Goes v. Vogler
937 N.W.2d 190
Neb.2020Background
- Homeowners Eric and Destini Vogler contracted with Shelton Brothers (general contractor) to rebuild a house after a fire; the written contract referenced both a $282,000 "agreed upon price" and stated it was a "cost plus contract" with specified fees (warranty 2%, overhead 5%, profit 3%).
- Contract provided initial $28,000 downpayment and monthly draws "as needed to pay for materials and services," with payments due within 10 days of draw requests; written change orders were contemplated but later the parties waived the formal requirement by conduct.
- Work proceeded with owner-directed changes (e.g., moving a wall, added features) that increased costs and caused scheduling issues; owners became dissatisfied with progress, communications, and accounting for draws.
- Voglers withheld full payment on a requested draw (paid only part) alleging shoddy workmanship and lack of accounting; Shelton terminated the contract and the Voglers hired another contractor to finish the house.
- Shelton and two subcontractors (Goes Construction and Franklin Drywall) filed liens and sued for contract damages; the trial court found the contract was cost-plus, defects were punch-list items, the Voglers materially breached first by withholding payments, and entered money judgments for Shelton, Goes, and Franklin (with some allocation between Shelton and Franklin).
Issues
| Issue | Plaintiff's Argument (Vogler) | Defendant's Argument (Shelton) | Held |
|---|---|---|---|
| Contract type: fixed-price vs cost-plus | The $282,000 statement shows parties intended a fixed-price contract capped at that amount | Paragraph 4 expressly labels the agreement a "cost plus contract" and sets builder fees; language supports cost-plus | Contract is a cost-plus agreement; appellate court affirmed trial court. |
| Contractor duties/accounting under cost-plus | Even if cost-plus, contractor owed heightened fiduciary duties and must provide full, detailed, prompt accountings before draws and notify of overruns | Contract required costs to be presented and permitted monthly draws "as needed"; no explicit fiduciary language; obligations limited to contract and law | No special fiduciary duty implied as a matter of law; contractor satisfied contract accounting obligations; no breach on this basis. |
| Who breached first (payment suspension) | Voglers justified withholding draws due to poor workmanship and lack of accounting; thus Shelton breached first | Voglers unilaterally withheld required draws, breaching the contract first; workmanship issues were punch-list items | Voglers committed the first material breach by suspending payments; trial court's finding affirmed. |
| Subsidiary lien recovery / "protected party" claim | Voglers claimed they paid prime contract price and are a "protected party" so subcontractor (Goes) cannot recover more under lien statutes | Payments made did not equal the prime contract price ($282,000 plus change orders); subcontractors who perfected liens remain entitled to unpaid contract balance | Goes entitled to recovery ordered by trial court; "protected party" argument rejected. |
Key Cases Cited
- Grothe v. Erickson, 157 Neb. 248 (discusses definition of cost-plus contract)
- Robison v. Madsen, 246 Neb. 22 (foreclosure of construction lien is equitable; appellate review de novo with deference to trial court factfinding)
- Bloedorn Lumber Co. v. Nielson, 300 Neb. 722 (breach of contract actions are at law)
- Tilt-Up Concrete v. State City/Federal, 261 Neb. 64 (contract framework applicable to construction lien disputes)
- Forrest Const. Co., LLC v. Laughlin, 337 S.W.3d 211 (recognizes implicit duty that cost in cost-plus contract be reasonable and proper)
- Kerner v. Gilt, 296 So. 2d 428 (discusses reasonableness requirement in cost-plus arrangements)
- Jones v. J.H. Hiser Constr. Co., 484 A.2d 302 (contract-specific language can create a fiduciary "relationship of trust and confidence")