Foster v. United Home Imp. Co., Inc.

• Decision Date: 15 December 1981
• Docket Number: No. 2-680A195,2-680A195
• Citation: 428 N.E.2d 1351
• Parties: Judith Ann FOSTER d/b/a The Filling Station, Appellant (Defendant Below), v. UNITED HOME IMPROVEMENT COMPANY, INC., Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 1351

428 N.E.2d 1351

Judith Ann FOSTER d/b/a The Filling Station, Appellant (Defendant Below), v. UNITED HOME IMPROVEMENT COMPANY, INC., Appellee (Plaintiff Below).

No. 2-680A195.

Court of Appeals of Indiana, Fourth District.

Dec. 15, 1981.

Joseph F. Quill, Quill, Steckler & Boberschmidt, Indianapolis, for appellant.

William O. Schreckengast, Kitley & Schreckengast, Beech Grove, for appellee.

MILLER, Presiding Judge.

Defendant-appellant Judith Ann Foster d/b/a The Filling Station, is appealing from a jury verdict awarding lost profits and other damages totaling $13,852.86 to plaintiff-appellee United Homes, Inc., ¹ (United) based on the failure to perform on oral contract to remodel a combination restaurant and bar operated by Foster. On appeal, Foster contends 1) there is insufficient evidence to support the establishment of an oral contract and the damages based thereon, 2) that the trial court erred in giving certain instructions and refusing others tendered by Foster; and 3) the court erred in permitting United to amend its complaint at the conclusion of all the evidence to indicate the proper corporate name for United. We affirm.

The basic facts supporting the trial court's judgment may be summarized as follows:

Foster is the operator of a restaurant/bar on the southside of Indianapolis. When she lost the lease on her previous business location, she applied to the Small Business Administration (SBA) for funds to purchase and remodel a nearby establishment. To accomplish the remodeling, Foster contacted United's president, Noel Max Bogard. According to Bogard, he first talked with Foster in the latter part of 1977, when they met at the building in question. Bogard testified Foster provided enough details for him to get the "gist" of the project and he agreed to provide a preliminary plan and approximate cost.

Bogard testified the parties met approximately three more times before the plans were made, on which occasions Foster outlined the remodeling changes "in detail" and there was also conversation as to the financing. He stated he gave Foster a figure of $3,000 for the preliminary work, and that she told him to proceed and have an engineer prepare plans so the project could be approved by the Administrative Building Council. Foster acknowledged at trial she "probably did" tell Bogard to go ahead with the plans and specifications. The parties went to a local bank to attempt to obtain financing for such work, and Bogard had surveying, drafting, and engineering work done to prepare the plans, at a cost of approximately $3,800.

In December, Bogard submitted a written contract to Foster which she did not sign at that time because, in her words, "there was no reason to do anything" since "I didn't have my financing." The contract did not contain a "no-lien" provision prohibiting a contractor's lien on the property, although Bogard acknowledged he "had heard" from Foster the SBA would not approve a contract without a "no-lien" clause.

Later, however, in April of 1978 or a little before after the plans were completed, Foster told Bogard to go ahead with the remodeling job. He testified that although he had not anticipated beginning without a written contract, "I had a request by her and an okay by her to start the job-the total job" and that "she had told me or requested that I start numerous times before the job was started, at an agreed price," $55,400. He asserted he proceeded on the basis of Foster's oral authorization to do so, and at trial submitted as exhibits various permits dated in June and July of 1978 which Bogard stated he obtained on Foster's behalf and at her authorization.

Bogard rejected a second written contract, tendered by Foster, because it did not adequately describe the parties' oral agreement. He stated the contract did not specifically describe what he was to do. In response, however, he re-tendered the contract he had proffered in December, stating he submitted the document to Foster "after I got a letter, a copy from Mrs. Foster, of the approval from S.B.A." The SBA approval of the loan, dated April 19, 1978, was subject to several conditions set out in the letter, including the following:

"(3) Borrower will not, prior to payment in full of the indebtedness evidence by this Note, without prior written consent of the holder of the Note, pledge, mortgage or otherwise cause or permit to be incumbered in any manner whatsoever any of Borrower's property or assets, whether then owned or thereafter acquired; except by purchase money liens upon property acquired after the date of the Note, and other liens upon such property at the time of the acquisition thereof.

Prior to final disbursement of construction funds, lien waivers must be obtained from all contractors, subcontractors, and any independent workers involved in the construction."

Bogard's second tendered contract, like the other proposed contracts between the parties, was never signed by Bogard or Foster. As noted above, Bogard acknowledged he had generally heard from Foster the SBA would not approve a loan without a "no-lien" provision. He testified he told Foster he would not agree to such a provision. He also testified, however, that at all times after Foster's oral authorization to begin the "total job" based on the parties' discussions, he was ready, willing and able to complete the job, and that his first indication he would not be permitted to complete the job was when he saw someone else doing it. Foster testified she told Bogard "we couldn't do business" when he rejected her tendered contract.

Foster eventually had the job done by a third party. There was evidence the plans ultimately used by Foster to remodel the building were "traced" from plans prepared by Bogard's engineer, John Myer, Jr. In particular, Myer testified on direct examination the final plans were "the same or similar" to the ones he prepared, and on cross-examination he stated he believed someone "traced" his plans because a table for a complicated electrical panel was "exactly the same, word for word, number for number." Bogard also testified in this regard the completed building had had the "same appearance," with a few modifications, as the design submitted by him to Foster.

The contract with the party who ultimately completed the work contained a provision described by Foster as a "no-lien" clause, which stated:

"The final payment shall not be due until the Contractor has delivered to the Owner an Affidavit stating that all bills incurred in the construction of the dwelling have been paid in full, and that no liens have been filed and no liens expected to be filed. The Contractor may, at his option and in lieu of the Affidavit, present to the Owners indemnifying him against any lien."

Bogard testified that based on his experience in construction work since 1954, the project could have been completed by him in less than six months, with a fair and reasonable profit of $10,000. In addition, the evidence also revealed he incurred expenses of approximately $3,852.86 in connection with the preliminary work authorized by Foster. As noted above, the jury awarded Bogard damages of $13,852.86, evidently the sum of these two figures.

Whether A Contract Was Created

We first consider Foster's contention the evidence was insufficient to show a valid oral contract. In particular, she argues 1) the parties allegedly had agreed they would not be bound until a contract was reduced to writing, and, therefore, any oral agreement was void; and 2) there was no "meeting of the minds," as evidenced by Bogard's refusal to accept a "no-lien" clause, (despite the fact SBA financing was allegedly a necessary "condition" of any contract between the parties) and as evidenced by the parties' failure to sign any of three written contracts.

In addressing this initial issue we are mindful of the basic appellate standard of review that this Court will not weigh the evidence but will only consider the evidence most favorable to the appellee and all favorable inferences to be drawn therefrom, and will reverse the trial court only if there is no substantial evidence of probative value to support the trial court's finding. McMahan Construction Co. v. Wegehoft Brothers, Inc., (1976) 170 Ind.App. 558, 354 N.E.2d 278, citing Hidden Valley Lake, Inc. v. Kersey, (1976) 169 Ind.App. 339, 348 N.E.2d 674. See also North v. Newlin, (1981) Ind.App., 416 N.E.2d 144.

In viewing the record of the instant case, summarized in pertinent part above, we find ample evidence supporting the existence of a valid oral contract between Bogard and Foster. Bogard testified that after the parties met at the site and had several subsequent discussions in which the remodeling was discussed "in detail," he arranged to have surveying, drafting and engineering work done at Foster's authorization, and appropriate plans were prepared. For this preliminary work, Bogard recited to Foster an approximate cost of $3,000, and she acknowledged she told him to go ahead with the plans and specifications. Thereafter, subsequent to receiving a written contract from Bogard, Foster told him to start the "total job" for $55,400, and Bogard proceeded on the basis of Foster's oral authorization.

Foster correctly observes, citing International Shoe v. Lacy, (1944) 114 Ind.App. 641, 53 N.E.2d 636 and Avery v. Citizen's Loan & Trust Co., (1932) 94 Ind.App. 161, 180 N.E. 23, that where the parties agree they shall not be bound until a contract is reduced to writing, execution of a written contract is necessary. In the instant case, however, the record does not reveal the jury was required to find the existence of such condition in the parties' oral agreement. Bogard merely testified, as noted above, he had not anticipated beginning work without a written contract, and on appeal Foster herself only asserts "the parties generally agreed and anticipated that they would sign a written contract, i.e., agree to terms...