Penzel Constr. Co. v. Jackson R-2 Sch. Dist.

• Decision Date: 08 November 2022
• Docket Number: ED 110487
• Citation: 655 S.W.3d 434
• Parties: PENZEL CONSTRUCTION COMPANY, INC., Respondent, v. JACKSON R-2 SCHOOL DISTRICT, Appellant.
• Court: Missouri Court of Appeals

655 S.W.3d 434

PENZEL CONSTRUCTION COMPANY, INC., Respondent,

v.JACKSON R-2 SCHOOL DISTRICT, Appellant.

No. ED 110487

Missouri Court of Appeals, Eastern District, DIVISION FOUR.

Filed: November 8, 2022

FOR APPELLANT: Jeffrey A. Marriott, 461 South Clay, Apartment C, Kirkwood, Missouri 63122, Matthew D. Wilson, 2833 East Battlefield, Suite B100, Springfield, Missouri 65804, Ryan S. Vanfleet, Case & Roberts, P.C., 2600 Grand Boulevard, Suite 300, Kansas City, Missouri 64108, Brian J. Mayer, 201 North Forest Avenue, Suite 200, Independence, Missouri 64050.

FOR RESPONDENT: Michael E. Wilson, Eugene F. Tucker II, Greensfelder, Hemker & Gale, P.C., 10 South Broadway, Suite 2000, St. Louis, Missouri 63102.

THIRD PARTY DEFENDANT: Robert T. Plunkert, Pitzer Snodgrass, P.C., 100 South Broadway, Suite 2000, St. Louis, Missouri 63102.

Philip M. Hess, Judge

Introduction

Jackson R-2 School District ("the District") appeals the judgment of the 32nd Judicial Circuit Court denying its motion for an order showing satisfaction of the original judgment obtained by Penzel Construction Company, Inc. ("Respondent"). The District raises three points on appeal. In Point I, the District argues the trial court erred in denying its motion for an order showing satisfaction of the judgment because the money they tendered to Respondent satisfied the plain and unambiguous meaning of the judgment. In Point II, the District argues the trial court erred in denying its motion for an order showing satisfaction of the judgment because the trial court impermissibly altered the judgment by effectively changing the rate of interest due. In Point III, the District argues the trial court erred in denying its motion for an order showing satisfaction of the judgment because neither the judgment nor the Prompt Pay Act provide for compound interest.

Because the trial court erroneously applied the law in interpreting the Prompt Pay Act to provide for compound penalty interest, we grant Point III. Because we grant Point III we grant Point I. Because Points III and I are dispositive, we decline to address Point II.

We reverse and remand.

Factual and Procedural History

This case comes to us for the third time. The District sought to build an addition to Jackson High School. As part of the bidding process, the District provided plans to Respondent, which in turn provided the plans to its subcontractor Total Electric, Inc. Neither Respondent nor Total Electric recognized errors in the plans. Total Electric submitted a $1,040,444.00 bid to Respondent for electrical work. On September 15, 2006, the District contracted with Respondent and Respondent subcontracted with Total Electric. The District notified Respondent it expected substantial completion within 550 days. Total Electric substantially completed its work significantly late and claimed the delay resulted from defects in the plans. The District refused to pay Respondent. Penzel Constr. Co., Inc. v. Jackson R-2 Sch. Dist. (Penzel II ), 635 S.W.3d 109, 139 (Mo. App. E.D. 2021), reh'g and/or transfer denied (Aug. 23, 2021), transfer denied (Dec. 21, 2021).

Respondent sued the District for breach of contract and raised a claim under section 34.057 (the "Prompt Pay Act"),¹ arguing the District made an implied warranty the plans were adequate and complete and the defective plans harmed Total Electric. In July 2010, Total Electric authorized Respondent to pursue Total Electric's claims. Respondent filed an amended petition seeking damages for Total Electric and for Respondent's markup for overhead and profit caused by the defective plans provided by the District.

The trial court entered summary judgment for the District. On appeal, this court reversed and remanded in Penzel Constr. Co., Inc. v. Jackson R-2 Sch. Dist. (Penzel I ), 544 S.W.3d 214 (Mo. App. E.D. 2017). On remand, a jury awarded Respondent $800,000.00 in damages. The trial court's judgment ("Judgment"), issued November 14, 2019, awarded Respondent: (1) the $800,000.00 principal; (2) nine percent annual pre-judgment interest beginning May 10, 2020; (3) Prompt Pay penalty interest "at the rate of one and one half percent (1½%) per month commencing May 10, 2010"; and (4) $630,884.00 in attorney's fees. The trial court assessed costs against the District. The trial court denied the District's post-trial motions for judgment notwithstanding the verdict and for a new trial. On appeal, this Court affirmed in Penzel II , 635 S.W.3d 109.

The District paid Respondent and Total Electric $4,585,762.94. The District asserts this amount includes the judgment principal, pre-judgment and post-judgment interest, attorneys’ fees, costs, and Prompt Pay penalty interest calculated at one and a half percent per month in simple interest. On February 28, 2022, the District moved under Rule 74.11(c) for an order showing satisfaction of the Judgment.² On April 5, 2022, the trial court entered an order and judgment denying the District's motion. The trial court found the District had not satisfied the Judgment because the District calculated the Prompt Pay Act penalty in simple interest. The trial court reasoned the Prompt Pay Act provides for compounding penalty interest through its use of a monthly rather than an annual interest provision so the District's payment did not satisfy the Judgment.

This appeal follows.

Standard of Review

We review a trial court's ruling on a Rule 74.11(c) motion under the standard in Murphy v. Carron , 536 S.W.2d 30, 32 (Mo. banc 1976). McLean v. First Horizon Home Loan, Corp. , 369 S.W.3d 794, 799 (Mo. App. W.D. 2012) (citing Rhodus v. McKinley , 71 S.W.3d 191, 195 (Mo. App. W.D. 2002) ). We will affirm the trial court's judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Id. We review questions of statutory interpretation de novo. Truman Med. Ctr., Inc. v. Am. Standard Ins. Co. , 508 S.W.3d 122, 124 (Mo. App. W.D. 2017) (citing Ivie v. Smith , 439 S.W.3d 189, 202 (Mo. banc 2014) ).

Discussion

Point III: Penalty Interest Under the Prompt Pay Act

We take Appellant's points out of order to ease our analysis. The District argues, in denying its motion for an order showing satisfaction of the Judgment, the trial court erred by adding an unexpressed provision of compound interest to the Judgment and to the Prompt Pay Act. The District argues the Judgment and the Prompt Pay Act provide only for simple interest, which the District paid in full.

The District argues the trial court erred in finding it granted compound interest not expressly stated in its Judgment. Medlin v. RLC, Inc. , 467 S.W.3d 865, 869 (Mo. App. S.D. 2015). The District argues the Prompt Pay Act, under which the Judgment awarded penalty interest, is silent on compound interest and therefore provides only for simple interest. The District contends no case holds the Prompt Pay Act provides for compound interest and cites cases which reject attempts to read language into statutes or contracts. Stoner v. Evans , 38 Mo. 461 (Mo. 1866) ; Wallemann v. Wallemann , 817 S.W.2d 548, 549 (Mo. App. E.D. 1991). The District argues it satisfied the Judgment because it paid Respondent "$1,691,346.54 for ‘Prompt Pay penalty interest at the rate of one and one half percent (1½%) per month commencing May 10, 2010’ for 140.945545 months from May 10, 2010, to February 7, 2022, on the principal sum of $800,000.00."

The District argues the trial court erroneously added a compound interest provision to the Prompt Pay Act despite its duty to interpret statutes according the language written by the legislature. Peters v. Wady Indus., Inc. , 489 S.W.3d 784, 792 (Mo. banc 2016). The District argues compound interest is disallowed because interest is not listed as subject to the statute's penalty provision. § 34.057.1(5). The District argues the Prompt Pay Act provides only for penalty interest "in addition to the payment due," to the exclusion of any other amounts including accumulated penalty interest. § 34.057.1(5). The "payment due" includes: "[E]stimates or invoices for supplies and services purchased, approved and processed, or final payments," but not interest. § 34.057.1(5).

Finally, the District argues Respondent's reliance on City of Independence for Use of Briggs v. Kerr Construction Paving Company., Inc ., for its assertion the Prompt Pay Act provides for interest compounding monthly is erroneous. 957 S.W.2d 315, 323 (Mo. App. W.D. 1997). The District argues the statement interest compounded monthly in Briggs was dicta because the Court's holding did not concern the proper Prompt Pay Act interest rate. The District suggests this statement was erroneous because the jury award in Briggs did not include compound interest. Id. The District argues no case has applied compound interest under the Prompt Pay Act but other cases have applied simple interest. Fru-Con/Fluor Daniel Joint Venture v. Corrigan Bros., Inc. , 154 S.W.3d 330 (Mo. App. E.D. 2004) ; Env't. Prot., Inspection, & Consulting, Inc. v. City of Kansas City , 37 S.W.3d 360 (Mo. App. W.D. 2000).

Respondent argues the District's claim has not been preserved because its interpretation of the Prompt Pay Act has been raised for the first time on appeal. Cornerstone Mortgage, Inc. v. Ponzar , 619 S.W.3d 524, 531 (Mo. App. E.D. 2021). Even if preserved, Respondent argues the District misinterpreted the Prompt Pay Act. Respondent argues "the statutory text permits a reasonable reading that if the withheld sum is not timely paid, the monthly interest is added to the withheld sum, i.e., the payment due, and the next month's interest accrues based on the total unpaid amount" and there are no statutory terms "to limit the monthly interest as accruing each month only on the originally withheld sum."

Noting we interpret statutes based on their plain language and that of related statutes, Respondent argues the legislature chose not to include terms limiting interest to "the...