448 S.W.3d 207
Ark. Ct. App.2014Background
- Van Horn Construction (general contractor) subcontracted dirtwork for a Searcy water‑treatment plant expansion to Keith Capps Landscaping & Excavation for $131,700; subcontract required “class 7” fill placed in 6–9 inch lifts with compaction and testing per plans/specs.
- Capps had a borrow pit containing shale (not class 7); parties disputed whether Van Horn told Capps shale would be acceptable and whether Capps saw the plans/specs before signing.
- Tests of placed lifts repeatedly failed due to moisture content and insufficient processing of shale; Capps reworked lifts extensively and allegedly placed lifts too thickly, increasing time and cost.
- Van Horn offered options (including splitting cost of alternative B stone); Capps declined, stopped work, and refused to return after a 48‑hour notice under the subcontract allowing termination for failure to perform.
- Van Horn completed the work using others and its own resources, incurring completion costs and liquidated/delay damages from the owner; it sued for breach of contract and recovered $245,632 (completion costs plus allocated delay damages), plus costs and fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Capps breached the subcontract by failing to perform and refusing to complete the work | Van Horn: Capps failed to comply with plans/specs (lifts, compaction, material processing) and abandoned the job after notice | Capps: shale could not meet specs under weather conditions; Van Horn permitted or induced use of shale and breached by refusing change order; performance impossible | Court: Factfinder credited Van Horn; Capps breached and ultimately refused to complete; prior negotiations merged into subcontract |
| Whether Van Horn’s damages were excessive/unreasonable | Van Horn: Damages measured by cost to complete minus contract balance and include allocated owner delay costs; provided itemized evidence | Capps: Completion costs were disproportionate (over 2.5× subcontract) and thus unreasonable | Court: Used standard measure (cost to complete less contract price); Van Horn’s itemized costs and testimony supported award; damages not clearly erroneous |
| Whether fraud in procurement vitiates enforcement of subcontract | Van Horn: N/A | Capps: Argues Van Horn committed fraud by inducing use of shale | Court: Fraud argument not raised below, thus waived on appeal; no consideration of new fraud claim |
| Whether credibility/findings were clearly erroneous under bench‑trial standard | Van Horn: Trial court’s factual findings supported by witnesses, documents, and testing results | Capps: Contends evidence shows impossibility and that trial miscredited testimony | Court: Appellate review deferred to factfinder; no firm conviction of mistake—findings not clearly erroneous |
Key Cases Cited
- Schwyhart v. J.B. Hunt, LLC, 436 S.W.3d 173 (Ark. Ct. App. 2014) (elements of breach and standard for proving contract claim in bench trial)
- MDH Builders, Inc. v. Nabholz Constr. Corp., 70 Ark. App. 284, 17 S.W.3d 97 (Ark. Ct. App. 2000) (measure of damages: cost to complete less contract price)