Novel Iron Works, Inc. v. Wexler Const. Co., Inc.

• Decision Date: 02 November 1988
• Docket Number: No. 87-576,87-576
• Citation: 26 Mass.App.Ct. 401,528 N.E.2d 142
• Parties: NOVEL IRON WORKS, INC. v. WEXLER CONSTRUCTION COMPANY, INC., et al. 1
• Court: Appeals Court of Massachusetts

Page 142

528 N.E.2d 142

26 Mass.App.Ct. 401

NOVEL IRON WORKS, INC. v. WEXLER CONSTRUCTION COMPANY, INC., et al. ¹

No. 87-576.

Appeals Court of Massachusetts Middlesex.

Argued Feb. 10, 1988.

Decided Sept. 22, 1988.

Further Appellate Review Denied Nov. 2, 1988.

F. Anthony Mooney (Linda A. Ouellette, Boston, with him), for Home Life Ins. Co.

James C. Heigham, Boston, for Boston Realty Advisors, Inc.

Warren G. Miller, Boston, for Wexler Const. Co., Inc.

Before GRANT, PERRETTA and FINE, JJ.

PERRETTA, Justice.

For the purpose of building condominiums on property owned by the North End Development Trust (Trust), Boston Realty Advisors, Inc. (Boston), and Home Life Insurance Company (Home) formed a joint venture. ² Wexler was to be the general contractor for the project. Novel furnished structural steel to Wexler pursuant to an oral subcontract. The enterprise ultimately failed, and actual construction was never commenced. Novel was not paid for its fabrication and furnishing of the steel, so it brought this action to reach and apply any monies due Wexler from the other defendants. Wexler had not been paid for its labor, supplies, and services, and it filed a cross claim against Boston and Home. The case was tried without a jury. On the last day of the trial, the judge allowed Wexler to amend its cross claim to conform to the evidence. Wexler maintained that it had an oral contract with Boston and Home for a fee in the amount of a percentage of the total costs of the completed project. After the close of the evidence and while the case was under consideration, Novel's claims were settled and its action dismissed by stipulation of the parties. Thereafter judgment entered against Boston and Home for Wexler in the amount of its labor, materials, and anticipated fee on the project. Boston and Home appeal, claiming error in the judge's allowance of Wexler's motion to amend and in his findings of fact and conclusions of law concerning the existence and enforceability of the oral contract and the sufficiency of Wexler's proof of damages and entitlement thereto. We affirm.

I. The Facts.

We relate the facts as found by the judge. Wexler has been engaged in the construction business since 1947, specializing as a general contractor for commercial buildings. Kenneth Wexler is the president of the company. Dennis C. Stackhouse was the president of Boston, a real estate development company, as well as a trustee of the trust. Home had agreed, at least tentatively, to participate with Boston in the development of a condominium complex at 350 North Street, Boston. That parcel of land was owned by the trust.

Some time in late 1980, or early 1981, Kenneth Wexler and Stackhouse entered into discussions concerning the condominium project. On or about January 30, 1981, Stackhouse wrote to Wexler on behalf of the trust advising Wexler that "[i]t is our intention to award Wexler ... a contract" for the construction project. The letter further advised that the "basis for the contract will be either a lump sum or upset price with a fee," and that "[t]his commitment" was subject to "our arriving at a mutually agreeable contract, a mutually agreeable contract price and our obtaining construction financing."

Throughout the first eight months of 1981, Stackhouse and Kenneth Wexler met frequently. Wexler had hired a plumbing and heating contractor as well as an electrical contractor to design the mechanical aspects of the building. The trust engaged an architectural firm, Vitols Associates (Vitols), and Vitols retained a structural engineer, David Berg. Berg and members of Vitols attended some of the meetings between Stackhouse and Wexler. Wexler made numerous suggestions as to various ways cost savings could be achieved. By late August, a formal set of architectural and structural drawings and a detailed book of specifications had been completed.

On September 2, 1981, there was a meeting attended by Kenneth Wexler, Stackhouse, as Boston's authorized agent, and Fred King, an authorized agent of Home. King advised Wexler that Home was a partner with Boston on the project. After discussion among the three concerning prices and various other aspects of the project, Stackhouse and King informed Wexler of the following specifics. Wexler would have the job of building the condominium complex at a price equal to its (Wexler's) costs plus a fee of six percent of those costs. However, the total of the costs and the fee was not to exceed a guaranteed maximum contract price of $4,255,000. Any cost savings were to accrue to the joint venture and to Wexler, seventy and thirty percent, respectively. It was also agreed that the project would be a " 'fast-track' job, meaning a job where materials requiring a long time to obtain would be ordered early in order to insure timely delivery." Starting and completion dates were set, and "[a]ll parties shook hands in token of their acceptance of that agreement," which was to be memorialized by a formal contract to be drafted by their attorneys. Thereafter, these terms were set out in two drafts, both dated September 15, 1981. The terms of each were the same and essentially incorporated the terms discussed on September 2, 1981. The only difference between the drafts was that the first names Boston as the owner, whereas the second, which was sent to Wexler by counsel for the joint venture on January 6, 1982, names the joint venture as the owner. Neither draft was ever signed byany of the parties.

The project was kept on a "fast-track." Wexler, based upon the drawings and specifications completed in August, had price quotations from various steel suppliers. On September 24, 1981, Kenneth Wexler, Stackhouse, and King met, and King told Wexler to order the necessary structural steel. That was done on October 9, when Kenneth Wexler met with Novel's principals, Leo Moreau and Ralph Noveletsky. At this meeting it was orally agreed that Novel would fabricate and supply the steel for $230,000, and that Wexler would pay Novel "only" after it (Wexler) had received payment for the steel from the joint venture.

Acting as the general contractor, Wexler also did the following: arranged for the issuance of a performance and payment bond which was to be executed simultaneously with the general contract, assigned a project manager to the job, obtained building permits, ³ made several oral awards of subcontracts, arranged for placement of a trailer at the job site, performed exploratory site work, and received and transmitted shop drawings from subcontractors, including Novel. Home and Realty executed a formal joint venture agreement on October 23, 1981.

Between October 20, 1981, and January 7, 1982, Novel ordered and received the structural steel at its plant located in Greenland, New Hampshire. By February, Novel had completed its fabrication work on over forty-two of the 234 tons of steel. In the meantime, on December 7, 1981, King wrote to Stackhouse, advising him (perhaps now officially, because in writing) to order the steel which would be paid for by the joint venture. King further wrote that "[a]ctual payment will not be made until the steel has been delivered which will be in the next two to three months, and until we have received the first draw under our construction loan...." The next day, Stackhouse sent a copy of the letter to Wexler with a cover letter stating, in part, that the enclosed letter was "authorization" for Wexler to order the steel for the joint venture. Wexler responded to Boston on December 10, 1981, by letter, a copy of which was also sent to King. The letter reads: "We have ordered the steel as your agent until such time as a contract is entered into between us for the entire project. It is our understanding that you are responsible for the costs of the steel and related expenses such as shop drawings, engineering and freight should a contract not be executed between us."

Thereafter, in December and January, Boston and Home obtained a loan commitment from the Provident Institution for Savings (Provident) which was never exercised. Exactly why or when trouble between the joint venturers began is not entirely clear. In any event, on February 9, 1982, Stackhouse informed Wexler that all work on the project was to cease. In turn, Wexler immediately notified Novel that it, too, was to cease work on the steel.

II. Wexler's Motion to Amend.

Boston and Home allege numerous errors in the judge's findings and conclusions pertaining to whether Boston, Home, and Wexler entered into a binding, enforceable oral construction contract on September 2, 1981. Before turning to those claims, we consider the threshold question whether Wexler's motion to amend its cross claim to conform to the evidence, see Mass.R.Civ.P. 15(b), 365 Mass. 761-762 (1974), was properly allowed.

No lengthy discussion is required. By its cross claim as originally presented, Wexler sought to recover its costs and expenses (for labor, materials, and services) incurred on the project "with a view toward the execution of a general contract." During trial, there was testimonial and documentary evidence showing the terms of the contract which was to be executed and which formed the basis, in part, at least, for damages beyond the money due and owing Novel. One of those terms was that Wexler, in addition to its costs, was to receive a fee in the amount of six percent of the costs of construction with a guaranteed maximum contract price of $4,255,000. As amended to conform to the evidence, Wexler's cross claim asserts a right to recover the fee that it would have received had it been allowed to complete the construction project.

As Boston and Home objected to the motion to amend, the question before us is whether they were prejudiced by its allowance. See Hall v. Horizon House Microwave, Inc., 24 Mass.App.Ct. 84, 88, 506 N.E.2d 178 (1987). See also Smith & Zobel, Rules Practice § 15.8 (1974 and Supp.1988). Although Boston and...