Jocon, Inc. v. Hoover

JOCON, INC. v. Paul HOOVER, Jr., and Dan
Robinson, Jr.

CA 97-732                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                          Division III
               Opinion delivered February 25, 1998


1.   Damages -- circuit court erred in amount credited against appellees'
     damages -- judgment modified. -- Where appellees' admitted that
     they had withheld the sum of $5,000 from the payment they owed
     appellant on the initial contract, the admission was
     conclusive because there was no motion seeking or order
     granting a withdrawal or amendment of the admission;
     consequently, the appellate court concluded that the circuit
     court erred in crediting only $2,519.10 against appelleesþ
     damages, rather than $5,000 and ordered the judgment of the
     trial court modified accordingly.

2.   Contracts -- finding that appellant breached "repair" contract not clearly
     erroneous. -- Given the conflicting testimony, whether appellant
     breached a þrepairþ contract was a matter of fact for the
     circuit court to determine; it is for the trial court sitting
     as the trier-of-fact, not the appellate court, to determine
     the credibility of witnesses and to resolve any conflicts in
     their testimony; the trial courtþs finding that appellant had
     breached a contract to repair deteriorated and damaged
     portions of a parking lot was not clearly erroneous.

3.   Accord & satisfaction -- general rule -- exceptions. -- The general
     rule governing the principle of accord and satisfaction is
     that if the consideration agreed upon in an accord is not
     performed, then the whole accord fails and recovery may be had
     for breach of the original contract; there are exceptions to
     this general rule where a promise to perform the accord is
     accepted in lieu of satisfaction, and where a party has taken
     such action, or accepted such benefits, as to place it out of
     his power to abandon the settlement/compromise agreement.

4.   Accord & satisfaction -- no express finding that exceptions were
     inapplicable -- trial court made findings necessary to support judgment. -
     - Although the trial court did not expressly find that the
     exceptions to the general rule of accord and satisfaction were
     not applicable, the appellate court presumed that the trial
     court acted properly and made the findings necessary to
     support its judgment concerning damages.

5.   Damages -- appropriate measure -- cost of repairs. -- Where appellees
     were free after appellant breached the repair contract to
     undertake reasonable efforts to repair the deteriorated and
     damaged areas of the parking lot and did so, the appropriate
     measure of damages to which they were entitled as a result of
     appellantþs breach of the original contract was the cost of
     the repairs.

6.   Appeal & error -- failure to object barred allegation of error on appeal.
     -- Where appellant failed to object at the circuit court level
     to an attorney's fee award, the appellate court would not
     address the allegation of error.


     Appeal from Pulaski Circuit Court, Third Division; John Ward,
Judge; affirmed as modified.
     Floyd A. Healy, for appellant.
     Cearley Law Firm, P.A., by: Robert M. Cearley, Jr., for
appellees.

     John B. Robbins, Chief Judge.
     John B. Robbins, Chief Judge.  This case involves an initial
construction contract, a breach of that contract, a second contract
concerning the repair of a parking lot that was built pursuant to
the initial contract, the breach of the second contract, and the
amount of money that the nonbreaching party is entitled to recover
as damages.  Appellant Jocon, Inc., a corporation engaged in the
construction business as a contractor, appeals the Pulaski County
Circuit Courtþs judgment in which the court awarded appellees, Paul
Hoover, Jr., and Dan Robinson, Jr., damages of $7,611.71 and
attorneyþs fees for the breach of a construction contract and as a
consequence of appellantþs breach of a subsequent contract to
repair the damaged and deteriorated portions of a parking lot that
appellant had previously constructed on commercial property owned
by appellees.  We affirm the circuit courtþs judgment as modified.
     In February 1995, appellant and appellees entered into a
contract whereby appellant agreed to construct a warehouse and
parking lot on property owned by appellees in return for a payment
of $108,491.  After appellant completed construction of the
warehouse and the parking lot, problems developed with the part of
the parking lot where a dumpster was situated.  In this area, the
asphalt used to construct the parking lot began to deteriorate, and
this area was damaged by heavy trucks driving to and from the
dumpster.
     Because of these problems with the parking lot, appellees
retained $2,519.10 of the $108,491 that was due to appellant under
the original contract.  On May 13, 1996, the parties entered into
a second contract.  This second contract had to do with repair of
the deterioration and damage to the parking lot.  Pursuant to the
provisions of this agreement, appellant agreed to provide the
equipment and labor necessary to repair the parking lot and
appellees agreed to pay for all the materials necessary to complete
the repairs.  Appellant began repair of the parking lot by
subcontracting with an excavation contractor, who used a bulldozer
and backhoe to excavate to a depth of approximately two feet in the
damaged areas of the parking lot.  At this point, appellant was to
fill in the excavated area with gravel and then pave over the
gravel with asphalt.  However, appellant did not do any further
repair work on the damaged areas of the parking lot.  Appellees
completed the repair work and incurred $10,130.81 in expenses.
     In January 1996, appellant filed suit against appellees in
order to recover the payment that appellees owed on the initial
construction contract, which appellant alleged was $5,000. 
Appellees filed an answer in which they denied that they owed
appellant any money in connection with the initial contract. 
Appellees also filed a counterclaim in which they alleged that
appellant had breached the February 1995 contract and that they
were entitled to damages in an amount to be proven at trial. 
However, during pretrial discovery, appellees admitted, in response
to appellantþs request for admissions, that they had retained
$5,000 of the payment they owed appellant on the initial
construction contract.
     Appellant brings four allegations of error.  According to
appellant, the circuit court erred in finding that appellees had
retained $2,519.10 of the amount that they owed appellant pursuant
to the initial contract and erred further in determining appelleesþ
damages by subtracting this figure from appelleesþ total cost to
repair the parking lot.  Appellant also asserts that the circuit
court erred in finding that it breached the May 13, 1996, contract
whereby it agreed to provide the equipment and labor to repair the
deteriorated and damaged areas of the parking lot.  Appellant also
maintains that the circuit court erred in determining that the
damages appellees were entitled to after they completed the repair
of the parking lot included the cost of the materials used to make
the repairs.  Finally, appellant asserts that the circuit court
erred in awarding appellees attorneyþs fees of $3,500.  
     For its first allegation of error, appellant asserts that the
circuit court erred in determining the amount of damages to which
appellees were entitled.  The circuit court found that appellees
were entitled to damages of $7,611.71.  The court arrived at this
figure by deducting from appelleesþ total expenditure to complete
the repair of the damaged and deteriorated portions of the parking
lot, which was $10,130.81, the amount of money that appellees
retained from the payment they owed appellant on the initial
construction contract, which the parties had entered into in
February 1995.  The circuit court found that the appellees had
retained $2,519.10 of the amount that they owed appellant pursuant
to the initial construction contract.  The circuit court found that
the appellee were entitled to damages of $7,611.71, which is the
remainder of $10,130.81 minus $2,519.10.  
     Appellant asserts that the trial courtþs calculation of
appelleesþ damages is in error in that the circuit court should
have subtracted from $10,130.81, the appelleesþ total cost to
repair the parking lot, $5,000, rather than $2,519.10.  Appellant
maintains that the circuit court should have determined appelleesþ
damages by subtracting $5,000 because this was the amount that the
appellees retained from the payment they owed appellant on the
initial contract.  Appellant asserts that the appellees retained
$5,000, not $2,519.10, because appellees admitted, in their
response to appellantþs request for admissions made pursuant to
Arkansas Rule of Civil Procedure 36(a), that they had withheld
$5,000 of the amount they owed appellant on the initial
construction contract.  The request for admission and response that
appellant relies on are as follows:
          Please admit that the [appellees] withheld the sum
     of $5,000.00 on the contract.

          Admitted, due to the fact that it appeared that
     parking areas were failing and that defective work and
     defective materials were causing the failure.

     At trial, appellee Hoover testified that although appellees
had admitted in pretrial discovery that they had retained $5,000
from the payment they owed appellant on the initial contract, this
admission was a mistake and that they had retained only $2,519.10. 
However, Hoover acknowledged that he was þstanding by that
mistake.þ  
     Furthermore, during the trial appelleesþ counsel objected to
a characterization by appellantþs counsel that the parties had
stipulated that the balance owed appellant by appellees on the
original contract was $5,000.  But after appellantþs counsel read
appelleesþ response to appellantþs request for admission that
$5,000 was withheld from the contract, appelleesþ counsel, Mr.
Cearley, stated:  þI withdraw my objection, I donþt know how I can
get around that.  Our testimony, your Honor, will be that that was
in error, and I wasnþt aware there had been an admission, but weþre
bound by that.þ  Appellantþs position at trial, and on appeal, is
that appellees were bound by their response to appellantþs request
for admissions that they had withheld $5,000 of the payment they
owed appellant on the initial construction contract.  Appellant
bases this argument on the following provision of Arkansas Rule of
Civil Procedure 36(b):  þAny matter admitted under this rule is
conclusively established unless the court on motion permits
withdrawal or amendment of the admission.þ
     Appellant is correct in maintaining that this admission was
conclusive because there was no motion seeking, or order granting,
a withdrawal or amendment of the admission.  Consequently, we
conclude that the circuit court erred in crediting only $2,519.10
against appelleesþ damages, rather than  $5,000.  The judgment of
the trial court should be modified accordingly. 
     Appellant also asserts that the circuit court erred in
determining that it had breached the partiesþ May 13, 1996,
contract to repair the deteriorated and damaged portions of the
parking lot.  Pursuant to this agreement, appellant was to provide
the equipment and labor necessary to repair the parking lot, and
appellees were to pay for all materials that were used to complete
the repairs.  In essence, appellant maintains that the appellees
breached the þrepairþ contract because they failed to have gravel
delivered to the job site.  Appellees, on the other hand, maintain
that appellant breached the þrepairþ contract in that it failed to
complete repairing the parking lot by having the excavated area
filled in with gravel and by then paving over the gravel with
asphalt.  At trial, each party presented testimony that explained
why appellant did not finish repairing the parking lot.  This
testimony was in conflict.  Appellantþs owner, Robert Jones,
testified that appellee Hoover told him to contact a man named
Manny Lassiter to make arrangements to have gravel delivered to the
job site.  Mr. Jones testified further:
     I got ahold of Manny Lassiter, and he told me that he
     would have to get back in touch with [Mr. Hoover] to
     verify it and heþd get back in touch with me, so he never
     got back in touch with me on that.  I think I called Mr.
     Hoover a second couple of times [to] see if they could
     get the [gravel] out there and no one ever showed up with
     the [gravel] then and the next day, I called the man that
     was the manager out there [at the job site] and I asked
     him was the [gravel] out there and he said no, it was not
     there yet, so I continued to call and ask if the [gravel]
     was out there.  After about two weeks ... I finally
     decided they werenþt going to be interested in putting
     [gravel] in there.

Appellees contradicted Jonesþs testimony with their own testimony
and that of other witnesses, including Manny Lassiter, to the
effect that they had tried to make contact with Jones concerning
the delivery of gravel to the job site but were unable to do so. 
When asked on re-direct examination for how long had he tried to
get in contact with Mr. Jones concerning delivery of gravel to the
job site, Manny Lassiter replied, þIþd guess that I tried for a
couple of weeks, three weeks or so, we tried to call and it got to
the point where the tenant was about ready to leave ... so we had
to move in ourselves [to finish the repairs].þ  Given this
conflicting testimony, whether appellant breached the þrepairþ
contract was a matter of fact for the circuit court to determine. 
It is for the trial court, sitting as the trier-of-fact, not this
court, to determine the credibility of witnesses and to resolve any
conflicts in their testimony.  See Firstbank of Arkansas v.
Keeling, 312 Ark. 441, 445-46, 850 S.W.2d 310 (1993); Fazeli v.
Barnes, 47 Ark. App. 99, 101, 885 S.W.2d 908 (1994).  The trial
courtþs finding on this issue was not clearly erroneous.
     Appellantþs third allegation of error also has to do with the
circuit courtþs finding that it breached the May 13, 1996, contract
between the parties pursuant to which it would provide the
equipment and labor necessary to repair the damaged and
deteriorated areas of the parking lot.  According to appellant, the
circuit court erred in determining the damages that appellees were
entitled to recover as a consequence of its breach of the May 13,
1996, contract.  According to appellant, even though it breached
this contract, the appellees were bound by its provision requiring
them to pay for the gravel, asphalt, and other material necessary
to repair the parking lot.  Appellant maintains that the circuit
court erred in determining the damages appellees should recover by
including appelleesþ expenditure for the materials necessary to
repair the parking lot.  According to appellant, even if it
breached the May 13, 1996, contract, appellees were still
obligated, pursuant to the contract, to pay for the materials
necessary to repair the parking lot and, therefore, appellees
should not recover, as damages, their expenditures for the
materials.
     Appellantþs allegation of error is based on a faulty premise: 
that the appellees were bound by the provisions of the May 13,
1996, contract even though appellant had breached it.  The May 13,
1996, letter agreement was in the nature of an accord, or agreement
to substitute a new undertaking in settlement of the dispute over
the original February 10, 1995, contract.  The question that the
trial court impliedly decided was whether there was satisfaction of
the accord.  The general rule is that if the consideration agreed
upon in an accord is not performed then the whole accord fails and
recovery may be had for breach of the original contract.  See
General Air Conditioning Corp. v. Fullerton, 227 Ark. 278, 282, 298 S.W.2d 61, 64 (1957); Boone v. Armistead, 48  Ark. App. 187, 191,
892 S.W.2d 531, 534 (1995).  There are exceptions to this general
rule where a promise to perform the accord is accepted in lieu of
satisfaction, Lyle v. Federal Union Ins. Co., 206 Ark. 1123, 1129-
30, 178 S.W.2d 651, 654 (1944), and when a party has taken such
action, or accepted such benefits, as to place it out of his power
to abandon the settlement/compromise agreement.  Boone v.
Armistead, supra.  Although the trial court did not expressly find
that these exceptions were not applicable, we indulge in the
presumption that the trial court acted properly and made the
findings necessary to support its judgment.  See Ingram v. Century
21 Caldwell Realty, 52 Ark. App. 101, 103 n.1, 915 S.W.2d 308,
309 n.1 (1996).
     After appellant breached the May 13, 1996, contract, appellees
were free to undertake reasonable efforts to repair the
deteriorated and damaged areas of the parking lot, which they did. 
Given that appellees repaired the parking lot, the appropriate
measure of damages to which they were entitled as a result of
appellantþs breach of the original contract was the cost of the
repairs.  See Howard Brill, Arkansas Law of Damages 268 (3d ed.
1996).
     Appellant also asserts that the circuit court erred in
awarding appelleesþ counsel a fee of $3,500.  This allegation of
error is procedurally barred from our review.  To preserve this
allegation of error for our review, appellant should have objected
at the circuit court level to the fee award.  Because appellant
failed to do so, we will not address this allegation of error. 
Schueck v. Burris, 330 Ark. 780, 787, ___ S.W.2d ___ (1997); Farm
Bureau Mut. Ins. Co. v. David, 324 Ark. 387, 393-94, 921 S.W.2d 930
(1996); Jamison v. Estate of Goodlett , 56 Ark. App. 71, 84, 938 S.W.2d 865 (1997).
     For the reasons set forth above, we affirm the judgment that
the Pulaski County Circuit Court caused to be entered in the
instant case in favor of appellees, but modify the amount of
judgment from $7,611.71 to $5,130.81 and attorneyþs fees.
     Affirmed as modified.
     Rogers and Crabtree, JJ., agree.