Kenko, Inc. v. Lowry Hill Const. Co.
| Decision Date | 12 August 1986 |
| Docket Number | No. C6-86-498,C6-86-498 |
| Parties | KENKO, INC., Respondent, v. LOWRY HILL CONSTRUCTION CO., Appellant, City of Plymouth, et al., Defendants. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. The contract between appellant and respondent was clear and unambiguous, therefore parol evidence was properly excluded.
2. Appellant made no offer of proof on evidence of subsequent conduct that purportedly modified the contract between the parties and therefore this court cannot review the issue.
3. The trial court's entry of partial judgment on respondent's contract claim did not require a dismissal of respondent's mechanic's lien claim.
Robert J. Huber, Fabyanske, Svoboda and Westra, St. Paul, for respondent.
Curtis D. Smith, Moss & Barnett, Minneapolis, for appellant.
Heard, considered and decided by RANDALL, P.J., and LANSING and HUSPENI, JJ.
Respondent, Kenko, Inc. (Kenko), a subcontractor, brought suit against the general contractor Lowry Hill Construction Company (Lowry Hill) for money due on a contract between the parties. The trial court held that as a matter of law the contract was a "unit price" contract and that Kenko had established the quantities of unit price items used in the project. The jury found that the construction had been completed in two stages thus entitling Kenko to higher prices for the second stage of construction. Kenko was awarded $58,407.04. On appeal, Lowry Hill claims that the trial court erred when it determined that the contract between the parties was unambiguous and provided for unit pricing, when it prohibited evidence of subsequent discussions to show that the contract had been modified, and when the trial court reserved the mechanic's lien issue for later determination. We affirm.
Kenko, Inc. is an underground sewer contractor that made a successful bid on a townhouse project being constructed by Lowry Hill. The controlling agreement between the parties was entered into on July 19, 1982, and consists of a "Standard Subcontract Agreement" form and a rider.
The standard agreement states that Lowry Hill will pay Kenko "the sum of * * * $127,612.80 (See Rider No. 1)." Rider No. 1 provides in part:
6. The undersigned agree that the quantities bid on this improvement are approximate only and are subject to increase or decrease on a need basis. The sum paid to Kenko, Inc. shall be obtained by multiplying each unit price by the quantities thereof actually incorporated in the project.
At trial, Lowry Hill claimed that the contract was a "fixed price" contract which meant Kenko had agreed to do the work for the fixed price of $127,612.80. Kenko contended that the contract was a "unit price" contract meaning Lowry Hill would pay for the actual quantities used. Kenko claimed that the sum of $127,612.80 listed on the standard agreement form was merely its original bid and not the final price which would be determined under Rider No. 1.
Both parties agreed that Lowry Hill had made two payments of $50,400 and $64,451. Under Lowry Hill's interpretation of the contract, there was still $14,480.80 owing on the contract. Using the unit pricing method Kenko argued that Lowry Hill still owed $48,301.20. Lowry Hill did not pay either of these sums and Kenko filed a breach of contract claim and a mechanic's lien claim. Sometime before trial the trial court separated the two claims. The mechanic's lien claim was combined with other mechanic's lien claims on the same project and the contract claim was then tried separately to a jury.
1. Did the trial court err by finding the contract between the parties clear and unambiguous and excluding parol evidence?
2. Did the trial court abuse its discretion by excluding evidence of subsequent conduct that purportedly modified the contract?
3. Did the trial court err by determining that partial judgment on Kenko's contract claim did not affect Kenko's mechanic's lien claim?
Lowry Hill argues that the standard subcontract agreement and the rider created an ambiguity as to whether the contract was based on a fixed price or priced per unit. Specifically, Lowry Hill stresses the fact that the standard agreement lists a single amount while the rider lists unit prices.
Whether a contract is ambiguous is a question of law to be determined in the first instance by the trial court. On appeal this court will determine whether the trial court was correct in finding there was no ambiguity. Employers Liability Assurance Corp. v. Morse, 261 Minn. 259, 263-64, 111 N.W.2d 620, 624 (1961).
In the present case we find no ambiguity in the contract. While the contract may have been somewhat clearer if the price line had included only the phrase "see Rider No. 1" and not the figure "$127,612.80," the inclusion of the reference to the rider immediately after the sum negates any ambiguity. All other references in the standard contract and the rider are to unit prices. These references clearly indicate that the contract is a unit price contract.
Lowry Hill claims that evidence outside the contract created an ambiguity. A contract is ambiguous, however, if the language in the contract itself is susceptible of more than one interpretation. Lamb Plumbing & Heating Co. v. Kraus-Anderson, 296 N.W.2d 859, 862 (Minn.1980). In this case, writings other than the contract could not be used to create an ambiguity which did not exist in the contract itself.
Lowry Hill also attempts to argue that the rider attached to the contract admitted into evidence was not the rider attached to the original contract. This issue was never raised, however, at the trial court level and will not be addressed for the first time on appeal. Holtberg v. Bommersbach, 235 Minn. 553, 554, 51 N.W.2d 586, 587 (1952).
Lowry Hill contends that the trial court erred by not allowing evidence of a conversation between the president of Lowry Hill and a Kenko employee subsequent to the signing of the contract. Lowry Hill claims this evidence would have shown that the parties intended the sum shown on the contract to be a final price.
It is true that the parol evidence rule does not apply to subsequent discussions that...
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