Title: Hardy Corporation v. Rayco Industrial, Inc.
Citation: N/A
Docket Number: 1090988, 1091041
State: Alabama
Issuer: Alabama Supreme Court
Date: December 13, 2013

REL: 12/13/2013
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2013-2014
____________________
1090988
____________________
Hardy Corporation
v.
Rayco Industrial, Inc.
____________________
1091041
____________________
Rayco Industrial, Inc.
v.
Hardy Corporation
Appeals from Jefferson Circuit Court
(CV-08-1714)
1090988, 1091041
STUART, Justice.1
Gambro Renal Products, Inc. ("Gambro"), hired The
Facility Group, Inc. ("TFG"), as the general contractor for
the  construction of a facility designed to produce kidney
dialysis filters in Opelika ("the  project").  TFG contracted
with the Hardy Corporation ("Hardy") for specialized piping
work on the project.  Absolute Welding Services, Inc. ("AWS"),
is a subsidiary of Rayco Industrial, Inc. ("Rayco"), a sub-
subcontractor hired by Hardy.  Although the negotiations on
the subcontract at issue in these appeals were between AWS and
Hardy, the subcontract was executed by Rayco and Hardy. 
Facts
On December 18, 2006, AWS submitted an offer to Hardy for
a certain scope of welding work that specifically excluded
passivation and the installation of pure-steam return ("PSR")
piping.   Hardy required a performance bond; however, AWS was
2
These cases were inadvertently placed on this Court's
1
administrative docket in September 2011 and were not assigned
to Justice Stuart until October 16, 2013.  This Court regrets
the delay in the issuance of the decisions in these appeals.
Passivation is a process by which the rate of corrosion
2
of metal, such as stainless steel, is slowed by the
application of a thin, transparent oxide film.  PSR piping is
used to inhibit the presence of bacteria in piping or tubing. 
As will be discussed infra, performing passivation and
2
1090988, 1091041
not approved for a performance bond.  Therefore, on January
17, 2007, Rayco, which was preapproved for a performance bond,
submitted an offer to Hardy on its letterhead with identical
terms and exclusions as those set forth by AWS in its offer,
with the exception of a minor price increase as a result of
the required bond.  On January 19, 2007, Hardy presented a
subcontract to Rayco that provided that Hardy would pay Rayco
$813,561 and Rayco would install sanitary pharmaceutical
piping that would meet the requirements of specification
15202, which contains the high-purity piping and welding
requirements for projects that undergo inspection by the
United States Food and Drug Administration; specification
15202 requires passivation and the installation of 
PSR 
piping. 
Rayco and Hardy executed the subcontract, and, as Rayco neared
the end of its scope of work under its understanding of the
subcontract, an issue developed as to whether Rayco would
provide the passivation and install the PSR piping as required
by specification 15202. 
The dispute centered upon whether the exclusion of
passivation and the installation of PSR piping in Rayco's
installing PSR piping on the project eventually required a
$210,941 expenditure.    
3
1090988, 1091041
January 17, 2007, offer was incorporated into the January 19,
2007, subcontract.  Rayco admitted that after the dispute
arose, "in the interest of assisting Hardy," it obtained a
quote from a "third-party vendor" for passivation, 
which 
Hardy
refused to pay, and, according to Rayco, "[a]fter the
passivation disagreement arose, Hardy refused to pay any of
Rayco's outstanding invoices for work performed on and goods
purchased for the Project."
On March 12, 2008, Rayco filed a complaint in the Lee
Circuit Court against Hardy, Gambro,  and 15 fictitiously
3
named parties, seeking an accounting, a declaratory judgment,
a reformation of the contract, and perfection of a lien. 
Rayco asserted claims for damages for breach of contract,
unjust enrichment/quantum meruit, and "work and labor done." 
On April 7, 2008, Hardy moved the Lee Circuit Court to dismiss
the action against Hardy without prejudice or, alternatively,
to sever and to transfer the action to the Jefferson Circuit
Court based on the forum-selection clause of the subcontract 
specifying that all legal proceedings would be filed in the
On May 9, 2008, upon the stipulated agreement of Rayco
3
and Gambro, the Lee Circuit Court entered an order dismissing
Gambro from the action.
4
1090988, 1091041
Jefferson Circuit Court.  Hardy asserted that, although
Rayco's claims against Gambro were properly filed in the Lee
Circuit Court, Hardy was not a necessary party in that
litigation and the action in which it was a party, if not
dismissed, should be severed and transferred to the Jefferson
Circuit Court.  On May 20, 2008, the Lee Circuit Court granted 
the motion to transfer the action to the Jefferson Circuit
Court.  
On June 30, 2008, Hardy answered Rayco's complaint,
admitting and denying certain claims and asserting various
affirmative 
defenses; 
Hardy 
also 
filed 
a 
counterclaim 
alleging
that Rayco had breached the subcontract by failing to complete
its obligations under the subcontract.  Hardy further sought
to add Rayco's surety, Fidelity and Deposit Company of
Maryland ("Fidelity"), as a counterclaim defendant and
asserted 
that 
Fidelity 
had 
breached 
the 
subcontract
performance bond.  Hardy requested damages and costs and
attorney fees.  The trial court granted Hardy's motion to add
Fidelity as a counterclaim defendant.  Fidelity answered
Hardy's counterclaim, admitting that it had entered into a
subcontract performance bond with Rayco, denying that Rayco
5
1090988, 1091041
had defaulted or that it was obligated to take any action
under the performance bond, and asserting various defenses.  
On September 9, 2008, Rayco amended its complaint to name
Travelers 
Casualty 
and 
Surety 
Company 
of 
America 
("Travelers")
as a defendant.  Rayco answered Hardy's counterclaim, denying
Hardy's counterclaims and asserting various affirmative
defenses.  Travelers answered Rayco's amended complaint
admitting that it had issued a payment bond in favor of TFG
and asserting various defenses. 
On November 20, 2009, Rayco and Fidelity moved to strike
Hardy's claim for an award of attorney fees because, they
said, Hardy had failed to provide certain requested discovery
regarding the requested attorney fees and to identify the 
expert witness to testify regarding the reasonableness of the
requested attorney fees for the trial.   
On November 25, 2009, the trial court conducted a trial,
at which ore tenus evidence was presented, and, on December
11, 2009, the trial court entered its judgment.  The trial
court  found that on January 19, 2007, Rayco entered into a
subcontract that included within its scope that all
procedures, including passivation and the installation of PSR
6
1090988, 1091041
piping, necessary to a complete installation of piping to
satisfy specification 15202 would be performed by Rayco; that
Rayco had breached the subcontract; that Rayco owed Hardy for
additional funds incurred with regard to passivation and the
installation of PSR piping; that Hardy owed Rayco for change-
order request numbers 2, 7, 8, 20, and 21 because those
changes were performed at Hardy's request or because of
modifications in the plans that changed the scope of the plan;
and that Hardy's other five claims for additional funds
incurred in its counterclaim were disallowed because either
the work was outside Rayco's scope of work or Hardy had failed
to comply with the notice requirements of the subcontract. 
Specifically, the trial court held that Rayco had breached the
subcontract by not performing the passivation and installing
the PSR piping; that Hardy owed Rayco $108,498.78 in damages;
that Rayco has a duty to give Hardy all close-out documents on
the project that it produced or had produced during the
performance of the subcontract; that, in light of its
determination that Rayco had breached the subcontract but was
awarded damages for certain additional funds incurred, Rayco
was not entitled to an award under the theories of unjust
7
1090988, 1091041
enrichment/quantum meruit or for work and labor done; that
Rayco was not entitled to have the subcontract reformed; and
that Hardy was entitled to certain additional funds incurred
that were authorized by the subcontract against the amount
otherwise found to be due Rayco.   The trial court
4
painstakingly recounted the evidence upon which it relied. 
That recounting and its findings are as follows:  
"1. [Hardy] invited an offer from [Rayco] to perform
the specification 15202 high purity piping work for
the Gambro Plant in Opelika, Alabama, in either
November or December 2006.
"2. [Rayco], through subsidiary AWS, on December 18,
2006, made an offer to [Hardy] to perform the said
work for a subcontract fixed price of $810,000, the
said bid excluded performance of the passivation
process of the piping system once installed as is
otherwise required by a 15202 installation.
"3. On December 20, 2006, the parties met and
discussed [Rayco's] offer. There is an even split in
the evidence as to what transpired in the December
20, 
2006 
meeting. 
[Rayco's] 
representative
testif[ied] that explicit reference was made to the
fact that [Rayco] did not provide passivation
The trial court's order did not specifically address the
4
claims 
against Fidelity, Rayco's surety.  However, because 
the
trial court found that Rayco did not owe Hardy money, that is,
that Rayco did not have any damages liability, the trial court
implicitly found that Fidelity had no liability.  Cf. 
Browder, Adm'r v. Faulkner, 82 Ala. 257, 260, 3 So. 30, 32
(1886)("Without 
a 
judicial ascertainment of the default of the
principal, no liability arises, and an action can not be
maintained against the surety.").
8
1090988, 1091041
services; that if [Hardy] insisted, then [Rayco]
would subcontract out the work and include a mark up
in its bid; and that [Hardy's] representative
demurred and stated that [Hardy] would seek another
subcontractor to perform the work so as to save the
mark up. [Hardy's] representative to the said
meeting, 
on 
the 
other 
hand, 
testified 
that
passivation was not raised as a separate issue; that
[Hardy] entered the meeting seeking a commitment
from [Rayco] for a 'turn key' installation
 and
[5]
that [Rayco] gave such an assurance.
"4. On January 17, 2007, [Rayco] submitted a bid in
its own name, changing the amount of the bid to
$813,561.00, with the same clarifications regarding
passivation.
"5. On January 19, 2007, rather than accept
[Rayco's] offer of January 17, 2007, [Hardy]
submitted a counter offer to [Rayco] in the form of
the subcontract which included within its scope all
procedures necessary to a complete installation of
piping consistent with specification 15202.
"6. 
[Rayco's] 
representatives 
understood 
the
requirements of a complete 15202 installation, read
the January 19, 2007[,] counterproposal and, the
Court infers from these two facts proven in the
record, understood the document as presented to
them.
"7. On January 19, 2007, [Rayco] executed the said
subcontract 
which 
included 
within 
its 
scope
passivation to be performed by [Rayco], thus
accepting Defendant Hardy's counterproposal for a
'turn key' installation.
"8. Five change orders were requested by [Rayco] and
approved by [Hardy], thus increasing the amount of
A "turn key" installation is an installation that is
5
complete and ready to operate.
9
9
1090988, 1091041
[Rayco's] subcontract by the aggregate amount of the
said change order as designated in the testimony and
documents.
"9. [Rayco's] change order request numbers 1, 3, 4,
5, 6, 9-16, 17, 18, 19, 22, and 23 were properly
denied by [Hardy] as the work is either part of the
original scope or, in the case of the requested
overtime or pay for idle time, contemplated by the
terms of the said subcontract between the parties.
"10. [Rayco's] change order request numbers 2, 7, 8,
20, and 21 were performed by [Rayco] either at the
request of [Hardy] or because of changes in the
plans and drawings approved by [Hardy] which
required [Rayco] to change the scope of its
performance.
"11. Regarding the six (6) charge back items claimed
by [Hardy] in its counterclaim, the Court finds that
the amount expended by [Hardy] for passivation to be
a proper charge back under the terms of the said
subcontract as well as the installation of the [PSR]
piping. 
"12. The Court finds that the other [five (5)] items
sought 
as 
charge 
backs 
by 
[Hardy] 
in 
its
counterclaim are to be disallowed due either to the
work being outside of [Rayco's] scope of work, or to
[Hardy's] 
having 
failed 
to 
comply 
with 
the
subcontract requirement of providing [Rayco] with
forty-eight hour written notification prior to
having others perform the work set forth in the said
other five claimed charge back items." 
The trial court relied on Cook's Pest Control, Inc. v.
Rebar, 852 So. 2d 730 (Ala. 2002), for its analysis of the
basic 
contract 
principles 
of 
offer, 
acceptance, 
and
counteroffer.  The trial court concluded that the January 19,
10
0
1090988, 1091041
2007, 
subcontract 
was 
Hardy's 
counteroffer, 
which 
was 
accepted
by Rayco.  Accordingly, it enforced the terms of the
subcontract 
and 
concluded 
that 
passivation 
and 
the
installation of PSR piping was within the Rayco's agreed-upon
scope of work, applied the terms to each of the 23 change-
order items in dispute, and used the following calculation to
award Hardy damages in the amount of $108,498.78.
To determine the amount of the damages award, the trial
court started with the fee agreed upon in the subcontract --
$813,561.  It added to that $200,123, the amount that
represented the total cost of the change orders Hardy admitted
were owed to Rayco ($813,561 + $200,123 = $1,013,684).  It
then added the amount of $83,040.68, which represented the
total cost of the change orders the trial court determined
that Hardy should have approved because the changes were not
within the scope of Rayco's work as defined by the subcontract
($1,013,684 + $83,040.68 = $1,096,724.68).
The trial court then subtracted the undisputed amount of
$764,604.90, the progress payments that Hardy had paid to
Rayco ($1,096,724.68 - $764,604.90 = $332,119.78), and it
subtracted from that the amount of $210,941, 
which 
represented
11
1
1090988, 1091041
Hardy's costs to provide passivation and to install PSR piping
($332,119.78 - $210,491 = $121,628.78), and the amount of
$12,680, which represented Hardy's extra administrative costs
with regard to acquiring passivation service ($121,628.78 -
$12,680 = $108,498.78).  
Finally, the trial court addressed the amount TFG owed 
Hardy pending the resolution of the action.  The trial court
determined the amount of $170,703.18 was recoverable upon
resolution of this dispute and did not "charge it back against
the contract balance due [Rayco]."
  
On December 23, 2009, Hardy moved to alter, amend, or
vacate the judgment.  Specifically, Hardy requested the trial
court to reconsider its award to Rayco of $83,040.68 for
change orders it concluded Hardy should have approved. Hardy
further requested that the amended judgment should include an
award of attorney fees, and, for the first time, Hardy
submitted an affidavit addressing the reasonableness of the
requested 
attorney 
fees. 
 
Finally, 
Hardy 
sought 
a
clarification of the judgment to "eliminate any suggestion
that Hardy was in breach of the subcontract" and to eliminate
any requirement that it compensate Rayco before TFG remitted
12
2
1090988, 1091041
its final payment to Hardy, which Hardy referred to as the
"pay-when-paid" provision of the subcontract.
On January 7, 2010, Rayco filed a postjudgment motion
requesting that the trial court vacate its judgment regarding
its determinations that the subcontract was a counteroffer,
that "the contract" should be defined by the subcontract that
included passivation and the installation of PSR piping, that
Rayco was obligated to perform passivation and to install PRS
piping, and that the damages award should be reduced by
Hardy's costs of performing passivation and installing PSR
piping.  Furthermore, Rayco requested that the trial court
alter its judgment to conclude that Hardy had failed to meet
its burden of proof regarding Hardy's costs for passivation
and for installing PSR piping and to increase the damages
award by $210,941.  On January 11, 2010, Rayco filed a
supplement to its postjudgment motion, seeking an order
vacating the finding that Hardy was entitled to be reimbursed
for the administrative cost of $12,680, Hardy's cost
associated with its performance of the passivation and the
installation of PSR piping. 
13
3
1090988, 1091041
Rayco and Fidelity opposed Hardy's postjudgment motion. 
Among other things, Rayco specifically contended that the
trial court should deny Hardy's request for 
reconsideration 
of
an award of attorney fees because Hardy failed to provide
expert testimony on the reasonableness of the requested
attorney fees at trial and failed to produce in a timely
manner documents reflecting the work performed by the
attorney.
A hearing on the postjudgment motions was held on
February 5, 2010.  On March 2, 2010, the trial court denied
the postjudgment motions, specifically stating that the issue
of attorney fees was moot because no evidence regarding the
propriety of the requested attorney fees had been presented at
trial and Hardy's posttrial affidavit was not properly before
the court.  
On March 22, 2010, Hardy filed a "motion for partial
reconsideration" of the trial court's denial of its
postjudgment motion, which specifically addressed its request
for an award of attorney fees.  In the motion, Hardy asserted 
that its request had been "set forth in its counterclaim" and
that, "[p]rior to the trial of the case, Hardy produced copies
14
4
1090988, 1091041
of bills reflecting legal expenses incurred by [Hardy], which
were entered into evidence at trial."  Hardy further asserted
that the trial court should reconsider its denial because
Rayco's motion to strike Hardy's request for attorney fees was
pending 
at 
the 
time 
of 
trial, 
and 
it was 
Hardy's
"understanding that all issues with respect to the award of
[attorney fees], and any objections or defenses relating
thereto, would be reserved for post-trial resolution."  Hardy
admitted that it had filed its affidavit regarding attorney
fees after the trial had concluded.  Rayco moved to strike
Hardy's motion, asserting that the trial court no longer had
jurisdiction over the matter and citing Ex parte Allstate Life
Insurance Co., 741 So. 2d 1066, 1071 (Ala. 1999)("[A]fter a
trial court denies a Rule 59 post-judgment motion, the trial
court no longer has jurisdiction over the case and the
aggrieved party's only remedy is to appeal.").  There is no
indication in the record that the trial court ruled on Hardy's
motion.6
The trial court apparently correctly determined that it
6
lacked 
jurisdiction 
to 
consider 
Hardy's 
successive
postjudgment motion because Hardy was not aggrieved in any of
the ways contemplated by Ex parte Dowling, 477 So. 2d 400, 404
(Ala. 1985).  Simply, there was no new judgment and the issue
of attorney fees not only could have been, but was, raised in
15
5
1090988, 1091041
On April 13, 2010, Hardy posted a supersedeas bond and
filed an appeal.  On April 23, 2010, Rayco filed a cross-
appeal pursuant to Rule 4(a)(2), Ala. R. App. P., which allows
a party to an appeal to file a cross-appeal within 14 days of
the first notice of appeal. 
Hardy seeks this Court's review as to three issues: 
Whether the trial erred 1) by adjusting the damages award
based upon the "disputed change orders" (those the trial court
determined Hardy should have approved), 2) by failing to
address Hardy's "requested" attorney fees, and 3) by failing
to apply the pay-when-paid provision of the subcontract.  In
its cross-appeal, Rayco seeks this Court's review as to four
issues: Whether trial court erred by concluding 1) that the
subcontract was the enforceable contract, 2) that the
subcontract was a counteroffer, 3) that Hardy had presented
sufficient evidence establishing the cost of performing
passivation and installing the PSR piping, and 4) that Rayco's
damages should be offset by Hardy's extra administrative
expenses with regard to passivation and the installation of
PSR piping.
Hardy's first postjudgment motion.  Therefore, Hardy's proper
avenue for relief was a timely appeal.
16
6
1090988, 1091041
Standard of Review
"Where evidence is presented to the trial court
ore tenus, a presumption of correctness exists as to
the 
court's 
findings 
of 
fact; 
its 
factual
determinations will not be disturbed unless clearly
erroneous, without supporting evidence, manifestly
unjust, or against the great weight of the evidence.
Gaston v. Ames, 514 So. 2d 877, 878 (Ala. 1987);
Cougar Mining Co. v. Mineral Land & Mining
Consultants, Inc., 392 So. 2d 1177 (Ala. 1981)." 
Valley Steel Constr., Inc. v. Addison Fabricators, Inc., 658
So. 2d 352, 353 (Ala. 1994).
Analysis
Initially, 
this 
Court 
must 
determine 
whether 
an
enforceable contract existed between Hardy and Rayco, 
an 
issue
raised in Rayco's cross-appeal; therefore, we address the
issues presented in Rayco's cross-appeal first.
Appeal No. 1091041 - Rayco's Cross-Appeal
I. Whether the Trial Court Erred by Concluding that the
Subcontract was the Enforceable Contract
Rayco contends that the trial court erred in concluding
that the subcontract was the enforceable contract because, it
says, Rayco and Hardy had reached an agreement on the terms
and scope of the work to be performed by Rayco, as evidenced
by the  two written proposals and the discussions occurring on
or before January 2, 2007.  Rayco reasons that the written
17
7
1090988, 1091041
subcontract submitted by Hardy on January 19, 2007, was to
memorialize the terms of the existing contract.
"'The requisite elements of [a contract] include: 
an offer and an acceptance, consideration, and
mutual assent to terms essential to the formation of
a contract.'  Strength v. Alabama Dep't of Finance,
Div. of Risk Mgmt., 622 So. 2d 1283, 1289 (Ala.
1993); Steiger v. Huntsville City Bd. of Ed., 653
So. 2d 975, 978 (Ala. 1995)."
Ex parte Grant, 711 So. 2d 464, 465 (Ala. 1997).
The trial court was presented with conflicting testimony
as to when Hardy accepted Rayco's offer and when the parties
assented to the terms essential to the formation of the
contract.  Representatives of Rayco insisted that they
consistently stated that Rayco would not provide passivation
and installation of PSR piping.  Representatives of Hardy
stated that throughout the discussions of the contract Hardy
insisted that it wanted an "all-inclusive" contract that
included the performance of passivation and the installation
of PSR piping.   The trial court concluded that the
7
Our review of the record indicates that this case is
7
clearly distinguishable from Buckmasters, Ltd. v. Auction
Archery, Inc., 915 F.Supp. 1188, 1195-96 (M.D. Ala. 1996).  In
Buckmasters, the testimony indicated that the representative
of Auction Archery 
"lulled" 
Buckmasters into thinking that the
submitted written contract for execution contained only one
minor change; therefore, the court concluded that Buckmasters
was not barred from rescinding the written contract because
18
8
1090988, 1091041
subcontract executed on January 19, 2007, evidenced the
formation of the agreement because it defined the terms of
performance.  Where, as here, the evidence regarding the
formation of the contract is presented ore tenus, the findings
of the trial court are entitled to a presumption of
correctness.  This Court will not reweigh the evidence, and
Rayco has not established that the trial court's conclusion
that the subcontract of January 19, 2007, defined the
obligations of the parties was clearly erroneous, without
supporting evidence, manifestly unjust, or against the great
weight of the evidence.  See Valley Steel Constr., supra.
II.  Whether the Trial Court Erred by Concluding that the
Subcontract was a Counteroffer
the written contract did not reflect the agreed-upon terms. 
Here, conflicting evidence was presented as to whether Hardy
agreed at any stage in the discussions during the formation of
the contract that Rayco would not be responsible for
passivation and the installation of PSR piping.  The trial
court's resolution of this disputed issue is supported by
reasonable inferences to be drawn from the ore tenus evidence. 
See Weeks v. Herlong, 951 So. 2d 670, 679 (Ala. 2006)("When
the trial court receives evidence ore tenus and resolves a
conflict of fact in favor of one party, this Court will not
substitute its judgment for that of the trial court unless the
trial court's decision is palpably erroneous or manifestly
unjust.  Philpot v. State, 843 So. 2d 122, 125 (Ala. 2002)."). 
19
9
1090988, 1091041
Rayco contends that the trial court erred in concluding
that the subcontract was a counteroffer because, it says,
Rayco and Hardy had completed negotiation of the terms of the
contract as of January 2, 2007, and a legally binding contract
was formed at that time.  The trial court, in reaching its
conclusion that the January 19, 2007, subcontract constituted
a counteroffer to which Rayco assented, applied the following
reasoning from Cook's Pest Control, Inc., 852 So. 2d at 736-
37:
"'In 
the 
process 
of 
negotiation
concerning 
a 
specific 
subject 
matter, 
there
may be offers and counter-offers.  One
party proposes an agreement on stated
terms; the other replies proposing an
agreement on terms that are different. 
Such a counter-proposal is not identical
with a rejection of the first offer,
although it may have a similar legal
operation in part.  In order to deserve the
name "counter-offer," it must be so
expressed as to be legally operative as an
offer to the party making the prior
proposal.  It is not a counter-offer unless
it is itself an offer, fully complying with
all the requirements that have been
previously discussed.  This does not mean
that all of its terms must be fully
expressed in a single communication.  Often
they can be determined only by reference to
many previous communications between the
two parties.  In this, a counter-offer
differs in no respect from original offers. 
But there is no counter-offer, and no power
20
0
1090988, 1091041
of acceptance in the other party, unless
there 
is 
a 
definite 
expression 
of
willingness to contract on definitely
ascertainable terms.
"'If the party who made the prior
offer properly expresses assent to the
terms of the counter-offer, a contract is
thereby made on those terms.  The fact that
the prior offer became inoperative is now
immaterial and the terms of that offer are
also immaterial except in so far as they
are incorporated by reference in the
counter-offer itself.  Very frequently,
they must be adverted to in order to
determine 
what 
the 
counter-offer 
is. 
Often, the acceptance of a counter-offer is
evidenced by the action of the offeree in
proceeding with performance rather than by
words.
"'... If the original offeror proceeds
with performance in consequence of the
counter-offer, there can be no successful
action for breach of the terms originally
proposed.
"'The 
terms 
"counter-offer" 
and
"conditional 
acceptance" 
are 
really 
no 
more
than different forms of describing the same
thing. 
They 
are 
the 
same 
in 
legal
operation.  Whether the word "offer" is
used or not, a communication that expresses
an acceptance of a previous offer on
certain 
conditions 
or 
with 
specified
variations 
empowers 
the 
original 
offeror 
to
consummate the contract by an expression of
assent 
to 
the 
new 
conditions 
and
variations. 
That 
is 
exactly 
what 
a
counter-offer does. Both alike, called by
either name, terminate the power of
acceptance of the previous offer.'
21
1
1090988, 1091041
"Joseph M. Perillo, Corbin on Contracts § 3.32 at
478-80; § 3.35 (rev. ed. 1993) (footnotes omitted)."
Our review of the record indicates that the trial court's
conclusion that the subcontract constituted a counteroffer
that Rayco accepted is supported by the evidence and is not
clearly erroneous or against the great weight of the evidence.
The evidence indicates that Hardy did not accept the terms in
Rayco's offer but instead proposed terms for the contract 
that included the performance of passivation and the
installation of PSR piping, as provided in specification
15202.  See Hall v. Integon Life Ins. Co., 454 So. 2d 1338
(Ala. 1984)(noting that a response of a party that makes
changes to the material terms of the offer is a counteroffer). 
Any conflicts in the testimony regarding the negotiations of
the terms of the contract were for the trial court, not this
Court, to resolve.
III.  Whether the Trial Court Erred by Concluding that Hardy
had Presented Evidence Indicating the Costs of Performing
Passivation and Installing PSR Piping
Rayco contends that, even if this Court concludes that 
Rayco was obligated to perform the passivation and to install
PSR piping as provided in specification 15202, the trial court
erred in awarding Hardy the amount it incurred in performing
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1090988, 1091041
the passivation and installing PSR piping.  According to
Rayco, the passivation and PSR piping specifications were
"amended" or "changed," and those changes increased the cost
of passivation and installing PSR piping after the execution
of the contract.  Rayco reasons that it could be held liable
only for the cost of performing passivation and installing PSR
piping pursuant to the original specifications and that it
should not be liable for any increased cost of performing
passivation and installing PSR piping as a result of the
amended specifications.  Rayco's argument, however, fails
because the record does not establish that Rayco presented
argument and evidence to the trial court with regard to the
changes in the cost of performing passivation and installing
PSR piping under the original specifications  as compared to
the cost of performing  passivation and installing PSR piping
under the amended changes.  Because Rayco did not develop a
record contesting Hardy's evidence of cost, we 
cannot 
conclude
that the trial court erred.  See Wal–Mart Stores, Inc. v.
Goodman, 789 So. 2d 166, 176 (Ala. 2000)("[W]e cannot assume
error or presume the existence of facts as to which the record
is silent.").
23
3
1090988, 1091041
IV.  Whether the Trial Court Erred by Concluding that
Rayco's Damages Should be Offset by Hardy's  Extra
Administrative Expenses
Rayco contends that the trial court erred in deducting
from its damages award $12,680, which is the amount of the
premium paid by Hardy to purchase a bond to "bond off" Rayco's
lien.  According to Rayco, because it was owed for its work on
the project, Rayco had a valid lien on the project.  The
evidence indicated that Hardy was entitled to retain the
balance owed Rayco pending resolution of the disputed issues
and that Hardy had obtained a payment bond that afforded Rayco
a complete remedy if the trial court found that the funds were
owed  Rayco.  
During the questioning of Bradley Cordell, Hardy's
project manager, the following testimony was elicited:
"[Hardy's counsel]: The bond premiums, Brad, what is
that?
"[Cordell]: Rayco filed a lien on the building. And
our contract with [TFG] require[d] us to bond off
all liens, and so we bonded off [Rayco's] lien.  And
those are the fees we incurred from our bonding
company.
"[Hardy's counsel]: And Rayco filed the lien even
though Hardy Corporation had posted a payment bond
from Travelers; correct?
"[Hardy's counsel]:  Yes.
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4
1090988, 1091041
"....
"[Rayco's counsel]: And you understand that if the
Court awards any compensation to Rayco including its
base contract, that that amount of money [the bond
premium]  –- you would agree that amount of money is
not due to be paid to you, wouldn't you?
"[Cordell]: I mean, I'm not going to make a decision
for the Court.  My opinion is [Rayco] filed the lien
unjustly.  And we had to bond it off and that we
should be compensated for that."
A review of the record supports the trial court's award
of the premium cost to Hardy.  
Appeal No. 1090988 - Hardy's Appeal 
I. Whether the Trial Erred by Adjusting 
the Damages Award Based upon the "Disputed Change Orders" 
Hardy disputes the trial court's damages award to Rayco
on the change orders in the amount of  $83,040.68.  The terms
of the subcontract required Rayco to submit "claims for
extras" upon completion of extra work.  Hardy denied several
claims for "extras" because it determined that those extras
were within the scope of Rayco's work as defined by the
subcontract.  Rayco disagreed at the trial.  The trial court
reviewed all the claims for "extras" and, based upon disputed
testimony and exhibits that were admitted into evidence,
25
5
1090988, 1091041
determined that some of the extras were properly denied and
that some of them were not.    
Hardy argues, as it did at trial and in its postjudgment
motion, that the trial court erred in awarding these damages
because, it says, Rayco's claimed extra work was not a "change
in scope," Rayco did not, as the subcontract required, obtain
written approval in advance from the project manager for the
extra work, and Rayco waived its claims to additional
compensation for the extra work in its "payment applications"
or "lien wavers."  
First, Hardy asserts that no factual basis exists for the
trial court's determination that the work in the change orders
constituted a change in the scope of the work to be performed
by Rayco.  Here, the trial court heard testimony and studied
the exhibits regarding 23 change orders Hardy had denied.  The
trial court subtracted amounts due on only 5 of the 23 change
orders, finding that "[Rayco's] change order request numbers
2, 7, 8, 20, and 21 were performed by [Rayco] either at the
request of [Hardy] or because of changes in the plans and
drawings approved by [Hardy] which required [Rayco] to change
the scope of its performance."   
26
6
1090988, 1091041
  "'"'"Appellate courts do not sit in
judgment of disputed evidence that was
presented ore tenus before the trial
court...."' Ex parte Roberts, 796 So. 2d
349, 351 (Ala. 2001) (quoting Ex parte
Bryowsky, 676 So. 2d 1322, 1324 (Ala.
1996)). 'When the evidence in a case is in
conflict, the trier of fact has to resolve
the conflicts in the testimony, and it is
not within the province of the appellate
court 
to 
reweigh 
the 
testimony 
and
substitute its own judgment for that of the
trier of fact.' Delbridge v. Civil Serv.
Bd. of Tuscaloosa, 481 So. 2d 911, 913
(Ala. Civ. App. 1985). '[A]n appellate
court may not substitute its judgment for
that of the trial court. To do so would be
to reweigh the evidence, which Alabama law
does not allow.' Ex parte Foley, 864 So. 2d
1094, 
1099 
(Ala. 
2003) 
(citations
omitted)."'
"Friedman v. Friedman, 971 So. 2d 23, 28 (Ala. 2007)
(quoting Ex parte R.E.C., 899 So. 2d 272, 279 (Ala.
2004))."
Curry v. Russell Cnty. Bd. of Educ., [Ms. 2110917, April 19,
2013] ___ So. 3d ___, ___ (Ala. Civ. App. 2013).  The trial
court resolved the conflicts in the testimony, and this Court
will not substitute its judgment for the trial court's on
appeal.  
Second, Hardy's argument that Rayco failed to obtain
written approval, in advance, of the changes is unpersuasive. 
Again, the trial court was presented with conflicting
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7
1090988, 1091041
testimony with regard to the various changes made on the
project and how or why those changes occurred.  The trial
court concluded that those particular 
changes were for 
changes
in Rayco's scope of work, i.e., the changes were either
required by or requested by Hardy.  The trial court properly
resolved the conflicts, and this Court will not reweigh the
evidence.  Curry, supra.  
Finally, Hardy contends that Rayco was not entitled to
this damages award because, it says, Rayco waived any claim
for payment for "extra work" in the three "pay applications"
or "lien waivers," which were admitted into evidence at the
trial.  Each pay application submitted by Rayco contained the
following lien-waiver language:
"To induce Hardy Corporation to pay the amount of
this requisition, the undersigned hereby forever
waives, relinquishes, releases, and discharges all
liens and claims of liens that the undersigned has
or shall have upon the property described in the
subject subcontract and all improvements thereon,
for all labor and/or materials furnished to said
property through the last day of the current month,
said waiver to be effective upon payment for the
amount of the requisition.  There are no additional
costs or claims of any kind for any extras or
additions of work, labor, material, or otherwise on
the Project, except as stated above."
(Emphasis added.)
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8
1090988, 1091041
In Southland Quality Homes, Inc. v. Williams, 781 So. 2d
949 (Ala. 2000), this Court recognized that when an instrument
is unambiguous, its construction and legal effect will be
based upon what is found within the four corners of the
instrument.
Here, the lien-waiver language is unambiguous.  Rayco's
pay applications that contained the lien-waiver language also 
included 
requests 
for 
payment 
for 
change-order 
request 
numbers
2, 7, 8, 20, and 21.  The evidence indicates that Hardy
refused to pay those change orders.  The language in the pay
application is unambiguous; 
Rayco's 
promise to waive any liens
was contingent on the payment of the underlying invoices. 
Therefore, even though Rayco did execute the lien waivers,
because Hardy did not pay Rayco for the underlying invoices,
the trial court did not err in awarding Rayco payment from
Hardy for change-order request numbers 2, 7, 8, 20, and 21.
II. Whether the Trial Erred by Failing 
to Address Hardy's "Requested" Attorney Fees
"Whether to award or to deny attorney fees lies
within the sound discretion of the trial court. On
appeal, the trial court's ruling on that question is
subject to reversal only upon a showing of abuse of
discretion. Advertiser Co. v. Auburn University, 579
So. 2d 645 (Ala. Civ. App. 1991)."
29
9
1090988, 1091041
Battle v. City of Birmingham, 656 So. 2d 344, 347 (Ala. 1995).
On June 30, 2008, Hardy requested an award of attorney
fees in its counterclaim.  On November 20, 2009, Rayco and
Fidelity moved to strike Hardy's claim for attorney fees
because, they said, Hardy had neither complied with their
discovery 
requests 
for 
an 
affidavit 
addressing 
the
reasonableness of the attorney fees nor produced the name of
the expected trial witness regarding the 
reasonableness of the
attorney fees.  Hardy opposed the motion to strike; the trial
court did not rule on the matter before trial.  The only 
mention of the issue of attorney fees at trial was during
Cordell's testimony.  The record provides:  
"Q [Hardy's attorney:] Has Hardy incurred legal
expenses in the defense of this case? 
"A [Cordell:] Yes.
"Q [Hardy's attorney:] Are the invoices from our
firm provided and attached as tab eleven?
"A [Cordell:] Yes.
"Q [Hardy's attorney:] And are they summarized --
"[Rayco's attorney]: Sorry. Go ahead.
"Q [Hardy's attorney:] -- at the front of that
section?
"A [Cordell:] Yes.
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0
1090988, 1091041
"[Rayco's attorney]: Your Honor, we would
object to the entry of any of this evidence
on attorney fees. There is no expert
testimony. These fees were only given to us
when we got these books on Friday. And we
move to strike any request for attorney
fees at this time.
"[Hardy's attorney]: We have a motion
pending on that, Your Honor. It's fine if
we defer that. I don't know if [Rayco's
attorney] wants to get into that now, but
I just want to -- the bills are in
evidence.
"THE COURT: All right." 
Hardy did not raise the issue again during the trial, and the
trial court's judgment did not address Hardy's request for
attorney fees. On March 2, 2010, the trial court denied
Hardy's postjudgment motion 
with a specific statement that the
issue of attorney fees was moot because no evidence regarding
the propriety of the requested attorney fees had been 
presented at the trial and that Hardy's posttrial affidavit
was not properly before the trial court. 
Our review of the record indicates that the trial court
exceeded the scope of its discretion in refusing to consider
Hardy's request for attorney fees.  The record indicates that
Hardy's counsel stated that he would defer presentation of
evidence with regard to attorney fees until after the trial
31
1
1090988, 1091041
court determined whether Rayco had breached the contract that
provided for an award of attorney fees and that the trial
court agreed.  Although the communication between the trial
court and counsel is not a model of clarity, a reasonable
reading of the record establishes that the trial court agreed
to provide Hardy an opportunity to present argument and
evidence with regard to an award of attorney fees after a
determination was made as to whether Rayco had breached the
contract.  Therefore, the trial court's judgment in this
regard is reversed.
III.  Whether the Trial Court Erred by Failing 
to Apply the "Pay-when-Paid" Provision of the Subcontract
Hardy contends that the trial court erred in failing to
order that Hardy was not required to pay Rayco the amounts due
until Hardy had received final payment from TFG.  The
subcontract provided:
"Section 9. ... Final payment shall be thirty (30)
days after completion of the Project provided it
shall not be due or owed from contractor or
contractor's surety unless and until, as conditions
precedent (1) the Subcontractor has met the
requirements and conditions of the Subcontract; (2)
Contractor 
has 
received 
final 
payment 
for
Subcontractor's work from the general contractor;
(3) Subcontractor has furnished a final lien waiver
at release to contractor and owner, and (4)
Subcontractor has properly furnished all project
32
2
1090988, 1091041
closeout documents to Contractor based upon the
breach or impending breach of any provision by the
Subcontractor or based upon the assertion of
reasonable likelihood of assertion, of any lien,
claim, garnishment, attachment, or other levy until
such 
breach, 
controversy, 
lien, 
claim, 
or
garnishment or other levy has been resolved."   
(Emphasis added.)
The evidence presented at trial established that the only
amount TFG owed Hardy was $170,703.  The testimony did not
establish that this amount was for work performed by Rayco. 
Therefore, Hardy has not established that this condition of
the subcontract is applicable or that the trial court erred in
this regard.
Conclusion
Based on the foregoing, in Rayco's cross-appeal (appeal
no. 1091041), the judgment of the trial court for Hardy is 
affirmed; in Hardy's appeal 
(appeal 
no. 1090988), the judgment
of the trial court for Rayco is affirmed in part and reversed
in part, and this case is remanded for proceedings consistent
with this opinion.
 
1090988 -- AFFIRMED IN PART; REVERSED IN PART; AND
REMANDED.
1091041 -- AFFIRMED.
Bolin, Parker, Shaw, Main, Wise, and Bryan, JJ., concur.
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3
1090988, 1091041
Moore, C.J., and Murdock, J., concur in the result.
34
4