Title: Patel v. Harless

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Patel v. Harless1996 WY 156926 P.2d 963Case Number: 96-67Decided: 11/27/1996Supreme Court of Wyoming
Piyush PATEL,

Appellant 
(Defendant),

v.

Keith HARLESS and Harvey 
Harless, d/b/a H & H Drywall, 

Appellees 
(Plaintiffs).

Appeal from District 
Court, Park County, Hunter Patrick, J.

Charles E. 
Graves and Loren Joseph Richards of Charles E. Graves & Associates, P.C., 
Cheyenne, for appellant.

Colin M. Simpson 
of Simpson, Kepler & Edwards, LC, Cody, for appellees.

Before 
TAYLOR, C.J., and THOMAS, MACY, GOLDEN and LEHMAN, JJ.

MACY, Justice.

[¶1]      Appellant Piyush 
Patel appeals from the judgment which was entered in favor of Appellees Keith 
Harless (Keith) and Harvey Harless (Harvey), who were doing business as H & 
H Drywall. The trial court found that a mutual mistake had occurred in the 
formation of the parties' contract.

[¶2]      We 
reverse.

ISSUES

[¶3]      Patel requests 
our review of the following issues:

I. Whether the evidence 
presented at trial supports a finding of mutual mistake[.]

II. Whether Appellees 
assumed the risk[.]

FACTS

[¶4]      In 1993, Patel 
contracted with Paragon Management Inc. to provide management services for a 
construction project on a Days Inn located in Cody. One of Paragon's 
responsibilities was to locate a subcontractor who would install the drywall in 
the building. The project architect contacted the appellees to see whether they 
would be interested in doing the job. The architect provided a set of plans and 
specifications for the appellees to review. When the appellees agreed to do the 
job, the architect sent a contract to them which provided that H & H Drywall 
would install and finish the drywall and all accessories according to the plans 
and specifications for a fixed price of $28,800. The contract also provided that 
H & H Drywall was required to submit a written request for a change order 
prior to beginning any extra work which might need to be done. The appellees 
reviewed the proposed contract and made some changes, but they did not change 
the fixed price amount, note any limitations on the square feet of drywall which 
would be installed, indicate any limitation on the number of drywall sheets 
which would be installed, or include a per sheet price. The appellees signed the 
contract and returned it to the architect.

[¶5]      H & H Drywall 
began installing the drywall at the motel in mid-March 1994. On March 22, 1994, 
Paragon gave H & H Drywall a $1,500 advance. H & H Drywall submitted a 
payment request for $16,585 on March 25, 1994, and received $13,426.20 on March 
29, 1994. H & H Drywall received a $4,500 payment on April 20, 1994, and a 
$2,000 payment on April 22, 1994. The drywall installation was completed by May 
7, 1994, and on that date Paragon paid $3,686 to H & H Drywall and one of 
its employees, jointly. H & H Drywall subsequently requested an additional 
payment which resulted in the total price for the job being significantly higher 
than the contract figure, claiming that it had installed 2,746 sheets of drywall 
and that it should be compensated $16 for each sheet that it had installed. 
Patel paid two of H & H Drywall's employees $1,170 and $1,496 to avoid 
having liens filed against the motel property, and it credited those amounts as 
payments to H & H Drywall.

[¶6]      The appellees 
recorded a lien against the motel on June 17, 1994, and thereafter filed an 
action to foreclose on that lien. After a bench trial, the trial court found in 
the appellees' favor, concluding that both parties had agreed on the total area 
which was to be drywalled and that they had both been mistaken in their estimate 
of the space. The trial court also concluded that, when the architect inserted 
the fixed price of $28,800 into the contract, he based that figure upon the rate 
of $16 per sheet multiplied by the number of sheets which would be required to 
drywall the erroneously estimated area. Patel appeals from that 
decision.

STANDARD OF 
REVIEW

[¶7]      In this type of 
case, we are guided by the following standard:

The initial question of 
whether the contract is capable of being understood in only one way is a 
question of law for the court. If the court determines that the contract is 
capable of being understood in only one way, then the language used in the 
contract expresses and controls the intent of the parties. In such case, the 
next question, what is that understanding or meaning, is also a question of law. 
. . . As we have said, "[w]e are . . . at liberty to make a determination as to 
the existence of ambiguity whether or not the parties here agree thereto one way 
or the other, and whether or not the trial court has reached a conclusion 
thereon one way or the other."

Examination 
Management Services, Inc. v. Kirschbaum, No. 95-278, 927 P.2d 686, 689 (Wyo. 
1996) (citations omitted) (quoting Amoco Production Company v. Stauffer Chemical 
Company of Wyoming, 612 P.2d 463, 465 (Wyo. 1980)). When the provisions of a 
contract are not ambiguous or uncertain, the document speaks for itself, and 
parol evidence which tends to show that a prior or contemporaneous oral 
agreement or tacit understanding was made with respect to the terms of the 
agreement is inadmissible. Cordova v. Gosar, 719 P.2d 625, 640 (Wyo. 1986). This 
Court, however, has recognized that, even though a document is unambiguous, an 
exception is made in the case of mutual mistake to the rule which prohibits 
parol evidence from being admitted. Schulz v. Miller, 837 P.2d 71, 75 (Wyo. 
1992); Cordova, 719 P.2d  at 640-41.

"[W]here there is no 
ambiguity, all conversations, contemporaneous negotiations, and parol agreements 
between the parties prior to a written agreement are merged therein. In the 
absence of accident, fraud or mistake, parol evidence is not admissible for the 
purpose of contradicting, subtracting from, adding to, or varying the terms of 
such written instruments."

Schinnell v. 
Doyle, 6 Wn. App. 830, 496 P.2d 566, 568 (1972) (quoting Fleetham v. 
Schneekloth, 52 Wn.2d 176, 324 P.2d 429, 430 (1958)).

DISCUSSION

[¶8]      Patel claims that 
the evidence with regard to an asserted mutual mistake was insufficient to 
support, by clear and convincing evidence, the trial court's finding that both 
parties intended to enter into a contract which provided for the installation of 
exactly 1,800 sheets of drywall at $16 per sheet.1 The appellees maintain that 
substantial evidence did support the trial court's finding of mutual mistake in 
the formation of the contract.

[¶9]      A contract may be 
canceled or reformed by reason of a mutual mistake. Shrum v. Zeltwanger, 559 P.2d 1384, 1386 (Wyo. 1977); see also Goodson v. Smith, 69 Wyo. 439, 457, 243 P.2d 163, 171 (Wyo. 1952). A mutual mistake is one which is reciprocal and 
common to both parties with each party being under the same misconception as to 
the terms of the written instrument. Shrum, 559 P.2d  at 1386.

"[W]hen a mistake in a 
writing is claimed, the burden rests on the party claiming the mistake to 
establish by evidence that is clear, satisfactory and convincing that the 
contract as written does not contain the agreement entered into between the 
parties; that the mistake was mutual; and that it did not occur by or result 
from negligence of the party claiming it."

Schulz, 837 P.2d  
at 76 (quoting Pfister v. Brown, 498 P.2d 1243, 1245 (Wyo. 1972)). Although an 
agreement may be reformed to reflect the parties' intent when a mutual mistake 
has occurred, the agreement cannot be revised to reflect only one party's 
subjective understanding. Jamsar, Inc. v. United States, 194 Ct.Cl. 819, 442 F.2d 930, 936 (1971). Courts should not aid those parties who have made an 
unwise bargain in forming their contracts. Fulkerson v. Reese (Estate of 
Frederick), 599 P.2d 550, 556 (Wyo. 1979). When parties reduce a contract to 
writing, they must abide by its plainly stated terms. Colorado Interstate Gas 
Company v. Natural Gas Pipeline Company of America, 842 P.2d 1067, 1070 (Wyo. 
1992).

[¶10]   It appears to us the trial court 
decided the parties intended that a different method of compensation be used 
than the one specified under the contract and, therefore, found mutual mistake. 
The trial court ignored the fixed price provision in the contract as well as the 
provision which required H & H Drywall to obtain a change order before any 
extra work would be approved. The trial court then determined that both parties 
intended that the contract provide that drywall installation throughout the 
entire motel would be compensated at $16 per sheet regardless of how many sheets 
were installed.

[¶11]   Having reviewed the contract, we 
conclude that it was not ambiguous. The relevant provisions of the contract 
provided:

5.2       The Subcontractor 
may be ordered in writing by the Contractor, without invalidating this 
Subcontract, to make changes in the Work within the general scope of this 
Subcontract consisting of additions, deletions or other revisions, including 
those required by Modifications to the Prime Contract issued subsequent to the 
execution of this Agreement, the Subcontract Sum and the Subcontract Time being 
adjusted accordingly. The Subcontractor, prior to the commencement of such 
changed or revised Work, shall submit promptly to the Contractor written copies 
of a claim for adjustment to the Subcontract Sum and Subcontract Time for such 
revised Work in a manner consistent with requirements of the Subcontract 
Documents.

. . . . 

10.1 The Contractor shall 
pay the Subcontractor in current funds for performance of the Subcontract the 
Subcontract Sum of TWENTY-EIGHT THOUSAND EIGHT HUNDRED AND 00/100 - Dollars 
($28,800.00), subject to additions and deductions as provided in the Subcontract 
Documents.

. . . .

10.3 Unit prices, if any, 
are as follows: [This provision was left blank.]

. . . .

16.1.3             
. . .

There will be no extras 
above base contract unless a change order is signed in approval prior to the 
work being completed.

[¶12]   The only evidence which we found in 
our review of the record that supported the appellees' assertions that the 
agreement was for H & H Drywall to install exactly 1,800 sheets of drywall 
at $16 per sheet was the appellees' testimony. Harvey testified that he informed 
the architect that H & H Drywall's price for hanging, taping, and finishing 
drywall sheets was $16 per sheet. The plans, however, did not require every 
sheet to be taped and finished. We are not convinced that the architect would 
have agreed to pay $16 per sheet regardless of whether the sheet was taped and 
finished. Even Keith testified that generally the cost for hanging drywall was 
$5 per sheet and that the cost for taping and finishing it was $12.

[¶13]   The architect denied that he told 
the appellees how much drywall would be required or that he agreed to pay $16 
per sheet. The record does not contain any evidence other than the appellees' 
testimony which would indicate that the architect intended to enter anything but 
a fixed price agreement. The contract was consistent with and supported the 
architect's testimony with regard to what his intentions were when he entered 
into the agreement.

[¶14]   Additionally, H & H Drywall did 
not obtain a change order before proceeding with work which it believed was over 
and above what the contract required. The appellees testified that they had 
requested a change order to get approval for the additional work which H & H 
Drywall was doing, that witnesses overheard the requests being made for a change 
order, and that they were told not to worry about a change order as H & H 
Drywall would be paid for its extra work. The appellees, however, did not 
present any of the witnesses at the trial to support their testimony that a 
change order had been requested or that either of them had been told that H 
& H Drywall would be paid for the extra work despite its failure to obtain a 
change order.

[¶15]   We conclude that the evidence was 
not sufficiently clear and convincing to support the trial court's finding that 
the appellees met their burden of proving mutual mistake. The evidence simply 
did not support the determination that the architect had made a mistake in 
forming the contract. Instead, the evidence supported only that the appellees 
had made a unilateral mistake. It would have been a simple matter for the 
appellees to write a cost-per-sheet price into the contract under the provision 
which provided for a unit price rather than to leave that provision blank and 
assume that the fixed price of $28,800 meant that exactly 1,800 sheets were to 
be installed at $16 per sheet without taking into account whether or not the 
sheets were to be taped and finished. It also would have been quite simple for H 
& H Drywall to comply with the provision in the contract which required it 
to get a change order before it commenced any extra work. We cannot rescue the 
appellees from the consequences of their unwisely made agreement, nor can we 
revise the agreement to reflect their subjective understanding.

[¶16]   Since our decision on this issue is 
dispositive, we will not address Patel's second issue.

[¶17]   Reversed.

FOOTNOTE

1 When $16 per sheet is 
multiplied by 1,800 sheets, the result equals the contract price of 
$28,800.