Palmer v. Glasbrenner, No. 4-027/03-0492 (IA 5/26/2004)
| Decision Date | 26 May 2004 |
| Docket Number | No. 4-027/03-0492,4-027/03-0492 |
| Parties | DUANE PALMER, d/b/a PALMER CONSTRUCTION COMPANY, Plaintiff-Appellant, v. JERRY GLASBRENNER and ROXANN GLASBRENNER, Defendants-Appellees. |
| Court | Iowa Supreme Court |
Appeal from the Iowa District Court for Linn County, Thomas L. Koehler, Judge.
Duane Palmer, d/b/a Palmer Construction Company, appeals from the trial court's adverse decree in an action to foreclose a mechanic's lien for the construction completed on Jerry and Roxann Glasbrenners' house.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Peter Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for appellant.
Guy Booth, Cedar Rapids, for appellees.
Heard by Huitink, P.J., and Vogel and Mahan, JJ.
Duane Palmer, d/b/a Palmer Construction Company, (Palmer) and Jerry and Roxann Glasbrenner entered into a contract on July 6, 2000, for Palmer to construct the Glasbrenners' house on property located in Ely, Iowa. The contract, drafted by Palmer, contained a clause requiring all change orders to be in writing and set the initial cost of completion of the house at $171,000.
On July 9, 2000, a written change order was executed that moved the building location from Ely to Mount Vernon. A second written change order was signed on October 14, 2000, adding a whirlpool tub to the house. The written change orders increased the cost of the home to $ 179,243.20. The Glasbrenners also orally requested changes to the home. Palmer claimed these additional changes cost $ 37,332.00, and increased the total cost of the home to $216,575.20.
The home was not completed when the Glasbrenners met with their mortgage lender to close the loan on December 15, 2000. Palmer asserted that he had not been paid what was due to him. The Glasbrenners were entitled to a credit of $171,638.41, due to payments they made and items they purchased. Palmer told the Glasbrenners they should not move into the home, because it was unsafe until it was completed. Thereafter, the Glasbrenners went to the house and changed the locks. Palmer did not complete any more work. The Glasbrenners presented evidence that it would cost at least $20,046.89 to complete the home.
On December 18, 2000, Palmer filed a mechanic's lien pursuant to Iowa Code section 572.2 (1999). Palmer filed an action to foreclose the lien on October 22, 2001, and the Glasbrenners filed an answer and counterclaim on November 8, 2001. In their counterclaim, the Glasbrenners alleged breach of contract, breach of warranty, and fraudulent misrepresentation.
The case was eventually tried in front of the court on December 18, 2002. The court issued its decree on January 22, 2003, finding Palmer's mechanic's lien was unenforceable because he did not produce valid written change orders for the additional amounts he claimed were due. The court found for the Glasbrenners on their counterclaims of breach of contract, breach of warranty, and fraudulent misrepresentation. Palmer was ordered to pay the Glasbrenners $20,046.89 to complete the house, $7300 in lost interest, $1000 in punitive damages, $4743.06 in attorney fees, and further ordered him to indemnify the Glasbrenners from any costs resulting from mechanic's liens placed on the property by unpaid subcontractors.
Palmer appeals the decision and raises the following issues for review: (1) whether he substantially complied with the contract and so may enforce his mechanic's lien; (2) whether oral change orders to the contract are enforceable; and (3) whether he should be liable for punitive damages.
An action to enforce a mechanic's lien is in equity. Schumacher Elec., Inc. v. DeBruyn, 604 N.W.2d 39, 41 (Iowa 1999). When a counterclaim is tried together with the mechanic's lien action, the counterclaim is also in equity. Nepstad Custom Homes v. Krull, 527 N.W.2d 402, 404 (Iowa Ct. App. 1994). Our review on appeal is de novo. Baumhoefener Nursery, Inc. v. A & D P'ship, Inc., 618 N.W.2d 363, 366 (Iowa 2000). In equity cases, especially when considering the credibility of witnesses, we give weight to the fact findings of the district court, but are not bound by them. Iowa R. App. P. 6.14(6)(g).
In order to successfully enforce a mechanic's lien, a contractor must show substantial performance of the contract. Bidwell v. Midwest Solariums, Inc., 543 N.W.2d 293, 295 (Iowa Ct. App. 1995). Substantial performance allows only omissions or deviations from the contract that are inadvertent or unintentional, not the result of bad faith, do not impair the structure as a whole, are remedial without doing substantial damages to the other portions of the building, and may be compensated through deductions in the contract price. Nepstad Custom Homes, 527 N.W.2d at 406 (citing Moore's Builder & Contractor, Inc. v. Hoffman, 409 N.W.2d 191, 193 (Iowa Ct. App. 1987)).
Palmer contends that he substantially complied with the parties' contract, and so should be able to enforce his mechanic's lien. He admits that he did not complete the work on the house, but asserts that this was because the Glasbrenners locked him out of the job site.
An exception to the substantial performance requirement arises if the homeowner hinders or delays the contractor's performance of the contract. See Sheer Constr., Inc. v. W. Hodgman & Sons, Inc., 326 N.W.2d 328, 332 (Iowa 1982) (). See also Employee Benefits Plus, Inc. v. Des Moines General Hosp., 535 N.W.2d 149, 155 (Iowa Ct. App. 1995) ().
The district court determined Palmer had voluntarily walked off the job. We note that Palmer did not seek to complete the job after the Glasbrenners changed the locks. The district court also determined Palmer failed to provide work in a professional manner and that some work needed to be redone or replaced. We conclude Palmer has failed to show he substantially performed the terms of the contract. Palmer is not entitled to enforcement of his mechanic's lien. See Nepstad Custom Homes, 527 N.W.2d at 406.
Although Palmer cannot enforce his mechanic's lien, he should still be paid for his work. See id. at 407. "A builder may recover from an owner for extras ordered or agreed upon which were not covered by the contract." Id. (citing S. Hanson Lumber Co. v. De Moss, 253 Iowa 204, 208, 111 N.W.2d 681, 684 (1961)). At the same time, the owner is entitled to offsets for defects in the builder's work and for omissions from the contract. Id. Therefore, Palmer should be able to recover the contract price, plus the cost of additions, less damages for omissions and deficiencies. See Carson v. Roediger, 513 N.W.2d 713, 716 (Iowa 1994).
At the trial, Palmer presented a copy of the blueprints for the home, which included the changes which were made, and which contained the Glasbrenners' signatures. The Glasbrenners asserted they had not signed the blueprints and alleged their signatures had been copied from other documents. The district court determined the signatures were invalid, and concluded Palmer had failed to show written changes to the contract. The court also found the Glasbrenners "were not told of any increase in cost in the contract if there was a deviation from the blueprints." The court concluded Palmer had failed to establish he was entitled to payment for the changes that were made.
Palmer contends the district court improperly found that to be enforceable, the change orders needed to be in writing. Palmer claims the district court became side-tracked by the issue of whether the Glasbrenners had signed the blueprints, instead of focusing on whether written change orders were necessary in this case.
Generally, a builder may recover for extra work performed on a construction contract when ordered and agreed to by the parties and not covered by the building contract. Service Unlimited, Inc. v. Elder, 542 N.W.2d 855, 857 (Iowa Ct. App. 1995); Nepstad Custom Homes, 527 N.W.2d at 407. This is because the mechanic's lien statute, chapter 572, is based on principles of equity which require paying for work done and materials delivered. Schaffer v. Frank Moyer Constr., Inc., 628 N.W.2d 11, 19 (Iowa 2001) (citing Carson, 513 N.W.2d at 715). The statute should be liberally construed to promote these principles. Carson, 513 N.W.2d at 715.
Although a contract may require written change orders, this requirement may be waived by the parties. Central Iowa Grading, Inc. v. UDE Corp., 392 N.W.2d 857, 860 (Iowa Ct. App. 1986). We have stated:
A written change order requirement is not of the essence of the contract, but is a detail in the performance. This type of requirement can be waived by the owner's knowledge of, agreement to, or acquiescence in such extra work, a course of dealing which repeatedly disregards this requirement, and a promise to pay for extra work,...
To continue reading
Request your trial