SANDSTROM, Justice.
[¶ 1] Terence and Rachel Barrett appeal from a judgment dismissing their claims against Harry Gilbertson, doing business as Harry Gilbertson Construction, in a contract dispute. The Barretts argue the court erred in dismissing their breach of contract claims related to the construction of their house and the court abused its discretion in denying their motion for attorney's fees. We affirm.
[¶ 2] On May 4, 2007, the Barretts and Gilbertson entered into a contract for the construction of a house and the sale of property to the Barretts. The Barretts provided Gilbertson with blueprints of the house they wanted Gilbertson to build, and the contract required the house "be erected in accordance with the approved plans and specifications of record...." After construction of the house was largely complete, the Barretts raised some concerns about the construction, and in early October 2007, the Barretts and Gilbertson reached an agreement entitled "Final Settlement Offer," which reduced the purchase price of the property. On October 8, 2007, the parties closed on the sale of the property.
[¶ 3] In July 2010, the Barretts sued Gilbertson for breach of contract, alleging Gilbertson failed to construct the house in a workmanlike manner and according to the blueprints and seeking over $40,000 in damages. The Barretts claimed the house was not constructed in accordance with the blueprints because the laundry room was smaller than the space indicated on the blueprints and the below-grade space was only a crawlspace and not a full-depth basement with a ceiling height of at least seven feet. The Barretts also alleged Gilbertson was required to fix various construction "discrepancies" or defects under the warranty provision of the contract and he failed to make any of the requested repairs. Gilbertson filed a counterclaim, seeking damages for defamation and emotional distress. Gilbertson's counterclaims were later dismissed.
[¶ 4] After a court trial, the district court dismissed the Barretts' claims, finding Gilbertson did not breach the contract, any claims for breach of contract related to
[¶ 5] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. The appeal was timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01.
[¶ 6] The Barretts argue the district court erred in finding they did not establish Gilbertson breached the contract by failing to build the below-grade space according to the blueprints. They claim they contracted for a full-depth basement but the below-grade space that was built is considered a crawlspace because it is only approximately six feet two inches in height.
[¶ 7] "A breach of contract is the nonperformance of a contractual duty when it is due." WFND, LLC v. Fargo Marc, LLC, 2007 ND 67, ¶ 13, 730 N.W.2d 841. To establish a breach of contract, the party asserting the breach must prove the existence of a contract, a breach of the contract, and damages which flow from the breach. Id. Whether a party has breached a contract is a finding of fact subject to the clearly erroneous standard of review. Id. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support the finding, or if this Court is convinced, on the basis of the entire record, that a mistake has been made. Id. We do not reweigh conflicting evidence, and we give due regard to the district court's opportunity to judge the witnesses' credibility. Cavendish Farms, Inc. v. Mathiason Farms, Inc., 2010 ND 236, ¶ 20, 792 N.W.2d 500.
[¶ 8] The contract included a provision addressing the requirements for the construction of the house:
The blueprints the Barretts provided to Gilbertson showed a below-grade space, significantly smaller than the main floor of the house, labeled "storage." The blueprints showed a stairway leading into the area with lines indicating steps. The blueprints
[¶ 9] The district court found Gilbertson's construction of the below-grade space was not a breach of the contract:
[¶ 10] Contracts are construed to give effect to the parties' mutual intent as it existed at the time of contracting. N.D.C.C. § 9-07-03. The parties' intent is ascertained from the writing alone whenever possible. N.D.C.C. § 9-07-04. "The words of a contract are to be understood in their ordinary and popular sense rather than according to their strict legal meaning, unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed." N.D.C.C. § 9-07-09. The circumstances under which the contract was formed and the matter to which it relates may be considered. N.D.C.C. § 9-07-12. We have explained the standards for interpreting a contract:
Langer v. Bartholomay, 2008 ND 40, ¶ 12, 745 N.W.2d 649 (citations omitted). The court may also consider "proof of the existence of a separate oral stipulation or agreement as to any matter on which the written contract was silent, and which is not inconsistent with its terms, if from the circumstances of the case, the court infers that the parties did not intend the document to be a complete and final statement of the whole of the transaction between them." Delzer v. United Bank of Bismarck,
[¶ 11] Here, the contract does not specify the height of the below-grade space. The Barretts contend Gilbertson did not build the below-grade space in conformance with the blueprints, because the blueprints showed stairs with thirteen risers from floor to floor, the average riser height is 7.5 inches, and if the plan had been followed, the space would have normal height dimensions for a basement with sufficient headroom. Although the blueprints indicate steps, the blueprints did not indicate the height of each step. There was evidence during the trial about the average height of a stair riser and the maximum height under the building code and that the height can vary, but there was no evidence of a minimum height or a required height. The written contract alone does not require a full-depth basement with normal height dimensions.
[¶ 12] There was evidence the parties did not intend for the contract to be a complete and final statement of the terms for the construction of the house, and there were additional terms concerning the dimensions of the below-grade space that were consistent with the contract. Both of the Barretts testified they believed the below-grade space would have eight-foot walls, and Rachel Barrett's notes from a January 2007 meeting with Gilbertson indicate "basement = 8ft wall." There was evidence the below-grade space from the concrete floor slab to the bottom of the trusses is approximately six feet two inches. However, Gilbertson testified the walls are eight-foot walls because the walls are seven feet ten inches tall, which is the industry standard for an eight-foot wall. He testified the space does not have normal basement height dimensions because the Barretts wanted the rest of the house to be a slab-on-grade foundation and they did not want any steps into the house or throughout the house except going down into the lower level, and to accommodate the Barretts' requests, the trusses had to hang down from the top of the wall instead of resting on top of the wall, which would have allowed for more headroom. Gilbertson testified he explained what the below-grade space would look like to Rachel Barrett and he showed her a house he built with a similar design. The Barretts also testified they planned to use the below-grade space for storage and mechanical. The evidence supports the court's finding that Gilbertson built the house in accordance with the contract and the parties' understanding and that no breach occurred.
[¶ 13] To the extent the Barretts also argue the district court erred in finding Gilbertson did not breach the contract regarding the size of the laundry room, the evidence supports the court's finding. Gilbertson admitted the laundry room is smaller than the space designated for the laundry room in the blueprints, but he testified he told Rachel Barrett there would have to be a change in the design to accommodate duct work for heating and air conditioning and she would have to lose space in either the laundry room or the master bathroom. He testified she chose to put the duct work in the laundry room. Rachel Barrett testified Gilbertson explained that the laundry room had to be
[¶ 14] Furthermore, the district court also found the parties' settlement before closing on the property extinguished the claims:
[¶ 15] "`In North Dakota, the law looks with favor upon compromise and settlement of controversies between parties, and where the settlement is fairly entered into, it should be considered as disposing of all disputed matters which were contemplated by the parties at the time of the settlement.'" Kuperus v. Willson, 2006 ND 12, ¶ 10, 709 N.W.2d 726 (quoting Vandal v. Peavey Co., 523 N.W.2d 266, 268 (N.D.1994)). A settlement takes on the character of a contract between the parties and is final and conclusive. Kuperus, at ¶ 10.
[¶ 16] There was evidence the parties signed a document entitled "Final Settlement Offer" a few days before closing on the property. The document showed the purchase price of the property under the terms of the contract was $344,000, but under the settlement the Barretts received credit for certain unspent allowance amounts, Gilbertson agreed to pay some of the expenses incurred, the realtor agreed to waive her commission, and the final price of the property after these amounts were deducted was $326,882.35. Terence Barrett testified he and Rachel Barrett met with Gilbertson, their realtor, and William Kuzas, Gilbertson's business banker, on September 28, 2007, to discuss problems the Barretts had with the property and to convince the Barretts to close on the property. He testified he and Rachel Barrett brought blueprints, documents, and photographs to the meeting, they talked about allowances and items they believed were to be provided under the terms of the contract but which they did not receive, and they went through a list of the items they wanted to be reimbursed for and deducted from the price of the house. He testified he knew about the basement issue before closing on the property. Kuzas testified the height of the below-grade space was one of the issues discussed during the settlement meeting. Kuzas's notes from the meeting also showed the height of the below-grade space was one of the issues discussed during the meeting. Kuzas also testified Terence Barrett discussed the height with him again on October 1, 2007, and Terence Barrett said the issue was his misunderstanding and Gilbertson had explained to Rachel Barrett what the elevation of the below-grade space would have to be in order to build the house according to the blueprints. Kuzas's notes from the meeting also state Terence Barrett indicated that if Gilbertson agreed to reduce the
Gilbertson and the Barretts signed the settlement and closed on the property a few days later. The evidence supports the court's findings, and we conclude the settlement disposed of any claims that the construction of the house did not conform to the contract.
[¶ 17] The Barretts failed to establish Gilbertson breached the terms of the contract. Furthermore, the settlement disposed of any claims the Barretts had with the house relating to the height of the basement and the size of the laundry room. We affirm the district court's decision denying the Barretts' claim for breach of contract relating to the construction of the basement and laundry room.
[¶ 18] The Barretts argue the district court erred in finding they did not establish a breach of contract by Gilbertson concerning construction defects. The Barretts contend Gilbertson had a duty to fix any work or materials that were defective within twelve months from the closing date, and they claim there was a long list of defects that Gilbertson failed to repair, including cracks in the sheetrock and problems with baseboards and interior and exterior doors. The purchase agreement provides, "[Gilbertson] shall promptly correct any work or materials failing to comply with the specifications of the blueprints or which are otherwise defective so long as the [sic] reported to [Gilbertson] in writing within 12 months from the Date of closing."
[¶ 19] The district court found Gilbertson agreed to correct any defective work within twelve months of the closing date, but found the Barretts' claim failed:
(Emphasis added.)
[¶ 20] There was evidence some of the "discrepancies" the Barretts raised were minor cosmetic issues that were related to environmental conditions and the materials selected. The Barretts' inspector, Donald Sakry, testified Terence Barrett pointed out some of what he thought were flaws in the construction, but the inspector thought the workmanship was quite satisfactory. The appraiser, William Triebwasser, testified the overall craftsmanship was good, he did not see any problems with the craftsmanship, and some of the alleged defects were normal and would not affect the appraisal. Gilbertson's home inspector, Lars Knobloch, testified some of the Barretts' complaints were legitimate but a lot of the issues were cosmetic and were typical. Knobloch testified he thought the workmanship was very good, there were only a couple of things that should be repaired, and those things could be easily repaired. He also testified the issues were minor and most people would not do anything about them because these types of issues are expected on account of the geological conditions and the materials used, including wood which normally shrinks and cracks with time. The evidence supports the court's findings.
[¶ 21] Moreover, to the extent there were defects Gilbertson was required to repair under the terms of the contract, his nonperformance is excused because the Barretts prevented him from making the repairs. "[E]ach party to a contract impliedly agrees not to prevent the other party from performing and not to render performance impossible." Barnes, 1999 ND 204, ¶ 16, 601 N.W.2d 587. When one party prevents the other party's performance of a term of a contract, it excuses the nonperformance and provides a defense in a suit for breach by the nonperformance. Id. The Barretts were required to allow Gilbertson to correct the defective work or materials. The district court found the Barretts did not give Gilbertson an opportunity to fix the alleged defects. The Barretts claim their duty was excused and they acted reasonably when they refused to risk further injury by allowing Gilbertson to make any repairs.
[¶ 22] There was evidence the Barretts initially identified 32 "discrepancies," but that number later increased to 81 "discrepancies." The Barretts sent Gilbertson multiple letters between December 2007 and May 2008 about the "discrepancies," requesting Gilbertson advise them of how he planned to fix the problems. Initially, Gilbertson responded to the Barretts' letters and advised the Barretts he was willing to go through the house and address their concerns. Gilbertson testified he contacted the Barretts by phone, through the mail, and through his attorney at the Barretts' request, and he offered to fix the problems they identified multiple times. He testified he believed it would take approximately three days to fix the identified defects, but he was never allowed into the house to complete any repairs. There was evidence the Barretts sent Gilbertson several letters about the alleged "discrepancies," requested a specific remedy for some
[¶ 23] We affirm the district court's finding that the Barretts failed to establish their claim for breach of contract relating to defects in the construction.
[¶ 24] The Barretts argue the court erred in denying their claim for attorney's fees relating to Gilbertson's counterclaim for defamation and emotional distress because the claims were frivolous.
[¶ 25] The Barretts requested attorney's fees under N.D.C.C. § 28-26-01(2), which provides:
The court must first determine whether a claim is frivolous, and if it is, then the court must award reasonable attorney's fees to the prevailing party. Wolt v. Wolt, 2011 ND 170, ¶ 25, 803 N.W.2d 534. The court has discretion in deciding whether a claim is frivolous and in deciding the amount and reasonableness of an award. Id. at ¶ 26. The court's decision will not be reversed on appeal unless the court abused its discretion. Id. A court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner, when the court misinterprets or misapplies the law, or when its decision is not the product of a rational mental process leading to a reasoned determination. Id. "`Frivolous claims are those which have such a complete absence of actual facts or law that a reasonable person could not have expected that a court would render judgment in [that person's] favor.'" Id. (quoting Deacon's Development, LLP v. Lamb, 2006 ND 172, ¶ 12, 719 N.W.2d 379).
[¶ 26] The district court denied the Barretts' motion, ruling the claim was not frivolous:
The court did not abuse its discretion in denying the Barretts' motion.
[¶ 27] We conclude the evidence supports the district court's findings on the breach of contract claims and the court did not abuse its discretion in denying the Barretts' claim for attorney's fees. We do not need to address other arguments raised because they are either unnecessary to the decision or are without merit. We affirm the district court's judgment.
[¶ 28] GERALD W. VANDE WALLE, C.J., CAROL RONNING KAPSNER, and MARY MUEHLEN MARING, JJ., concur.
CROTHERS, Justice, concurring specially.
[¶ 29] I agree with the majority decision except Part II, paragraphs 6-13, regarding claims for breach of contract involving the below-grade space and the laundry room dimensions.
[¶ 30] In Part II, paragraphs 14-17, the Court concludes the parties resolved these construction claims by settlement.
[¶ 31] Daniel J. Crothers
