Opinion ID: 2117528
Heading Depth: 1
Heading Rank: 2

Heading: ISI's Cause of Action

Text: The key document in ISI's claim against Fluidizer was the purchase order (subcontract) between ISI and Fluidizer dated July 24, 1973, which called for shipment of Engineering design and drawings of scaling and batching system for S.T.D. dry wall   . A provision of the purchase order specifically provided, Engineering drawings include panel front, electric schematics and conduit wiring, etc. It is uncontroverted that engineering drawings of the panel front were delivered to Fluidizer by ISI, but that drawings of electrical schematics and conduit wiring were not. The purchase order also provided: There is no understanding or agreement pertaining to this order other than expressed herein or in other written agreements between the parties. On July 27, 1973, a meeting was held by representatives of Fluidizer and ISI to review the items to be delivered in fulfillment of the purchase order. Schlee prepared a memorandum of the meeting for Fluidizer, which stated, in pertinent part: I.S.I. or Instrumentation Services Inc., are to furnish [an] engineering service, including a graphic panel print with manual operation instructions. To be completed in two or three weeks for customer approval. Dennis Brady, design engineer for ISI at that time, also prepared a memorandum of the meeting. The relevant portion of his memorandum stated: Dennis [Brady] asked what the scope of `Engineering' as required in the first phase was to be. Woody [Schlee] indicated that his drawings would give size and function but would not be fabrication drawings. Also, that conduit drawings would not be required until after the Engineering phase had been approved. The memoranda, ISI argued, established that ISI was to provide only drawings of the panel front and that ISI had therefore completely performed under the contract. ISI invoiced Fluidizer for the amount of the purchase order on November 9, 1973. By mid-January 1974, Fluidizer learned that Standard had accepted the bid from Dynamic Air. In a letter dated January 24, 1974, Fluidizer informed ISI that it would not pay the November invoice because the purchase order was subject to cancellation if we did not get an order from Standard Dry Wall, which we have not. Fluidizer never requested further performance by ISI and never paid ISI the amount of the invoice. Notwithstanding the language of the purchase order, the trial court held that ISI had fully performed under the contract. The trial court found that the phrase in the purchase order  Engineering drawings include panel front, electric schematics and conduit wiring, etc.  was ambiguous and did not make clear whether electrical schematics and drawings of conduit wiring were required. The trial court then used the memoranda of the July 27, 1973, meeting between ISI and Fluidizer as extrinsic evidence to further find that the parties intended ISI to complete only the drawings of the panel front. We hold that the trial court erred. The words electric schematic and conduit wiring appear in the purchase order and are unambiguous. The language of the purchase order clearly defines engineering drawings to include drawings of electrical schematics and conduit wiring. Extrinsic evidence (oral testimony regarding the July 27, 1973, meeting or the memoranda of that meeting) cannot be used to create an ambiguity in a document. The fact that the parties met to decide what the purchase order called for cannot be used to demonstrate that the purchase order was ambiguous; ambiguity must be found in the language of the document itself. The language of the purchase order was clear, and we hold that ISI did not fully perform its contract with Fluidizer. However, ISI is entitled to recovery against Fluidizer on another theory. By unilaterally repudiating the underlying contract with Standard and by specifically telling ISI that it refused to process the invoice because of loss of the Standard contract, Fluidizer materially breached the subcontract with ISI. Fluidizer's acts essentially prevented ISI from completing the contract; there was no reason for ISI to tender further performance. Where one party repudiates a contract and the nonbreaching party has only partially completed its performance, the nonbreaching party may sue on the contract without completing performance or he may sue, on quantum meruit, for the value of benefit conferred by partial performance. In the present case, the cause of action by ISI was based upon breach of contract and ISI is therefore entitled to damages. [8] We believe that the present case is analogous to a situation in which a building contractor only partially performs a construction contract because of material breach by a landowner. Under those circumstances the basic rule is that the contractor is entitled to recover the contract price less the savings realized from not being required to fully perform the contract. Dobbs, Remedies, § 12.24. We therefore hold that ISI is entitled to the full contract price minus the expenses it would have incurred to complete the work, plus interest at the legal rate. [9] Because there is no showing in the record of the savings ISI realized because it was not required to fully perform the subcontract with Fluidizer, we remand to the trial court with directions that it ascertain the amount of savings realized by ISI. Affirmed in part; reversed in part and remanded.