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CARDINAL DEVELOPMENT COMPANY v. STANLEY CONSTRUCTION COMPANY, INC.


CARDINAL DEVELOPMENT
COMPANY

v.

STANLEY CONSTRUCTION
COMPANY, INC.


February 27, 1998
Record No. 971001

CARDINAL DEVELOPMENT COMPANY

v.

STANLEY CONSTRUCTION COMPANY, INC.

OPINION BY JUSTICE LEROY R. HASSELL, SR.
FROM THE CIRCUIT COURT OF HANOVER COUNTY

Richard H. C. Taylor, Judge

Present: All the Justices


I.

In this appeal, we consider issues that arose during the trial
of an action for breach of a construction contract.

II.

Stanley Construction Company, Inc. (Stanley Construction),
filed its amended motion for judgment against Cardinal
Development Company (Cardinal). Stanley Construction alleged that
Cardinal breached its construction contract by refusing to pay
Stanley Construction for certain additional work it had
performed. Stanley Construction also alleged that it was entitled
to recover damages from Cardinal under a theory of quantum
meruit. Cardinal denied that it was indebted to Stanley
Construction and filed a counterclaim seeking to recover monies
that it purportedly overpaid to Stanley Construction.
At the conclusion of a bench trial, the trial court found that
Cardinal had breached the contract, entered a judgment in favor
of Stanley Construction in the amount of $99,894.80, and denied
Cardinal’s counterclaim. Cardinal appeals.

III.

A.

We will review the evidence in the light most favorable to
Stanley Construction, the prevailing party below. Horton
v. Horton, 254 Va. 111, 115, 487 S.E.2d 200, 203 (1997).
Because the trial court heard the evidence ore tenus,
its findings based on an evaluation of the testimony have the
same weight as a jury verdict. Id. We will affirm the
trial court’s judgment unless it appears from the evidence that
the judgment is plainly wrong or without evidence to support it.
Code ? 8.01-680; Horton, 254 Va. at 115, 487 S.E.2d
at 203, Tuomala v. Regent Univ., 252 Va. 368, 375,
477 S.E.2d 501, 505-06 (1996).

B.

Cardinal planned to develop a residential subdivision called
Battlefield Green on a tract of land in Hanover County. Cardinal
divided the subdivision into several sections: B-5, B-6, A-7, and
A-8. Sections A-7 and A-8 are the subjects of this dispute.
Cardinal intended to construct single-family homes in Section A-7
and townhouses in Section A-8.

Cardinal executed a contract with Holly & Associates,
Ltd., an engineering and surveying firm, to prepare the
subdivision plats and construction plans for the streets,
sanitary sewer, storm drainage, water distribution, and erosion
control. Cardinal also executed a contract with Stanley
Development to construct all the "improvements required by
[Hanover] County to each section to include but not limited to
the roads, water, sewer, curbs, gutters, sidewalks, [and] drainage all pursuant to the plans and specifications prepared by
Cardinal’s engineers, Holly & Associates, Ltd." This
contract was "subject to [Hanover] County not making any
substantial changes to the storm drainage system in either
Section A-7 or Section A-8." Cardinal agreed to pay Stanley
Construction $1,025,000 for performance of the work.

Holly & Associates provided Stanley Construction with a
building plan for Section A-7 in February 1991, before Stanley
submitted its bid to Cardinal. This building plan indicated that
42 lots would be created in Section A-7. Even though a plat
existed which indicated that 62 lots would be constructed on
Section A-7, this plat was not a building plan, and Stanley
Construction based its price on the building plan for Section
A-7. Subsequently, Holly & Associates developed a building
plan for Section A-7 which increased the number of lots from 42
to 62.

Hanover County approved Cardinal’s subdivision plans for
Section A-7 in 1993. The approved plan differed substantially
from the 42-lot plan that Holly & Associates had supplied to
Stanley Construction in February 1991.

Randolph L. Middleton, Stanley Construction’s estimator,
testified that he compared the 1991 A-7 building plan with the
County-approved plan and determined that the later plan
significantly increased the scope of the work that Stanley
Construction would be required to perform. The County-approved
plan increased the number of building lots from 42 to 62, added a
pedestrian path which was not shown in the original building
plan, increased the amount of work necessary for erosion control
and "clearing and grubbing" sites, added changes to the
storm sewer system, and created an additional grade basin and an
off-road right-of-way.

Calvin L. Stanley, president of Stanley Construction, sent a
letter dated November 9, 1993 to Charles E. Ayers, Cardinal’s
vice-president, director, and major stockholder, which summarized
the substantial changes in the scope of the work. Later that
November, Calvin Stanley met with Ayers, A. Wayland Stanley
(chairman of the board of Stanley Construction), Middleton, and
Vincent G. Robinson (a real estate broker and developer who
performed work for Cardinal). During this meeting, A. Wayland
Stanley and Calvin Stanley informed Ayers about the changes in
the scope of work in Section A-7. After a discussion among the
persons at the meeting, Ayers directed Stanley Construction’s
employees to proceed with the work.

A. Wayland Stanley testified that during the November 1993
meeting, Ayers "told us to go ahead and proceed with the
work, proceed with it. The only thing he would expect from us was
to treat him fairly . . . . To my knowledge,
the only thing he ever told us was to proceed with the work and
. . . be fair with him in the billing. That’s the only
thing I remember him saying." Middleton and Calvin Stanley
testified that Ayers directed them to proceed with the work.
Middleton testified that Ayers told him to bill Cardinal fairly
for performance of the work.

Hanover County also made changes to the plans for Section A-8
of the subdivision. Middleton, who compared the County-approved
plans to the original plans that Holly & Associates had
provided to Stanley Construction for purposes of bidding on the
contract, identified substantial differences in the plans. The
approved plans required, among other things, additional paving,
curbs and gutters; construction of a turning lane; changes in
sanitary sewer encasement; changes in the sewer system; clearing
and grubbing; grading; soil erosion control; traffic control, and
patching and excavation.

Stanley Construction performed some of the additional work and
submitted invoices to Cardinal for payment. Some of those
invoices specifically stated that the work performed was
"extra work versus contract or original scope of work."
On one invoice, the notation "extra work" appears.
Cardinal paid the invoices for extra work, even though
occasionally it paid the bills late. Calvin Stanley testified
that in the fall of 1995, Charles Ayers informed him that
Cardinal would pay the outstanding bills for Section A-7
"before Christmas" of 1995.

Connie Z. Hawkes, Stanley Construction’s former office manager
and secretary of the corporation, testified that the total amount
of additional work that Stanley Construction performed because of
changes in the scope of the work to Sections A-7 and A-8 totaled
$151,905.50. Although Calvin Stanley testified that Stanley
Construction expected the County to make some changes in the
plans that Stanley Construction relied upon to make its bid,
Stanley Construction did not expect that Cardinal or the County
would significantly expand the scope of the project.

IV.

Cardinal argues that "[t]he [t]rial [c]ourt erred by
admitting parol evidence to interpret the parties’ unambiguous
lump sum, fixed price written contract." Cardinal asserts
that "[u]nder the parties’ contract, Stanley [Construction] bore the risk that performance might turn out to be more
difficult or more expensive than it predicted," and that
"[p]arol or extrinsic evidence is generally inadmissible to
alter, contradict, or explain the terms of a written contract
. . . ." We do not consider this assignment of
error because Cardinal did not argue in the trial court that the
parol evidence rule barred admission of any evidence. Rule 5:25.

V.

Cardinal argues that Stanley Construction failed to present
sufficient evidence to support the trial court’s finding that
Cardinal agreed to modify the lump sum, fixed price contract and
pay Stanley Construction for the additional work. We disagree.

In Stanley’s Cafeteria, Inc. v. Abramson, 226
Va. 68, 73, 306 S.E.2d 870, 873 (1983), we stated the following
principles which are relevant here:

"[A] course of dealing by contracting parties,
considered in light of all the circumstances, may evince
mutual intent to modify the terms of [a] contract. See
Kent v. Kent, 2 Va. Dec. 674, 678, 34 S.E. 32,
33 (1899) . . . . But the circumstances
surrounding the conduct of the parties must be sufficient to
support a finding of a ‘mutual intention’ that the
modification be effective, Warren v. Goodrich,
133 Va. 366, 388, 112 S.E. 687, 694 (1922), and such
intention must be shown by ‘clear, unequivocal and convincing
evidence, direct or implied’, id. at 389, 112 S.E. at
694. And when one party claims that the other party has
surrendered a right guaranteed by the contract, the party
asserting such modification must prove either passage of
valuable consideration, estoppel in pais, or
waiver of the right. See Atlantic Coast Line v.
Bryan, 109 Va. 523, 65 S.E. 30 (1909)."

Applying these principles, we hold that there is clear,
unequivocal, and convincing evidence in the record which shows
that Cardinal and Stanley Construction intended to modify the
terms of their contract and that Cardinal agreed to pay for the
additional work that Stanley Construction had performed. As we
have already stated, the building plan that Holly &
Associates provided to Stanley Construction in February 1991
indicated that 42 lots would be created in Section A-7, but the
County-approved plan provided for the creation of 62 lots, as
well as other substantial changes.

Upon receiving these plans, Calvin Stanley forwarded a letter
to Ayers, Cardinal’s vice-president, and at a subsequent meeting,
Ayers directed Stanley Construction to "proceed with the
work" on Section A-7 and to "treat [Cardinal] fairly" in billing Cardinal for the additional work.
Cardinal’s clear instructions that Stanley Construction bill
Cardinal fairly mean that Cardinal agreed, by its conduct, to
expand the scope of the work and to pay for the additional work.
Cardinal paid Stanley Construction’s detailed invoices for the
additional work for one and one-half years without complaint and
Ayers, on behalf of Cardinal, promised to pay for the completed
work on A-7 "before Christmas of" 1995. Cardinal’s
agreement to pay for the additional work, along with Stanley
Construction’s actual performance of that work, constitutes
valuable consideration sufficient to modify the contract.

After Calvin Stanley sent a letter to Ayers complaining about
the substantial changes in the scope of the work for Section A-8,
Cardinal further agreed to modify the contract when Ayers
informed Stanley by letter: "I am in receipt of your letter
with the price increases and assuming that they are items that
you could not determine initially we will pay whatever the cost
increase is based on unit pricing." Calvin Stanley and
Middleton testified that the changes in the scope of the work,
including the substantial increases in the quantity of work and
the materials required by the County-approved plans, were not
items that they could have determined when the construction
contract was executed. Cardinal also paid bills that Stanley
Construction had submitted to it for work performed for Section
A-8.

VI.

Cardinal argues that Stanley Construction "presented
insufficient evidence to prove ‘substantial changes to the storm
drainage systems’" and, thus, the trial court erred by
awarding Stanley Construction damages for additional work
associated with these items. We disagree. As we have already
stated twice, at least two witnesses testified on behalf of
Stanley Construction that the scope of the work shown on the
County-approved plans for Section A-8 changed substantially,
including the scope of the storm drainage work. Additionally,
Cardinal, by its conduct, agreed to enlarge the scope of the work
and pay Stanley Construction for that work. Thus, we find no
merit in this contention.

VII.

We reject Cardinal’s argument that the "trial court erred
by allowing Stanley to recover on a theory not raised in
Stanley’s motion for judgment." Cardinal says that the trial
court’s judgment is "flawed because it appears to be based
on some sort of estoppel or waiver theory — theories never
raised by Stanley . . . ." Our review of the
record indicates that the trial court considered this case as a
breach of contract action and that the trial court’s judgment was
not based upon principles of estoppel or waiver.

VIII.

Cardinal argues that Stanley Construction presented
insufficient evidence to prove its damage claims. We disagree.

Stanley Construction adduced extensive testimony in support of
its damages. Stanley Construction presented evidence of the
amounts it billed to Cardinal for additional work performed on
Sections A-7 and A-8, payments made by Cardinal, and the balance
due. In addition, the trial court admitted Stanley Construction’s
billing records in evidence. The trial court considered this
evidence, which was disputed by Cardinal, and awarded Stanley
Construction $54,319.76 in damages for work performed in Section
A-7 and $45,575.04 for damages related to Section A-8. We cannot
say, from our review of the record, that the trial court’s award
is plainly wrong or without evidence to support it. Horton,
254 Va. at 115, 487 S.E.2d at 203.

We also disagree with Cardinal’s contention that the trial
court made an erroneous damage calculation. Cardinal argues that
one of Stanley Construction’s trial exhibits contained
mathematical errors and that the trial court relied upon this
erroneous exhibit when calculating the award of damages. However,
Stanley Construction responded at trial, and here, that its
evidence of damages was based on actual work performed and
invoices mailed, not on the errors contained in the challenged
exhibit. Upon our review of this record, which contains disputed
evidence, we cannot say that the trial court, as the trier of
fact, erred by accepting Stanley Construction’s explanation of
the errors contained in the challenged exhibit.[1]

IX.

Cardinal argues that the trial court erred by failing to grant
judgment on its counterclaim. Cardinal contends that the
undisputed evidence adduced at trial demonstrated that it made
overpayments to Stanley Construction in the amount of $87,346.67
and that Cardinal is entitled to repayment of those funds. The
trial court, however, implicitly held that the monies that
Cardinal purportedly overpaid were actually payments that
Cardinal made to Stanley Construction for the additional work
that Stanley Construction had performed. This is a factual issue
which was resolved by the trial court, and we cannot say, based
upon the evidence of record, that the trial court was plainly
wrong.

X.

For the foregoing reasons, the judgment of the trial court
will be affirmed.

Affirmed.

 

 

 

FOOTNOTES:

[1]
During a colloquy between counsel at trial, Stanley
Construction’s counsel offered to make certain stipulations if
Cardinal’s counsel could identify mathematical errors. The record
is devoid of a stipulation of any figures which would form the
basis for any credits or deductions related to the alleged
errors.

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