Unified Contractor, Inc. v. Albuquerque Hous. Auth.

• Decision Date: 24 April 2017
• Docket Number: NO. 34,826,34,826
• Citation: 400 P.3d 290
• Parties: UNIFIED CONTRACTOR, INC., Plaintiff/Counterdefendant-Appellant, v. ALBUQUERQUE HOUSING AUTHORITY, a political subdivision, Defendant/Counterclaimant-Appellee.
• Court: Court of Appeals of New Mexico

400 P.3d 290

UNIFIED CONTRACTOR, INC., Plaintiff/Counterdefendant-Appellant,

v.ALBUQUERQUE HOUSING AUTHORITY, a political subdivision, Defendant/Counterclaimant-Appellee.

NO. 34,826

Court of Appeals of New Mexico.

Filing Date: April 24, 2017

Calvert Menicucci, P.C., Sean R. Calvert, Albuquerque, NM, for Appellant.

City of Albuquerque, Jessica M. Hernandez, City Attorney, John E. DuBois, Assistant City Attorney, Kevin A. Morrow, Assistant City Attorney, Albuquerque, NM, for Appellee.

OPINION

JAMES J. WECHSLER, Judge

{1} This litigation and appeal result from a contractual dispute between Appellant Unified Contractor, Inc. (Unified) and Appellee Albuquerque Housing Authority (AHA). Unified appeals from the district court's ruling that both parties breached the contract (the Contract) between them and that both parties were liable for damages.

{2} In its letter decision, the district court made various factual findings and legal conclusions. It also instructed the parties to submit requested findings of fact and conclusions of law within fourteen days. Neither party timely submitted findings of fact and conclusions of law.

{3} Unified characterizes several of its appellate arguments as either questions of law or mixed questions of law and fact. As discussed in detail below, to the extent that Unified's appellate arguments simply re-purpose questions of fact as questions of law, they are not well-taken.

{4} Unified does, however, raise legal arguments related to (1) its entitlement to notice of deficient performance and the opportunity to cure such deficient performance (notice and opportunity to cure) under the Contract and general principles of contract law, (2) the district court's decision to allow AHA to raise grounds for termination of the Contract other than those articulated as the basis for termination prior to trial, (3) the district court's method of calculating damages, and (4) the district court's refusal to consider Unified's motion for reconsideration. With the exception of Unified's argument as to the district court's method of calculating damages, these arguments lack merit. As to the calculation of damages, we adopt and apply the "contract price limitation rule" to the facts of this case; a decision requiring that we reverse the district court's judgment in favor of AHA in the amount of $33,281.37 and remand to the district court for entry of a final judgment in favor of AHA in the reduced amount of $22,257.34.

{5} Finally, Unified argues that it is entitled to statutory interest pursuant to the Prompt Payment Act. NMSA 1978, §§ 57-28-1 to -11 (2001, as amended through 2007). For the reasons discussed herein, we disagree. We therefore affirm in part, reverse in part, and remand to the district court for entry of a final judgment consistent with this opinion.

BACKGROUND

The Contract

{6} Unified submitted a bid in response to AHA's invitation for bids number B13001 (IFB B13001). IFB B13001 called for various construction services at four residential properties owned by AHA. The physical addresses of the properties in Albuquerque are 514 Morris NE, 716 Morris NE, 903 Nakomis NE, and 2905 Chelwood NE.

{7} Section 2.0 of IFB B13001 outlined the scope of work and technical specifications for the project. Subsection 2.3 provided that bidders could propose to substitute for products specified in IFB B13001 so long as the substitute product was "substantially equivalent or exceeding to the product [ ] identified." Subsection 2.4.1.5 required the bidder to "[p]aint [the] entire exterior of [each] building with one coat of [a]crylic base primer and one coat of elastomeric coating." Subsection 2.4.6.1.2.8 defined elastomeric coating by reference to "El Rey elastomeric coating, or equal[.]" IFB B13001 did not define a "coat" of elastomeric coating.

{8} AHA accepted Unified's bid, and the parties entered the Contract on July 15, 2013. The Contract expressly incorporated Form HUD-5370 (11/2006), which outlines general conditions for the termination of a construction contract due to default by the contractor or for the convenience of the agency. The Contract also contained various clauses related to billing and payment, including (1) a prompt payment clause, which required payment for "properly completed invoice[s]" within thirty days, and (2) a disputed billings clause, which required AHA to pay any undisputed portions of billings and to formally notify Unified of any disputed billings within ten days of receipt.

{9} On August 8, 2013, Unified submitted an elastomeric coating manufactured by UltraKote Products, Inc. for use in the project. AHA did not approve this product for use. On September 3, 2013, Unified submitted an elastomeric coating manufactured by ParexUSA for use in the project. Although disputes as to which product AHA approved continued throughout the litigation, the record shows that AHA approved ParexUSA elastomeric coating for use on the project on September 9, 2013.¹ ParexUSA elastomeric coating can be applied in one or two coats by spray, brush, or roller over porous or smooth surfaces. The stucco surfaces at issue in this case were porous. Using the "one coat" method, each pail of ParexUSA elastomeric coating would cover 125-180 square feet of a porous surface. Using the "two coat" method, each pail of ParexUSA elastomeric coating would cover 250-375 square feet of a porous surface.

The Project

{10} In September 2013, Unified began work at 716 Morris NE and 903 Nakomis NE. The contract price for these properties was $278,349. Unified submitted its first itemized invoices for work at these locations on September 24, 2013. Attachments to these invoices indicate that Unified had not yet patched stucco or applied elastomeric coating at either location. AHA paid these invoices in full.

{11} On October 16, 2013, AHA's site inspections revealed deficiencies in the appearance of the finished walls at 716 Morris NE and 903 Nakomis NE. AHA sent numerous emails and a letter between October 16, 2013 and November 13, 2013 requesting confirmation that the approved elastomeric coating was being installed in accordance with the manufacturer's recommendations. Unified repeatedly responded in the affirmative.

{12} On October 24, 2013, Unified submitted a second set of itemized invoices for work at 716 Morris NE and 903 Nakomis NE. Attachments to these invoices indicate that Unified had completed eighty-eight percent of stucco patching and elastomeric coating application at each location.

{13} On November 25, 2013, Unified submitted a third set of itemized invoices for work at 716 Morris NE and 903 Nakomis NE. Attachments to these invoices indicate that Unified had completed ninety-seven percent of stucco patching and elastomeric coating application at 716 Morris NE and one hundred percent of stucco patching and elastomeric coating application at 903 Nakomis NE.

{14} On November 26, 2013, AHA sent an email notifying Unified that, with respect to the October 24, 2013 invoices, AHA would pay for certain itemized work and withhold payment for other itemized work at the respective properties.

{15} On December 9, 2013, AHA sent another email notifying Unified that AHA would pay for certain work itemized in the November 25, 2013 invoices and would withhold payment for other itemized work. This email included attachments that differentiated between invoiced items by marking certain items "OK." On the same day, AHA exercised its contractual right to audit. The audit requested invoices demonstrating that Unified purchased the approved elastomeric coating for the project.

{16} On December 17, 2013, Unified produced the invoices and a certification letter from its supplier, ProBuild. The invoices showed that, between September 10, 2013 and October 23, 2013, Unified purchased seventy-nine pails of ParexUSA elastomeric coating.

{17} On December 18, 2013, Unified filed a complaint in district court for breach of contract, unjust enrichment, and violation of the Prompt Payment Act. The complaint alleged that AHA breached the Contract by failing to provide notice of billing disputes within ten days and by failing to make prompt payment for undisputed, invoiced items.

{18} On December 29, 2013, Unified submitted itemized invoices for work at 716 Morris NE and 514 Morris NE. Attachments to these invoices indicate that Unified had completed one hundred percent of stucco patching and elastomeric coating application at 716 Morris NE and twenty percent of stucco patching and elastomeric coating application at 514 Morris NE. AHA did not pay these invoices.

{19} On January 3, 2014, AHA terminated the Contract. As grounds for termination, AHA stated that Unified materially breached the Contract by failing to (1) use contractually required construction materials, and (2) follow the manufacturer's recommended application process for the construction materials used. AHA alleged that its inspections revealed that Unified was not following the manufacturer's recommended application process. Unified amended its complaint to include a claim of wrongful termination of the Contract. AHA answered the amended complaint and filed a counterclaim for breach of contract.

The Trial

{20} The parties conducted discovery, and the district court set the matter for trial in February 2015. Unified filed a motion for partial summary judgment, which alleged that AHA breached the Contract by failing to comply with contract provisions related to bill payment and billing disputes. The district court entered a preliminary order granting the motion with respect to liability but reserving judgment on the issue of damages.

{21} Witnesses at trial included (1) Unified President Ivan Santistevan, (2) AHA Capital Improvements Projects Coordinator James Tacosa, (3) ProBuild employee Kenneth Garcia, (4) licensed stucco contractor/expert witness Danny Carrillo,² (5) AHA Capital Improvements Manager Patrick Strosnider, and (6) AHA Executive Director Linda Bridge. Both Santistevan and Tacosa...