Mdh Builders v. Nabholz Constr. Corp.

• Decision Date: 17 May 2000
• Docket Number: 99-1317
• Citation: 17 S.W.3d 97
• Parties: MDH BUILDERS, INC. v. NABHOLZ CONSTRUCTION CORPORATION CA 99-1317 ___ S.W.3d ___ Opinion delivered
• Court: Arkansas Court of Appeals

MDH BUILDERS, INC. v NABHOLZ CONSTRUCTION CORPORATION

CA 99-1317 ___ S.W.3d ___

Opinion delivered May 17, 2000

Court of Appeals of Arkansas

Division IV

Appeal from the Pulaski Chancery Court; W.H. Dillahunty, Chancellor; affirmed.

1. Appeal & error -- chancery cases -- standard of review. -- Chancery cases are tried de novo on appeal; however, the appellate court does not reverse a chancellor's findings of fact unless they are clearly erroneous; a finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.

2. Contracts -- essential elements. -- The essential elements of a contract are: (1) competent parties; (2) subject matter; (3) legal consideration; (4) mutual agreement; and (5) mutual obligations.

3. Contracts -- acceptance -- words or conduct. -- Acceptance of a contract may be accomplished by words or conduct.

4. Contracts -- acceptance -- no error in finding appellee accepted appellant's bid. -- The words and conduct of both parties manifested mutual assent to the contract where appellee's senior vice-president notified appellant's vice-president that the latter was the low bidder on the project and that they would be doing a job together, and where appellant's vice-president, who was excited to get the job, submitted a subcontractor information sheet to appellee after receiving appellee's senior vice-president's call and subsequently attended a preconstruction meeting after being invited along with other subcontractors and suppliers; given the evidence, the appellate court could not say that there was error in the chancellor's finding that appellee accepted appellant's bid offer based upon appellee's mere use of the bid.

5. Contracts -- acceptance -- must be identical with terms of offer. -- To be effective, an acceptance must be identical with the terms of the offer.

6. Contracts -- acceptance -- introduction of new terms is counteroffer. --While the introduction of new terms may indicate a willingness to negotiate further, such a response is a counteroffer, not an acceptance.

7. Contracts -- mutual assent -- no reversible error on issue. -- Where the testimony of appellee's vice-president indicated that any overlap was inadvertent; where the unexecuted written contract with appellant was for the exact amount of appellant's bid; and, thus, where the contractor neither reopened negotiations with the subcontractor nor attempted to add new, material conditions by submitting a contract with terms that were directly contrary to the original bid, the appellate court found no reversible error on the issue of mutual consent.

8. Estoppel -- promissory estoppel -- when subcontractor's bid becomes binding. -- Under the promissory-estoppel theory, a subcontractor's bid may become binding when its promise, which it should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the general contractor, does induce such action or forbearance and injustice can be avoided only by enforcement of the promise.

9. Contracts -- promissory estoppel -- invoked when formal elements of contract do not exist. -- Promissory estoppel may be used as a basis for recovery when the formal elements of a contract do not exist.

10. Contracts -- extra-contractual theory -- no need to examine where courtupheld finding that contract existed. -- Where the appellate court held that the trial court was correct in finding that a contract existed between appellant and appellee, there was no need to explore whether appellee proved entitlement to relief on an extra-contractual theory.

11. Appeal & error -- ruling affirmed if correct for any reason. -- A trial court's ruling will be affirmed if it is correct for any reason.

12. Principal & agent -- agent's scope of authority -- question of fact. --Whether an agent is acting within the scope of his apparent or actual authority is a question of fact.

13. Principal & agent -- apparent authority -- definition. -- Apparent authority is such authority as a principal knowingly permits an agent to assume or which he holds the agent out as possessing; it is such authority as an agent appears to have by reason of actual authority that he has and such authority as a reasonably prudent person, using diligence and discretion, in view of the principal's conduct, would naturally suppose an agent to possess.

14. Principal & agent -- scope of authority -- no reversible error on issue. --Where the person who entered into a contract with appellant was vested by appellee with the title of vice-president and had the actual authority to prepare and submit bids on projects, a reasonable and prudent person could thus conclude that he had the concomitant authority to receive communications regarding the acceptance of a project that he had bid upon; the appellate court found no error on the issue scope of authority.

15. Contracts -- general contractor's completion of subcontractor's abandoned project -- measure of damages. -- Where a general contractor is forced to complete a subcontractor's work because of the subcontractor's abandonment of the project, it may recover for expenses incurred in completing the work less the amount it would have paid the subcontractor had no breach occurred.

16. Contracts -- evidence of difference between appellant's bid & cost of obtaining substitute performance -- correct measure of damages. -- Where appellee offered evidence of the difference between appellant's bid and the cost of obtaining substitute performance, the appellate court found no error in the evidence introduced by appellee to prove its damages and held that the correct measure of damages was used.

17. Witnesses -- credibility -- deference to chancellor. -- On matters of credibility, the appellate court defers to the chancellor.

18. Appeal & error -- unsupported arguments not addressed. -- Arguments made without citation to authority or convincing argument will not be addressed on appeal.

19. Attorney & client -- attorney's fees -- award upheld under breach-of-contract interpretation. -- The appellate court upheld the award of attorney's fees based upon its interpretation that the chancellor's decree awarded damages for breach of contract. [wbj]

David A. Orsini, for appellant.

Friday, Eldredge & Clark, by: Jeffrey H. Moore, for appellee.

Margaret Meads, Judge.

This case concerns a breach-of-contract/promissory estoppel lawsuit filed by appellee Nabholz Construction Corp., a general contractor, against appellant MDH Builders, Inc., a subcontractor. The chancellor found in favor of appellee and awarded $90,998 in damages, plus $22,500 in attorney fees. Appellant raises several points of error on appeal, none of which merit reversal. Therefore, we affirm.

On March 9, 1994, appellee Nabholz submitted a $6,000,000-plus bid to Wal-Mart Stores, Inc., to act as general contractor on a construction project. Earlier the same day, appellant MDH, through its vice-president Ricky Marise, had submitted a $245,777 subcontract bid to appellee to perform the following work on the project: metal stud framing, gypsum board/tape and finish, rough carpentry, roof blocking, millwork installation, acoustical ceiling, F.R.P. panels, installation of door and frame hardware, toilet compartments, toilet accessories, and batt insulation. Appellee used appellant's subcontract bid in computing its own general-contract bid.

By March 11, Wal-Mart informed appellee that it had been awarded the general contract. On or about that same day, appellee's senior vice-president, Earl Ballentine, called Ricky Marise of MDH and informed him that "he [Marise] was the low bidder

and we were going to do a job with him." According to Ballentine, Marise had been anxious to hear about the job and was very excited. On March 23, Marise faxed a completed subcontractor information form to appellee, and on April 5, he attended appellee's preconstruction meeting. However, on April 7, appellant's president, Mike Hill, called appellee's CEO, Dan Nabholz, and informed him that Marise would no longer be associated with MDH. He also asked that the subcontract be allowed to go with "an employee who was starting up his own firm." Mr. Nabholz told Hill that the contract was in the name of MDH and that MDH must honor the contract, but also told Hill that he would have to talk to Ballentine. Ballentine spoke with Hill soon thereafter and was told that appellant did not want to perform the subcontract. As a result, appellee acquired substitute performance and executed a $287,669 contract with Systems Painters, Inc. Additionally, some of the work included in appellant's bid was performed by appellee, using its own labor and materials, at a cost of $50,156.

On May 2, 1996, appellee sued appellant in Pulaski County Chancery Court for its failure to perform the subcontract. The complaint asserted the theories of breach of contract and estoppel and sought damages of approximately $90,000. A trial was held on the matter, and the chancellor entered an order awarding appellee $90,998. This sum represented the total amount of costs expended by appellee ($337,825), less appellant's bid price ($245,777), less$1,050 deducted as the result of a change order issued during the construction process. Appellant appeals from that order.

Chancery cases are tried de novo on appeal. Adkinson v. Kilgore, 62 Ark. App. 247, 970 S.W.2d 327 (1998). However, we do not reverse a chancellor's findings of fact unless they are clearly erroneous. Id. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. Id.

Appellant's first argument is that appellee did not prove that a contract existed between Nabholz and MDH. The essential elements of a contract...