Justia Contracts Opinion Summaries

Respondent Annapolis Towne Centre (ATC), the owner and developer of a mixed-use development, entered into an agreement with petitioner Hovnanian Land Investment, a residential developer, under which ATC agreed to sell a portion of the property to Hovnanian for the construction of a residential tower. The contract required certain conditions to be met by ATC prior to the closing and contained a clause stating that any waiver of the contract had to be in writing. Before closing, Hovnanian terminated the agreement, alleging that ATC failed to meet a condition precedent. ATC sought a declaratory judgment, and both parties filed motions for summary judgment on the issue of whether ATC had complied with the condition precedent. The circuit court granted ATC's motion for summary judgment on that issue, holding that Hovnanian waived the condition precedent. The court of special appeals affirmed. The Court of Appeals reversed, holding that summary judgment was not appropriate because (1) a condition precedent may be waived by a party's conduct, despite a non-waiver clause, but whether Hovnanian's actions amounted to a waiver was a dispute of material fact; and (2) the question of whether ATC strictly fulfilled the condition also involved material questions of fact. Remanded.

In 2006, Appellant Yvan Safar contracted with developer Per Bjorn-Roli to construct a 12-unit condominium project. Appellee Wells Fargo agreed to finance the project. By early 2007, the developer paid Appellant the entire amount of his contract, and Wells Fargo disbursed the entire loan, but the units were not complete. Appellant allegedly used his own funds to meet his payroll needs on the project. The project overran its budget, and Wells Fargo had to foreclose. Appellant contended that the bank promised to reimburse him for monies he spent in contemplating the completion of the project. After trial, the superior court found that Wells Fargo made no enforceable promise to Appellant to reimburse him. Upon review, the Supreme Court found that the bank did not make any promise or commitment to Appellant sufficient to meet the "actual promise" element of promissory estoppel. Accordingly, the Court affirmed the lower court's dismissal of Appellant's case.

After Clark and Sullivan Constructors (C&S), a general contractor, solicited bids for a public works project, Dynalectric, a subcontractor, submitted a bid to perform electrical work on the project. C&S incorporated Dynalectric's bid into its bid for the contract, and C&S was awarded the project. Subsequently, Dynalectric repudiated its obligations to C&S. C&S sued Dynalectric in district court under various theories of liability, including promissory estoppel. The district court entered judgment for C&S on its promissory estoppel claim and awarded C&S $2,501,615 in damages, which represented the difference between Dynaletric's bid and the amount C&S paid the three replacement contractors to complete the work. Dynalectric appealed, contending that the district court applied the incorrect measure of damages. The Supreme Court affirmed, holding (1) the determination of the appropriate measure of damages in any given case turns on considerations of what justice requires and the foreseeability and certainty of the particular damages award sought; and (2) the presumptive measure of damages for a general contractor that reasonably relies on a subcontractor's unfulfilled promise is the difference between the nonperforming subcontractor's original bid and the cost of the replacement subcontractor's performance.

The issue before the Supreme Court in this case was whether a limitations period applied to an action for breach of a construction contract. The Court of Appeals held that the limitations period applied in this case, and that the statute's six-year limit expired before Plaintiff Miller-Davis Company filed its complaint. The appellate court reversed the judgment of the trial court that had awarded Plaintiff damages. Plaintiff argued on appeal to the Supreme Court that a different statute of limitations for breach of contract controlled, and the period prescribed by that statute was the applicable statute for this action. Upon review of the two statutes of limitations, the Supreme Court agreed with Plaintiff. The limitation in both statutes is six years, however, the period runs from "the date the claim first accrued." The Court reversed the appellate court's judgment because there was a question about the date Plaintiff's action accrued. The Court remanded the case for further proceedings.

The Utah Department of Transportation (UDOT) contracted with Meadow Valley Contractors (MVC) for a highway construction project. MVC subcontracted the paving work to Southwest Asphalt Paving. After UDOT refused to allow Southwest to use ribbon paving and assessed MVC a thickness-laying penalty, MVC filed a compliant against UDOT, alleging that (1) it incurred costs not contemplated by the contract as a result of UDOT's prohibition on ribbon paving, and (2) the thickness penalty assessed by UDOT was unwarranted. UDOT denied MVC claims. Southwest then filed a complaint in district court in MVC's name against UDOT alleging breach of contract. The trial court (1) concluded that UDOT breached its contract with MVC by refusing to allow ribbon paving on the construction project, and (2) denied MVC's claim that UDOT had erroneously imposed a paving-thickness penalty. On appeal, the Supreme Court reversed in part and affirmed in part, holding (1) UDOT did did not breach its contract with MVC when it forbade MVC and Southwest from using ribbon paving, and (2) there was sufficient evidence to support the trial court's conclusion that UDOT's interpretation of the contract regarding paving thickness was more reasonable than MVC's interpretation.

In 1995, Charles and Charlene Ebinger contracted with Venus Construction Corporation to build a home. The couple moved into their new residence in 1997. In 2003, the Ebingers filed suit against Venus alleging defects in the home's foundation. Venus sought indemnification from one of its subcontractors. At issue in this case is whether the construction company's third-party demand against its subcontractor was time-barred by state law that established a peremptive period for actions against residential building contractors. The peremptive period was established originally at ten years, but subsequent amendments shortened its duration. A 1999 amendment reduced the period to seven years; a 2003 amendment reduced it to five years. Upon consideration of the trial record and the applicable legal authority, the Supreme Court found that the latest version of the statute applied in this case (2003). Consequently, the court held that the construction company's right to indemnity from its subcontractor was extinguished and its third party demand was perempted.

Plaintiffs William and Vivian Allen contracted defendant V and A Brothers, Inc. (V&A) to landscape their property and build a retaining wall to enable the installation of a pool. At the time, V&A was wholly owned by two brothers, Defendants Vincent DiMeglio, who subsequently passed away, and Angelo DiMeglio. The corporation also had one full-time employee, Defendant Thomas Taylor. After V&A completed the work, Plaintiffs filed a two-count complaint naming both corporate and individual defendants. The first count was directed solely to V&A and alleged that the corporation breached its contract with Plaintiffs by improperly constructing the retaining wall and using inferior backfill material. The second count was directed to the corporation and Vincent's estate, Angelo, and Taylor individually, alleging three "Home Improvement Practices" violations of the state Consumer Fraud Act (CFA). Before trial, the trial court granted the individual defendants' motion to dismiss the complaint against them, holding that the CFA did not create a direct cause of action against the individuals. Plaintiffs' remaining claims were tried and the jury returned a verdict in favor of plaintiffs on all counts, awarding damages totaling $490,000. The Appellate Division reversed the trial court's order dismissing the claims against the individual defendants under the CFA. The panel remanded the matter to determine whether any of the individual defendants had personally participated in the regulatory violations that formed the basis for Plaintiffs' CFA complaint. The panel precluded relitigation of the overall quantum of damages found by the jury in the trial against the corporate defendant. Upon review, the Supreme Court held that employees and officers of a corporation might be individually liable under the CFA for acts they undertake through the corporate entity. Furthermore, individual defendants are not collaterally estopped from relitigating the quantum of damages attributable to the CFA violations. The Court remanded the case for further proceedings.

At issue in this case was whether the trial court abused its discretion when it concluded that Defendants Richco Construction, Inc. (Richco) and Ronald Richards, Jr. were personally notified of the default judgment against them and denied their motion to set aside that judgment. The suit arose from a contractual relationship between Plaintiff Lawrence M. Clarke, Inc. (Clarke) and Defendant. Clarke worked on a residential subdivision in 2003, and hired Richco as a subcontractor to work on the sewer system. Richco's work did not satisfy the local governing municipality, and after efforts to repair were unfruitful, Clarke contracted with another party to finish the work. Clark filed a breach of contract and fraud complaint against Richco. The process server attempted to serve Richco at its business address on file with the state, but Richco had vacated the premises and left no forwarding address. Clarke continued in its efforts to locate Richco and refiled its complaint. The trial court permitted alternative service through mailing notice to last-known addresses and a classified advertisement in the local paper. With no response, Clarke moved for a default judgment that the court granted. Upon review of the trial court record, the Supreme Court found that the trial court abused its discretion by finding that Richco was personally notified, and that Richco was entitled to relief from the default judgment. The Court reversed and remanded the case back to the trial court for further proceedings.

Plaintiffs Stephen and Marilee Bell hired contractor Defendant Perception Construction Management, Inc. (PCM) to build a log home. The parties' relationship deteriorated, and the Plaintiffs terminated the contract before construction was complete. Plaintiffs refused to pay PCM's final invoices, and PCM filed suit to enforce a lien it placed on the home for the unpaid invoices. Plaintiffs filed multiple counterclaims, including construction defect and breach of contract. PCM prevailed at trial, and the district court found PCM was entitled to damages, prejudgment interest and attorney fees. Plaintiffs appealed, contending that the district court erred by excluding certain evidence relating to their defense against the lien, and in its determination of the monies allegedly owed under the lien. The Supreme Court found that the district court impermissibly excluded Plaintiffs' evidence, and as such, the Court vacated the district court's judgment and remanded the case for further proceedings.

Ron and Linda Reece and Greg and Staci Hunter agreed to flip a house and put their agreement in writing. Mr. Reece supplied the labor and submitted invoices for expenses incurred to Mrs. Hunter. Later, the Hunters became dissatisfied with the progress on the project, told Mr. Reece to stop working on the project, and hired other contractors to complete the project. The Reeces then filed suit against the Hunters, alleging that, under the contract, the Reeces were entitled to payment for Mr. Reece's labor on the project in addition to one half of the profits. The district court found that the parties' contract was not valid because there had been no meeting of the minds regarding an essential term of the agreement, that being whether Mr. Reece was to be paid for his work in addition to receiving one half of the profits. The court then invoked the theory of unjust enrichment to award all of the profits to the Reeces. The Hunters appealed. The Supreme Court reversed, holding that, given the language of the written agreement and the parties' stipulation that it was a valid contract, the district court erred in finding there was no contract.