Sainsbury Const. Co., Inc. v. Quinn

• Decision Date: 08 April 2002
• Docket Number: No. 27197.,27197.
• Parties: SAINSBURY CONSTRUCTION CO., INC., an Idaho corporation dba SCC Excavation, Plaintiff-Respondent, v. Shawn M. QUINN and Angela D. Quinn, husband and wife, Defendants-Appellants, and Family Home Mortgage Corp., an Oregon corporation; Dime Mortgage, Inc., a New York corporation and North Idaho Title Insurance Inc., an Idaho corporation. Defendants.
• Court: Idaho Court of Appeals

47 P.3d 772

137 Idaho 269

SAINSBURY CONSTRUCTION CO., INC., an Idaho corporation dba SCC Excavation, Plaintiff-Respondent, v. Shawn M. QUINN and Angela D. Quinn, husband and wife, Defendants-Appellants, and Family Home Mortgage Corp., an Oregon corporation; Dime Mortgage, Inc., a New York corporation and North Idaho Title Insurance Inc., an Idaho corporation. Defendants.

No. 27197.

Court of Appeals of Idaho.

April 8, 2002.

Review Denied June 5, 2002.

Rude, Jackson & Daugharty, Coeur d'Alene, for appellant. Paul W. Daugharty argued.

Evans, Keane, Kellogg, for respondent. Charles L.A. Cox argued.

GUTIERREZ, Judge.

This case involves a dispute over payment for the construction of a house. At the conclusion of a court trial, the district court found that appellants Shawn M. Quinn and Angela D. Quinn (Quinns) breached their express contract with respondent Sainsbury Construction Company Inc. (SCC) and entered an amended judgment in favor of SCC in the amount of $22,423.62 plus prejudgment interest and attorney fees and costs of $18,345.40. The Quinns appeal, arguing that the district court erred when it determined that the express oral agreement made between SCC and the Quinns did not merge into a warranty deed and in awarding prejudgment interest, attorney fees and costs to SCC. We affirm.

I. FACTUAL AND PROCEDURAL HISTORY

In late 1995, SCC, an Idaho corporation in the construction business, hired Shawn Quinn as a heavy equipment operator. In 1996, the Quinns decided that they wanted to purchase a five-acre parcel in Post Falls and construct a house on it. The Quinns were unable to secure a construction loan to purchase the parcel and finance the construction of the house so they approached Tom Sainsbury, corporate president and owner of SCC, in April 1997 for assistance. SCC agreed to assist the Quinns by purchasing the building lot, and allowing the Quinns to use SCC's credit and accounts to obtain construction materials and subcontractor labor. In exchange, SCC was to receive reimbursement of its actual costs plus a 5 percent fee to cover SCC's internal overhead expenses. SCC did not agree to build the Quinns' house for them or act as the general contractor in the construction of the house. The agreement between SCC and the Quinns was not reduced to writing.

The parties created a working budget and the Quinns stated that they would do all the roofing, labor, subcontracting supervision, site preparation and cleanup, plumbing, exterior concrete, and septic system installation to keep costs within the working budget. Additionally, Angela Quinn agreed to solicit bids from subcontractors and material suppliers as she was especially skilled in obtaining favorable deals and price reductions. These terms were also not reduced to writing.

During the construction process, the Quinns were unable to fully perform the role of general contractor and SCC assumed some of those duties, hiring subcontractors to finish work left undone by the Quinns. Also during the construction, the Quinns requested and received several significant changes in the materials that differed from the working budget. On August 18, 1997, Tom Sainsbury and the Quinns conducted a walk-through of the nearly finished house and Sainsbury informed the Quinns that they had already exceeded their budget by approximately $1,800. Sainsbury also warned the Quinns to expect more bills for unpaid expenses in the future. The final inspection of the house occurred on or about September 5 and the Certificate of Occupancy was issued on or about September 15.

In order to take advantage of an interest rate that expired on September 22, the Quinns asked SCC to close on September 15. At the closing, SCC issued a warranty deed to the Quinns conveying the real property with improvements free and clear of all encumbrances except current taxes and easements of record in consideration for $167,673.14. Prior to the closing, SCC told the Quinns to expect bills for labor and material costs incurred in September and October. The Quinns orally agreed to pay those bills. Tom Sainsbury testified that SCC relied on the Quinns' promise to pay those outstanding bills in proceeding to closing.

After the closing, SCC sent the Quinns bills totaling approximately $17,000 for unpaid labor and material costs. The Quinns refused to pay SCC any money in addition to that received at closing on September 15. On December 23, SCC filed a claim of lien on the property stating that SCC had furnished materials and labor in the just and reasonable value of $30,568.47 from April 5, 1997 to September 24, 1997. On June 12, 1998, SCC filed a complaint against the Quinns for breach of contract, restitution, unjust enrichment, quantum meruit and foreclosure of its claim of lien. On January 19, 2000, SCC amended its complaint to allege a count of fraud against the Quinns. The matter was tried before the district court. At the conclusion of the trial the district court orally pronounced judgment in favor of SCC. On July 7, the district court entered its written findings of fact and conclusions of law. The district court's conclusions of law in part state:

2. In light of the Court's finding of an express contract between the parties, the Court deems [SCC's] additional equitable claims for relief to be inapplicable.

3. The parties' contractual obligations did not merge into the warranty deed delivered by SCC on September 15, 1997.

4. By virtue of having delivered its warranty deed to the Quinns on September 15, 1997, SCC waived and relinquished its right to secure its contractual claim with a mechanics' lien for all work and materials provided to Quinns prior to September 15, 1997, but SCC did not waive its right to pursue the contractual claim itself.

5. Quinns are in breach of their express oral contract with SCC.

6. As the direct and proximate result of the Quinns' breach, SCC has been damaged in the amount of $22,423.62.

Additionally, the district court found that SCC was the prevailing party and entitled to attorney fees, prejudgment interest and costs. Also, on July 7, the district court entered a written judgment against the Quinns in the amount of $22,423.62 plus prejudgment and postjudgment interest. On December 5, the district court entered an amended judgment awarding SCC the amount of $22,423.62 plus prejudgment interest and attorney fees and costs of $18,345.40. The Quinns filed this timely appeal.

II. STANDARD OF REVIEW

It is well established that appellate review of a lower court's decision is limited to ascertaining whether the evidence supports the findings of fact, and whether the findings of fact support the conclusions of law. Baker v. Boren, 129 Idaho 885, 890, 934 P.2d 951, 956 (Ct.App.1997). The task of weighing evidence and finding facts is within the province of the trial court and we will not set aside findings made by the trial court unless they are clearly erroneous. Id. Further, we will give due regard to the opportunity of the trial judge to weigh conflicting testimony and to judge the credibility of witnesses. Id. We must accept the trial court's findings of fact if they are supported by substantial, competent though conflicting evidence. Id.

III. DISCUSSION

A. The District Court Did Not Err When It Determined That The Quinns' Contractual Obligation To Pay SCC For The Costs Of Constructing The Home Did Not Merge Into The Warranty Deed.

The Quinns argue that the district court erred in determining that their contractual obligations to pay SCC did not merge into the warranty deed. The Idaho Supreme Court, in Jolley v. Idaho Securities, Inc., 90 Idaho 373, 414 P.2d 879 (1966), explained the doctrine of merger as follows:

It is a well established rule of law that prior stipulations are merged in the final and formal contract executed by the parties, and this rule applies to a deed or a mortgage based upon a contract to convey. When a deed is delivered and accepted as performance of the contract to convey, the contract is merged in the deed. Though the terms of the deed may vary from those contained in the contract, the deed alone must be looked to to determine the rights of the parties.

....

There is an exception to the rule stated, which is that the contract of conveyance is not merged upon execution of a deed where under the contract the rights are conferred collaterally and independent of the deed; there being no presumption that the party in accepting the deed intends to give up the covenants of which the deed is not a performance or satisfaction. Where the right claimed under the contract would vary, change, or alter the agreement in the deed itself, or inheres in the very subject-matter with which the deed deals, a prior contract covering the same subject-matter cannot be shown as against the provisions of the deed.

Id. at 382-83, 414 P.2d at 884 (quoting Continental Life Ins. Co. v. Smith, 41 N.M. 82, 64 P.2d 377 (1936)). The Jolley court continued:

It seems to be well settled that ordinarily the provisions of an executory contract for the sale of land and all prior negotiations leading up to it are merged in a subsequent deed. (citing cases.)

It will be presumed that it was the desire of the parties to consider the deed as the final expression of their mutual intentions. If the covenants in the contract relate to the conveyance, or inhere in the very subject-matter with which the deed deals, they are merged in the deed and any reference to them in the deed will be considered as final, even though the deed contradict the contract. (citation)

To the general rule that there is a merger of prior covenants and agreements in the deed, there is a well-recognized exception. Where the covenants in the contract do not relate to the conveyance, but are collateral to and independent of the conveyance, they are not merged in the deed, in so far as the deed is only a part performance of the contract. (citations)

A grantee may accept a deed as full performance of a

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