Howard Const. Co. v. Teddy Woods Const. Co., WD
| Decision Date | 20 August 1991 |
| Docket Number | No. WD,WD |
| Citation | 817 S.W.2d 556 |
| Parties | HOWARD CONSTRUCTION COMPANY, Appellant/Cross-Respondent, v. TEDDY WOODS CONSTRUCTION COMPANY, Defendant, and Integon Indemnity Corporation, Respondent/Cross-Appellant. 43353. |
| Court | Missouri Court of Appeals |
Gardiner Blaine Davis, Kansas City, for appellant/cross-respondent.
Richard W. Mason, Kansas City, for respondent/cross-appellant.
Before FENNER, P.J., and TURNAGE and ULRICH, JJ.
Integon Indemnity Corporation, (Integon) was corporate surety on three corporate surety performance and payment bonds furnished Howard Construction Company, (Howard Construction) on behalf of Teddy Woods Construction Company, (Woods Construction). Howard Construction was a general contractor on three state highway improvement projects and Woods Construction was a subcontractor for each of the three highway projects. Woods Construction defaulted on its subcontracts and Howard Construction initiated the underlying action herein in regard to Integon's obligation on its surety bonds.
Woods Construction had subcontracted with Howard Construction for landscaping on a highway project involving Route 60 in Carter County, Missouri, for the subcontract amount of $46,176.15 (subcontract A); landscaping and culvert work on a highway project involving Route 20 in Saline County, Missouri, for the subcontract amount of $246,876.20 (subcontract B); and sidewalk work, curb work, culvert work and landscaping on a highway project involving Route 20 in Lafayette and Saline Counties, Missouri, for the subcontract amount of $255,361.60 (subcontract C).
Prior to completing the work under any of its three subcontracts, Woods Construction went out of business due to its inability to obtain continued financing. On March 20, 1985, Howard Construction notified Integon that Woods Construction had defaulted on its contract obligations. At this time, Integon was already aware that Woods Construction had lost its financing and was unable to complete its subcontracts with Howard Construction.
At the time that Woods Construction went into default, all of the work on subcontract A remained to be done, and the culvert work, which was a major item of subcontracts B and C, had not been completed. Howard Construction was accountable to the Missouri Highway Department for the timely completion of the projects. The evidence was that on the project to which subcontract A related, only eight "working days" remained for the project to be completed before Howard Construction would be assessed liquidated damages for each day until completion. Furthermore, work on the projects to which subcontracts B and C related could not proceed until the culvert work was completed.
Upon official notification, on March 20, 1985, of the default by Woods Construction, Integon put attorney Gordon Gaebler in charge of handling and monitoring the default on Integon's behalf. Thereafter, on April 4, 1985, Howard Construction entered into an agreement with another landscaping contractor for completion of the work under subcontract A. Howard Construction reacted quickly in regard to subcontract A because only eight working days remained for completion of the project to which subcontract A related. Howard Construction was ultimately charged three days of liquidated damages for untimely completion of this project.
On April 5, 1985, Teddy Woods contacted the attorney for Howard Construction, Gregory Lawhon, in order to arrange a meeting later that day to discuss information on the projects and the prospective takeover of the subcontracts by C & C Excavating, (C & C). Lawhon requested of Gaebler that Gaebler attend the meeting, but Gaebler refused to do so. No one from Integon attended the meeting.
Although Gaebler had lead Lawhon to believe that C & C Excavating had already agreed to take over the work of Woods Construction, it was learned at the meeting that C & C had not yet reached a decision on the matter. Ten days after the meeting, Lawhon learned that C & C declined the work.
On April 26, 1985, Howard Construction entered into an agreement with Viebrock Construction for completion of the culvert work under subcontracts B and C. At this time, Howard Construction was concerned that the projects to which these subcontracts related were stalled until the culvert work was completed and Integon had not provided for completion of the work. The remainder of the work under subcontracts B and C was ultimately relet in July, 1985.
On March 7, 1985, Howard Construction submitted a claim to Integon for added completion costs resulting from Woods' default. Integon rejected the claim. Howard Construction then instituted this suit to recover under Integon's bonds, claiming that Integon breached its duty under the bonds by failing to arrange promptly for the completion of the work under the subcontracts and by failing to pay the completion sub-contractors secured by Howard Construction. Integon filed a counterclaim alleging that Howard Construction, as obligee under Integon's bonds, had breached the terms of the bonds by unilaterally taking over the subcontracts and thereby excluding Integon from securing completion of the subcontract work.
While the underlying suit herein was pending and before trial, Integon gave notice to Howard Construction, pursuant to § 433.010, RSMo 1986, to require Howard Construction to commence suit against Woods Construction. 1 In compliance with said notice, Howard Construction obtained an interlocutory default judgment against Woods Construction in the principal amount of $52,034.65 and prejudgment interest in the amount of $19,681.93.
The cause came to trial in January of 1990. At the conclusion of the trial, the jury returned a verdict for Howard Construction on its claim against Integon for contract damages in the amount of $60,000.00, prejudgment interest in the amount of $12,420.00 and attorneys' fees in the amount of $50,000.00. The jury also found in favor of Howard Construction on Integon's counterclaim. The obligation of Integon for contract damages being derivative of that of Woods Construction, the trial court then revised the jury's verdict to conform to the damages assessed against Woods Construction in the interlocutory default judgment entered against Woods in the principal amount of $52,034.65 with prejudgment interest in the amount of $19,681.93. The trial court also set aside the jury award of attorneys' fees in the amount of $50,000.
Howard Construction appeals and Integon cross-appeals. Because Integon presents a challenge to the sufficiency of the evidence, its cross-appeal is first addressed.
In its appeal, Integon argues that the trial court erred by overruling its motions for directed verdict and for judgment notwithstanding the verdict because the record lacked sufficient evidence to support the verdict. Integon argues 1) that there was no substantial evidence to show that it refused or failed to undertake responsibility for completion of the subcontracts under the terms of its bonds after the default by Woods Construction; and 2) that the judgment of the court for damages was not supported by the evidence.
In deciding whether the plaintiff made a submissible case against the defendant and whether a motion for directed verdict or for judgment notwithstanding the verdict should have been granted, the appellate court reviews the evidence from a viewpoint most favorable to the plaintiff and gives the plaintiff the benefit of every reasonable inference which the evidence tends to support, disregarding all contrary evidence. Rauh v. Interco, Inc., 702 S.W.2d 497, 499 (Mo.App.1985). Under this standard, a jury verdict will not be overturned unless there is a complete absence of probative facts to support the verdict. Treon v. Hayes, 721 S.W.2d 789, 791 (Mo.App.1986).
Integon's obligation under its performance and payment bonds upon the default of Woods Construction was to "promptly remedy the default, or ... promptly
1) Complete the Contract in accordance with its terms and conditions, or
2) Obtain a bid or bids for completing the Contract in accordance with its terms and conditions, and upon determination by Surety of the lowest responsible bidder, or, if the Owner elects, upon determination by the Owner and the Surety jointly of the lowest responsible bidder, arrange for a contract between such bidder and Owner ..."
The evidence showed that Howard Construction notified Integon on March 20, 1985, that Woods Construction was in default. When notice was given, time was of the essence in that the work under subcontract A had not yet been started and only eight working days remained for completion of the contract. Under subcontracts B and C, the culvert work, which was a major part of the subcontracts, was not completed and the other work on the projects could not proceed until completion of the culvert work. Not only was Howard Construction subject to liquidated damages for not completing the projects as contracted, but its performance would be taken into account when the company was under consideration for other highway projects.
Gordon Gaebler suggested to Howard Construction in March of 1985 that C & C Excavating had agreed to complete the work. However, Howard Construction learned in early April of 1985 that C & C was only considering the work and further learned in mid-April of 1985 that C & C would not complete the work. When Howard Construction learned that C & C would not complete the work, Integon was contacted and urged to secure a completing contractor quickly. When Integon had not secured a completion contractor by the end of April, 1985, Howard Construction entered into a completion agreement with the second lowest bidder on the work under subcontracts B & C. Howard Construction had previously...
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