Opinion
No. 3-303 / 02-1624.
Filed June 25, 2003.
Appeal from the Iowa District Court for Mahaska County, Dan F. Morrison, Judge.
The defendant appeals a district court ruling denying its motion for a directed verdict. AFFIRMED.
Wesley Chaplin of Kreykes Law Office, Pella, for appellant.
Michael Brice and Michael Fisher, Oskaloosa, for appellee.
Heard by Zimmer, P.J., and Hecht and Eisenhauer, JJ.
The defendant appeals a district court ruling denying its motion for directed verdict on the plaintiffs' request for damages resulting from a contract dispute regarding the construction of their new home. The defendant argues the district court erred in denying his motion for directed verdict because (1) the plaintiffs failed to prove they had an enforceable oral contract, (2) the court failed to afford the term "time and materials" its technical meaning, and (3) the plaintiffs prevented it from fully performing under the terms of their agreement. We affirm.
I. Backgrounds Facts and Proceedings. In 1998, Donald and Donna Arendt discussed the building of a new home with various contractors in the Oskaloosa area. The contractors informed the Arendts that based on their floor plans, the estimated price would be between $425,000 and $450,000. The Arendts ultimately chose Vande Noord Construction to build their home. The Arendts discussed the plans with Marc Vande Noord and informed him of their desire to keep the cost of the home below $400,000. Vande Noord informed them it was possible if the home was constructed on a "time and materials" basis. According to the Arendts, Marc informed them his company did most of their own work, and that the subcontractors that were used would not charge a markup on their labor and materials. Although no written contract was signed, it was agreed construction would begin in the spring of 1999 and would be completed by August.
Construction commenced as planned, and in June 1999 the Arendts received a bill of $30,729.09. The Arendts requested copies of the underlying bills but did not receive them until September, at which time they discovered Vande Noord was charging them a thirteen percent markup. The Arendts discussed this issue with Marc, who informed the Arendts that such markup was standard under a "time and materials" agreement. The Arendts disputed the markup but continued to pay the bills in full until October 1999, when the Arendts fired Vande Noord and hired a new contractor to complete the home. The home was ultimately finished in April 2000 at a cost of $607,000.
The Arendts subsequently filed a breach of contract action against Vande Noord. At trial, the Arendts testified it was their understanding during discussions with Marc Vande Noord that no markup would be charged, enabling them to lower the construction costs. They testified that while they were aware from their discussion with other contractors that a markup is generally added under a "time and materials" agreement, Marc specifically informed them no such markup would be added. Vande Noord, however, maintained that under the technical definition of "time and materials" it is accepted practice to charge a markup, and that the Arendts were aware of this prior to commencement of construction.
Vande Noord filed a motion for directed verdict at the close of the Plaintiffs' case. The motion was denied. After the trial the district court ruled Vande Noord was in a superior position to understand the meaning of the term "time and materials" and the Arendts did not understand that a markup would be charged. The court awarded them $20,731.36 in damages for the markups but denied the remainder of their contract claims. Vande Noord has appealed, claiming the district court erred in denying its motion for directed verdict.
II. Scope of Review. Our scope of review is for the correction of errors at law. Heinz v. Heinz, 653 N.W.2d 334, 338 (Iowa 2002). We consider the evidence in a light most favorable to the non-moving party. Rife v. D.T. Corner, Inc., 641 N.W.2d 761, 766 (Iowa 2002). If reasonable minds could reach different conclusions based upon the evidence presented, the issue must be submitted to the trier of fact. Id. III. Contract. Vande Noord first argues the Arendts' claims are unenforceable because there was no enforceable oral contract between them. It contends there was no agreement on the final price of the home, and that it was not provided with blueprints until construction commenced. Vande Noord asserts no written contract was ever signed by the parties, and that only an oral agreement existed to construct the home based on the "time and materials" basis.
In order to prove the existence of an oral contract, the terms must be sufficiently definite for a court to determine with certainty the duties of each party, the conditions relative to performance, and a reasonably certain basis for a remedy. Gallagher, Langlas Gallagher v. Burco, 587 N.W.2d 615, 617 (Iowa Ct.App. 1998). We look to whether (1) an agreement has been reached on terms intrinsic to the contract, (2) the contract is of a type usually put in writing, (3) the details are few or many, and (4) the amount involved is large or small. Faught v. Budlong, 540 N.W.2d 33, 36 (Iowa 1985). The agreement need only be certain and unequivocal in its essential terms, absolute certainty is not required. In re Guardianship and Conservatorship of Price, 571 N.W.2d 214, 216 (Iowa Ct.App. 1997). Where a contract appears to exist, courts are reluctant to find it too uncertain to be enforceable. Id. However, where the terms are not definite, courts are reluctant to impose reasonable terms on contracting parties. Id. In determining whether an oral agreement is enforceable, we may consider the surrounding circumstances and conduct of the parties. In re Estate of Ohrt, 516 N.W.2d 896, 901 (Iowa 1994).
The parties did not enter into a written contract. However, the parties met several times to discuss the building of the home and the plaintiffs' concerns regarding cost. Although at the time the Arendts did not have blueprints to build the home, they were given to Vande Noorde in the spring of 1999. Vande Noorde agreed the home price could be lowered if they contracted on a "time and material" basis. All parties agreed the home would be built on this basis. Although the exact price was never determined, it was clear the parties expected the home to cost somewhere close to $400,000 or less. The parties agreed construction would begin in the spring of 1999 and be completed by August. Based on these facts, Vande Noorde began performance by starting construction on the home as scheduled. The parties understood that monthly bills were to be submitted and that the Arendts would pay Vande Noorde for its material costs. Although they disputed the markups, the Arendts paid in full each bill that was submitted to them until they fired Vande Noord and obtained a new contractor. While not all terms were totally definite, we conclude the actions of the parties and the surrounding circumstances indicate there was an enforceable oral contract between the parties. We find no error here.
IV. Time and Materials. Vande Noord argues the district court additionally erred in denying its motion for directed verdict because it failed to give the phrase "time and materials" its technical meaning. Vande Noord contends the plaintiffs were aware that construction under a "time and materials" basis included a markup for materials. It asserted it intended all along to charge a thirteen percent markup. The Arendts, however, contend that while they understood a markup was traditionally charged under such a basis, Vande Noord represented to them it could keep the constructions costs down without charging a markup, and that they relied on his representations.
The parties do not dispute that the term "time and materials" as used in the construction industry typically includes a markup on materials. Thus, the crux of the argument is not, as Vande Noord suggests, whether the district court incorrectly applied the ordinary rather than the technical meaning to "time and materials," but whether Vande Noord represented it would waive the markup in this case and whether the Arendts relied on those representations. The Arendts admitted that when they discussed their building plans with several other contractors, they were informed that under a "time and materials" basis a markup would be charged. However, they maintained it was Vande Noord's additional representations it could lower the construction costs of the home while at the same time waiving the markup on materials that influenced them to select Vande Noorde for construction.
While several other contractors informed the Arendts it was customary to charge a markup under a "time and materials" basis, Vande Noord had superior knowledge concerning how this term was applied to construction. The Arendts had never before built a new home and were unfamiliar with the construction process. When the Arendts discovered that a markup was being charged, they immediately informed Vande Noord that this was contrary to their earlier agreement, and challenged each markup that was submitted. On at least one occasion, Vande Noord waived the markup on a submitted bill after the Arendts protested.
It is for the district court to determine the credibility of the witnesses. Here, the court concluded that based on the conduct of the parties, it was clear they had agreed the markup would be waived. Based on the attendant circumstances, we conclude the district court correctly denied Vande Noord's motion and awarded the Arendts $20,731.36 in damages for excess markup. We have considered Vande Noord's remaining argument and find it has no merit. We therefore affirm.