If this case were a play, it would
begin something like this:
Developer: Contractor stole sand!
Burn Contractor alive!
Contractor: Developer owes money!
Burn Developer alive!
Judge: Ugh. Contractor,
you owe Developer for the sand plus prejudgment interest. Developer, you have to pay Contractor what
you owe plus prejudgment interest on that amount. Neither of you get attorney’s fees. No punitive damages. Now go home.
Contractor: I shall appeal this injustice to the SCOV!
Developer: As shall I!
SCOV: Uh, yeah, sorry, but we’re pretty much with Judge on this
one.
Look—I never said I was a
playwright. Let’s fill in the blanks a
bit, shall we?
Developer is plaintiff, and
Contractor is defendant and counter-claimant.
The parties had three written contracts all aimed toward developing some
overgrown land. Contractor’s
responsibilities included clearing the land and installing sewer, roads, and
utilities. At some point, Developer
learned that Contractor had removed sand from the building site.
A legal tango of sorts ensued, with
Contractor filing a contractor’s lien for withheld payments, and the parties
coming to a tenuous resolution where Contractor withdrew the lien and Developer
put the monies due to Contractor in an escrow account.
Contractor was supposed to complete
road paving under one of the contracts, but because of the sand dispute, and
Contractor’s fear of nonpayment, Developer had to hire a third party to
complete the paving. So Developer sued
for breach of contract and Contractor counterclaimed. “Developer alleged breach of contract,
slander of title and fraud and requested compensatory and punitive damages and
attorney’s fees under the Prompt Pay Act (PPA) . . . . Contractor counterclaimed for breach of
contract, and violation of the PPA, requesting damages, penalties, and
attorney’s fees.” Some claims were resolved
before trial.
.
There was a four-day trial and a
site visit. In summary, the trial
court’s findings were:
·
The main dispute between the parties
concerned the disposal and removal of excess sand from the construction site
·
At one point, Developer visited the
construction site and observed a truck leaving with a load of sand. He followed it and watched the truck deposit
the load at a different construction site where Contractor was working
·
Developer told Contractor to stop
taking sand, but Contractor didn’t listen
·
The trial court found that
Contractor was in the wrong for taking sand without permission
·
The trial court also ordered
contractor to pay for the extra cost of paving performed by the third party
·
Developer was entitled to
replacement cost for sand, but not transportation costs because those costs
were too speculative
·
Contractor’s actions were not
egregious enough to warrant punitive damages
·
Developer did not carry its burden
on slander of title
·
Neither party was the
“substantially prevailing party” under
the PPA
·
Both parties had a good-faith basis
for their actions
·
Contractor gets paid for the money
it’s due, minus the cost of the sand and prejudgment interest
Contractor appealed, and Developer
cross-appealed.
The SCOV begins its analysis with
Developer’s damages-calculation claim.
The SCOV explains that Contractor had to remove the sand from the
property, and so that wasn’t a breach of the contract. It was when Contractor hauled the sand away
that the alleged breach occurred.
Developer argues that it was entitled to expectation damages: damages
that provide the “benefit of the bargain” to make the party whole. In this case, Developer argues that those
damages include the costs of transportation and putting it back into the
property.
Though we don’t often include
citations here, you should make a note of this case: French v. Freeman, 43 Vt. 93, 95 (1870). This is a case cited in the opinion and deals
with the classification of manure as real or personal property—in other words,
a veritable goldmine for sarcastic citation.
The SCOV cannot find a theory to support
Developer’s expectation damages claim. Once
the sand was removed from the land—as part of the agreement—it became personal
property. As such, the SCOV reasons that
the “measure of developer’s damages is not for any damage to its real property,
but for the unlawful taking of its personal property.”
The SCOV proceeds, then, on a
conversion theory, concluding that the proper measure of damages is “the fair
market value of the sand at the time it was improperly converted by contractor.” Although this is a different damages than the
trial court’s, the SCOV notes the
correct-result-by-different-reasoning-ain’t-a-problem doctrine and concludes
there was no abuse of discretion. That’s
not a “real” doctrine; I just made it up, but it conveys the idea behind this
line of reasoning.
The SCOV makes short work of
Developer’s trial-court-should’ve-awarded-punitive-damages claim, noting that
Contractor viewed the sand as excess material that needed to be removed for
work to proceed, and that there was no apparent willful and wanton conduct that
would support a punitive-damages award.
The SCOV next explores the parties’
competing claims under the Prompt Pay Act. When payment is
delayed, interest gets added to the amount due.
If payment is withheld unreasonably, then interest, a penalty, and
attorney’s fees get awarded. But if
there’s a good-faith claim in relation to the amount due, then there’s no
penalty. Attorney’s fees are awarded to “the
substantially prevailing party.”
The SCOV first reviews Developer’s
claim that no prejudgment interest should have been awarded to Contractor. The SCOV does not give much weight to
Developer’s argument that the interest provisions of the PPA do not apply,
noting that prejudgment interest is well-established “as a matter of right” under
general principles of law. The SCOV
explains that prejudgment interest and penalty under the PPA, though calculated
at the same percentage and timeframe, are two distinct avenues of
recovery. So the Contractor gets
prejudgment interest and that’s final
But wait. Contractor argues it’s entitled to a penalty
under the PPA, essentially because developer withheld more than it was
due. The SCOV makes short work of this
claim also, reasoning that there was a reasonable relationship between the
amount withheld and the Developer’s claims.
Accordingly, “there are no grounds to disturb the [trial] court’s denial
of a penalty.”
Both parties claim a right to attorney’s
fees under the PPA. The SCOV notes that
the question of whether either party “substantially prevailed” is left solely
to the trial court’s discretion. Though
there is substantial—and somewhat interesting—argument from both sides on this
issue, the essential point remains that the trial court did not abuse its
discretion in determining that neither party “substantially prevailed.”
Developer’s final claim is that the
trial court erred in dismissing its slander-of-title claim. Slander of title requires three elements: (1)
a false statement concerning its title to land; (2) the statement caused
special damages; and (3) the defendant acted with malice.
The trial court found that Developer
could not make a showing of elements one or three. The SCOV reviews the claim in some
depth—including Developer’s claims that the lien was overbroad and that the
lien should’ve only extended to the value of the claim. The SCOV reasons that the lien was based on
work completed and not paid for and that the lien was not placed on lands not
connected to Contractor’s work. The SCOV
concludes that “the evidence supports the court’s finding that contractor acted
to protect its interest in being paid and not out of malice or ill will.”
And there you have it, folks. At the end of the day, this is a case in
which a judge tells the parties to “play nice” and “settle up.” Is the SCOV really going to disturb such a
decision?
Fin.
Thanks for share such informative blog. Highly appreciate, Very well explained. To know about Builder in Bushey contact VR Wood Flooring.
ReplyDelete