Tobias v. North Dakota Dept. of Human Services, 890166

• Decision Date: 20 November 1989
• Docket Number: No. 890166,890166
• Citation: 448 N.W.2d 175
• Parties: Randy TOBIAS, Appellee, v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, Appellant. Civ.
• Court: North Dakota Supreme Court

Page 175

448 N.W.2d 175

Randy TOBIAS, Appellee, v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, Appellant.

Civ. No. 890166.

Supreme Court of North Dakota.

Nov. 20, 1989.

Blaine L. Nordwall (argued), Asst. Atty. Gen., Human Services Dept., Bismarck, for appellant.

Lies, Bullis and Grosz, Steven J. Lies (argued), Wahpeton, for appellee.

ERICKSTAD, Chief Justice.

The North Dakota Department of Human Services appeals from a district court judgment reversing a Department order denying reimbursement costs incurred by Randy Tobias doing business as Tobias Construction. ¹ We reverse.

Randy Tobias is a general contractor and sole proprietor of Tobias Construction. Tobias met with several representatives of the Vocational Rehabilitation Division (hereinafter VR) of the North Dakota Department of Human Services to discuss what modifications would be necessary to make the home of Richard Krump, handicap accessible. Richard Krump is disabled and confined to a wheelchair.

An oral agreement was reached between VR and Tobias whereby Tobias was to modify the bedroom, bathroom, and kitchen areas and install an elevator in the Krump home. VR requested, and Tobias submitted, written estimates of labor and materials required for the project. VR contends that it informed Tobias that it needed these figures in order to set aside the proper amount of money for the project.

Tobias' labor estimate was $21,125. This written estimate included the following language:

"The labor breakdown on Rick Krump's project is as follows: However, they may vary somewhat depending on exactly what we run into once we open up the project and actually start."

Tobias' estimate for materials was $13,237.33. The written estimate for materials contained the following language:

"The attached list is an estimate of what is necessary for the Krump project. If additional materials are necessary you will be billed extra. If there is a credit due because of mis-figuring that will also be issued."

Tobias started the project in September of 1985. He contends that he was still unsure as to exactly what was to be done, as VR had not provided him with any blueprints or specific plans. Certain problems were encountered during the project. Tobias contends that as there were no plans or specifications, he could not have contemplated the problems or have given a realistic estimate of the costs before construction began. He contends he had to spend additional money for labor and materials in order to keep the construction area clean because of Krump's health needs and to keep the temperature of the house constant as Krump was living in the house during the modifications. He asserts he also ran into problems in the construction of the elevator. To comply with the building code, Tobias had to dig footings for the elevator. While digging the elevator footings, he ran into granite chunks which hampered the digging. Because the house was 90 years old, the walls and floors had to be leveled so that the elevator could smoothly move within the elevator shaft. Finally, because roofing shingles were not replaceable, they had to be removed carefully so that they could be used again on the elevator shaft so that there would be some conformity.

Tobias billed and VR paid for labor in the amount of $5,000 on September 30, 1985. VR contends that Dennis Buckman, a VR officer, met with Tobias on October 29, 1985, and informed him of a $17,000 limit on any further labor authorizations. Tobias contends that he was never specifically told that there was a limitation on the funds and that he was never aware of such a limitation. Tobias submitted the following four separate billings for labor: $3,857.00 on October 31, 1985; $6,364.06 on March 6, 1986; $5,384.00 on April 30, 1986; and $11,290.14 on May 5, 1986. The first three billings were paid in full, but VR paid only $1,394.94 of the last amount billed, as the $17,000 authorized maximum had been reached. Tobias was paid $13,237.33 for materials, the amount of his original estimate.

In addition to the above-described payments, VR paid Tobias an additional sum of $1,988.00 for additional expenses associated with the construction of a concrete base for the elevator and electrical wiring which were not contemplated in Tobias' materials and labor proposals. Tobias now claims an additional $9,895.20 in labor and $8,080.75 in materials over and above his initial estimates.

An administrative hearing was held on February 4, 1987, before Mr. Robert Brady, hearing officer. Tobias' claim was denied by order executed by John A. Graham, Executive Director of the North Dakota Department of Human Services. The findings of fact of the Department of Human Services are as follows: ²

"Findings of fact: The evidence of record has been considered and appraised, and from the facts at issue the following findings are made:

"(1) An oral agreement was reached in June, 1985, between the Vocational Rehabilitation Division (VR) and Randy Tobias, doing business as Tobias Construction (Tobias) wherein Tobias agreed to modify the home of a VR client in Wahpeton in accordance with the plans, specifications, and instructions provided by VR, and VR agreed to pay him for his services on the basis of labor and materials plus an unspecified allowance for profit which Tobias would include in his cost proposals. Compensation could be adjusted by mutual agreement of the parties upon a showing of additional expenses due to unforeseen construction problems.

"(2) Pursuant to that agreement, Tobias submitted a proposal and a billing for estimated materials in the sum of $13,237.33 on June 19, 1985, and VR, in turn, paid Tobias $13,237.33.

"(3) Pursuant to that agreement, Tobias submitted a proposal for estimated labor in the sum of $21,125 on July 16, 1985, and an initial billing was thereafter submitted by Tobias for $5,000 of that amount, which was, in turn, paid by VR on September 30.

"(4) A final authorization for remaining labor was approved by VR on September 30, in the amount of $17,000. Tobias thereafter submitted the following four separate billings for labor: $3,857 on October 31, 1985; $6,364.06 on March 6, 1986; $5,384.00 on April 30, 1986; and $11,290.14 on May 5, 1986. The first three billings were paid as billed, but VR paid only $1,394.94 of the last amount billed, as the $17,000 authorized maximum had been reached. [Amended Findings of Fact.]

"(5) In addition to the above-described payments, VR paid Tobias an additional sum of $1,988 for additional expenses associated with construction of a concrete base for an elevator and electrical wiring which were not contemplated in Tobias' materials and labor proposals.

"(6) On October 29, 1985, well in advance of the completion of the project, VR representatives met with Tobias and notified him that the $17,000 authorized for labor on September 30 would be all that he could draw from for all remaining outstanding or anticipated labor costs, and that he should plan and adjust his labor budget accordingly. Tobias gave no indication that this was not acceptable or could not be done.

"(7) Tobias' claim for an additional $9,895.20 in labor and $8,080.75 in materials is over and above his initial proposals. In order to establish a valid claim, either on the basis of an express agreement with VR, or on the basis of an applied [sic] [implied] contract or quantum meruit, he has the burden of proving, by verifying documentation, not only that such expenses were actually incurred, but that they had not been already paid. [Amended Findings of Fact.]

"(8) Tobias was unable to produce business records or other reliable verification which substantiated his claim. The records he did produce following the hearing cannot be considered as supportive verification of unpaid materials and labor because he did not keep a record of those items of labor and materials which had already been paid. Therefore, he had no way of determining his claim. In fact, that post-hearing information generally concerned items that were included in the initial proposals and which presumably had already been paid by VR.

"(9) Many of the items of labor and materials contained in the information submitted by Tobias after the hearing, as well as the dollar totals associated with each, are inconsistent on their face with the items and amounts identified by Tobias at his hearing. This inconsistency, when viewed together with the fact that Tobias could not show that he ever kept an accounting of expenses incurred and reimbursed, requires the conclusion that Tobias' claim for additional money owed to him by VR had to have been fabricated in this instance.

"Decision: Tobias has failed to establish a claim for any additional amounts due him from VR and the denial of his claim is affirmed."

On Tobias' appeal to the District Court for Richland County, the court reversed and remanded the case to the Department of Human Services, concluding that Tobias was entitled to recover $9,895.20 for labor and $8,080.75 for material. The court, in finding of fact number 14, said that the findings of fact made by the agency were not supported by a preponderance of the evidence. The Department then appealed to this Court.

On appeal the Department contends that Tobias has not demonstrated that he is entitled to any additional payment from VR and that the payments demanded by Tobias are forbidden by law.

When an administrative agency decision is appealed to the district court and then to this Court, we review the decision of the agency and not the decision of the district court. Montana Dakota Utilities Company v. Public Service Commission, 413 N.W.2d 308 (N.D.1987); Skjefte v. Job Service of North Dakota, 392 N.W.2d 815 (N.D.1986). Accordingly, we review the record compiled before the agency rather than the findings of the district court. Application of Zimbelman, 356 N.W.2d 99 (N.D.1984).

Our review of administrative agency decisions involves a three-step process: (1) Are the...