G.V. Development, LLC, Respondent, vs. Atlas Excavating and Utilities, Inc., et al., Appellants.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

  STATE OF MINNESOTA

IN COURT OF APPEALS

CX-02-1973

 

G.V. Development, LLC,
Respondent,
 
vs.
 
Atlas Excavating and Utilities, Inc., et al.,
Appellants.

 

Filed August 13, 2003

Affirmed

Peterson, Judge

 

Hennepin County District Court

File No. 017725

 

Stephen E. Yoch, Felhaber, Larson, Fenlon & Vogt, P.A., 30 East Seventh Street, Suite 2100, St. Paul, MN  55101-4901 (for respondent)

 

Robert J. Bruno, Robert J. Bruno, Ltd., 1601 East Highway 13, Suite 107, Burnsville, MN  55337 (for appellants)

 

            Considered and decided by Peterson, Presiding Judge, Lansing, Judge, and Wright, Judge.

U N P U B L I S H E D   O P I N I O N

PETERSON, Judge

            Respondent G.V. Development, LLC (GV), brought an action against appellant Atlas Excavating and Utilities, Inc., alleging that Atlas breached a contract to perform construction work at a condominium site in Golden Valley.  Later, with leave of court, GV filed an amended complaint adding appellant Michael Jurgens as a defendant.  Atlas filed a counterclaim seeking payment for work performed at the condominium site and at an adjacent townhome site owned by GV.  Atlas also commenced a separate action to foreclose its mechanic's lien on the condominium property.  GV answered the counterclaim but did not serve or file an answer in the mechanic's-lien-foreclosure action.

            The breach-of-contract and mechanic's-lien-foreclosure actions were consolidated and tried to the court.  The district court concluded that appellants breached their contracts with GV and awarded judgment for GV in the amount of $67,033.94, later clarifying its order to declare Atlas's mechanic's lien null and void.  Judgment was entered accordingly.

In this appeal from the judgment and the order denying appellants' motion for amended findings, appellants argue that (1) the record does not support the district court's findings that GV did not breach its contract with appellants, that appellants' work was defective, that GV's alleged overpayments on one property could be applied to the other property, that appellants received in-kind consideration of a certain value, that the parties reached an accord, and that appellants' lien was overstated; (2) GV repudiated the contract; (3) the district court erred in ruling that appellants waived their claims regarding one property where there was inadequate consideration and the facts render waiver implausible; and (4) the district court failed to make adequate findings regarding damages and GV's obligations under the contract.  We affirm.

D E C I S I O N

            A district court's findings of fact will not be set aside unless clearly erroneous.  Minn. R. Civ. P. 52.01; Schuett Inv. Co. v. Anderson, 386 N.W.2d 249, 252 (Minn. App. 1986).  Findings are clearly erroneous if not reasonably supported by the record as a whole.  Hubbard v. United Press Int'l, Inc., 330 N.W.2d 428, 441 (Minn. 1983).  Whether the evidence also supports a reasonable finding to the contrary is immaterial if the evidence supports the district court's finding.  Total Equip. Leasing Corp. v. LaRue Inv. Corp., 357 N.W.2d 347, 350 (Minn. App. 1984), review denied (Minn. Feb. 19, 1985).

1.         GV hired Jurgens to perform excavation and utility work in condominium and townhome projects in Golden Valley.  Arnold Zachman, GV's president, testified that three different Atlas Entities were involved in the projects:  first, Atlas Excavation, Inc.; second, Atlas Excavating and Utilities, a proprietorship; and third, the current Atlas Excavating and Utilities, Inc.  Appellants do not dispute that both Jurgens and the current Atlas were responsible for performing work on the condominium and townhome projects.

            Michael Zachman, GV's onsite construction manager, testified that untimeliness was a problem with appellants' work:

Q  Atlas starts working on the job, and can you tell the judge any concerns or how the project and process go with the folks at Atlas as they were proceeding with their work?

 

A  As we started the condo, my issues with [Jurgens], and have been all along, is his commitments to me.  My job depends on dates.  I deal with a substantial number of contractors.  They are busy doing other work.  And I depend on my people, when I discuss with them that they give me a date that something is going to be completed, that it is accurate enough that I can schedule out additional work.

 

Q  And do you have concerns about their timeliness?

 

A  Yes, I did.  The first time when I had an issue with [Jurgens], which was on Building A, we started that in May.  By the end of July, * * * there were eighty different times that I had run into a commitment problem with [Jurgens].  Then on July July 1st, I ended up firing him when we ran into the Halley [debacle], as I call it.

 

Q  * * * Can you tell the judge what you mean by the Halley [debacle]?

 

A  The Halley [debacle] was, on our contract we were responsible for removal of excess fill and import of good material.  I had it lined up with Halley Homes through Cut and Fill, another subcontractor that we deal with, that Halley would provide us with some sand material.  They would in turn, we would fill up with some black material, which we had an excess of, and they would provide all of the trucking.

 

This was set up, and then on July 1st, the trucks started arriving, and [Jurgens] wasn't there.  I called him on four separate occasions.  The trucks were dumping their material and leaving empty.  [Jurgens] kept telling me he was coming.  We kept the trucks rolling.  Halley was on the phone and Cut and Fill, giving me a bad time as to why the trucks were coming back empty.  He was paying for these trucks.  I finally told [Jurgens], on the fourth time, "Forget it.  I'm finding someone else."

 

Q  Did you ultimately pay for the trucks?

 

A  Yes.

 

* * * *

 

Q  Okay.  Now, there were delays that you talked about, and lack of timeliness by [Atlas], could those delays be explained by weather and rain?

 

A  Checking the records on the period that was in question, we did have rain, but there was work that was performed on a daily basis.  So, I would have to say there was we did have maybe an hour or two delay here and there, but there was not a full day's delay.

 

Michael Zachman testified that after firing appellants, GV hired Bollig & Sons, and it performed excavation and grading work on the condominium project during July and August 2000.

            Michael Zachman testified:  He worked things out with Jurgens, and on August 19, 2000, appellants returned to work on the project.  The second condominium building was constructed in two stages under very strict timelines.  Appellants completed their work on the first half without problems, but were untimely in completing their work on the second half.  Michael Zachman advised Jurgens that appellants had to complete their work on the second half by September 15, 2000.  At a morning meeting on September 11, 2000, Jurgens informed Michael Zachman that he would be unable to meet the September 15 deadline.  Later that day, Michael Zachman saw appellants loading up their equipment, and they left the project site.  GV hired another contractor, Kevitt Excavation, to complete the work on the second half of the building.

            Jurgens testified that the September 2000 delay was caused by GV's refusal to pay for the cost of importing new soil onto the project site.  Michael Zachman testified that the contract expressly stated that Atlas was not responsible for paying for exporting and importing soil, and GV was aware of that provision.  Jurgens testified that GV had paid him for exporting soil and did pay Kevitt for importing soil.  The district court specifically found incredible Jurgens's claim "that Arnold Zachman refused to pay for fill when he had done so in the past to Atlas, and did so in the future to Kevitt."

In a deposition, Arnold Zachman testified that about two weeks before the September 11, 2000, meeting, Jurgens told Arnold Zachman that GV was behind in paying appellants' invoices and appellants would not continue working on the condominium project.  At trial, Arnold Zachman testified that he had misunderstood the deposition question and that Jurgens's demand for payment happened after the September 11 meeting.

            Appellants argue that GV breached the contract in September 2000 by failing to pay the money it owed to Atlas and by instructing appellants that Atlas was required to complete performance within four days.  When one party breaches a contract, the other party's further performance under the contract is excused.  See Greer v. Kooiker, 312 Minn. 499, 512, 253 N.W.2d 133, 142 (Minn. 1977) (when one party repudiates the contract, the other party can treat the renunciation as an immediate breach and sue at once for any damages which he may have sustained); MTS Co. v. Taiga Corp., 365 N.W.2d 321, 327 (Minn. App. 1985) ("a party cannot raise to its advantage a breach of contract against another party when it has first breached the contract itself."), review denied (Minn. June 14, 1985).  "The question whether a contractor properly performed its contract is a question of fact."  Julian Johnson Constr. Corp. v. Parranto, 352 N.W.2d 808, 810 (Minn. App. 1984) (citation omitted).

            There was disputed evidence about whether GV owed Atlas for work already completed as of September 11, 2000.  Arnold Zachman testified that he reviewed allegedly unpaid invoices submitted by Jurgens and compared them to the invoices and other documents in GV's file and calculated that GV had overpaid appellants for work already completed and would owe appellants $7,000 if appellants completed the project.  The district court found:

17.  * * * [T]he parties agreed that $3,000 would be paid to Atlas for all prior work on the condominium, and $20,000 would be paid to complete the project.  This $20,000 payment was more than Arnold Zachman believed Atlas was entitled to based on his earlier calculations, but because of the significant cost of having others complete the project, he agreed to pay the $20,000 in order to have the job completed.

 

The evidence supports this finding.  The district court also found that Jurgens and Nancy Jurgens, who did bookkeeping for Atlas, admitted to poor and inaccurate recordkeeping and that the lack of accuracy undermined appellants' credibility.

            Appellants next contend that GV repudiated the contract on September 11, 2000, by imposing an unreasonable September 15 deadline for completion.  "[W]here a contract is silent as to the time of performance, the general rule is that the contract must be performed within a reasonable time."  Hill v. Okay Const. Co., Inc., 312 Minn. 324, 333, 252 N.W.2d 107, 114 (1977).  What constitutes a reasonable time for the performance of contract obligations is a question of fact or mixed law and fact for determination by the factfinder.  Bly v. Bublitz, 464 N.W.2d 531, 535 (Minn. App. 1990).

            Michael Zachman testified that DayCo imposed a mid-September deadline for completion of the preparation work necessary for DayCo to pour the footings.  The district court found:

8.  Atlas' failure to meet timely completion schedules ultimately led to its termination on July 1, 2000.  Following this termination, GV incurred the costs of hiring Bollig & Sons to perform additional work.  * * *

 

9.  Due to the significant expense of using Bollig & Sons, Atlas was encouraged to return to the job and complete the project as previously promised.  Atlas returned.  Once again Atlas caused many delays.

 

10.  As a result of Atlas' continued delays, Mike Zachman provided Michael Jurgens with an ultimatum to complete the job by September 15.  * * * The time limit was imposed by the concrete company, DayCo, which needed to pour the footings by that date, or one month of construction would be lost.

 

11.  Jurgens left the job.  The next day, Mike Zachman was able to get Kevitt Excavating to complete the job within days of the September 15 deadline, and the footings were poured by DayCo as scheduled.

 

The evidence supports these findings, and the findings indicate that the September 15 deadline was reasonable.  The fact that DayCo was able to pour the footings even though Kevitt did not finish its work until September 18 does not make the September 15 deadline unreasonable.  The district court did not err in declining to find that GV breached the contract.

2.            Appellants argue that the district court erred in determining that appellants breached the contracts based on defective work and abandonment.  "The question whether a contractor properly performed its contract is a question of fact."  Julian Johnson Constr. Corp. v. Parranto, 352 N.W.2d 808, 810 (Minn. App. 1984).

The rule in this state, in the case of building contracts, is that if the facts show that a contractor has substantially performed his contract, although there were minor defects in his work, he is entitled to recover the contract price, less the sum necessary to cure the defects.  However, the doctrine of substantial performance does not apply when the omissions or departures from the contract are intentional or so substantial as not to be capable of remedy, so that even though the owner received an allowance out of the contract price he still would not receive what he contracted for.  If the contract is entire and performance is wilfully abandoned before completion, there can be no recovery on the contract or in quantum meruit.

 

Sward v. Nash, 230 Minn. 100, 102-03, 40 N.W.2d 828, 830 (1950) (citations omitted).

            Appellants argue that Minnesota does not recognize a cause of action for negligent performance or negligent breach of a construction contract.  But

[a contractor] undertakes a duty to use due care in the performance of its contract.  It may be held liable for those damages proximately caused by its negligence.

 

Parranto, 352 N.W.2d at 810 (citations omitted).

On November 9-10, 2000, appellants performed work on the condominium project, but they left on November 10 without completing the project and did not return.  After appellants left the project in November 2000, GV hired Billy Nikko to complete the project and correct settling problems.  Nikko also discovered that appellants had improperly constructed catch basins and storm sewers.  Nikko testified that the settling problems resulted from appellants' failure to adequately compact the soil.

Based on Nikko's testimony, the district court found that appellants defectively constructed the catch basins and that the sidewalk settled due to appellants' failure to compact over a wide area for the deep trench beneath the sidewalk.  Based on appellants' defective construction and their abandonment of the condominium contract before completion, the district court determined that appellants breached their contracts with GV.  Appellants argue that problems with the catch basins and sidewalk settling was not appellants' fault but rather resulted from the conduct of GV and other contractors.  The issue is a credibility question.  The district court placed great weight on Nikko's testimony because he was a disinterested witness and had more than 30 years of experience in excavating.

This court gives due regard to the district court's opportunity to judge witness credibility.  Minn. R. Civ. P. 52.01.  The district court did not err in determining that appellants breached their contracts with GV.  Under Sward, GV is entitled to recover the costs of repairing the defects in appellants' work, and because appellants abandoned the job, they are not entitled to recover the $20,000.

3.            Appellants argue that the district court erred in finding that the parties agreed that GV would pay Atlas $3,000 for all work already done and an additional $20,000 upon completion.

            Arnold Zachman testified that Jurgens gave him a proposal, dated March 28, 1999, to perform excavation and grading on the condominium project.  The proposal set a price of $74,000.  Jurgens testified that in August 1999, he gave GV a proposal to perform soil-correction work on the townhome project for a total price of $15,000.  Arnold Zachman testified that he hired Jurgens to perform excavation and backfilling and to install city water and sewer lines for $2,100 per unit, but the price was later reduced to $1,400 per unit because appellants only did the excavation and backfilling.  In November 1999, Jurgens gave GV a proposal to install sanitary sewer, storm sewer, and water mains at the condominium site for a total price of $97,905.  Arnold Zachman testified that infrastructure costs, including water and sewer parts, paid for by GV were to be subtracted from the bid price of $97,905.  Arnold Zachman testified that he signed the proposals and that GV drafted AIA form contracts and gave them to Jurgens.  Arnold Zachman testified that Jurgens did not return the contracts and that when GV requested that Jurgens return the contracts, Jurgens handwrote a document setting forth the contract terms and signed it.

            Jurgens testified that between February 22, 2000, and September 11, 2000, appellants and GV executed change orders and contracts for additional work, or extras, including:  replacing a four-inch valve with a four-inch PIV valve at a price of $3,000; moving excess fill from one location on the project site to another at a price of $15,008; removing excess fill material from the townhome site at a price of $2,800; excavating and removing an old sewer line at a price of $4,000; loading and removing buried concrete and rubble from the condominium site at a price of $2,835; installing a sewer connection to the condominium building at a price of $4,900; leveling exported fill at a disposal site at a price of $5,885; and loading excess fill into trucks at a price of $19,943.  The record contains change orders and invoices documenting these charges, but GV disputed that they authorized the work shown on four of the invoices as extras.

            Arnold Zachman testified that GV paid appellants $12,300 for work on three townhomes, which was an overpayment of $6,000 because the contract price per townhome was $2,100.  Arnold Zachman testified that he directed Jurgens to apply the overpayment to the extras on the townhome and condominium projects.

After the September 11 2000, meeting, appellants submitted to GV allegedly unpaid invoices totaling $97,808.60.  Arnold Zachman testified:  He compared those invoices to the documents and invoices in GV's file.  He and Jurgens went over the invoices, lien waivers, and checks paid by GV and agreed that GV had overpaid appellants and that if appellants returned and completed the condominium project, GV would owe appellants $7,807.30.  There was unfinished work to complete and problems with the work appellants had already done that needed to be corrected, including curb and asphalt settling.  He and Jurgens met in November 2000 and went over appellants' invoices and Arnold Zachman's calculations.  A few days later, Jurgens contacted Arnold Zachman, and they agreed that GV would make a final payment of $3,000 to appellants for work already completed, and appellants would complete the project for an additional $20,000.

GV received a document from Nancy Jurgens stating that $23,700 was owed for "work not yet completed or billed, for the Medley Hills Condominiums project."    Michael Jurgens denied agreeing to accept $3,000 for past invoices and $20,000 for work to be completed.  Jurgens testified that Arnold Zachman promised that if appellants completed the project, GV would pay all of the unpaid invoices submitted by appellants.

The work performed by appellants in November 2000 was an extra not included in the contract, and GV agreed to pay 75¢ per yard for excess dirt to be exported, which an invoice shows totaled $2,985.  Jurgens' testimony indicated that the $3,000 payment was for the work done on November 9-10.  Jurgens signed a lien waiver acknowledging the $3,000 payment.  "Final payment on all invoices" is handwritten on the lien waiver admitted into evidence at trial.  Jurgens denied that the handwritten language was on the lien waiver when he signed it.  Arnold Zachman testified that the handwritten language was on the lien waiver when Jurgens signed it.  The district court specifically found incredible appellants' claim that the lien waiver admitted into evidence was a forgery.

            "Waiver is the voluntary and intentional relinquishment or abandonment of a known right."  In re Estate of Sangren, 504 N.W.2d 786, 790 (Minn. App. 1993) (quotation and citation omitted), review denied (Minn. Oct. 28, 1993).  Intent may be inferred from the parties' conduct.  Id.

It is established law in Minnesota that a lien waiver must be based upon a consideration. 

 

It can generally be said that a materialman who receives payment in exchange for a signed waiver has received a sufficient consideration to support a waiver of all lien rights accruing from the work for which payment was received.  However, a waiver in consideration of payments made by one legally bound to pay the claimant does not constitute valuable consideration so as to bar a lien for any amount remaining unpaid.  This rule is generally based on the legal principle that doing what one is bound to do is not a valuable consideration.

 

Sussel Co. v. First Fed. Sav.  and Loan Ass'n, 304 Minn. 433, 435-36, 232 N.W.2d 88, 90 (1975) (citations omitted).  A compromise and settlement, however, is contractual in nature and requires an offer and acceptance constituting a meeting of the minds, the consideration for which is the settlement of the dispute.  Hillmeyer v. Watz, 415 N.W.2d 89, 92 (Minn. App. 1987), review denied (Minn. Jan. 28, 1988).

            The district court found:

36.  Atlas has waived any claims as they related to the condominium because Atlas provided a mechanics['] lien waiver to GV demonstrating payment in full.

 

Arnold Zachman testified that after appellants submitted $97,808.60 in allegedly unpaid invoices, he calculated that GV would owe appellants $7,807.30 if they completed the job.  Michael and Nancy Jurgens admitted to poor and inaccurate recordkeeping.

At oral argument, appellants argued that the district court erred in finding that the document received from Nancy Jurgens in response to Arnold Zachman's calculation of the amount owed to appellants was an invoice.  Whether the document is an invoice is not a material fact.  The document supports the district court's finding that appellants agreed that a balance of $23,700 was the amount owed upon completion of the townhome and condominium projects.  The line crossed out and Arnold Zachman's signature on the document show that GV agreed to pay appellants $23,000.  The evidence supports the district court's finding that the parties agreed that GV would pay appellants $3,000 for work already completed and an additional $20,000 upon completion of the job.  Under Hillmeyer, the settlement of the disputed claim provided consideration for the lien waiver.

            Appellants argue that the $3,000 payment for which the lien waiver was executed was for the work performed on November 9-10, 2000.  But there was evidence that the $3,000 payment was for previously completed work, and the district court subtracted $2,985 for the work done on November 9-10 from the damages awarded to GV.

            Appellants argue that the retention of $14,307.30 referred to in GV's interrogatory answers is inconsistent with the district court's finding of waiver.  But Arnold Zachman's testimony indicates that the $14,307.30 figure was incorrect.  Arnold Zachman testified on cross-examination that GV owed appellants $20,000, which is the same amount that he testified GV would owe if appellants completed the project, including correcting the settling problems.

4.         The district court has broad discretion in determining damages and "will not be reversed except for a clear abuse of discretion."  Admiral Merchs. Motor Freight, Inc. v. O'Connor & Hannan, 494 N.W.2d 261, 267 (Minn. 1992) (citation omitted).  This court will not disturb a damage award "unless its failure to do so would be shocking or would result in plain injustice."  Hughes v. Sinclair Mktg., Inc., 389 N.W.2d 194, 199 (Minn. 1986) (citations omitted).  When reviewing a damage award, this court must consider the evidence in the light most favorable to the judgment.  Rayford v. Metro. Transit Comm'n, 379 N.W.2d 161, 165 (Minn. App. 1985), review denied (Minn. Feb. 14, 1986).

            The district court found that GV incurred damages in the amount of $80,798.94.  From that amount, the district court subtracted amounts owed to appellants for extras and the work done on November 9-10, 2000, resulting in a net damage award of $67,033.94.  The evidence presented by GV supports the district court's calculation of damages.

            Appellants object to several of the district court's findings relating to payments made by GV to appellants.  The objections go to witness credibility.  The evidence presented by GV supports the district court's findings.

            Appellants argue that the district court erred in finding that the parties agreed that GV would pay appellants $3,000 for work already completed and an additional $20,000 upon completion because GV did not raise accord and satisfaction as a defense.  But that finding relates to waiver, a defense that was raised by GV.

            Affirmed.