Scenicland Const. v. St. Francis Med. Ctr.

• Decision Date: 26 July 2006
• Docket Number: No. 41,147-CA.,41,147-CA.
• Citation: 936 So.2d 247
• Parties: SCENICLAND CONSTRUCTION CO., LLC, Plaintiff-Appellee, v. ST. FRANCIS MEDICAL CENTER, INC., Defendant-Appellant.
• Court: Court of Appeal of Louisiana — District of US

936 So.2d 247

SCENICLAND CONSTRUCTION CO., LLC, Plaintiff-Appellee, v. ST. FRANCIS MEDICAL CENTER, INC., Defendant-Appellant.

No. 41,147-CA.

Court of Appeal of Louisiana, Second Circuit.

July 26, 2006.

COPYRIGHT MATERIAL OMITTED

William A. Jones, Jr., Michael S. Coyle, Ruston, for Appellant.

James A. Rountree, Monroe, for Appellee.

Before STEWART, GASKINS and DREW, JJ.

GASKINS, J.

St. Francis Medical Center, Inc., the defendant in this breach of contract case, appeals from the portions of a trial court judgment favoring the plaintiff, Scenicland Construction Co., LLC. We amend the judgment and, as amended, affirm.

FACTS

In November 2001, Scenicland and St. Francis entered into a contract for the renovation of patient rooms. The contract was drafted by Fred Bayles, the managing member of Scenicland. In pertinent part, the contract provided:

1. Property to be renovated. Contractor agrees to renovate and Owner agrees to pay Contractor for renovation improvements to individual patient rooms in accordance with model renovations in patient room 5004 attached hereto as Exhibit "A" and made a part hereof by Contractor on rooms to be designated by Owner ...

2. Price. Owner agrees to pay Contractor the sum of Three Thousand and no/100 ($3,000.00) dollars per unit, based on renovating two hundred twenty-three (223) units as set forth in paragraph 4 herein....

...

4. Payment Date. Owner will pay contractor after the completion of each group of rooms completed and accepted within 48 hours of said acceptance. Each group of rooms to be renovated will consist of 10 to 17 rooms. . . .

The price per unit was later raised to $3,500. Scenicland renovated 75 rooms at the $3,000 per unit rate, and 15 rooms at the $3,500 rate, for a total of 90 rooms. At this point, St. Francis required immediate work on its rehabilitation unit on the seventh floor. This project involved severe time restraints. Scenicland agreed to meet the timetable for the project; it was awarded the job without bidding. The rehabilitation unit project was completed in a timely fashion. St. Francis then asked Scenicland to look at its ICU facilities with an eye toward completely renovating them. However, the ICU project was ultimately awarded to another company. Contrary to Scenicland's expectations, the original room renovation project was not resumed.

Scenicland filed suit against St. Francis on April 4, 2003. It asserted that, although it and St. Francis had a contract for Scenicland to renovate 223 hospital rooms, St. Francis defaulted after only 90 were completed. It also contended that St. Francis was liable to it in the amount of $68,391.67 for additional work it performed. This included $3,000 for the carpenter shop; $38,391.67 for the cost of materials purchased for the job and storage of material for the hospital; and $27,000 for the preliminary design of ICU units. Scenicland also alleged that St. Francis promised it the ICU renovation job as a reward for the "Herculean effort" necessary to complete a project on the rehabilitation facilities on the seventh floor by St. Francis' deadline. It sought to recover lost profits for the remaining portion of the room renovation job and the ICU project.

On May 20, 2003, St. Francis filed its answer, generally denying the claims in the plaintiff's petition. It also pled the affirmative defenses of the plaintiff's failure to mitigate damages and the right of offset or extinguishment or partial extinguishment of an obligation. The latter involved St. Francis' claim that it had to replace substandard work performed by Scenicland.

On May 14, 2004, St. Francis filed an amended answer in which it stated that the contract did not provide for the plaintiff to renovate 223 rooms; instead it provided that it was to renovate the rooms designated by the defendant. It also reiterated the affirmative defense of offset or extinguishment or partial extinguishment of an obligation.

St. Francis filed a reconventional demand against Scenicland on June 29, 2004. It alleged that it had to secure the services of another contractor to correct Scenicland's substandard work. According to St. Francis, it had already paid in excess of $40,000 and anticipated additional costs. In its answer to the reconventional demand, Scenicland asserted that certain problems with its work were caused by St. Francis' haste in flooding floors and making renovated rooms available to patients before floor glue had an opportunity to adhere.

Bench trial began on April 25, 2005, and concluded on April 29, 2005, at which time the judge took the matter under advisement. On July 18, 2005, the trial court gave written reasons for judgment. It found in favor of the plaintiff on breach of contract as to the 223 rooms and granted relief in the amount of $156,408. The court based its determination that the contract called for renovation of 223 rooms on the wording of the contract (which gave a price per unit based on renovating 223 units) and the deposition testimony of Jean-Paul Lejeune. As chief operating officer, Lejeune signed the contract on St. Francis' behalf; he testified that the room renovation project was temporarily placed on hold in favor of the rehabilitation unit with the intention that the room renovations would resume after the completion of the seventh floor work. The court also found in the plaintiff's favor on the issues of "materials" and "storage" and awarded, respectively, $20,000 and $10,000.

The court ruled in favor of the defendant and against the plaintiff on the claim of detrimental reliance on the ICU project. It based this decision on Lejeune's testimony that while St. Francis was interested in Scenicland doing the work, it wanted to go through the full bid process on that project. It also dismissed the defendant's reconventional demand, noting that Lejeune testified that he had no problem with Scenicland's work and that the hospital's housekeeping had twice flooded the area before the floors were cured. Judgment was signed on July 19, 2005, and an amended judgment on July 29, 2005.

St. Francis appeals the provisions of the trial court judgment provisions awarding recovery to Scenicland and denying its reconventional demand as to the floors that had to be redone.

Scenicland answered the appeal, arguing that the judgment should be amended to include damages of $190,455 for its detrimental reliance on St. Francis' promise of the ICU contract. However, Scenicland withdrew its claim at oral argument. Consequently, this matter is no longer before the court.

CONTRACT TERMS

St. Francis contends that the trial court erred in finding that its contract with Scenicland called for the renovation of 223 rooms. It points to a provision that calls for renovation of rooms "to be designated by Owner." It argues that Scenicland wrote the contract and created ambiguity (the inclusion of a per unit price for 223 rooms instead of a lump sum) which should now be construed against it. St. Francis' witnesses asserted that the remaining rooms were not renovated due to declining patient numbers and poor financial performance. However, St. Francis points out that while Scenicland did not get to renovate 133 other patient rooms for a price of $465,500, it was awarded the seventh floor rehabilitation unit job which amounted to $1,692,225.

When a contract is subject to interpretation from the four corners of the instrument, without the necessity of extrinsic evidence, that interpretation is a matter of law. NAB Natural Resources, L.L.C. v. Willamette Industries, Inc., 28,555 (La.App.2d Cir.8/21/96), 679 So.2d 477. In the case of ambiguity in a contract, where factual findings are pertinent to the interpretation of a contract, those factual findings are not to be disturbed unless manifest error is shown. However, when appellate review is not premised upon any factual findings made at the trial level, but is instead based upon an independent review and examination of the contract on its face, the manifest error rule does not apply. In such cases, appellate review of questions of law is simply whether the trial court was legally correct or legally incorrect. Lawrence v. Terral Seed, Inc., 35,019 (La.App.2d Cir.9/26/01), 796 So.2d 115, writ denied, 2001-3134 (La.2/1/02), 808 So.2d 341.

A contract is an agreement by two or more parties whereby obligations are created, modified or extinguished. La. C.C. art. 1906. Legal agreements have the effect of law upon the parties. La. C.C. art. 1983. A contract is the law between the parties and courts are bound to give legal effect to all such contracts according to the true intent of the parties. La. C.C. art. 2045. Newman Marchive Partnership, Inc. v. City of Shreveport, 40,512 (La. App.2d Cir.2/24/06), 923 So.2d 852.

When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. La. C.C. art. 2046. Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. La. C.C. art. 2050. In case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished its text. La. C.C. art. 2056.

La. C.C. art. 2045 directs that the common intent of the parties is used to interpret a contract. Parol evidence is inadmissible to vary the terms of a written contract. However, if that contract could have more than one interpretation, there is ambiguity as to its provisions, or the intent of the parties cannot be ascertained by the language, then parol evidence is admissible to clarify the ambiguity and show intent of the parties. Fleet Fuel, Inc. v. Mynex, Inc., 40,683 (La.App.2d Cir. 3/8/06), 924 So.2d 480.

We find that the contractual language is unclear and therefore ambiguous. However, both persons signing the contract testified that the intent was that the contract covered...