Mallory Fire Protection Servs. v. McShane Constr. Co.
A-16-752
Neb. Ct. App.Oct 3, 2017Background
- McShane was general contractor for a 7‑building apartment project; Mallory contracted to design/install fire suppression for $345,000 (later $373,565 by change order).
- Buildings 1–3 and 7 were NFPA‑13R (residential); Buildings 4–6 were NFPA‑13 (commercial), which required attic sprinklers or insulated interstitial spaces.
- Dispute arose when Mallory’s bid included interstitial sprinklers for Bldgs 4–6 but the design plans omitted them; Mallory later installed some sprinklers then McShane chose to insulate interstitials instead.
- Mallory left the job in March 2013 over alleged nonpayment; McShane retained Continental temporarily, then negotiated Mallory’s return with a March email agreement that McShane would pay $130,604.54 on final inspection for completion of Bldgs 4–6.
- Mallory completed remedial work on Bldgs 4–6, then left permanently in May 2013 after McShane withheld further payment. McShane paid for various remedial expenses and sued; Mallory counterclaimed for unpaid work.
- After a bench trial the district court found Mallory breached (walked off twice), awarded McShane $132,169.27 for certain remediation costs, and awarded Mallory $130,604.54 for partial performance; both parties appealed.
Issues
| Issue | Plaintiff's Argument (McShane) | Defendant's Argument (Mallory) | Held |
|---|---|---|---|
| Contract construction / March emails: whether emails modified or waived contract rights | Emails did not modify/waive the contract; waiver requires clear act; court should enforce original terms | Emails were a clarification enforceable to pay agreed amount upon completion | Court: emails were a clarification of duties (not waiver); treating them as clarification did not prejudice McShane; affirmed |
| Breach & substantial performance / divisibility: whether contract divisible and Mallory substantially performed | Contract not divisible; Mallory breached and should not recover for unfinished work | Contract divisible by building; Mallory substantially performed on Bldgs 1–6 and is entitled to fair value | Court: contract was not divisible as written but Mallory conferred substantial benefit; Mallory entitled to recovery ($130,604.54) for partial performance; result affirmed though reasoning differs |
| Proof of damages to McShane: whether McShane proved its claimed remediation and consequential losses with reasonable certainty | McShane proved various categories (insulation, drywall, labor, etc.) and other consequential losses | Many claimed items were speculative, undocumented, or remote; burden was on McShane to prove amounts | Court: awarded $132,169.27 for specific proven items (insulation, drywall, painting, cleaning, temp labor); rejected other categories for lack of certainty or proof; award affirmed |
| Prejudgment interest & change order/other Mallory claims: whether Mallory entitled to additional recovery (change order, Bldg 7, prejudgment interest) | Mallory sought amounts under change order, completion of Bldg 7, and prejudgment interest | Mallory lacked proof of reasonable fair value beyond the email amount; dispute over liquidated claim precluded prejudgment interest | Court: refused additional change‑order and Bldg‑7 recovery for lack of proof; prejudgment interest denied because claim was not liquidated/controverted; affirmed |
| Negligence claims: whether tort claims survive despite contract remedy | McShane asserted independent tort duties were breached by Mallory | Mallory argued contractual remedies control; tort theories duplicative | Court: dismissed negligence claims as alternative contract theories; even if error, harmless because damages overlap and proof insufficient; affirmed |
Key Cases Cited
- Labenz v. Labenz, 291 Neb. 455 (contract construction standard)
- D & S Realty v. Markel Ins. Co., 280 Neb. 567 (waiver principles)
- Selig v. Wunderlich Contracting Co., 160 Neb. 215 (modification requires consideration)
- Anderson Excavating v. SID No. 177, 265 Neb. 61 (bench‑trial factual findings not reversed unless clearly wrong)
- Henderson v. City of Columbus, 285 Neb. 482 (credibility and factfinding in bench trials)
- Gibbons Ranches v. Bailey, 289 Neb. 949 (contract ambiguity rule)
- RN Campbell Indus. v. Midwest Renewable Energy, 294 Neb. 326 (substantial performance and recovery)
- Latzel v. Bartek, 288 Neb. 1 (affirming correct result on different reasoning)
- BSB Constr. v. Pinnacle Bank, 278 Neb. 1027 (prejudgment interest analysis)
- Brook Valley Ltd. Part. v. Mutual of Omaha Bank, 285 Neb. 157 (reasonable controversy for interest)
- Roskop Dairy v. GEA Farm Tech., 292 Neb. 148 (prejudgment interest recoverable only as provided by statute)
- Archbold v. Reifenrath, 274 Neb. 894 (liquidated claim two‑pronged inquiry for prejudgment interest)
- Donut Holdings v. Risberg, 294 Neb. 861 (bench‑trial findings have effect of jury verdict)