Matt Miller Co. v. Taylor-Martin Holdings, LLC

• Citation: 393 S.W.3d 68
• Decision Date: 25 October 2012
• Docket Number: No. SD 31478.,SD 31478.
• Parties: MATT MILLER COMPANY, INC., Plaintiff–Appellant, v. TAYLOR–MARTIN HOLDINGS, LLC, Defendant–Respondent.
• Court: Court of Appeal of Missouri (US)

393 S.W.3d 68

MATT MILLER COMPANY, INC., Plaintiff–Appellant,

v.TAYLOR–MARTIN HOLDINGS, LLC, Defendant–Respondent.

No. SD 31478.

Missouri Court of Appeals,

Southern District,

Division Two.

Oct. 25, 2012.

Rick J. Muenks, Springfield, MO, for Appellant.

Richard L. Rollings, Jr., Camdenton, MO, for Respondent.

DON E. BURRELL, J.

Matt Miller Company, Inc. (“Contractor”) appeals a judgment awarding net damages in the amount of $228,138.72 to Taylor–Martin Holdings, LLC (“Owner”) after a bench trial. The lawsuit arose out of a construction contract (the “Agreement”) to renovate a historic commercial building in Springfield. Contractor presents ten points that challenge the evidence supporting its breach of the Agreement, the trial court's calculation of certain damages,and the trial court's refusal to award Contractor attorney fees and interest. We deny each of Contractor's points and affirm the judgment.

Applicable Principles of Review

We must affirm the judgment in a bench-tried case “unless there is no evidence to support it, the judgment is against the weight of the evidence, or the judgment erroneously declares or applies the law.” McCullough v. Doss, 318 S.W.3d 676, 678 (Mo. banc 2010). Even if we find error, we cannot reverse the judgment unless we also determine that the error “materially affect[ed] the merits of the action.” Rule 84.13(b).¹

“Substantial evidence is evidence which has probative force and from which the trier of fact could reasonably find the issues in harmony with its decision.” Grider v. Tingle, 325 S.W.3d 437, 440 (Mo.App. S.D.2010).

[A]n against-the-weight-of-the-evidence challenge presupposes the threshold issue of the existence of substantial evidence supporting a proposition necessary to sustain a judgment, but, nevertheless, challenges the probative value of that evidence to induce belief in that proposition when viewed in the context of the entirety of the evidence before the trier of fact.

Houston v. Crider, 317 S.W.3d 178, 186 (Mo.App. S.D.2010).

We defer to the trial court's determination of the facts and matters of witness credibility such that “[t]he evidence and all reasonable inferences drawn therefrom must be viewed in the light most favorable to the trial court's judgment, and all contrary evidence and inferences must be disregarded.” Wildflower Cmty. Ass'n, Inc. v. Rinderknecht, 25 S.W.3d 530, 534 (Mo.App. W.D.2000). As a result of this deference, “the judgment should be affirmed under any reasonable theory supported by the evidence.” Tower Prop. Co. v. Allen, 33 S.W.3d 684, 688 (Mo.App. W.D.2000).

“Contract construction is a question of law and is reviewed de novo by this court.” Wildflower Cmty. Ass'n, Inc., 25 S.W.3d at 534. “Whether a contract is ambiguous is a question of law to be decided by the court.” Baker–Smith Sheet Metal, Inc. v. Building Erection Serv. Co., 49 S.W.3d 712, 716 (Mo.App. W.D.2001). A contract is ambiguous when a review of the entire contract would cause reasonable persons to differ on the construction of its terms. Lobo Painting, Inc. v. Lamb Constr. Co., 231 S.W.3d 256, 258 (Mo.App. E.D.2007). “After determining that a contract is ambiguous, this Court can look to evidence outside the contract, such as testimony, to determine the parties' intent.” Id.

Facts and Procedural History

We focus on the facts necessary to decide the issues on appeal and present them in the light most favorable to the judgment. See Wildflower Cmty. Ass'n, Inc., 25 S.W.3d at 534. Owner and Contractor entered into the Agreement on February 28, 2007. The brick building to be renovated (“the project”) is located in downtown Springfield and was originally built between 1902 and 1905. One of Owner's principals, Jay Kenneth Martin (“Martin”), testified that the project involved a cost certification process used to obtain federal and state historic tax credits “to achieve any equity in the project [by] ... fill[ing] the void between the value of the project and the actual cost of the project[.]”

The cash received from the sale of the tax credits is what makes these projects “economically viable.” Contractor's Vice President, James Matthew Miller (“James Miller”) testified that Contractor “specialize[d] in historic tax credit projects.” The Agreement was a “cost-plus” contract that contemplated a 12–month span from the issuance of a building permit to “Substantial Completion,” defined as the issuance of an occupancy permit for the building, although the parties anticipated that occupancy could be possible in a shorter time frame.²

In March 2007, Owner leased the building being renovated to Inspired Commerce, LLC (“Tenant”) under a 33–year “master lease” agreement. Martin was also a principal member of Tenant, which planned to sublease lofts and other parts of the building to subtenants. Tenant would begin making rent payments on the master lease on August 1, 2008, even though the building might not be “100 percent complete” at that time, and the master lease provided that Tenant would have possession by at least “the completion of [Owner's] Work” on or prior to December 31, 2008.

The master lease provided that Tenant's failure to notify Owner “of any defective or incomplete work” within 12 months of assuming possession of the building would be “conclusive evidence against Tenant” that the property, including Owner's work, “was then in good order and satisfactory condition.” The master lease also required Tenant to make repairs to the building “at least equal in quality and cost to the original improvements[.]” Owner reserved the right to execute a mortgage against the building and to terminate the lease after five years with a termination payment “in the event of a sale or other direct or indirect transfer of all of [Owner's] interest in the [p]remises to an unrelated buyer on arms' length terms[.]”

The building permit for the project was issued on December 26, 2007, and the “certificate of occupancy” was issued just over a year later, on December 31, 2008. Work on the building continued through the “punch list stage” after the occupancy permit was issued in order to complete unfinished and “touchup” items that are not typically required before building occupancy. Contractor was paid for exterior tuck-pointing work, and James Miller knew that the specifications for the Agreement “clearly called to remove the mortar that was bad.” Tuck-pointing is the process of finding, removing, and replacing loose mortar between bricks. Over time, the loss of mortar between bricks “can become a structural issue, because it has to hold the wall up.”

Kim Buche ³ worked as an employee for Contractor on “the tax credit partnership” used to create equity for the project. She sent out cost-payment applications for the purpose of receiving payment from Owner, and she communicated with Owner's architect to get his approval for the payment applications. From looking at the cost certification information and the invoices, Buche determined that Contractor charged Owner $56,225.01 for labor and $5,514.05 for materials for “exterior tuck[-]pointing work[.]”

Contractor added “a burden rate” of 30 percent for construction labor on top of the hourly rate it paid to its employees workingon the project in order to address amounts paid by Contractor for “Social Security, Medicare, Unemployment, Work Comp, [and] Payroll Processing.” Buche said that her understanding of the components constituting the burden rate came from communication with Contractor's insurance company and its accountant. She could not recall the individual rates for the different elements such as social security, worker's compensation, or payroll processing.

Buche agreed that Owner's “Exhibit 29,” admitted into evidence, was a “Cost Certification” that documented the final costs for the project as prepared by independent accountants. Exhibit 29 is set up in a spread-sheet format, and each page of the 25–page document bears the following text in the upper left-hand corner:

Missouri Department of Economic Development

Historic Preservation Tax Credit Program—Final Approval

List of Itemized Project Costs

The upper right-hand corner of each page, not including the first page, states:

Taylor Martin Holdings, LLC

Missouri Form HTC–E

MO Log# [number redacted]

The columns on the spread-sheet are entitled: “Category”; “Method of Payment”; “Date Paid”; “Vendor”; “Description”; “Work Completed”; “Rehab Eligible”; “Rehab Ineligible”; and “Category Total.” Included under “Category” are entries for “General Labor” and additional entries reflecting labor activities appear under the associated “Description” column. The document does not bear any signature or attestation. The entries under “Date Paid” range from before the parties actually entered into the Agreement to an entry for Owner's “Developer Fee” in September 2009. The entries also reflect various payments Owner made to Contractor after Contractor was terminated in January 2009. Exhibit 29 reflected subtotals of $3,799.653.99 paid as “Rehab Eligible,” $1,458,487.96 paid as “Rehab Ineligible,” and a total of $5,258,141.97 for “Work Completed.”

At some point, Martin became concerned about Contractor's labor charges, and while he did not provide a precise date for his inquiry, he said he requested an audit “at the very end of the relationship.” When Contractor provided additional information about its labor charges, Martin discovered “that they were charging us an additional 30 percent[.]” He testified, without objection, that when he negotiated the Agreement, Matthew E. Miller (“Matt Miller,” another of Contractor's principals) “even stated a case [that] if we have an $8 an hour guy cleaning up or doing something around there, we charge you $8. And then we [Contractor] make our 9 percent [for Contractor's Profit] on that.” According to Martin, Matt Miller never mentioned 30% being added to amounts invoiced to Owner for labor, there was no negotiation for such a term, and Matt Miller...