Opinion
No. 4-423 / 03-1931.
September 29, 2004.
Appeal from the Iowa District Court for Pottawattamie County, Gordon C. Abel, Judge.
Defendant appeals from a district court ruling on plaintiff's contract action. AFFIRMED.
Matthew Stierman of Murphy, Rodenburg Stierman Law Offices, P.C., Council Bluffs, for appellant.
Michael Reilly of Reilly, Petersen, Hannan Dreismeier, P.L.C., Council Bluffs, for appellee.
Considered by Mahan, P.J., and Zimmer and Eisenhauer, JJ.
The defendant, 4-State Supply, Inc. (4-State), appeals from a district court ruling on plaintiff Ciaccio Roofing Corp.'s (Cicaccio) action for breach of contract. 4-State contends the district court erred in finding it had breached its contract with Cicaccio. 4-State also asserts that Cicaccio did not establish expectancy or consequential damages, and that its failure to mitigate damages waived any claim it might have for expectancy damages. We affirm.
I. BACKGROUND FACTS AND PROCEEDINGS.
4-State owns a building in Council Bluffs, Iowa. Sometime during 2001 the building sustained hail damage to its roof. At the request of 4-State's insurance company, Ciaccio inspected the roof and prepared a repair estimate. Ciaccio submitted a proposal to 4-State to do the repair work for a total contract price of $73,500. On October 9, 2001, 4-State's office manager signed the proposal and it became a contract between the parties.
The contract was silent as to the time for performance. However, Ciaccio informed 4-State that work would not begin until after 4-State had received payment from its insurance company. Ciaccio would then take final measurements and order materials. Once the materials arrived, within five to seven days, the work would begin. In late October 2001, 4-State received a check from its insurance carrier in the amount of $73,500, to cover the contract price. 4-State informed Ciaccio the check had been received. The parties had no further contact until April 2002.
On either April 11 or 12, 2002 representatives of Ciaccio contacted 4-State and advised that final measurements would be taken on the roof so that special-order materials could be ordered from Ciaccio's supplier, and that work would commence on April 29. A representative of 4-State did not object to taking measurements or ordering materials, but did state that, due to other, ongoing construction work, 4-State's owner would have to approve the start date.
While 4-State insists that measurements were not taken until April 12, Ciaccio asserts that measurements were in fact taken on April 11.
The special-order materials necessary for the roofing project were ordered immediately after the measurements were done. Ciaccio billed 4-State for the materials by invoice dated April 11, 2002. 4-State received the invoice on April 15, 2002, the same date Ciaccio delivered project materials to 4-State's building and lifted the materials to the roof of the building using a boom truck.
After 4-State failed to make payment for the materials delivered to the job site, and failed to agree upon a date for Ciaccio to begin work, Ciaccio gave notice to 4-State that it was in breach of contract. Ciaccio further informed 4-State that the materials would be removed from the roof of the building on June 4, 2002. After Ciaccio removed the materials from the roof and returned the materials to its supplier, 4-State invited Ciaccio to perform the contract. Ciaccio declined.
Ciaccio sued 4-State on April 8, 2003, claiming damages based on breach of the parties' written contract. Following a bench trial, the district court concluded 4-State had breached the parties' contract when it failed to make prepayment for the materials delivered to the job site as required by the contract. The court awarded expectancy and consequential damages to the plaintiff in the amount of $25,088.69. After the district court overruled its post-trial motion pursuant to Iowa Rule of Civil Procedure 1.904(2), 4-State appealed.
II. SCOPE OF REVIEW.
Because the breach of contract claim was tried as a law action, our scope of review is for corrections of errors of law. Land O'Lakes, Inc. v. Hanig, 610 N.W.2d 518, 522 (Iowa 2000). The district court's findings of fact are binding on us if supported by substantial evidence. EnviroGas, L.P. v. Cedar Rapids/Linn County Solid Waste Agency, 641 N.W.2d 776, 780-81 (Iowa 2002). Evidence is substantial for purposes of sustaining a finding of fact when a reasonable mind would accept it as adequate to reach a conclusion. Land O'Lakes, 610 N.W.2d at 522. The evidence is viewed in a light most favorable to the district court's judgment. Van Oort Constr. Co. v. Nuckoll's Concrete Serv., Inc., 599 N.W.2d 684, 689 (Iowa 1999).
III. BREACH OF CONTRACT ISSUES.
4-State asserts the district court erred in concluding it had breached the parties' contract by failing to make prepayment for the materials delivered to the job site, given that the contract was silent and ambiguous as to various pertinent terms. 4-State contends the contract is unenforceable because the parties failed to manifest mutual assent as to when the work contracted for was to be performed. Alternatively, 4-State contends if the contract is given a reasonable construction, and ambiguities are construed against Ciaccio as the drafter of the contract, no duty of prepayment was ever triggered.
For a contract to be valid, the parties must express mutual assent to the terms of the contract. If there is a misunderstanding in the language that relates to the object of the agreement so that "one party [understands] [it] is buying one thing and the other party thinks [it] is selling another thing, no meeting of the minds occurs, and no contract is formed." Yet, "mutual assent is based on objective evidence, not on the hidden intent of the parties." The misunderstandings of the parties must be reasonable under the circumstances to support a finding of a lack of mutual assent.
Schaer v. Webster County, 644 N.W.2d 327, 338 (Iowa 2002) (citations omitted).
Here, the contract is silent as to the time of performance. The only evidence in the record regarding the parties' contemplation of the time for performance was a mutual understanding that repair work would not commence until after 4-State had received its check from the insurance company. Beyond this, Ciaccio never guaranteed, and 4-State never requested, a date or time for performance. Objectively viewed, these facts do not establish a reasonable misunderstanding sufficient to void the contract. Rather, the contract's silence as to the time for performance merely requires the court to imply a term for performance within a reasonable time. See Fausel v. JRJ Enter., Inc., 603 N.W.2d 612, 619 (Iowa 1999).
We therefore turn to 4-State's contention that, under the facts of this case, no duty of prepayment was ever triggered, and thus its failure to pay the invoice could not constitute a breach of contract. Although 4-State complains of various alleged ambiguities in the contract, the alleged breach in this case was limited to failure to pay the invoice. Accordingly, we limit our analysis to the following pertinent parts of the contract: "PREPAYMENT FOR MATERIALS, BALANCE IS DUE UPON COMPLETION. . . . All payments due under the contract shall be paid within 10 days of invoice date."
Ciaccio's petition alleged 4-State breached the contract by both failing to make prepayment and refusing to allow Ciaccio to perform. During closing arguments, however, Ciaccio's counsel limited the breach of contract claim to the prepayment issue, and this was the only ground for breach found by the court.
4-State focuses on the word "prepayment," and its commonly-understood definition of making a payment in advance. See Webster's Third New Int'l Dictionary 1791 (2002). 4-State then extrapolates that payment in advance must be interpreted as requiring payment to Ciaccio prior to the time when Ciaccio orders or otherwise obtains any materials.
Although words are to be given their ordinary meaning, they are not to be interpreted in isolation. Iowa Fuel Minerals, Inc. v. Iowa State Bd. of Regents, 471 N.W.2d 859, 863 (Iowa 1991). A contract is to be interpreted as a whole, and "an interpretation which gives a reasonable, lawful, and effective meaning to all terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect." Id. Reviewing the contract in this matter, there is absolutely no indication that "prepayment" was intended to have the extremely narrow meaning urged by 4-State. Rather, the reasonable interpretation of this term would allow Ciaccio to submit a materials invoice prior to completion of work, and require 4-State to make payment for the materials within ten days of the invoice date. Thus, contrary to 4-State's assertion, a reasonable interpretation of the contract in fact allows Ciaccio to demand prepayment for materials at any time prior to completion of the repair work.
4-State points to language in the contract that "[a]ll work is to be completed in a workmanlike manner according to standard practices," and argues "work" should be interpreted as encompassing payment terms. Pointing to testimony from its own witness that the industry standard would be to receive payment prior to ordering materials, it argues Ciaccio's demand for payment did not comply with "standard practices." The district court did not address this argument in either its judgment or its order overruling 4-State's post-trial motion. We find it to be without merit. Under the plain language of the contract, "work" clearly refers to the repair work to be completed on 4-State's roof, and not the payment terms. Moreover, to the extent the district court's silence is an implicit rejection of the argument, there is substantial evidence to support that decision. Although 4-State offered testimony that the industry standard would be to receive payment prior to ordering materials, Ciaccio offered testimony that it typically ordered before receiving payment, and that pre-order payment was not "standard practice."
As previously noted, 4-State had already been compensated by its insurer for the exact contract price, placing it in a position to make ready and timely payment for materials.
4-State suggests it had no duty to pay for the materials because it never consented to have the materials delivered to the building, and that due to other ongoing construction work 4-State was not then ready for Ciaccio to begin construction on the roof. However, nothing in the contract itself ties 4-State's duty to pay for the materials to the giving of such consent, and a representative of 4-State was in fact aware that, once Ciaccio took final measurements, the materials would be ordered and delivered to the job site within five to seven days. That representative made no objection when the measurements were taken. Similarly, nothing in the contract conditions 4-State's obligation to prepay on an agreed-upon time for performance. Under the plain language of the contract, the question of when and if the parties were ready to proceed with the roof repair has no bearing on 4-State's obligation to make timely payment for materials. We conclude the district court did not err in concluding 4-State breached the parties' contract by failing to pay the invoice submitted by Ciaccio.
4-State appears to assert that its non-payment was justified, or that it should be excused from its duty to pay for the materials, because Ciaccio insisted on beginning work immediately despite the need to coordinate work with other contractors, and because the materials delivered were defective and worth less than the amount billed in the invoice. However, 4-State's failure to adequately argue or cite authority in support of these propositions has waived any such claims. See Iowa R. App. P. 6.14(1)( c).
IV. DAMAGES.
The district court awarded Ciaccio $7,088.69 in consequential damages for expenses incurred in removing the building materials from 4-State's roof: $500 for a crane rental, $1,100 in trucking fees, $363.29 in labor expenses, and a $5,125.40 restocking fee paid to the material manufacturer. The court also awarded Ciaccio $18,000 in lost profits. 4-State contends the court erred in awarding these damages, because Ciaccio failed to provide adequate proof the damages had been incurred, and that to the extent Ciaccio established the existence of any damages, it failed to provide adequate proof as to their amount.
Ciaccio bore the burden of proving its damages, and if the record was uncertain or speculative as to whether Ciaccio had in fact sustained damages, the district court was required to deny recovery. Data Documents, Inc., v. Pottawattamie County, 604 N.W.2d 611, 616 (Iowa 2000). However, proof of damages need not be shown with mathematical certainty. Id. Rather, the evidence must be sufficient to allow a fact finder to make an approximate estimate of the loss. Id. at 617.
We find substantial evidence supports the district court's award of damages. Pete Ciaccio, Ciaccio's owner, provided testimony regarding his company's claims. In regard to the claim for consequential damages, he testified to each of the amounts incurred. He provided invoices to support the claims for crane rental, trucking and restocking fees, and verified that Ciaccio had paid each bill. With regard to the claim for lost profits, Pete Ciaccio testified Ciaccio would have earned $18,201.77 in profit on its contract with 4-State. He reached this figure by deducting the costs of insulation, materials, labor, dumpster and boom rental, and shipping from the total contract price. The amounts Pete Ciaccio attributed to the deductions were largely consistent with the amounts contained in Ciaccio's project estimation sheet, which was admitted into evidence without objection.
4-State asserts the district court erred in admitting the documentary evidence as it had not been sufficiently authenticated. We cannot agree, as Pete Ciaccio's testimony adequately demonstrated he had knowledge that the exhibits were what they claimed to be. See Iowa R. Evid. 5.901(1)( b). 4-State also asserts that both the exhibits and Pete Ciaccio's testimony constituted hearsay. Even if we assume the hearsay objection was valid as to the exhibits, Pete Ciaccio testified from his direct knowledge that Ciaccio had incurred the expenses listed. Thus, any error in admitting the exhibits was harmless. See State v. Reitenbaugh, 392 N.W.2d 486, 491 (Iowa 1986).
4-State also claims Ciaccio waived its right to recover damages for lost profits and failed to mitigate damages when it refused to return to the job site and complete the project. See Kuehl v. Freeman Bros. Agency, Inc., 521 N.W.2d 714, 719 (Iowa 1994) (citations omitted) ("A person asserting breach of contract has a duty to mitigate the damages [by] . . . exercis[ing] all reasonable diligence to lessen the damages caused by the other party's breach."). However, 4-State's refusal make prepayment for the materials ordered by Ciaccio necessitated the removal of the materials from the job site and their return to Ciaccio's supplier. We reject this assignment of error.
V. CONCLUSION.
We have considered the various arguments forwarded by 4-State, whether or not specifically discussed, and find that none are meritorious. We conclude substantial evidence supports the trial court's conclusion that 4-State breached its contract with Ciaccio and that as a result of the breach Ciaccio is entitled to damages for lost profits and for consequential damages in the amounts awarded by the court. Accordingly, we affirm the district court's ruling in this matter.