David Bertram v. James Harberts D/B/A Exclusive Contracting L.L.C.
16-0919
| Iowa Ct. App. | Jul 19, 2017Background
- Bertram contracted with Harberts (Exclusive Contracting) in June 2013 to build an 80x105 pole barn for $265,210 with staged payments (65% before start, 25% after assembly, 10% after interior floor).
- Bertram claims an oral term required completion "by winter" and that his advance funds would be segregated; court found neither term integrated into the written contract.
- Construction began July 2013; building was up by October 21, 2013. Bertram paid the second installment then; he delayed ordering overhead doors until November, delaying door delivery to late December.
- Disputes over sequencing (contractor’s practice to do flooring last until doors in place) and work stoppage followed; Bertram sent letters in Dec.–Jan. and terminated the contract February 18, 2014.
- Trial found roof and panel defects (roof replacement cost ~$32,487); district court held Harberts materially breached, awarded Bertram damages but offset for extras Harberts performed, and entered judgment for Bertram for $4,090.70; later the court amended to find Bertram partially breached and denied return of prepayments.
- On appeal the court affirmed that Bertram materially breached by cancelling before a reasonable time for completion (spring 2014) but reversed the damages ruling and remanded to determine what prepaid materials/labor must be returned or credited to Bertram.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether completion-by-winter or segregation of funds were contract terms | Bertram: those oral terms were part of the agreement | Harberts: completion date was not contractual; no segregation promise | Court: neither term was integrated; reasonable time for performance was spring 2014 |
| Whether Bertram materially breached by terminating in Feb. 2014 | Bertram: termination was justified because Harberts breached by poor workmanship and delay | Harberts: delay was reasonable; owner delayed necessary work (doors); contractor had right to sequence work | Court: Bertram cancelled before reasonable time elapsed and thus materially breached |
| Whether Harberts materially breached for defective work and entitled to offset/extras | Bertram: defects entitled him to withhold final payment and recover full costs/return of unearned prepayments | Harberts: entitled to keep prepayments for work/materials/labor expended and to payment for extras performed | Court: Harberts responsible for repair/replacement of gutters, side panels, roof; entitled to payment for extras, but cannot keep more than he would have earned; district court erred by refusing to require return/credit for unused/prepurchased materials and remand required |
| Proper measure of damages and restitution for prepayments | Bertram: entitled to return of unearned prepayments (or credit for incomplete work) | Harberts: may keep expected profit and prepaid sums spent on job; not liable to return prepaid labor already consumed | Court: Harberts may keep expected profit and amounts spent on this job, but must return or credit materials/prepayments not used on this job; remanded to determine specifics |
Key Cases Cited
- NevadaCare, Inc. v. Dep’t of Human Servs., 783 N.W.2d 459 (Iowa 2010) (standard of appellate review for bench trials and legal conclusions)
- Fausel v. JRJ Enters., Inc., 603 N.W.2d 612 (Iowa 1999) (when contract omits time for performance, a reasonable time applies)
- R.P. Andreas & Son v. Hempy, 276 N.W. 791 (Iowa 1937) (factors for determining reasonable time for performance)
- Midland Mut. Life Ins. v. Mercy Clinics, Inc., 579 N.W.2d 823 (Iowa 1998) (damage measure: nonbreaching party entitled to position as if contract performed but not better)
- Ritam Corp. v. Applied Concepts, Inc., 387 N.W.2d 619 (Iowa Ct. App. 1986) (breaching party may recover expected profits; limits on recovery for prepaid labor/materials)