Opinion ID: 2319344
Heading Depth: 1
Heading Rank: 11

Heading: The Construction Coordination Fee Issue

Text: NTV contends that the trial court erred in rel[ying] on an email exchange between the parties' real estate agents[] to justify [WCD's] refusal to pay a construction fee on the work it refused to disclose at closing. NTV also maintains that the trial court did not take into consideration WCD's failure to disclose to NTV all of its expenditures, which in total, equaled about $600,000; and it further argues that every reasonable inference should have been drawn in NTV's favor. NTV claims that it was entitled to the full $30,000 sought, irrespective of any defense WCD might have raised to paying a fee on that entire sum. WCD generally supports the trial court's analysis of the construction coordination fee issue. WCD asserts that virtually all of the $600,000 that served as the basis for NTV's request constituted payments to third-party vendors, and thus covered items that the parties explicitly agreed to exclude from the construction coordination fees by the parties. Furthermore, WCD argues that it disclosed to NTV the only fees for which WCD was responsiblean amount that totaled $31,082, as the trial court found. Under § 7.10(c) of the contract, WCD agreed to pay [NTV] a fee at [c]losing of five percent (5%) of all Build-Out Costs, as a construction coordination fee. Build-Out Costs are defined in Section 1.1 of the contract; the definition specifies that for the purpose of calculating the fees described in . . . Section 7.10(c), Build-Out Costs shall mean the costs described in clause (i) of this definition. . . . Clause (i) of the definition states: all direct costs for the Build-Out Work including without limitation general contractors' and subcontractors' fees, general conditions, and all costs for labor and materials, and changes thereto, regardless of who performs the work or supplies the material. The trial court determined in its decision and order of judgment that: In March and April 2006, WCD, through its real estate agent, Geoffrey Kieffer, negotiated with [NTV], through its real estate agent, Eugene Kenney, and the parties agreed to exclude from the 5% fee the work of contractors hired by WCD for the purchase and installation of dental equipment, telephones, furniture, computers and stereo equipment. The record supports this finding. On August 25, 2009, NTV requested that the trial court award it $30,000 in construction coordination fees. The trial court awarded NTV 5% on $31,082, which amounted to $1,554, plus prejudgment interest. The court noted that although WCD's record keeping is deficient concerning what work fell into the category of non-Kfoury work on which a management fee was owed, NTV bore the burden of recovery of unpaid commission, and the most reliable evidence in the record supported the $1,554 amount. Contrary to NTV's position, we conclude that the trial court did not err in examining extrinsic evidence to determine whether Build-Out Costs included the nonKfoury work in dispute such that WCD was obligated to pay NTV its construction coordination fees. Extrinsic evidence may not be relied upon to show the subjective intent of the parties absent ambiguity in the contract's language. Debnam, supra, 976 A.2d at 197; see also Akassy, supra, 891 A.2d at 299. However, extrinsic evidence may be considered to determine the circumstances surrounding the making of the contract, so that it may be ascertained what a reasonable person in the position of the parties would have thought the words meant. 1010 Potomac Assocs., supra, 485 A.2d at 205-06 (citations and footnote omitted). Here, extrinsic evidence was relevant to determining what meaning a reasonable person in the position of NTV and WCD would have given to the definition of Build-Out Costs as it related to the construction coordination fee. Sections 1.1 and 7.10(c) of the contract defined Build-Out Costs as direct costs for the Build-Out Work including without limitation general contractors' and subcontractors' fees, and these fees were due regardless of who perform[ed] the work or supplie[d] the materials. It is true that the contract contains an integration clause stating that [t]his Agreement sets forth the entire understanding and agreement of the Parties hereto, and shall supersede any letter of intent and any other agreements and understandings (written or oral) between Seller and Purchaser on or prior to the date of this Agreement. . . . Given that the parties had engaged in lengthy negotiations to reach consensus on the material terms, it is likely that they intended the contract to be a completely integrated document. Cf. Hercules & Co. v. Shama Rest. Corp., 613 A.2d 916, 927-29 (D.C.1992); Stamenich v. Markovic, 462 A.2d 452, 455-56 (D.C.1983). However, regardless of whether the document was completely or partially integrated, WCD was required to pay NTV a construction coordination fee of 5% of all of the Build-Out Costs at closing, but prior to executing the contract, the parties agreed via email that the contractors that Dr. Deutsch would hire directly to install items such as telephones, stereo systems, furniture, dental equipment, and supplies, would be excluded from the definition of Build-Out Costs and thus exempt from the 5% construction coordination fee. They agreed to change the language in Build-Out Costs from just contractor fees to general contractor and subcontractor fees. On April 7, 2006, Eugene Kenney, NTV's representative stated that he did not see the fees being applicable to WCD's examples of telephones, stereo systems, furniture and dental equipment and supplies. Although Ms. Totah testified that she did not agree to changing the language, the contract reflects this amended language, and thus a reasonable person in the position of NTV and WCD would have thought that the nonKfoury work noted above would not be subject to the 5% construction coordination fee. Moreover, the court did not err in determining that most of the $600,000 that served as the basis for NTV's request covered nonKfoury work that the parties agreed to exclude from the scope of the construction coordination fees. Dr. Deutsch admitted that he understood that NTV expected to be paid the 5% construction coordination fee for some of the work done outside of the [Kfoury] contract, which included things he did himself. However, he also testified that the bulk of NTV's requested amount was comprised of installation of dental equipment (approximately $280,000) and dental cabinetry (approximately $300,000), which the parties agreed would be exempt from the construction coordination fees. Dr. Deutsch conceded that he should have paid construction coordination fees on nonKfoury work performed by Apex Tile & Marble, and other work performed by Ms. Levitt, as the parties had not agreed to exclude those items. The total sum of this work was $31,082. Although Ms. Totah testified that she was unable to ascertain the actual amount of Dr. Deutsch's work because he did not provide her with anything that was clear. . . . [to] allow [her] to clearly delineate what he paid, she admitted that she did not subpoena any of his contractors, nor did she ask about the computer work invoices during Dr. Deutsch's deposition, to get a better sense of the actual amount. She also could not say whether the $600,000 included the $103,000 upon which Dr. Deutsch had already paid construction coordination fees. Because NTV has not offered any other proof of WCD's costs, like the trial court, we are constrained to rely on the most accurate assessment of the fees that is reflected in the record evidence. In short, we see no reason to disturb the court's award of construction coordination fees in the amount of $1,554 (5% of $31,082) to NTV. [12]