Powers v. Miller

Decision Date17 May 1999
Docket NumberNo. 19,244.,19,244.
Citation984 P.2d 177,127 N.M. 496
CourtCourt of Appeals of New Mexico
PartiesA.D. POWERS, d/b/a Powers Structures, Plaintiff-Appellant/Cross-Appellee, v. Wendell G. MILLER and Janet B. Miller, husband and wife, Defendants-Appellees/Cross-Appellants.

J. Robert Beauvais, J. Robert Beauvais, P.A., Ruidoso, for Appellant/Cross-Appellee.

Don E. Dutton, The Dutton Firm, Ltd., Ruidoso, for Appellees/Cross-Appellants.

OPINION

WECHSLER, Judge.

{1} A.D. Powers d/b/a Powers Structures (Contractor) appeals and Wendell G. and Janet B. Miller (Homeowners) cross-appeal from the trial court's judgment in this dispute over the construction of a residence. On appeal, Contractor raises two issues of first impression. First, he argues that the trial court erred in requiring proof by clear and convincing evidence that the parties modified their written contract by a subsequent oral agreement. We hold that the trial court was correct in ruling that oral modifications to written contracts requiring modifications be in writing must be proven by clear and convincing evidence. Second, Contractor argues that this Court lacks jurisdiction over Homeowners' cross-appeal because Homeowners did not timely file notice of cross-appeal. We hold that the notice was timely and in so doing clarify the application of the rule concerning computation of time to the facts of this case.

{2} In addition, Contractor contends that the trial court erred in allowing parol evidence to clarify the contract regarding the intended use of areas labeled "storage room" and "unexcavated space" on the plans. He also contends that the trial court erred by determining that he had not proven the oral modifications to the contract, by rejecting his defenses of equitable estoppel and mitigation of damages, and by denying him recovery in quantum meruit for the additional work performed on the residence.

{3} In their cross-appeal, Homeowners argue that the trial court erred in offsetting their damages for substandard work by an amount representing the expense of modifications or additional items that Homeowners agreed they had requested. We affirm the judgment of the trial court.

Facts

{4} Contractor is a licensed general contractor. In 1993, Homeowners approached Contractor about building a home for them. After discussing the design and negotiating the price, on November 28, 1993, the parties entered into a written contract for the construction of a residence for a price of $258,450.35. The contract consisted of a written agreement labeled "proposal and acceptance," two pages of specifications drawn up by Contractor based on the discussions concerning the design, and plans drawn up by someone hired by Contractor. The contract provided that "[a]ny alteration or deviation from above specifications involving extra costs will be executed only upon written orders, and will become an extra charge over and above the estimate." The contract also warranted that all work would be completed "in a workmanlike manner according to standard practices."

{5} As often happens, the house that was built differed in a number of respects from the plans and specifications. After Homeowners moved into the house, Contractor presented Homeowners with a list of additional costs that were the result of modifications to the plans and specifications. Contractor contended that Homeowners had requested or authorized these items as additional expenses over and above the contract price. Homeowners paid for some of the alleged changes or modifications but refused to pay for others. After Homeowners moved into the house, they discovered a number of problems. Homeowners asked Contractor to fix the problems with the house. Contractor fixed some but not all of the problems.

{6} When the parties were unable to resolve their differences, Contractor filed suit against Homeowners. Contractor sought to recover the cost of what he refers to as "extras," meaning items not required by the written plans and specifications. In the alternative, Contractor contended that he should be compensated for the cost of the extras under the theory of quantum meruit. Homeowners denied that they had requested the extras and counterclaimed for the cost of repairing certain allegedly substandard aspects of the home.

{7} The case was tried to the bench in July 1997. Neither side was satisfied by the outcome. The trial court determined that oral modifications to written contracts must be proven by clear and convincing evidence. The trial court determined generally that the contract was ambiguous as to some items, that it was silent as to others, and that still other changes or additions had been made unilaterally by Contractor without the prior approval of Homeowners. Thus, the trial court concluded that Homeowners only owed Contractor for certain extras that they had stipulated to during trial. The total cost of these items was $5346.67. In addition, the trial court concluded that some of the work was substandard and awarded Homeowners $9395, the cost of correcting the problems. The trial court rejected Homeowners' contention that they had already paid the additional $5346.67 owed to Contractor and offset that amount against the cost of fixing the various problems. Thus, the trial court entered judgment in favor of Homeowners in the amount of $4047.33. These appeals followed.

Standard of Proof

{8} Contractor contends that the trial court erred in determining that he was required to prove the oral modifications to the contract by clear and convincing evidence. We disagree. A written contract may be modified by a subsequent oral agreement, even though the written contract requires that modifications be in writing. See Medina v. Sunstate Realty, Inc., 119 N.M. 136, 138-39, 889 P.2d 171, 173-74 (1995)

. The question before this Court is simply the standard or quantum of proof required to prove such modifications.

{9} Contractor relies on Superior Concrete Pumping, Inc. v. David Montoya Construction, Inc., 108 N.M. 401, 404, 773 P.2d 346, 349 (1989), for the proposition that oral modifications to written contracts need only be proven by a preponderance of the evidence. However, Superior Concrete Pumping, Inc. involved oral modifications to an oral contract, not to a written contract, as in this case. See id. In Archuleta v. Velasquez, 60 N.M. 97, 99, 287 P.2d 989, 991 (1955), our Supreme Court held that "evidence of rescission of a written contract by a subsequent parol agreement must be clear, positive and above suspicion." See also A & P Constr. Co. v. Dorn, 79 N.M. 292, 292, 442 P.2d 782, 782 (1968)

("[E]vidence of rescission of a written contract by a subsequent parol agreement must be clear, positive and convincing."); Driver-Miller Plumbing. Inc. v. Fromm, 72 N.M. 117, 118-19, 381 P.2d 53, 54 (1963) (assuming without deciding that oral modifications of written contracts must be proven by clear and convincing evidence because evidence was clear and convincing in that case); Twin Forks Ranch, Inc. v. Brooks, 1998-NMCA-129,¶ 8, 125 N.M. 674, 964 P.2d 838 ("The party seeking to reform a writing must prove by clear and convincing evidence that a mutual mistake occurred.").

{10} We consider rescission to be sufficiently analogous to modification that it is appropriate to apply a heightened standard of proof to oral modifications of written contracts that specify that modifications must be in writing. We are aware that the phrasing of the standard varies slightly from case to case. However, we believe that it is appropriate to characterize the standard of proof as clear and convincing evidence because that phrase is a term of art with a well-established meaning. See In re Sedillo, 84 N.M. 10, 12, 498 P.2d 1353, 1355 (1972)

("For evidence to be clear and convincing, it must instantly tilt the scales in the affirmative when weighed against the evidence in opposition and the fact finder's mind is left with an abiding conviction that the evidence is true.").

{11} We find support for our decision in cases from other jurisdictions that require that a subsequent oral modification of a written contract be proven by clear and convincing evidence. See City Nat'l Bank v. First Nat'l Bank & Trust Co., 22 Ark.App. 5, 732 S.W.2d 489, 492 (1987)

(clear and convincing evidence); Kline v. Clinton, 103 Idaho 116, 645 P.2d 350, 355 (1982) (clear and convincing); Duncan v. Cannon, 204 Ill.App.3d 160, 149 Ill.Dec. 451, 561 N.E.2d 1147, 1149 (1990) (clear and convincing evidence); Glass v. Bryant, 302 Ky. 236, 194 S.W.2d 390, 393 (1946) (clear and convincing); Duffy v. Park Terrace Supper Club, Inc., 295 Minn. 493, 206 N.W.2d 24, 28 (1973) (clear and convincing); Jenson v. Olson, 144 Mont. 224, 395 P.2d 465, 469 (1964) (clear, convincing, and inconsistent with written contract); Lambe-Young, Inc. v. Cook, 70 N.C.App. 588, 320 S.E.2d 699, 702 (1984) (clear and convincing); Mathis v. Thunderbird Village, Inc., 236 Or. 425, 389 P.2d 343, 349 (1964) (clear and convincing), Nicolella v. Palmer, 432 Pa. 502, 248 A.2d 20, 23 (1968) (clear, precise, and convincing); Combs v. McLynn, 187 W.Va. 490, 419 S.E.2d 903, 907 (1992) (clear and positive evidence). But see Freeman v. Stanbern Constr. Co., 205 Md. 71, 106 A.2d 50, 55 (1954) (preponderance of the evidence); Gagnon v. Wright, 200 A.2d 196, 198 (D.C.1964) (same); Swindell v. Bulger, 526 So.2d 422, 424 (La.Ct.App.1988) (same). We recognize that not all of these cases include written contracts with a provision that any modification must be in writing, or make such a distinction. Nonetheless, we limit our decision today to the facts before us. Thus, oral modifications to a written contract requiring that any modifications must be made in writing must be proven by clear and convincing evidence.

{12} We note that different courts have attributed the clear and convincing standard of proof to different reasons. Some courts appear to relate this heightened standard of proof to similar...

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