Kehn Fine Home Bldg. v. Muthian
| Decision Date | 15 May 2023 |
| Docket Number | 22-P-14 |
| Parties | KEHN FINE HOME BUILDING, INC. v. SHANMUGAM MUTHIAN; MICHAEL KEHN, third-party defendant. |
| Court | Appeals Court of Massachusetts |
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (), are primarily directed to the parties and therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
In 2016, defendant Shanmugam Muthian hired the plaintiff, Kehn Fine Home Building, Inc. (KFHB), to undertake a major renovation project at his home in Marblehead. After the project was substantially but not totally completed, Muthian refused to pay KFHB for a large outstanding invoice and fired the company. KFHB brought the current collection action alleging breach of contract and related theories. Muthian counterclaimed and brought a third-party action against Kehn's principal, Michael Kehn (Kehn). After a nine-day jury-waived trial, a Superior Court judge ruled largely in favor of KFHB and Kehn (collectively, the Kehn parties) explaining his decision in comprehensive findings and rulings. On July 12, 2021, two judgments entered that had the net effect of requiring that Muthian pay the Kehn parties approximately $100,000 in damages (including prejudgment interest). On August 18, 2021, another judgment entered awarding attorney's fees to Muthian.[1] After the judge denied motions for reconsideration filed by each side,[2]Muthian appealed, and the Kehn parties filed a limited cross appeal.[3] We affirm the liability finding on KFHB's breach of contract claim, but conclude that the damages award on that claim was incorrect in one respect. We also reverse so much of the judgment as entered in favor of KFHB on its quantum meruit claim. We otherwise affirm.
A full recounting of the facts is unnecessary, and we refer the reader to the extraordinarily detailed factual findings that the trial judge issued. Those findings exhibit the thoughtful, careful, and balanced approach that the judge took with respect to the testimony he heard from the at least seventeen witnesses. On appeal, Muthian does not challenge the judge's subsidiary findings as clearly erroneous (with the limited exceptions discussed below), and, in any event, those findings appear well supported by the trial record. Nor is the thrust of Muthian's argument that the judge applied the wrong legal principles. Rather, he mainly argues that the judge misapplied the correct law to the facts found. For the most part, we disagree.
The judge found that Muthian materially breached his contract with KFHB in January of 2018 when he refused to pay more than a nominal amount of what KFHB was owed, and it is self-evident that Muthian's subsequent firing of KFHB from the job also was a material breach.[4] That conclusion is well supported and correct. We discern no error in the judge's rejection of Muthian's argument that his actions were justified by a prior material breach by KFHB. To be sure, the project at that point had not been completed within the nine-month time frame set forth in the contract, but for reasons the judge thoroughly explained, the contract read as a whole does not support Muthian's view that the nine-month provision of the contract established an unforgiving drop dead date.[5] In addition, the judge found that KFHB bore little responsibility for causing delay,[6] and that, overall, Kehn was "exceptionally patient" and accommodating with his exacting client. Those findings are well supported by the trial evidence.
Granted, some problems remained at the time that Muthian fired KFHB or arose thereafter. However, the judge found that KFHB would have fixed these issues had it not been fired.[7]
Muthian argues that KFHB is precluded from pursuing its contractual remedies because of the principle that a construction "contractor cannot recover on the contract itself without showing complete and strict performance of all its terms." Andre v. Maguire, 305 Mass. 515, 516 (1940). As the Supreme Judicial Court recently emphasized, the "need for strict compliance with construction law contracts [is] to ensure that the construction itself is done safely and correctly according to design specifications." G4S Tech. LLC v. Massachusetts Tech. Park Corp., 479 Mass. 721, 731 (2018) (G4S Tech.). Although the court in G4S Tech. reaffirmed that a contractor may not sue on the contract unless it can demonstrate complete and strict compliance, the court emphasized that this principle is limited to Id. All other alleged breaches - including allegedly delayed construction -- are subject to ordinary contract principles, including a "materiality standard." Id. at 733 &n.16.
In the case before us, the "complete and strict performance" principle applies at most to any actual construction work that did not meet plans, specifications, or standards set forth in the contract. See G4S Tech., 479 Mass. at 732 (). But as we already have noted, to the extent that Muthian demonstrated that KFHB left behind unaddressed problems that left the project falling short of what the contract required, this was because Muthian unjustifiably fired KFHB before it had the opportunity to fix such issues. We therefore agree with KFHB that the principle reaffirmed in G4S Tech. is inapplicable in this context. Put differently, it cannot be that a client unilaterally gets to bar his or her contractor from suing on a construction contract by - - without adequate justification -- preventing the contractor from completely and strictly finishing the contract.
We pause to dive into the details regarding two specific disputes that played an outsized role in the conflict between the parties. The first had to do with the finishing of the wood floors. Against Kehn's forceful warnings, Muthian insisted that the floors be finished using an unusual three-step manner in which a water-based dye would first be applied, followed by an oil-based stain, and then coats of water-based polyurethane. The uneven results proved the wisdom of Kehn's advice. Nevertheless, having agreed to use Muthian's preferred method (against his own better judgment), Kehn willingly had the floors redone a second time. Problems remained. Kehn still was willing to refinish the floors a third time, but only if Muthian agreed that he could use his more traditional tried and true two-step means of doing so. Otherwise, Muthian would have to hire his own floor contractor to perform his chosen method. Muthian chose to pursue the latter route, although notably, once he fired KFHB, he ended up having the floor redone using the traditional method. On appeal, Muthian argues that the failure of KFHB to complete the floor work stands as a bar to KFHB suing on the contract, and that, in any event, the judge erred by not deducting the cost of finishing the floors a third time from what KFHB was owed. Given that KFHB already had finished the floors twice notwithstanding that the problems were due to Muthian's insistence on using his unproven methods against the advice of Kehn, we discern no error in the judge's handling of the floor issues.
The second detailed dispute that merits some discussion had to do with the energy efficiency of the heating, ventilation, and air conditioning (HVAC) system that was installed. The relevant subcontractor, whose testimony Muthian did not include in the record appendices, claimed that the installed system in fact could perform at the efficiency level that Muthian desired even though it was not nominally rated at that level. The judge's ruling that any shortcoming in the system did not constitute a material breach that justified KFHB's firing is well founded, particularly given that the energy efficiency of the system was never set forth as a required specification in the written contract. Where it is not clear how the dispute about the energy efficiency rating of the system would have played out had KFHB not been fired, we discern no error in the judge's declining to treat this issue as a bar to KFHB's suing on the contract.[8] We additionally note that even though the judge awarded damages based on a violation of an oral agreement to install the higher efficiency equipment, the judge recognized the possibility that the HVAC system in fact might be able to achieve the desired efficiency level.
KFHB was not looking to be paid on the contract for any work it had not yet performed. Hence, in calculating what KFHB was owed, the judge ruled that Muthian was not entitled to a setoff for what he paid a different contractor to complete the job. At the same time, the judge ruled that Muthian was entitled to work needed correct problems that remained after KFHB was fired.9[] Drawing a line between completion work and correction...
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