WILLIAM C. WEIMAR, Plaintiff and Appellant, v. MIKE LYONS, individually and doing business as LYONS CONCRETE, LYONS CONCRETE, INC., a dissolved corporation, DOES 1 THROUGH 10, Defendants and Respondents. MIKE LYONS, individually and d/b/a LYONS CONCRETE, INC., Counterclaimant and Respondent, v. WILLIAM C. WEIMAR, Counterclaim Defendant and Appellant.
No. DA 06-0106
Supreme Court of Montana
August 1, 2007
Submitted on Briefs December 13, 2006.
2007 MT 182 | 338 Mont. 242 | 164 P.3d 922
For Respondent: Matthew H. O‘Neill, Attorney at Law, Polson.
JUSTICE RICE delivered the Opinion of the Court.
¶1 Plaintiff William C. Weimar (Weimar) and Defendant Mike Lyons, individually and d/b/a Lyons Concrete, Inc. (individually and collectively “Lyons,” as appropriate), entered into an agreement under which Lyons would construct certain concrete works on Weimar‘s property. Disputes over payment arose, leading to Lyons’ filing of a construction lien on Weimar‘s property and this action by Weimar to expunge the lien. Weimar appeals from the findings of fact, conclusions of law and judgment entered by the Twentieth Judicial District, Lake County, granting Lyons judgment against Weimar in the amount of $16,763, plus interest at 1.5 percent per month from August 18, 2003, until paid, plus reasonable costs and attorney fees as determined by the District Court. We affirm in part and reverse in part.
¶2 We restate the issues on appeal as follows:
¶3 (1) Did the District Court abuse its discretion by going beyond the pretrial order to hear evidence on the nature of the parties’ agreement?
¶4 (2) Was there sufficient evidence to support the District Court‘s findings and conclusions that there had been a written fixed price contract followed by a series of binding oral agreements, its
¶5 (3) Did the District Court err by awarding Weimar only $8,967.19 for the costs of repair or replacement work done by Clark-Salsbury Contracting, Inc.?
¶6 (4) Did the District Court err in allowing Mike Lyons to offer expert testimony concerning the quality of the work?
¶7 (5) Did the District Court err by concluding that Lyons had standing to file his construction lien and counterclaim?
¶8 (6) Did the District Court err in granting Lyons interest at 1.5 percent per month under
¶9 (7) Is Weimar entitled to his costs and attorney fees as the prevailing party?
BACKGROUND
¶10 The parties entered an agreement whereby Lyons would provide concrete work on Weimar‘s property.1 The nature of this agreement was disputed. Lyons asserts that the parties entered into a series of agreements, beginning with a May 1, 2003, written contract to perform work for $19,810, followed by verbal understandings to perform certain additional concrete and related work on a time and material basis. Weimar alleges the parties agreed to a single, time and material-based contract.
¶11 After the project began, Lyons invoiced Weimar for $14,389, which he asserted at trial represented a portion of the work under the written contract and some of the additional work orally agreed to. Weimar paid that sum. Thereafter, Lyons completed the project and invoiced Weimar for that work in the amount of $25,731. Weimar did not make payment on that invoice and instead claimed that the $14,389 he earlier paid was sufficient to cover Lyons’ work.
¶12 Lyons, as “Mike Lyons d/b/a Lyons Concrete, Inc.,” filed a construction lien against Weimar‘s property, claiming the sum of $26,031. In response, Weimar instituted an action to expunge the lien and sought damages resulting from its filing, to which counterclaims reasserting the construction claim were filed by Mike Lyons, individually and d/b/a Lyons Concrete, Inc. Weimar responded by filing
¶13 On September 10, 2004, Weimar filed a motion for change of venue on the grounds that there was a sign advertising the business of Lyons Concrete on the courthouse lawn, which indicated that an impartial trial could not be had. The District Court denied this motion. On October 27, 2005, Lyons filed a motion in limine to exclude expert witnesses for Weimar‘s failure to answer interrogatories, which sought the identity of experts and the substance of their testimony. The motion also sought exclusion of evidence in support of Weimar‘s defense to Lyons’ claim under
¶14 A bench trial was held on November 17, 2005. The District Court found the parties had entered into a written contract for identified work in the sum of $19,810, followed by “a series of binding oral agreements” for additional work and extras. The court further found that while some of the work performed by Lyons was not done in a workmanlike manner, Weimar had waived many of the deficiencies in Lyons’ work by accepting the work, causing the deficiencies by direct
¶15 On December 16, 2005, Lyons filed an affidavit of attorney fees and costs totaling $24,442.50. Although not objecting to this amount, Weimar nonetheless asserted that he was the true prevailing party and, as such, was entitled to costs and attorney fees. He further filed a motion to alter or amend judgment on various grounds. The District Court denied Weimar‘s motion and, on February 1, 2006, entered an order awarding Lyons costs of $190 and attorney fees of $25,980.50 in addition to the amounts awarded under the contract claims. Weimar appeals.
STANDARD OF REVIEW
¶16 This Court applies a clearly erroneous standard using a three-part test to review a district court‘s findings of fact:
First, we review the record to determine if the findings are supported by substantial evidence; second, if the findings are supported by substantial evidence, we will determine if the trial court has misapprehended the effect of the evidence; and third, if substantial evidence exists and the effect of the evidence has not been misapprehended, the Court may still conclude that a finding is clearly erroneous when a review of the record leaves the Court with the definite and firm conviction that a mistake has been made. Fiedler v. Fiedler (1994), 266 Mont. 133, 137-38, 879 P.2d 675, 678 (citations omitted).
James Talcott Const. v. P & D, 2006 MT 188, ¶ 26, 333 Mont. 107, ¶ 26, 141 P.3d 1200, ¶ 26. Our standard of review for conclusions of law is whether the district court correctly interpreted the applicable law.
¶17 We apply the abuse of discretion standard to our review of an award of damages. Graveley Simmental Ranch Co. v. Quigley, 2003 MT 34, ¶ 21, 314 Mont. 226, ¶ 21, 65 P.3d 225, ¶ 21. However, “[a] district court‘s award of prejudgment interest is a question of law; therefore, this Court determines whether the district court correctly applied the law.” Talcott, ¶ 28 (citing American Music Co. v. Higbee, 2004 MT 349, ¶ 13, 324 Mont. 348, ¶ 13, 103 P.3d 518, ¶ 13) (citation omitted).
DISCUSSION
¶18 (1) Did the District Court abuse its discretion by going beyond the pretrial order to hear evidence on the nature of the parties’ agreement?
¶19 Weimar argues that the District Court violated the well established principle that a court may not consider issues outside the pleadings. Weimar contends the complaint alleged and Lyons’ answer admitted that the original contract was partially written and partially verbal, and was based on “time and material,” but not to exceed $19,810. Weimar further contends that there was nothing in the pre-trial order to the contrary, and that the District Court thus erred by allowing Lyons to introduce evidence regarding the nature of the parties’ agreement.
¶20 The pretrial order governs “the subsequent course of the action unless modified by a subsequent order.”
¶21 While the pre-trial order stated as an agreed fact that “Plaintiff and Defendant Mike Lyons made a verbal agreement for certain concrete and related work on a time and material basis,” it also recognized the parties’ differing allegations regarding the nature of the
On or about May 1, 2003, Plaintiff and Defendant Lyons Concrete, Inc. entered into a written contract under the terms of which said Defendant agreed to install certain concrete work on Plaintiff‘s property for the sum of $19,810.
....
Lyons Concrete, Inc. entered into a series of contracts, both written and oral, with Plaintiff to provide concrete work on Plaintiff‘s property. The contracts at issue here are the May 1, 2003 written contract to perform certain work for $19,810 followed by a verbal contract to do additional work on a time and materials basis.
¶22 We conclude that the pre-trial order adequately set forth the parties’ conflicting views about their agreements and that the District Court did not abuse its discretion by hearing evidence on the nature of the agreements.
¶23 (2) Was there sufficient evidence to support the District Court‘s findings and conclusions that there had been a written fixed price contract followed by a series of binding oral agreements, its determination of the amount owed thereunder, and that Weimar had waived deficiencies in the work by his actions?
¶24 The District Court entered findings of fact as follows:
3. That Lyons Concrete, Inc. entered into a series of contracts, both written and oral, with Plaintiff to provide concrete work on Plaintiff‘s property. The contracts at issue here are the May 1, 2003 written contract to perform certain work for $19,810 followed by a verbal contract for additional work and extras.
4. That Lyons invoiced Weimar $14,389 [invoice #7424] for a portion of the work on the written contract and additional work performed under an oral agreement.
5. That Weimar paid invoice #7424 in the amount of $14,389 in full.
6. That thereafter, Lyons completed performance of the written contract and several additional items under oral agreements and invoiced Weimar for that work at invoice #8056 on July 17, 2003 in the amount of $25,731.
....
16. That Weimar did not testify nor introduce any evidence refuting Lyons’ claim to a written contract for a fixed price of $19,810.
¶25 Weimar argues there was insufficient evidence to support the court‘s findings of a fixed price contract and maintains the parties’ actual conduct is inconsistent with that idea, as the testimony demonstrated that Weimar‘s employees did some of the forming work—since Lyons was unable to do it—without Lyons offering any credit back for the work. Weimar notes that when he attempted to settle up his account with Lyons, he requested the actual cost information, as he believed the work was a time and materials project. Weimar also asserts that even if it was a fixed price contract, the poor quality of the work, which required corrective measures, amounted to a breach of the agreement, thereby excusing any further performance by Weimar.
¶26 “Whether or not a contract exists is a combined issue of fact and law.” Austin v. Cash, 274 Mont. 54, 59, 906 P.2d 669, 672 (1995). We conclude that the record contains sufficient evidence to support the District Court‘s findings and conclusions that there had been a written fixed price contract, followed by subsequent binding oral agreements. The written document contained a detailed description of the tasks to be performed by Lyons and the respective price for each, totaling $19,810, was signed by both parties, and supported by consideration. The existence of a subsequent oral agreement for additional work was supported by evidence of agreed-upon work outside the scope of the written contract, such as the pier caps, wall caps, and mechanical pad. Thus, despite the existence of conflicting evidence, we conclude that the court‘s determination of the existence of multiple agreements was supported by substantial credible evidence.
¶27 With regard to Weimar‘s contention that, even if there was a fixed price contract, the poor quality of Lyons’ work, which required corrective measures, constituted a breach of the agreement, thereby excusing Weimar‘s performance, we conclude that, based on our review of the record, the District Court correctly determined that Lyons completed the work he had agreed to. To the extent deficiencies existed in the work, they were either waived by Weimar‘s actions, or Weimar was granted reimbursement for their repair. Regarding Weimar‘s haste on the project, Lyons testified that:
As soon as we got done with the pool deck, [Weimar] said, “I need some help here. I need these caps poured on the fountains right away.” And I told him that I could see—with the radius walls
and stuff, I could try to form that cap up but that it was going to take a long time. And I was real busy and I told him that I didn‘t have time to do it. And he said his crew would do it. I said, “Well, if they could form it up, we could come out and pour it.”
¶28 Then, when it came time to pour, Lyons noticed that the forming had been completed improperly by Weimar‘s crew and mentioned that it may lead to problems, yet was told by Weimar employee Monte Berg that “[w]e‘ve got to have it poured, let‘s do it.” Berg testified that “Mike [Lyons] didn‘t have time to do the forming on Mr. Weimar‘s schedule. And we were just told to go out and do the best we could, put it together, and try to make something happen.” Lyons testified that Weimar told him to pour despite imminent rain and that Weimar had stated “he would take responsibility,” with Berg likewise testifying that he overheard Weimar tell Lyons to pour the concrete in the rain. The record demonstrates that deficiencies found in the sidewalk were the result of pouring the concrete in the rain. This continual rush to complete the project, even at the risk of having to repair the work later, sufficiently demonstrated that deficiencies in Lyons’ work were occasioned by Weimar‘s own haste.
¶29 Consequently, Lyons’ completion of the work entitled him to the full $19,810, as called for by the written contract, less the amount, discussed below, Weimar was granted for repair of deficiencies in the work. Regarding the oral agreements, the court weighed Weimar‘s testimony about the appropriate amount owed against Lyons’ testimony that he charged his regular, fair rate. “It is well-established that the testimony of one witness is sufficient to prove any fact.” Eustance v. State, 2005 MT 34, ¶ 11, 326 Mont. 77, ¶ 11, 107 P.3d 478, ¶ 11 (citations omitted). Moreover, “[i]n nonjury trials, the credibility of a witness and the weight which his or her testimony should be afforded is within the sound discretion of the district court. We will not reweigh the evidence and substitute our judgment for that of the court under such circumstances.” In re Marriage of Epperson, 2005 MT 46, ¶ 23, 326 Mont. 142, ¶ 23, 107 P.3d 1268, ¶ 23 (citations omitted). Therefore, Lyons’ testimony, even if self-serving, was sufficient to support the District Court‘s determination that his billing was the correct amount due for the additional services provided.
¶30 We affirm the District Court‘s findings and conclusions regarding the parties’ agreement and the amounts owed thereunder.
¶31 (3) Did the District Court err by awarding Weimar only $8,967.19 for the costs of repair or replacement work done by Clark-Salsbury Contracting, Inc.?
¶32 Weimar argues the District Court erred in allowing only $8,967.19
¶33 As seen above, it was established that Weimar waived or caused many of the deficiencies by accepting the work, making improper additions to the work, and issuing hasty and ill-conceived commands. Although not assessing monetary values to the individual losses occasioned by each of Weimar‘s actions, the District Court nonetheless had before it the evidence of those actions and their consequences, which provided substantial evidence for its assessment of costs necessary to repair those deficiencies that were Lyons’ responsibility. Although the parties did not attempt to apportion the Clark-Salsbury bill between them during the trial, the District Court could properly do so by making inferences from the evidence regarding the cause of the deficiencies. The court thus concluded that $8,967.19 was an appropriate measure for reimbursement of Weimar for defects in the work not caused by Weimar‘s own actions. We conclude that the District Court did not err in so doing.
¶34 (4) Did the District Court err in allowing Mike Lyons to offer expert testimony concerning the quality of the work?
¶35 Weimar argues that because Lyons failed to serve an expert disclosure statement required by the scheduling order, he should have been barred from testifying as an expert at trial. Lyons counters that he has over thirty years of concrete experience, which well qualified him to testify regarding the quality of his own product, but, in any event, insists that he did not need to be named as an expert to offer his opinion on why his own work suffered under the circumstances of the construction. Moreover, Lyons contends he did not disclose himself as an expert, because Weimar failed to disclose any experts.
¶36 The spirit of the Montana Rules of Civil Procedure requires liberal disclosure on the part of all parties, including the disclosure of witnesses. Smith v. Babcock, 157 Mont. 81, 92, 482 P.2d 1014, 1020 (1971). As such, this Court has recognized that allowing an undisclosed expert witness to testify may constitute reversible error. Miranti, 253 Mont. at 235, 833 P.2d at 166 (determining that the district court abused its discretion when it allowed two witnesses to testify as
¶37 However, such concerns about prejudicial impact are not evident under the circumstances here. Lyons was not only the contractor who had performed the work, he was also the party being sued. It was obvious that he would testify regarding the extent and quality of his own work. Indeed, Weimar‘s responses to Lyons’ discovery requests listed Lyons as a person Weimar expected to call as a witness and further explained that he expected Lyons to testify about the defects in his work. Weimar knew Lyons would testify, had ample time to plan his examination of Lyons, and was prepared to respond to Lyons’ testimony with his own expert testimony regarding the quality of Lyons’ workmanship. Therefore, Weimar suffered no prejudice.
¶38 We conclude that the District Court did not abuse its discretion in permitting Lyons to give opinion testimony concerning the quality of his own workmanship and the reasons for the lower quality of work on this project.
¶39 (5) Did the District Court err by concluding that Lyons had standing to file his construction lien and counterclaim?
¶40 Prior to trial, Weimar sought to expunge Lyons’ lien on the grounds that the lien claimant—“Mike Lyons doing business as Lyons Concrete, Inc.“—was without standing because, at the time of the lien filing, Lyons Concrete, Inc., had been involuntarily dissolved as a Montana corporation. The District Court denied Weimar‘s motion, and ruled thereafter that Weimar was equitably estopped from denying the corporate existence of Lyons Concrete, Inc., which it determined to be a valid lien claimant. The District Court further ruled that any relief awarded to Weimar would be enforceable against any of the Lyons entities and individuals. After trial, the court concluded that “Defendants Mike Lyons and Lyons Concrete, Inc.,” were entitled to judgment on the lien.
¶42 Pursuant to Montana‘s construction lien statutes, a person who furnishes services or materials pursuant to a real estate improvement contract may claim a construction lien to secure the payment of the contract price.
¶43 Weimar challenges none of the procedures employed by Lyons, only the names listed as lien claimants. In Kosena v. Eck, 195 Mont. 12, 22, 635 P.2d 1287, 1293 (1981), the trial court noted several alleged defects in the mechanic‘s lien, including that the lien had been filed by “Bruce A. Kosena,” but that the action had been brought by “Bruce A. Kosena, d/b/a The Pub.” This Court described the alleged error as an “inconsequential technical discrepancy” and concluded it would not invalidate an otherwise valid lien, repeating the admonition that the lien statute “must be interpreted liberally to protect the right of the lien.” Kosena, 195 Mont. at 22, 635 P.2d at 1293.
¶44 Likewise, it is clear in this case that Mike Lyons was listed individually as a lien claimant. The lien adequately identified Mike Lyons and imparted notice to Weimar of Mike Lyons’ status as a lien claimant. The distinction Weimar raises is an “inconsequential technical discrepancy” that caused no prejudice to Weimar. Kosena, 195 Mont. at 22, 635 P.2d at 1293. Construing the statute liberally to
¶45 Regarding Lyons Concrete, Inc., the District Court concluded that the corporation was likewise a valid lien claimant and entitled to judgment “under the doctrine of Corporation by Estoppel.” Weimar acknowledges this equitable doctrine, but argues that its application here makes no sense because a dissolved corporation does not exist and could not receive payment on any judgment awarded in its favor. Guidance on the doctrine is provided by Official Comments to
This doctrine [corporation by estoppel] provides that if (a) a business held itself out as a corporation, and (b) if a third party dealing with it assumed it to be a corporation, both the corporation and the third party are estopped from raising the issue as to whether or not the corporation is validly incorporated. “In short, the fact that an entity is not a corporation3 should not, in and of itself, be a defense to an otherwise valid obligation.” General Comments to
§ 35-1-119, MCA . We applied this doctrine in Valley Victory Church v. Sandon:The doctrine prevents a party from denying a party-corporation‘s status. See, e.g., Cranson v. Int‘l Business Machs. Corp. (Md. 1964), 200 A.2d 33, 39 (“[W]here one has recognized the corporate existence of an association, he is estopped to assert the contrary with respect to a claim arising out of such dealings.“); Timberline Equip. Co., Inc. v. Davenport (Or. 1973), 514 P.2d 1109, 1112. The doctrine may apply to the corporation itself, or to the corporation‘s opponent. Compare Ohaco Sheep Co., Inc. v. Heirs of Ohaco (Ariz. App. 1986), 713 P.2d 343, 346 (applying doctrine to stockholders or partners of the purported corporation); with Lettinga v. Agristor Credit Corp. (6th Cir. 1982), 686 F.2d 442, 446 (“A person or entity who has contracted with, or otherwise dealt with a company as a corporation is estopped to deny its corporate existence.“). The doctrine rests upon equitable principles, and should only be applied when equity requires it.
Valley Victory Church, 2005 MT 72, ¶ 26, 326 Mont. 340, ¶ 26, 109 P.3d 273, ¶ 26.
¶47 We conclude from these circumstances that it would be inequitable for Weimar to now avoid an obligation because Lyons Concrete, Inc., though having acted in good faith through its principals, had been involuntarily dissolved. Weimar is estopped from denying the corporate status of Lyons Concrete, Inc., and, with that conclusion, it was not necessary for Lyons Concrete, Inc., to register as an assumed business name under
¶48 (6) Did the District Court err in granting Lyons interest at 1.5 percent under
¶49 Prior to trial, Lyons filed a motion in limine to forbid any evidence in support of Weimar‘s defense to Lyons’ claim under
....
¶50 Weimar first argues that, because he did not receive notice of the interest provision, it cannot be applied to him by virtue of
¶51 Weimar also argues that the District Court erred in concluding that Lyons was entitled to recover interest under these statutory provisions, because Weimar‘s contract with Lyons did not call for construction work valued greater than $400,000. Weimar does not dispute that all of the improvements to his property totaled more than $400,000, but he argues this interest provision only applies when an individual contract costs that much. Weimar reasons that if this statute was applied to Lyons’ contract, then it would likewise apply to any other small construction project—“a dog run, a fence or a sprinkler system“—completed on a property on which over $400,000 in construction work had previously been completed. Such a result, Weimar maintains, would be absurd.
¶52 We agree with Weimar‘s interpretation of the statute. The interest obligation is imposed upon “a periodic or final payment that is required by a construction contract to be paid by an owner to a contractor ....”
....
¶53 An exception to the interest assessment is made for “improvements to real property intended for residential purposes with a total cost of less than $400,000.”
¶54 We thus turn to the District Court‘s order prohibiting Weimar from contesting the application of the interest statute to the contract as a discovery sanction. Having concluded that the District Court erred in determining that the statute applied, we further conclude that it was inappropriate and an abuse of discretion for the District Court to impose the interest under an inapplicable statute as a sanction for discovery abuse. While a sanction may have been appropriate for the discovery error, Weimar should not have to bear the penalty of an interest assessment under a statute which, as a matter of law, did not apply to his contract, and that assessment is reversed. Upon remand, if Lyons yet clamors for imposition of a discovery sanction that matter may be brought to the attention of the District Court.
¶55 (7) Is Weimar entitled to his costs and attorney fees as the prevailing party?
¶56 With this Court‘s determination of the issues herein, we also conclude that the District Court correctly concluded that Lyons, and not Weimar, was the prevailing party. Thus, Weimar is not entitled to his costs and attorney fees.
¶57 Affirmed in part, reversed in part, and remanded for entry of judgment consistent herewith.
JUSTICES COTTER, WARNER, MORRIS and LEAPHART concur.