Steven Stouffer and Pamela Stouffer v. T & L Janitorial, Inc. d/b/a ServiceMaster

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NOT DESIGNATED FOR PUBLICATION  ARKANSAS COURT OF APPEALS  D.P. MARSHALL JR., JUDGE  DIVISION II  CA07­364  12 December 2007  STEVEN STOUFFER and  PAMELA STOUFFER,  APPELLANTS  v.  T & L JANITORIAL, INC. d/b/a  SERVICEMASTER,  APPELLEE  AN APPEAL FROM THE SEBASTIAN  COUNTY CIRCUIT COURT  [CV­2004­56(V)]  THE HONORABLE J. MICHAEL  FITZHUGH, CIRCUIT JUDGE  AFFIRMED  After a bench trial, the circuit court concluded that Pamela and Steven Stouffer had  a contract with T & L Janitorial, Inc. d/b/a ServiceMaster to clean and restore their home  after a fire.  The court further concluded that the Stouffers broke that contract when they  refused  to  endorse  a  final  check  from  their  insurer,  one  of  the  Cincinnati  Insurance  Companies, to ServiceMaster.  The Stouffers contend that no contract existed.  They argue  that their obligation to ServiceMaster was a matter of quasi­contract, and thus we should  reverse  and  remand  for  the  circuit  court  to  fix  the  reasonable  value  of  ServiceMaster’s  services.  The Stouffers also challenge the court’s award of attorney’s fees to ServiceMaster  because that  award stands or falls on the contract question.  We affirm on all the issues  because the circuit court’s conclusion that the parties had a contract is not clearly against the preponderance of the evidence.  I.  In  May  2003,  the  Stouffers’  house  caught  on  fire.  The  next  day,  their  insurance  company contacted ServiceMaster about cleaning and restoring the house.  Several days  later, Cincinnati’s adjuster, Wayne Gammon, and ServiceMaster’s owner, Tommy Smith,  went to the property to view the damage.  That day, the Stouffers indicated to Gammon that  they wanted to hire ServiceMaster to do the restoration work on their home.  Mr. Stouffer  signed  an  “Authorization  &  Assignment  of  Insurance”  agreement  on  ServiceMaster  letterhead, which stated:  This  is  to  authorize  the  firm  of  ServiceMASTER  Professional  Cleaning  &  Restoration Services (herein referred to as ServiceMaster) to proceed with the  cleaning  and/or  repair  of  the  loss  of  damage  resulting  from  fire  which  occurred on or about ____ to the property located at ____. This is also to serve  as  an  authorization  for  the  insurance  company  of  responsible  party  to  pay  ServiceMaster  direct  for  services  rendered.  It  is  fully  understood  that  the  insured  is  personally  responsible  for  all  charges  or  costs  not  paid  by  the  insurance  company.  This  insurance  benefits  to  ServiceMaster  for  services  performed and is irrevocable and legally binding. In the event that the insured  is paid directly by the insurance company, or if listed payee on a check or a  draft is other than ServiceMaster, the insured agrees to pay ServiceMaster for  services rendered within five (5) days of their receipt of the document. The  insured agrees to be responsible for all the legal costs to collect this debt and  agrees to pay a finance charge of 1.5% per month after this (5) day period.  (emphasis in original). This form also contained the home’s address and contact information  for everyone, including Gammon.  The Stouffers moved out of their house from late May through mid­August while 2  ServiceMaster cleaned and restored it.  As the work progressed, ServiceMaster prepared  detailed estimates for the tasks, which Gammon  approved from time to time.  There was no  evidence  that  the  Stouffers  saw  or  approved  these  estimates.    Cincinnati  paid  for  the  restoration in several installments.  It issued the first check in June and a second check in  July.  It made each check payable to both the Stouffers and to ServiceMaster.  The Stouffers  endorsed  each  of  these checks, and then gave them to ServiceMaster as required by the  Authorization and Assignment of Insurance document.  After  the  Stouffers  moved  back  into  their  home  in  August,  they  complained  that  ServiceMaster had failed to complete the job  and  had caused additional damage to their  house by scratching their Jacuzzi bathtub.  In late September 2003, Gammon, Smith, and the  Stouffers met at the house to discuss the final tasks that needed to be finished.  Mr. Stouffer  was ill and did not participate in this meeting.  Mrs. Stouffer participated, but did not testify  about what occurred.  According to Gammon, the work was 95% completed by this meeting  and only a few minor tasks remained, such as hanging a towel rack and installing a ceiling  fan.  In the following weeks, Cincinnati received a final estimate from ServiceMaster and  issued the final check in the amount of $15,111.25.  The Stouffers refused to endorse that check.  ServiceMaster had polished but not  replaced the scratched bathtub; the remaining restoration tasks had not been done; and the  working relationship between the Stouffers and ServiceMaster had fallen apart.  ServiceMaster then sued the Stouffers for breach of contract because they refused to 3  sign  the  final  check  in  accordance  with  the  Authorization  agreement.  The  Stouffers  counterclaimed against ServiceMaster, alleging that it had failed to complete the job, leaving  more than $15,000.00 worth of restoration and repair undone.  The Stouffers also alleged an  additional $25,000.00 in damages because, among other things, ServiceMaster removed their  personal property from the house to do the repairs, and failed to return or damaged many of  the items.  No one sued Cincinnati.  After the trial, the circuit court concluded that ServiceMaster and the Stouffers had  a contract and that the Stouffers were in breach.  Here is Judge Fitzhugh’s reasoning:  The  Court  finds  that  a  contract  existed  between  the  parties.    Both  sides  intended to enter into a service agreement.  That is, Plaintiff was to provide  restoration work, for a fee and Defendants were to benefit from said work.  That  was  the  objective  manifestation  of  each  side  as  well  as  the  oral  understanding between the sides.  The court held that the Stouffers failed to provide sufficient proof on their counterclaim and  dismissed it.  The court ordered the Stouffers to pay ServiceMaster $15,111.25.  The court  also  ordered  ServiceMaster  to    complete  the  restoration  of  the  home  or  reimburse  the  Stouffers in “a reasonable sum to cover . . .” a list of specific repairs. On ServiceMaster’s  later motion, the court awarded the company approximately $4,000.00 in attorney’s fees.  The Stouffers appealed.  This court dismissed their appeal for lack of a final order  because the judgment was indefinite about the reimbursement for additional repairs. Stouffer  v. T & L Janitorial, CA05­613, slip op. (Ark. App. March 8, 2006).  On remand, the circuit  court  modified  its  previous  order  by  giving  the  Stouffers  a  $924.83  credit  for  the 4  uncompleted repairs. The court then reaffirmed the rest of its prior judgment.  The Stouffers’  second appeal brings the merits here.  II.  The record sustains the circuit court’s decision.  The Stouffers’ main contention is an  either/or: either the parties had an express contract, which would support a claim for breach,  or their obligations were quasi­contractual, implied by law and enforced to prevent unjust  enrichment irrespective of breach.  This is a false choice.  Our law also recognizes contracts  implied in fact, “where the contract is inferred from the acts of the parties. . ..”  Steed v.  Busby, 268 Ark. 1, 7, 593 S.W.2d 34, 38 (1980); see also Berry v. Cherokee Village Sewer,  Inc., 85 Ark. App. 357, 360–61, 155 S.W.3d 35, 38 (2004).  The legal relationship created  by a contract implied in fact is no different from the one created by an express contract.  Steed, 268 Ark. at 7, 593 S.W.2d at 38.  The  Stouffers  argue  that  no  contract  existed  because  the  Authorization  and  Assignment of Insurance was indefinite and lacked mutuality.  As to definiteness, they point  out that the document contained no total or estimated price, no rates, and no specifics about  the restoration tasks.    As  to  mutuality, they argue that though Mr. Stouffer assigned the  insurance proceeds, ServiceMaster did not promise unequivocally to do the work.  These  attacks, however, overlook the parties’ course of performance.  This document was just one  of the parties’ many acts manifesting an objective intention to be bound.  Shea v. Riley, 59  Ark. App. 203, 206, 954 S.W.2d 951, 953 (1997). 5  The parties executed their arrangement.  The Stouffers told ServiceMaster to do the  restoration.  The company went to work.  It was undisputed that, for about three months,  ServiceMaster had possession of the Stouffers’ home and performed a clean up.  During this  time, the Stouffers endorsed two checks from Cincinnati to pay toward the clean­up costs.  This performance eliminated any mutuality problem about ServiceMaster’s obligations that  may  have  existed  at  the  threshold.  Swafford  v.  Sealtest  Foods  Division  of  Nat’l  Dairy  Products Corp., 252 Ark. 1182, 1188, 483 S.W.2d 202, 206 (1972).  We discern no insuperable indefiniteness problem either.  The law requires reasonable  certainty about the parties’ terms.  Key v. Coryell, 86 Ark. App. 334, 341, 185 S.W.3d 98,  103 (2004).  Though “a contract is uncertain in its terms, it does not necessarily follow that  it is a nullity.”  Beasley v. Boren, 210 Ark. 608, 612, 197 S.W.2d 287, 289 (1946).  The  Stouffers wanted their house restored to pre­fire condition as soon as possible, as anyone in  this difficult situation would.  Cincinnati’s obligation to the Stouffers was to pay for that  restoration—in Gammon’s words “to get . . . an insured back to the way they were one hour  before the incident happened.”  ServiceMaster offered to “proceed with the cleaning and/or  repair of the loss of damage resulting from the fire . . ..”  This was a definite offer to restore  the home completely.  There was no indefiniteness about the Stouffers’ assignment of all  their insurance proceeds to ServiceMaster.  And the particulars of ServiceMaster’s tasks  came clear during the work.  The parties to a contract may, by their mutual actions in carrying it out, furnish  an index to its meaning, which the language thereof fails to do.  After all, the 6  written instrument is but an evidence of what the signers thereof propose to  bind  themselves  to  do,  and  when  by  their  conduct  in  carrying  out  the  agreement, both of the parties demonstrate an intention to heal an uncertainty  in the contract, the courts will generally adopt this practical construction.  Beasley, 210 Ark. at 612, 197 S.W.2d at 289.  Completely restoring the Stouffers’ home necessarily involved some uncertainty at  the outset about the extent of the work.  ServiceMaster’s undisputed performance through  the  detailed  estimates  and  the  work  across  several  months,  coupled  with  the  Stouffers’  repeated endorsement of Cincinnati’s checks for that work, healed any uncertainty in the  parties’ contract.  See also Foundation Telecommunications, Inc. v. Moe Studio, Inc., 341  Ark. 231, 242, 16 S.W.3d 531, 538­39 (2000).  It is not dispositive that the Stouffers never saw and approved the detailed estimates.  Cincinnati did.  And this company was footing the bill and acting on behalf of its insureds,  the Stouffers.  Moreover, the parties’ main dispute was not about whether ServiceMaster  agreed to do particular tasks; it was about whether ServiceMaster had done all the tasks it  had  agreed  to  do  in  the  estimates.  The  detailed  estimates  show  the  parties’  contract  in  execution.  The alleged breach turned on ServiceMaster’s follow through.  The Stouffers  described  this  situation  in  their  counter­claim:  “Despite  the  representations  of  [ServiceMaster] as to having the requisite skill, staff, training, materials, and supplies to  completely clean, restore, and repair the damages resulting from the fire [ServiceMaster has]  wholly  and  totally  failed  to  complete  the  job  leaving  in  excess  of  $15,000.00  worth  of 7  restoration and repair undone[.]” The parties’ arrangement achieved reasonable certainty,  which allowed the circuit court to determine whether a breach occurred and an appropriate  remedy. Arkansas law required no more.  Key, supra.  We affirm the circuit court’s decision that the parties  had  a  contract and that the  Stouffers were in breach of it.  The Stouffers do not challenge the circuit court’s rejection  of their counterclaim or the amount of the credit that they received for the few unfinished  repairs.  The Stouffers attack on the attorney’s­fee award therefore fails.  Their obligation  to ServiceMaster was a matter of contract, not quasi­contract.  And our statute allowing the  circuit court to award fees in a breach­of­contract case, Ark. Code Ann. § 16­22­308 (Repl.  1999), makes no distinction between express contracts and contracts implied in fact.  There  is no distinction because the legal relationship created by both kinds of contracts is the same.  Steed, supra.  We therefore affirm the award of fees too.  Affirmed.  VAUGHT  and MILLER, JJ., agree. 8 

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