Somerset Community Hosp. v. Allan B. Mitchell & Associates, Inc.

• Decision Date: 31 October 1996
• Citation: 454 Pa.Super. 188,685 A.2d 141
• Court: Pennsylvania Superior Court
• Parties: SOMERSET COMMUNITY HOSPITAL, a Pennsylvania Not-For-Profit Corporation, Appellant, v. ALLAN B. MITCHELL & ASSOCIATES, INC., a Pennsylvania Corporation: and Deeter Ritchey Sippel, Architects/Planners, a Professional Corporation, Appellees. DEETER RITCHEY SIPPEL, ARCHITECTS/PLANNERS, a Professional Corporation, Appellees, v. SOMERSET COMMUNITY HOSPITAL, a Non-Profit Corporation, Appellant.

Page 141

685 A.2d 141

454 Pa.Super. 188

SOMERSET COMMUNITY HOSPITAL, a Pennsylvania Not-For-Profit

Corporation, Appellant, v. ALLAN B. MITCHELL & ASSOCIATES, INC., a Pennsylvania

Corporation: and Deeter Ritchey Sippel,

Architects/Planners, a Professional

Corporation, Appellees.

DEETER RITCHEY SIPPEL, ARCHITECTS/PLANNERS, a Professional

Corporation, Appellees, v. SOMERSET COMMUNITY HOSPITAL, a Non-Profit Corporation, Appellant.

Superior Court of Pennsylvania.

Argued Sept. 10, 1996.

Filed Oct. 31, 1996.

Daniel W. Rullo, Somerset, for Somerset Community Hospital.

Robert W. Doty, Pittsburgh, for Deeter Ritchey Sippel.

Before CIRILLO, President Judge Emeritus, and TAMILIA and HESTER, JJ.

CIRILLO, President Judge Emeritus.

Somerset Community Hospital appeals from the judgment entered in the Court of Common Pleas of Somerset County denying its post-trial motions. ¹ We affirm.

This appeal involves two consolidated cases filed by Appellant-Somerset Community Hospital ("Hospital") and Appellee-Deeter Ritchey Sippel Architects/Planners ("DRS"). The first action, filed by DRS against the Hospital, alleges breach of an oral and written contract, promissory estoppel and quantum meruit. ² The second action, filed by the Hospital against DRS, alleges breach of the same written contract.

The facts underlying the two cases are as follows. On October 1, 1984, DRS and the Hospital signed a contract ("October agreement") obligating DRS to perform architectural and planning services for renovations and additions to be made to the Hospital's medical facilities. The October agreement set forth a total construction cost of $5,000,000.00, with a fixed fee to be paid in increments of $375,000.00 to DRS. Shortly after entering into the agreement, the Hospital began directing and approving changes in the project which substantially changed and expanded the initial plans and resulted in a total construction cost increase of over $2,000,000.00.

On January 12, 1985, the parties allegedly made an oral modification to the October agreement regarding the scope of services to be provided by DRS and the compensation to be received. At trial, DRS alleged that additional oral modifications were made to the October agreement, and presented evidence which discussed the additional work to be done by DRS, the Hospital's intentions to approve this work, negotiations for revised fees for DRS' services, and certain amounts already due to DRS. Relying on these discussions, DRS continued to perform architectural, planning, and design services which were requested by the Hospital. On July 15, 1986, the Hospital terminated its contract with DRS for failure to stay within the budgetary constraints of the October agreement.

On August 11, 1986, DRS submitted to the Hospital a written invoice which totaled $157,363.15 and represented the cost for services which it rendered from May 20, 1985 through July 15, 1986. When the Hospital refused to pay DRS, the first action involved in this consolidated appeal was filed by DRS.

After trial, the jury returned a $46,000.00 verdict in favor of DRS. The court subsequently molded the verdict to reflect "pre-judgment" interest accrued from June 12, 1986 until March 3, 1995, ³ at a rate of 6% per year--a total verdict of $70.086.16. After filing post-trial motions which were denied, the Hospital now appeals and raises the following issues for our review:

(1) Did the trial court err in failing to direct the verdict or grant judgment notwithstanding the verdict in favor of Hospital on DRS' claim, especially when the evidence established that there was no authorization of the parties to modify the written contract of October 1, 1984; that there was no meeting of the minds by authorized representatives of the parties as to the establishment of an essential term, such as price; and that DRS' own evidence refuted the fact that there was an oral modification of architect fees in the amount of $450,000.00?

(2) Did the trial court err in allowing DRS to amend its pleading and theory after the close of its case to allege an oral modification of a written contract on unspecified dates, at unspecified times, at unspecified places, with unspecified individuals, especially when the standard of proof required clear, precise and convincing evidence?

(3) Did the trial court err in not granting a new trial where DRS was granted an amendment of its theory after the close of its case in chief and despite its pretrial projection utilized four or five days in the presentation of its case requiring the Hospital to shorten its trial presentation by two days to stay within the date certain time allocated for the case? ⁴

(4) Where the parties contractually agreed to permit Hospital to withhold disputed payments until a "final court determination," may interest be awarded before there is an obligation to make payment?

(5) Where DRS failed to mitigate damages by not seeking a final court determination for over eight years, will prejudgment interest be awarded?

(6) Did the trial court err in not granting the directed verdict of the Hospital on its claim for damages or granting a new trial where DRS had failed to perform its obligations under the October 1, 1984 agreement by underestimating the construction costs, failing to stay within the budget restraints, preparing drawings that were inaccurate thereby requiring the Hospital to redesign the project and incurring a duplication of expenses for the project?

Our standard of review of an order denying judgment notwithstanding the verdict is whether there was sufficient competent evidence to sustain the verdict. Wenrick v. Schloemann-Siemag Aktiengesellschaft, et al., 523 Pa. 1, 4, 564 A.2d 1244, 1246 (1989). The standard of review for an appellate court is the same as that for a trial court: j.n.o.v. will be entered only in a clear case where the facts are such that no two reasonable minds could fail to agree that the verdict was improper. Pirozzi v. Penske Olds-Cadillac-GMC, 413 Pa.Super. 308, 605 A.2d 373 (1992). The standard of review of a trial court's grant or denial of a motion for a new trial is, generally, whether the trial court clearly and palpably abused its discretion or committed an error of law which controlled the outcome of the case. Stevenson v. General Motors Corp., 513 Pa. 411, 428-29, 521 A.2d 413, 422 (1987). To reverse the trial court, this court must consider all the evidence in the light most favorable to the appellee and conclude that the verdict would be changed if another trial were granted. Robertson v. Atlantic Richfield Petroleum Prod. Co., 371 Pa.Super. 49, 537 A.2d 814 (1987).

The Hospital first claims that the trial court erred by not directing a verdict or granting judgment in its favor. Specifically, the Hospital alleges that there was no evidence to establish that the parties modified the October agreement. The record belies this assertion.

A written contract which is not for the sale of goods may be modified orally, even when the written contract provides that modifications may only be made in writing. Universal Builders, Inc. v. Moon Motor Lodge, Inc., 430 Pa. 550, 244 A.2d 10 (1968). An agreement that prohibits non-written modification may be modified by subsequent oral agreement if the parties' conduct clearly shows the intent to waive the requirement that the amendments be made in writing. Accu-Weather v. Prospect Communications, 435 Pa.Super. 93, 644 A.2d 1251 (1994). An oral contract modifying a prior written contract, however, must be proved by clear, precise and convincing evidence. Pellegrene v. Luther, 403 Pa. 212, 169 A.2d 298 (1961).

Viewing the evidence in the light most favorable to DRS, we find that the court correctly determined that the conduct of the parties and their representatives orally modified the October agreement, effectively waiving the clause prohibiting non-written modification of the parties' written contract. ⁵ Presently, the record evidences a multitude of minutes from meetings wherein representatives of both parties extensively discussed that DRS would continue to perform additional services, and that DRS would be compensated for such additional work. See Universal Builders, supra (where an owner requests that a builder do additional work, promises to pay for such extra work, and watches it performed knowing that it is not authorized in writing, he cannot refuse to pay on the ground that there was no written amendment to contract stating that the additional work was authorized under the parties' contract). In a letter admitted at trial, the parties proposed that the architect's fee would be increasingly modified. The meeting minutes also reflect extensive plans for the increase in the scope of the construction, for the use of additional architect plans, and for DRS' compensation for such extra work. Accordingly, based upon the clear and convincing evidence of oral modification to the parties' contract, the Hospital was not entitled to a judgment or verdict in its favor. See Wenrick, supra; see also East Texas Motor Freight, Diamond v. Lloyd, 335 Pa.Super. 464, 484 A.2d 797 (1984) (it is within the province of the jury to define terms of parol modification of contract and, unless party's version of modification is not supported, the court should not declare that modification did not exist).

The Hospital next contends that the court erred by allowing DRS to amend its case theory after it rested and the Hospital moved for non-suit. Specifically, the trial court allowed DRS to amend Count II of its complaint by adding conduct and promises made between the parties on certain dates in order to prove that certain modifications of price terms from the October agreement had taken place.

A party may, at any time, with consent of an opposing party or by leave of court, amend his or her pleading. See Ecksel v. Orleans Const. Co., 360 Pa.Super. 119, 519 A.2d 1021 (1987); Pa.R.C.P. 1033. A trial court has broad discretion...