORK FARMS, Donald R. Clark, Virginia Clark, and Gene Clark, Appellants (Defendants), v. SAND LIVESTOCK SYSTEMS, INC., Appellee (Plaintiff).

No. 06A01-8906-CV-201.

Court of Appeals of Indiana,

First District.

Dec. 10, 1990.

Norman P. Rowe, Joseph H. Yeager, Jr., Baker & Daniels, Indianapolis, Paul S. Kruse, Parr, Richey, Obremskey, & Morton, Lebanon, for appellants.

Michael R. Fruehwald, Alan K. Mills, Barnes & Thornburg, Indianapolis, Thomas A. Whitsitt, Peyton, Giddings, Whitsitt, Baker & McClure, Lebanon, for appellee.

SHIELDS, Presiding Judge.

STATEMENT OF THE CASE

Clark's Pork Farms (CPF), Donald R. Clark (Don), Virginia Clark (Virginia), and Gene Clark (Gene) appeal the Boone Circuit Court's judgment in favor of Sand Livestock Systems, Inc. (Sand) in Sand's action to foreclose a mechanic's lien against real estate owned by Don and Virginia, and its judgment in favor of Gene in his counterclaim against Sand for breach of contract. We affirm in part, reverse in part and remand to the trial court for further proceedings.

ISSUES

Restated, the issues presented for our review are as follows:

1. Whether the trial court erred in awarding $251,082.00 in contract damages to Gene, representing lost profits, defects in workmanship, and other miscellaneous damages.

2. Whether the trial court erred in foreclosing Sand's mechanic's lien because damages resulting from defects in the buildings exceeded any amount due under the contract.

3. Whether the trial court's judgment foreclosing Sand's mechanic's lien is invalid due to an inadequate description of the subject property.

4. Whether the trial court erred in awarding Sand $84,204.00 in attorney fees.

5. Whether the trial court erred in awarding Sand prejudgment interest on the contract balance.

FACTS

Gene and his father Don have operated CPF on property owned by Gene's parents, Don and Virginia, since 1980. In 1986, Don and Gene decided to expand their operation and contacted Sand, a designer and builder of hog confinement systems. It was Construction began in August of 1986 and continued through February of 1987. Don and Gene were concerned the finished project was seriously defective; therefore, the last payment due Sand on the contract, approximately $80,000.00, was withheld. Sand sent a letter to Don on March 2, 1987 demanding payment for the project, which went unheeded.

agreed Sand would design and build new buildings for the farrowing, nursery, and grower stages of a farrow-to-finish hog production operation. CPF's existing buildings were to serve as the finishing area. Don and Gene decided that Gene alone would sign the contract with Sand, thus enabling Gene to secure a low interest loan for young farmers. Prior to signing the contract, Gene told Sand's representative, Rudy Bell, that he wanted the new buildings to house an operation capable of bringing to market 180 pigs per week. Bell told Gene that Sand's proposed design, with a contract price of $364,029.00, was large enough to handle that amount. Gene signed the contract on July 26, 1986.

On October 3, 1987 Sand filed suit, seeking contract damages from Gene, foreclosure of a mechanic's lien on the real property owned by Don and Virginia, and damages under quantum meruit against all the Clarks and CPF. ¹ On December 31, 1987 the Clarks filed their answer and Gene filed a counterclaim asserting Sand had breached the contract. After a trial before the court, the trial court awarded Sand its contract balance of $80,568.00, attorney's fees of $84,204.50, and prejudgment interest of $10,636.00. The trial court also awarded the Clarks $251,082.00 on Gene's counterclaim which it setoff against Sand's judgment. Thus, after the setoff, the Clarks' net award was $75,674.00.

Don and Virginia and Sand filed motions to correct errors. Don and Virginia challenged the trial court's award of attorney's fees and interest and its denial of the cost of some repairs. Sand challenged several factual findings which supported the damage award, and asserted a setoff was improper because Gene and Sand were the only contracting parties. In response to the cross motions, the court modified its order as follows:

A. Judgment on the original Complaint is HEREBY AMENDED and MODIFIED in favor of Plaintiff Sand Livestock Systems, Inc., foreclosing the Plaintiff's mechanic's lien against the property of Donald Clark and Virginia Clark (as described in Plaintiff's Exhibit 1 at trial) in the sum of One Hundred Seventy Five Thousand Four Hundred Eight Dollars ($175,408.00); representing $80,568.00 owed on the contract balance by Gene Clark, $84,204.00 attorney fees, and $10,636.00 interest;

B. Judgment on the Counterclaim is HEREBY AMENDED AND MODIFIED in favor of Counterclaim Plaintiff/Defendant, Gene Clark, and against Counterclaim Defendants/Plaintiff, Sand Livestock Systems, Inc., in the sum of Two Hundred Fifty One Thousand Eighty Two Dollars ($251,082.00);

C. The Findings and Conclusions, where necessary, are hereby ORDERED to be modified and amended to be consistent with the rulings herein;

Record at 473-74.

On February 14, 1990 this court held appellate review of this case was frustrated due to the lack of adequate special findings of fact. The case was remanded to the trial court for the entry of findings of fact in support of its amended judgment. 550 N.E.2d 846. Amended special findings were entered by the trial court on April 16, 1990.

Additional facts will be added as necessary to our discussion.

DISCUSSION AND DECISION

This is an appeal from a judgment in which the trial court, on its own motion, entered special findings of fact. We will not reverse such a judgment unless the findings or conclusions drawn therefrom are clearly erroneous. Donavan v. Ivy Knoll Apartments Partnership (1989), Ind.App., 537 N.E.2d 47; Rose Acre Farms, Inc. v. Greemann Real Estate (1987), Ind.App., 516 N.E.2d 1095, trans. denied. Findings of fact are clearly erroneous when the record lacks any facts or reasonable inferences to support them. A judgment is clearly erroneous when it is not supported by the special findings of fact. Donavan. We may not reweigh the evidence, and must affirm the trial court unless the evidence, viewed in a light most favorable to the trial court's decision, leads incontrovertibly to a conclusion opposite to the one reached by the trial court. Donavan; Kokomo Veterans, Inc. v. Schick (1982), Ind.App., 439 N.E.2d 639, trans. denied.

I.

Both Sand and Gene challenge the trial court's damage award to Gene. Gene received buildings of the square footage for which he contracted; however, the trial court found the contract also included the representations of Sand's agent that the buildings as designed and contracted would be capable of maintaining a certain rate of production. The court found the buildings did not have this capacity, and Gene was entitled to damages for Sand's breach of the construction contract.

The trial court awarded Gene $251,082.00 in damages, based on the following findings of fact:

A. Alleged Defects in Design.

(i) Spacing

24. The representation that the specified Sand buildings could accommodate a production schedule of 180 pigs per week was a part of the Contract, and the Court finds that the space provided in the Sand Buildings is not adequate and within industry standards if pigs are retained in the various areas for the periods assumed in the design. Gene Clark has not asserted deficient spacing in the farrowing area. The only spacing issue is in the nursery and grower. The nursery provides 2.4 square feet per pig assuming 180 pigs per week and a 4-week stay. The grower provides 5.23 square feet per pig at 180 pigs per week staying 10 weeks. However, these dimensions, when considered in conjunction with Gene Clark's finisher area, create a "bottle neck" in the farrow to finish process. As the Clarks' experts testified, the design of the facility as it exists forces Gene Clark to sell "Feeder Pigs" and not utilize the full number born because of inadequate "nursery to grower" space. The Clark's expert, Larry Christianson, testified that in order to remove the defect in design of the facility, there should have been 30 additional grower pens.

. . . . .

27. The Court specifically finds the design by Sand to be defective in that it does not meet the represented 180 hogs per week production, and that the facility Sand designed and built for Gene Clark under their Contract is not capable of raising 180 pigs from farrow to finish on any continuing basis. As a result, Gene Clark has been deprived annually of the profit from about 1,800 market hogs, or about 35 per week. That profit is about $35. per head, being the profit lost when pigs are sold at feeder weight rather than market weight.

28. Because Gene Clark can build additional capacity, his weekly losses resulting from lack of grower/finisher space should not extend beyond the end of 1988. Because his crowding began in the middle of 1987, he is entitled to recover from Sand his losses experienced over one and one-half years at the rate set forth in paragraph 27 above, or a total of $94,500.

29. The Sand nursery is capable of producing only 178 pigs per week. Had Gene Clark operated his farrowing house and nursery to capacity he would still be short by two animals per week of the design goal. Accordingly, he will each week during the first 18 months of operation lose another $40., the profit on two feeder pigs. That totals $3,120. in 18 months.

30. The configuration of the nursery does not allow for an expansion of the nursery pens to provide room for an extra two pigs per pen. Accordingly, even when and if the grower-finisher is enlarged, Gene Clark will continue for the life of the facility to lose the profit on two market hogs--a total of $92.--per week. That profit will equal $4,784. per year, or $88,504. over the remainder of the 20-year life span of the facility as of the...