Court Opinion

ID: 7801219
Source: CourtListenerOpinion
Date Created: 2022-08-17 10:08:25.816699+00
Date Added: 2024-06-11T16:29:14.657856
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                DESERT VALLEY CONTRACTING, INC.,                        No. 83338
                A NEVADA CORPORATION,
                Appellant,
                vs.
                IN-LO PROPERTIES, A NEVADA
                                                                        Fn. D
                LIMITED LIABILITY COMPANY;                               AUG 1 1 2022
                EUGENE INOSE, AN INDIVIDUAL; AND
                                                                              .H A. SROWN
                JEFFREY LOUIE, AN INDIVIDUAL,                                 UPREME COURT

                Res • ondents.                                                r; CLERK

                                         ORDER OF AFFIRMANCE
                            This is an appeal from a final judgment in a contract dispute.
                Eighth Judicial District Court, Clark County; Joseph Hardy, Jr., Judge.'
                            Respondents (collectively, Inose) hired appellant Desert Valley
                Contracting, Inc., to repair and restore a home after it suffered extensive
                water damage.2       Their contract required Desert Valley to perform the
                restoration work in a good and workmanlike manner, while Inose agreed to
                immediately forward insurance proceeds to Desert Valley and instruct the
                insurer to make Desert Valley a payee on all insurance drafts for the work.
                Desert Valley performed extensive work on the home but made mistakes
                and decisions that increased costs and resulted in additional damage.
                Meanwhile, Inose requested changes and upgrades that were not in the
                scope of the repair work, believing those costs could be offset. Throughout
                the restoration work, Inose turned over some, but not all, of the insurance

                      1Pursuant to NRAP 34(f)(1), we have determined that oral argument
                is not warranted in this appeal.

                      2 Respondent Eugene Inose is the principal of In-Lo Properties, which
                owns the subject property.

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                proceeds to Desert Valley. Eventually Desert Valley stopped work on the
                home. Inose thereafter worked with Desert Valley's subcontractors directly
                to complete the work. Desert Valley filed the underlying lawsuit alleging
                breach of contract and related claims; Inose responded with similar
                counterclaims.    Following a seven-day bench trial, the district court
                dismissed both parties' claims. The district court found that both parties
                breached the contract and concluded that neither party was entitled to
                damages. In relevant part, the district court concluded that a scrivener's
                error in the parties' contract rendered the contract ambiguous, construed
                the ambiguity against Desert Valley, and found that Desert Valley failed to
                establish damages because it was paid for the work it completed.
                            On appeal, this court concluded that the district court erred by
                finding the scrivener's error made the contract ambiguous such that it
                should be construed against Desert Valley, and by concluding that the
                ambiguity barred Desert Valley from seeking damages for its expected
                profits. Nevertheless, because this court could not determine whether the
                error was harmless, we reversed and remanded for further proceedings on
                two issues. First, "the [district] court did not determine who breached first
                or if the breaches were mutual, thereby precluding relief." Desert Valley
                Contracting, Inc. v. In-Lo Props., No. 79751, 2021 WL 818191 (Nev. Mar. 3,
                2021) (Order of Reversal and Remand). Second,
                            because the district court erred in determining the
                            profit provision was ambiguous and that Desert
                            Valley therefore could not establish damages, the
                            district court did not address whether, in light of
                            the evidence presented, the contract, once reformed
                            to omit the scrivener's error, entitled Desert Valley
                            to its expected profit and overhead in the event of
                            termination by Inose.
                Id.
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                                 On remand, the district court largely incorporated its findings
                of fact from its previous order.         It also made three alternative legal
                conclusions, that: (1) both parties materially breached their contract,
                precluding recovery by either side; (2) Desert Valley is barred from
                recovering because it committed the first material breach of the contract by
                stopping work and instructing the subcontractors to also stop working on
                Inose's project; and (3) that regardless of whether it materially breached the
                contract,        Desert Valley failed to demonstrate its damages by a
                preponderance of the evidence.          The district court also found that its
                previous order awarding fees and costs to Inose—based on Desert Valley
                not obtaining an award more than Inose's offer of judgment—remained in
                effect.
                                 Desert Valley appeals, arguing the district court erred by
                concluding that it materially breached the contract first, or at all. But the
                record supports the district court's finding that the parties mutually
                breached the contract, and that Desert Valley therefore is not entitled to
                damages for lost profits.3 See Wells Fargo Bank, N.A. v. Radecki, 134 Nev.
                619, 621, 426 P.3d 593, 596 (2018) (holding that we will not overturn a
                district court's findings of fact "unless they are clearly erroneous or not
                supported by substantial evidence"); State, Univ. & Cmty. Coll. Sys. v.
                Sutton, 120 Nev. 972, 983, 103 P.3d 8, 15 (2004) ("Factual disputes
                regarding breach of contract are questions for [the factfinder] to decide.");
                Westinghouse Elec. Corp. v. Garrett Corp., 601 F.2d 155, 158 (4th Cir. 1979)
                (observing that, under general contract law, "in proper circumstances a

                            record does not contain substantial evidence regarding which
                          3The
                party breached first, but, because we can affirm on an alternative basis, the
                lack of evidence on this issue is inconsequential.
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                     court may refuse to allow recovery by either party to an agreement because
                     of their mutual fault"); see also Restatement (Second) of Contracts § 244
                     (2022) (explaining that a party's responsibility for damages is discharged
                     where the injured party would not have performed the contract).
                     Specifically, as to Desert Valley's breach, the contract required that "[i]f any
                     requests for additional work to be performed are made during the scope of
                     the job, all such requests must be put in writing so that these costs will be
                     added to the Scope of Work." (Emphasis added). Desert Valley's owner
                     confirmed that without written and approved change orders signed by the
                     homeowner, Desert Valley would have no obligation to, and would not pay
                     the subcontractor for, any change to its scope of work. And both the owner
                     and another Desert Valley representative testified that Desert Valley failed
                     to obtain Inose's approval or signature on any change orders throughout the
                     course of its work on Inose's property.4
                                 Additionally, there was evidence that Desert Valley breached
                     the contract by failing to perform in a good and workmanlike manner. For
                     example, there was testimony—deemed credible by the district court—that
                     Desert Valley's decision to paint before installing tile resulted in the paint
                     being damaged and having to be redone at an additional cost. See Castle v.

                           4Desert  Valley argues that Inose was aware of the change orders but
                     fails to provide relevant authority or cogent argument as to why this would
                     excuse it from performing under the terms of the contract, which required
                     Inose's signed approval. See Edwards v. Emperor's Garden Rest., 122 Nev.
                     317, 330 n.38, 130 P.3d 1280, 1288 n.38 (2006) (holding that we need not
                     address arguments not cogently argued or supported by relevant authority).
                     Additionally, there was evidence that Inose refused to sign the change
                     orders because Desert Valley consistently represented to Inose that it could
                     offset the costs of certain changes in scope by removing other items that
                     were part of the original scope without affecting the total cost of the project.
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                  Simmons, 120 Nev. 98, 103, 86 P.3d 1042, 1046 (2004) ([W]e will not
                  reweigh the credibility of witnesses on appeal; that duty rests within the
                  trier of fact's sound discretion."). There was also testimony that Desert
                  Valley left the home unlocked and failed to supervise the workers, resulting
                  in items being stolen from the home and additional water damage from a
                  rainstorm. And that Desert Valley then incorporated the cost of repairs for
                  this darnage and missing items into the cost it sought to collect from Inose.
                  Thus, substantial evidence supports the district court's finding that Desert
                  Valley's contractual breaches precluded it from any award of damages.5 We,
                  therefore,
                                  ORDER the judgment of the district court AFFIRMED.6

                                                                                         Sr.J.
                  Silver

                  cc:      Hon. Joseph Hardy, Jr., District Judge
                           William C. Turner, Settlement Judge
                           Hurtik Law & Associates
                           Holley Driggs/Las Vegas
                           Eighth District Court Clerk

                                on this conclusion, we need not consider the argument that
                           5Based
                  the district court erred in concluding Desert Valley failed to prove its
                  damages by a preponderance of the evidence.

                           6TheHonorable Mark Gibbons, Senior Justice, participated in the
                  decision of this matter under a general order of assignment.

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