Fru-Con/Fluor Daniel v. Corrigan Brothers

• Decision Date: 19 October 2004
• Docket Number: No. ED 82587.,ED 82587.
• Citation: 154 S.W.3d 330
• Parties: The FRU-CON/FLUOR DANIEL JOINT VENTURE, et al., Appellants/Cross-Respondents, v. CORRIGAN BROTHERS, INC., Respondent/Cross-Appellant.
• Court: Missouri Court of Appeals

154 S.W.3d 330

The FRU-CON/FLUOR DANIEL JOINT VENTURE, et al., Appellants/Cross-Respondents, v. CORRIGAN BROTHERS, INC., Respondent/Cross-Appellant.

No. ED 82587.

Missouri Court of Appeals, Eastern District, Division One.

October 19, 2004.

Application for Transfer to Supreme Court Denied January 26, 2005.

Application for Transfer Denied March 1, 2005.

Phillip George Greenfield, Daniel E. Blegen, Kansas City, MO, J. Roger Edgar, Mark A. Menghini, Christopher John Daus, St. Louis, MO, for appellant.

James R. Dowd, Michael A. Gross, Joseph Fredric Yeckel, St. Louis, MO, for respondent.

SHERRI B. SULLIVAN, J.

Introduction

The Fru-Con/Fluor Daniel Joint Venture ("the Joint Venture") appeals from the trial court's Amended Judgment entered after a bench trial awarding a net judgment in favor of Corrigan Brothers, Inc., d/b/a Corrigan Company Mechanical Contractors ("Corrigan") in the amount of $2,497,063.50. Corrigan cross-appeals.

Factual and Procedural Background¹

The Procter and Gamble Paper Products Company ("Procter and Gamble") hired the Joint Venture as the general contractor to build a $485 million paper products manufacturing facility in Cape Girardeau County, Missouri (the "Project"). During the latter half of 1998, the Joint Venture, as general contractor, and Corrigan, as subcontractor, entered into two contracts, the "Papermaking contract" and the "Balance of Plant contract," both of which called for Corrigan to perform certain pipe fabrication and mechanical work in the construction of the Project.

Throughout the course of the Project, the Joint Venture made substantial modifications to the scope of Corrigan's work. These modifications came in the form of change orders. A change order² is an agreement between parties that modifies or changes the original contract terms. Nicholson Const. Co. v. Missouri Highway and Transp. Com'n, 112 S.W.3d 6, 11 (Mo.App. W.D.2003). The parties had significant disputes over the pricing of these change orders. As a result of their disputes over how much and when Corrigan would get paid for the change orders, Corrigan quit working on the Project in mid-September, 1999.

The Joint Venture filed suit against Corrigan, alleging that Corrigan breached the contracts by not completing the required scope of work. The Joint Venture sought damages for completion of the work by replacement contractors, back charges, and attorney's fees and costs. Corrigan counterclaimed for breach of contract, cardinal change and/or abandonment, quantum meruit and intentional or negligent misrepresentation, and sought damages for unpaid work that was performed, prejudgment interest, attorney's fees and costs.

The trial court found that as to the Papermaking contract, Corrigan breached the contract by walking off the job. At the time Corrigan left, the Joint Venture's expert witness Brad Bright estimated that about 70% of the base work and change work in the Papermaking contract had been completed. The trial court accepted this estimate and used it for its damage calculations, also using a reasonable labor modifier of 43%³ on top of Corrigan's base rate, to find that Corrigan had been underpaid by $345,152.74 on the Papermaking contract. The trial court did not award the Joint Venture any damages from Corrigan's breach, because it found the Joint Venture failed to distinguish between work remaining to be performed under Corrigan's base contract and unresolved PCA work. The trial court found that Corrigan was not responsible for the unresolved PCA work, and since the Joint Venture did not allocate these costs, it was impossible for the trial court to assess the Joint Venture's damages for Corrigan's breach of contract.

As for the Balance of Plant contract, the trial court found that the parties mutually abandoned their agreement for the following reasons. The Balance of Plant contract called for Corrigan's work to be completed by February 1, 1999, but Corrigan could not even start until approximately that date. The contract required Corrigan to perform its work in accordance with ISOs,⁴ or drawings, to which the Joint Venture had made "a multitude of changes." Specifically, the Joint Venture issued 258 revised ISOs amounting to 132% of the initial drawings. The contract required Corrigan to work four 10-hour shifts, but significantly more hours were required from the Joint Venture's schedule changes and ISO revisions. The trial court held that because the Balance of Plant contract was abandoned, Corrigan was entitled to recover in quantum meruit. The trial court awarded Corrigan a net subtotal of $1,925,624.60, a figure which the trial court arrived at by taking $5,781,032.00, for the reasonable value of Corrigan's services performed, and subtracting $3,638,388.00, which had already been paid to Corrigan and subtracting $195,273.08 in back charges against Corrigan.

Both parties appeal from the trial court's judgment.

Standard of Review

In a court-tried case, the decree or judgment of the trial court will be sustained by the appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976). Appellate courts should exercise the power to set aside a decree or judgment on the ground that it is against the weight of the evidence with caution and with a firm belief that the decree or judgment is wrong. Id.

Discussion

In its first point, the Joint Venture alleges that the trial court erred in failing to award the Joint Venture, as damages for Corrigan's breach and failure to complete the Papermaking contract, its cost of completing Corrigan's remaining work under the Papermaking contract. This point assumes Corrigan's breach of contract and only challenges the trial court's award of damages to the Joint Venture for the breach. However, Corrigan's first three points on cross-appeal dispute the trial court's finding that it breached the Papermaking contract at all. Therefore, we shall address Corrigan's first three points on cross-appeal prior to addressing whether the amount of damages awarded for such breach were appropriate.

Corrigan's First Three Points on Cross-Appeal

In its first point, Corrigan claims that the trial court erred in concluding that Corrigan breached the Papermaking contract because the Joint Venture, and not Corrigan, breached the contract, in that the Joint Venture (1) rejected Corrigan's reasonable pricing proposals, which denied Corrigan compensation for change work and forced Corrigan to subsidize change work; and (2) wrongfully terminated the Papermaking contract after Corrigan justifiably suspended performance pending resolution of payment for change work.

In its second point, Corrigan contends that the trial court erred in concluding that Corrigan breached the Papermaking contract because the parties abandoned the contract prior to the time that Corrigan suspended work, in that (1) the Joint Venture substantially delayed the start-up and the performance of Corrigan's work on the contract, (2) the Joint Venture ordered sweeping and continuous changes that significantly changed the cost of the contract from the price initially agreed upon by the parties, (3) the contractual procedure for determining and paying for change costs proved incapable of resolving change payment issues, (4) the Joint Venture pursued a strategy of delaying payment for extra work performed by Corrigan, and (5) the Joint Venture's "advance" payment to Corrigan and Corrigan's stated desire to convert to a time-and-material contract or some other replacement of the original lump sum contract demonstrated the parties' acknowledgment that the original contract was abandoned.

In its third point, Corrigan asserts that the trial court erred in concluding that Corrigan breached the Papermaking contract because the Joint Venture effected a cardinal change and thereby breached the contract, in that (1) after providing Corrigan with a complete set of isometric drawings for its bidding and building, the Joint Venture changed or revised approximately 2,500 of the 3,600 drawings, (2) the Joint Venture abused its authority under the contractual provisions for ordering changes and making payment for change orders, and (3) the combination of continuous changes to and revisions of isometric drawings and withholding of reasonable contract modifications fundamentally altered Corrigan's work under the contract.

Condensed, Corrigan's first three points assert that the parties abandoned the contract prior to the time that Corrigan suspended work (Pt. 2); or that the Joint Venture breached the Papermaking contract because it rejected Corrigan's reasonable pricing proposals and wrongfully terminated the Papermaking contract after Corrigan justifiably suspended performance (Pt. 1); and/or that the Joint Venture effected a cardinal change and thereby breached the contract (Pt. 3).

Abandonment

Corrigan cannot be guilty of a breach of the Papermaking contract if it has been mutually abandoned by the parties. Schwartz v. Shelby Const. Co., 338 S.W.2d 781, 788 (Mo.1960). An abandonment may be accomplished by express mutual consent or by implied consent through the actions of the parties. Id. Where acts and conduct are relied on to constitute an abandonment, they must be positive, unequivocal and inconsistent with an intent to be further bound by the contract. Id. The question of abandonment is essentially one of fact. Id. at 787. Our State Supreme Court perspicaciously noted in Schwartz that "The law is not complicated, though the facts may be." Id. at 788.

In the instant case, there was no express consent to abandon the contract, so we focus on whether there was implied consent consisting of positive and unequivocal acts and conduct inconsistent with an intent to be further bound by the contract. We find that there was not. Rather,...