Elkins Manor Associates v. Eleanor Concrete Works, Inc.

• Decision Date: 25 July 1990
• Docket Number: No. 19272,19272
• Citation: 396 S.E.2d 463,183 W.Va. 501
• Parties: , 13 UCC Rep.Serv.2d 75 ELKINS MANOR ASSOCIATES, a Limited Partnership, and Elkins Manor, Inc., a Corporation, v. ELEANOR CONCRETE WORKS, INC., a Corporation v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Third-Party Plaintiff Below v. Lawrence D. BUTCHER, Third-Party Defendant Below.
• Court: West Virginia Supreme Court

Page 463

396 S.E.2d 463

183 W.Va. 501, 13 UCC Rep.Serv.2d 75

ELKINS MANOR ASSOCIATES, a Limited Partnership, and Elkins

Manor, Inc., a Corporation, v. ELEANOR CONCRETE WORKS, INC., a Corporation v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Third-Party Plaintiff Below v. Lawrence D. BUTCHER, Third-Party Defendant Below.

No. 19272.

Supreme Court of Appeals of

West Virginia.

July 25, 1990.

Syllabus by the Court

1. "Upon a motion to direct a verdict for the defendant, every reasonable and legitimate inference fairly arising from the testimony, when considered in its entirety, must be indulged in favorably to plaintiff and the court must assume as true those facts which the jury may properly find under the evidence." Syllabus, Nichols v. Raleigh-Wyoming Coal Co., 112 W.Va. 85, 163 S.E. 767 (1932).

2. Where time is of the essence in the performance of a contract, a delay in performance beyond the period specified in the contract, unless caused by the other party or waived by such party, will constitute a breach of the contract, entitling the aggrieved party to terminate it.

3. An owner does not waive his right to damages occasioned by the contractor's delay in constructing a building by permitting the contractor to proceed with the work.

4. " '[T]he proper measure of damages in ... cases involving building contracts is the cost of repairing the defects or completing the work and placing the construction in the condition it should have been if properly done under the agreement contained in the building contract.' Steinbrecher v. Jones, 151 W.Va. 462, 476, 153 S.E.2d 295, 304 (1967)." Syllabus Point 2, Trenton Constr. Co. v. Straub, 172 W.Va. 734, 310 S.E.2d 496 (1983).

5. Where a construction contract provides for inspection of the work to assure compliance with the contract specifications, the contractor is required to remedy such defects found at its own expense and is chargeable with the delay occasioned thereby.

6. The provisions of the Uniform Commercial Code, W.Va.Code, 46-2-101, et seq., are not available to modify the express language of a building construction contract. Moreover, there is a presumption that the sales provisions of the Uniform Commercial Code will not apply to such contract unless the party seeking a Uniform Commercial Code right is able to demonstrate substantial justification for its use.

7. An owner's failure to give notice to the surety of the principal's default does not discharge the surety unless the bond specifically provides for such notice.

Richard W. Gallagher, Jeffrey A. Kimble, McNeer, Highland & McMunn, Clarksburg, for Elkins Manor Associates.

David Nibert, Kingery & Nibert, Point Pleasant, for Eleanor Concrete Works, Inc. and Lawrence Butcher.

James R. Watson, Randall C. Light, Steptoe & Johnson, Clarksburg, for U.S. Fidelity & Guar. Co.

MILLER, Justice:

Elkins Manor Associates and Elkins Manor, Inc., appeal from a final order of the Circuit Court of Randolph County, entered on January 17, 1989, which granted Eleanor Concrete Works, Inc., United States Fidelity and Guaranty Company, and Lawrence Butcher a directed verdict. We have reviewed the record, and we find that the trial court erred in directing a verdict. Accordingly, we reverse and remand the case for further proceedings consistent with this opinion.

I.

Elkins Manor Associates is a limited partnership which was formed to provide government subsidized housing for the elderly in Randolph County. Elkins Manor, Inc., is one of the general partners of the limited partnership. ¹ After locating a site which complied with the Federal Housing Authority (FHA) requirements, Elkins Manor secured a twelve-month construction loan for $3,099,500 from the West Virginia Housing Development Fund (WVHDF). ² In return, Elkins Manor agreed to comply with the guidelines of WVHDF and FHA. The controversy in this case involves Elkins Manor and one of the contractors on the housing project, Eleanor Concrete Works, Inc. (Eleanor).

Elkins Manor's evidence at trial revealed the following. On July 26, 1979, Elkins Manor and Eleanor entered into a contract in which Eleanor agreed to manufacture, deliver, and install pre-cast prestressed concrete planks for use as the floors and ceilings in the housing project. Eleanor was to provide the concrete for the first floor within eighteen days after the shop drawings had been approved and a one-half floor shipment of concrete every ten days thereafter. ³ Elkins Manor agreed to pay Eleanor a total of $159,400 for this service. The contract further required Eleanor to obtain a performance bond guaranteeing the completion of its work. Eleanor obtained a performance bond from United States Fidelity and Guaranty Company (USF & G).

The first floor of the project was installed by Eleanor in September, 1979. In October, 1979, inspectors from FHA discovered that the installed planks had not been anchored in accordance with the design specifications of the project. ⁴ Upon closer examination, the inspectors observed that several of the planks were cracked and warped. Believing that the planks were unsafe, the inspectors gave Elkins Manor two alternatives: (1) to remove all of the planks which had already been installed, or (2) to test the planks to assure that they complied with the standards prescribed by the American Concrete Institute (ACI). Both FHA and WVHDF require that all subsidized projects comply with these standards and this requirement was a part of Eleanor's contract. ⁵ Eleanor decided to have the concrete tested.

Meanwhile, representatives from WVHDF inspected Eleanor's plant in Putnam County and determined that the plant's manufacturing process did not comply with the standards set by ACI or by the licensor of the product, Spiroll. WVHDF refused to allow any of Eleanor's planks to be used on the Elkins Manor project until Eleanor obtained approval from both the ACI and Spiroll. Eleanor did not obtain the necessary approval until January, 1980.

During February, 1980, delivery and installation of the concrete planks proceeded relatively on time. In March, Eleanor experienced financial difficulties and did not have any trucks in which to make the deliveries to the Elkins Manor project. ⁶ Because of time limitations in its construction financing, Elkins Manor was forced to hire a trucking company to load and deliver the planks. Often, when a truck was sent down to pick up the concrete planks, the truck would return empty or half full. Eleanor also failed to provide either the manpower to install the planks or the crane necessary to remove them from the truck onto the construction site, as required by its contract. ⁷ Consequently, Elkins Manor had to rent its own crane and use its own personnel to install the planks. Installation of the planks required removing them from the truck, leveling them, anchoring the slabs to the outside walls, and grouting between the planks.

Although Elkins Manor attempted to secure another company to make the pre-cast concrete, because of the time constraints of the construction loan, the estimates provided by the other companies were very uneconomical. According to Daniel Siegel, president of Elkins Manor, a decision was made to "limp along" with Eleanor even though it was not fulfilling its contractual obligations. Elkins Manor frequently notified USF & G of the difficulties they were experiencing with Eleanor. These notices included at least three phone calls to the insurance company and two responses to status inquiries, all of which informed USF & G that Eleanor was failing to comply with the terms of the contract. USF & G did not respond to any of these notices.

After the project was completed in December, 1980, Elkins Manor filed suit against Eleanor and USF & G for breach of the contract. Eleanor filed a counterclaim seeking payment for the remaining amount owed on the contract. ⁸ The trial commenced on June 21, 1988. At the close of Elkins Manor's case, Eleanor and USF & G filed motions for directed verdict. The trial court granted these motions, finding that Elkins Manor provided insufficient evidence that Eleanor had breached the contract. Alternatively, the trial court found that if a breach had occurred, it was excused pursuant to Section 615(a) of the Uniform Commercial Code (UCC), W.Va.Code, 46-2-615(a).

Moreover, the trial court found that Elkins Manor failed to provide adequate or timely notice to USF & G of Eleanor's default; therefore, it granted USF & G's motion for directed verdict. Finally, the trial court ruled that Eleanor's counterclaim for the remaining amount due under the contract should be offset by Elkins Manor's cost in shipping, installing, anchoring, and grouting the concrete planks. Elkins Manor moved for a new trial, and, in an order entered on January 17, 1989, the trial court denied this motion.

II.

We have traditionally held that a verdict should not be directed against a plaintiff in a civil case unless he has failed to present a prima facie case. See Jividen v. Legg, 161 W.Va. 769, 245 S.E.2d 835 (1978). In determining whether a prima facie case has been established, it is incumbent upon the trial judge to weigh the evidence in the plaintiff's favor. Blair v. Preece, 176 W.Va. 532, 346 S.E.2d 50 (1986), cert. denied, 492 U.S. 923, 109 S.Ct. 3253, 106 L.Ed.2d 599 (1989). We explained this more fully in the Syllabus of Nichols v. Raleigh-Wyoming Coal Co., 112 W.Va. 85, 163 S.E. 767 (1932):

"Upon a motion to direct a verdict for the defendant, every reasonable and legitimate inference fairly arising from the testimony, when considered in its entirety, must be indulged in favorably to plaintiff; and the court must assume as true those facts which the jury may properly find under the evidence."

See also Covey v. Fields, 177 W.Va. 481, 354 S.E.2d 413 (1987); Blair v. Preece, supra; Jenkins v. Chatterton, 143 W.Va. 250, 100 S.E.2d 808 (1957).

III.

When the evidence is viewed in the light most favorable...