Hartford Acc. & Indem. v. Cochran Plaster

Decision Date13 January 2006
Docket Number2040647.
Citation935 So.2d 462
CourtAlabama Court of Civil Appeals
PartiesHARTFORD ACCIDENT & INDEMNITY COMPANY v. COCHRAN PLASTERING COMPANY, INC.

E.J. Saad of Crosby Saad, LLC, Mobile, for appellant.

James P. Green and Thomas H. Nolan, Jr., of Wright, Green, P.C., Mobile, for appellee.

THOMPSON, Judge.

Hartford Accident & Indemnity Company ("Hartford") appeals a judgment entered against it and in favor of Cochran Plastering Company, Inc. ("Cochran Plastering").

Lee L. Saad Construction Co., Inc. ("Saad Construction"), entered into a contract pursuant to which it was to serve as the general contractor for the construction of Semmes Middle School ("the school") for the Board of School Commissioners of Mobile County ("the Board") and the Alabama Public School and College Authority. Hartford was Saad Construction's surety, pursuant to § 39-1-1, Ala.Code 1975, for the school-construction contract. Saad Construction hired Cochran Plastering to perform certain work as a subcontractor in the construction of the school. After the construction of the school, a dispute arose between Saad Construction and Cochran Plastering regarding amounts due to be paid to Cochran Plastering.

Cochran Plastering sued Hartford, as Saad Construction's surety asserting a breach-of-contract claim and seeking to recover $22,191.19, plus interest and an attorney fee. Saad Construction intervened in the action and filed a third-party claim alleging assault and trespass against Cochran Plastering; Cochran Plastering filed a claim alleging assault against Saad Construction. Both Cochran Plastering and Saad Construction amended their claims against the other.

The trial court conducted a hearing and received ore tenus evidence. At the beginning of that hearing, Cochran Plastering and Saad Construction each moved to dismiss their assault claims, and Saad Construction moved to dismiss its trespass claim against Cochran Plastering. On January 26, 2005, the trial court entered a judgment in which it found in favor of Cochran Plastering and against Saad Construction on Cochran Plastering's breach-of-contract claim. On Saad Construction's motion, the trial court later amended that judgment to find in favor of Cochran Plastering and against Hartford and awarded Cochran Plastering $33,978.88 in damages, including costs and an attorney fee. Hartford timely appealed.

The record indicates the following pertinent facts. Saad Construction contracted to pay Cochran Plastering a total of $287,750 in exchange for Cochran Plastering's performing plastering or stucco work on the construction of the school. The contract between Saad Construction and Cochran Plastering provided that Saad Construction make periodic progress payments to Cochran Plastering as Cochran Plastering completed portions of its work. Those progress payments were subject to a 5% "retainage." Michael Cochran ("Cochran"), one of the owners of Cochran Plastering, explained that general practice in the construction industry allows a general contractor to retain a portion of the amount to be paid to a subcontractor in order to ensure the completion of and the quality of the work performed by the subcontractor.1

As its work progressed, Cochran Plastering submitted periodic progress-payment requests, and Saad Construction paid those requests in a timely manner. Each of the payment requests contained a provision entitled "certification by the subcontractor," which stated, among other things, that Cochran Plastering certified that "payments, less applicable retention, have been made through the period covered by previous payments received from [Saad Construction]."

After Cochran Plastering completed its work on the school, it submitted its final payment request, seeking payment in the amount of $12,849.27; that amount did not include the retainage amount, which, at that point, totaled $9,341.92. Saad Construction supplied Cochran Plastering with a form entitled "final release and waiver of lien from subcontractor" ("the release") to sign, and on August 14, 2002, Cochran, on behalf of Cochran Plastering, signed that release. The release stated that the amount of the final periodic payment request, $12,849.27, "pa[id] in full the contract between [Cochran Plastering and Saad Construction]" and that "[t]his waiver is contingent on the payment of the above-listed amount."

Cochran testified that it was standard industry practice for a subcontractor to execute releases such as the one he executed on August 14, 2002, in order to receive its final payment, and that the subcontractor generally received the payment set forth in the release within 30 days of the execution of the release. Cochran further testified that it was standard procedure for the subcontractor to be paid the retainage amount within a period of a few months to a year after the execution of the "final" release, and that in exchange for the payment of the retainage, the subcontractor would sign yet another release. The testimony of Paul Baker ("Baker"), Cochran Plastering's former business manager, supported Cochran's testimony on these matters. However, Lee Saad ("Saad"), the president of Saad Construction, disputed that testimony; he stated that in his 20 years' experience in the construction industry, he had only given or obtained releases for the "final payment."

It is undisputed that Saad Construction did not pay the $12,849.27 when Cochran signed the release or within 30 days of Cochran Plastering's submitting the periodic-payment request, together with the release. Baker testified that he telephoned Saad Construction repeatedly in an effort to obtain payment. Saad Construction had requested that Cochran Plastering submit certain materialmen-lien waivers and other documents pertinent to the tax-exempt status of the project. Apparently in an attempt to deliver those documents to Saad Construction, Cochran traveled to Saad Construction's workplace on November 25, 2002. However, during that meeting, Cochran and Saad became involved in a physical altercation; that altercation formed the basis of the trespass and assault claims that were later voluntarily dismissed. Cochran testified that he did not leave the requested waivers or tax documents with Saad Construction after that physical altercation.

Two days after the altercation, on November 27, 2002, Cochran Plastering submitted to Saad Construction a request for payment of the 5% retainage. On November 30, 2002, Saad sent a letter to Cochran Plastering rejecting the request for the payment of the retainage, citing as the basis for that rejection his contention that Cochran Plastering had "breached [the] contract." The trial court questioned Saad regarding his contention that Cochran Plastering had breached the contract; Saad responded by stating that "I felt like I did not want to be dealing with him anymore, your Honor."

On December 4, 2002, the lien-waiver and tax documents Saad Construction had requested from Cochran Plastering were in the possession of either Saad Construction or its attorney. However, Saad Construction did not pay either the amount specified in the August 14, 2002, release or the amount of the retainage at that time or within 30 days of receiving those documents.

During the trial, Saad insisted that he and Baker had an agreement that Cochran Plastering would pay certain "backcharges," or charges for the use of Saad Construction's equipment by Cochran Plastering. According to Saad, Baker agreed to waive the retainage in exchange for Saad Construction's waiving the "backcharges," and, Saad alleged, the language of the release incorporated that agreement. Baker disputed that testimony by denying that he had ever discussed "backcharges" with anyone at Saad Construction. Saad acknowledged that he had not mentioned any "backcharges" in any of his correspondence with Cochran Plastering. Saad stated that he never "sat down and formally put together" the amount of "backcharges" he contended was owed by Cochran Plastering; however, he estimated those charges to be "around seventeen, eighteen thousand, somewhere in that range."

On February 23, 2003, Cochran Plastering filed its complaint in this matter. On August 6, 2003, while the action was pending in the trial court, Saad Construction sent Cochran Plastering a check for $12,849.27, together with a letter stating:

"With this letter we are enclosing Saad Construction's check for $12,849.27, made payable to Cochran Plastering Company and [Cochran Plastering's] attorney. In making this payment, Saad Construction does not admit any other, further, or different responsibility and insists that it was entitled to act within the scope of its contract."

The "memo" line of the August 6, 2003, check read "Semmes sub August." Saad testified that he relied on the release in sending the August 6, 2003, check, and that he would not have sent that money had he not thought it would settle the dispute between Saad Construction and Cochran Plastering.

Cochran Plastering negotiated the August 6, 2003, check, and Cochran sent a letter, dated August 7, 2003, to Saad Construction, stating:

"I have Lee Saad Construction Company, Inc.'s check in the amount of $12,849.27 which you forwarded under cover of letter dated August 6, 2003. I wanted to make it clear that by negotiating this check, Cochran [Plastering] does not waive or release any claim it may have against Saad Construction or Saad's surety for additional amounts due, or for attorney's fees and interest on the amount paid, as well as additional amounts due."

The parties appeared for trial on January 18, 2005. At the trial, Hartford raised, for the first time, the defenses of release and accord and satisfaction. However, those defenses were tried by the implied consent of the parties. See Rule 15(b), Ala. R. Civ. P.; and Tounzen v. Southern United Fire Ins. Co., 701 So.2d 1148, 1150 (Ala.Civ.App.1997). In finding in favor of Cochran...

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