SAMUEL GRAYSON v. RANDY LEE CARPENTER
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RENDERED: APRIL 6, 2007; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2005-CA-002266-MR
SAMUEL GRAYSON
v.
APPELLANT
APPEAL FROM MASON CIRCUIT COURT
HONORABLE JOHN W. MCNEILL, III., JUDGE
ACTION NO. 04-CI-00235
RANDY LEE CARPENTER
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: ABRAMSON AND STUMBO, JUDGES; KNOPF,1 SENIOR JUDGE.
STUMBO, JUDGE: Samuel Grayson, d/b/a Samuel Grayson Construction, appeals from
findings of fact, conclusions of law and judgment of the Mason Circuit Court in his
action to enforce the terms of a residential construction contract. Grayson argues that he
is entitled to the contract price without deduction for set-offs, that the circuit court's
calculations and findings were erroneous, and that the court improperly relied on hearsay
evidence. For the reasons stated below, we affirm the judgment on appeal.
1
Senior Judge William L. Knopf, sitting as Special Judge by assignment of the Chief Justice pursuant to
Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
On October 31, 2003, Grayson entered into a written contract with Randy
Lee Carpenter providing that Grayson would build a house on a parcel of real property
owned by Carpenter. Under the terms of the contract, Grayson was to provide and
supervise all labor and obtain all materials necessary for the project. The contract set
forth a list of building materials to be supplied by Grayson, and reflected a 5% building
charge to compensate Grayson for purchasing and delivering the materials to the site.
Carpenter was required to pay Grayson by the 10th day of each month for building
materials that Grayson had purchased. The total cost of the project was $164,464, which
was payable in two installments. Grayson also was entitled to payment for the costs of
any unanticipated “extras”. The contract further provided that Carpenter would pay $200
for every day between the date of Carpenter's possession and the date of full payment.
Grayson was to complete the project based on a picture and floor plan that Carpenter had
torn from a magazine or other publication.
Construction on the project commenced, after which it was later alleged that
the parties entered into various oral agreements to alter the specifications. One such
agreement, for example, provided that Carpenter would procure certain building materials
and provide them to Grayson or the subcontractors for inclusion in the project.
Carpenter took possession of the house on or about August 8, 2004. It was
Grayson's belief that the house had been completed and accepted by Carpenter in
accordance with the terms of the contract and that his work was done. Carpenter,
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however, maintained that there existed multiple defects and that his possession did not
constitute acceptance of those defects.
The contract price for the project was $164,464. Carpenter maintained that
he paid $19,002 directly to the subcontractors, which by agreement of the parties should
be deducted from the contract price. He also claimed certain costs related to the alleged
construction defects. Ultimately, Carpenter paid $142,924, and the parties were unable to
agree whether the contract price was owed by Carpenter or whether the price should be
amended.
On September 9, 2004, Grayson filed the instant action against Carpenter in
Mason Circuit Court. Grayson alleged that Carpenter breached the contract by failing to
make payment in accordance with its terms. Specifically, he claimed that Carpenter did
not make the final payment of $23,322, and refused to pay for certain materials, contract
labor and the 5% material charge in the amount of $16,928. Grayson sought a judgment
in the amount of $40,280, plus a charge of $200 per day for late payment in accordance
with the terms of the contract.
Carpenter responded with a general denial and counterclaim. He asserted
that his payments to the subcontractors were properly deducted from the contract price,
and argued that he was entitled to a set-off for the construction defects. His counterclaim
alleged entitlement to $35,000 representing his out-of-pocket costs and a diminution in
value to the house arising from the defects.
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The matter went before the circuit court, which conducted a bench trial on
July 12, 2005. After taking proof, the court rendered its findings of fact, conclusions of
law and judgment on September 13, 2005. The court noted that the lack of proper plans
and specifications was “the first ingredient of a predictable disaster,” and found that “the
evidence that followed was such a mish-mash of numbers, of bills and statements, and of
general complaints that it is hard to make out exactly what the parties believed the
contract meant at the outset of the transaction . . . .” It nevertheless found that Grayson
was entitled to a total contract payment of $180,935 representing all materials and labor,
including the 5% surcharge for materials purchased by Grayson and some additional
work performed on two or more barns. From that sum, the court deducted Carpenter's
payment of $152,824 and an allowance of $10,087 for remedial work to repair defects.
Grayson was awarded $18,024, plus interest, accruing from the date of judgment.
After entry of the judgment, Grayson filed a motion to vacate on September
22, 2005. He alleged a general lack of evidence in the record to support Carpenter's
affirmative defenses and counterclaim, and again claimed entitlement to $40,280 plus the
surcharge of $200 per day after the date of possession. The motion was denied by way of
an order rendered on October 4, 2005, wherein the court noted that the parties agreed to
the admission of certain evidence which otherwise would have been inadmissible.
Though not specifically referenced in the order, the court was referring to a purported
agreement to stipulate as to the nature and amount of bids to perform repair work on
defects, without calling the bidders to testify.
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On October 14, 2005, Grayson filed a renewed motion to vacate, or in the
alternative for specific findings related to the October 4, 2005 order. Grayson argued that
the parties had not stipulated as to the nature and amount of work necessary to perform
repairs, and maintained that the introduction of said evidence without calling the bidders
to testify ran afoul of Kentucky Rules of Evidence provisions on expert testimony and
hearsay.
On November 2, 2005, and prior to the circuit court's ruling on Grayson's
October 14, 2005 motion, Grayson filed a notice of appeal. The court then rendered an
order on October 28, 2005 setting aside numerical paragraph 10 of its judgment relating
to the objectionable hearsay testimony on the remedial work. A supplemental hearing
was conducted on November 1, 2005 to allow Carpenter to produce evidence in support
of his claim of entitlement to set-offs for remedial work. And finally, on November 23,
2005, additional findings and amendment of judgment were rendered addressing the
evidence tendered at the November 1, 2005 hearing.2 The court enumerated additional
findings on Carpenter's claim of entitlement to set-offs arising from construction defects,
and rendered an amended judgment in favor of Grayson in the amount of $19,633. This
appeal followed.
Grayson now argues that the circuit court erred in rendering a judgment of
less than $40,280 plus the $200 daily surcharge for late payment. He maintains that the
court's calculations and findings of fact are clearly erroneous, and that the court
2
The October 28, 2005 and November 23, 2005 orders were entered by the clerk of court on December 1,
2005.
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erroneously relied on its own knowledge and on hearsay evidence to support its findings
of fact and judgment. Grayson also argues that the court's final order was an improper
attempt “to obfuscate its reversible errors, and create the deception” that the September
13, 2005 judgment was proper. He seeks an order reversing the judgment and remanding
the matter for additional proceedings.
We have closely examined the record and the law, and find no basis for
reversing the judgment on appeal. Grayson first maintains that the court's findings of fact
and calculations are clearly erroneous. In support of this argument, he recites a few of
the calculations relied on by the circuit court in reaching its findings, and offers the
general assertion that Carpenter failed to tender competent evidence of damages for the
alleged defective work.
We find no error on this issue. Though Grayson cites to a handful of the
calculations relied on by the circuit court in reaching its conclusion, his thesis is that the
evidence was insufficient to support the judgment. We are not persuaded by this
argument. The circuit court studied what it properly described as the “mish-mash of
numbers, of bills and statements” before endeavoring to distill from this mish-mash the
cost of materials, which materials were purchased by Grayson and which by Carpenter,
the 5% surcharge, the labor costs and so forth. These findings, and the calculations
which gave rise thereto, are set forth in a clear and understandable manner in the
judgment on appeal. Our duty is not to enter into these calculations de novo, but rather to
determine if the findings of fact are supported by substantial evidence. Leveridge v.
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Leveridge, 997 S.W.2d 1 (Ky. 1999). Substantial evidence is evidence of substance and
relevant consequence sufficient to induce conviction in the minds of reasonable people.
Kentucky State Racing Commission v. Fuller, 481 S.W.2d 298 (Ky. 1972). The bills and
statements contained in the record, in conjunction with the testimony of the parties,
constitute substantial evidence sufficient to support the circuit court's findings. As such,
we find no error on this issue.
Grayson also argues that the court erroneously relied on its own knowledge
and on hearsay evidence to support its findings of fact, conclusions of law and judgment.
This argument centers on a claim raised in Grayson's post-judgment motions that the
circuit court improperly accepted hearsay evidence from the parties, in the form of
written estimates, on the issue of the amount of remedial work necessary to repair
construction defects. Carpenter argued, and the circuit court agreed, that the parties had
stipulated (outside the courtroom) to the admission and authenticity of these written
estimates, without requiring witnesses to testify. Grayson, in his motion to vacate,
maintained that there was no stipulation or other agreement and that the court's reliance
on this evidence constituted reversible error.
The court ultimately agreed in its October 28, 2005 order that the testimony
at issue “was objectionable under the rules of evidence”. It set aside the findings arising
from this testimony and later conducted a hearing where additional evidence was
adduced. Error, if any, in the introduction of the alleged hearsay, was corrected by way
of the order setting aside the findings on this issue. A hearing on the matter was
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conducted where evidence in conformity with the Kentucky Rules of Evidence was
tendered, and ultimately the findings based on the contested evidence were set aside and
held for naught. We find no error on this issue.
Lastly, Grayson briefly argues that the circuit court improperly rendered its
final order rejecting the hearsay evidence after previously stating that the hearsay
evidence was considered admitted but could be impeached by Grayson. He maintains
that the entry of the final order “entirely contradicts the ruling from the bench” and
represents the court's attempt “to obfuscate its reversible errors, and create the deception”
that the September 13, 2005, judgment was proper.
Grayson's argument on this issue is specious and we may summarily
dispose of it. The court's October 28, 2005 order states in clear and unambiguous
language that the findings arising from the alleged hearsay evidence were stricken. A
hearing was conducted pursuant to this order and the amended judgment subsequently
was rendered. Accordingly, we find no error.
For the foregoing reasons, we affirm the findings of fact, conclusions of law
and judgment of the Mason Circuit Court.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Donald L. Wood
John F. Estill
Maysville, Kentucky
Danny Merril Newman, Jr.
Cincinnati, Ohio
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