Fitzgerald v. Danaher, No. S0225-04 CnC (Katz, J., July 25, 2005)

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STATE OF VERMONT                                     SUPERIOR COURT
Chittenden County, ss.:                          Docket No. S0225-04 CnC



FITZGERALD

v.

DANAHER and XL BUILDING



                         FINDINGS OF FACT
                        CONCLUSIONS OF LAW



       On the basis of evidence presented at trial July 19–20, 2005, the
following decision is announced.

1.      Defendants at all times conducted their business under X-L
Building & Design, Inc. There is no reason to impose personal liability
upon either Mr. or Mrs. Danaher.


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2.       The largest single dispute in this home and barn-building dispute is
whether defendant builder contracted to supply a slab for the barn project,
as part of the house contract. The parties envisioned construction of a barn
at the time they entered into the house contract. They provided for a barn
frost wall as part of the house contract with the words: “and frost wall for
barn with an unexcavated center, and preparation for slab on grade.” The
contract also speaks of “barn to be a 4' frost wall only.”
        These parties made a written contract. It is the court’s obligation to
apply that contract, not to rewrite it. Morrisseau v. Fayette, 164 Vt. 358,
366–67 (1995); H.P. Hood & Sons v. Heins, 124 Vt. 331, 336 (1964). In so
doing, it is our foremost obligation to understand the agreement of the
parties, to discern their intent. New Eng. P’ship, Inc. v. Rutland City Sch.
Dist., 173 Vt. 69, 79 (2001). Any rule of contract interpretation is merely
subservient to the purpose of discerning that intent. 11 S. Williston & R.
Lord, A Treatise on the Law of Contracts § 30.2, at 22–25 (4th ed. 1999).
Here, we think the plain language of the contract is controlling. Isbrandtsen
v. North Branch Corp., 150 Vt. 575, 579–80 (1988). It clearly provides for
“preparation” for slab, and for “frost wall only.” To somehow interpret this
language to mean “supply slab” would be to wholly twist it beyond its clear
meaning. The fact that specification 4 speaks of “slabs” in the plural does
not change this result. It is best understood as referring to any slab which
might be provided shall meet the then-stated specifications.
        The parties’ intention, as revealed by their signed agreement, must
be discerned from their agreement as a whole, not from one sentence read
in isolation. John A Russell Corp. v. Bohlig, 170 Vt. 12, 17 (2002).
Viewing the pertinent provisions, we find:
C       frost wall for barn with an unexcavated center and preparation for
        slab on grade;
C       barn to be 4' frost wall only;


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C       all slabs to be 4" thick;
C       barn construction to be determined by separate contract.
Fairly read, three of the provisions point to the conclusion that the barn was
to be built under a separate contract, but the “frost wall only” is included in
this contract, plus preparation for slab. The fourth provision, indicating
specifications for a slab is pertinent to both house and barn, but does not by
itself indicate a duty to pour a slab for the barn. The only support for
plaintiff’s position is a single s making slab into a plural, and thereby
implying a duty to provide more than one slab. Read as a whole, we
conclude that an interpretation which assigns more weight to that lone s
than to “frost wall only” and “preparation for slab” and “separate contract”
would be wholly unreasonable. See Colgan v. Agway, 150 Vt. 373, 375
(1988) (“Clarity of language, like ambiguity, is a relative and not an
absolute concept.”).
        The provisions just discussed are from the August 23, 2002 house
contract executed by the parties. On October 9 of that year, they executed a
barn contract. It contains the same slab specifications, again in the plural,
as the house contract. Hence, the parties’ later expression manifested an
intent that they were, then, contracting for a slab. Parenthetically, the
footing and slab provisions are identical in both contracts, even to their
typographical errors. At least in terms of understanding the intent of X-L,
it shows that this was a standard specification. It does not support a shared
understanding of more than one slab. Each contract uses the plural, but
each contract clearly intended only one slab to be installed. The later
contract shows the ongoing, shared intent of the parties to the earlier.
Isbrandtsen, 150 Vt. at 578–79; see also 9A V.S.A. § 2–208 (course of
performance and usage of trade); Rutland & B.R. Co. v. Crocker, 29 Vt.
540, 542–43 (C.C.D.Vt. 1857) (two instruments between substantially the
same parties made at the same time and constituting the same transaction
may explain each other).


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3.       The box sill issue centers on plaintiff’s claim that this perimeter
house component was left uninsulated. It will be quite a project to rip out
the cellar sheetrock; install insulation; and replace, retape and repaint new
sheetrock. Based on all the evidence, we are not persuaded that insulation
was probably omitted from the finished portion of the basement. It was
omitted at least in portions of the mechanical room, but we are not
persuaded that it was omitted in the balance. This is a fact that the
witnesses’ testimony put in dispute.

4.       Plaintiff had a circulating hot water pipe freeze during very cold
weather. We are persuaded that this resulted from not using the heating
system and relying instead on a wood stove in the basement to heat the
house. As to whether the hot water system was inadequately insulated, this
is a close question. But we are persuaded that good workmanship would
provide that joists extending out into a cantilevered porch should probably
have been caulked and insulated. It may be that such insulating would
prevent intrusion of cold air into the wall and cellar areas adjacent to the
problem heating pipes. The reasonable costs of caulking the point where
the deck joists pass through the exterior wall to thereby better protect these
heating pipes in that limited area is $435. In addition, it appears reasonable
to require cutting through a small section of upstairs drywall; insulating the
pipe length; and then repairing, retaping, and repainting that small section.
Although parties did not offer an estimate of this particular task, through
either Meunier or Danaher, based on other evidence presented we find that
$225 would have been the reasonable cost to defendant to cure that
problem, which was its responsibility. The cutting, insulating, retaping,
and repainting, although in a small area, are at the same time similar to
tasks being done in other locations for corrections such as nail pops and
cracks.


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5.       Plaintiff has raised an issue about the timeliness of the barn’s
construction. It is not clear where this issue takes us, as even if a breach of
the time issue is shown, no damages were proved from delayed
construction. Carter v. Sherburne Corp., 132 Vt. 88, 92–93 (1974)
(“Ordinarily, in contracts where time is not of the essence, a failure to
complete the work within the specified time will not terminate the contract,
but it will subject the contractor to damages for the delay.”). We
understand that plaintiff’s animals lost the protection of a barn for a whole
winter, but no evidence was presented that she suffered recoverable
damages as a result. See, e.g., Sutton v. Hisaw & Assoc. Gen. Contractors,
Inc., 65 S.W.3d 281, 285 (Tex. App. 2001) (breach of contract requires
proof of damages). The barn contract provides “Completion time will be
approximately 6-10 weeks from commencement.” Commencement is not
defined, but its reasonable meaning would be commencement of
construction of the barn. It could not mean commencement of construction
of the house, which had started before the barn contract was even signed.
The facts pertinent to understanding and applying this contractual provision
are that barn construction, according to this contract, never commenced.
Defendant contractor continued to work steadily on plaintiff’s house.
Plaintiff communicated a pressing need to have the house ready for her
occupancy before December 1. She was, in fact, able to commence
residing within it during November in the unusual circumstance of residing
within the house while it was being construction. The parties remained
friendly through the end of January, although barn construction never
started. From all these circumstances, together with the meager wording of
the contract, we conclude that defendant did not breach the timeliness
requirement of its contract—the provision was never triggered because
construction never started, with the consent and understanding of plaintiff.
Isbrandtsen, 150 Vt. at 578–79 (intent of parties best revealed by all


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circumstances surrounding their respective performances).

6.       We are not persuaded that the deck was improperly built because it
lacked Sonotube support. Once the foundation was excavated, ledge was
revealed at the site of the deck. The excavator put gravel atop the ledge,
with perhaps one foot separating deck and subsurface ledge. Ledge does
not move with frost. There is no reasonable need for Sonotubes in such a
situation, even though they had been shown in original plans. Sonotubes
only one foot in length are wholly uncommon. There is no persuasive
proof the deck has moved or is improperly supported.

7.       Defendant contractor performed substantial work in plaintiff’s
cellar, beyond the scope of his contract. The understanding of the parties
was that he would do that work in exchange for a horse owned by
plaintiff’s friend, Gary Gilmond, which was asserted to be worth $3,500.
He never got the horse. He is entitled to be paid for the work, according to
the agreement reached by these parties. Their contract was never a “time
and materials” agreement. Of course, we don’t know the real, fair market
value of the horse and cannot enforce the deal against Gilmond, the horse
owner. But even if the horse’s value was exaggerated, plaintiff is in a poor
position to argue that she does not owe contractor $2,000 for his work in
her basement.

8.       Defendant contractor received $7,000 as a “binder” on the barn
contract although he never commenced performance of that contract.
Plaintiff wants the money returned. Defendant counters that he was ready
to commence the barn in January but was delayed from doing so by
plaintiff after it was understood that Gilmond would work on the barn job
because she did not want her friend Gilmond working in such cold weather.
There was also credible evidence that Gilmond offered the view that it was


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too cold to start the barn project, which may or may not have been related
to his personal participation in it. This was a period in which the parties
remained cordial, as shown by their sharing a Super Bowl party. Defendant
delayed starting the work until he realized, probably in March, that their
business relationship was over. In this interval, he could have taken other
jobs but turned them down because he felt committed to the barn contract.
As a result, he lost income.
         The amount of that lost income is very vague. The actual test of
damages for a corporation such as defendant would be lost profits, not lost
income. Tour Costa Rica v. Country Walkers, Inc., 171 Vt. 116, 124
(2000) (“The purpose of expectation damages is to put the non-breaching
party in the same position it would have been [in] had the contract been
fully performed.”) (citation omitted). We are persuaded that defendant, an
established, successful contractor, did lose profits. But the amount of any
such loss is not shown by the IRS Form 941 Employer’s Quarterly Federal
Tax Return. At best, that form merely corroborates that there was probably
some loss, because no workers were on payroll for the quarter. In sum, we
are persuaded that defendant lost some profits waiting for the barn go-
ahead, which never came. But we are unable to ascertain what those profits
were.
         We conclude that the contract provision for a “binder” constitutes
something of a liquidated damages provision, which, under all the
circumstances is not unfair. Highgate Assocs., Ltd. v. Merryfield, 157 Vt.
313, 316 (1991). As an experienced contractor, homebuilder, we would
expect defendant to earn a profit of $84,000 per year. So if he takes $7,000
as damages for one lost month of construction, as he waited for the barn to
start, that is reasonable compensation.

9.      Defendant contractor’s obligation to complete the contract includes
an obligation to complete the punch list. 13 Am. Jur. 2d Building &


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Construction Contracts §§ 33, 34; see also Nelson v. Marchland, 691
N.E.2d 1264, 1267 n.1 (Ind. App. 1998) (defining a “punch list”); Quin
Blair Ent., Inc. v. Julien Const., 597 P.2d 945, 947 (Wyo. 1979) (“[A]
‘punch-list’ . . . required the contractor to redo work that was incorrectly or
defectively done . . . .”). In this case, that became problematic because a
punch list, per se, was not delivered for until months after the contractor
had left the site. It came accompanied by an attorney’s letter threatening
suit. Although there was no actual punch list delivered in a timely manner,
defendant still owes some duty to correct the errors which are inevitable in
construction of a new home.
       But the duty to correct punch list items, when contractor is still
mobilized on site, with its own labor, does not equate to a duty to pay retail
prices to have different trades come on to the site to do one or another
repair. See Sid Grinker Co. v. Craighead, 146 N.W.2d 478, 481 (Wis.
1966) (homeowner not entitled to cost of completion award that exceeded
the quality of the original contract); see also 13 Am. Jur. 2d Building &
Construction Contracts § 78, at n. 5; D. Dobbs, Law of Remedies § 12.21
(1973). The fact that it is now more expensive for the various, mostly
minor punch list items to be corrected should not render defendant
contractor liable for a greater amount of damages.

10.     Minor punch list items include:
C      Several pieces of vinyl siding had an unsightly ripple, as a result of
       expansion after the weather warmed, the siding having been nailed
       in cold weather. Had the contractor been permitted to fix it, it could
       probably have been done without incurring additional material costs,
       but would have cost him: $200 (in labor);
C      A floodlight was broken, required fixing. Probably a $10 item;
C      Upstairs door to balcony needed replacement, as it swung the wrong
       way. Contractor secured the replacement door, but was denied


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       permission to install replacement because plaintiff did not want door
       removed for several hours during January cold. Why should
       contractor have to pay someone else retail prices to replace door,
       when he could have done it himself? Had he done so, his labor cost
       would have been: $180;
C      Weather stripping around front door probably damaged during
       construction. Another small item, probably: $50 (including labor);
C      Insulation above the bathroom apparently defective as a gap appears
       when view through lighting “can.” Had contractor been told of the
       problem, and confirmed it, himself, he would have secured the
       insulation subcontractor to remedy the problem without cost. For
       not having been given that opportunity, why should he have to pay
       any damages?
C      Attic access through closet: $30;
C      Guest bathroom vanity must be moved, several hours work. Had he
       done it with his assistant it would have cost him probably: $200;
C      Cleaning up grout and polyurethane in bathroom, redoing grout.
       Again cheaper for contractor to do it himself: $200;
C      Adjusting bathroom door to meet catch: $10;
C      Window sill in living room replaced, finished: $80;
C      Faucet handles on whirlpool tub probably require reversing one
       cartridge, which could be figured out by an experienced carpenter,
       without need to call a plumber: $30;
C      Miscellaneous drywall repairs (nail “pops” and cracks): $150;
C      Complete painting of exterior trim: $200.
Total miscellaneous credit to plaintiff homeowner: $1,340.




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                                SUMMARY

       On the basis of the foregoing findings, law, and reasoning, we reject
the claim that defendant is responsible for the barn slab or for delay in the
barn project; we reject plaintiff’s claim for return of the $7,000 barn binder.
We hold that plaintiff is entitled to recover from defendant contractor
$1,340 for miscellaneous punch list items; $435 for insulating deck joist
pass-through area; and $225 for insulating heating pipes in area where they
have been prone to freezing. We hold that defendant is entitled to recover
$2,000 from plaintiff for the value of his labor in finishing her basement.
All other claims dismissed.



       Dated at Burlington, Vermont, _________________, 2005.




                                             __________________________
                                                                  Judge




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