Fairway Builders, Inc. v. Malouf Towers Rental Co., Inc.

• Decision Date: 03 July 1979
• Docket Number: No. 1,CA-CIV,1
• Citation: 124 Ariz. 242,603 P.2d 513
• Parties: FAIRWAY BUILDERS, INC., an Arizona Corporation, Appellant, v. MALOUF TOWERS RENTAL CO., INC., an Arizona Corporation, Appellee. 3318.
• Court: Arizona Court of Appeals

Page 513

603 P.2d 513

124 Ariz. 242

FAIRWAY BUILDERS, INC., an Arizona Corporation, Appellant, v. MALOUF TOWERS RENTAL CO., INC., an Arizona Corporation, Appellee.

No. 1 CA-CIV 3318.

Court of Appeals of Arizona, Division 1, Department B.

July 3, 1979.

Rehearing Denied Aug. 28, 1979.

Review Denied Sept. 25, 1979.

[124 Ariz. 246] Law Offices of Frederick E. Kallof by Frederick E. Kallof, Sandra L. Massetto, Phoenix, for appellant.

Streich, Lang, Weeks & Cardon, P. A. by Dan M. Durrant, Robert E. Miles, Phoenix, for appellee.

OPINION

EUBANK, Judge.

The issues raised by the appeal and cross appeal in this complex case all involve an office building and garage constructed by appellant/cross appellee, Fairway Builders, Inc. (Fairway) for appellee/cross appellant, Malouf Towers Rental Co., Inc. (Malouf). The case was tried to the court without a jury, and no findings of fact or conclusions of law were requested or given. In this situation, we must affirm if possible "on any theory within the issues and supported by the evidence." Gabitzch v. Cole, 95 Ariz. 15, 18, 386 P.2d 23, 25 (1963); Harmon v. Hanson's Pump & Machine Works, Inc., 4 Ariz.App. 107, 109, 417 P.2d 741, 743 (1966). Further, we must assume that the court found every fact necessary to support its judgment. Estate of Brashear, 54 Ariz. 430, 96 P.2d 747 (1939). All inferences supported by the evidence must be taken in favor of affirming the judgment. Odom v. First National Bank of Arizona, 85 Ariz. 238, 336 P.2d 141 (1959); Logan v. O. S. Stapley Company, 14 Ariz.App. 65, 480 P.2d 680 (1971).

In light of these standards, the essential facts of this case are as follows. Malouf, a corporation formed by three members of the Malouf family, obtained a 99-year ground lease on a parcel of property located on Central Avenue in Phoenix. On November 4, 1964, Malouf contracted with Fairway for Fairway to construct a high-rise office building on the site for $1,279,000.00. The basic contract was on a four-page form entitled "The Standard Form of Agreement Between Owner and Contractor," and was supplied by the American Institute of Architects. On page four of this Agreement, other documents are incorporated by reference into the contract. These other documents include the building plans and specifications, an "Agreement Dated November 4, 1964," and the "General Conditions." The General Conditions is another document supplied by the American Institute of Architects, the full title of which is "The General Conditions Of The Contract For The Construction Of Buildings."

The parties again contracted on April 20, 1965 for Fairway to build the garage which was to accompany the office building. The contract sum was $181,200 and the parties again utilized "The Standard Form Of Agreement Between Owner and Contractor." Like the office building contract, the garage contract incorporated the plans and specifications, and the General Conditions.

The two contracts were executed by W. B. Malouf, President of Malouf, and by Alfred Tibshraeny, President of Fairway. Mr. Tibshraeny and the Maloufs are related. Together, the two contracts constituted the Malouf Towers Project. While Fairway did some of the actual construction work itself, much of the work was performed by numerous subcontractors.

In 1968, Fairway brought this action against Malouf seeking recoveries for various alleged breaches of contract and on the basis of other theories. In its amended complaint, Fairway prayed for sums allegedly owed to it by Malouf under the office building and garage contracts. Further, it sought payment for extra work it had allegedly performed at Malouf's oral request and for fees paid out of money owing to it, and requested foreclosure of its mechanics' lien. Malouf counterclaimed and alleged that some of the construction work was negligently done and was defectively and incompletely performed in breach of contract. The case was exhaustively tried to the court over a period of weeks. As already noted, no findings of facts or conclusions of law were requested or given. The court's judgment of August 5, 1975 reflects its acceptance of most of the allegations in the complaint and counterclaim. The court awarded Fairway substantial amounts as due under the contracts (offset by allowances for work not done), and large sums for extra work. However, the court also awarded Malouf a sizeable amount as compensation for defective and incomplete work. Many of the sums awarded to Fairway were, by the terms of the judgment, to bear prejudgment interest from various dates. In paragraph 11 of the judgment, the court offset the awards in favor of the parties, and the net result was a judgment in favor of Fairway of $90,188.76, "which money judgment shall bear interest at the rate of six (6%) percent per annum from and after dates due until paid as set forth herein." This provision has caused considerable confusion in view of the court's original decree that various amounts awarded to Fairway were to bear prejudgment interest from various dates. How is the prejudgment interest to be calculated in light of the offset? The court also awarded Fairway a mechanics' lien on the Malouf Towers Project property in the net amount after offsets, $90,188.76.

Both parties challenge the judgment on numerous bases, most of which involve the sufficiency of the evidence. Further facts will be stated as necessary in the discussions of the various issues.

I. THE VAULT DOOR

As already noted, the trial court awarded a large sum to Fairway as due under the office building contract. This sum was immediately partially reduced by offsets for work not performed, in breach of contract. One of these offsets was $1,000.00 for Fairway's failure to install a vault door specified in the plans. Fairway raises numerous challenges to this offset, but we consider only the alleged failure of Malouf to prove its damages due to the lack of the door since this issue is dispositive.

At trial, Malouf attempted to prove its damages and the value of the door through the testimony of James F. Lindlan, an architect connected with the Malouf Towers Project. He stated that the vault door had an approximate value of $1,000.00 to $1,200.00. However, the court sustained an objection to this testimony, although it was not stricken from the record. Malouf attempts to avoid the fact that the objection was sustained by contending that it is the rule in Arizona that testimony which enters the record but is not stricken, even though an objection to its admissibility is sustained, nevertheless remains part of the record. Malouf cites Greene v. Hereford, 12 Ariz. 85, 95 P. 105 (1908) in support of its contention. The entire relevant portion of Greene consists of the following sentence:

The fifteenth assignment of error is idle, for the reason that, although the court sustained the objection to the question, the witness nevertheless answered the question after the objection was sustained, and the answer was neither withdrawn nor stricken out on motion, but remains in the record.

Id. at 97, 95 P. at 108. While this sentence does seem to support Malouf's suggested rule, we think Greene is inapplicable since that case involved a jury trial. Of course, it is important in a jury trial to strike testimony to which an objection has been sustained, or to give a cautionary instruction. However, there is no general requirement in trials to the court to strike evidence to which an objection has been sustained. Once the objection is sustained in a non-jury trial, the evidence is excluded and must not be considered by the court. Consequently, Mr. Lindlan's testimony as to the value of the vault door could not be considered and cannot provide a basis for the award of damages for the door.

In its brief, Malouf concedes that, absent Mr. Landlan's testimony, no evidence was presented establishing the amount of Malouf's damages due to Fairway's failure to install the proper door. In this situation, we are forced to conclude that there was no evidence presented by which Malouf discharged its obligation to prove its damages. See Graham v. Asbury, 112 Ariz. 184, 540 P.2d 656 (1975); 25A C.J.S. Damages § 144, at 11-12 (1966). Thus, the offset of $1,000.00 for the vault door in paragraph 1 of the August 5, 1975 judgment is vacated, and appropriate complying modifications of paragraphs 1, 7 and 11 must be made.

II. THE OFFICE BUILDING ROOF

The amount awarded to Fairway as due under the office building contract was also offset by $7,541.00 to compensate Malouf for Fairway's failure to install the proper roof on the office building as required by the office building contract. On appeal, Fairway alleges that there was insufficient evidence to support and justify this offset. We disagree.

Fairway's primary contention appears to be that the only evidence which supports the offset for its failure to install the roof is negative evidence, and that this evidence is insufficient to overcome the positive evidence it presented. Specifically, Fairway suggests that the testimony of James F. Lindlan, one of the architects connected with the Malouf Towers Project, that the roof described in the plans and specifications for the office building was never installed, was negative evidence. In contrast, Fairway asserts that the testimony of Leroy Malouf, one of the owners of Malouf, that the parties agreed that the specified roof need not be installed, is positive evidence. Fairway further asserts that the negative evidence (Mr. Landlan's testimony) is insufficient to overcome the positive evidence (Mr. Leroy Malouf's testimony) so that there is no evidence to support the offset for the failure to install the proper roof. Fairway cites the following passage from Illinois Bankers' Life Association v. Theodore, 44 Ariz. 160, 173, 34 P.2d 423, 428 (1934):

We held, in substance, that mere negative testimony, with no proper accompanying and explanatory reasons in support thereof, is of no...