Eastlake Const. Co., Inc. v. Hess

• Court: Washington Court of Appeals
• Writing for the Court: CORBETT
• Citation: Eastlake Const. Co., Inc. v. Hess, 655 P.2d 1160, 33 Wn.App. 378 (Wash. App. 1982)
• Decision Date: 02 August 1982
• Docket Number: No. 9125-5-I
• Parties: EASTLAKE CONSTRUCTION CO., INC., a Washington corporation, Appellant/Cross-Respondent, v. Leroy HESS and Jean M. Hess, husband and wife, Respondents/Cross-Appellants.

Page 378

33 Wn.App. 378

655 P.2d 1160

EASTLAKE CONSTRUCTION CO., INC., a Washington corporation Appellant/Cross-Respondent, v. Leroy HESS and Jean M. Hess, husband and wife Respondents/Cross-Appellants.

No. 9125-5-I.

Court of Appeals of Washington Division 1.

Aug. 2, 1982.

Review Granted Jan. 7, 1983.

R.M. Holt, Issaquah, for appellant.

David Koopman, Seattle, for respondents.

CORBETT, Judge.

Plaintiff appeals judgment on defendants' counterclaim. Defendants cross-appeal the amount of judgment and dismissal of their Consumer Protection Act claim.

The defendants (Hess) contracted with the plaintiff (Eastlake) for the construction of a 5-unit apartment building. Under the contract, Eastlake agreed to complete the building for $118,600, according to the plans and specifications drawn by the architect. Construction began in June 1977. The building was not completed on schedule, and Hess found some of the work and materials to be below specification. Although Eastlake promised satisfactory completion, it ultimately abandoned the project, contended substantial completion, and initiated this action for the balance owed on the contract. Hess counterclaimed for breach of contract and violation of the Consumer Protection Act. The trial court awarded Hess damages, less the amount of the contract balance. The court dismissed the consumer protection claim.

Eastlake contends that even though Hess was a proper defendant as a party to the contract, Hess was not the real party in interest as contemplated by CR 17(a), ¹ capable of claiming damage. This contention is based upon Hess' intention to convert the apartment into a condominium. Hess formed a corporation for that purpose and transferred three of the units to others after recording a declaration of condominium. However, Hess failed to transfer title to the corporation and did not assign his interest in the construction contract. When the "real party in interest" defense was raised, Hess obtained assignment of any cause of action the three purchasers might have had against Eastlake.

Modern rules of procedure are intended to allow the court to reach the merits as opposed to disposition on technical niceties. CR 17(a) is designed to expedite litigation. It is not intended to allow technicalities to interfere with the litigable merits. Fox v. Sackman, 22 Wash.App. 707, 709, 591 P.2d 855 (1979). By their assignments, the purchasers ratified the counterclaim, thereby satisfying the requirements of CR 17(a). The purpose of the rule and the corresponding statute, RCW 4.08.010, ² is to protect the adverse party from subsequent claims of third parties. See West & Wheeler v. Longtin, 118 Wash. 575, 577, 204 P. 183 (1922). As a party to the contract, Hess is entitled to enforce it and to sue in his name. 17A C.J.S. Contracts § 518 (1963). The trial court did not err by failing to dismiss the counterclaim because of the sale of the condominium units.

Eastlake assigns error to admission of Exhibit 18, a letter from Hess to the City of Issaquah Building Department relating to a $2500 bond that Hess posted in order to obtain a temporary occupancy permit. The objection on appeal is that it is self-serving hearsay. The objection at trial was "I don't see the point of the letter." The objection was not sufficiently definite to preserve it for appeal. See Lappin v. Lucurell, 13 Wash.App. 277, 292, 534 P.2d 1038, 94 A.L.R.3d 594 (1975). The same evidence was admitted without objection through the testimony of Mr. Hess. No harm resulted from admission of the exhibit, nor does Eastlake assert how it claims to have been prejudiced by the exhibit. There was no error in its admission.

Eastlake also assigns error to the trial court permitting the testimony of Mr. Hess as to the fair rental value of the three units that he had sold. Hess testified that the monthly rental of each unit from November 15, 1977 until the date each was first occupied was $275, and that the total amount of lost rent due to Eastlake's delay was $4,262.50. He based these figures upon the fact that he rented one of his own units at $275 per month, and that one of the purchasers later rented a unit for $275 per month. Such testimony is admissible pursuant to ER 701, ³ relating to opinion testimony by lay witnesses. The testimony was properly admitted.

The trial court refused to admit Hess' income tax return and testimony concerning the return offered by Eastlake to show that Hess had not claimed the cost of repairs for tax purposes. The fact of repair was otherwise proved by testimony and cancelled checks, and report of the amount for tax purposes would not tend to prove or disprove the fact of damage. The court did not err by refusing the tax return and testimony.

Eastlake next contends that Hess, by conduct, waived any unexcused delay and any variations from the specifications. This issue is raised for the first time on appeal and we will not consider it. Waiver is an affirmative defense that must be set forth in the pleadings. CR 8(c). The record does not contain any reply by Eastlake to the Hess counterclaim and we find no record that waiver was affirmatively pled. Eastlake's reliance upon Mahoney v. Tingley, 85 Wash.2d 95, 529 P.2d 1068 (1975), to relieve it from the operation of this rule is misplaced. Mahoney is distinguishable because the affirmative defense was argued in the trial memorandum and before the trial court.

Eastlake further contends that the trial court should have first determined if the contract was substantially performed and then applied the appropriate measure of damages, i.e., (1) difference in value, or (2) cost of remedying the defects. As for the kitchen cabinets, Eastlake contends that the trial court improperly combined these two measures of damage. As for the other damage awards, Eastlake contends that the trial court should have applied the difference in value approach and awarded no damages.

The trial court did not make an express finding that the contract had been substantially performed. Eastlake's complaint alleges that it had performed "all of the services contracted for." The trial court found that on February 15, 1978, Eastlake abandoned the project prior to its completion, and that on November 10, 1977, the building was 82.5 percent completed. The measure of damages applied to every item, except the kitchen cabinets which are discussed below, was the cost to complete the structure as contemplated by the contract. The cost to complete is the appropriate measure of damages where the builder has substantially complied with the contract. Forrester v. Craddock, 51 Wash.2d 315, 321, 317 P.2d 1077 (1957); White v. Mitchell, 123 Wash. 630, 637-38, 213 P. 10 (1923). The trial court implicitly found that the contract had been substantially performed and, therefore, applied the appropriate measure of damages where it awarded damages based upon the cost of remedying the defects.

We turn now to the cross-appeal by Hess.

Hess contends that the trial court erroneously awarded the difference between the value of the kitchen cabinets specified ($8,725.50) and the cost of the cabinets actually installed ($3,700), which difference is $5,025.50. Hess argues that the trial court improperly combined these two measures of damage, and that he should not be required to accept cabinets that did not meet the plans and specifications. He contends that the trial court should have awarded the cost for removing the unspecified cabinets and installing those specified.

The determination of the award is contained in finding of fact 13A:

The kitchen cabinets and bath vanities installed by plaintiff were made of particle board with a photographic finish, of modular design, and extended only to 7 feet from the floor, rather than to the ceiling. The specifications called for custom-made, birch finish, plywood cabinets that extended to the ceiling. The removal of the kitchen cabinets and bath vanities and replacing these cabinets with the specified cabinets would constitute economic waste. Defendants are entitled to receive as damages for the installation of the improper cabinets the difference between the value of the specified cabinets ($8,725.50) and the cost of the cabinets actually installed ($3,700), which difference is $5,025.50 and is the amount which plaintiff should reimburse to defendants.

The trial court's finding was based upon the...