Mini Togs Products, Inc. v. Wallace

• Decision Date: 23 September 1987
• Docket Number: No. 19003-CA,19003-CA
• Parties: MINI TOGS PRODUCTS, INC., Plaintiff-Appellee, v. Karl Mike WALLACE, et al., Defendants-Appellants.
• Court: Court of Appeal of Louisiana — District of US

Page 867

513 So.2d 867

MINI TOGS PRODUCTS, INC., Plaintiff-Appellee, v. Karl Mike WALLACE, et al., Defendants-Appellants.

No. 19003-CA.

Court of Appeal of Louisiana Second Circuit.

Sept. 23, 1987.

Rehearing Denied Oct. 22, 1987.

Writs Denied Nov. 30, 1987.

Joe D. Guerriero, Monroe, for Mini Togs Products, Inc.

Blackwell, Chambliss, Hobbs & Henry by James A. Hobbs, West Monroe, for Bobby Russell Const. Co.

Bell, Faller, West & Cooper by David S. Bell, Baton Rouge, for Commercial Union Ins. Co.

Before HALL, C.J., and MARVIN and FRED W. JONES, Jr., JJ.

HALL, Chief Judge.

Suit was filed by Mini Togs Products, Inc. (Mini Togs) against Bobby Russell Construction Company, Inc. (Russell), Commercial Union Insurance Company (Commercial Union) and Karl Mike Wallace seeking damages for the failure to perform a building contract in a workmanlike manner. The trial judge granted judgment in favor of Mini Togs and against defendants, Commercial Union and Russell in the sum of $321,632.05 with legal interest from judicial demand. Attorney's fees in the amount of $107,210.64 were awarded based on 33 1/3% of the principal amount of the judgment. From this judgment, Commercial Union appealed suspensively limited to the question of whether legal interest should accrue from judicial demand or from the date of judgment. Russell appealed devolutively. For reasons set forth in this opinion, we affirm the judgment of the district court.

ASSIGNMENTS OF ERROR

Five assignments of error have been raised on appeal. Commercial Union has limited its appeal to assignment of error 3. The assignments of error present the following issues:

(1) Whether the trial court abused its discretion in awarding damages to the plaintiff.

(2) Whether plaintiff is entitled to any interest on its claims since none was claimed or prayed for.

(3) Whether the trial court erred in awarding legal interest from the date of judicial demand rather than from the date of judgment on damages awarded arising out of the contractor's defective performance of a building contract.

(4) Whether an attorney's fee fixed in the amount of 33 1/3% of the damage award, or $107,210.64, is reasonable.

(5) Whether legal interest should have been added to the offset of $67,378.00 for the balance due on the contract price against the amount owed to the plaintiff to correct defects.

Facts

On December 29, 1980, Mini Togs Products, Inc. entered into a contractual agreement with Russell for the construction of a building to be located at 2813 DeSiard Street in Monroe, Louisiana for the price of $575,245.00. Russell was to perform all of the work required for the construction of the building. The contract also stipulated that in the event of default of any terms of the contract, the defaulting party would pay all costs and expenses, including a reasonable attorney's fee incurred in enforcing the contract or in recovering damages for its breach. Commercial Union subsequently bound itself as surety for Russell in the full amount of the construction contract.

On April 14, 1982, Mini Togs filed suit seeking damages in the amount of $2,027,375.00 from Karl Mike Wallace, Russell and Commercial Union severally and in solido for the faulty construction of the building. Karl Mike Wallace, as engineer and designer of the building, was subsequently dismissed from the suit upon mutual consent of the parties. Mini Togs alleged numerous defects in the construction of the building. Among these were: defects in the footings, both interior and exterior; defective floor slabs; inadequate structural steel beams; improper welds on the plates at the beams slices; inadequate steel supporting columns; improper bolted connections from the steel roofs to the columns; improper painting of the steel members and that these defects will cause other repairs and/or labors consisting of additional painting and movement of walls; and replacement of entire sections of the building. The defendants basically denied all the plaintiff's allegations and Russell reconvened claiming that plaintiff still owed $67,378.00 which represented the balance due under the original contract.

After trial, the district court determined that the Mini Togs building contained substantial defects. The amount necessary to remedy the defects totalled $299,238.50 plus an 8% overhead or margin of $23,939.08, a 12% profit of $35,908.62, and a 10% engineering fee of $29,923.85, or a total of $389,010.05. Applying a credit of $67,378.00 for the balance due on the contract withheld, the court awarded $321,632.05, plus interest from judicial demand. The court also awarded an attorney's fee of 33 1/3% of the $321,632.05 principal award, or $107,210.64.

While a motion for new trial was pending, Commercial Union partially settled the judgment with the plaintiff, Mini Togs, whereby the parties agreed that all the legal issues giving rise to the judgment and merged therein were accepted as being final, except the issue of from what date interest runs on the principal amount of the judgment, that is, from date of judicial demand or from date of judgment. The amount of interest at issue is stipulated to be $166,000. Commercial Union subsequently suspensively appealed on the above limited issue which is before the court. ¹ Russell appealed devolutively.

Assignment of Error 1

Russell contends that the trial court abused its discretion in awarding damages to the plaintiff. Appellant admits that there are defects, but takes issue with the trial court's findings that $389,010.05 is required to make the corrections.

Russell urges that on the trial of the matter, third party contractors testified that they would and could make all corrections necessitated by the improper design, as outlined by plaintiff's engineer, for the total sum of $112,900.00. He submits that the contractors presented by him were all very qualified in their field and all agreed under oath that they would undertake the job of correcting the defects in plaintiff's building for a set price.

Russell states that the test is how much it would take to complete the building in a good, workmanlike manner. While we agree with the test stated, we do not agree that the trial court abused its discretion when it determined that the cost of correcting the defects was $389,010.05. Where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact made by the trial judge who has an opportunity to hear and see the witnesses testify, should not be disturbed upon appeal in absence of manifest error. Arceneaux v. Domingue, 365 So.2d 1330 (La.1978); Canter v. Koehring Company, 283 So.2d 716 (La.1973); Caldwell v. Texas Industries, Inc., 441 So.2d 472, 478 (La.App. 2d Cir.1983).

The trial judge made extensive findings of fact following the trial on the merits. He stated that he had heard from various experts and noted that their testimony conflicted. His written reasons delineated the areas which needed repair or replacement in order to make the plaintiff whole. These areas included: telephone removal and replacement; computer removal; repair and replace footings; under pinnings; floor slab removal and repair; structural steel work and correction; exterior wall and repair; interior wall work; electrical work and miscellaneous painting. He recognized the inclusion of equipment rental costs of moving, dust shields and various sundry-related expenses within the cost estimates. He further stated that testimony revealed that there was an 8% overhead and a 12% profit that had to be included. An engineering fee of 10% was also added.

A review of the record reveals that the plaintiff's experts were very thorough in their preparation of estimates for the trial court's consideration. Of particular importance was the testimony of Henry David Gullette, manager of technical services for Breck Construction Company. Other than a Bachelor of Science degree in building construction, he had considerable experience in price estimation. His experience was exemplified through the character of the evidence presented to the court. His estimates included a detailed analysis of the materials, man-hours and equipment necessary for the repair of the Mini Togs complex. His testimony demonstrated his knowledge of the defects in the building and what was necessary to bring it up to standards.

The defendant's witnesses did not display the same amount of knowledge concerning the defects in the building. Bobby Russell testified that Bentley & Sons of Atlanta, Georgia could put a top cap on the concrete for $2.50 per square foot. He did not know what type of dust protection was included in the price. M.D. Bamburg's bid of $112,900.00 was submitted on a one page report. As a general contractor he had considerable experience in the construction of pre-engineered steel buildings but he did not prepare a detailed analysis for the repair of the Mini Togs complex. He used the computation of plaintiff's witness for the price of removal and replacement of exterior footings. His testimony revealed that he intended to remove and replace the paved area at each footing for less than $25.00 each. He did not have the breakdown for the amount of concrete necessary for the replacement of the paved areas. Although Mr. Bamburg had a breakdown for the amount necessary to replace the interior footings, he did not know the number of man-hours necessary to clean up and haul out the debris. Mr. Bamburg also gave an estimate of $500.00 to tighten only visibly loose bolts. He did not know the number of loose bolts which required tightening. Mr. Bamburg's estimate did not include: removal of the partition wall between Howards and Mini Togs, removal of metal racks, removal of interior wall at the computer area, telephone removal and replacement, dust protection, computer removal, or electrical work. The evidence submitted by Mr. Bamburg was not very detailed and did not include all of the areas found by the...