Unerstall Foundations, Inc. v. Corley

• Decision Date: 25 January 2011
• Docket Number: No. ED 93624.,ED 93624.
• Citation: 328 S.W.3d 305
• Parties: UNERSTALL FOUNDATIONS, INC., Holdings, Inc., Respondent, v. Caroline M. CORLEY, Mortgage Electronic Registration Systems, Inc., South and Associates, P.C., Trustee, Edward Jones Mortgage, LLC and Joyce Novotny, Appellants, and Bruce J. Zebel, Defendant.
• Court: Missouri Court of Appeals

328 S.W.3d 305

UNERSTALL FOUNDATIONS, INC., Holdings, Inc., Respondent,

v. Caroline M. CORLEY, Mortgage Electronic Registration Systems, Inc., South and Associates, P.C., Trustee, Edward Jones Mortgage, LLC and Joyce Novotny, Appellants,andBruce J. Zebel, Defendant.

No. ED 93624.

Missouri Court of Appeals,

Eastern District,

Division Five.

Oct. 12, 2010.

Motion for Rehearing and/or Transfer t Supreme Court Denied Nov. 23, 2010.

Application for Transfer Denied Jan. 25, 2011.

Richard F. Huck III, Clayton, MO, for appellants.

Kurt A. Voss, Washington, MO, for respondent.

PATRICIA L. COHEN, Judge.

Introduction

Caroline M. Corley (Corley) appeals from the judgment of the Circuit Court of St. Louis County in favor of Unerstall Foundations, Inc. (Unerstall) on its claims for quantum meruit and enforcement of a mechanic's lien. On appeal, Corley claims that: (1) the trial court erred in not reducing Unerstall's recovery by virtue of either a set-off or recoupment and the trial court's judgment in favor of Unerstall is inconsistent with its judgment in favor of Corley and against Zebell; (2) Unerstall failed to prove that Corley was unjustly enriched as required for a claim of quantum meruit; (3) the trial court applied the wrong interest rate and calculated interest based on an incorrect commencement date; and (4) Unerstall's mechanic's lien statement was deficient because it did not contain a "just and true account" of Unerstall's demand. We affirm in part and reverse and remand in part.

Background

On April 2, 2007, Corley contracted with Bruce Zebell d/b/a Bruce J. Zebell L.L.C. Construction Management Services (Zebell) to construct a new house for Corley with Zebell serving as the general contractor on the project and Corley agreeing to pay $216,134. Zebell hired Unerstall as a subcontractor to perform concrete work on the house's footings, foundation, and basement floor pursuant to plans prepared by Contempri Homes and approved by the City of Richmond Heights (the City). The agreement between Zebell and Unerstall provided that interest on any unpaid balance would accrue at two percent per month. Unerstall did not have an agreement with Corley.

In July 2007, other subcontractors hired by Zebell surveyed and excavated footings for the house. After the footings were dug, Unerstall poured the footings and foundation. Unerstall did not participate in digging the footings or setting the final grade for the footings. Unerstall later poured a concrete floor for the basement and a driveway, sidewalks, and two patio slabs. Unerstall last worked on the property on October 22, 2007.

After Unerstall completed its work, Corley discovered multiple problems with Zebell's work including that a portion of the footings did not comply with the applicable building code. The building code requires that the depth of all footings be a minimum of thirty inches below the final grade. On November 27, 2007, Corley terminated her contract with Zebell.

Unerstall submitted invoices totaling $31,478.90 to Zebell for the concrete work, with the last invoice submitted on October 18, 2007. Unerstall also submitted a demand letter through his counsel to Corley requesting payment on December 21, 2007. Neither Zebell nor Corley paid Unerstall for the concrete work. On March 27, 2008, Unerstall filed a mechanic's lien statement against the property for the sum of theinvoices plus interest. Unerstall attached supporting documentation to the lien statement including the invoices, time sheets, and materials receipts.

On July 11, 2008, Unerstall filed suit against Corley and Zebell seeking, inter alia, enforcement of the mechanic's lien and recovery for quantum meruit. Corley denied Unerstall's allegations and filed a cross-claim against Zebell alleging breach of contract. The trial court held a bench trial on February 27, 2009, and March 23, 2009.

At trial, Albert Unerstall, Unerstall's president, testified that Unerstall was not responsible for either the grading or digging of the footings, another subcontractor excavated the footings before Unerstall arrived on the job site, and Unerstall was only responsible for pouring the footings, foundation, and the external flatwork. Mr. Unerstall further testified that he followed Zebell's directions because Zebell was the general contractor on the project. Mr. Unerstall conceded that he did not have any agreement with Corley regarding the interest rate to be charged on unpaid balances and that the depth of a portion of the footings did not comply with the building code.

Zebell confirmed Mr. Unerstall's testimony that Unerstall was not responsible for the grading or digging of the footings and that as general contractor, Zebell directed Unerstall's work. Zebell also testified that Unerstall poured the footings consistent with the approved plans and his directions and he had no issue with the work Unerstall performed. Zebell admitted that some of the footings did not meet building code requirements.

The City building commissioner and senior building inspector opined that if the depth of any of the footings was less than thirty inches below grade, then such footings did not comply with the building code. However, the building commissioner testified that the City approved the footings and did not find any issues with Unerstall's work. Corley's architect also testified that a portion of the footings did not comply with the building code because they were not sufficiently deep. He proposed a method to make the deficient footings code compliant, but the repair would cost approximately $36,500.

Corley testified that she paid Zebell and the other subcontractors, excluding Unerstall, a total of $178,214.75 before terminating Zebell. Corley hired other contractors to repair Zebell's mistakes and complete the construction on the house. Corley paid the new contractors a total of $68,987.46. Corley admitted that Unerstall performed work on the house for which she had not paid anyone and that she did not have any evidence that Unerstall's work did not conform to the approved plans or Zebell's directions.

The trial court entered a judgment in favor of Unerstall against Corley and Zebell, jointly and severally, on its claims for enforcement of a mechanic's lien and quantum meruit. The trial court specifically found that Unerstall performed its work on the project in a workmanlike manner and awarded Unerstall $31,478.90 in damages and interest at a rate of two percent beginning on November 6, 2007. The trial court also found in favor of Corley on her cross-claim against Zebell and awarded her $36,500 for the cost of repairing the footings and $30,487.46 for the excess costs Corley incurred in completing the house. Corley filed a motion for new trial, which the trial court denied. This appeal followed.

Standard of Review

We will affirm the judgment of the trial court in a court-tried case unlessthere is no substantial evidence to support it, it is against the weight of the evidence, or the trial court erroneously declared or applied the law. Mo. Land Dev. Specialties, LLC v. Concord Excavating Co., L.L.C., 269 S.W.3d 489, 496 (Mo.App. E.D.2008) (citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976)). We view the evidence and all reasonable inferences drawn therefrom in the light most favorable to the judgment. Gateway Foam Insulators, Inc. v. Jokerst Paving & Contracting, Inc., 279 S.W.3d 179, 184 (Mo. banc 2009). We disregard all evidence and inferences contrary to the judgment. Id. This court will generally defer to the trial court's findings of fact but will review conclusions of law without any deference. Mo. Land Dev. Specialties, 269 S.W.3d at 496.

Discussion

1. Set-off, Recoupment, and Inconsistent Judgments

In her first point on appeal, Corley contends the trial court erred in failing to reduce Unerstall's award for the cost of repairing the footings because "Corley was entitled, under the doctrine of recoupment, to a set-off." Corley argues either recoupment or set-off is warranted because the evidence supports a finding that Unerstall performed its work in an unworkmanlike manner by failing to comply with the applicable building code. Unerstall asserts that the trial court did not err because Corley's claim of defective performance did not apply to work for which Unerstall was responsible. Corley also claims in her first point that the trial court's judgment in favor of Unerstall was fatally inconsistent with the judgment in favor of Corley on her cross-claim against Zebell.

Though Corley refers interchangeably to recoupment and set-off in her brief, they are distinct theories. See Tindall v. Holder, 892 S.W.2d 314, 326 (Mo.App. S.D.1994). Set-off is a remedy employed by a defendant "to discharge or reduce plaintiff's claim by an opposite claim arising from a transaction extrinsic to the plaintiff's cause of action." Sveum v. J. Mess Plumbing, Inc., 965 S.W.2d 924, 926-27 (Mo.App. E.D.1998) (internal citation omitted). Set-off permits a trial court to enter an affirmative judgment in favor of a defendant if defendant's claim exceeds the plaintiff's claims. Edmonds v. Stratton, 457 S.W.2d 228, 232 (Mo.App.1970).

Conversely, recoupment is a defense that reduces or eliminates a plaintiff's recovery through proof of plaintiff's defective performance but does not permit an affirmative judgment in favor of a defendant. RPM Plumbing Mech., Inc. v. Jim Plunkett, Inc., 46 S.W.3d 60, 62 (Mo.App. W.D.2001); Edmonds, 457 S.W.2d at 232. Unlike set-off, recoupment allows for a reduction in a plaintiff's claim only if a defendant's claim of defective performance arises from the same transaction supporting the plaintiff's claim. Edmonds, 457 S.W.2d at 232; see also 80 C.J.S. Set-off and Counterclaim § 37 (2010). To establish a right to recoupment, a defendant must prove that the plaintiff performed defective work. See Edmonds, 457 S.W.2d at 232-34.

We first find that the trial court did not err in refusing to apply a set-off to the...