Goes v. Vogler
304 Neb. 848
Neb.2020Background
- Eric and Destini Vogler hired Shelton Brothers Construction to rebuild their home; the written contract included both an "agreed upon price" of $282,000 and an express statement that the agreement was a "cost plus contract" with specified fees (warranty, overhead, profit).
- Contract required an initial $28,000 payment and monthly draws "as needed to pay for materials and services," with payments due within 10 days of requests; parties waived requirement for written change orders by their conduct.
- Work began Oct. 2015; scope changes and upgrades (e.g., moving a wall, added features) increased costs and disrupted scheduling; Voglers grew concerned about workmanship, communication, and lack of detailed accounting.
- Voglers made initial payments and the first two draws but partially paid the third draw and later withheld further draws, citing shoddy work and lack of accounting; Shelton terminated the contract and the Voglers hired a replacement contractor.
- Shelton and subcontractors (Goes and Franklin) filed construction liens and breach-of-contract claims; the district court found the contract was cost-plus, ruled the Voglers committed the first material breach by withholding payment (punch-list defects only), and entered money judgments for Shelton, Goes, and partially for Franklin.
- Voglers appealed, arguing the contract was fixed-price, that Shelton breached fiduciary/accounting duties under a cost-plus arrangement, and that they are a "protected party" limiting lien recoveries; the Nebraska Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument (Vogler) | Defendant's Argument (Shelton/Subcontractors) | Held |
|---|---|---|---|
| Contract type: cost-plus vs. fixed-price | Contract fixed at $282,000; parties intended fixed-price | Contract expressly calls itself "cost plus" and specifies fees and draw mechanics | Contract is cost-plus; district court did not err |
| Duty to provide detailed accounting / fiduciary duty under cost-plus | Contractor must provide prompt, detailed accountings and inform of overruns; fiduciary duties arise as matter of law | Only duties in contract and law apply; contract requires presentation of costs but not exhaustive backup for each draw | No special fiduciary duty as matter of law; contract did not require extensive contemporaneous accounting; no breach shown |
| Who breached first (withholding draws) | Withholding justified by defective workmanship and lack of accounting | Withholding payments was breach; defects were only punch-list items | Voglers committed first material breach by suspending payments; defects were not material breaches |
| Subcontractor lien recovery / "protected party" defense | Voglers paid prime price; as protected party, liability limited | Voglers had not paid contract price after changes; liens enforceable for unpaid balances | Goes awarded recovery; Franklin's lien time-barred but received $15,000 via Shelton; Voglers remain liable to subcontractors |
Key Cases Cited
- Grothe v. Erickson, 157 Neb. 248, 59 N.W.2d 368 (Neb. 1953) (defines cost-plus contract and payment computation)
- Robison v. Madsen, 246 Neb. 22, 516 N.W.2d 594 (Neb. 1994) (mechanics’ lien foreclosure is equitable; cost-plus payment basis articulated)
- Bloedorn Lumber Co. v. Nielson, 300 Neb. 722, 915 N.W.2d 786 (Neb. 2018) (breach-of-contract actions are actions at law; standard of review noted)
- Tilt-Up Concrete v. State City/Federal, 261 Neb. 64, 621 N.W.2d 502 (Neb. 2001) (construction-lien matters may be framed and reviewed as contract actions)
- Forrest Const. Co., LLC v. Laughlin, 337 S.W.3d 211 (Tenn. Ct. App. 2009) (cost-plus contracts imply costs must be reasonable; contract language can impose additional burdens)
- Jones v. J.H. Hiser Constr. Co., 60 Md. App. 671, 484 A.2d 302 (Md. Ct. Spec. App. 1984) (fiduciary relationship found where contract expressly required trust, economy for owner, and detailed accounts)