Wicked Prof'l Servs. v. Holland

Decision Date03 November 2022
Docket Number921-2021
PartiesWICKED PROFESSIONAL SERVICES INC. v. DANIEL HOLLAND, ET AL.
CourtCourt of Special Appeals of Maryland

UNREPORTED

Circuit Court for Worcester County Case No. C-23-CV-20-000034

Kehoe Leahy, Friedman, JJ.

OPINION [*]

Leahy J.

This appeal and cross-appeal arise from a custom home construction contract dispute. Laura and Daniel Holland appellees/cross-appellants, contracted with Wicked Professional Services, Inc. ("WPS"), appellant/cross-appellee, a home building company owned and operated by Donald Littleton, for the construction of a new home on land titled in the name of their limited liability company, Chesapeake Bay Land Company, LLC ("Chesapeake"). The Hollands filed suit against WPS for breach of contract and related claims, and WPS filed a counterclaim and a third-party complaint against Chesapeake, asserting claims for breach of contract, unjust enrichment, and related claims. The claims, cross-claims, and third-party claims were tried to the court over one day. The trial court ruled in favor of the Hollands on their breach of contract claim, awarding them $57,853.46 in damages, but against them on their claim for breach of the Maryland Custom Home Protection Act ("MCHPA"), Maryland Code, (1974, 2015 Repl. Vol., 2017 Supp.), Real Property Article ("RP"), §§ 10-501-10-509. The court entered judgment against WPS on its counterclaims and third-party claims.

On appeal, WPS presents four questions,[1] which we have consolidated and rephrased as two:

I. Did the circuit court err by determining that the parties had entered into a written construction contract and that WPS breached that contract?
II. If the written contract is binding, did the circuit court err by not enforcing paragraph 28 of the contract, which provided for WPS to receive a construction management fee?

In their cross-appeal, the Hollands challenge the trial court's decision not to award attorneys' fees under the MCHPA, and ask: "Does the [MCHPA] apply to the construction of a single family dwelling for a married couple on land owned by the couple's limited liability company?"

We hold that the circuit court did not err in determining that the parties entered into a written contract that established a fixed total price for the construction of the Hollands' home, and that WPS breached the contract when it demanded money above and beyond the total price as a condition to completing the work. We also hold that the court did not err, based on the evidence in this case, in ruling that the Hollands were not obligated to pay WPS a construction management fee.

On the cross-appeal, however, we conclude that the circuit court erred in ruling that the MCHPA did not apply in this case. Accordingly, we shall vacate the denial of the Holland's request for attorneys' fees under Count III of the amended complaint and remand for the circuit court to hold additional proceedings to determine whether the contract violated the MCHPA, and if so, whether an award of attorneys' fees under the MCHPA is justified.

BACKGROUND

Since 2011, the Hollands, through Chesapeake, have owned and managed Chesapeake Bay Dairy, a dairy farm located at 3847 Whitesburg Road in Pocomoke City ("the Property") which previously was owned by Mr. Hollands' parents' family business. For many years, the Hollands lived in an existing farmhouse on the Property. In 2017, they contracted with David Quillen, an architect, to design a "Proposed New Holland Residence" to be built on the Property. Mr. Quillen drew up plans, dated May 4, 2017, for a 3,912 square foot custom home.

Contract Negotiations

In late May or early June 2017, the Hollands were introduced by their pastor to Mr. Littleton, who owns and operates WPS. Initially, the Hollands asked WPS to construct the shell of the house for them and make it "watertight," with the expectation that they would finish the inside over time. Mr. Littleton emailed Ms. Holland on June 7, 2017 with a costs and materials proposal, with a total cost of $249,500 to construct the house, which was then planned to be built on a concrete slab except for a 400 square foot basement room. He stated that the pricing in the email included "material & labor," but that he would "try and get things done cheaper"[2] if he could. Any savings would be "passed on" to the Hollands and WPS would charge a 10 percent management fee "for scheduling and getting this project done on [sic] a timely manner [within] the budget[.]"

By June 20, 2017, the Hollands had advised WPS that they wanted him to construct and finish the house, and Mr. Littleton sent them a new proposal by email. In that email, Mr. Littleton estimated a total cost of $665,750 if the Hollands separately contracted for the well, permits, site work, and "digging for the mason." He estimated a total cost of $700,250 for him to do the whole project but added that he would try to get them "better pricing as we go along."

The Hollands decided to hire WPS to construct their home, "soup to nuts[.]" According to Mr. Quillen's contemporaneous notes from a July 7, 2017 meeting between him, the Hollands, and Mr. Littleton, WPS would be "doing the project as a mix between a [general contractor] and a [construction manager]." Mr. Littleton would "giv[e] [the Hollands] a not-to-exceed number in the contract, but will also show them bids for subs."

The Contract

On July 24, 2017, WPS emailed Ms. Holland a "Construction Contract" created from a template available on the website "rocketlawyer.com" ("the Contract"). WPS agreed to begin providing services to the Hollands on September 4, 2017. Specifically, it would "CONSTRUCT A CUSTOM HOME IN ACCORDANCE WITH PLANS AND SPEC SHEETS DESIGNED BY DAVID QUILLEN THE ARCHIETECT [sic] WITH PLANS DATED MAY 4TH, 2017 JOB # 1608." Under section 2 of the Contract, WPS would "provide all services, materials and labor for the construction" of the house, but was not responsible for the driveway, the well, clearing the lot, or the geothermal system, "unless otherwise written on a change order to be approved by all parties involved." The Hollands agreed, in section 3, to make the plans, specifications, and related construction documents available to WPS. In section 5, the Hollands "warrant[ed]" that they owned the Property and were authorized to enter into the contract.

WPS agreed, in section 6 of the Contract, to provide to the Hollands "a List of each and every party furnishing materials and/or labor to [WPS] as part of the Services, and the dollar amounts due or expected to be due with regards to provision of the Services herein described." That list was to be attached to the Contract as Exhibit A.

Section 7 governed the terms of payment. The Hollands agreed "to pay [to WPS] the total sum of $700,250.00" under a specified draw schedule. That schedule provided for six payments tied to specific events, with the first payment due upon signing the Contract and breaking ground and the final payment due when a certificate of occupancy was issued by the building department.

WPS agreed to begin construction within 30 days of September 4, 2017, and to complete the work by May 16, 2018, with "time being of the essence."[3]

Section 9 provided that modifications to the scope of the Contract only could be made by "written 'Change Order,' which is signed and dated by both parties." If a change order was executed, it would be become part of the Contract and the Hollands agreed to "pay any increase in the cost of the Construction work" resulting from a change order. Likewise, any other modifications to the Contract were required to be made in writing, signed by both parties. ¶ 24.

The indemnification clause contained in section 13 provided, in relevant part:

With the exception that this Section shall not to be [sic] construed to require indemnification by [WPS] to a greater extent than permitted under the public policy of the State of Maryland, [WPS] may agree to indemnify [the Hollands] against, hold it [sic] harmless from, and defend [the Hollands] from all claims, loss liability, and expense, including actual attorneys' fees, arising out of or in connection with [WPS]'s Services performed under this Contract.

So, it appears that the Contract permitted, but did not require, WPS to indemnify and defend the Hollands against claims, losses, liability, and expense arising from its provision of services under the Contract.

Events of material default were defined in section 18 to include a failure to "make a required payment when due" by the Hollands and a failure to perform the construction services by WPS.

An integration clause in section 22 provided:
This Contract contains the entire Contract of the parties, and there are no other promises or conditions in any other contract whether oral or written concerning the subject matter of this Contract. Any amendments must be in writing and signed by each party. This Contract supersedes any prior written or oral agreements between the parties.

Section 28, entitled "Additional Provisions," specified that WPS would "RECEIVE A MINIMUM OF TWELVE PERCENT CONSTRUCTION MANAGEMENT FEE FOR ALL ASPECTS OF CONSTRUCTION ON THE HOLLAND PROJECT."

Mr. Littleton signed the Contract electronically, on behalf of WPS, on July 24, 2017. According to Ms. Holland, she and her husband later met with Mr. Littleton and went over a hard copy of the Contract "very specifically." The Hollands then signed the Contract.

The Construction Loan

Meanwhile the Hollands, on behalf of Chesapeake, applied for a $600,000 construction loan through First Shore Federal bank ("FSFB"). The loan was approved on January 11, 2018 and was secured by a deed of trust on the Property. "Chesapeake Bay Land Company, LLC" was named in the Construction...

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