Ervin Const. Co. v. Van Orden

• Court: Idaho Supreme Court
• Writing for the Court: TROUT; McDEVITT, C.J., BISTLINE and JOHNSON, JJ., and WOODLAND
• Citation: Ervin Const. Co. v. Van Orden, 874 P.2d 506, 125 Idaho 695 (Idaho 1993)
• Decision Date: 25 August 1993
• Docket Number: No. 20388,20388
• Parties: ERVIN CONSTRUCTION COMPANY, a Montana corporation, Plaintiff, Counterdefendant-Respondent, v. Jay VAN ORDEN and Shelli Van Orden, husband and wife, Defendants, Counterclaimants-Appellants, v. MASTER LOG HOMES, INC., a Montana corporation, Counterdefendant-Respondent. Twin Falls March 1993 Term

Page 506

874 P.2d 506

125 Idaho 695

ERVIN CONSTRUCTION COMPANY, a Montana corporation, Plaintiff, Counterdefendant-Respondent, v. Jay VAN ORDEN and Shelli Van Orden, husband and wife, Defendants, Counterclaimants-Appellants, v. MASTER LOG HOMES, INC., a Montana corporation, Counterdefendant-Respondent.

No. 20388.

Supreme Court of Idaho,

Twin Falls March 1993 Term.

Aug. 25, 1993.

Rehearing Denied March 25, 1994.

Racine, Olson, Nye, Cooper & Budge, Pocatello, for appellants. John A. Bailey, Jr. argued.

Blaser, Sorensen & Hansen, Blackfoot, for respondent. Murray J. Sorensen argued.

TROUT, Justice.

Jay and Shelly Van Orden (the Van Ordens) purchased materials and supplies from Master Log Homes, Inc. (Master Log) for the construction of a log home. They later contracted with Ervin Construction Company (Ervin), to complete construction on that home. Both Ervin and Master Log are closely held Montana corporations owned by Jerry Ervin. After the home was eighty to ninety percent completed, the Van Ordens refused to pay for a portion of the completed work. Ervin thereafter brought a breach of contract action. The Van Ordens denied liability and counterclaimed against Ervin and Master Log, contending that the work was not done in a workmanlike manner. The trial court, sitting without a jury, ruled that Ervin had breached express and implied warranties under the contract. The trial court also ruled that the Van Ordens had breached the contract by refusing to pay certain monthly billings. The Van Ordens appealed from the judgment of the trial court which, in part, awarded damages to Ervin. We assigned this case to the Court of Appeals which vacated the judgment and remanded the case to the trial court for a recomputation of damages. We subsequently granted both Ervin's and the Van Ordens' petitions for review of the Court of Appeals' decision.

I. BACKGROUND

During the summer of 1985, Master Log sold logs and other construction materials to the Van Ordens to build a new log home. The original contractor retained by the Van Ordens was fired following completion of the foundation, basement and first floor system. In November of 1985, the Van Ordens contracted with Ervin to finish construction on the home for the sum of $84,500.00. The contract between Ervin and the Van Ordens provided that Ervin would be paid on a monthly basis as work progressed. The contract further provided that the Van Ordens would retain ten percent of the contract amount until final completion and that all work would be completed in a workmanlike manner. The contract did not specify a completion date and provided that the Van Ordens could terminate the contract at any time by paying the percentage of work completed based on the net contract amount and the value of materials installed.

The Van Ordens paid the first four monthly billings for the work completed from November, 1985, through February, 1986. During this time, the parties agreed to reduce by $2,718.25 the original contract amount. In April of 1986, the Van Ordens began to complain about the workmanship on their home, including gaps in the corners of the log walls, gaps in the horizontal joints, improperly installed beams and improper finish work. They voiced these concerns at a meeting with Ervin which they followed with a letter enumerating the defects. Ervin responded with a letter on April 28, 1986, acknowledging that there were butt joints which were not sealed, cracks in the logs that ran from the inside of the house to the outside which allowed air to flow into the house, unsealed windows, and trim along the edge of the roof decking that was not finished.

On April 29, 1986, Ervin sent the Van Ordens a billing statement for March and April in the amount of $13,151.02. The Van Ordens assured Ervin they would pay this balance on May 15, 1986, and as a result, Ervin continued work at the site. On May 15, the Van Ordens delivered Ervin a check for $13,061.07 which was post-dated to August 15, 1986. Ervin attempted to deposit this check, unaware that it had been post-dated. The check was returned for non-sufficient funds on May 21 and Ervin promptly notified the Van Ordens that unless they paid the check and gave assurance that future payments would be timely, Ervin would withdraw from the job site. On May 22, after receiving no assurance from the Van Ordens, Ervin withdrew.

The Van Ordens thereafter hired John Grimmett to complete construction and repair defects in the home. The Van Ordens moved into their new home in the fall of 1986.

When Ervin left the construction site, there was approximately four to six weeks of work remaining to finish the house and Ervin had been paid a total of $19,321.00. Ervin alleged the Van Ordens owed an additional $16,061.07 for work completed. Ervin did not bill the Van Ordens for work that was not completed.

II. PROCEDURAL HISTORY

Ervin brought a breach of contract action against the Van Ordens to collect the unpaid balance on the contract. The Van Ordens denied liability and counterclaimed against Ervin and Master Log for breach of contract, breach of warranty, negligence and fraud. The court trial included testimony from both parties, both parties' experts and an on-site inspection of the house by the trial judge.

The trial court held that the Van Ordens breached their contract with Ervin by failing to pay monthly billings for March and April totaling $13,151.02. The trial court also held that Ervin "partially breached" the implied and express warranties of the contract by failing to construct certain parts of the house in a "workmanlike" manner. Specifically, the trial court found that the following conditions existed when Ervin left the construction site:

excessive gaps between certain log courses and butt joints (where the logs meet end to end in the walls); certain logs were used with excessive cracks in them; excessive gaps between the logs in the corners where they are stacked on top of each other; some of the logs used in the walls were of different diameters; improperly placed stairways; improperly hung doors; warped beams; walls that were not perpendicular or straight; improperly installed tongue and groove paneling; improperly installed interior trim; improperly installed exterior trim; use of incorrect bottom course logs in the upper courses of the logs; garage beams that were not properly designed and constructed; deck and roof support system on the rear deck that were not properly constructed or supported; improper construction and sealing of the joint between the top log courses and the roof structure.

The trial court also found that the center beam on the back porch had twisted and was subsequently replaced and that Ervin had miscut a chase in a place where the Van Ordens intended to place a china cabinet.

The trial court held that Ervin was forced off of the construction site by the Van Ordens' refusal to pay installments due under the contract and was not allowed the opportunity to remedy the defects or complete the home. The trial court then fashioned what it styled a "reasonable balance" and awarded the Van Ordens $5,174.33. This amount reflected what the trial court calculated to be one-half of all the labor and material costs incurred by Grimmett to complete and repair the Van Orden home. The trial court did not award the Van Ordens any damages for the construction defects which were not repaired. The trial court awarded Ervin $15,506.43 for work completed prior to leaving the job site along with pre-judgment interest accruing from June 10, 1986.

The trial court denied the Van Ordens' various post-trial motions. These included a motion to alter or amend the judgment under I.R.C.P. 59(e), a motion to alter or amend the findings of fact and conclusions of law under I.R.C.P. 52(b), and a motion for a new trial under I.R.C.P. 59(a). The trial court also found that Ervin "generally" prevailed in the case and awarded Ervin two-thirds of its requested attorney fees and all of its costs of right.

The Van Ordens appealed and raised the following issues which were considered by the Court of Appeals: (1) did the trial court properly find the Van Ordens in breach of the contract; (2) did the trial court employ a correct measure of damages; (3) was the award of pre-judgment interest proper; (4) did the trial court properly find that the Van Ordens failed to prove their negligence claim; and (5) was the award of costs and attorney fees proper. The Court of Appeals vacated the judgment entered and remanded the case back to the trial court for recalculation of damages.

We now consider this appeal pursuant to our grant of each party's petition for review of the Court of Appeals' decision. I.A.R. 118.

III. STANDARD OF REVIEW

The standard by which this Court reviews a decision of the Court of Appeals was set forth in Sato v. Schossberger, 117 Idaho 771, 774-75, 792 P.2d 336, 339-40 (1990):

If we decide to review a decision of the Court of Appeals, we ordinarily consider all of the issues presented to the Court of Appeals. Occasionally, we may decide to address less than all of the issues presented to the Court of Appeals. In that case, we advise the parties of the issues we will address. As to the issues we decide to address, we consider that we are hearing the matter in the first instance, not merely considering the correctness of the decision of the Court of Appeals. If, as in this case, the issues presented to the Court of Appeals concerned a decision of a district court, we consider the correctness of the district court's decision. While we value the opinion of the Court of Appeals for the insight it gives us in addressing the issues presented on appeal, we do not focus on the opinion of the Court of Appeals, but rather on the decision of the district court.

We will consider each of the issues presented to the Court of Appeals focusing on the decision of the trial court. Our review of the trial court's decision is...