PHILIP M. HESS, Judge.
In this dispute involving the breach of a construction contract, subcontractor Scheck Industrial Corporation (Plaintiff) appeals the amended judgment of the Circuit Court of the City of St. Louis entered after a bench trial in favor of general contractor Tarlton Corporation (Defendant) on Plaintiff's claims for account stated and breach of contract and on Defendant's counterclaims for breach of contract, breach of warranty, and indemnification, and for Defendant's request for attorney fees. On appeal, Plaintiff claims that the trial court abused its discretion by barring Plaintiff's retained expert from testifying. Plaintiff also claims that the trial court's amended judgment against Plaintiff on its claims of account stated and breach of contract is "against the manifest weight of the evidence and a misapplication of the law" because: (1) Defendant did not dispute Plaintiff's invoices and admitted it owed Plaintiff compensation for work performed; (2) Plaintiff performed its obligations
In March 2008, Defendant entered into a Contract with the electric utility company Ameren under which Defendant agreed to perform certain work related to the repair of Ameren's Taum Sauk hydroelectric power plant. Defendant was the general contractor on the project, charged with performing general contracting services pursuant to the terms of the Contract. Pertinent to this dispute, the Contract required Defendant to cut eight drain access ports into the lower section of the plant's "penstock," weld steel collars composed of A572 carbon steel around each port, and install removable covers or doors over these ports.
Because Defendant did not have the requisite expertise to install the collars on each of the eight drain access ports required under the Contract, it entered into a Subcontract with Plaintiff in January 2009, under which Plaintiff agreed to complete these repairs of the penstock on a "time and materials" basis.
Pertinent to this appeal, the Contract contained a warranty provision, under
Regarding the relevant provisions of the Subcontract, Part I of the Subcontract concerned "payment" and included the following "pay-if-paid" clause, applicable to both progress payments and final payments:
Part II of the Subcontract contained certain "special requirements" and, under subpart (H), listed numerous "general" provisions pertaining to Plaintiff's obligations and further agreements between the parties. Paragraph 17 of Part (II)(H) is an indemnity clause, which provides:
Further, under paragraphs 30 and 32 of Part (II)(H), Plaintiff and Defendant agreed that Plaintiff would undertake personal
In March 2009, Plaintiff selected a welding procedure appropriate for welding A572 carbon steel to the A201 steel in the upper portion of the penstock. After Plaintiff had successfully completed the placement of the invert plates on this upper portion of the penstock, it began, in early June 2009, the welding work on the eight drain access ports located in the lower portion of the penstock. Although the lower portion of the penstock is composed of a different type of steel than the upper portion of the penstock, Plaintiff did not investigate whether a different base metal was present and did not submit a new welding procedure for welding the A572 carbon steel collars to the T-1 steel of the penstock. Shortly thereafter, on June 25th when 85 percent of the welding on the drain access ports was complete, Plaintiff identified cracking in the penstock just outside the completed welds and reported this information to Defendant.
Welding continued based on the parties' belief that the cracking was an isolated incident. However, by July 2, 2009, the parties realized that the cracking was widespread and Defendant directed Plaintiff to stop its welding work and requested Plaintiff to submit a new welding method. Around the same time, James Sopata, Plaintiff's superintendent for the project, learned for the first time that the lower portion of the penstock was composed of T-1 steel.
Several weeks later, around July 29th, Plaintiff applied its new proposed welding method to a single access collar. This required Plaintiff to remove the faulty access collar, remove the cracks in the penstock, and re-weld a new access collar using the new method. After its application, Plaintiff discovered additional cracks in the penstock and the new welding method was rejected. Plaintiff made a second attempt, again removing the defective weld, fixing the cracks and placing a new weld, but cracks in the penstock appeared again.
Consequently, by August 10th, rewelding ceased entirely. Because six or seven weeks had passed since the first discovery of the cracks and no solution had been found, Defendant contacted a metallurgist engineering firm, Briem Engineering, to develop a solution. After conducting an investigation, Briem Engineering's final report concluded that the cracking was due to "weld shrinkage stresses and pre-existing residual stress levels" and recommended an alternative welding procedure appropriate for welding A572 carbon steel to T-1 steel.
In anticipation that it would have to submit a claim to Ameren for payment of Plaintiff's repair and rework of the drain access welds, Defendant asked Plaintiff to track its time separately for the repair and rework of the welds. This work included removing all the defective welds, fixing the cracks in the penstock, and re-welding anything that had already been welded once. Defendant submitted the claim to Ameren based on its understanding at that point, as Plaintiff asserted to Defendant, that the cracking was related to problems in the penstock, not Plaintiff's welding procedure. Defendant sought a total of $733,416 from Ameren, reflecting both Plaintiff's costs in completing the repair and rework and Defendant's costs to support that work.
In June 2010, Ameren rejected the claim in its entirety, indicating in a letter to Defendant that Ameren had only approved a welding procedure for the upper portion of the penstock and that "improper welding practices" caused the lower portion of the penstock to crack. Subsequently, and after further conversation with Briem Engineering, Defendant realized that Plaintiff's position — that problems with the penstock caused the cracking — was not scientifically supportable in that "there was absolutely no engineering or metallurgical support to [Plaintiff's] claim...." Ultimately, Plaintiff received payment for all its work on the project except the $553,133.51 related to the repair and rework.
Plaintiff then filed this account stated and breach of contract action against Defendant seeking $553,133.51, the amount allegedly owed for the repair and rework.
After a four-day bench trial, the trial court entered a judgment for Defendant on Plaintiff's claims of account stated and breach of contract and on Defendant's counterclaims for breach of contract, breach of warranty, and indemnification. In essence, the trial court found that the evidence did not support Plaintiff's account stated and breach of contract claims, but instead established that Plaintiff breached the Subcontract by failing to complete the welds in a workmanlike manner and by failing to investigate and independently identify the proper welding procedure to be applied to the penstock. The trial court further found that Plaintiff breached the Subcontract by failing to indemnify Defendant for costs and expenses incurred as a result of Defendant's breach and that Plaintiff's failure to perform its obligations in a workmanlike manner constituted a breach of the Subcontract's warranty provision. Accordingly, the trial court awarded Defendant $220,093.80 in "labor and general conditions costs" that Defendant
Plaintiff moved for a new trial and Defendant moved for additional attorney fees. The trial court denied Plaintiff's motion and entered an amended judgment granting Defendant the additional attorney fees, for a total amount of $190,383.19 in fees. This appeal followed.
Plaintiff's first point on appeal relates to the trial court's decision to strike the testimony of Plaintiff's retained expert, which we review for an abuse of discretion. Kivland v. Columbia Orthopaedic Group, LLP, 331 S.W.3d 299, 311 (Mo. banc 2011). A trial court abuses its discretion when its "ruling is clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration." Blake v. Irwin, 913 S.W.2d 923, 931 (Mo.App.W.D.1996). No abuse of discretion occurs where "reasonable persons can differ about the propriety of the action taken by the trial court...." Id. When reviewing the trial court's decision regarding issues arising from pre-trial discovery, of which appellate courts grant trial court decisions great deference, "[w]e look only for an abuse of this broad discretion which results in prejudice or unfair surprise." Day Advertising Inc. v. Devries & Assocs., 217 S.W.3d 362, 366 (Mo.App.W.D.2007) (citation and quotations omitted); Ellis v. Union Elec. Co., 729 S.W.2d 71, 74 (Mo.App.E.D.1987).
Plaintiff's remaining points allege that the trial court's amended judgment misapplies the law or is against the manifest weight of the evidence. In a court-tried case, "we will affirm the circuit court's judgment unless there is no substantial evidence to support it, it misstates or misapplies the law, or it goes against the weight of the evidence." Brooke Drywall v. Building Constr. Enterprises, Inc., 361 S.W.3d 22, 26 (Mo.App.W.D.2011) (citation and quotations omitted). "The trial court's judgment is presumed valid, [and] the burden is on the appellant to demonstrate its incorrectness[.]" Harness v. Wallace, 167 S.W.3d 288, 289 (Mo.App.S.D. 2005). Even if we find error, we cannot reverse the judgment unless we determine that the error "materially affect[ed] the merits of the action." Rule 84.13(b).
"Substantial evidence is evidence which has probative force and from which the trier of fact could reasonably find the issues in harmony with its decision." Grider v. Tingle, 325 S.W.3d 437, 440 (Mo.App.S.D.2010). "[A]n against-the-weight-of-the-evidence challenge presupposes the threshold issue of the existence of substantial evidence supporting a proposition necessary to sustain a judgment, but, nevertheless, challenges the probative value of that evidence to induce belief in that proposition when viewed in the context of the entirety of the evidence before the trier of fact." Houston v. Crider, 317 S.W.3d 178, 186 (Mo.App.S.D.2010). However, we defer to the trial court's determination of the facts and matters of witness credibility, such that "[t]he evidence and all reasonable inferences drawn therefrom must be viewed in the light most favorable to the trial court's judgment, and all contrary evidence and inferences must be disregarded." Wildflower Cmty. Ass'n, Inc. v. Rinderknecht, 25 S.W.3d 530, 534 (Mo. App.W.D.2000). A judgment should be set aside as "against the weight of the evidence" only with caution and only when the reviewing court has a firm belief that the judgment is wrong. Houston, 317 S.W.3d at 186.
At the outset, we note that many of Plaintiff's points relied on fail to comply with the briefing requirements set forth in Rule 84.04. Points II, III, IV, VI, and VII challenge the trial court's amended judgment with respect to Plaintiff's claims and Defendant's counterclaims as "against the manifest weight of the evidence and an improper application of the law." Challenging the substantial evidence to support the trial court's finding and the trial court's application of law identifies more than one ruling or action of the trial court. Additionally, Points III, V, and VII challenge multiple rulings of the trial court pertaining to different substantive matters: Point III combines challenges the trial court's decision on Plaintiff's breach of contract claim and affirmative defense of waiver; Point V addresses Defendant's counterclaims for breach of contract, breach of warranty, and Plaintiff's affirmative defense of mitigation; and Point VII challenges both the award of damages and attorney fees.
Therefore, Plaintiff's points relied on run afoul of Rule 84.04(d)(l)(A)'s requirement that a point "identify the trial court ruling or action that the appellant challenges[.]" Inadequate briefs are a disservice to the parties and a burden on the justice system. Thummel v. King, 570 S.W.2d 679, 686 (Mo. banc 1978). However, given the result we reach in this case, suspension of Rule 84.04's application will result in no hardship to Defendant. Accordingly, and because we are able to discern the basic contentions of Plaintiff's points relied on, we exercise our discretion to review Plaintiff's claims. See Reynolds v. Brill, 302 S.W.3d 716, 718-19 & n. 3 (Mo.App.S.D.2010).
In its first point relied on, Plaintiff asserts that the trial court abused its discretion by barring the testimony of its retained expert witness because the expert was timely disclosed five weeks before trial, the parties had waived the scheduling order's deadlines, and Defendant had already commenced deposition of the expert.
"Missouri caselaw has consistently held that courts have broad discretion to strike expert witnesses who are not timely filed." Legg v. Certain Underwriters
Here, the record reflects that Plaintiff, pursuant to the scheduling order, was required to name any retained experts by July 1, 2011, which was five months and five days before the original December 5, 2011 trial date. Plaintiff did not name any retained experts in its initial answer to Defendant's request for interrogatories. On September 27, 2011, Plaintiff moved for a continuance of the trial date indicating that written discovery had not been completed, as Plaintiff had allegedly not received complete written discovery from Defendant, and that oral discovery was yet to ensue, despite the scheduling order's October 1, 2011 deadline for completion of all discovery. Although Defendant did not agree to the continuance, the trial court granted Plaintiff's motion and reset the trial date for February 27, 2012. About a month before trial, on January 19, 2012, Plaintiff moved for another continuance, noting that although "the parties have been diligent in taking discovery" and that written discovery had been completed, Plaintiff still needed to take the depositions of multiple witnesses. Defendant did not agree to the continuance, but the trial court granted Plaintiff's motion and reset trial for April 30, 2012, indicating that Plaintiff needed to take additional depositions.
Five weeks before the trial date, Plaintiff filed an amended answer to Defendant's request for interrogatories designating, for the first time, Doctor Kent Johnson, P.E.,
Contrary to Plaintiff's position, Plaintiff did not timely disclose Johnson as a retained expert. The original scheduling order required designation of Plaintiff's retained experts by July 1, 2011, more than five months before the original trial date. Plaintiff did not designate a retained expert by that deadline. Instead, while the lawsuit remained pending for nearly a year and a half, Plaintiff did not designate a retained expert until just five weeks before trial, at which time the scheduling order precluded Defendant from obtaining its own retained expert witness. Under the circumstances, the disclosure was untimely. See Wilkerson v. Prelutsky, 943 S.W.2d 643, 649 (Mo. banc 1997) (failure to disclose expert witness until a "few weeks"
Notwithstanding its clear violation of the scheduling order's deadline for disclosing retained expert witnesses, Plaintiff asserts that because neither party complied with the scheduling order that the deadlines were waived and that Plaintiff's disclosure of Johnson was, therefore, timely.
Plaintiff also asserts that no prejudice would result from allowing Johnson's testimony because Defendant was not surprised by the untimely disclosure and Defendant was able to adequately prepare for Johnson's testimony. However, with only five weeks remaining before trial, it was not unreasonable for the trial court to conclude that unfair prejudice would result to Defendant, in that Defendant would have no realistic opportunity to review the documents Johnson relied on, depose Johnson, and, if necessary, retain and prepare
Finally, despite Plaintiff's assertion to the contrary, we fail to see how the prejudice that Defendant would have sustained is outweighed by any potential prejudice to Plaintiff. This is because the testimony's exclusion did not materially affect the outcome of the case, given that Johnson's proposed testimony was either inadmissible or cumulative of evidence presented at trial.
Given the foregoing, we perceive no fundamental unfairness in the trial court's decision to strike Johnson's testimony where Plaintiff's disclosure was untimely, Defendant would have suffered unfair disadvantage, delay, and expense, and admission of Johnson's testimony would not have changed the outcome of the case. The trial court did not abuse its discretion by sustaining Defendant's motion to strike Johnson's testimony on the basis that Plaintiff untimely designated its retained expert. Point I is denied.
In its second point relied on, Plaintiff asserts that the trial court's amended judgment against Plaintiff on its account stated claim is against the "manifest weight of the evidence and a misapplication of the law" because Defendant acknowledged the account since it did not dispute Plaintiff's invoices and admitted that it owed Plaintiff compensation for work performed. In support, Plaintiff likens the present case to Chisler v. Staats, 502 S.W.2d 424 (Mo.App.1973), where the defendant did not object to invoices for work completed and this Court held that the evidence established an account stated. Defendant responds that Plaintiff did not plead or prove an action for account stated.
"An account stated is an agreement between parties, having had previous financial transactions, that a balance
In the instant matter, the trial court found that Plaintiff did not prove that: (1) "the parties reached an agreement that [Defendant] owed [Plaintiff] any of the money claimed by [Plaintiff] as owed" and (2) "that [Defendant] acknowledged an obligation to [Plaintiff] in the amounts [Plaintiff] claims or that it made an unconditional promise to pay [Plaintiff]." Accordingly, the trial court ruled in favor of Defendant on Plaintiff's account stated claim.
On appeal, Plaintiff relies primarily on the testimony of Kris Kestner, Defendant's senior project manager responsible for oversight of the project. Kestner, however, never testified that Defendant and Plaintiff reached an agreement as to the amount Plaintiff claimed it was owed or that Defendant promised to pay Plaintiff that amount. Kestner merely explained that Defendant submitted to Ameren, on Plaintiff's behalf, a claim reflecting the time and materials Plaintiff expended in completing the repair and rework and, that once Ameren rejected the claim, Defendant concluded that Plaintiff was not entitled to remuneration. Kestner made clear that Defendant's initial belief that Plaintiff was owed compensation for the repair and rework, and never disputed Plaintiff's related invoices, was due to the fact that Defendant "took [Plaintiff] fully at [its] position that there was nothing wrong with [Plaintiff's] work." In short, Kestner's testimony does not provide evidence of an agreement between the parties that a balance is due or that Defendant promised to pay that amount, both of which are required to establish a claim for account stated. See Grant Selsor & Sons Lumber Co., 872 S.W.2d at 153. Rather, the thrust of Kestner's testimony is that Defendant's obligation to pay Plaintiff was contingent on the successful resolution of the Ameren claim.
Plaintiff, however, asserts that Defendant acknowledged the account since Defendant did not dispute Plaintiff's invoices and admitted that it owed Plaintiff compensation for work performed. Kestner did testify that Defendant did not dispute the invoices Plaintiff submitted to Defendant, that some invoices remained unpaid, and that Defendant never indicated in correspondence that it would not pay Plaintiff. Plaintiff, however, infers too much from this testimony and reads Kestner's statements in isolation. When viewed as a whole and in context, Kestner's testimony simply indicates that Defendant did not dispute the content of the invoices, i.e., that these invoices correctly reflected the costs Plaintiff incurred executing the repair and rework and that these invoices remained unpaid because Defendant had submitted a claim to Ameren for payment. Further, Defendant's failure to expressly disagree with the amount allegedly owed in correspondence with Plaintiff, was not an implied promise to pay Plaintiff for the repair and rework, but was consistent with
Therefore, this case is unlike Chisler, on which Plaintiff relies, because there the defendant reassured the plaintiff in writing that the balance of an unpaid invoice would be paid. 502 S.W.2d at 426-27. No such reassurance occurred in this case. Contrary to Plaintiff's position, the trial court did not "disregard" the evidence supporting an account stated claim. Rather, the evidence that Plaintiff relies on does not support such a claim and, therefore, does not instill in this Court a firm belief that the trial court's judgment is wrong. See Houston, 317 S.W.3d at 186. Accordingly, the trial court's amended judgment against Plaintiff on its account stated claim is not against the weight of the evidence. Point II is denied.
In its third point relied on, Plaintiff asserts that the trial court's amended judgment against Plaintiff on its breach of contract claim is "against the manifest weight of the evidence and a misapplication of the law" because the evidence established that it performed its work in a "good and workmanlike" manner and, even assuming arguendo that it had not, Defendant accepted Plaintiff's work, thereby waiving its right to assert otherwise. In response, Defendant argues that the trial court's judgment against Plaintiff on its breach of contract claim is supported by substantial evidence on the record. Because this point is multifarious, we address each claim separately.
To establish a claim for breach of contract, the party asserting the claim must establish the existence of a contract, the rights and obligations imposed by the contract, a breach, and damages. Hanna v. Darr, 154 S.W.3d 2, 5 (Mo.App.E.D. 2004). "In the context of construction contracts... proof of breach requires proof that payment was not made for work performed in a good and workmanlike manner." See R.K. Matthews Inv., Inc. v. Beulah Mae Housing, LLC, 379 S.W.3d 890, 897 (Mo.App.W.D.2012). Workmanlike in this context is defined as "work which is completed in a skillful manner and is non-defective." Evans v. Werle, 31 S.W.3d 489, 491 (Mo.App.W.D.2000) (citation omitted). The burden of proof rests with the party claiming breach of contract. R.K. Matthews Inv., Inc., 379 S.W.3d at 897.
In this matter, Plaintiff's breach of contract theory was that it fully and satisfactorily performed its obligations under the Subcontract and that Defendant failed to remit amounts due. In considering Plaintiff's claim, the trial court found that: (1) Plaintiff was responsible under the terms of the Subcontract for preparing a welding procedure; (2) Plaintiff did not identify the type of steel in the lower portion of the penstock and did not submit a new welding procedure for welding to T-1 steel before beginning its work on that portion of the penstock; and (3) Plaintiff's welding of the drain access collars caused the penstock to crack. Accordingly, the trial court concluded that Plaintiff failed to meet its burden of proof to establish that "the work it
At trial, several of Plaintiff's and Defendant's witnesses testified that Plaintiff did not determine the type of steel located in the lower portion of the penstock before beginning its work there and that Plaintiff's welding procedure used at that location was defective and caused the penstock to crack. Sopata, Plaintiff's superintendent on the project, testified that Plaintiff would typically "find out what [we were] welding on first," but that Plaintiff did not follow this process and only discovered that the lower portion of the penstock was composed of T-1 steel after numerous defective welds had been completed. Steve Weber, Plaintiff's first superintendent on the project, similarly testified that Plaintiff typically informs its "quality control man ... what the steel is," i.e., both the base metal and material to be welded, and that he did not know what information was given to Plaintiff's quality control consultant. Carl Davis, Plaintiff's quality control consultant who submitted Plaintiff's welding procedures for the drain access collars, testified that he never saw or asked for the drawings or specifications for the project and that, in hindsight, the welding procedures he submitted and that Plaintiff used were not appropriate for welding A572 carbon steel to T-1 steel and would cause the penstock to crack. James Briem, Defendant's metallurgical expert, explained that the cracking in the penstock was caused by Plaintiff's improper welding process, which applied too much heat to the T-1 steel embrittling it and causing it to crack. Briem Engineering's final report was also admitted into evidence and reflected its conclusion that the "excess weld shrinkage" of Plaintiff's weldments caused the penstock to crack. Given the foregoing, we agree with Defendant that the trial court's conclusion, that Plaintiff failed to establish that it performed its obligations in a workmanlike manner, is supported by substantial evidence.
Notwithstanding the substantial evidence supporting the trial court's conclusion, Plaintiff challenges the probative value of that evidence by referencing two pieces of evidence that allegedly indicate that its welds were not defective: (1) the claim for payment that Defendant submitted to Ameren, as well as (2) Kestner's testimony that the "metal surrounding the welds" failed.
In the alternative, Plaintiff contends that even if its work was defective, Defendant accepted the welding and, thus, waived its right to complain of the defects. Defendant responds that the evidence was "undisputed that everyone involved" knew the cracks were a defect that had to be repaired.
In the context of a construction contract, waiver is an affirmative defense that may excuse a contractor's breach if the owner accepts the defective work. See Leonards v. U-Jin Enterprises, Inc., 811 S.W.2d 480, 485 (Mo.App.S.D. 1991); Forsythe v. Starnes, 554 S.W.2d 100, 109 (Mo.App.1977). "A waiver of defects in construction can occur when there is knowledge [of the defect] and acquiescence." Leonards, 811 S.W.2d at 485. To establish waiver, Plaintiff must show that Defendant intentionally relinquished a known contractual right — here, the right to work free from defects. See Matt Miller Co. v. Taylor-Martin Holdings, LLC, 393 S.W.3d 68, 79 (Mo.App.S.D.2012). "If waiver is implied from conduct, the conduct must clearly and unequivocally show a purpose to relinquish the right." O'Connell v. School Dist. of Springfield R-12, 830 S.W.2d 410, 417 (Mo. banc 1992).
At trial, witnesses for both Plaintiff and Defendant agreed that, once the cracking was discovered around June 25, 2009, that work was continued for about a week because the parties believed the cracking was isolated. Once the parties discovered the cracking was widespread, Defendant directed Plaintiff to stop welding and to develop a new welding method, which was tested on a single drain access collar. This method failed and Plaintiff made another attempt. When Plaintiff discovered cracks again after its second attempt, further attempts at rewelding were stopped and Defendant hired Briem Engineering to develop a successful method. In its amended judgment, the trial court implicitly concluded that Plaintiff's affirmative defense of waiver failed when it found that Defendant "stopped [Plaintiff's] work when it became apparent that [Plaintiff's] work caused the cracks," and that Defendant "did not accept this work without complaint...."
Contrary to the trial court's findings, Plaintiff asserts that Defendant waived its right to complain of Plaintiff's defective performance because Defendant initially directed Plaintiff to continue using the original welding procedure and Defendant, after the project was complete, represented to Ameren that Plaintiff's work did not cause the cracking. These facts, while true, do not establish that Defendant waived its contractual rights because this evidence does not show that Defendant knowingly accepted Plaintiff's defective work. See Leonards, 811 S.W.2d at 485. That Defendant did not initially cease further welding when the first cracks were discovered was due to the fact that the parties believed the cracking to be isolated to a single access collar. Further, that Defendant represented to Ameren that Plaintiff's work was not defective was due to Defendant's good-faith belief that Plaintiff's assertions were true and to Defendant's obligation to seek payment from Ameren for Plaintiff's work. Plaintiff, therefore, has not identified any evidence
In sum, substantial evidence supports the trial court's conclusion that Plaintiff did not perform its obligations under the Subcontract in a "workmanlike manner" and that Defendant did not accept Plaintiff's defective performance. Plaintiff has not established that these conclusions are against the weight of the evidence. Accordingly, the trial court did not err by entering judgment against Plaintiff on its breach of contract claim. Point III is denied.
In its fourth point relied on, Plaintiff asserts that the trial court's amended judgment for Defendant on its breach of contract counterclaim is "an improper application of the law" because the Subcontract's pay-if-paid clause is inapplicable. Plaintiff asserts that the clause is ambiguous, similar to the one in MECO Systems, Inc. v. Dancing Bear Entertainment, Inc., 42 S.W.3d 794 (Mo.App.S.D.2001), and therefore the trial court erred by construing it as creating a condition precedent to Defendant's obligation to pay Plaintiff.
Because Point III is dispositive as to this claim, we need not consider the merits of this argument. As explained, Plaintiff's breach of contract claim fails because it did not perform its work satisfactorily under the Subcontract. It follows that Plaintiff is not entitled to payment for the repair and rework and the pay-if-paid clause is not implicated. Therefore, the legal question whether the pay-if-paid clause is inapplicable due to a supposed ambiguity is moot. Point IV is denied.
In its fifth point relied on, Plaintiff asserts that the trial court's amended judgment for Defendant on its breach of contract counterclaim is "against the manifest weight of the evidence and a misapplication of the law" because Plaintiff performed its obligations in a workmanlike manner and because Defendant failed to perform its obligations under the Subcontract. Plaintiff further asserts that the warranty provision did not apply and that Defendant failed to mitigate its damages. In response, Defendant argues that the trial court's judgment in Defendant's favor on its breach of contract counterclaim is supported by substantial evidence on the record. Defendant further contends that it timely asserted its warranty claim and that the evidence does not support Plaintiff's assertion that Defendant did not mitigate its damages. Because this point is multifarious, we address each claim separately.
Defendant's breach of contract theory was that Plaintiff breached the Subcontract by failing to perform its work in a workmanlike manner and, more generally, by failing to investigate and select appropriate welding procedures as Part II(H) paragraphs 30 and 32 of the Subcontract required. As a counterclaimant, Defendant affirmatively asserted a claim for a relief and the burden therefore shifted to Defendant to prove both the poor quality of Plaintiff's work and the damage incurred as a result. See R.K. Matthews Inv., Inc., 379 S.W.3d at 897. In concluding that Defendant satisfied its burden, the
At the outset, we reject Plaintiff's assertion that because Plaintiff allegedly performed its work satisfactorily, that the trial court's amended judgment was erroneous. We have already determined under Point III that the trial court did not err by concluding that Plaintiff failed to establish that it performed its obligations in a workmanlike manner. We also noted under Point III the substantial evidence supporting the trial court's conclusion that Plaintiff's performance was deficient. Accordingly, the trial court did not err by concluding that Defendant established that Plaintiff's work was not performed in a workmanlike manner.
Our conclusion in this regard, however, is not dispositive as to Defendant's breach of contract counterclaim because Plaintiff, relying on the first-to-breach rule, asserts that Defendant breached the Subcontract first and thereby hindered Plaintiff's performance. See Williams Constr., Inc. v. Wehr Constr. LLC, 403 S.W.3d 660, 664 (Mo.App.S.D.2012) ("[A] party to a contract cannot claim its benefit where he is the first to violate it." (citation and quotations omitted)). Specifically, Plaintiff explains that the Subcontract obligated Defendant to provide Plaintiff with "contract documents" pertaining to the specifications of the penstock, which Defendant allegedly failed to do.
Regarding the obligation to provide "contract documents," the Subcontract's opening paragraph states:
The final clause of this paragraph expressly states that contract documents "shall be made available to the Subcontractor upon his request," meaning that it was ultimately Plaintiff's responsibility to request any of the contract documents that it wished to review. The implication of this language is that Defendant's obligation to provide the contract documents was entirely contingent upon Plaintiff's request for contract documents, and that in the absence of such a request, Defendant had no obligation to provide them. Because Defendant was not obligated to provide the contract documents in the absence of a request from Plaintiff, the contractual obligation that Plaintiff alleges Defendant breached does not exist.
Nonetheless, Plaintiff asserts that ambiguities exist in the Subcontract's identification of the "contract documents," meaning that Plaintiff should have been entitled to rely solely on the information it received from Defendant and also that Defendant failed to prove that Plaintiff should have known of the penstock's composition. In other words, this ambiguity, according to Plaintiff, nullifies Plaintiff's obligations under paragraphs 30 and 32 of Part II(H) of the Subcontract, which required Plaintiff to personally investigate conditions affecting the penstock and to independently verify field construction criteria.
As noted, the Subcontract's opening paragraph clearly delineates the "contract documents." Plaintiff's argument that the Subcontract is ambiguous is, therefore, belied by the Subcontract's evident clarity. Accordingly, we will not construe the Subcontract against Defendant as to relieve Plaintiff of its duties under the Subcontract to request the contract documents, to personally investigate and inform itself of conditions affecting its work on the penstock, and to independently determine and verify the construction criteria required to complete its work. Plaintiff's argument is merely an attempt to avoid its contractual obligations. The trial court did not err by ruling in Defendant's favor on its breach of contract counterclaim.
Next, Plaintiff claims that the Subcontract's warranty provision is inapplicable because Defendant failed to assert its counterclaim for breach of warranty within one year from the completion of Plaintiff's work.
The warranty provision states in relevant part:
In considering Defendant's breach of warranty counterclaim, the trial court found that Plaintiff "expressly warranted its work against defects of design, workmanship and materials...." It further concluded that Defendant established that "the
As Plaintiff points out, the record reflects that Defendant asserted its breach of warranty counterclaim more than a year after Plaintiff completed its work. This fact, however, is immaterial because the warranty provision does not require Defendant to initiate a legal claim for breach of warranty within a year of Plaintiff's completion of the work. In arguing that the warranty clause establishes a deadline for filing a claim, Plaintiff simply misconstrues the contractual language. As Defendant explains, the warranty provision unambiguously indicates that Plaintiff breaches the warranty provision if Plaintiff's work fails to comply with its warranties within one year of the work's completion. Plaintiff breached the warranty provision well within this time frame, when the parties discovered the cracks in the penstock around the welds within days of their completion. Thereafter, Defendant invoked the warranty provision by directing Plaintiff to remove and replace the defective work.
Plaintiff next asserts that the trial court ignored evidence that Defendant failed to mitigate its damages, which is an affirmative defense that defeats Defendant's counterclaims in their entirety. Defendant counters that it did not fail to mitigate damages.
Under the rule of mitigation of damages, "one damaged through alleged breach by another of some legal duty or obligation [has to] make reasonable efforts to minimize the resulting damage." Cunningham v. Cunningham, 805 S.W.2d 363, 365 (Mo.App.S.D.1991) (quotations omitted). Thus, losses that could reasonably have been avoided are not recoverable. Business Men's Assurance Co. of Am. v. Graham, 891 S.W.2d 438, 448 (Mo.App. W.D.1994). "The duty to mitigate damages, however, does not arise until the promisee learns that the contract has been breached." A.G. Edwards & Sons v. Drew, 978 S.W.2d 386, 391 (Mo.App.E.D. 1998).
The trial court did not expressly address Plaintiff's affirmative defense that Defendant failed to mitigate its damages. However, the trial court implicitly concluded that this defense failed when it found that Defendant "stopped [Plaintiff's] work when it became apparent that [Plaintiff's] work caused the cracks," and that Defendant "did not accept this work without complaint but instead immediately directed [Plaintiff] to begin repairing and removing the defective work."
We have already noted the evidence, under Point III, showing that Defendant acted promptly to cease further defective welding, worked with Plaintiff for a reasonable amount of time for it to develop
To summarize, the trial court's ruling in favor of Defendant on its breach of contract counterclaim is not against the weight of the evidence, the trial court did not err by concluding that the warranty provision is applicable, and the trial court's conclusion that Defendant mitigated its damages is not against the weight of the evidence. Point V is denied.
In its sixth point, Plaintiff asserts that the trial court's judgment for Defendant on its claim for indemnification is "against the manifest weight of the evidence and a misapplication of the law" because Defendant failed to establish it was entitled to indemnity under the Subcontract's indemnity provision. Plaintiff explains that the Subcontract's indemnity clause is limited to indemnity against liability and because Defendant did not claim that Defendant was liable to Ameren, the trial court erred by finding that Plaintiff had an obligation to indemnify Defendant. In response, Defendant argues that the Subcontract's indemnity provision is not limited to "liability to others."
Generally, there are two types of indemnity contracts: those that indemnify against liability and those that indemnify against loss. Burns & McDonnell Engineering Co. v. Torson Constr. Co., 834 S.W.2d 755, 758 (Mo.App.W.D.1992). Regarding indemnity against liability, such "[a] claim for indemnity is ripe for adjudication when the defendant has suffered a judgment and liability has attached." Fast v. Marston, 282 S.W.3d 346, 348 (Mo. banc 2009). "If the indemnity is against loss, the cause of action accrues when the indemnitee sustains actual loss." Burns & McDonnell Engineering Co., 834 S.W.2d at 758. Some indemnity contracts are intermixed, providing for indemnification against both liability and loss. Superintendent of Ins. v. Livestock Market, 709 S.W.2d 897, 903 (Mo.App.W.D.1986).
In the instant case, the indemnity provision required Plaintiff to "indemnify and hold harmless [Defendant] from and against any and all loss, claims, suits, causes of action, liability, damages, costs, [and/or] expenses ... incurred by [Defendant]... as a result of ... any work or operations under or in connection with this Subcontract." (Emphasis added). Based on this language, the trial court concluded that the Subcontract required Plaintiff to indemnify Defendant for Defendant's
Looking to the contractual language, it is clear that the terms "loss" and "liability" refer to indemnification against both losses and liability. Thus, the indemnity provision required Plaintiff to indemnify Defendant for both actual losses and liabilities arising from Plaintiff's performance of the Subcontract. See Burns & McDonnell Engineering Co., 834 S.W.2d at 758 (indemnity contract is mixed where it protected against "all claims ... [and] losses."). In order to establish that Plaintiff breached the indemnity provision, Defendant had to show that it suffered a loss or incurred a liability as result of Plaintiff's performance in connection with the Subcontract. Under the plain terms of the Subcontract it is not necessary, as Plaintiff suggests, that Defendant exclusively establish that it suffered a "liability." Plaintiff misconstrues the contractual language.
The trial court did not err by concluding, consistent with the unambiguous contractual language, that the indemnity clause applied and required Plaintiff to indemnify Defendant for loss arising out of Plaintiff's breach of the Subcontract. Point VI is denied.
In its seventh point relied on, Plaintiff asserts that the trial court's amended judgment in Defendant's favor on Defendant's breach of contract counterclaim is "against the manifest weight of the evidence and a misapplication of the law" because Defendant failed to establish that it was entitled to damages and attorney fees. Specifically, Plaintiff claims that the trial court improperly awarded Defendant consequential damages and that the indemnity clause of the Subcontract, upon which Defendant claimed entitlement to attorney fees, does not afford Defendant such fees. Because this point is multifarious, we address each claim of error separately.
Regarding its claim that the trial court misapplied the law in awarding damages, Plaintiff asserts that the proper measure of damages was the cost of repair and that the trial court's award improperly awarded Defendant consequential damages. Defendant responds that that measure of damages is inapplicable because the present matter is not a "defective construction" case.
"The proper measure of damages is a question of law for determination by the trial court." Business Men's Assurance Co., 891 S.W.2d at 449. The party claiming damages bears the burden to establish the existence and amount of damages within a reasonable degree of certainty. Manors at Village Green Condo., Inc. v. Webb, 341 S.W.3d 162, 164 (Mo.App.E.D. 2011). "The trial court's findings as to damages are entitled great weight and this Court will not disturb these findings unless the damages awarded are clearly wrong, could not have been reasonably determined, or were excessive." Id. at 165.
Here, the trial court awarded Defendant $220,093.80 in damages that Defendant incurred as a result of Plaintiff's breach of the Subcontract. The trial court determined that $94,599 of this amount reflected costs incurred for "support labor and remedial work" and that $125,494.80 of this amount reflected general conditions costs, including "project management time, forklifts, job trailer rental, trucks, fuel, amounts paid to Briem Engineering, testing costs for the rewelds, and other items."
With respect to the award of attorney fees, Plaintiff asserts that the trial court erred by awarding attorney fees under paragraph 33 of the Contract because Defendant's pleadings did not request attorney fees under that provision, but rather asserted entitlement to attorney fees under the indemnity clause. Plaintiff again argues that the indemnity clause is inapplicable, and that even if Defendant had properly pleaded entitlement to attorney fees under paragraph 33, that that provision is inapplicable because the Subcontract is ambiguous. Defendant counters that it met the pleading requirements and that Plaintiff raised no objection to Defendant's request for fees under paragraph 33 of the Contract during trial.
Missouri follows the "American Rule," meaning that each party generally pays for its own attorney fees. Washington University v. Royal Crown Bottling Co., 801 S.W.2d 458, 468 (Mo. App.E.D.1990). However, "[a]ttorney fees are recoverable in two situations: when a statute specifically authorizes recovery and when the contract provides for attorney fees." Lucas Stucco & EIFS Design, LLC v. Landau, 324 S.W.3d 444, 445 (Mo. banc 2010). Further, it is established that attorney fees are special damages that must be pleaded specifically. Bailey v. Hawthorn Bank, 382 S.W.3d 84, 107 (Mo. App.W.D.2012); Rule 55. 19. A plaintiff in a breach of contract case can recover special damages "if those special damages have been pleaded and made known to the person who breaches the contract." Allen v. Foster, 668 S.W.2d 277, 280 (Mo.App. S.D.1984).
Here, each counterclaim of Defendant's answer pleaded entitlement to attorney fees and expenses under Part II(H), paragraph 17 of the Subcontract, i.e., the indemnity clause. Each counterclaim was also followed by a prayer for relief specifically
That Defendant's answer did not specifically reference paragraph 33 of the Contract is immaterial because the facts pleaded and relief prayed sufficiently placed Plaintiff on notice that Defendant sought an award of attorney fees. See Foster, 668 S.W.2d at 280 (special damages recoverable if made known to breaching party); cf. Lucas Stucco & EIFS Design, 324 S.W.3d at 444 (pleading requirements satisfied where all elements of statutory claim pleaded and prayer for "reasonable attorneys' fees" was made). Plaintiff cites no authority indicating that the specific contractual provision, or provisions, entitling a litigant to attorney fees must be cited in the pleadings. Moreover, Plaintiff's allegation that the indemnity clause and paragraph 33 of the Contract create an ambiguity, such that paragraph 33 is inapplicable, is specious. The indemnity clause affords attorney fees in the event the indemnity clause is triggered, whereas paragraph 33 permits attorney fees in the event an attorney is hired to enforce any provision of the Subcontract. Paragraph 33 is consistent with, and merely supplements, the indemnity provision.
In sum, the trial court did not err by awarding Defendant damages or attorney fees. The damages award was contemplated by the Subcontract, as was the award of attorney fees. Point VII is denied.
The amended judgment of the trial court is affirmed.
LISA VAN AMBURG, P.J. and PATRICIA L. COHEN., J. concur.
