King Enterprises, In re
| Citation | 678 F.2d 73 |
| Decision Date | 19 May 1982 |
| Docket Number | No. 81-1929,81-1929 |
| Parties | 10 Fed. R. Evid. Serv. 800 In re KING ENTERPRISES, INC., Debtor. FALCON JET CORPORATION and American Falcon Service, Inc., Appellants, v. KING ENTERPRISES, INC., Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (8th Circuit) |
Joe D. Bell, Friday, Eldredge & Clark, Little Rock, Ark., for appellant, Falcon Jet Corp.
L. Scott Stafford, Little Rock, Ark., for appellee, King Enterprises, Inc.
Before HENLEY, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and McMILLIAN, Circuit Judge.
King Enterprises, Inc. (King), a construction company, agreed to build an aircraft hangar for Falcon Jet Corporation (Falcon), an airplane manufacturer with facilities in Little Rock, Arkansas. Mr. and Mrs. George King are the sole shareholders in King Enterprises.
In March 1979, King commenced excavation of the hangar site for Falcon. In June, nearly three months later, George King was the first to sign a document entitled "Construction Contract, New Facilities for Falcon Jet Corporation at Municipal Airport, Little Rock, Arkansas" (hereinafter referred to as the contract).
The contract was undated and does not describe with particularity the facilities to be constructed by King. The contract does state a price for the project of $950,000. The contract also contains the following provision in its appendix:
13-01 PREFABRICATED METAL BUILDINGS-The prefabricated metal buildings shown on the drawings will be furnished and installed by others and will not be included in this contract. The metal building manufacturer will also furnish and install all rolling hangar doors and anchor bolts to be embedded in foundation for anchoring metal buildings.
Nevertheless, King did furnish and install a prefabricated metal building for Falcon as part of the project here at issue.
The contract provided that any changes in the work to be performed would be by written change-order. 1 However, during the course of construction, numerous changes were made on oral directives and only two written change orders were executed.
After the completion of the hangar (referred to as hangar number five), Falcon refused to pay King for the changes which were not represented by written change orders. King was thus unable to pay many of its suppliers and subcontractors and subsequently sought relief under Chapter 11 of the United States Bankruptcy Code.
King also filed this action against Falcon in the United States Bankruptcy Court for the Eastern District of Arkansas, Western Division. The case was tried before a jury. Falcon admitted owing King $136,191, representing the price stated in the written contract, plus the two written change orders, less the sum of $914,114 previously paid to King by Falcon. The jury found that Falcon owed King an additional sum of $252,087. Thus, judgment was entered for $388,278. The judgment was appealed to the United States District Court for the Eastern District of Arkansas, 2 which affirmed the judgment of the bankruptcy court. We affirm the district court.
George King first became involved with a Falcon project in late 1976. At that time Falcon was developing plans for two hangars (referred to as hangars number three and four), which were constructed before the hangar which is the subject of this suit. Mr. King was, at the time, working for the company which designed, manufactured, and subcontracted the erection of hangars three and four. King obtained the contract for his company with Falcon for the hangars and then acted as the agent or liaison between his company and Falcon during the construction. Mr. King attended weekly construction meetings attended by the contractors for hangars three and four. King became aware of the practice on that project that most change orders were given orally and were never reduced to writing, despite a provision in the controlling contract to the contrary.
King argued before the trial court and here that he assumed that a similar practice would be followed on hangar number five. He testified that he informed Falcon before beginning the project that the hangar could not be built for $950,000, as originally estimated, and that the Falcon vice president in charge of contracts advised him that the $950,000 figure written in on the contract was just a starting point and that there would be additions and changes.
King filed, tried, and submitted this case to the jury on three alternative theories for recovery. They are:
1. King should recover the written contract amount, plus the amounts agreed to by written and oral change orders.
2. King should recover the written contract amount, plus the amount agreed to by written change order, plus the reasonable value of the prefabricated metal building built by King which was specifically excluded from the written contract.
3. King should recover by quantum meruit, or the reasonable value of the hangar, due to the absence of agreement between the parties on all the essential terms of the contract.
Falcon has raised five issues on this appeal. It argues that the court erred (1) in admitting invoices from King's subcontractors as evidence of extra cost accrued, (2) in finding that King proved its damages with reasonable certainty, (3) in failing to find that King's failure to inform Falcon that extra items of work would be considered additions to the contract precluded the existence of a binding modification of the contract, (4) in finding that change orders did not have to be in writing and signed by an authorized agent of King, and (5) in failing to find that King, by executing a written change order on July 25, 1979, waived the right to collect costs incurred on extras performed before July 25. King contends that all of the issues raised by Falcon on this appeal are moot because the errors alleged would only be prejudicial on the first theory for recovery whereas the amount of the jury's verdict is consistent only with the second and third theories for recovery. Under theory one, King testified there were 39 oral changes to the "contract" totaling $157,798. The jury verdict was for $252,087 additional. This shows clearly that the jury's verdict was not based on theory number one and therefore the general verdict must rest on theory two or three. We will, however, briefly address the merits of Falcon's contentions of error, as we believe that resolution of the issues raised therein may have had some relevancy in the jury's evaluation of Falcon's contentions.
First, the course of conduct of the parties to this suit negates the idea that they proceeded on the Falcon project solely under the terms of the contract. It was not until nearly three months after construction of the hangar began that the contract was even signed by George King, the first party to sign it. The contract was undated, and presumably was prepared by Falcon.
In addition, King, by virtue of his participation in the building of hangars three and four, was aware that, contrary to provisions in the contract which supposedly governed that project, oral change orders were routinely given by Falcon and followed by the job coordinator. Upon the completion of hangars three and four, Falcon had a reconciliation meeting with the general contractor at which it was agreed that Falcon would pay an amount over and above the contract price as compensation for those oral changes. Mr. King had reason to believe that he would be compensated for expenses incurred in executing oral change orders as well.
Furthermore, the two written change orders which were executed for the hangar number five project incorporated, for the most part, changes which had been completed prior to the signing of the orders by any Falcon employee. This was done, with the parties' knowledge, in spite of the specific contract provision governing changes which required that no changes be made in the work or material "except upon prior written order of the Owner." See ante at n.1 (emphasis added). This is the very provision which Falcon relies so heavily on in arguing its case against King.
King had the...
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