Opinion
June 2, 1971.
Editorial Note:
This case has been marked 'not for publication' by the court.
Page 918
Alex Stephen Keller, Denver, for plaintiff in error.
T. Kenneth Loughlin and Victoria F. Gross, Denver, for defendants in error.
PIERCE, Judge.
This case was transferred from the Supreme Court pursuant to statute.
The parties appear here in reverse of their appearance below; they will be referred to by their trial court designations or as 'the architects' and 'the owner.' Plaintiffs are architects who entered into a written agreement with defendant building corporation regarding the design and construction of an apartment house. The agreement specified in detail various services to be performed by the architects and payments to be made therefor at certain intervals. In accordance with the terms of the agreement, the architects prepared the preliminary plans, specifications, cost estimate and architectual rendering, for which they were entitled to a fee of $1,400. Under the agreement, the owner, in the absence of written notification to the architects, was under no obligation to proceed with the construction beyond this point.
Thereafter, the owner advised the architects in writing to proceed with the working drawings and specifications in accordance with the contract, and plaintiffs proceeded to complete their specified duties and to secure approval from the building inspector as to the drawings and specifications. The owner did not obtain financing for the project and eventually abandoned its endeavor and refused to pay the architects for the additional work. Whereupon, the architects sued for $10,000 balance due under the contract, and were awarded judgment for this sum in the trial court.
The owner now questions the court's interpretation of a clause in the contract which reads as follows:
'* * * In the event of termination due to the fault of the OWNERS, the Architect shall be paid the original $1,400.00-plus the $4,500.00-plus $7,500.00 upon the full completion of the PRELIMINARY PLANS and the FINAL WORKING DRAWINGS AND SPECIFICATIONS herein, as full liquidated damages with no recourse against the owners whatsoever. * * *' (Emphasis theirs)
This provision, as finally revised, was drafted by an attorney who was secretary of the owner corporation. The owner now maintains that the 'liquidated damages' provision, as aforestated, was a penalty and the award cannot be allowed to stand where the architects offered no specific proof as to the dollar value of their services.
The law is clear that in a contract, deliberately entered into by parties having an equal opportunity for understanding, a provision for payment of a specified amount for breach of performance which payment bears a reasonable relation to actual compensation or damages constitutes a provision for liquidated damages rather than for a penalty. Broderick Wood Products Co. v. United States, 10 Cir., 195 F.2d 433; Burns Trading Co. v. Welborn, 10 Cir., 81 F.2d 691. See Marvin v. Pueblo Dairymen's Cooperative, Inc., 131 Colo. 601, 284 P.2d 238; C. McCormick Damages s 149.
In this case we find there was sufficient proof of the reasonable relationship between the stipulated amount and the actual compensation due under the contract. The stipulated amount was based upon the contract price for the completed work and the architects introduced definitive evidence that the work was in fact completed. In the absence of a stipulated damage provision in this agreement, the architects' damages would be the contract price for the work done. We hold that proof of the dollar value of actual damages was unnecessary, under the circumstances of this case, for the trial court to make a proper determination that the liquidated damages provision of this contract was valid, enforceable, and not a penalty.
Defendant further complains that the trial court erred in failing to grant its counterclaim which alleged that the plaintiffs had given inaccurate estimates as to the cost of the building, making the final figures so high that defendant was unable to obtain the desired 100% Loan.
The evidence indicates, however, that a substantial portion of the difference between the original estimate made by the architects and the final figure was caused by items added to the specifications after the original estimate at the request or with approval of the owner. There is, again, ample evidence to justify the court's conclusion that the owner did not suffer any loss through the deliberate or negligent acts of plaintiffs. See Kellogg v. Pizza Oven, Inc., 157 Colo. 295, 402 P.2d 633.
The architects' duty, in this instance, must be weighed in light of a further provision of the contract which states:
'Since the Architect has no control over the cost of lobor and materials, or competitive bidding, he does not guarantee the accuracy of any statements or estimates of probable construction cost.'
There being no proof offered that the architects conducted themselves inconsistently with sound and accepted estimating practices within the profession, it was proper for the trial court to deny the counterclaim.
Judgment affirmed.
SILVERSTEIN, C.J., and DWYER, J., concur.