Greenmoss Builders v. King

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 88-108


Greenmoss Builders, Inc.                     Supreme Court

                                             On Appeal From
     v.                                      Washington Superior Court

Richard King, Harriet King, and              April Term, 1989
King & King


James L. Morse, J.

Thomas F. Heilmann and Janice A. Forgays of Thomas F. Heilmann, P.C.,
  Burlington, for plaintiff-appellee

King & King, Waitsfield, and George E. Brooks, Montpelier, for defendants-
  appellants


PRESENT:  Allen, C.J., Peck, Gibson and Dooley, JJ., and Barney, C.J.
          (Ret.), Specially Assigned


     DOOLEY, J.   A builder and his lawyers parted ways.  Appellee Premar
Corporation/Greenmoss Builders (hereinafter plaintiff) sued appellants
Richard King, Harriet King, and King & King (hereinafter defendants) to
recover money allegedly owed on a construction contract.  Defendants
counterclaimed for an amount allegedly overpaid on an earlier construction
contract.  Plaintiff then added a claim for monies owed on that first
contract.
     The trial court entered judgment in favor of plaintiff (FN1) for the amount
owed on the second contact, plus interest at 1 1/2 % per month from the date
payment was due.  The court denied defendants recovery on the first
contract, ruling that defendants' conduct subsequent to the alleged
overpayment constituted a waiver of the right to pursue damages.  The court
also denied plaintiff's claim for additional monies on the first contract,
ruling that defendants had not waived their rights as to those payments.  We
affirm the trial court's decision on the claim and the counterclaim, and we
vacate the order to pay interest and remand the case for a recalculation of
the interest to be awarded on the accrued damages.
     The facts in this case, taken in the light most favorable to the
prevailing party and excluding all modifying evidence, New England Road
Machinery Co. v. Calkins, 121 Vt. 118, 120, 149 A.2d 734, 736 (1959), are as
follows.  Plaintiff is a construction company located in Waitsfield.
Defendants are lawyers and their law firm. (FN2) Defendants represented
plaintiff on a variety of corporate issues and represented plaintiff's
principal on some personal matters.  The relationship between the builder
and the lawyers was, at first, a benefit to both.
     Defendants hired plaintiff to do an addition on their personal
residence in the spring of 1981.  The construction contract, based upon the
standard American Institute of Architects form contract, contained a
guaranteed maximum price of $38,063.  It also provided for increases or
decreases to be made in the maximum price through change orders.  The terms
of the contract, however, were not strictly followed nor were those terms
always clear.
     The trial court found that the contract was ambiguous, that many of the
terms were unilaterally added by defendants, and that the parties very often
did not follow the provisions of the contract.  The written contract was
never signed by plaintiff.
     Payment for the construction was made in part by crediting plaintiff's
account with the law firm.  Defendants actively participated in the design
and oversight of the construction.  Many changes were made as the
construction moved forward, but formal change orders were not submitted to
defendants.  Each invoice contained an explanation of all charges.  Payment
for the work was steady but did not follow the dictates of the written
contract.  Defendants paid each invoice as it came in up to a total of
$45,134.35 -- an amount obviously in excess of the $38,063 maximum price.
Plaintiff's final two invoices, totalling $6,923.68, were not paid.
Although the final price, including that portion not paid by defendants, was
almost $14,000 over the guaranteed maximum price, the trial court found that
the price was fair and reasonable for the work performed.  The court also
found that defendants did not raise the issue of the overpayments until suit
was filed against them for collection of funds owed on a second contract, as
described below.  Similarly, plaintiff never made an effort to collect the
$6,923.68 billed out but not paid by defendants on the first contract until
responding to defendants' counterclaim.
     Despite the failure of defendants to pay the final two installments on
the house contract and plaintiff's failure to perform the house contract
within the maximum price, plaintiff and defendants maintained their
professional relationship and entered into a second contract for renovation
work in defendants' new office in February, 1983.  Plaintiff agreed to do
the work on a cost plus 25% basis.  In lieu of cash payments, defendants
were to credit the plaintiff's account, representing charges for legal
services.  Greenmoss did more work for defendants than initially agreed to,
and the total bill for $4,474.15 was submitted by plaintiff on May 10,
1983.  The trial court found the amount charged for the renovations to be
fair and reasonable.
     At about the same time plaintiff finished the office renovations,
defendants negotiated a settlement to an unrelated law suit on behalf of
plaintiff and presented plaintiff with a bill for $9,517.10.  Defendants,
however, would not honor the agreement to offset the fee with plaintiff's
charges for the office renovations and required plaintiff to pay the bill in
full in order to receive the settlement proceeds.  Plaintiff continuously
billed defendants for the office work, but the billings and a collection
letter from plaintiff's present attorney were ignored.  This litigation
ensued.
     The trial court found that defendants' payment of part of the excess
beyond the maximum price on the house contract, along with their silence,
was an "acquiescence that the house contract was over and done with."  It
further found that defendants misrepresented their intentions regarding
payment for the office job and plaintiff reasonably relied on defendants'
promise that it would be paid in agreeing to do the office renovation.  On
this basis, it concluded that plaintiff could collect for the price of the
office renovation and defendants could not collect the amount that they paid
for the house addition in excess of the guaranteed maximum price.  The court
also concluded that plaintiff could not collect for the amount of bills that
were submitted for the house contract, but were not paid, because they were
above the maximum price.  The court added interest to plaintiff's recovery
at the rate of 1 1/2 % per month from the date of plaintiff's billing.
     Defendants make three arguments on appeal:  (1) the trial court erred
in finding a waiver and estoppel to their claim for monies paid in excess of
the maximum price on the house contract; (2) the court further erred by not
awarding to them recovery where changes in the house contract terms resulted
in cost decreases; and (3) the court erred in granting prejudgment interest
at the rate of 1 1/2% per month absent any agreement between the parties.
We take these issues in order, but we do not reach the second argument
because we affirm on the first.
     We begin by reiterating that the findings of the trial court will not
be reversed unless we find them clearly erroneous.  Fisher v. Poole, 142 Vt.
162, 166, 453 A.2d 408, 411 (1982); V.R.C.P. 52(a).  The trial court in this
case did its job of sifting the evidence and stating the facts.  See, e.g.,
Lynda Lee Fashions, Inc. v. Sharp Offset Printing, Inc., 134 Vt. 167, 170,
352 A.2d 676, 677 (1976).  Most of the evidence was contested.  The
recitation of the events by the president of plaintiff corporation differed
in most crucial aspects from the version contained in the testimony of
defendants.  Particularly crucial to this appeal are the differences in the
testimony with respect to defendants' actions and statements in making
payments above the guaranteed maximum price for the house addition.
Defendants' position was that they overpaid by mistake and expected their
money back.  Plaintiff's position was that defendants did not overpay and
never stated that they expected any money back.  It was the trial court's
role to resolve this conflict, and it did so.  We cannot second-guess this
resolution on appeal.
     Although the trial court found that plaintiff never signed the contract
containing the guaranteed maximum price, it apparently accepted that some
contract embodying that maximum price existed.  Plaintiff has not challenged
this conclusion and, thus, we must accept it for purposes of this appeal.
The court did not attempt to resolve whether that price had been increased
or decreased as a result of modifications in the work to be done.  It relied
instead on its conclusion that even if plaintiff were overpaid in
contravention of the guaranteed maximum price, "[defendants'] conduct
effectively waived, and estopped them from asserting, any claim for return
of monies and credits made above the [guaranteed maximum] . . . price."
     There is no question that a party to a contract may lose the right to
assert a term of the contract, or to require performance of a part of the
contract, by waiver or estoppel.  See generally W. Jaeger, 5 Williston on
Contracts { 679 at 249-58 (3d ed. 1961) (sets forth nine separate, but
related, theories of waiver or estoppel that will excuse nonperformance of a
contract provision).  Our cases recognize the application of waiver in such
circumstances.  See Ejnes v. Carinthia Trailside Assoc., ___ Vt. ___, ___,
571 A.2d 49, 52-53 (1989); Brouha v. Postman, 145 Vt. 449, 452-53, 491 A.2d 1038, 1040(1985); Lynda Lee Fashions, 134 Vt. at 170-71, 352 A.2d  at 677-78.
Our cases also recognize the application of equitable estoppel.  See
Chadwick v. Cross, Abbott Co., 124 Vt. 325, 330-31, 205 A.2d 416, 421-22
(1964); Boston & Maine R.R. v. Howard Hardware Co., 123 Vt. 203, 211-12, 186 A.2d 184, 191 (1962).  The trial court appears to have accepted an estoppel
theory.
     The doctrine of equitable estoppel is based upon concerns of public
policy and an interest in encouraging fair dealing, good faith and justice.
My Sister's Place v. City of Burlington, 139 Vt. 602, 609, 433 A.2d 275, 279
(1981).  "[I]ts purpose is to forbid one to speak against his own act,
representations or commitments to the injury of one to whom they were
directed and who reasonably relied thereon."  Dutch Hill Inn, Inc. v.
Patten, 131 Vt. 187, 193, 303 A.2d 811, 815 (1973).  The test to determine
whether a party is estopped from a claim is simple:  "whether, in all the
circumstances of the case, conscience and duty of honest dealing should deny
one the right to repudiate the consequences of his representations or
conduct."  Neverett v. Towne, 123 Vt. 45, 55, 179 A.2d 583, 590 (1962).
     Equitable estoppel has four elements.  Fisher, 142 Vt. at 168, 453 A.2d  at 412.  The party invoking the doctrine has the burden of
establishing that:
         first, the party to be estopped [knows] the facts;
         second, the party being estopped [intends] that his
         conduct shall be acted upon or the acts must be such
         that the party asserting the estoppel has a right to
         believe it is so intended; third, the latter must be
         ignorant of the true facts; and finally, the party
         asserting the estoppel must rely on the conduct of the
         party to be estopped to his detriment.

Id.  In this case, defendants knew, or should have known, that they paid in
excess of the maximum price for the addition to their home.  The trial court
found that they made no effort to recover the alleged overpayment in order
to induce plaintiff to finish the job and, later, to induce plaintiff to
renovate the law firm's new offices.  Plaintiff believed itself entitled to
the monies paid and did not believe that defendants retained a claim for
overpayment for the house addition.  Plaintiff would not have finished the
construction on defendants' home nor would it have undertaken the renovation
of defendants' office had it known of defendants' position on the issue of
payment.  Estoppel can be based on silence where there is an obligation to
speak.  See Boston & Maine R.R. Co., 123 Vt. at 211, 186 A.2d  at 191.  We
believe that an obligation to speak was present here to ensure fair dealing
and good faith.  It was not error to find that  defendants are estopped from
collecting the overpayment. (FN3)
     Because of our holding we do not address defendants' second argument.
If defendants are estopped from obtaining the return of payments made in
excess of the original guaranteed maximum price, they are similarly estopped
with respect to any changes in that price.  Further, the trial court's
finding that the charges for the renovations were fair and reasonable is
supported by the record.
     We now address the issue of what rate of prejudgment interest, if any,
should be applied to the unpaid bill for the work done on the Kings'
office.  Interest is a legal right of the plaintiff.  See VanVelsor v.
Dzewaltowski, 136 Vt. 103, 106, 385 A.2d 1102, 1104 (1978).  When a debt
becomes payable, if the contract does not stipulate a rate of interest, the
statutory or legal rate applies. See Vermont Structural Steel Corp. v.
Brickman, 131 Vt. 144, 147-48, 300 A.2d 629, 631 (1973); Reporter's Notes to
1981 Amendment to V.R.C.P. 54.  Although the trial court awarded interest at
1 1/2% per month, it did not find that the parties had agreed to interest at
this rate.  We cannot find that the office renovation contract contained an
agreement to pay interest at this rate.  We therefore conclude that
plaintiff is entitled to prejudgment interest only at the legal rate of 12%
per annum.  See 9 V.S.A. { 41a(a).  We therefore vacate the imposition of
prejudgment interest at a rate of 1 1/2% per month through December 1, 1987
and remand for recalculation of prejudgment interest at the legal rate.
     The judgment for plaintiff Greenmoss Builders, Inc. is affirmed.  The
case is remanded for recalculation of prejudgment interest at the legal rate
specified in 9 V.S.A. { 41a(a).

                                        FOR THE COURT:




                                        Associate Justice





FN1.    The action was brought in the name of Greenmoss Builders, Inc.
Thereafter, defendants sought successfully to join Premar Corporation, a
corporation related to Greenmoss, as a party defendant.  The joinder of
Premar is of no consequence to the issues on appeal.

FN2.    We have not in this opinion distinguished between actions taken
individually by Richard and Harriet King and those taken by the law firm.
For purposes of this opinion, there is no reason to draw a distinction.

FN3.    The relationship between these parties is relevant to the decision
that an equitable estoppel occurred here.  Defendants were lawyers for the
plaintiff.  They represented plaintiff on business matters and represented
plaintiff's principal on personal matters.  It is clear that plaintiff
relied, in part, on the fiduciary relationship it had with defendants in
taking the actions it did.  The nature of the relationship increased
defendants' obligation to insure its actions were candid and fair.