Wachter v. Gratech Co., Ltd.

• Decision Date: 24 March 2000
• Docket Number: No. 990171.,990171.
• Citation: 608 N.W.2d 279,2000 ND 62
• Parties: Gail WACHTER, aka Gail F. Wachter, Lance A. Wachter, and Wachter Development L.L.C., Plaintiffs and Appellants, v. GRATECH COMPANY, LTD., Defendant and Appellee
• Court: North Dakota Supreme Court

608 N.W.2d 279

2000 ND 62

Gail WACHTER, aka Gail F. Wachter, Lance A. Wachter, and Wachter Development L.L.C., Plaintiffs and Appellants, v. GRATECH COMPANY, LTD., Defendant and Appellee

No. 990171.

Supreme Court of North Dakota.

March 24, 2000.

William C. Severin, Severin, Ringsak & Morrow, Bismarck, N.D., for plaintiffs and appellants.

Richard P. Olson (argued) and Troy J. Eickhoff (appearance), Olson Burns Lee, Minot, N.D., for defendant and appellee.

MARING, Justice.

[¶ 1] Gail Wachter, Lance A. Wachter, and Wachter Development, L.L.C. ("Wachter"), appealed from a judgment dismissing with prejudice an action against Gratech Company, Ltd. ("Gratech") for slander of title, abuse of process and lost profits, and awarding Gratech $118,370 plus interest on its counterclaim against Wachter for breach of contract. We conclude the trial court's findings that Wachter breached the parties' contract, Gratech suffered $118,370 in damages as a result of the breach, and Gratech did not commit an abuse of process, are not clearly erroneous. We affirm.

I

[¶ 2] On February 22, 1996, Wachter hired Gratech to excavate about 300,000 cubic yards of dirt for a housing development. The terms of the parties' contract were set forth in a letter from Gratech to Wachter:

This is to confirm the work to be accomplished and the price and payment terms for the referenced project.

Grading items per your X-X-96 drawing, which consists of the removal of clay embankment material from a "borrow" area and the placement of this material in a nearby "fill" area. The approximate quantity of excavated material is 300,000 cubic yards and the approximate average haul distance is 3,000 feet.

Price per cubic yard of excavation:

• First 150,000 cy— $.85

• Second 150,000 cy— $.79

Our price includes:

• All labor, equipment and material necessary to provide cut and fill grades as specified.

• Clearing, grubbing and stockpiling the trees in the fill area for removal by others.

• Compaction of embankment in the area of streets as specified by Engineer.

Our price does not include:

• Building permits (if required)

• Utility relocation costs (if any)

• Compaction tests

• Initial layout of the work and "bluetops"

• Initial and final cross-sectioning of excavation area

....

We ask that a payment in the amount of $20,000 be made at the start of mobilization, that progress payments be made bi-weekly based on estimated quantities and that final payment be made within 10 days of completion....

We understand your objective is to have this site ready for water and sewer line installation in approximately 8 to 10 weeks. We will commit the necessary resources in that effort, but cannot accept responsibility for weather related or other unforeseen delays outside our control.

[¶ 3] The excavation was part of Wachter's plan for the development of two subdivisions. Swenson Hagen & Company ("Swenson Hagen"), an engineering firm, designed the housing project and proposed digging a lake and using the fill from the lake to raise the elevation of nearby land so it could be developed. Although the excavation was initially estimated to involve more than 300,000 cubic yards of dirt, Wachter estimated the total for compacted fill to be about 240,000 cubic yards. Gratech was to excavate the proposed lake and move the fill to a development area known as Cottonwood Lake Fifth Addition, which did not include the waterfront property. Wachter planned to develop the waterfront property at a later time.

[¶ 4] Gratech initially believed excavation of the lake would require the removal of eight feet of dirt and the company based its proposal to Wachter on that assumption. Before beginning work on the project, however, Gratech realized it would be required to remove 13 feet of dirt, which would involve excavating from below the water table. Swenson Hagen provided markers called "blue tops," which indicated how much fill was needed to be placed into the development area.

[¶ 5] Gratech began the excavation project in February 1996. Gratech soon encountered water at the 13-foot level, which caused problems creating a smooth bottom for the lake. Gratech employees met with Swenson Hagen's land consultant and Wachter's agent to explain these problems. Rather than creating a flat bottom, Gratech dug a series of holes resembling basements and knocked down the walls between them to deal with the challenge of digging below the water table. Wachter's agent and the land consultant either approved or did not object to Gratech's method of digging the lake bottom. This method resulted in an "egg carton" bottom with small "islands" in the lake. Gratech employees said Wachter representatives told them they were not concerned about the bottom of the lake being flat, but were primarily concerned that sufficient dirt be removed to bring the fill area to the correct grade or elevation.

[¶ 6] Shortly before Gratech completed the project in September 1996, Gratech employees met with the land consultant and Wachter's agent, who expressed concerns about the uneven bottom of the lake. After a Gratech employee reminded them about their earlier meeting regarding the difficulty in making the bottom of the lake flat, there was no further discussion about the lake bottom. The land consultant and Wachter's agent viewed the fill area and requested that Gratech stockpile 4,000 cubic yards of fill for later use.

[¶ 7] On September 4, 1996, Lance Wachter wrote to Gratech stating he knew Gratech would be finished with the excavation project in a few days.

Therefore, I will have the lake crossed-sectioned [sic] to determine the amount of yards excavated. The only problem we have now is the islands in the lake. Who is going to pay, to straighten out.

[¶ 8] Gratech responded on September 6, 1996, telling Wachter:

During discussion with your representatives, Gratech's project superintendents pointed out that it was not possible to excavate to the "neat line" in these conditions. They were told the primary objective of the project was to obtain material for fill and that the final condition of the borrow area bottom was not a significant concern.

Our position on this matter is that we have done the best we can to deal with a condition that was not apparent at the time the agreement was made. Any further work on the borrow area must be for the account of others.

In any event, though, we believe that over time the lake bottom will level out on its own. We do not feel any of the parties involved should spend money in this effort.

Wachter did not respond to Gratech's letter.

[¶ 9] On January 20, 1997, Gratech sent Wachter a final invoice for $66,761. The invoice was based on information about the amount of dirt excavated provided by the Swenson Hagen land consultant. Gratech later learned the land consultant had not had the property cross-sectioned as called for by the contract, but had used a different method of calculating the amount of dirt excavated. Cross-sectioning is a process where measurements are taken of the topography of land to determine how much dirt has been removed or added. Generally, information concerning the topography before changes are made and after changes are made is necessary to gain an accurate measurement. The land consultant said the lake could not be accurately cross-sectioned because of the pitted nature of the bottom of the lake. However, cross-sectioning also was not performed before Gratech began the excavation project, and Gratech was not told before sending the final invoice of the failure to cross-section the lake.

[¶ 10] On December 12, 1997, almost 11 months after the final invoice had been sent and no payment had been made, Gratech again wrote to Wachter claiming Wachter had not acted in accordance with the contract, had changed the scope of the work, had failed to perform cross-sectioning and had failed to make payments. Gratech informed Wachter that, because of these reasons, Wachter would be billed on an "equipment time" hourly basis and requested payment of $571,297.65. Wachter did not respond to the letter or pay the invoice.

[¶ 11] On May 20, 1998, Wachter was served by certified mail with a notice of intention to claim a mechanic's lien. However, Wachter refused the certified mail, and on June 9, 1998, Gratech filed a mechanic's lien in the amount of $571,297.65. [¶ 12] On June 12, 1998, Wachter brought this lawsuit against Gratech, seeking damages for slander of title, abuse of process and lost profits. Gratech counterclaimed for breach of contract and sought release of land sale proceeds from the development, which had been deposited in escrow by agreement of the parties, payment of $691,126.81 in principal and interest on the mechanic's lien, and a declaration that its lien be given first priority on the development property. On October 5, 1998, the trial court ruled the mechanic's lien could be enforced only in the amount of $102,570.90, with interest at the legal rate, but further ruled Gratech "may prove damages in excess of that amount when the issues between the parties are tried."

[¶ 13] Following a bench trial, the trial court found Gratech's filing of the mechanic's lien was not an abuse of process or slander of title, and Wachter "failed to establish a claim for lost profits." The court found Gratech was "justified" in filing its mechanic's lien because Wachter "failed to pay the amounts claimed due by Gratech, failed to communicate with Gratech regarding the disputed claim, and provided misleading information regarding the amount of fill excavated." Although Gratech filed the mechanic's lien in an amount higher than appropriate, the court reasoned this was "the result of Wachter's own failure to respond reasonably."

[¶ 14] On the counterclaim, the trial court ruled Wachter materially breached the contract "by failing to have cross-sectioning done to determine the amount of dirt moved and by failing to make payments." Although Wachter estimated...