New England Partnerships, Inc. v. Rutland City School District
Annotate this Case
New England Partnership, Inc. v. Rutland City School Dist. (2000-108);
173 Vt. 69; 786 A.2d 408
[Filed 14-Sep-2001]
[Motion for Reargument Denied 29-Oct-2001]
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, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.
No. 2000-108
New England Partnership, Inc. Supreme Court
On Appeal from
v. Washington Superior Court
Rutland City School District June Term, 2001
Mary Miles Teachout (findings and conclusions) and Alden T. Bryan (judgment
order), JJ.
Michael B. Clapp, Burlington, for Plaintiff-Appellant.
William H. Meub and Erin Gallivan (On the Brief) of Keyser Crowley, P.C.,
Rutland, for Defendant-Appellee.
PRESENT: Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.
SKOGLUND, J. In this dispute over payment due under a construction
contract, appellant New England Partnership, Inc. (NEPI), architects of a
building and remodeling project for appellee Rutland City School District
(district), appeals the Washington Superior Court's determination that the
amount still owed on the contract to NEPI was $41,059. NEPI argues that
the trial court erred in (1) its calculation of the contingent fee amount
due pursuant to paragraph six of the addendum to the contract; (2) its
determination of the "basic compensation" amount pursuant to paragraph 3 of
the addendum agreement; (3) its calculation of the amount of prejudgment
interest to be awarded NEPI; and (4) its holding that the Prompt Pay Act,
9 V.S.A. §§ 4001-4009, does not apply to
paragraph 6 of the addendum. The district presents three cross claims as
well: that the trial court erred in (1) its determination that NEPI was
owed any amount under the contingent fee agreement in paragraph six of the
addendum; (2) its calculation of the contingent fee amount pursuant to
paragraph six of the addendum; and (3) its award of attorney's fees to
NEPI. We agree with NEPI on its first, second, and third arguments, and
disagree with its fourth argument as well as the arguments presented by
appellee on cross-appeal. We therefore affirm the trial court's decision
in part, reverse in part, and remand.
I. Factual Background
We begin with the facts, as found by the trial court, which are
relevant to this appeal. On December 8, 1989, the parties entered into a
written agreement in which NEPI would provide the district with
architectural services for the building of a new high school and the
renovation of other buildings. The agreement was memorialized in a
standard American Institute of Architects contract, and incorporated a
budget dated November 16, 1989 which had previously been developed by NEPI
for the district for bond vote purposes. The agreement specified in
paragraph 11.2 the "basic compensation" NEPI was to receive for its
services. It stated, in pertinent part, that "basic compensation" shall be
computed as "[t]he Stipulated Sum of Eight Hundred Twenty Five Thousand
Dollars (Gross Fee of $853,000.00 less $28,000.00 credit for payments for
pre-bond services)[.]" On May 16, 1990, the parties agreed to change the
compensation portion of the agreement to reflect a cost of $8,804 for
insurance, resulting in a new basic compensation fee of $816,196.
In June 1990 the district's Act 250 permit request was denied. In
August, when it appeared that it would be some time before the permit
would be obtained, NEPI stopped working on the plans
for the high school. In January 1991, NEPI informed the district that when
the project resumed, its fees would need to be increased as a result of
the delay.
The Act 250 permit was granted in the summer of 1992, and NEPI resumed
work on the drawings. On July 23, 1992, NEPI informed the district of
what would be necessary to complete the project, and that completion would
cost the district $466,373 in additional fees above and beyond the
original contract amount. Despite NEPI's letter providing a description of
the bases for these increased costs, the district was upset over this
increased amount, finding it difficult to understand why, with the
construction drawings 58% complete, so much in additional fees was
necessary.
On July 28, NEPI provided a new budget which called for a total
project cost of $16 million - substantially higher than the $8.7 million
project cost at the time of the bond vote. The district requested that
NEPI come up with a fixed fee for the completion of the project, and during
the next three months NEPI worked with the district to develop a budget
and scope for the project that would be in balance with the district's
available funding. On September 14, a budget in line with the available
funding was presented to the district, with construction costs for the high
school at $9,002,000, not including a four-percent construction
contingency. The budget included a fixed fee for NEPI's services for the
entire project at $1,095,585, plus $91,475 in start-up costs. At this
time, NEPI indicated that it was willing to address the issue of the near
$150,000 in project suspension costs by making payment for them contingent
on the project being bid below the budget for construction.
On October 13, 1992, the parties met to negotiate a revised contract,
as the original agreement was due to expire. As a result of these
negotiations, on November 23, 1992 the parties agreed on the terms of an
addendum to the contract. Subsequently, the district contacted a
construction company to manage the construction project, and on April 13,
1993 the district and the construction company agreed on a "guaranteed
maximum price" (GMP) for the overall project of $10,183,406, including a
guaranteed maximum price of $8,759,405 for construction of the high school
portion of the project. The construction project agreed to with the
construction company differed from that planned by NEPI, as the district
specifically eliminated from this later agreement certain items present in
the NEPI plans and drawings in order to ensure that the district would have
money left over. The project then went out for bidding, and the project,
as bid on, resulted in a savings of $342,760.
On July 12, 1993, NEPI submitted a bill to the district for the
contingency fee called for under paragraph six of the addendum. The bill
referred to $9,001,500 as the amount by which the contingency was to be
calculated, and claimed that the GMP, as adjusted for bid savings, was
below this amount. The district did not pay the bill for the contingency.
II. NEPI's Claims on Appeal
NEPI first argues the trial court erred in calculating the suspension
contingency amount as described in paragraph six of the addendum.
Paragraph six provides:
Owner agrees to pay Architect additional contingent compensation
over that already set out above. The contingent compensation will
be 50% of the amount, if any, by which the high school GMP, as
adjusted through completion of bidding, is lower than the October
13, 1992, estimate, attached hereto, up to a maximum contingent
compensation of $50,000.00. For example, if the adjusted GMP is
$50,000.00 lower than the October 13, 1992 estimate, Architect
will receive $25,000.00, if the adjusted GMP is $101,000.00 or
more lower than the October 13, 1992 estimate, Architect will
receive only $50,000.00. The calculation of the contingent
compensation will be made at the completion of bidding and
payment shall be made out of initial bond proceeds.
NEPI claims that the trial court erred in adjusting the "high school GMP"
upwards, as there was no provision in the addendum for such an upward
adjustment.
We note initially, as to NEPI's claims that paragraph six does not
provide for any upward adjustment of the "high school GMP," that the
addendum does not specifically state that the adjustment to be made at the
completion of bidding is limited to decreasing the "high school GMP"
amount. NEPI's proposed construction of the phrase "as adjusted through
completion of bidding" allows only a downward adjustment of the high
school GMP. NEPI does not, however, indicate whether this argument was,
if ever, presented to the trial court. The trial court's decision makes no
reference to whether there was an issue as to the ambiguity of the language
NEPI now challenges. It found that portions of paragraph six were
ambiguous, but it did not state whether or not it had concluded, or even
considered, if the adjustment language at issue here was ambiguous.
Accordingly, we will not search the record to determine if the issue was
preserved for review. See In re Wright, 131 Vt. 473, 490, 310 A.2d 1, 10
(1973) ("This Court is not required nor about to undertake a search for
claimed error where it is not adequately briefed, supported by argument, or
pointed out in the record before us."). Therefore, absent any indication
the argument was raised below, the matter is not before us on appeal.
Bull v. Pinkham Eng'g Assocs., 170 Vt. 450, 459, 752 A.2d 26, 33 (2000)
("Contentions not raised or fairly presented to the trial court are not
preserved for appeal.").
The trial court did conclude that the second portion of the suspension
contingency in paragraph six - referring to the "October 13, 1992
estimate"-was ambiguous because of the unresolved question of whether that
description referred to the budgeted amount in the estimate with, or
without, the 4% construction contingency amount included. However, the
trial court did not find
or conclude that the first portion of the contingency clause, pertaining to
the high school GMP, was ambiguous. Nor did it present any other
reasoning or authority supporting its decision to add back to the "high
school GMP" the items it categorized as "items that were eliminated from
the guaranteed maximum price contract, but were clearly in the October
13th, 1992 drawings" and "items that although not clearly depicted on
either the October 13th, 1992 drawings or specifically named in the
budget, are ones that both sides expected through representations and
discussions would be components of the building as defined in the addendum
contract." The court also refused, when so requested by NEPI, to
describe with any particularity the individual components of each of these
categories.
"The trial court has a fundamental duty to make all findings necessary
to support its conclusions, resolve the issues before it, and provide an
adequate basis for appellate review." Secretary, Agency of Natural Res.
v. Irish, 169 Vt. 407, 419, 738 A.2d 571, 580 (1999); see also V.R.C.P.
52(a); Roy v. Mugford, 161 Vt. 501, 507, 642 A.2d 688, 692 (1994). "It is
the duty of the court, in making findings of facts, to sift the evidence
and state the facts. The purpose of V.R.C.P. 52 findings is to make a
clear statement to the parties, and to this Court if appeal is taken, of
what was decided and how the decision was reached." Arnold v. Arnold, 141
Vt. 118, 120, 444 A.2d 890, 891 (1982) (emphasis in original) (citations
and internal punctuation omitted). "Findings made under Rule 52,
V.R.C.P., are required to report the factual ingredients essential to the
disposition." Standard Packaging Corp. v. Goodrich, 131 Vt. 57, 59, 300 A.2d 541, 543 (1972).
The trial court's "findings" on the categories of project items
eligible for add-back failed to satisfy the requirements of V.R.C.P. 52.
The court's refusal to identify the components of the categories it
decided to add back deprived the parties an opportunity to challenge the
propriety of the
court's decision of what should or should not be included in the add-back.
This is particularly pertinent to this case, as both sides have claimed
error in either what was, or was not, added back. (FN1) This omission
also deprived this Court the opportunity to meaningfully review the trial
court's findings. Therefore, we remand the matter back to the trial court
to enter findings identifying the specific items, and their prices, which
composed the four add-back categories, and to provide the reasoning
supporting making such add-backs to the "high school GMP."
The district argues that the trial court did not need to provide
specific findings on what items composed each of the categories of
add-backs, citing Bonanno v. Bonanno, 148 Vt. 248, 251, 531 A.2d 602, 604
(1987) for the proposition that "[w]hile it is the better practice to
articulate the specific facts upon which the ultimate facts are based, it
is not reversible error to omit to do so." In Bonanno, the trial court
failed to provide information on why certain insufficiencies rendered a
custody evaluation report's recommendation invalid. Id. at 251, 531 A.2d
at 604. We held that the evaluation report was not the sole basis for the
court's conclusion, and that the report was just one factor considered in
making its custody award. Id. The present case is clearly distinguishable
from Bonanno, as the findings omitted here are not simply one of several
other factors the court examined in making the conclusion challenged on
appeal, and thus Bonanno does not apply to the present case.
NEPI further argues that the trial court erred as a matter of law in
concluding that NEPI's estimate of the high school guaranteed maximum
price was $9,001,500 rather than $9,361,600. The trial court concluded
that there was an ambiguity in addendum paragraph six's reference to the
"October 13, 1992 estimate" as to whether or not the addendum language
includes the 4%, or $360,100, construction contingency amount present in
the estimate. The pertinent portion of the estimate reads as follows:
1. ESTIMATED EXPENSES
A. HIGHSCHOOL/TECHNICAL CENTER
. . . .
6. Contingency: 4% x $9,001,500 360,100
$9,361,600
Upon examining the evidence presented, the court determined that the lower
number, without adding in the 4% construction contingency, was the correct
amount.
The issue of whether or not a contract term is ambiguous is a matter
of law for the trial court to decide. Isbrandtsen v. North Branch Corp.,
150 Vt. 575, 577, 556 A.2d 81, 83 (1988). "Ambiguity will be found where
a writing in and of itself supports a different interpretation from that
which appears when it is read in light of the surrounding circumstances,
and both interpretations are reasonable." Id. at 579, 556 A.2d at 84.
Extrinsic evidence may be introduced to aid in the construction of a
written instrument once an ambiguity has been found. Id. at 577, 556 A.2d
at 83.
The trial court correctly identified that paragraph six makes no
mention of whether or not the 4% construction contingency is applicable to
the calculation of the suspension contingency. In examining how to
resolve this ambiguity, the trial court found that NEPI used the lower
figure in its own initial billing for the contingency fee, and that in
notes from meetings on January 4 and 5,
1993, NEPI used the lower figure as a reference point for the cost of the
building. These findings are sufficient to support the trial court's
decision resolving the ambiguity; therefore, we will not disturb its
conclusion on appeal. State v. Austin, 165 Vt. 389, 398, 685 A.2d 1076,
1082 (1996) ("We will uphold the trial court's legal conclusions if
reasonably supported by its findings.").
NEPI's next argument is that the court erred in setting at $967,296
the basic compensation payable to it under paragraph three of the
addendum, and, as a result, the district received a double credit for
$28,000 in pre-bond work performed by NEPI. Paragraph three reads as
follows:
The Architect's total compensation under Article 11.1 & 11.2 is
amended from $853,000.00 to $1,004,100.00. All sums paid
Architect to date will be treated as compensation under this
portion of this Agreement and credited against the $1,004,100.00.
The December 8, 1989, contract called for "basic compensation" for
basic services in the amount of $825,000, an amount arrived at by
subtracting $28,000 "credit for pre-bond services" from the "gross fee" of
$853,000. Also, on May 16, 1990, the parties agreed to change the
compensation portion of the agreement to reflect a cost of $8,804 for
insurance, which further reduced the basic compensation amount. The court
concluded that paragraph three of the addendum was ambiguous as to whether
or not these credits were to be subtracted from the new amount. The court
stated that "[t]here is something of an ambiguity there" and resolved this
ambiguity in favor of the district. It stated that "the most reasonable
way to read the addendum together with the original contract is simply to
replace the $853,000 number with the $1,004,100 number." The court further
concluded that the effect of the addendum was to change the basic
compensation amount to $1,004,100, subject to a reduction of $28,000
credited in paragraph 11.2.1 of the December 8, 1989
contract, as well as the $8,804 change reflecting the cost of insurance,
resulting in a basic compensation amount of $967,296.
"A provision in a contract is ambiguous only to the extent that
reasonable people could differ as to its interpretation." Isbrandtsen,
150 Vt. at 577, 556 A.2d at 83. If a court finds a writing to be
ambiguous, "the proper interpretation becomes a question of fact, to be
determined on all relevant evidence." Kipp v. Chips Estate, 169 Vt. 102,
107, 732 A.2d 127, 131 (1999).
We will not set aside a trial court's findings unless clearly
erroneous, nor disturb its conclusions if they are reasonably
supported by the findings. Findings are viewed in the light most
favorable to the judgment, disregarding modifying evidence, and
will not be disturbed merely because they are contradicted by
substantial evidence; rather, an appellant must show that there
is no credible evidence to support the finding.
Agency of Natural Res. v. Glens Falls Ins. Co., 169 Vt. 426, 432, 736 A.2d 768, __ (1999) (citations omitted).
Extrinsic evidence may be introduced to aid in the construction of a
written instrument once an ambiguity has been found. Isbrandtsen, 150 Vt.
at 577, 556 A.2d at 83. In this case, examination of the October 13, 1992
estimate makes clear that the trial court's construction of the addendum
and contract will result in the district receiving a double credit for
$28,000 worth of pre-bond services. Under the trial court's construction,
the credit is first received by the district in the October 13, 1992
estimate's calculation of the $1,004,100 total compensation amount, as that
number includes the "pre-bond credit" of $28,000. The second credit is
manifest in paragraph 11.2.1 of the December 8, 1989 contract when the
original $853,000 amount is replaced, per the trial court's construction of
the addendum, with $1,004,100, because this paragraph requires the
additional subtraction of "$28,000 credit for payments for pre-bond
service."
The district makes no argument in support of the trial court's
interpretation of paragraph three of the addendum - it simply states that
appellant's argument is without merit. After examining the October 13,
1992 estimate, it does not appear that the trial court's conclusion is
reasonably supported by the findings. The trial court made no findings on
the issue of how to construe the contract. It simply concluded that there
was an ambiguity, took evidence on the issue, and then resolved the issue
in favor of the district - all without giving a factual basis for so
holding. It did note that the $1,004,100 amount is available in the
estimate, even though "[i]t is only available by adding and subtracting
certain numbers that require [a] certain amount of sophistication and
understanding of that budget." However, the estimate also specifically
indicates the $28,000 pre-bond credit was already taken out in the
calculation of the estimated expense of the design of the high school
portion of the project, and there is no credible evidence in the record
supporting a conclusion contrary to this evidence. Therefore, we disagree
with the trial court's conclusion that, upon replacing "$853,000.00" in
paragraph 11.2.1 of the contract with "$1,004,100.00," the district is also
entitled to the additional $28,000 credit provided in paragraph 11.2.1.
NEPI's next argument is that the trial court erred in calculating the
interest award of $8,640, claiming that the court abused its discretion
and erred as a matter of law when it calculated the interest at the rate
of 6% "rather than the legal rate of interest of 12%." 9 V.S.A. § 41a(a)
provides that "the rate of interest . . . for forbearance or use of money
shall be twelve percent per annum computed by the actuarial method." We
recognized in Greenmoss Builders, Inc. v. King, 155 Vt. 1, 8, 580 A.2d 971, 975 (1992), that "[i]nterest is a legal right of the plaintiff. When
a debt becomes payable, if the contract does not stipulate a rate of
interest, the statutory or legal rate applies." "Reversal of the court's
prejudgment interest award is warranted only if the method of calculation
chosen was so 'irrational as to amount to an abuse of discretion.'" Remes
v. Nordic Group, Inc., 169 Vt. 37, 41, 726 A.2d 77, 80 (1999) (citing In
re Merrill, 157 Vt. 150, 154, 596 A.2d 345, 348 (1991)). In the present
case, neither side argues that the contract contained a provision for
prejudgment interest awards or any other interest rate provision applicable
in this situation. Therefore, the trial court's application of a 6%
interest rate, in the absence of any mention of interest rates in the
contract itself, and contrary to the clearly-enumerated statutory rate of
12%, constitutes an abuse of discretion warranting reversal.
NEPI's final argument is that the trial court erred in holding that
the Prompt Pay Act (PPA), 9 V.S.A. §§ 4001-4009, does not apply to
paragraph six of the addendum. The PPA was enacted in 1991, and applies
only to contracts entered into on or after January 1, 1992. See id. The
contract at issue in this case was entered into on December 8, 1989, and
modified by the addendum agreement on November 23, 1992. The question
raised is whether the PPA therefore has effect on the contract, or the
addendum, or both.
NEPI states that the PPA applies to paragraph six of the construction
contract, as that paragraph "is completely independent of any of the
provisions or terms contained in the 1989 Agreement." They claim that
this paragraph reflects a settlement agreement reached by the parties
regarding costs incurred when the project was suspended because of Act 250
problems, and is "not merely an alteration of provisions contained in the
1989 Agreement" but is "instead an entirely new agreement reached in
settlement." We disagree. It is a generally understood principle of
contract construction that "[t]he modification of a contract results in
the establishment of a new agreement between the parties which pro tanto
supplants the affected provisions of the original agreement while leaving
the balance of it intact." Beacon Terminal Corp. v. Chemprene, Inc., 429 N.Y.S.2d 715,
717-18 (1980) (citing in part 6 Corbin, Contracts, § 1293). Thus, the
addendum provision is not itself a stand-alone agreement, and NEPI's
argument for application of the PPA fails.
III. The District's Claims on Cross-Appeal
The first claim by the district is that the condition precedent to
payment of the contingency fee described in paragraph six of the addendum
was never met. In support of this position, the district claims that the
district provided testimony showing that the intent of the district was to
pay the contingency only if the district received the school as
contemplated on October 13, 1992, and, since the school as built deviated
from that contemplated design, the condition was not met.
"We interpret the contract according to its terms and the parties'
intent as expressed in the contract language." Suchoski v. Redshaw, 163
Vt. 620, 622, 660 A.2d 290, 292 (1995). From the plain meaning of the
language of paragraph six, there is no expression that the intent of the
parties was to attach the satisfaction of the contingency to the actual
building received. The language provides that the contingency is met if
"the high school GMP, as adjusted through completion of bidding, is lower
than the October 13, 1992 estimate," and makes no mention of the finished
project as such would relate to the contingency being met. We therefore
reject the district's argument.
The district's second claim is that the trial court erred in awarding
attorney's fees to NEPI because the award was tied to finding a
contingency, and because the trial court stated that under the
circumstances NEPI was entitled to attorney's fees. As we disagree with
the district that the paragraph six contingency was not met, we address
only the claim that the court erred in "finding" that the contract
entitled NEPI to fees in this case. The contract provides that, should a
party breach the agreement, the party "forced to take any action to
collect sums due it . . . may also recover all costs of collection
(including court costs and reasonable legal fees)." "We will not disturb
the trial
court's findings of fact unless they are unsupported by the evidence or
clearly erroneous." State v. Zaccaro, 154 Vt. 83, 86, 574 A.2d 1256, 1258
(1990). By arguing that the court's statement that NEPI is entitled to
attorney's fees in this case is the equivalent of reading the contract as
mandating attorney's fees in the event of a breach, the district displays
a misunderstanding of the word "entitle." To be entitled to fees is not
only to have a mandatory right to such, but also to "furnish with proper
grounds for seeking or claiming." Black's Law Dictionary 477 (5th ed.
1979). In light of the trial court's finding that the contingency was
owed to NEPI, its conclusion that NEPI was also entitled to attorney's
fees under the contract was supported by the evidence.
Affirmed in part, reversed in part, and remanded.
FOR THE COURT:
_______________________________________
Associate Justice
------------------------------------------------------------------------------
Footnotes
FN1. One of the district's claims on cross-appeal is that the trial
court erred in failing to add-back category four as well, arguing that
this category contains items taken out but contemplated under the October
13, 1992 estimate. However, as the district fails to provide any support
for this proposition in the four sentences it devotes to the argument in
its brief, we will not address it on appeal. See State Farm Mut. Auto
Ins. Co. v. Powers, 169 Vt. 230, 242, 732 A.2d 730, 738 (1999) (noting
this Court will not address issues inadequately briefed).
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