Turner v. Low Rent Housing Agency of City of Des Moines

• Decision Date: 21 May 1986
• Docket Number: No. 84-1938,84-1938
• Citation: 387 N.W.2d 596
• Parties: Clinton A. TURNER and Juanita A. Turner, Plaintiffs, v. LOW RENT HOUSING AGENCY OF the CITY OF DES MOINES, Iowa, Appellant, and B.B. Andersen Development Company, Inc., Appellee. B.B. ANDERSEN DEVELOPMENT COMPANY, INC. and B.B. Andersen Construction Co., Inc., Third-Party Plaintiffs, v. R.G. ELDER & SON COMPANY, State Surety Company and Trossen Wright & Associates, Architects, Third-Party Defendants.
• Court: Iowa Supreme Court

Page 596

387 N.W.2d 596

Clinton A. TURNER and Juanita A. Turner, Plaintiffs, v. LOW RENT HOUSING AGENCY OF the CITY OF DES MOINES, Iowa, Appellant, and B.B. Andersen Development Company, Inc., Appellee.

B.B. ANDERSEN DEVELOPMENT COMPANY, INC. and B.B. Andersen Construction Co., Inc., Third-Party Plaintiffs, v. R.G. ELDER & SON COMPANY, State Surety Company and Trossen Wright & Associates, Architects, Third-Party Defendants.

No. 84-1938.

Supreme Court of Iowa.

May 21, 1986.

Paul H. Rosenberg and Raymond Rosenberg of Rosenberg, Rosenberg & Reade, Des Moines, for appellant Low Rent Housing Agency of the City of Des Moines.

John A. Templer, Jr. and David J. Darrell of Davis, Hockenberg, Wine, Brown & Koehn, Des Moines, for appellees B.B. Andersen Development Co., Inc. and B.B. Andersen Const. Co., Inc.

Considered by UHLENHOPP, P.J., and McGIVERIN, LARSON, SCHULTZ, and CARTER, JJ.

LARSON, Justice.

A fifty-unit low-rent housing facility was built in Des Moines in a cooperative effort by the Housing and Urban Development agency of the federal government (HUD) and the Low Rent Housing Agency of the City of Des Moines. B.B. Andersen Development Company, Inc. and B.B. Andersen Construction Company, Inc. (referred to collectively as Andersen) were employed to do the work.

A steep slope on the east side of the project became a problem and resulted in a lawsuit by the adjoining owners against several defendants, including HUD, Low Rent Housing, and Andersen. The case was removed to federal court, which dismissed the claim against HUD, and the case was returned to Polk County District Court.

The original suit had, by then, gathered several crossclaims, as the principals in the housing project asserted their respective claims against the others. All of the claims in the case were resolved prior to trial except a cross-claim by Andersen against Low Rent Housing. This cross-claim sought recovery of money held by Low Rent Housing as "retainage" (to secure the completion of specified items of construction) and to recover consequential damages claimed by Andersen as a result of Low Rent Housing's delay in payment for the construction. (The delay was caused, at least in part, by a dispute over a retaining wall which is at the center of this controversy.) The district court granted judgment for the contractor, Andersen, and Low Rent Housing appealed. We affirm in part, reverse in part and remand.

The first issue before us is the scope of our review. The original suit, by the adjoining neighbors, was an action for deprivation of light and air, an equitable action. This cross-claim by Andersen, which was filed in that action, was a claim for damages, ordinarily a law action. Low Rent Housing's defense to the cross-claim centered on a "settlement" agreement entered into by it and Andersen prior to final payment under the contract. Andersen disavows the settlement agreement and seeks to avoid it on the ground of economic duress. It agrees that an original action to rescind an agreement would be in equity but argues that the present case is a hybrid in which there were both law and equitable issues. It appears to suggest a mixed scope of review.

Because the case was originally tried in equity, and because the heart of the issues on appeal is whether or not the settlement agreement may be rescinded, we review it as an equity case, de novo.

It is undisputed that the original contract did not expressly require the construction of the retaining wall at issue here. The specifications incorporated in the contract, however, required that certain procedures be followed by Andersen in order to stabilize the bank. This included stripping of vegetation, "benching," and compaction of the soil. Crown vetch, a soil stabilizing plant, was to be planted on the slope.

During construction of the project, it became apparent that these procedures were not adequate to stabilize the soil. Low Rent Housing blamed Andersen, claiming it had failed to properly follow the contract specifications in regard to soil compaction.

The problem of the eroding east bank persisted and, as final settlement neared, the problem became critical. Andersen, which by then had over a million dollars coming to it, needed the money. It was in default on its bank loan, and it claims its bonding ability was in jeopardy. According to Andersen, it was imperative for it to obtain immediate payment.

An attorney for Andersen had proposed, at one point, that Low Rent Housing pay for the remainder of the project and leave the matter of the retaining wall to be litigated later. Low Rent Housing did not reject this proposed settlement. It did, however, propose another alternative: A written settlement agreement to resolve the "punch list" issues and the problem of the retaining wall. As part of this agreement, Andersen would construct the wall, and Low Rent Housing would pay an additional $12,000 on the contract to be applied toward the wall.

The settlement agreement was signed by the parties on March 31, 1977, and the contract proceeds (less a...