DIETZEL ENTERPRISES, INC., APPELLANT, V. J. A. WEVER CONSTRUCTION, L.L.C., APPELLEE.
No. S-21-106
Nebraska Supreme Court
September 16, 2022
312 Neb. 426
Breach of Contract: Damages. A suit for damages arising from a breach of contract presents an action at law. - Judgments: Appeal and Error. In a bench trial of a law action, a trial court‘s factual findings have the effect of a jury verdict and will not be set aside on appeal unless clearly wrong.
- ____: ____. After a bench trial of a law action, an appellate court does not reweigh evidence, but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party.
- Damages: Appeal and Error. The amount of damages to be awarded is a determination solely for the fact finder, and its action in this respect will not be disturbed on appeal if it is supported by evidence and bears a reasonable relationship to the elements of the damages proved.
- Fraud. In determining whether an individual reasonably relied on a misrepresentation, courts consider the totality of the circumstances, including the nature of the transaction; the form and materiality of the representation; the relationship of the parties; the respective intelligence, experience, age, and mental and physical condition of the parties; and their respective knowledge and means of knowledge.
- Negligence: Fraud. In both negligent and fraudulent misrepresentation cases, whether the plaintiff exercised ordinary prudence is relevant to whether the plaintiff justifiably relied on the misrepresentation when the means of discovering the truth was in the plaintiff‘s hands.
- Contracts. In order for the implied covenant of good faith and fair dealing to apply, there must be in existence a legally enforceable contractual agreement.
- Contracts: Parties. The implied covenant of good faith and fair dealing exists in every contract and requires that none of the parties do
anything which will injure the right of another party to receive the benefit of the contract. - ____: ____. The nature and extent of an implied covenant of good faith and fair dealing are measured in a particular contract by the justifiable expectations of the parties. Where one party acts arbitrarily, capriciously, or unreasonably, that conduct exceeds the justifiable expectations of the second party.
- Contracts. The question of a party‘s good faith in the performance of a contract is a question of fact.
- Breach of Contract: Words and Phrases. A material breach is a failure to do something that is so fundamental to a contract that the failure to perform that obligation defeats the essential purpose of the contract or makes it impossible for the other party to perform under the contract.
- Breach of Contract. A material breach will excuse the nonbreaching party from its performance of the contract.
- ____. Whether or not a breach is material and important is a question of degree which must be answered by weighing the consequences of the breach in light of the actual custom of persons in the performance of contracts similar to the one involved in the specific case.
- Damages: Evidence. Evidence of damages must be sufficient to enable the trier of fact to estimate actual damages with a reasonable degree of certainty and exactness.
- Damages: Evidence: Proof. Proof of damages to a mathematical certainty is not required; however, a plaintiff‘s burden of offering evidence sufficient to prove damages cannot be sustained by evidence which is speculative and conjectural.
- Breach of Contract: Damages. In a breach of contract case, the ultimate objective of a damages award is to put the injured party in the same position the injured party would have occupied if the contract had been performed, that is, to make the injured party whole.
- Damages: Proof. A claim for lost profits must be supported by some financial data which permit an estimate of the actual loss to be made with reasonable certitude and exactness.
Appeal from the District Court for Douglas County: JAMES M. MASTELLER, Judge. Affirmed in part, and in part reversed and remanded with directions.
Patrick T. Vint and Todd W. Weidemann, of Woods & Aitken, L.L.P., for appellant.
Zachary W. Lutz-Priefert and Frederick D. Stehlik, of Gross, Welch, Marks & Clare, for appellee.
PAPIK, J.
J. A. Wever Construction, L.L.C. (Wever), contracted with Dietzel Enterprises, Inc. (Dietzel), to perform excavation work for the construction of a transmission line. While Wever and Dietzel do not agree on who is to blame, all agree that the project did not go well. Dietzel eventually abandoned the project before its work was done. Unsurprisingly, litigation followed. Dietzel filed a lawsuit asserting various claims against Wever, and Wever asserted a breach of contract counterclaim against Dietzel. Following a bench trial, the district court found that Dietzel was the first party to materially breach the contract and awarded Wever damages. From this judgment, Dietzel appeals, arguing that the district court erred in its rejection of some of its claims, in its finding that Dietzel was not entitled to suspend its performance on the project, and in its damages award. We find that the evidence in the record did not support the entirety of the damages award to Wever but that the district court did not otherwise err. Accordingly, we affirm in part, and in part reverse and remand with directions.
I. BACKGROUND
The setting for this case is the construction site for a transmission line in Maryland owned by Baltimore Gas & Electric (BG&E). MasTec North America, Inc. (MasTec), was the project‘s general contractor. Wever and Dietzel, two Nebraska companies, worked as subcontractors on the project. MasTec subcontracted with Wever to lay certain concrete foundations for the line, and Wever subcontracted with Dietzel to excavate the holes where the foundations would be laid.
The parties experienced difficulties from the start. Work was to begin on the project in April 2015, but Dietzel was unable to arrive at the jobsite at the time directed by MasTec. To avoid a delay, the parties agreed that Wever would rent equipment and begin the excavation process until Dietzel could arrive.
Dietzel later became concerned that it was not being paid for the time and materials it was expending on the project. Of particular concern was whether it would receive payment for change orders it submitted to Wever for the excavation of hard rock it contended was not covered by the contract. Under the contract, however, Wever was not obligated to make payments to Dietzel unless and until it received payment from MasTec, and there was evidence that MasTec was slow to pay bills submitted by Wever.
This all came to a head in the fall of 2015. At that time, Dietzel requested assurance from Wever that Wever was seeking payment of its change orders from MasTec and that Dietzel would be paid for those change orders. Approximately 2 weeks later, Dietzel abandoned the project.
Dietzel later filed this lawsuit alleging claims of breach of contract, unjust enrichment, negligent misrepresentation, and breach of the implied covenant of good faith and fair dealing. Wever filed a breach of contract counterclaim.
Following a bench trial, the district court issued a written order. The district court found that Dietzel committed the first material breach of the contract when it abandoned the project, and it awarded Wever $2,758,250.47 in damages for that breach. It found in favor of Wever on Dietzel‘s claims of negligent misrepresentation and breach of the implied covenant of good faith and fair dealing, but found that Wever had been unjustly enriched in the amount of $328,507, because it received a payment from MasTec for Dietzel‘s work but had
Additional relevant background is provided in the analysis section below.
II. ASSIGNMENTS OF ERROR
Dietzel assigns, renumbered and restated, that the district court erred (1) by finding that Wever was not liable for negligent misrepresentation, (2) by finding that Wever was not liable for a breach of the implied covenant of good faith and fair dealing, (3) by finding that Dietzel did not have the right to stop performance of the contract on the grounds that Wever failed to provide adequate assurances of payment, (4) by finding that Wever‘s failure to make a timely payment was not a material breach of contract, and (5) in its calculation of damages.
III. STANDARD OF REVIEW
[1] A suit for damages arising from a breach of contract presents an action at law. Goes v. Vogler, 304 Neb. 848, 937 N.W.2d 190 (2020).
[2,3] In a bench trial of a law action, a trial court‘s factual findings have the effect of a jury verdict and will not be set aside on appeal unless clearly wrong. McGill Restoration v. Lion Place Condo. Assn., 309 Neb. 202, 959 N.W.2d 251 (2021). After a bench trial of a law action, an appellate court does not reweigh evidence, but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party. Id.
[4] The amount of damages to be awarded is a determination solely for the fact finder, and its action in this respect will not be disturbed on appeal if it is supported by evidence and bears a reasonable relationship to the elements of the damages proved. Funk v. Lincoln-Lancaster Cty. Crime Stoppers, 294 Neb. 715, 885 N.W.2d 1 (2016).
We address each of Dietzel‘s assignments of error below. We take the assignments up in the chronological order of the underlying facts.
1. NEGLIGENT MISREPRESENTATION
(a) Additional Background
Dietzel claims that it came to be involved in the transmission line project as a result of a misrepresentation by Wever. The alleged misrepresentation occurred in January 2015. At that time, Joshua Dezort, acting on behalf of Wever, sent an email to Brandon Kreiling, the operations manager for Dietzel. Kreiling had been involved with estimating projects for Dietzel since 2008 and, at the time, managed Dietzel‘s submission of bids for potential projects. The email sought a bid from Dietzel for excavation work.
Dezort‘s email stated:
Graceton Tline just north of Baltimore. Transmission line runs from Bel Air to Pylesville. 82 Drilled pier. There will be an outage so no energized lines overhead. Work would start end of Feb. Top 4” is loose running around 5 to 7 blows. Then increases about 30 blow from 7’ to 20‘. 20’ plus runs around 50 blows with some holes a 90 blows down 30‘. There is an adder for rock excavation if required. The rock is Schist, which is sheet like rock consisting of mud and clay. Let me know if you are good with $1000 per cubic yard for rock excavation if required. There is 15 holes that you will hit rock on. On the schedule it shows depth of rock and depth of hole.
Within 30 minutes of this email, Dezort sent Kreiling a geotechnical report. The geotechnical report provided details about small test holes drilled in the area of the jobsite. Thirteen test holes had a notation of “auger refusal,” which indicated that when the test hole was being drilled, the device used to drill the test hole hit something that prevented it from going any deeper. Kreiling testified that “auger refusal” could
The geotechnical report also had a section titled “Regional Geology.” This section stated:
[T]he project area is underlain by residual soils derived primarily from the in-situ weathering of the underlying bedrock (Wissahickon Formation) and several of its members in this portion of the county, which include the Lower Peltic Schist, and Boulder Gneiss, which are comprised primarily of a fine to medium grained chlorite, muscovite schist with zones of quartzite, metagraywacke, and gneiss. A small portion of the transmission alignment also appears to be underlain by rocks associated with the Ultramafic and Gabbroic Rock, comprised of metagabbros, talcs, serpentinites, actinolite schists.
Dezort testified that metagraywacke is “a type of quartz schist rock,” that gneiss is “similar to schist, but ... much harder and more compressed over time,” and that “muscovite schist with zones of quartzite” would mean that there would be a possibility of hitting quartz. Kreiling admitted that the geotechnical report was the best source of information about subsurface conditions and that it was available to him when he formulated Dietzel‘s bid.
Dietzel submitted a bid to Wever to perform the excavation work for $722,000 and estimated that it would be able to complete the work in 100 days. Wever accepted Dietzel‘s bid.
When Dietzel began its excavation work, it discovered granite and quartz. According to Dietzel, this was contrary to a sentence in Dezort‘s initial email stating that the rock would be “[s]chist, [a] sheet like rock consisting of mud and clay.” Dietzel‘s president, Andrew Dietzel, alleged at trial that the hard rock Dietzel encountered was “undrillable” and that if he
Based on this information, Dietzel asserted a claim of negligent misrepresentation. The district court rejected the claim, finding that Dietzel did not justifiably rely on the representation in Dezort‘s email.
(b) Analysis
Dietzel contends that the district court erred in finding that it did not justifiably rely on Dezort‘s representation and that it proved all other elements of its negligent misrepresentation claim. We focus on the issue of justifiable reliance, because we find it resolves Dietzel‘s argument.
[5,6] In order to prevail on a claim of negligent misrepresentation, the plaintiff must prove justifiable reliance on the alleged misrepresentation. See, e.g., Lucky 7 v. THT Realty, 278 Neb. 997, 775 N.W.2d 671 (2009). In determining whether an individual reasonably relied on a misrepresentation, courts consider the totality of the circumstances, including the nature of the transaction; the form and materiality of the representation; the relationship of the parties; the respective intelligence, experience, age, and mental and physical condition of the parties; and their respective knowledge and means of knowledge. Nathan v. McDermott, 306 Neb. 216, 945 N.W.2d 92 (2020). In both negligent and fraudulent misrepresentation cases, whether the plaintiff exercised ordinary prudence is relevant to whether the plaintiff justifiably relied on the misrepresentation when the means of discovering the truth was in the plaintiff‘s hands. Id. We have treated the question of whether a plaintiff justifiably relied on a representation as a question of fact. See Lucky 7, supra.
Dietzel contends that the statement in Dezort‘s email regarding schist was a positive statement of fact and that thus, under
Here, Kreiling claims to have understood Dezort‘s email to represent that the only rock Dietzel would encounter in its excavation would be schist, a “sheet like rock consisting of mud and clay.” Significant evidence, however, suggested that Dietzel was not justified in relying on such an understanding. The alleged misrepresentation appears in a terse email introducing the idea of Dietzel‘s submitting a bid on the project. In that email, Dezort did not specifically state that the only rock in the area would be schist or otherwise indicate that the area would not have other rock that was more difficult to drill. In addition, shortly after sending the introductory email, Dezort sent the geotechnical report, which contained detailed and more technical information. Kreiling, who had years of experience reviewing such information and submitting bids, admitted that this additional information was the best source of information regarding subsurface conditions. This information reported the “auger refusal” that occurred during testing and the discovery of “[v]ery hard materials” in a number of locations. It also listed various types of rock found in the area, which Dezort testified indicated the presence of rock that was “much harder [than] schist,” as well as quartz. Viewing all this evidence in the light most favorable to Wever, we cannot conclude that the district court clearly erred by finding that Dietzel did not establish justifiable reliance.
(a) Additional Background
Dietzel also contends that Wever is liable for failing to take certain actions shortly after it began work on the project. Wever arrived at the project site in early April 2015, but Dietzel was unable to begin work at that time. To avoid falling behind schedule, the parties agreed that Wever would rent equipment and begin to perform a portion of the excavation work for which Dietzel had submitted a bid.
Wever began excavation work at a location provided by MasTec, but it soon encountered materials that were too hard for it to excavate. Wever responded by moving to another location where Wever did not encounter the same difficulties. Wever did not, however, inform Dietzel about the hard rock discovered in its initial excavation work.
When Dietzel arrived at the scene several weeks later, it was directed to begin excavating in the area where Wever encountered hard rock. Like Wever, Dietzel encountered hard rock that was difficult to excavate.
Dietzel alleged that Wever‘s failure to disclose that it had discovered hard rock was a breach of its implied covenant of good faith and fair dealing. The district court rejected the claim, reasoning that Wever was not obligated to inform Dietzel about the hard rock, because the existence of hard rock was something Dietzel should have contemplated given the information that was available to it at the time it submitted its bid.
(b) Analysis
Dietzel contends that the district court erred by finding that Wever did not breach the implied covenant of good faith and fair dealing. Relying again on the reference in Dezort‘s email to schist, Dietzel contends that Wever was obligated to inform Dietzel about the hard rock. When it did not, Dietzel submits, Wever breached the implied covenant of good faith and fair dealing.
[8-10] The implied covenant of good faith and fair dealing exists in every contract and requires that none of the parties do anything which will injure the right of another party to receive the benefit of the contract. In re Application of Northeast Neb. Pub. Power Dist., 300 Neb. 237, 912 N.W.2d 884 (2018). The nature and extent of an implied covenant of good faith and fair dealing are measured in a particular contract by the justifiable expectations of the parties. Id. Where one party acts arbitrarily, capriciously, or unreasonably, that conduct exceeds the justifiable expectations of the second party. Id. The question of a party‘s good faith in the performance of a contract is a question of fact. Spanish Oaks v. Hy-Vee, 265 Neb. 133, 655 N.W.2d 390 (2003).
We find no clear error in the district court‘s conclusion that Wever did not breach the implied covenant of good faith and fair dealing. For reasons we have already explained, the district court did not clearly err by finding that Dietzel could not justifiably rely on Dezort‘s email to believe that only schist would be encountered in the excavation. The same evidence
3. ADEQUATE ASSURANCES
(a) Additional Background
Dietzel‘s next two assignments of error pertain to its contention that when it abandoned the project in October 2015, it was legally entitled to do so. In order to discuss these assignments of error, it is necessary to set forth a fairly detailed discussion of the way in which parties on the project were paid.
The parties entered into what they refer to as a “paid-when-paid” contract. The phrase “paid-when-paid” refers to the fact that Wever was contractually required to make payment to Dietzel only after it received payment from MasTec. The contract provided that Wever was to make payment within 7 days of receiving payment from MasTec.
Dietzel sent Wever two types of invoices. One type sought “progress payments” under the contract—the payment Dietzel was owed for the percentage of work it had completed from its scope of work. The other sought payment of “change orders“—a request for payment for additional work Dietzel claimed was not covered by the contract. Wever was then expected to submit these requests for payment, with a contractually authorized markup, to MasTec.
Dietzel submitted an invoice to Wever dated July 1, 2015, for progress payments for April, May, and June. Wever sent checks to Dietzel for progress payments in July, August, and September: It sent Dietzel a check for $41,706 dated July 17, 2015; a check for $68,708 dated August 10, 2015; and a check for $15,143.06 dated September 30, 2015. Kathryn Hisel, the
Dietzel submitted its first change order for excavating hard rock on July 19, 2015. The change order sought payment of $328,507.
The owner of Wever, James Wever, testified that he attended a meeting in late July 2015 in which the change order was discussed. James Wever testified that Andrew Dietzel and representatives of BG&E and MasTec were also present. According to James Wever, BG&E and MasTec did not commit to paying the change order, but did agree to review it and provide them with an answer “at a later time.”
Dietzel employees made inquiries with Wever regarding the status of the change order after it was submitted. On August 6, 2015, a Dietzel employee emailed Dayna Wever, Wever‘s president, and asked about the change order. Dayna Wever responded:
[T]he rock change order is out if [sic] our hands and is on the table with Mas[T]ec and BG[&]E. Change orders are not paid until approved by owner. We will pay you when and if we are paid. ... As I told Andrew [Dietzel] in our phone conversation last week, I am emailing and asking about it everyday [sic] and when we hear something I will definitely pass it on to you!!
On August 14, 2015, Dietzel submitted a second change order for excavating hard rock, requesting an additional $73,943.
Hisel and Dezort testified that Dietzel‘s change orders were submitted to MasTec. Dezort testified that when a change order was pending, Wever would “keep on asking [about] the status of that change order during the duration of the project.” Andrew Dietzel acknowledged during his testimony that no one at Wever ever disputed his change order requests, indicated that they were rejecting a change order request, or stated that they would not pursue the change orders.
On September 24, 2015, Dietzel sent a letter requesting that Wever provide assurance within 7 days that it was “pursuing Dietzel‘s claims for outstanding progress payments and change orders” and that it would “receive payment of these outstanding amounts.” On September 25, Dayna Wever forwarded Andrew Dietzel an email from a representative of MasTec. The MasTec representative had asked in his email, “Which foundations hit undrillable rock?” Andrew Dietzel responded with information about the specific foundations.
On October 5, 2015, Dietzel abandoned the project. Andrew Dietzel sent Dayna Wever a letter explaining Dietzel‘s decision to leave. Among the reasons he cited were Wever‘s failure to provide assurances of payment and failure to provide documentation that it was “prosecuting Dietzel‘s claims.” Based on these failures and others, Andrew Dietzel wrote, Dietzel considered Wever in material breach of the contract. The district court found that Dietzel committed the first material breach of the contract when it abandoned the project.
(b) Analysis
Dietzel argues that the district court erred by finding that it committed the first material breach of the contract. Dietzel contends that when it did not receive adequate assurance that Wever was pursuing its change order requests with
Dietzel cites the Restatement (Second) of Contracts § 251 (1981) to argue that it had the right to request assurance of Wever‘s performance of the subcontract and that because Wever did not provide such adequate assurance within a reasonable time, Dietzel was permitted to treat the failure as a repudiation of the subcontract. While this court has not yet adopted § 251 of the Restatement, see McKinnis Roofing v. Hicks, 282 Neb. 34, 803 N.W.2d 414 (2011), we need not decide whether to adopt it here, because, even if we were to adopt it, Dietzel cannot show that it would apply.
Section 251 states:
(1) Where reasonable grounds arise to believe that the obligor will commit a breach by non-performance that would of itself give the obligee a claim for damages for total breach under § 243, the obligee may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance.
(2) The obligee may treat as a repudiation the obligor‘s failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case.
Restatement (Second) of Contracts § 251 at 276-77.
Dietzel argues that Wever was obligated to assure it that it was “prosecuting” Dietzel‘s change orders with MasTec and that it would pay Dietzel for its change orders. But Wever would have such an obligation under § 251 only if Dietzel had “reasonable grounds to believe” that Wever would “commit a breach by non-performance.” Viewing the evidence in the light most favorable to Wever, we cannot say that Dietzel had reasonable grounds to believe that Wever was or would be committing a breach.
Faced with all this evidence that Wever was submitting its change orders and pressing MasTec to approve them, Dietzel focuses on the September 25, 2015, email Dayna Wever forwarded to Andrew Dietzel, in which a MasTec representative asked, “[w]hich foundations hit undrillable rock?” Dietzel argues that this email shows that Wever had not been submitting its change orders because the MasTec representative did not know that Dietzel had been excavating undrillable rock. This does not strike us as a likely interpretation, let alone the only reasonable one. Taken at face value, the question simply sought clarification on which foundations were at issue.
Based on the evidence that Wever was consistently communicating that the change orders were being pursued, as well as the evidence that Dietzel had actual knowledge that the July 2015 change order was submitted, Dietzel did not have reasonable grounds to believe that Wever had or would breach any obligation with respect to the pursuit of Dietzel‘s change orders.
We also conclude that at the time of its September 24, 2015, letter requesting assurances, Dietzel did not have reasonable grounds to believe that Wever would breach the subcontract by not making payment on its change orders. Here, it was not
4. MATERIAL BREACH
(a) Additional Background
In addition to its adequate assurances theory, Dietzel contends that it was also legally entitled to abandon the project on October 5, 2015, because Wever had materially breached the contract. Its claim of material breach rests on Wever‘s receipt of a payment from MasTec on September 22 and failure to make payment to Dietzel for the portion to which it was entitled by September 29, as required by the paid-when-paid clause.
There appears to be no dispute that Wever did, in fact, receive payment from MasTec on September 22, 2015. On September 30, Dayna Wever emailed Andrew Dietzel stating that Wever had received a payment from MasTec and would be sending Dietzel its contractually required portion promptly. The district court found that Dietzel received the check for
The district court determined that because the payment was not made by the time required by the subcontract, Wever committed a breach. The district court concluded, however, that the breach was not material and that thus, Dietzel‘s nonperformance of the contract was not excused.
(b) Analysis
[11,12] Dietzel argues that the district court erred when it found that Wever‘s untimely payment was not a material breach of the subcontract. A material breach is a failure to do something that is so fundamental to a contract that the failure to perform that obligation defeats the essential purpose of the contract or makes it impossible for the other party to perform under the contract. Siouxland Ethanol v. Sebade Bros., 290 Neb. 230, 859 N.W.2d 586 (2015). A material breach will excuse the nonbreaching party from its performance of the contract. Id. Unless there is only one reasonable conclusion regarding the issue, in which case a court decides the issue as a matter of law, whether a breach was material is a question of fact. See id.
We understand Dietzel to primarily argue that any delayed payment to a construction contractor is a material breach as a matter of law. Dietzel claims that because timely payment to a contractor is critical to the contractor‘s ability to cover its expenses and continue working, delayed payments are always material breaches. We are not persuaded.
[13] We have said that whether or not a breach is material and important is a question of degree which must be answered by weighing the consequences of the breach in light of the actual custom of persons in the performance of contracts similar to the one involved in the specific case. Siouxland Ethanol, supra. A test that considers the degree and consequences of the breach does not lend itself to the kind of bright-line rule Dietzel asks us to adopt. Furthermore,
Dietzel nonetheless maintains that under Nebraska law, delayed payments to contractors are material breaches. In support of this argument, Dietzel relies on a fairly recent case, Goes v. Vogler, 304 Neb. 848, 937 N.W.2d 190 (2020), and a very old one, Howard County v. Pesha, 103 Neb. 296, 172 N.W. 55 (1919). While Goes affirmed a district court‘s finding that a particular nonpayment to a contractor was material, we did not hold that all such delayed payments are material. As for Howard County, in that case, this court did find that a county‘s failure to pay a contractor as required by the contract entitled the contractor to suspend performance. And, to be fair, the court quoted some language from other jurisdictions that could be read to suggest that the failure to make payments to a contractor as required justifies the contractor in abandoning the work. That said, in more than a century since Howard County was published, we do not appear to have ever cited the case in a published decision and the idea that any delay in paying a construction contractor is a material breach as a matter of law is inconsistent with our material breach jurisprudence. To the extent Howard County suggests otherwise, it is disapproved.
Of course, none of this precluded Dietzel from contending that, under the circumstances of this case, Wever‘s delay in payment amounted to a material breach. The district court rejected that argument, however, and therefore, we may reverse
For the reasons provided above, we find the district court did not err in concluding that Dietzel committed the first material breach of the parties’ contract.
5. DAMAGES
(a) Additional Background
Wever relied on testimony from Hisel in an attempt to prove damages for Dietzel‘s alleged breach of contract. Hisel testified about several expenses Wever incurred in the course of the transmission line project. For each such expense, she identified a specific amount for which Wever was claiming damages. She testified that she arrived at those amounts by taking expenses Wever incurred and increasing them by 15 percent pursuant to a contractual term which permitted Wever to add a markup to expenses incurred by Dietzel. With respect to most of the expenses she testified to, Hisel testified that they were costs Wever incurred after Dietzel had left the job. She admitted, however, that some of the expenses Wever incurred prior to Dietzel‘s departure.
In addition to expenses incurred by Wever, Hisel briefly testified that as a result of Dietzel‘s actions, Wever lost the ability to complete a segment of the transmission line project and that, as a result, Wever lost $1,795,317. She testified that number “was what [the lost segment] was supposed to be, our
The district court received a spreadsheet summarizing Hisel‘s testimony regarding the damages sought by Wever. The spreadsheet included expenses Wever incurred, as well as a line item for “Lost Revenue” for the “Lost Segment” of the project in the amount of $1,795,317. Those items totaled $4,263,479.99.
On cross-examination, the district court received into evidence several invoices corresponding to Wever‘s claimed damages. These exhibits showed some additional expenses referenced by Hisel were incurred before Dietzel abandoned the jobsite. Hisel also admitted on cross-examination that the invoices demonstrated that when she had increased the expenses to account for the contractual markup, she had erroneously increased the expenses by 20 percent rather than 15 percent. Additional details about the evidence related to damages are incorporated in the analysis below.
The district court found that Wever was entitled to damages that resulted from Dietzel‘s materially breaching the contract when it abandoned the jobsite. It stated that it found that Dietzel‘s abandonment resulted in damages to Wever, including the loss of a portion of the project. It acknowledged that evidence and testimony at trial revealed calculation errors in Wever‘s claimed damages, but found that Wever proved damages proximately caused by Dietzel‘s breach in the amount of $2,758,250.47. The district court specifically stated that this damages amount was for damages caused by Dietzel‘s abandoning the project.
The district court also noted an argument from Wever that it suffered damages in the form of lost profits from jobs that it could have otherwise completed while it was completing this project and from future work with MasTec. The district court then stated, “The Court finds that Wever failed to prove its claims for lost profit related to future MasTec jobs or
The district court offset its damages award to Wever by $328,507, an amount it found Wever had been unjustly enriched by Dietzel. After including the offset, it found that Wever was entitled to $2,429,743.47. Wever does not challenge the unjust enrichment damages on appeal.
(b) Analysis
Dietzel argues that even if the district court did not err in finding it liable for breach of contract, it erred in its calculation of Wever‘s damages. It argues that the evidence does not support the amount of damages awarded by the district court. Before addressing Dietzel‘s arguments, we briefly review the governing legal standards.
[14,15] We have said that “damages, like any other element of the plaintiff‘s [cause of action], must be pled and proved and that the burden is on the plaintiff to offer evidence sufficient to prove the plaintiff‘s alleged damages.” Pan v. IOC Realty Specialist, 301 Neb. 256, 276, 918 N.W.2d 273, 291 (2018). Evidence of damages must be sufficient to enable the trier of fact to estimate actual damages with a reasonable degree of certainty and exactness. Id. Proof of damages to a mathematical certainty is not required; however, a plaintiff‘s burden of offering evidence sufficient to prove damages cannot be sustained by evidence which is speculative and conjectural. Id. Although the standard of review on appeal for the amount of damages is generally deferential to the trier of fact, the question of whether the evidence of damages is reasonably certain is a question of law. See, id. (damages award “will not be disturbed on appeal if it is supported by evidence and bears a reasonable relationship to the elements of the damages proved“); Pribil v. Koinzan, 266 Neb. 222, 227, 665 N.W.2d 567, 572 (2003) (“[w]e have consistently framed the question whether the evidence of damages is ‘reasonably certain’ as a question of law . . .“).
Dietzel argues that a number of the expenses Hisel testified to cannot support the district court‘s damages award because the evidence shows that they were incurred prior to Dietzel‘s abandonment of the project. Dietzel argues that the following expenses fall into that category: expenses associated with the rental and delivery of an auger; the rental, delivery, repair, and return of a “Watson” drill; the rental of a hammer drill and compressor; “slurry“; and a lump sum requested for miscellaneous equipment Wever rented from United Rentals; as well as various expenses from Greene Construction.
We agree with Dietzel as to the auger delivery, Watson drill delivery and repair, hammer drill and compressor, and slurry, because the undisputed evidence showed those were expenses Wever incurred before Dietzel abandoned the jobsite. As for the other expenses, invoices received by the district court show that an identifiable portion of the expenses were incurred after Dietzel departed. We find that the evidence would thus support an award of damages for those identifiable portions. Adjusting for Hisel‘s calculation error on the contractual markup, we find that the evidence would support awarding Wever $4,443.60 for the return of the Watson drill, $1,886 for the expenses from Greene Construction, and $5,942.63 for the auger rental.
This leaves the costs for renting the Watson drill and the miscellaneous rentals from United Rentals. We find the evidence for these two expenses suffer from the same deficiency: The finder of fact would have been forced to speculate as to what amount of the requested damages were incurred after Dietzel abandoned the jobsite.
On the Watson drill, the record is inadequate to determine with reasonable certainty what portion of the damages were related to the drill and Dietzel‘s abandonment of the jobsite. Although the record includes invoices for those months after Dietzel‘s departure, the invoices list a single price for the
As for the rental expenses from United Rentals, the extent of Hisel‘s testimony on those expenses was that they were incurred “when we started having to rent more support stuff to perform their scope” and that Wever began to incur the expenses in August 2015, which was prior to Dietzel‘s leaving the project. Hisel did not identify what equipment was rented, for how long Wever rented it, or if all of the equipment was rented for the same period of time. We find no basis in the evidence by which to estimate what portion of these expenses were incurred after Dietzel abandoned the jobsite. Thus, we find that the record does not support awarding Wever damages for equipment rented from United Rentals.
(ii) “SR-80” Drill
Wever presented evidence that it excavated holes after Dietzel‘s departure using a rented “SR-80” drill (SR-80). Hisel testified that expenses for the SR-80 after Dietzel left the jobsite amounted to $418,382.62. Dietzel argues that the damages for the SR-80 are unrelated to Dietzel‘s abandonment of the jobsite. Here, Dietzel presents several points, and we address them in turn.
Dietzel argues that the SR-80 costs are unrelated to Dietzel‘s abandonment of the jobsite. It contends that MasTec reimbursed Wever for some of the expenses associated with the SR-80 and that the SR-80 was not within Dietzel‘s scope of work. We disagree. Hisel testified that the only damages she requested for the SR-80 were not reimbursed by MasTec. She
Finding no merit to Dietzel‘s arguments specific to the SR-80, we find that the record provided competent evidence by which to conclude that Wever had been damaged by the continued use of the SR-80 after Dietzel abandoned the jobsite. However, because Hisel acknowledged that the requested amount incorrectly added a 20-percent markup rather than one of 15 percent, we adjust the amount for which the evidence supported a damages award accordingly. We find that the evidence would support an award of $400,950.01 for expenses associated with the SR-80.
(iii) Operators and Administrative Expenses
Wever requested $538,162.50 in damages for what it labeled “Operators Expense” and $234,000 for administrative expenses. Hisel testified that the first category was determined by multiplying 7,174.5 hours by a billed rate of $75 per hour. Hisel testified that this expense was for the additional time “it took [for Wever employees] to run a drill rig” after Dietzel abandoned the jobsite. She also said that she was “trying to recoup[]” money Wever spent on additional hotels, per diems, rental pickups, and other miscellaneous expenses. She testified that the administrative expenses were calculated by multiplying 3,120 hours by a billed rate of $75 per hour. Hisel testified that this expense reflected the additional time Dezort and Dayna Wever spent at the jobsite and that she and other “coordinators” spent managing the project.
Hisel testified that in using the $75 per hour rate, she “was just trying to use a medium range cost that could ... easily be backed up between the hourly wages and the per diem and the hotels and meals.” She testified that Wever billed at $110 per
Dezort testified that Wever originally planned on a crew of eight people for the project. He also testified that Wever “ended up sticking probably about 3 of our crews on this job” and “the job ended up taking about 6 months longer than it should have.” Earlier, Dezort had testified that “[f]or smaller jobs, [Wever] ran about five crews, five guys per crew.”
Dietzel argues that awarding Wever damages for operators and administrative expenses requested by Wever would have been clear error, because the evidence was speculative and conjectural. Viewing the evidence in the light most favorable to the Wever, we disagree.
Hisel‘s testimony about the additional work completed by Wever employees and how she arrived at $75 per hour, if credited, would provide the finder of fact a reasonably certain basis to determine that Wever was damaged and the extent of those damages. Dezort‘s testimony about the additional man-hours required by Wever employees further supported the existence and scope of the damages. We conclude that the amounts requested for operators and administrative expenses, in the amounts of $538,162.50 and $234,000, respectively, were supported by the evidence. These amounts were not affected by Hisel‘s calculation error for other damages requested, so these amounts remain unaltered.
(iv) Auger Purchase
Hisel testified that Wever was forced to purchase an auger after Dietzel abandoned the jobsite and requested damages in the amount of $33,391.78. Dietzel argues that awarding Wever damages for this auger would be clear error, because Wever can still use the auger.
We find there was sufficient evidence to support an award of damages for this expense. Wever offered evidence that it was forced to purchase the auger because Dietzel abandoned the jobsite. Hisel testified that Wever rented equipment unless
(v) Remaining Items
Dietzel concedes that Wever presented sufficient evidence regarding several expenses that were attributable to Dietzel‘s abandonment of the jobsite, including costs associated with an “IMT” drill, moving drill rigs, and “[d]rilling [m]ud.” Accounting for Hisel‘s calculation error, we find the evidence supported a damages award for these expenses in the amount of $217,229.73.
Hisel also testified regarding a number of other expenses to which Dietzel does not present specific arguments on appeal. Therefore, we presume that the record contained adequate support for the district court to award Wever damages for those items. See Nathan v. McDermott, 306 Neb. 216, 945 N.W.2d 92 (2020) (to be considered by appellate court, alleged error must be both specifically assigned and specifically argued in brief of party asserting error). These items include expenses for equipment from Jeffrey Machine, “Vac Trucks,” “Frac Tanks,” steel casing, concrete, and “Teeth.” Accounting for Hisel‘s calculation error, these expenses amount to $308,289.10.
(vi) Lost Revenue
Hisel briefly testified that Wever lost $1,795,317 in “gross proceeds” because, as a result of Dietzel‘s breach, it was not permitted to complete its work on a segment of the project. Wever‘s damages spreadsheet also listed this amount as “Lost Revenue.”
Dietzel argues that the district court specifically found that Wever was not entitled to any recovery for the lost segment
[16] Hisel asserted in her testimony that if Dietzel‘s breach had not caused Wever to lose a segment of the project, Wever‘s “gross proceeds” or “lost revenue” would have been $1,795,317. Wever was not entitled to an award of damages for lost revenue. In a breach of contract case, the ultimate objective of a damages award is to put the injured party in the same position the injured party would have occupied if the contract had been performed, that is, to make the injured party whole. TNT Cattle Co. v. Fife, 304 Neb. 890, 937 N.W.2d 811 (2020). An award of lost revenue, however, would have made Wever more than whole, because it would not account for the additional expenses Wever would have incurred to complete the work for which it would have received the lost revenue.
[17] A party can, with adequate evidence, recover lost profits. See, e.g., Aon Consulting v. Midlands Fin. Benefits, 275 Neb. 642, 748 N.W.2d 626 (2008). Here, however, Wever‘s evidence was not adequate. Hisel did not provide any meaningful explanation as to how the $1,795,317 figure for “gross proceeds” was calculated, let alone what Wever‘s expenses likely would have been to earn those proceeds. A claim for lost profits must be supported by some financial data which permit an estimate of the actual loss to be made with reasonable certitude and exactness. World Radio Labs. v. Coopers & Lybrand, 251 Neb. 261, 557 N.W.2d 1 (1996). We note that even Wever appears to recognize the frailty of its claim for an award of
(vii) Summary
Considering each of the above, we find that viewing the evidence in the light most favorable to Wever, the record would support awarding Wever damages for the following expenses in the following dollar amounts:
| Item | Amount |
| Operator‘s Expense | $ 538,162.50 |
| Administrative Expense | 234,000.00 |
| SR-80 | 400,950.01 |
| Watson Drill Return | 4,443.60 |
| Greene Construction | 1,886.00 |
| 90” Auger Rental | 5,942.63 |
| 90” Auger Purchase | 32,000.46 |
| IMT Drill | 185,769.85 |
| Moving Drill Rigs | 27,370.00 |
| Drilling Mud | 4,089.88 |
| Jeffrey Machine | 42,006.96 |
| Vac Trucks | 98,673.11 |
| Frac Tanks | 17,940.59 |
| Steel Casing | 66,936.13 |
| 355.89 CY Concrete | 80,626.88 |
| Teeth | 2,105.43 |
| TOTAL | $1,742,904.03 |
Because the evidence would not support the entirety of the damages awarded by the district court, we must reverse that portion of the judgment and remand the cause to the district court with directions to enter judgment in the amount of $1,742,904.03.
We find that the district court did not err by rejecting Dietzel‘s claims of negligent misrepresentation and breach of the implied covenant of good faith and fair dealing. We likewise find no error in the district court‘s conclusions that Dietzel was not entitled to suspend contractual performance due to Wever‘s failure to provide adequate assurances and that Dietzel committed the first material breach of the contract.
Because, however, we find that the evidence did not support the entirety of the damages awarded by the district court, we reverse the district court‘s damages award and remand the cause to the district court with directions to enter judgment against Dietzel and in favor of Wever on Wever‘s breach of contract claim in the amount of $1,742,904.03 and, taking into account the offset for Wever‘s unjust enrichment liability, to order that Dietzel is liable to Wever in the amount of $1,414,397.03. In all other respects, the judgment of the district court is affirmed.
AFFIRMED IN PART, AND IN PART REVERSED AND REMANDED WITH DIRECTIONS.