Pro Commercial, LLC v. K & L Custom Farms, Inc., 14–0633.

• Decision Date: 20 May 2015
• Docket Number: No. 14–0633.,14–0633.
• Citation: Pro Commercial, LLC v. K & L Custom Farms, Inc., 870 N.W.2d 273(Table) (Iowa App. 2015)
• Parties: PRO COMMERCIAL, LLC, Plaintiff–Appellee, v. K & L CUSTOM FARMS, INC., d/b/a K & L Landscape & Construction, Inc., Defendant–Appellant.
• Court: Iowa Court of Appeals

870 N.W.2d 273 (Table)

PRO COMMERCIAL, LLC, Plaintiff–Appellee

v.K & L CUSTOM FARMS, INC., d/b/a K & L Landscape & Construction, Inc., Defendant–Appellant.

No. 14–0633.

Court of Appeals of Iowa.

May 20, 2015.

Todd W. Weidemann, Brian S. Koerwitz, and Monica L. Freeman of Woods & Aitken, L.L.P., Omaha, NE, for appellant.

Brenton D. Soderstrum of Brown, Winick, Graves, Gross, Baskerville & Schoenebaum, P.L.C., Des Moines, for appellee.

Heard by VAITHESWARAN, P.J., and TABOR and MULLINS, JJ.

Opinion

MULLINS, J.

K & L Custom Farms d/b/a K & L Landscape and Construction, Inc.(K & L) appeals the district court's decision concluding it breached the terms of a subcontract with Pro Commercial, LLC.K & L claims the district court incorrectly interpreted the terms of the subcontract and also should have awarded K & L damages in its counterclaim for breach of contract against Pro Commercial.Finally, K & L claims, in the event we affirm the district court's decision regarding the breach of contract, the district court erred in not giving it credit for the work it performed under the contract with Pro Commercial.

I.Background Facts and Proceedings.

Pro Commercial decided to bid on a rest area construction project with the Iowa Department of Transportation(IDOT).It requested subcontractors submit bids for the project, and various subcontractors, including K & L, responded.The plans and specifications prepared by the architect and engineers employed by the IDOT were available to the subcontractors as they prepared and submitted their bids to Pro Commercial.K & L submitted an estimate for the dirt work and grading required for the project.On the estimate, K & L itemized descriptions of the work it proposed to do along with the price associated with the work.The estimate listed the following work descriptions:

Description	Qty	Rate	Total
MOBILIZATION	1	8,500.00	8,500.00
REMOVAL OF FENCE	1	2.00	720.00
BUILDING SUBGRADE PREP	2,400	5.00	12,000.00
GRADING	1	6,500.00	6,500.00
REMOVAL OP TREES	1	3,500.00	3,500.00
REMOVE RETAINING WALL	50	2.00	100.00
REMOVAL OF TRASK RECEPTACLES	11	100.00	1,100.00
REMOVAL OF LIGHT POLE	1	250.00	250.00
REMOVAL OF GRILL ROCK SURFACING & WOOD TIMBERS	1	100.00	100.00
REMOVAL OF PICNIC TABLES	6	50.00	300.00
REMOVAL OF WOODEN GARAGE	1	750.00	750.00
REMOVAL OF REST AREA BUILDING	1	6,500.00	6,500.00
REMOVAL OF VENDING BUILDING	1	450.00	450.00
REMOVAL OF WATER BOOSTER PUMP PIT & APPURTENANCES	1	300.00	300.00
REMOVAL OF INTAKE & PLUG	1	250.00	250.00
REMOVAL OF SIDEWALK	19,358	1.25	24,197.50
REMOVAL OF PAVEMENT SY WITH SAW CUT	350	25.00	8,750.00

The total of all this work was $74,267.50.

Steve Aldred, estimator and project manager with Pro Commercial, contacted Bruce Hovey, estimator with K & L, to discuss the bid.Aldred testified he explained to Hovey, “I will want to make sure that you have everything in the dirt work and you're a hundred percent covered.”Aldred stated that Hovey had to check with “Hector,” but Hovey eventually called back and said “Yes, we're complete.”Hovey also testified regarding the conversation he had with Aldred but stated he told Aldred that “what [K & L was] doing was written out on the proposal.”He then instructed Aldred to call the president of K & L, Kevin Alexander, if he had other questions.Alexander testified he did have a conversation with Aldred, but that conversation dealt with Aldred's request for K & L to remove the landscaping portion of the estimate.¹Alexander stated Aldred never asked him about the scope of the dirt work.

Pro Commercial took K & L's estimate along with the estimates from the other subcontractors and compiled them in order to submit a final bid to the IDOT for consideration.The IDOT awarded the construction contract to Pro Commercial, who in turn drafted contracts with the various subcontractors to do the work,² including K & L.The subcontract sent to K & L stated, in relevant part:

SECTION 1.The Subcontractor agrees to furnish all labor, material and equipment, necessary to perform and complete all the work for [the]Adair County Rest Area, ... as described in Section 2 hereof, and in accordance with the Drawings, General Conditions of the Contract, Supplementary General Conditions, Specifications, and AddendaNo. 1.(as supplied) inclusive prepared by Yeggy Colby Associates.

SECTION 2.Scope of Work: The Subcontractor agrees to promptly begin said work IMMEDIATELY after notification by said Contractor, and complete all work IN ACCORDANCE WITH THE SCHEDULE AS OUTLINED BY THE CONTRACTOR AND IN ACCORDANCE WITH OTHER TRADES in accordance with this Agreement upon Acceptance and notice to proceed by the Bonding Company.

(Work Description)

In accordance with the contract documents, as listed on Attachment “A,” furnish labor, material and equipment complete as described by the following Specification Sections:

Division 1–General Requirements (as applicable to your work);Division 31 Complete, Section 024100.

Supply all labor, material and equipment to provide all dirt work, site clearing, subsoil work, building removal, demolition, misc items per your quote in its entirety per plans and specifications.

Work includes, but is not limited to:

A. 1 Electronic set of Submittals per your specifications within 10 days.

B.Supply a schedule of values breaking out labor and materials.

C.Attach current insurance certificate specific to this project and naming Pro Commercial LLC as an additional insured.

D.Supply Federal ID # and list of suppliers and subcontractors.

E.Work per the attached construction schedule.Project to begin April 19th and complete in December 2010.ALL subcontractors will be required to work 6 days per week unless approved by Pro Commercial.

F.Work per your proposal dated 3/17/10.

Both parties signed the subcontract, but disputes regarding the scope of work K & L was to perform erupted almost immediately.K & L insisted it contracted to perform only the work itemized in its estimate; whereas Pro Commercial argued K & L was to perform all of the work described in Division 31, which included the specifications for dirt work for the project.Division 31 included items such as digging the footings for the buildings and retaining wall, supplying granular fill (rock) for the project, and excavating the sidewalk.

K & L agreed to do some of the work Pro Commercial requested, but K & L insisted this work would be billed on a time-and-materials basis.Pro Commercial asserted the cost of the work requested was included in the contract price.In addition to disputing the scope of the work, disputes arose regarding the timeliness and quality of K & L's performance.Eventually Pro Commercial stopped making further payments to K & L in July 2010, and K & L stopped working on the project in November 2010.Construction on the rest area project resumed in the spring of 2011, and Pro Commercial hired other subcontractors to complete the dirt work on a time-and-materials basis.

Pro Commercial filed a petition against K & L in February 2012 to recover the money it spent remediating K & L's work under the subcontract.K & L filed a counterclaim against Pro Commercial for the work it claims it completed but for which it was not compensated.The case proceeded to a bench trial in August 2013.The district court issued its “Findings of Fact, Conclusions of Law, and Order” on March 17, 2014.

The court concluded the subcontract between Pro Commercial and K & L included all the work described in Division 31.Any unilateral mistake made by K & L regarding the scope of work called for in the contract would not excuse K & L from performing the contract, the court stated.It thus concluded Pro Commercial was entitled to $186,179.14 on its claim, and K & L failed to prove what amount of money it would have been entitled to had the court concluded it was entitled to payment under the counterclaim.

K & L appeals the district court's decision.

II.Scope and Standard of Review.

A breach-of-contract claim tried at law to the district court is reviewed by us for correction of errors at law.The district court's findings of fact have the effect of a special verdict.“The trial court's ‘legal conclusions and application of legal principles are not binding on the appellate court.’ “We will reverse a district court's judgment if we find the court has applied erroneous rules of law, which materially affected its decision.In contrast, the district court's findings of fact are binding on us if they are supported by substantial evidence.

NevadaCare, Inc. v. Dep't of Human Servs.,783 N.W.2d 459, 465(Iowa2010)(citations omitted).Interpretation of a contract involves determining the meaning of the words in a contract; whereas construction involves determining the legal effect of such words.Fausel v. JRJ Enters. Inc.,603 N.W.2d 612, 618(Iowa1999).We review the district court's interpretation as a legal issue unless the interpretation depended on extrinsic evidence.Id.In that case, the “question of interpretation is left to the trier of fact unless ‘the evidence is so clear that no reasonable person would determine the issue in any way but one.’ “Id.(citation omitted).“[W]e always review construction as a legal issue.”Id .

III.Pro Commercial's Breach–of–Contract Claim.

K & L claims the district court failed to give proper effect to the intent of the parties at the time it entered into the contract when determining the scope of the work under the contract.K & L claims that had the district court considered the circumstances of the transaction, it would have noted that K & L proposed to do a very specific list of work for $74,268 and this work did not include supplying over $100,000 worth of rock, backfilling, or digging footings for the buildings and retaining wall.

The intent of the parties is the cardinal principle of contract interpretation.NevadaCare,783 N.W.2d at 466.“[T]he most important evidence of the parties' intentions at the time they entered into the contract is the words of the contract.”Id.The court can also consider the words and conduct of ...