Forsgren, Inc. v. Matlock Electric Company, Inc.

Annotate this Case
ca04-017

ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION

DIVISION III

FORSGREN, INC.

APPELLANT

V.

MATLOCK ELECTRIC COMPANY, INC.,

APPELLEE

CA04-17

SEPTEMBER 29, 2004

APPEAL FROM THE SEBASTIAN COUNTY CIRCUIT COURT,

FORT SMITH DISTRICT,

(NO. CV01-972,)

HON. J. MICHAEL FITZHUGH, JUDGE

AFFIRMED

Sam Bird, Judge

This appeal involves a dispute between a general contractor and a subcontractor over the general contractor's withholding money from the subcontractor's final payment because of a delay in the completion of the project, which the general contractor attributed to the subcontractor. The general contractor appeals the trial court's granting of summary judgment to the subcontractor, arguing that there were questions of fact to be determined. We disagree and affirm.

Appellant Forsgren, Inc., was the general contractor on the construction of a water-treatment facility for the City of Mulberry (City). The contract between the City and Forsgren called for a completion date of October 5, 2000, and provided that $20,000 in liquidated damages would be assessed against Forsgren if the October 5 deadline was not

met. On December 1, 1999, Forsgren received notice from the City to proceed. On December 14, 1999, Forsgren entered into a subcontract with appellee Matlock Electric Company, Inc., to perform certain electrical work on the project. The subcontract provided, inter alia, that Matlock would be paid $111,472 for its work; that payment to Matlock would be made as set out in the main contract documents and specifications and within five days of Forsgren's receipt of payment; and that Matlock represented that it had adequate resources to satisfactorily complete its portion of the work. Construction of the water-treatment facility was not completed by the October 5, 2000, deadline, and the City assessed liquidated damages of $20,000 against Forsgren. Forsgren's vice president, Kevin Kelton, executed a "Contractor's Affidavit and Waiver of Lien" on April 5, 2001, signifying completion of the project. On April 30, 2001, Forsgren tendered a check for its final payment to Matlock, noting on the check stub that $6,667 was being deducted as "liquidated damages."

Matlock filed suit alleging that Forsgren breached its contract by failing to pay the entire amount due. The complaint sought damages in the amount of the $6,667 withheld and attorney's fees. Forsgren answered and counterclaimed for damages of $13,333, alleging that Matlock breached the contract by failing to have adequate resources to perform its contract. Forsgren also asserted the affirmative defenses of accord and satisfaction and waiver. Matlock denied the material allegations of the counterclaim. By amendment, Forsgren's counterclaim reduced the damages sought for Matlock's breach to the sum of $6,667.

After discovery, Matlock filed a motion for summary judgment for the $6,667 that Forsgren withheld and for dismissal of Forsgren's counterclaim. In support of its motion, Matlock presented an affidavit from the project engineer, Andy Dibble, in which Dibble stated that he had some concerns about Bob Smith, a Matlock employee, working alone on the project the majority of the time. Dibble's concern was that, because the building was completed later than originally projected, Smith might not be able to meet the project deadline. However, Dibble was unable to point to a particular incident where Smith or Matlock was the cause of any delay in the project. Dibble also stated that another subcontractor, Instrument Supply Company (ISC), was still delivering and installing equipment after the scheduled completion date and that, after ISC installed the equipment, Matlock was required to connect the equipment. He opined that, because of ISC's failure to timely deliver its equipment, it was impossible for Matlock to complete its work prior to the scheduled completion date of October 5, 2000. There were also affidavits submitted from Don Bull and Neal Wagner, construction observers for the engineering firm, consistent with Dibble's affidavit.

Matlock also presented the affidavit of Ralph Pruitt, Forsgren's project superintendent on the project, who testified that, although Smith worked alone most of the time, he did not find Smith to be understaffed, because whenever Smith needed assistance he requested and received the necessary assistance. Pruitt also stated that the work of Smith and Matlock did not contribute to the delay in the project, which he stated was caused by Forsgren's inexperience in the construction of water-treatment facilities and Kevin Kelton's failure to be fully involved in the project. He also stated that ISC's delay in delivering and installing certain equipment prevented Matlock from completing its work prior to the deadline.

Matlock also presented excerpts from the deposition of Kevin Kelton, Forsgren's vice president, in which Kelton admitted that no one from Forsgren negotiated with Marvin Matlock concerning the inclusion of a liquidated damages clause in the subcontract. Kelton stated that the subject of liquidated damages was discussed with Matlock's vice president, Tommy Hill, at a preconstruction conference but Kelton offered no specifics of the conversation. In further support of its motion, Matlock offered Forsgren's answers to requests for admissions in which Forsgren admitted that ISC was still installing equipment after the project's completion date and that Matlock could not complete its work until ISC had installed all of its equipment. Forsgren presented no affidavits in opposition to Matlock's motion, stating in its response that materials submitted by Matlock left issues ofmaterial fact unanswered.

The trial court granted Matlock's motion for summary judgment on its complaint, finding that the subcontract between Forsgren and Matlock did not provide for a liquidated-damages or a penalty-for-delay provision. The trial court awarded Matlock judgment for the $6,667 that Forsgren withheld. The trial court also granted Matlock's motion for summary judgment on Forsgren's counterclaim, finding that Forsgren failed to submit evidence to counter Matlock's affidavits that the delays were not attributable to Matlock. The court also found that Forsgren did not submit any evidence concerning its affirmative defenses of accord and satisfaction or waiver. The trial court also allowed Matlock ten days to file a motion for attorney's fees and later allowed Matlock $17,170 in attorney's fees and costs. This appeal followed.

Forsgren argues two points on appeal: that the trial court erred in granting summary judgment because the evidence submitted by Matlock was insufficient, conclusory, and created questions of fact; and that the evidence showed that Matlock was barred from recovery by Forsgren's affirmative defenses.

In reviewing summary-judgment cases, we determine whether the trial court's grant of summary judgment was appropriate based on whether the evidence presented by the moving party left a material question of fact unanswered. Alberson v. Automobile Club Interins. Exch., 71 Ark. App. 162, 27 S.W.3d 447 (2000). The moving party is entitled to summary judgment if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is not a genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Id. All proof submitted with a motion for summary judgment must be viewed in the light most favorable to the party resisting the motion, and any doubts and inferences must be resolved against the moving party. McWilliams v. Schmidt, 76 Ark. App. 173, 61 S.W.3d 898 (2001). Summary judgment is not appropriate where evidence, although in no material dispute as to actuality, reveals aspects from which inconsistent hypotheses might reasonably be drawn and reasonable minds might differ. Lee v. Hot Springs Village Golf Schs., 58 Ark. App. 293, 951 S.W.2d 315 (1997).

Forsgren first argues that the trial court erred in granting summary judgment because Matlock's evidence was insufficient, conclusory, and presented material issues of fact. As noted, Forsgren did not file any affidavits in opposition to the motion. The failure to file counter affidavits does not in itself entitle the moving party to a summary judgment. However, the effect is to leave the facts asserted in the uncontroverted affidavits supporting the motion for summary judgment accepted as true for purposes of the motion. Ashley v. Eisele, 247 Ark. 281, 445 S.W.2d 76 (1969); Inge v. Walker, 70 Ark. App. 114, 15 S.W.3d 348 (2000).

Forsgren argues that there was still a material issue of whether Matlock breached the contract by failing to have sufficient staff to complete its work. Matlock presented the affidavits of the project engineers and Ralph Pruitt, who formerly worked for Forsgren, to establish that Matlock was not responsible for the delay because another subcontractor (ISC) did not timely install the equipment that Matlock was to connect. Once a moving party has established a prima facie entitlement to summary judgment, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. Stilley v. James, 345 Ark. 362, 48 S.W.3d 521 (2001). Forsgren admitted that it did not have any evidence that any possible understaffing on Matlock's part contributed to the delay in the project. Instead, Forsgren argues that there was an inference to be drawn by a jury that Matlock was understaffed because Matlock "borrowed" ISC employees to work on the project and that this somehow contributed to the delay in completing the project independent of the delays caused by ISC's not completing its portion of the project in a timely fashion. However, there was nothing in the pleadings, depositions, or affidavits to show that Matlock, in fact, "borrowed" ISC employees. Further, there was nothing in the record showing that Matlock's use of ISC employees contributed to the delay in the project. Therefore, Forsgren failed to meet proof with proof, and summary judgment was proper. We affirm on this point.

For its second point, Forsgren argues that there were still material issues of fact as to its affirmative defenses of accord and satisfaction and waiver. Forsgren argues that Matlock's cashing of the final check that had been reduced by $6,667 constituted an accord and satisfaction.

Arkansas Code Annotated section 4-3-311 (Repl. 2001) provides that, if a person against whom a claim is asserted proves that he tendered an instrument to the claimant in good faith as full satisfaction of the claim, the amount of the claim was unliquidated or subject to a bona fide dispute, and the claimant obtained payment of the instrument, then (unless certain circumstances not applicable here apply) the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim. An "accord and satisfaction" contemplates an agreement between parties to give and accept something different from that claimed by virtue of the original obligation, and both the giving and acceptance are essential elements. Inge v. Walker, supra. There must be a disputed amount involved and a consent to accept less than the amount in settlement of the whole before acceptance of the lesser amount can be an accord and satisfaction. Id.; Hardison v. Jackson, 45 Ark. App. 49, 871 S.W.2d 410 (1994).

Here, there was no evidence offered that the check tendered to Matlock contained a conspicuous statement that it was tendered in full satisfaction of the debt. Such a notation or other contemporaneous writing or negotiations would put Matlock on notice that Forsgren was disputing the amount owed to Matlock. Further, the trial court found that Forsgren failed to present evidence that there was an accord and satisfaction.

It is not enough for the debtor merely to write on a voucher or on his check such words as "in full payment" or "to balance account," where there has been no such dispute or antecedent discussion as to give reasonable notice to the creditor that the check is being tendered as full satisfaction.

Widmer v. Gibble Oil Co., 243 Ark. 735, 736, 421 S.W.2d 886, 887 (1967); see also Dyke Indus., Inc. v. Waldrop, 16 Ark. App. 125, 697 S.W.2d 936 (1985).

The key element of an accord and satisfaction is a meeting of the minds, or, in more modern contract terms, an objective indicator of agreement because the parties must agree that the payment of the smaller sum will discharge the whole debt. Fort Smith Serv. Fin. Corp. v. Parrish, 302 Ark. 299, 789 S.W.2d 723 (1990). In this case, there was simply nothing to show that parties agreed that the acceptance of the check with $6,667 deducted would discharge the balance owed on the contract. The mere fact that a creditor receives less than the amount of his claim, with knowledge that the debtor claims to be indebted to him only to the extent of the payment made, does not necessarily establish an accord and satisfaction. Id. We affirm on this point.

Affirmed.

Crabtree and Roaf, JJ., agree.