Case Title: Huang Intern., Inc. v. Foose Const. Co.

Citation: 

Docket Number: 86-247

State: wyoming

Court: Wyoming Supreme Court

Date: 1987-03-27T00:00:00Z

Document:
Huang Intern., Inc. v. Foose Const. Co.1987 WY 33734 P.2d 975Case Number: 86-247Decided: 03/27/1987Supreme Court of Wyoming
HUANG 
INTERNATIONAL, INC., Huang-Lo Enterprises, Inc., Appellants (Defendants), United 
Savings Bank of Wyoming, (Defendant)

 
 
v.

 
 
FOOSE 
CONSTRUCTION COMPANY, Appellee (Plaintiff), Western Sheet Metal and Roofing 
Company, Inc., (Plaintiff)

 
 
John W. 
Pattno of Pattno-Smith Associates, for Appellants.

 
 
Blair J. 
Trautwein of Hathaway, Speight, Kunz, Trautwein & Barrett, for Appellee. 

 
 
Before 
Brown, C.J., and Thomas, Cardine, Urbigkit, and Macy, JJ. 

 
 
MACY, 
Justice.

 
 

[¶1.]     Foose Construction 
Company and Western Sheet Metal and Roofing Company, Inc. brought an action 
against Huang International, Inc., Huang-Lo Enterprises, Inc., and United 
Savings Bank of Wyoming. In their complaint against Huang, 
Foose and Western Sheet Metal alleged breach of contract and demanded payment of 
the amounts due under the contract or authorization to foreclose their liens on 
Huang's property in execution of the judgment. They also requested an order 
adjudging their liens to have priority over mortgages on the property held by 
the bank.

 
 

[¶2.]     Prior to trial, Western 
Sheet Metal settled its claim against Huang. A trial to the district court was 
held on Foose's claims, and judgment was entered against Huang in the amount of 
$31,074.75. The judgment authorized Foose to foreclose upon its lien if 
necessary in execution of the judgment. The judgment also recited that Foose's 
lien had priority over the bank's construction money mortgage but not over the 
bank's purchase money mortgage. Huang now appeals to this Court from the 
district court's judgment.

 
 

[¶3.]     We 
affirm.

 
 

[¶4.]     Huang makes the 
following claims before this Court:

 
 
"1. 
Whether the Trial Court [erred] in granting attorneys fees to 
Plaintiff;

"2. 
Whether the Trial Court [erred] in finding that extra items in construction were 
outside the scope of the contract and not required to be in writing as provided 
by the contract;

"3. 
Whether the Trial Court [erred] in finding that the Defendant agreed to pay for 
extra items either by words or conduct, which was contrary to the contract's 
requirement that extras are to be in writing; and

"4. 
Whether the Trial Court [erred] in finding that some extras furnished by 
contract were not a voluntary act when the extras were covered by the terms of 
the contract."

 
 

[¶5.]     Foose restates the 
issues as follows:

 
 
"1. 
WHETHER THE COURT ERRED IN FINDING $7,132 AS COMPENSATION FOR EXTRA WORK OUTSIDE 
THE SCOPE OF THE ORIGINAL CONTRACT?

"2. 
WHETHER THE COURT ERRED IN ITS AWARD OF ATTORNEY FEES TO FOOSE 
CONSTRUCTION?"

 
 

[¶6.]     On August 20, 1984, 
Huang entered into a written agreement with Foose for the construction of a 
Chinese restaurant in Cheyenne, Wyoming. Thereafter, on August 30, 1984, the 
parties entered into a second written agreement (Rider "A") which was 
incorporated by reference into the original agreement. The agreements provided 
that Foose would reconstruct the outside of an existing building in accordance 
with drawings and specifications prepared for Huang by Richard Porter, a 
Cheyenne 
architectural designer. The agreements also provided that the outside work would 
be completed in 1984 to enable interior construction to be completed during the 
winter months. Under the terms of the agreements, the cost of the work was not 
to exceed $200,000; in the event it did exceed that amount, 50% of the excess 
cost was to be deducted from Foose's fee.

 
 

[¶7.]     Construction began in 
August 1984. By November, the cost of construction had exceeded $200,000. In an 
effort to complete construction by the first of the year, Huang and Foose 
entered into a third written agreement which provided that Foose would perform 
additional work at a cost of $47,000. Thereafter, Foose completed the work 
specified in the third agreement in addition to work not covered by any of the 
written agreements. When Foose sought payment for the work completed, Huang 
refused to pay the total amount, claiming that Foose had performed work beyond 
the scope of the written agreements. Efforts to settle the dispute failed, and 
Foose brought suit against Huang on June 14, 1985.

 
 

[¶8.]     In its complaint, Foose 
alleged that all of the work was performed pursuant to either written or oral 
agreements with Huang. In response, Huang filed an answer and counterclaim 
alleging that Foose did not complete the contract, performed the work in an 
unsatisfactory manner, and charged Huang for work not required by the written 
agreements. Foose answered and raised the affirmative defense that Huang waived 
the terms of the written agreements by its own conduct.

 
 

[¶9.]     At trial, Foose 
introduced evidence of 50 "extras" allegedly performed pursuant to oral 
agreements entered into with Huang after performance of the written agreements. 
Upon considering all of the evidence and testimony presented, the district court 
found that Foose proved by clear and convincing evidence that Huang approved 
extras valued at $7,171. In its decision letter, the court stated that 
Foose

 
 
"was 
entitled to the sum of $200,000.00 on the original contract, the further sum of 
$44,500.00 on the supplemental contract, and the additional sum of $7,171.00 for 
extras as specifically found above. [Foose] therefore is entitled to a total of 
$251,671.00. [Foose] acknowledges having received payments totaling $231,389.00 
which leaves a balance still due from [Huang] to [Foose] of $20,282.00. [Foose] 
further has agreed to give credit to [Huang] for the sum of $425.00 for a desk 
converted by [Foose] and belonging to [Huang]. This leaves the net recovery due 
to [Foose] from [Huang] of $19,857.00."

 
 
The 
court also awarded attorney's fees to Foose in the amount of 
$11,217.75.

 
 
I

 
 

[¶10.]  As indicated above, on appeal to this 
Court Huang sets forth three claims with respect to the district court's award 
for extra work performed by Foose beyond the scope of the parties' written 
agreements. Because each of the claims in essence questions whether the district 
court correctly found Huang liable for the cost of that work, we will address 
the claims together.

 
 

[¶11.]  The original agreement executed by Huang 
and Foose contained the following provisions:

 
 
"If the 
final working drawings and specifications have not been completed, the 
Contractor, the Architect/Engineer and Owner will work closely together to 
monitor the design so as to assure the project can be constructed within the 
Guaranteed Maximum Price and in accordance with the exhibits attached hereto. As 
these final plans and specifications are being completed, the Contractor will 
keep the Owner apprised of any changes in the Guaranteed Maximum Price caused by 
changes in the scope of the project which the Owner may 
request.

. . 
.

"5.2 The 
Owner shall designate a person who shall be fully acquainted with the scope of 
the Work, and has authority to approve changes in the scope of the Work, render 
decisions promptly, and furnish information expeditiously.

. . 
.

"9.1 The 
Owner may make Changes in the Work in accordance with the General Conditions 
insofar as they are consistent with this Agreement. The Contractor shall be 
reimbursed for Changes in the Work on the basis of Cost of the Work as defined 
in Article 10 of this Agreement.

"9.2 
If changes in the Work are authorized in writing by the Owner, their 
estimated value shall be added to or deducted from the Guaranteed Maximum 
Price. In arriving at the gross estimated amount of such changes involving 
extra work, the fee to the Contractor shall be decreased by percent of the 
estimated cost of the additional Work (including additional design costs) to 
cover his main office overhead and profit. In the event of authorized credit 
change orders, they shall be made at the estimated cost of the work with no 
change in Fee.

. . 
.

"9.4 If 
Changes in the Work are required to comply with local, state or federal laws, 
rules, regulations or requirements which are not applicable at the time of the 
execution of this agreement, the Guaranteed Maximum Price shall be adjusted to 
reflect the cost of such changes. Such changes shall include, by way of 
illustration and not limitation, compliance with Environmental Protection Agency 
rules and regulations, Air and Water Pollution Control Agency regulations and 
other agencies and authorities." (Emphasis added.)

 
 

[¶12.]  The district court found, and the parties 
are in agreement, that the original drawings and specifications were not 
intended to be complete and final but were intended merely to satisfy the basic 
requirements for obtaining building permits. The parties clearly contemplated 
that changes in the scope of the work would occur. Yet, Huang contends that it 
is not obligated to pay for the changes which occurred after the November 
written agreement because they were performed without prior written 
authorization in violation of the express terms of the written 
agreement.

 
 
"Generally, 
the stipulation in a private building or construction contract * * * * that 
alterations or extras must be ordered in writing is valid and binding upon the 
parties, and therefore, so long as such a provision remains in effect no 
recovery can be had for alterations or extras done without a written order in 
compliance therewith." Annot., 2 A.L.R.3d 620, 626 (1965).

 
 
However,

 
 
"all the 
cases agree that a stipulation requiring a written order for extras or 
alterations is not applicable to work done in order to comply with an order of a 
public building inspector." Id. at 643.

 
 
In 
addition, a provision requiring written authorization for 
extras

 
 
"can be 
avoided by the parties to the contract where their words, acts, or conduct would 
amount to a waiver, modification, rescission, abrogation, or abandonment of such 
provision, or where the owner * * * * by his conduct is estopped to rely on it." 
Id. at 
627.

 
 

[¶13.]  This Court long ago recognized the 
validity of the above-stated rule. In Snowball v. 
Maney Bros. & Co., 39 Wyo. 84, 270 P. 167, 61 A.L.R. 199 (1928), we said that a provision of a highway 
construction contract requiring change orders to be in writing could be waived 
or modified by either express or implied oral contract.

 
 

[¶14.]  In the present case, the evidence at 
trial showed that the drawings and specifications upon which the $200,000 
estimate was based were not complete. Richard Porter testified that he provided 
Huang with estimates of $23,000 and $15,000 to prepare complete drawings and 
specifications for the project. Both estimates were rejected by Huang as too 
high, and the parties agreed that Porter would prepare only such drawings as 
were sufficient to enable Huang to obtain building permits. The drawings were to 
be finalized as construction progressed.

 
 

[¶15.]  The evidence at trial also clearly showed 
that, as the end of the year grew closer and problems associated with the 
project arose, Huang relied increasingly on Foose for work both outside and 
inside the building. Despite the terms of the original agreement which 
contemplated that Foose would construct the shell of the building and Huang 
would complete the interior, the record demonstrates that Huang called upon 
Foose to assist with a number of projects inside the building. These projects 
were requested and undertaken without written change orders. The habitual 
disregard of a provision which requires that change orders for extras be in 
writing, if determinable as a matter of fact, can amount to a waiver of the 
contractual requirement.  Harrington v. McCarthy, 91 Idaho 307, 420 P.2d 790 (1966); Arc & Gas Welder 
Associates, Inc. v. Green Fuel Economizer Co., 285 F.2d 863 (4th Cir. 1960), cert. denied 366 U.S. 919, 81 S. Ct. 1095, 6 L. Ed. 2d 241 
(1961). It is apparent from the record that the parties ignored the 
writing requirement and frequently orally agreed to "extras." The record also 
clearly demonstrates that the provision requiring written approval of all 
changes in the work was waived by the words and conduct of the 
parties.

 
 

[¶16.]  Of the 50 items of extra work claimed by 
Foose, the district court found Huang liable for payment for the 
following:

 
 
1. 
Loading and unloading equipment and materials belonging to Huang -- 
$300;

2. 
Reframing walls between kitchen and dining room -- $400;

3. 
Reframing walls for three recessed areas for framed art work -- 
$450;

4. 
Removing existing teller line counter and building liquor dispensing room -- 
$3,600;

5. Four 
solid core doors -- $1,800;

6. Labor 
and materials for wood table -- $540;

7. Fuel 
bills -- $381;

8. Hats 
from American Culinary Supply -- $26.70; and

9. 
C.O.D. charges for materials ordered by Huang -- $158 and 
$301.96.

 
 

[¶17.]  At trial, the president of Huang 
International, Inc., Walter Huang, testified that the $300 for loading and 
unloading equipment was correctly charged to Huang. He also testified that he 
asked Foose to construct a wood table after the last written agreement was 
executed. In addition, Mr. Huang testified that the fuel bills and hats were 
correctly charged to Huang. Several witnesses, including Mr. Huang, testified 
that the liquor dispensing room was constructed at Huang's request in order to 
satisfy the city requirement for obtaining a liquor license. Dave Foose, owner 
of Foose Construction Company, testified that all of the extras for which 
payment was sought were performed at the request of Huang and were not within 
the scope of the written agreements. In addition, Foose introduced each set of 
drawings and specifications reflecting the changes in the project as 
construction progressed. Foose also introduced copies of the billings sent to 
Huang for the extra work performed. Using photographs taken just prior to trial 
of the walls between the kitchen and dining room and the recessed areas for art 
work, Foose pointed out the changes which were made after the last set of 
drawings was completed on October 10, 1984. Foose also used photographs to 
demonstrate the location of the doors added after the last drawings pursuant to 
Huang's oral request. Other witnesses testified on behalf of Foose that Huang 
was extremely eager to complete construction and open the restaurant by the 
first of the year, that Huang urged them to get the work done, and that Huang 
indicated written approval of changes was unnecessary.

 
 
"As a 
reviewing court, we assume the evidence of the successful party is true, leave 
out of consideration entirely evidence of the unsuccessful party in conflict 
therewith, and give the evidence of the successful party every favorable 
inference which may reasonably be drawn from it." DeJulio v. Foster, 
Wyo., 715 P.2d 182, 185 (1986).

 
 
"Where 
evidence justifies either of two reasonable inferences, the trier of fact is 
allowed to determine which, if either, of the two inferences is more reasonable 
or probable. 'The trial court is in a far better position to judge the demeanor, 
truth and veracity of a witness; therefore, we give considerable deference to 
the court's findings regarding such witness.'" Ott 
v. Rissler & McMurry Co., Wyo., 726 P.2d 1079, 1080 (1986), quoting Smith v. State, 
Wyo., 714 P.2d 1201, 1204 (1986) (citations omitted).

 
 

[¶18.]  The district court heard the testimony of 
the witnesses, considered the evidence, and found that Foose carried its burden 
of proving by clear and convincing evidence that Huang modified the terms of the 
written agreements by orally approving extra work on the project. We are not 
willing to say that the district court's finding is incorrect as a matter of 
law. Support can be found in the record for the factual conclusion that the 
parties habitually disregarded the written change order requirement and that the 
requirement consequently was waived. That we might have reached a different 
result is not a sufficient reason for overturning the fact finder's 
judgment.

 
 
II

 
 

[¶19.]  Huang also contends that the district 
court erred in awarding attorney's fees to Foose.

 
 

[¶20.]  Rider "A", which was incorporated by 
reference into the original contract, provides:

 
 
"ATTORNEY 
FEES AND COSTS. In the event of any default of the terms or conditions of the 
Contract Documents by the parties hereto, the defaulting party shall be 
responsible for the payment of the nondefaulting party's reasonable attorney 
fees and court costs incurred in curing any such default, whether or not 
litigation becomes necessary."

 
 

[¶21.]  Huang does not contend that attorney's 
fees were not available under the terms of the contract, nor does it object to 
the amount awarded. Rather, Huang contends that the district court improperly 
awarded attorney's fees to Foose in that Foose, not Huang, was the defaulting 
party, and consequently Foose was responsible for payment of Huang's attorney's 
fees. More specifically, Huang contends that Foose defaulted on the contract by 
failing to complete the landscaping required by the third written agreement and, 
therefore, that Huang is entitled to attorney's fees.

 
 

[¶22.]  The district court found that Huang 
defaulted on the contract by failing to pay for extra work performed by Foose 
pursuant to the parties' agreements. The district court also found 
that

 
 
"after 
the controversy arose between the parties as to the amounts remaining due, 
[Foose] did not complete the landscaping for which the allowance of $2,500.00 
was made in the supplemental agreement."

 
 

[¶23.]  Upon Huang's failure to pay the amount 
due in accordance with the parties' agreements, further performance by Foose was 
excused. 17 Am.Jur.2d, Contracts § 365 (1964). 
Thus, the district court acted properly in reducing Huang's liability by the 
amount for the landscaping work and in awarding Foose reasonable attorney's 
fees.

 
 

[¶24.]  Affirmed.