Weaver v. Grafio, 90-808.

• Decision Date: 09 August 1991
• Docket Number: No. 90-808.,90-808.
• Citation: 595 A.2d 983
• Parties: Gerald WEAVER and Katherine Brewer, Appellants, v. Sai GRAFIO, Appellee.
• Court: D.C. Court of Appeals

595 A.2d 983

Gerald WEAVER and Katherine Brewer, Appellants, v. Sai GRAFIO, Appellee.

No. 90-808.

District of Columbia Court of Appeals.

Argued May 6, 1991.

Decided August 9, 1991.

Gerald Weaver and Katherine Brewer, pro se.

Alan Dumoff, Washington, D.C., for appellee.

Before ROGERS, Chief Judge, STEADMAN and FARRELL, Associate Judges.

ROGERS, Chief Judge:

Appellants Gerald Weaver and Katherine Brewer brought this suit against appellee Sai Grafio for breach of contract, defamation, and intentional infliction of emotional distress. The trial judge granted Grafio's motion for dismissal and summary judgment on the grounds that the breach of contract claim was barred by res judicata and that appellants had failed to raise a genuine issue of material fact on the remaining claims. We affirm.

I.

Appellee Sai Grafio, a professional housepainter, agreed to paint appellants'¹ house for $5,650. The parties' contract provided that payments were to be made in three installments, with the final installment of $1,845 to be paid when the work was completed. Prior to this time, however, appellants began to raise questions about the quality of Grafio's work. The parties' relationship continued to deteriorate, and when the final payment was due, appellants paid with a check on which they had placed a stop payment order.

Grafio sued appellants in the Small Claims Branch of the Superior Court for the final $1,845 owed on the contract. Appellants filed a separate suit in the Civil Division against Grafio for breach of contract, fraudulent misrepresentation and property damage, consisting of Grafio's failure to obtain a smooth finish on the painted surface. Appellants alleged that the paint job appeared lumpy and that the paint peeled, and ascribed these problems to Grafio's failure to properly sand and spackle the surface of the house before painting. They also alleged that Grafio had left trash in their yard and footprints in the paint on their roof. Appellants later amended their complaint, adding claims of defamation and intentional infliction of emotional distress. According to the amended complaint, Grafio sent appellants a copy of a letter that he had sent to the Bar Ethics Committee of the D.C. Bar accusing appellants of a felony for knowingly passing a bad check.

At the start of the Small Claims action, appellants moved to consolidate the two lawsuits. Grafio opposed the motion and it was denied by the Hearing Commissioner. Following a two-day trial in the Small Claims Branch, Judge Levie ruled that Grafio had substantially performed his contract to paint appellants' house. The judge found that Grafio had warned appellants that their house, which was extremely old, was difficult to paint and that rotten boards and the many previous coats of paint would make it almost impossible to create a smooth finish. He credited the testimony of Grafio's expert that the paint job was as good as could be expected under such conditions. He further stated that he had examined photographs of the alleged damage to appellants' property and concluded that Grafio was responsible only for a single footprint on the roof. Thus, the judge awarded Grafio $1,845 less $50 as a setoff to pay for the cost to appellants of removing the footprint.

Appellants filed a motion to reconsider or to reopen the record, claiming that they were surprised by Judge Levie's ruling on the question of setoff, and that because they had not expected him to reach that issue, they had failed to present all the evidence in support of their damages claim. Judge Levie denied the motion on the grounds that appellants had an ample opportunity to present evidence of property damage as a defense to Grafio's contract claim and could have contested Grafio's testimony that the cost of fixing the footprint was approximately $50.

Grafio thereafter moved for dismissal of appellants' breach of contract claim in the Civil Division, on the grounds that it was barred by res judicata, for summary judgment on the defamation and intentional infliction of emotional distress claims, and for sanctions under Super.Ct.Civ.R. 11. In his Super.Ct.Civ.R. 12-I(k) statement, Grafio asserted that the letter he had sent to the Ethics Committee was privileged and, although the letter showed a "cc:" to Channel 7, he denied publication of the letter to Channel 7. Appellants opposed the motion and, in the alternative, requested leave to amend further their complaint to refer to the letter being sent to Channel 7; in their Rule 12-I(k) statement, appellants disputed that Grafio had not sent the letter to Channel 7, noting the admission on the letter in the form of the "cc:" and his admission that he had sent the letter to the other two "cc:"s noted on the letter. Grafio, in reply, submitted an affidavit to the effect that the letter, which formed the basis for the defamation and intentional infliction of emotional distress claims, was never sent to Channel 7. Judge Bacon granted the motion to dismiss appellants' complaint on the grounds that all of the issues in the breach of contract claim were litigated or should have been litigated in the Small Claims suit brought by Grafio, and that Grafio was entitled to judgment as a matter of law on the remaining claims since there were no genuine issues of material fact. The remainder of the order set a date for argument on the issue of whether sanctions should be imposed.

II.

A threshold issue is whether the court has jurisdiction to review Judge Bacon's order. See Super.Ct.Civ.R. 54(b) (1990); Customers Parking, Inc. v. District of Columbia, 562 A.2d 651, 654 (D.C.1989) ("lack of subject matter jurisdiction can be raised any time, even by this court itself, sua sponte"). Although the order dismissed appellants' complaint in its entirety, Grafio's motion for sanctions under Rule 11 remains unresolved. Ordinarily the court will review only those orders which decide all of the issues in a case. Jones v. American Express Co., 485 A.2d 607, 609 (D.C.1984) (noting that "strict compliance with Rule 54(b) is an absolute necessity"); McDiarmid v. McDiarmid, 594 A.2d 79, (D.C.1991) (dismissing as nonfinal an order proposing a "hypothetical" or "tentative" distribution of marital property). The Supreme Court has held, however, in an analogous context, that a judgment disposing of the "merits," leaving only the question of attorney's fees, is a final appealable order. Budinich v. Becton Dickinson & Co., 486 U.S. 196, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988). The Court reasoned that the finality rule should focus on "a practical approach," not on "the preservation of conceptual consistency." Id. at 202, 108 S.Ct. at 1721. Because the request for attorneys' fees raises issues that are, for all practical purposes, "`collateral to' and `separate from' the decision on the merits," id. at 200, 108 S.Ct. at 1720, the Court held that the order disposing of the merits was immediately appealable.

Similar reasoning persuades us that an order disposing of all issues except Rule 11 sanctions should be treated as immediately appealable. As with attorney's fees, a motion for sanctions under Rule 11 raises issues that "are not tied to the outcome of litigation; the relevant inquiry is whether a specific filing was, if not successful, at least well founded." Business Guides, Inc. v. Chromatic Communications Enterprises, Inc., ___ U.S. ___, 111 S.Ct. 922, 934, 112 L.Ed.2d 1140 (1991). We agree with the conclusion of the United States Court of Appeals for the Seventh Circuit that the reasoning of Budinich applies with equal force to a pending Rule 11 motion:

A trial courts' intentional deferral of action on a motion for Rule 11 sanctions, when it enters a judgment definitely and completely disposing of the underlying action, constitutes a determination on the part of the trial court that its disposition of the motion for sanctions will not impact upon its resolution of the underlying litigation. Under these circumstances, a "practical approach" to the matter of finality counsels that we not defer consideration of the merits until the trial court addresses the matter of sanctions.

Cleveland v. Berkson, 878 F.2d 1034, 1036 (7th Cir.1989); see also Bogney v. Jones, 904 F.2d 272, 273 n. 1 (5th Cir.1990) (a "notice of appeal was not filed until after the district court entered its sanction award, and was thus too late to pertain to the court's earlier decision on the merits").

Accordingly, we hold that the court has jurisdiction to entertain this appeal even though the trial judge has not yet ruled on the pending motion for sanctions under Rule 11.

III.

Judge Bacon dismissed appellants' breach of contract claim as barred by issue preclusion: the issues raised had already been conclusively decided against appellants in the Small Claims action.² Appellants contend that the Small Claims action determined only that Grafio substantially performed the contract, and did not determine whether he should be held responsible for breach of the contract. To the extent Judge Bacon made findings relevant to the setoff, appellants claim that these rulings were unnecessary, and that they were surprised by them. Appellants' contentions are unpersuasive.

The doctrine of substantial performance is a "rule of recovery that the contractor has a right to the contract price, less compensatory damages for the injury caused by his breach." 3A CORBIN ON CONTRACTS § 709 at 334-35 (1960); see also Matthew A. Welch & Sons, Inc. v. Bird, 193 A.2d 736, 738-39 (D.C.1963) ("a contractor is entitled to recover the contract price less compensatory damages for any injuries found to be due to defective or incomplete work"). In the Small Claims action appellants asserted the defense that Grafio had breached the contract in a material fashion. For example, as Judge Levie recounted in his opinion and order denying appellants' motion to reopen the record,³ "in the direct examination of Grafio, appellants raised the...