E. V. Cox Const. Co. v. Brookline Associates

• Decision Date: 20 November 1979
• Docket Number: No. 2,No. 51600,51600,2
• Citation: E. V. Cox Const. Co. v. Brookline Associates, 604 P.2d 867 (Okla. Civ. App. 1979)
• Parties: E. V. COX CONSTRUCTION CO., a corporation, Appellant, v. BROOKLINE ASSOCIATES, a general partnership, and its individual partners, David C. Sprague, Moss Travis, R. Paul Sprague, Theodore R. Racossin, and LeRoy Rubin, Individuals, Appellees
• Court: United States State Court of Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

Page 867

604 P.2d 867

E. V. COX CONSTRUCTION CO., a corporation, Appellant, v. BROOKLINE ASSOCIATES, a general partnership, and its individual partners, David C. Sprague, Moss Travis, R. Paul Sprague, Theodore R Racossin, and LeRoy Rubin Individuals, Appellees.

No. 51600.

Court of Appeals of Oklahoma, Division No. 2.

Nov. 20, 1979 Released for Publication by Order of Court of Appeals Dec. 20, 1979.

Appeal from the District Court of Oklahoma County; Raymond Naifeh, Trial Judge.

Action by contractor to recover amounts due under a construction contract. Owner counterclaimed for damages arising out of alleged breach by contractor. From a judgment in its favor contractor appeals seeking a higher award and owner cross-appeals from the judgment denying it relief on its counterclaim.

AFFIRMED AS MODIFIED.

John B. Hayes, Looney, Nichols, Johnson & Hayes, Oklahoma City, for appellant.

Robert E. Manchester and James E. Britton, McClelland, Collins, Sheehan, Bailey & Bailey, Oklahoma City, for appellee.

BRIGHTMIRE, Judge.

A general contractor, engaged to build a five story office complex in Oklahoma City, filed this lawsuit against the project owners for the balance claimed to be due under the contract along with damages for the owners' breach. Plaintiff E. V. Cox Construction Co. was granted a judgment against defendants Brookline Associates, a partnership, and its partners. Cox, however, thought the amount awarded inadequate and perfected this appeal. Brookline which had cross-petitioned for damages it said it sustained as a result of a breach of the contract by Cox cross-appealed from a judgment denying it relief. Both parties raise multiple questions out of a complexity of facts, lengthy contractual terms, and cloudy law.

I

On December 15, 1972 the parties entered into a written agreement an AIA Standard Form Contract calling for the construction of the Ehr-Lite Tower at a cost of $954,653. Work was to be completed within 210 days after its commencement. Final plans and specifications were in rough outline form only when the contract was signed and were not completed until January 1973. A change order was executed on May 29, 1973 increasing the contract price to $970,321, and Cox began work June 4, 1973 making its completion date December 1, 1973.

The building was not finished December 1, 1973. Nevertheless, Cox continued working and Brookline continued making progress payments. June 1974 arrived and the building still was not completed. Brookline's lender began to threaten foreclosure because the borrower would not repay $25,000 for interest the loan company had inadvertently failed to deduct when it made progress payments to Cox. It was also about this time that Brookline failed to make a progress payment that had come due and, when Cox complained, Brookline disclosed it had decided to abandon the project and terminate the contract.

The status of the situation at termination was this: Cox had received 13 progress payments totaling $810,530; there remained unpaid a fourteenth progress payment in the amount of $29,053.58, $8,578.80 on a Brookline check that had failed to clear, and retainage of $44,624.07; and the building was complete except for interior finishing work subcontracted to the Ehr-Lite Company. Cox estimated the final completion work would run about $211,000 thus pushing the total building cost over the contract price by about $56,000. The contractor tried to talk Brookline out of abandoning the project pointing out that Ehr-Lite was bonded and its surety would have to finance the work if Ehr-Lite defaulted. ¹ Brookline, however, would not relent. The loan company foreclosed its mortgage and Jim Cox (the president of Cox) purchased the unfinished building at the sheriff's sale.

Cox filed this action in February 1975 seeking recovery of the $44,624.07 retainage, $37,632.38 in unpaid progress payments, and $35,000 in lost profits. Brookline answered with a general denial and later a counterclaim for $50,850.26 the amount, it pleaded, of the damage it had sustained due to what it claimed was an "overpayment" to Cox as a result of the contractor's breach of the contract in failing to complete the structure within the agreed 210 day period.

The case was tried to the court October 28, 1975 and March 23, 1976. Findings of fact and conclusions of law were not filed until August 26, 1977 and judgment not entered until October 6, 1977. The court ruled in favor of Cox but awarded it only $37,326.27, the amount of the unpaid progress estimates. Brookline's counterclaim was rejected.

II

Cox contends first of all that it should have been given judgment for the retainage as well as for the profits it lost as a result of Brookline's premature termination of the contract. Its argument though somewhat convoluted if not contradictory is, essentially, that the trial judge's failure to award it the retainage arose from a misconstruction, or at least a misunderstanding, of the contract's General Conditions as manifested in numbered paragraph 12 of his Conclusions of Law. ² It argues that the condition relied on by the court Article 9.7.4 ³ allows a contractor to recover retainage after it has been Permitted to "substantially complete" a project but where final completion is delayed through no fault of its own. It does not, Cox says, govern situations such as the instant case where the owner abandons a project before it has even reached the "substantial completion" stage, and, therefore, the lower court erred when, on the basis of its construction of Article 9.7.4, it made "substantial completion" a prerequisite to Cox's right to recover the full amount it had earned prior to Brookline's termination. Tossed in alternatively is a claim that the "General Conditions" were not part of the contract at all because they were not incorporated therein by reference, and although the court erroneously found otherwise, he "properly concluded that the parties 'never acted under the A.I.A. General Conditions' " so they therefore did not apply.

Nonetheless, continues the argument, if the conditions are considered to be a part of the contract then one other than the one relied on by Brookline controls, namely, Article 14.1 dealing with termination of the contract by the contractor. This condition supports its legal theory, says Cox, and provides that in the event the owner fails to make the required progress payments, the contractor may terminate the contract and recover payment from the owner for work completed and lost profits. Cox cited M & W Masonry Construction, Inc. v. Head, Okl.Ct.App., 562 P.2d 957 (1976) as case authority in further support of its position. And, it adds, the fact that the cost of finishing exceeds the amount of retainage is not a hindrance because a bonding company is in the background.

So, concludes Cox, it is clear that it did all it was contractually obligated to do and that the lack of final completion was attributable solely to Brookline's failure to furnish plans for the interior finishing and its ultimate abandonment of the project.

Brookline's response to this line of reasoning is that 9.7.4, not 14.1, is the applicable article because it was Cox's untimely performance which caused the project to collapse and which also made it unable to pay Cox's fourteenth progress estimate. The owner goes on to argue that incorporation of the AIA General Conditions into the contract was accomplished in the Standard Form contract Articles 1 and 8. ⁴ And, it continues, if indeed agreement Article 8.2 does create a contractual ambiguity by failing to include the General Conditions among the specific documents included in the contract, then testimony regarding the intention of the parties becomes an important predicate for a finding resolving that issue. Such testimony, Brookline says, surfaced during the trial and the issue was resolved against Cox.

But, as Brookline realizes, there is still another obstacle in the path of its reliance on the General Conditions and that is the trial court's further conclusion that the parties never acted in accordance with them and therefore waived any obligations they created. In an effort to escape the thrust of this Brookline offers what it sees as fatal inconsistencies between that conclusion and certain of the trial judge's other conclusions and findings which seemed to indicate that the parties did act under the General Conditions. And to somehow bolster this argument, as it were, Brookline points out yet another inconsistency, viz., between the trial court's Conclusion 6 on the one hand that Cox breached the contract and Conclusions 3 and 5 on the other that the parties modified the performance time and waived other conditions. ⁵ One cannot, says Brookline, have both a modification or waiver of contractual terms after a breach, but only a "waiver of a breach."

III

We think it would not profit us to pursue all the secondary and tertiary issues conceivable in this complex and hard fought case. As is usual in building construction contract cases things frequently happen which create gray problem areas puzzling to both parties and the court. But no matter how difficult the questions are nor how uninspiring the factual situation is, a decision ultimately has to be made. And while meting out perfect justice is our goal, its elusiveness will doubtless result in only a proximate attainment.

To resolve the central issues we think it best to consider the defaults or other conduct of the parties in the chronological order of their commission and discuss the consequence of each.

First of all it is undisputed that Cox did not complete the structure within the agreed time. Work continued past the 210 day deadline as though no limit existed. No exculpatory excuse for the seven month overtime was shown nor did Cox ever submit any written request for an extension of the contract period as required by General Condition Article 8.3. Brookline, however, did not declare...