Opinion
Rehearing Denied Dec. 31, 1974.
Page 408
[Copyrighted Material Omitted]
Page 409
Yegge, Hall & Evans, Edward H. Widmann, Denver, for defendant-appellee Lippert Bros. Construction Co.
Weller, Friedrich, Hickisch & Hazlitt, John R. Hickisch, Denver, for defendant-appellee United States Fidelity and Guaranty Co.
Hoffman, Goldstein, Armour & Lonnquist, P.C., Abe L. Hoffman, Denver, for defendant-appellant.
Gorsuch, Kirgis, Campbell, Walker & Grover, John J. Mulins, Jr., Denver, for defendant-appellee Dallas W. Tourney.
Looney, Watts, Looney, Nichols & Johnson, Clyde J. Watts, Oklahoma City, for defendant-appellee United Pacific Ins. Co.
ENOCH, Judge.
This action concerns the rights of the respective parties derived from a contract to construct the eleven story Cypress Towers apartment building in Denver. The litigation was commenced when the First National Bank of Englewood, who was the assignee of Englewood Heating and Air Conditioning Company's (Englewood) mechanic's lien as mechanical subcontractor, sued the owner, Iliff Builders Supply Co. (Iliff) and Lippert Brothers Construction Co. (Lippert) to foreclose a mechanic's lien on the property. Subsequently, many parties involved in the construction of the apartment building instituted a myriad of claims, counterclaims, and crossclaims among themselves. After prolonged proceedings involving 35 days of trial to the court, the court entered judgments for Lippert against Iliff, for the plastering subcontractor, Dallas W. Tourney, against Lippert, and for United States Fidelity and Guaranty Co., the assignee of the balance of Englewood's contract rights with Lippert, against Lippert and its surety, United Pacific Insurance Co., jointly and severally. The judgments disposed of all questions raised by the various parties involved in the litigation. Iliff brings this appeal. We affirm.
In 1962, after several meetings initiated by an architect, DeGette, Iliff contracted with DeGette to prepare the plans and specifications for Cypress Towers, to be built at the price of $9.10 per square foot. DeGette's compensation for his architectural services was contingent on completion of the building within that stipulated cost. Iliff and DeGette later agreed that the architect would also inspect and supervise the actual construction of Cypress Towers.
After entering into the contract with Iliff, DeGette conducted preliminary negotiations with prospective contractors and subcontractors in an effort to design a building which could be constructed within the agreed financial constraints. Based on these discussions, Iliff entered into a written construction contract with Lippert in March 1963 for the construction of Cypress Towers for $1,129,950. The Iliff-Lippert construction contract incorporated DeGette's plans and specifications and provided that all major changes in construction were to be pursuant to a written order from Iliff, signed or countersigned by the architect, or a written order from the architect stating that Iliff had authorized the change.
In the construction of Cypress Towers there were a substantial number of changes from the written contract between Iliff and Lippert. Some of these changes were negotiated between DeGette and Lippert, and were evidenced by written change orders, approved by the owner. Others were approved by DeGette alone, orally or in writing. The trial court found that even if the writing were to be strictly construed, some of the changes were minor, and did not require the owner's approval.
Iliff asserts claims against each of the appellees, based on alleged deviations from the contract, as measured by the plans and specifications. During the course of proceedings, with court approval, Lippert amended its cross-claim and answer in respect to Iliff by praying for a reformation of their contract to conform with their actual understanding. Lippert alleged, among other things, that the understanding was that single rock lath partition walls were to be installed instead of the double lath specified in the plans and specifications. In March 1968 the court tried the question of reformation and the related question of whether DeGette had the authority to agree and did in fact agree to this substitution, thereby binding Iliff. Subsequently, the court determined that the architect was acting as the authorized agent of Iliff in the approval of this change in the plans, and ordered that the plans and specifications be reformed from double to single lath wall construction.
The remaining issues were tried to the court intermittently from June to October 1968. After taking the matter under advisement, the court made detailed findings of fact and conclusions of law and entered judgment accordingly. The court determined that there had been substantial performance under the construction contract, as reformed, and made a disposition of all of the claims of the parties. The court allowed Iliff the following recoveries: $3,000 for aggregate walls, $250 for a terrazzo crack, $640 for bifold doors, $1,376 for bathroom tiling, $400 for a pump, $295 for a transformer vault, and it ordered Englewood and Lippert to bear the cost of installing new boilers. Since Iliff had not paid Lippert the balance due on their contract, the court ordered judgment for Lippert on the outstanding balance and set off Iliff's recovery. After allowance for the set-off, the judgment for Lippert against Iliff was $50,468.90.
Iliff contests the court's finding that DeGette had the authority to act as its agent, alleges error in the reformation of the contract, and alleges numerous errors in various findings of the court on the basis that they are not supported by the evidence. These alleged errors include the findings of substantial performance and the amounts of damages awarded.
I. AGENCY AND REFORMATION
In reforming the construction contract between Lippert and Iliff, the court relied heavily on its conclusion that DeGette was Iliff's agent during the negotiations prior to the execution of the contract for the construction of Cypress Towers. The court also determined that because of this agency relationship, the deviations from the written plans and specifications approved by the architect were binding on Iliff.
In determining the existence and extent of the agency relationship, the trial court was not limited to considering relevant instruments, but could also consider the circumstances of Iliff's holding out of DeGette as its agent, and what it knew or should have known DeGette, as agent, was doing. Furthermore, where there is sufficient evidence for reasonable men to conclude that agency exists, we are bound by the trier of fact's determination that such an agency does exist. Marron v. Helmecke, 100 Colo. 364, 67 P.2d 1034; Systems Investment Corp. v. Montview Acceptance Corp., 355 F.2d 463 (10th Cir.).
The employment contract between Iliff and DeGette clearly established the architect's authority to negotiate the construction contract for Iliff. There was testimony that Cypress Towers was a 'negotiated bid' project, and that under these circumstances where an architect had agreed to complete an undertaking at a set cost, the architect is normally authorized to approve changes in plans and specifications. Such authority was substantiated by the actions of the alleged principal, Iliff. At the time of the signing of the construction contract between Iliff and Lippert, one of Iliff's representatives advised Lippert that DeGette would be in complete charge of the job. Subsequently, DeGette restated by letter to Lippert his control over the construction of Cypress Towers, sending a carbon copy of the letter to Iliff, which never repudiated it. Finally, Iliff's representatives were present on the job during each day of construction, observing and inspecting the work done, which included the numerous changes which had been authorized by DeGette. Iliff denied the authorizty of DeGette only after the construction was substantially completed. The trial court's determination that the architect was the agent of Iliff for the purpose of approving changes in the plans and specifications was supported by the evidence and is binding on review.
In general, reformation of a written instrument is permitted where that instrument does not express the true intent or agreement of the parties. Segelke v. Kilmer, 145 Colo. 538, 360 P.2d 423. Reformation should be granted only when the evidence supporting reformation is clear and unequivocal; however, the fact that there is conflicting testimony will not preclude the granting of relief. Eisele v. Barnhart, 98 Colo. 241, 55 P.2d 321. In order to reform the Iliff-Lippert contract to change the specifications of double lath wall to single lath, it was necessary to determine that DeGette did in fact approve this change and that he had the authority from the owner to do so. The court having determined these issues in favor of Lippert it follows that, in effect, by mutual mistake, the parties signed the contract with the specifications calling for double lath when it had already been determined that single lath was intended. Thus the contract as signed did not express the true intent of the parties. In view of the deference accorded the trier of fact in evaluating credibility of witnesses, we find that there was sufficient evidence to support the court's order of reformation.
II. PLEADINGS AND PROOF
The trial court denied certain of Iliff's claims on the ground that they were not properly before it. Iliff appeals those determinations which concern the alleged plumbing and mechanical defects.
In respect to the alleged water main break, Iliff conceded in its brief that this occurred after the complaint was filed. Iliff argues, however, that the issue was sufficiently rasied by a provision in its crossclaim against Lippert concerning deviations, departures, and deficiencies from the contract that might be discovered after the time of the pleading.
Pleadings are to be liberally construed, as long as they provide the pleader's adversary with notice of the claim asserted against it. Vance v. St. Charles Mesa Water Ass'n, 170 Colo. 313, 460 P.2d 782. However, the pleadings in this case provided Lippert with no reasonable notice that a water main claim would be asserted, and therefore the trial court acted properly within its discretion in excluding evidence bearing on this issue.
Early in the trial, the court sustained an objection by Englewood to the introduction of evidence concerning flexible connectors in the plumbing system, but the court overruled the same objection made by Lippert. Subsequently, the court ruled generally that evidence of flexible connectors was outside the scope of issues. However, at the time of the first ruling and after the subsequent ruling, substantial evidence on this subject was allowed.
Iliff concedes that it did not present specific proof of damage regarding flexible connectors, but states that evidence taken on this subject clearly established a deviation from the plans and specifications. Iliff asks that we consider this alleged deviation in determining whether Lippert substantially performed its contract and should recover any balance owing thereunder. In view of the relatively insignificant nature of any injury concerning flexible connectors, underscored by a concession of no proof of damages, we find that even if we were to accept Iliff's argument of proof of some injury, this would not require a different finding regarding substantial performance.
In regard to the other claims which the court ruled were not properly before it as not being in the scope of the pleadings, we note that the parties actually introduced considerable evidence on these issues. In spite of its ruling the court proceeded to make factual determinations on these issues and concluded that there was insufficient evidence of damages to justify recovery. When issues not raised by the pleadings are tried by the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. C.R.C.P. 15(b). Therefore, in those situations where the court did not restrict the introduction of evidence on an issue and found that evidence to be insufficient to establish a claim, that finding is dispositive where supported by the evidence, as it is in this case, irrespective of the ruling that the claim was outside the issues raised by the pleadings.
III. SUFFICIENCY OF THE EVIDENCE
Iliff generally asserts that there was insufficient evidence to support any of the trial court's adverse findings on its particular claims. Where the trial court serves as trier of fact, its conclusions may not be disturbed on review unless so clearly erroneous as to find no support in the record. Adler v. Adler, 167 Colo. 145, 445 P.2d 906; Thiele v. Colorado, 30 Colo.App. 491, 495 P.2d 558.
Many of Iliff's claims relate to substitutions or workmanship concerning structural features of Cypress Towers. In respect to interior and exterior walls, the court made specific findings regarding single wall construction, the omission of paperback lath, alleged miscellaneous plastering defects, the composition of exterior stucco walls, and the nature of exterior aggregate walls. Except as to the exterior aggregate walls for which the court awarded damages, the court found the changes in plans and specifications had been properly approved, that certain claims were outside the issues as framed by the pleadings, and that there had been a failure in the proof of damages as to other claims.
The court found that the use of ceiling plaster had been approved, and that any shortcomings in its appearance were due to design. It also concluded that the architect and plasterer agreed to enclose certain pipes in lieu of splaying columns. Bathroom and patio floor level problems were found to be design deficiencies, and the proof of damages respecting floor tile was determined to be insufficient. The court determined that the architect approved a minor substitution in balcony dividers, and further found that there was inadequate proof of damage as to this claim. It decided that any cracking around door frames was caused by the structural scheme dictated by the plans and specifications and thus not the result of defective construction.
Damages were awarded relative to the bifold doors. However, the finish hardware was determined to be in accord with the plans and specifications, and the change in number plates for the apartment doors approved. Additionally, the court held that the owner had failed in its proof of damages as to the change in number plates.
Iliff also contends that the structure was not constructed on the right location on the site and challenges the court's finding that Cypress Towers was properly constructed several feet from the location stated in the plans and specifications pursuant to the architect's approval and for good cause. It further asserts that there was insufficient evidence for the court to have found that the delay in completion of the apartment house was not attributable to the contractor. It disputes the court's finding that Iliff did not adequately establish damages concerning the substitution of an evaporative cooler.
In addition, Iliff asserts that the court erred in denying damages for a variety of miscellaneous mechanical and plumbing defects. The court found that some of these defects were not properly raised, that certain substitutions or deviations were correctly made, and generally found that there was insufficient proof of damage. The particular claims asserted were for: Omission of clean-outs, failure to install concrete bases for motors and pumps, damages resulting from a water main break, mislocation of the cooling tower, failure to insulate certain pipes, omission of flexible connectors, noisy plumbing, installation of non-designated ventilation fans, failure to flush pipes, a waste water backup problem, improper installation of dishwasher connections, leakage in various plumbing connections, failure to install automatic controls for adjusting air conditioning and ventilation, heating problems, and assorted problems relative to the toilets, basins and tubs.
The question of whether certain issues were adequately raised by appellant in the trial court has been treated in the preceding section of this opinion. Concerning all other allegations directed to the sufficiency of the evidence, we find that although there is much conflict in the evidence, all of the court's findings are supported by the evidence, and we will not disturb those findings on review. Adler v. Adler, Supra; Thiele v. Colorado, Supra.
In respect to the automatic controls, we note from the record that the court made no findings on this issue and Iliff did not raise the question in its motion for new trial. We therefore decline to consider this claim of Iliff for damages. Matters not set forth in a motion for new trial are not subject to review. Cady v. City of Arvada, 31 Colo.App. 85, 499 P.2d 1203.
IV. SUBSTANTIAL PERFORMANCE
Iliff asserts that the trial court erred in concluding that Lippert had substantially performed its agreement to construct Cypress Towers and that therefore Lippert should not be permitted to recover the balance due under that contract. Substantial performance is a factual determination, which will not be disturbed on review where it is supported by the evidence, Fenner & Shea Construction Co. v. Wadkins, 32 Colo.App. 364, 511 P.2d 924. There is amply evidence to support the court's conclusion that there was substantial performance of the contract.
V. ADEQUACY OF DAMAGES
Iliff argues that the damages it was awarded for bifold doors and aggregate walls were inadequate, because they did not represent replacement costs for deviations from the contract.
The court found that a substitution in bifold doors was properly approved and therefore binding on Iliff. That finding is adequately supported by the evidence and will not be disturbed on review. Adler v. Adler, Supra; Thiele v. Colorado, Supra. However, the court additionally held Lippert liable for warping in approximately 20 of the bifold doors provided. Iliff presented testimony that replacement of the 80 bifold doors involved in the construction of Cypress Towers would cost $2,534. In view of that testimony, an award of $640 for the replacement of approximately 20 bifold doors was proper. Linley v. Hanson, 173 Colo. 239, 477 P.2d 453.
In respect to aggregate walls, the court awarded Iliff $3,000 as the cost of glazing to contain stone chips which had been falling out of the walls. In cases involving construction contracts, it is appropriate for the court to award as damages the cost of repairing defects in construction. Zambakian v. Leson, 79 Colo. 350, 246 P. 268; Summit Construction Co. v. Yeager Garden Acres, Inc., 28 Colo.App. 110, 470 P.2d 870. The award for aggregate walls was supported by the evidence and will not be disturbed on review. Linely v. Hanson, Supra.
We have examined Iliff's other allegations of error and find them to be without merit.
Judgment affirmed.
RULAND and KELLY, JJ., concur.