Kranz v. Centropolis Crusher, Inc.

• Decision Date: 02 February 1982
• Docket Number: No. WD,WD
• Citation: 630 S.W.2d 140
• Parties: Al KRANZ, d/b/a Kranz Construction Company, Respondent, v. CENTROPOLIS CRUSHER, INC., et al., Defendants, and Diversified Mortgage Investors and Callaway Mining Company, Appellants. 32218.
• Court: Missouri Court of Appeals

Page 140

630 S.W.2d 140

Al KRANZ, d/b/a Kranz Construction Company, Respondent, v. CENTROPOLIS CRUSHER, INC., et al., Defendants, and Diversified Mortgage Investors and Callaway Mining Company,

Appellants.

No. WD 32218.

Missouri Court of Appeals, Western District.

Feb. 2, 1982.

As Modified On Motion for Rehearing and/or Transfer to

Supreme Court Overruled

and Denied March 2, 1982.

Jerome T. Wolf, Terry W. Schackmann, Spencer, Fane, Britt & Browne, Kansas City, for appellants.

Gordon R. Gaebler, Marion W. O'Neill, Svoboda & Gaebler, P. C., Kansas City, for respondent.

Before SHANGLER, Acting P. J., WASSERSTROM and CLARK, JJ.

WASSERSTROM, Judge.

Al Kranz d/b/a Kranz Construction Company ("Kranz") sued in this case for the value of construction work done by him for Centropolis Crusher, Inc. ("Centropolis") and to establish a mechanic's lien on the land on which the work was performed. The suit was defended by Diversified Mortgage Investors ("DMI") who held a deed of trust on the property and by Callaway Mining Company ("Callaway") who acquired the land after foreclosure by DMI of its deed of trust. DMI and Callaway also filed counterclaims alleging defective work on the part of Kranz and his failure to complete the work which he had contracted to perform. The trial court held for Kranz, allowing him quantum meruit recovery in the amount of $556,321.42, together with prejudgment interest in the amount of $211,889.65 and adjudged a mechanic's lien in favor of Kranz with priority against the Centropolis owned land on which it desired to build an underground warehouse facility. It sought financing for this purpose from DMI and Continental Mortgage Investors ("CMI"). In June 1972, negotiations between those parties resulted in a commitment by DMI for a "land loan" in the amount of $2,750,000, to be followed by a "construction loan" by CMI in the amount of $5,250,000, then to be followed in turn by a "take out loan" by DMI in the amount of $8,000,000. The first loan was consummated by note and deed of trust on August 10, 1972. From that loan an engineering fee of $20,000 was paid looking toward the construction of the underground facility. On May 14, 1973, the CMI construction loan was consummated by note and deed of trust. This loan was intended to cover payments to contractors and materialmen, and St. Paul Title Insurance Company was designated as disbursing agent for that purpose. In connection with this construction loan, DMI executed an agreement subordinating its lien under the August 1972 deed of trust to that of CMI.

                DMI deed of trust.  1  All counterclaims by the defendant were denied.  Callaway and DMI appeal
                

On June 19, 1973, Centropolis entered into a written contract with Kranz under which Kranz was to do specified excavating and grading work for $322,000, and certain specified concrete work for $388,942. That contract contained provisions for additional payment to be made in the event of changes and for any extra work which might be required.

After Kranz entered upon this project, he encountered many difficulties, largely caused by defaults on the part of Centropolis in what it and its engineers were supposed to do and also arising from a number of changes in the contract plan requiring substantial additional work on the part of Kranz. Kranz made numerous complaints. By early 1974, the parties had come to a state of serious disagreement. The situation deteriorated to the point that the respective positions were reduced to an exchange of letters, which became so voluminous that the engineer in charge testified that they were at the point of "writing letters instead of working." The scope and tenor of the disagreements can be best understood by summarizing the highlights of this exchange of correspondence.

On January 14, 1974, Kranz wrote to Centropolis that: "During the past several weeks we have numerously requested that a meeting, with all parties concerned with this project, be held for the purpose of discussing and resolving pertinent items affecting our contract. It appears that my verbal requests have been ignored. We respectfully request that a meeting time be set within the next forty eight (48) hours, or we will be compelled to cease all operations on January 17, 1974." After intervening letters, Kranz wrote again on March 12, 1974, as follows: "We have performed extra and additional work, pursuant to your instructions, in substantial amounts. We are herewith requesting a meeting at your earliest convenience for the purpose of making a determination of the amount of such increased work and to reach an agreement as to the value of such work, so that a payment request can be submitted. In view of the foregoing, as of now we are shutting down all work, in the open rail cut, until this matter is resolved."

That letter produced a meeting between the parties on March 13, after which the engineer Shoup outlined certain excavating and grading work and requested that Kranz proceed with it. That instruction led to further written debate after which Kranz's lawyer, Charles R. Svoboda picked up the correspondence on April 5 as follows: "A review of your letters of March 28th and 29th, 1974 show that they are inaccurate and unfair, and constitute an attempt by you as agent for the owner to compel Kranz Construction Co. to perform work outside of Shoup responded by letter of April 16 stating again "that those items delineated in my letter of March 28, 1974, and as discussed in conference of April 11, 1974, are still considered as part of the contract duties." Svoboda answered the next day in the following language: "You were advised that the work of Kranz Construction Company has been substantially completed. However, completion of the work is being held up pending the performance of the following items which are the responsibility of Centropolis Crusher ... Would you please take immediate steps to see that the above items which are the responsibility of Centropolis Crusher are completed at once so that Kranz Construction Company can finish its work in those areas...."

that as defined by your oral representations and the contract, without fair compensation. On behalf of Kranz Construction Co. a request is hereby made for a wirtten (sic) Field Order for all such work which is outside of the scope of the work as defined by contract and the oral representations, as a great deal of the work described by you in your letter of March 28th will involve additional compensation and an increase in contract price ... I am herewith renewing my request for a joint meeting of all concerned parties at the earliest possible time in the hopes that the issues can be resolved...."

Shoup responded in turn by letter of April 22 in which he threatened that if the work demanded by him was not promptly performed by Kranz, "then said work will be performed by others as a back charge item to your contract." Svoboda responded by letter of April 23, refusing the Shoup directives and further stated: "As you know you are suggesting that Kranz Construction Company drill and shoot rock to a greater depth than required by their contract. Centropolis Crusher has refused to honor my request on behalf of Kranz Construction Company as set forth in my letter of April 5th to discuss this and other items which would include the amount of compensation to be paid. Since Centropolis Crusher has refused to meet and discuss such changes, the change in the contract suggested by you is refused and you are advised that Kranz Construction Company intends only to drill and shoot to the elevation required in the contract...."

No progress was made toward resolution of the disputes, and Kranz left the project on May 24th. Mr. William K. Poindexter, a lawyer for Centropolis, wrote a letter of protest on that date to Kranz. Svoboda's response to that letter contained certain language which has become a point of considerable controversy on this appeal. The pertinent portions of Svoboda's letter in question dated May 31 are as follows: "On behalf of Kranz Construction Company you are herewith advised that Kranz has by no means abandoned the work but, as a matter of fact, has more than fully performed and completed the quantities and items required by contract. Furthermore, Centropolis Crusher, Inc. has repeatedly breached the contract, interfered with progress of the work and has failed and refused to compensate Kranz Construction Company for labor and material, and losses occasioned by changes in the work ... On behalf of Kranz Construction Company you are herewith advised that the performance of the work required by Kranz Construction Company has been substantially completed and the work items suggested by you constitute work outside of the contemplation of the parties and are not covered by the contract ... The performance by Kranz Construction Company of the work specified by you, which for the most part has already been performed by Kranz, would involve additional cost and expense for which Kranz Construction Company would be entitled to additional compensation. You are advised that I will be happy to meet with you and your client at your very earliest convenience as I have previously offered to do, to resolve the various matters referred to, and if we can reach an agreement satisfactory to Kranz Construction Company as to the nature, scope, magnitude, extent, compensation and timetable of the work items referred to by you, I am sure Kranz Construction Company would enter into a contract to perform such work items...."

The parties found themselves at a complete impasse. Centropolis proceeded to do some of the disputed work by its own workmen and then employed a different concern to finish the work which Kranz had declined to perform. According to Centropolis' figures submitted at trial, the cost of the substitute work came to $53,521.70.

On the basis of very voluminous testimony and documentary exhibits, the trial court made extensive...