Henson v. James M. Barker Co., Inc.

• Decision Date: 12 January 1990
• Docket Number: No. 87-1437,87-1437
• Citation: 555 So.2d 901
• Parties: 15 Fla. L. Weekly D174 Larry K. HENSON and Cheryl D. Henson, Appellants, v. JAMES M. BARKER CO., INC. and Seaboard Surety Co., Appellees.
• Court: Florida District Court of Appeals

Page 901

555 So.2d 901

15 Fla. L. Weekly D174

Larry K. HENSON and Cheryl D. Henson, Appellants, v. JAMES M. BARKER CO., INC. and Seaboard Surety Co., Appellees.

No. 87-1437.

District Court of Appeal of Florida First District.

Jan. 12, 1990.

William G. Cooper of Coker, Myers & Schickel, P.A., Jacksonville, for appellants.

Thomas B. Whitefield of Ulmer, Murchison, Ashby & Taylor, P.A., Jacksonville, for appellee James M. Barker Co., Inc.

Dale K. Bohner of VanWert, Heebner, Baggett, Bohner and Prechtl, Daytona Beach, for appellee Seaboard Surety Co.

ZEHMER, Judge.

We review an order dismissing the Hensons' amended complaint with prejudice. The amended complaint alleges that appellee contractor James M. Barker Company, Inc., fraudulently induced the appellant owners, the Hensons, to release Barker from further liability on its construction contract with the Hensons. The complaint seeks alternative remedies of rescission and damages resulting from Barker's alleged fraud and breach of the construction contract. The critical issue is whether the allegations are sufficient to show that Barker had a duty to disclose certain facts to the Hensons in connection with the negotiation and execution of the "Take Over Agreement" whereby Barker's construction contract with the Hensons was taken over by another contractor and Barker was released of all claims arising out of that contract upon payment of certain stipulated sums by the Hensons. We hold the allegations, viewed most favorably to the plaintiffs, are sufficient to require an answer and presentation of evidence on the issues raised by the complaint.

I.

The essential facts are found in the amended complaint and documents annexed thereto. Barker, a licensed general contractor, and the Hensons, as owners, executed an AIA standard form construction contract entitled "Cost Of The Work Plus A Fee" covering the construction of an eight-unit condominium. The contract contained a guaranteed maximum cost to the owners in the amount of $937,862, plus an agreed fee to the contractor. Appellee, Seaboard Surety Company, issued a payment and performance bond covering the specified work. The Hensons made a construction loan from American Federal Savings and Loan Association of Duval County to finance the construction of the project.

During the course of construction, it is alleged, disputes arose between the Hensons and Barker over the timely and orderly progress of the work and Barker's entitlement to payment of certain draws based on Barker's revision of the schedule of values attached to the construction contract. Barker began requesting that the Hensons agree to increase the maximum construction cost figure and Barker's fee. These requests were accompanied by various written and verbal threats and representations by Barker to shut the job down for alleged nonpayment of the draws and other breaches of contract by the Hensons. Barker is also alleged to have contacted American Federal and suggested that it foreclose the Hensons' construction loan and permit subsequent development of the property by Barker. The complaint alleges that the Hensons did not know, although Barker did know but did not disclose to the Hensons, the following critical facts:

11. Matters unknown to Henson at relevant times, but known to Barker included, but are not limited to the following:

a. That certain portions of the work suffered severe latent defects which ultimately cost Henson in excess of $250,000 to correct; and

b. That Barker encouraged Henson's lender to foreclose he and his wife out, and negotiate a better deal for Barker with the lender i.e. [sic] for increased construction costs and fees under a new contract so that Barker could alleviate itself from the guaranteed costs under the attached contract.

The complaint then alleges that Barker's threats, representations and actions caused American Federal to threaten the Hensons with foreclosure unless they provided further equity for the project, which in turn caused Henson to infuse an additional $200,000 into the project. Barker persisted in making wrongful demands for payment coupled with threats of filing a lien on the property. As a result the Hensons, with the advice of counsel, consented to executing the annexed "Take Over Agreement" with another contractor, D. Coleman, Inc., to be substituted for Barker "under conditions recognized by Henson to include an increase in the cost of construction by approximately $200,000 and a new construction contract with D. Coleman."

The Take Over Agreement is annexed to the complaint and recites, in part, as the premises for the agreement that Barker is indebted to the named subcontractors and materialmen in certain described amounts; that "a dispute has arisen between [Barker] and HENSON concerning the Construction Contract, and the parties desire to amicably terminate their relationship"; and that "HENSON desires to employ D. COLEMAN, INC. ('COLEMAN') to complete construction of the project and HENSON with COLEMAN'S assistance has informed himself of the status of the Project." The agreement then sets forth substantive provisions whereby the parties agree that: Barker's rights in the original construction contract and all subcontracts will be assigned to Coleman; the Hensons release Barker and Seaboard "of and from any and all claims, demands and liabilities arising out of the Construction Contract, or under any of the Subcontracts, or under the Bond, whether the same have accrued prior to the date hereof or arise subsequent hereto"; the Hensons will pay a certain amount which Barker agrees to accept in satisfaction of all sums due Barker for prior construction; and that "HENSON has inspected the work performed by each Subcontractor and has reviewed the provisions of each Subcontract," and Barker "makes no representation or warranty with respect to the work performed by [Barker] or by Subcontractors under the Subcontracts or that the Subcontractors named will perform any additional work required by the Subcontracts, or if performed, that such work will be satisfactory or will be performed for the amounts shown" on an attached schedule.

The amended complaint then alleges that had the Hensons or their counsel "known of the concealed activities by Barker as set forth in paragraph eleven, above, at the time of the execution" of the Take Over Agreement, "Henson would not have agreed to excuse Barker and the surety, Seaboard from performance" under the construction contract. It further alleges that the condominium project was ultimately completed by the second contractor "at an additional cost for the work described in [the original construction contract] in a sum exceeding $500,000 due to Barker's latent and covered defective work, Barker's delay and the costs incurred by Henson arising out of Barker's imposition of the 'take-over agreement.' " The amended complaint claims relief in four counts: (1) Rescission and estoppel as to certain parts of the Take Over Agreement, primarily the release contained therein; (2) Barker's breach of the construction contract by:

a. wrongfully suggesting to Henson's lender that Barker develop the project following foreclosure for an increased construction contract and fee;

b. by anticipatorily repudiating the contract as a result of continual threats to stop the work and intentional delay to wrongfully leverage the plaintiffs to pay Barker more than the original contract sum;

c. concealing serious latent defective work; and

d. by failing to progress the work and staff the job with the necessary skilled persons to accomplish same;

(3) Seaboard's breach of the payment and performance bond to the extent of Barker's breach of contract; and (4) Barker's intentional fraud, as previously alleged, which caused plaintiffs to suffer damages, claiming both compensatory and punitive damages.

The parties and the trial court have treated each of the four counts as being dependent upon Barker's having a duty to disclose the matters alleged, primarily to avoid the effect to the release contained in the Take Over Agreement. The trial court dismissed the amended complaint with prejudice, reciting as follows:

The Court recognizes its duty to take each of the allegations of ultimate fact as contained in the Amended Complaint to be true. Such being the case, the real issue before the Court is whether or not the allegations of ultimate fact and reasonable inferences therefrom as set forth in the Amended Complaint demonstrate the type of relationship or circumstances existing between plaintiffs and defendant James M. Barker Company, Inc. at the time of the execution of the "Take Over Agreement" attached as an Exhibit to the Complaint were such so as to require a disclosure on the part of defendant James M. Barker Company, Inc. of certain facts involving Barker's communications with the owners' construction lender, American Federal Savings and Loan as alleged in paragraph ______ [sic] of the Amended Complaint. If the circumstances do not support a duty to disclose, then plaintiffs' attempt to obtain relief from the release provisions of the Take Over Agreement are unavailable to them. The Court concludes that the allegations of the Amended Complaint dealing with communications by James M. Barker Company, Inc. with plaintiffs' lender, under the circumstances set forth in the Amended Complaint, do not, as a matter of law, give rise to an affirmative duty on James M. Barker Company to disclose such communications.

For reasons not otherwise explained, the trial court placed its ruling squarely on the lack of a duty to disclose Barker's communications with the construction lender, and made no reference to the allegations of concealed, latent defects in the construction.

II.

The sole issue presented on this appeal is whether the trial court erred in ruling as a matter of law that the allegations of the complaint were insufficient to state a cause of action for equitable...