Mandell v. Ward

• Decision Date: 23 August 2016
• Docket Number: No. DA 16–0015.,DA 16–0015.
• Parties: Michael J. MANDELL, Plaintiff and Appellant, v. Bayliss WARD and Bayliss Architects, P.C., et al., Defendant and Appellee.
• Court: Montana Supreme Court

384 Mont. 377

377 P.3d 1228

2016 MT 205

Michael J. MANDELL, Plaintiff and Appellant

v.Bayliss WARD and Bayliss Architects, P.C., et al., Defendant and Appellee.

No. DA 16–0015.

Supreme Court of Montana.

Submitted on Briefs June 15, 2016.

Decided Aug. 23, 2016.

For Appellant: Karl Knuchel, Shenandoah R. Roath, Karl Knuchel, P.C., Livingston, Montana.

For Appellee: Alanah Griffith, Griffith Law Group, Bozeman, Montana.

Justice JIM RICE

delivered the Opinion of the Court.

¶ 1 Appellant Michael J. Mandell (Mandell) contests the Sixth Judicial District Court's granting of relief in quantum meruit and awarding of attorney fees to Appellees Bayliss Ward and Bayliss Architects, P.C. (Bayliss) in this residential construction dispute. We affirm in part, reverse in part, and remand for further proceedings. We address the following issues:

1. Did the District Court err in granting equitable relief in quantum meruit, despite violation of the statutory requirement that residential construction contracts be in writing?

2. Did the District Court err in awarding attorney fees for the entire case, including the quantum meruit claim?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 Mandell is the owner of real property in the Paradise Valley, outside of Livingston. He contacted architect Bayliss Ward via email in March 2012 to inquire whether Ward and Ward's firm, Bayliss Architects, P.C.,¹ would design and provide architectural services for a proposed house on the property. Mandell worked in Thailand as the events herein unfolded, so the communication between the parties was primarily electronic, especially through email.

¶ 3 Bayliss and Mandell engaged in extensive communications regarding the proposed construction project and Mandell's budget. At one point, Bayliss stopped the process, stating to Mandell in an email: “After spending several hours on your residence, I am going to have to stop work and decline any further effort towards your project. The budget for this project and the items that you want to include will be very difficult to achieve and I will not lead you as if we could really do your project for your budget. Your site it beautiful, but I cannot design a home for you with your budget.”

¶ 4 However, Mandell continued to pursue Bayliss, sending an email three days later, stating: “I think it would be beneficial for both of us to have every person floating the Yellowstone admire your work.... Maybe you can design something within my budget that I will be happy with.” When Bayliss explained that the house Mandell was requesting would cost at least $170 per square foot, Mandell answered that “I may be able to swing the $170 per sq. ft[.] range if you think you can make it work.... Let's just save where we can, without compromising quality and your style.” In June 2012, the parties met on the site, and Mandell testified that Bayliss agreed that he would design an approximately 2000 square foot home costing $300,000. Bayliss testified that the parties agreed to a construction price of $170 per square foot, with an 8–10% fee for architectural design and structural engineering of the project.

¶ 5 Mandell originally intended to have another party act as the general contractor on the project. However, this did not occur, and Mandell requested that Bayliss provide construction management services, in addition to the architectural and structural engineering services. Bayliss agreed to do so for an additional payment of 7–10% of the construction costs as a construction management fee.²

¶ 6 The details of the parties' agreement were not reduced to writing, but construction commenced, in Bayliss' words, as a “fast track” project. Mandell wired funds in payment of Bayliss' invoices as the project continued, ultimately paying a total of $394,198.65. At trial, the parties disputed the occurrence of changes in the project, with Mandell testifying that he never approved any changes to the design, plans, or finishes, and Bayliss testifying that he consulted with Mandell on a number of changes as the project evolved, to which Mandell had typically responded to Bayliss to “[j]ust make it nice.” No written change orders were prepared. The home was essentially completed in 2013, at which time Bayliss presented Mandell with a final invoice, identifying additional amounts still owing. Mandell refused to pay, and Bayliss filed a construction lien on the property in the amount of $138,241.35 in October 2013.

¶ 7 Mandell initiated this action, stating counts for breach of contract, declaratory judgment that the lien was invalid, and quiet title to the property. Bayliss answered and stated three counter-claims for foreclosure of the construction lien, quantum meruit, and breach of contract.

¶ 8 Mandell sought summary judgment, arguing that because the parties had not reduced their agreement to writing, in violation of § 28–2–2201(2), MCA

, the oral contract between them was invalid and unenforceable, and there was no basis for the construction lien on his property, nor any basis for Bayliss to claim breach of contract. The District Court partially granted Mandell's claim for declaratory relief, concluding that because Bayliss failed to obtain a written contract for construction services, the contract for construction services was void and the lien for those services was invalid, leaving only that portion of the lien related for architectural services, in a maximum amount of $29,250, the amount claimed by Bayliss for those services. The District Court thus denied all claims for quiet title and foreclosure, awaiting trial to determine the final architectural lien amount. Mandell did not request summary judgment on Bayliss' quantum meruit claim, and it was not addressed in the order. The District Court reserved the issue of attorney fees.

¶ 9 At trial, Bayliss produced evidence that $75,409.53 of the amount he had claimed was based upon invoices still owing for materials and subcontractors. The District Court issued Findings of Fact, Conclusions of Law and Order, concluding that Mandell owed $29,250 to Bayliss for architectural services and holding Mandell in breach of that contract between the parties. The court held that Bayliss' construction lien was valid only for the $29,250 owed to him for architectural services, and ruled that, because Bayliss had established the lien, “the Court must award Bayliss [ ] its fees incurred for filing and recording the lien and reasonable attorney fees....” The court further held that “unjust enrichment and quantum meruit concepts apply to the transaction [,]” and awarded $75,409.53 as “an appropriate measure of quantum meruit damages. Mr. Mandell would be unjustly enriched if he retained the benefit of said services and materials, without paying for them.”

The court summarily concluded that “[b]ased on the foregoing findings of fact and conclusions of law, Mr. Mandell cannot succeed to prove any of his claims.”

¶ 10 The District Court conducted a hearing on attorney fees. Mandell disputed Bayliss' entitlement to any fees beyond those related to establishing the construction lien related to architectural services. Bayliss called an expert witness who testified briefly of her opinion that the quantum meruit, breach of contract, and construction lien claims were inseparably intertwined. The District Court thereafter issued an order granting the entirety of Bayliss' attorney fees and costs in the case. Mandell appeals.

STANDARD OF REVIEW

¶ 11 Mandell's appeal involves a review of both the District Court's findings of fact and conclusions of law. When reviewing conclusions of law, this Court looks to see “whether the district court correctly interpreted the applicable law.” James Talcott Constr., Inc. v. P & D Land Enters., 2006 MT 188, ¶ 26, 333 Mont. 107, 141 P.3d 1200

. This Court applies a clearly erroneous standard using a three-part test to review a district court's findings of fact. Talcott Constr., ¶ 26. “A district court's findings are clearly erroneous if they are not supported by substantial credible evidence, if the trial court has misapprehended the effect of the evidence, or if a review of the record leaves this Court with the definite and firm conviction that a mistake has been committed.” Morton v. Lanier, 2002 MT 214, ¶ 12, 311 Mont. 301, 55 P.3d 380 (citing Guthrie v. Hardy, 2001 MT 122, ¶ 24, 305 Mont. 367, 28 P.3d 467 ).

¶ 12 This Court reviews a trial court's order granting or denying attorney fees and costs for abuse of discretion. Talcott Constr., ¶ 27.

DISCUSSION

¶ 13 1. Did the District Court err in granting equitable relief in quantum meruit, despite violation of the statutory requirement that residential construction contracts be in writing?

¶ 14 Section 28–2–2201, MCA

, part of legislation enacted in 2009, provides as follows:

Residential construction contracts—disclosure and warranty requirements.

(1) For the purposes of this section, “residential construction contract” means a contract between a general contractor and an owner for the construction of a new residence.

(2) All residential construction contracts that are subject to the provisions of this section must be in writing and must contain the following:

(a) a disclosure that the general contractor has a current general liability policy;

(b) a disclosure that the general contractor has a workers' compensation policy or is an independent contractor without employees;

(c) a provision setting out the billing cycle establishing the payment schedule to be followed by the owner;

(d) a provision establishing procedures for handling change orders by the owner;

(e) a statement of all inspections and tests that the general contractor will perform or have performed prior to, during, or upon completion of construction and a statement that the owner is entitled to receive the results of any tests conducted by the general contractor or conducted at the general contractor's request;

(f) a statement that the owner is entitled at the owner's expense to have any inspections and

...