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Parkway Construction Services, Inc. v. Blackline LLC

Court of Appeals of Missouri, Eastern District, Fourth Division

March 26, 2019

PARKWAY CONSTRUCTION SERVICES, INC., Respondent and Cross-Appellant,

          Appeal from the Circuit Court of the City of St. Louis Honorable James E. Sullivan



         A general contractor and plumbing subcontractor both appeal the trial court's judgment on breach-of-contract and equitable claims raised in the subcontractor's petition. The underlying dispute involves the renovation of two apartment buildings and whether the subcontractor exceeded the scope of work authorized by the contract it entered into with the general contractor. The general contractor appeals the judgment finding it liable for breach of contract and awarding attorneys' fees to the subcontractor as the prevailing party. The subcontractor appeals the judgment finding against it on its equitable claims of unjust enrichment and quantum meruit.

         Although the subcontractor voluntarily dismissed its breach-of-contract claim, the trial court properly exercised its authority when reinstating the claim prior to trial where the voluntary dismissal was made without prejudice by the plaintiff/subcontractor and the reinstatement caused no harm to the defendant/general contractor. While the record contains sufficient evidence to support much of the subcontractor's breach-of contract claim, the trial court erred when it included the shower-valve work within the contract, and that part of the judgment is reversed.

         As to the subcontractor's equitable claims, the record supports the trial court's finding that the subcontractor waived said claims. Lastly, we find that the subcontractor was the prevailing party, and therefore was entitled to an award of attorneys' fees under the contract. However, we remand the award of attorneys' fees to the trial court to reexamine the amount of the attorneys' fee award and ensure that the award does not include fees for work that was completely severable and related exclusively to the equitable claims upon which the subcontractor did not prevail.

         Factual and Procedural History

         I. The Contract

         Parkway Construction Services, Inc. ("Parkway") and Blackline LLC ("Blackline") entered into a construction contract (the "Contract") pertaining to a renovation of two apartment buildings (the "Project") located on 2804-2820 S. Compton in St. Louis, Missouri (the "Property"). Magnolia Halliday, LLC ("Magnolia") owned the Property. Magnolia hired Blackline as the general contractor for the Project. Blackline subsequently entered into the Contract with Parkway, the plumbing subcontractor on the Project. Under the Contract, Parkway agreed to perform construction work relating to the plumbing system for buildings situated on the Property, including the provision of both labor and materials. Blackline agreed to pay Parkway $96, 000 for this work. Although, Parkway was to supply materials necessary for the scope of its work under the Contract, Blackline agreed to provide shower valves, faucets, tubs, and sinks. Parkway committed to "[r]ework all existing water supply lines and waste drains at tubs, sinks, and showers to accommodate new fixtures and locations per plans." The Contract defined Parkway's objective as "provid[ing] a complete working plumbing system[.]"

         Both Parkway and Blackline believed it was likely that some of the drain/waste/vent ("DWV") piping in the walls would not need to be replaced as part of Parkway's rework of the plumbing systems. However, the parties were uncertain as to how much of the DWV piping would need to be replaced to complete the Project. Because Parkway was unwilling to accept the risk of replacing all of the DWV piping, the parties stipulated that Parkway would be responsible under the Contract for repairing or replacing up to a maximum of fifty percent of the DWV piping. The record before us suggests that this "fifty-percent threshold" was not clearly defined. Both parties defined the threshold differently at trial and in their briefs. However, the record is clear that any work exceeding the fifty-percent threshold was beyond the scope of work under the Contract, and would be considered either an additional cost or extra work. The Contract expressly precluded Parkway from performing extra work beyond the scope of the Contract without first obtaining written authorization by Blackline.

         Pertinent to this appeal, the Contract included a change-order provision, mandating that:

Any adjustment in the [Contract] Amount or time of performance shall be authorized by a Change Order. No adjustments shall be made for any changes performed by [Parkway] that have not been ordered by [Blackline]. A Change Order is a written instrument prepared by [Blackline] and signed by [Parkway] stating their agreement upon the change in [Contract] Work.

         The Contract also provided that all progress payments were "subject to receipt of such lien waivers, affidavits, warranties, guarantees or other documentation required by this Agreement or [Blackline]." Additionally, "[f]inal payment shall constitute a waiver of all claims by [Parkway] relating to [Contract] Work[.]"

         The Contract also contained an attorneys' fee provision, stating that "[t]he prevailing party in any dispute that goes beyond mediation arising out of or relating to this [Contract] or its breach shall be entitled to recover from the other party reasonable attorneys' fees, costs and expenses incurred by the prevailing party in connection with such dispute." The Contract did not define "prevailing party."

         II. Performance under the Contract

         As Parkway began work under the Contract, the Project quickly began to fall behind schedule due to factors beyond Parkway's control. Blackline continuously pressured Parkway to stay on schedule. As Parkway's plumbers performed the plumbing work on the Project, they repaired or replaced almost all stacks/DWV piping in the two apartment buildings.[1] The plumbers replaced both horizontal and vertical piping from a few feet above the basement floor to the highest drain connection at each stack. Parkway did not replace the cast-iron vent stacks that did not carry water or waste and allowed only for air venting. Parkway did not obtain a written change order or even a definite verbal authorization from Blackline to replace more than fifty percent of that piping. On May 8, 2015, Parkway emailed Blackline stating in pertinent part:

I know we conceded to replacing up to [fifty percent] of the stacks without additional cost. We are there. How do you want to handle this going forward? This has been a tough job with a ton of additional costs we could not have foreseen. I am sure that is true for both of us. We are keeping track of the time and materials but want to know if we need to talk about it before we get too far into the process. Be assured we will do all we can to limit any additional work but the inspectors are being less than forgiving and much of the existing stacks are cracked.

         Blackline responded three days later, telling Parkway that it disagreed that Parkway had reached the fifty-percent threshold. Blackline further stated that there should not be an issue completing the job within the fifty-percent allowance. On June 1, 2015, Parkway sent Blackline another email informing Blackline that Parkway had replaced all forty-three stacks.

         Parkway created two change-order forms: one form relating to the extra DWV-piping work and a second form relating to extra shower-valve work. Parkway submitted the shower-valve change-order form to Blackline before commencing work on the shower valves. Blackline approved Parkway's change-order request for the shower-valve work for $ 1051. Parkway submitted the DWV-piping work change-order form to Blackline only after completing the work. Parkway continued working on installing a complete, working plumbing system, but did not detail the precise hours spent on each task to Blackline.

         Due to the parties' dispute and Blackline refusal to grant retroactively Parkway's change-order request for the extra DWV-piping work, Parkway stopped performing work under the Contract. Blackline was required to hire another plumbing contractor to complete the remainder of the work for which Parkway was obligated under the Contract.

         III. Payment

         Despite the disagreement between Blackline and Parkway as to the amount Blackline owed Parkway for the DWV piping replacement, Parkway executed a lien waiver in return for Blackline payment of $25, 200 (the "Waiver") on June 16, 2015. The Waiver read:

Contractor/Supplier hereby waives all right, title and interest to any claim of any kind for payment for its Work through today's date; including, but not limited to, claims to a mechanic's or other form of Hen or claim on or against: (a) the Property or the improvements thereon; (b) any funds for the Property or the Project, whether held by the Owner or otherwise; or (c) any funds due or to become due any higher-tier contractor. This is a partial waiver with respect to the Work, and Contractor/Supplier expressly reserves the right to assert claims for payment (including mechanic's liens) for Work performed after the date listed below.

         The Waiver defines "Work" as labor and/or materials furnished on or for the Project.

         After Parkway ceased working, Blackline offered Parkway a check for $8712.97, which Blackline calculated as the remaining amount due to Parkway on the Contract after subtracting Blackline cost of hiring a second subcontractor to complete the job. Parkway refused to accept the final payment, fearing it would preclude Parkway from seeking payment relief for the extra work Parkway performed on the Project. At trial, Blackline admitted to owing Parkway $1051 for the extra shower-valve work and $8712.97 under the Contract.

         IV. Pre-Trial

         Parkway filed a petition against Blackline and Magnolia on March 17, 2016 seeking compensation for the work Parkway completed on the Project. Parkway included four counts in its petition. In Count I, Parkway alleged Blackline was unjustly enriched by Parkway's additional work outside the scope of the Contract, and thus Parkway prayed for judgment against Blackline in the amount of $79, 449. In Count II, Parkway contended Blackline either requested the extra and additional work or acquiesced, accepted, and retained the extra work performed, and thus Parkway sought $79, 449 under the principle of quantum meruit. In Count III, Parkway averred that it substantially performed its obligations under the Contract and Blackline breached the Contract by failing to pay Parkway the remaining $24, 000 due and payable under the Contract. In Count IV, Parkway argued Magnolia owed Parkway $100, 569 under a mechanics' lien against the Property.

         Blackline and Magnolia moved for summary judgment on Count IV. The trial court granted the motions and dismissed Count IV because Parkway's statement of the mechanic's lien was insufficient and unenforceable as it failed to describe the work performed or identify the labor and materials Parkway was claiming as subject to the lien. Count IV is not at issue in this appeal.

         On May 3, 2017, Parkway voluntarily dismissed Count III without prejudice. Although the record is unclear as to when Parkway requested leave of court to amend its petition to reinstate its claim for breach of contract, Blackline filed suggestions in opposition of Parkway's oral motion to reinstate Count III on May 5, 2017; just two days after Parkway filed its voluntary dismissal. On May 8, 2017, the trial court granted Parkway leave to reinstate Count III over Blackline objection. Blackline requested that the trial court "be sure the record does reflect that it's a reinstatement of a dismissed claim and not assertion of a new claim[.]" The trial court responded, "[y]es. And I believe that was the oral motion and that is how the order shall read." The case proceeded to a bench trial.

         V. Trial

         Parkway presented evidence at trial of the money Parkway claimed Blackline owed related to the work Parkway completed on the Project. Specifically, Parkway presented evidence that Blackline originally agreed to pay Parkway $96, 000. Blackline paid Parkway two installments under the Contract, totaling $72, 000. Accordingly, Blackline owed Parkway $24, 000 for the Contract work. Parkway also introduced evidence of the "extra work" costs: the shower-valve work ($1051), the cost to replace the DWV piping beyond the fifty-percent threshold ($64, 908), fixture costs outside the Contract ($1600), and basement re-piping ($11, 890). Parkway introduced evidence that the cost of the "extra work" totaled $79, 449. Parkway sought $79, 449 in damages on its equitable claims in Counts I and II, and damages of $24, 000 in Count III for breach of contract, for a total damage claim of $ 103, 449.

         The trial court found in favor of Blackline on Counts I and II. The trial court found in favor of Parkway on Count III and awarded Parkway $9763.97 in damages. The trial court then determined Parkway to be the prevailing party, and awarded Parkway attorneys' fees totaling $103, 234.31.

         The trial court noted in its judgment that "[t]his is a dispute over plumbing services rendered by [Parkway][.]" The trial court acknowledged the multiple miscommunications contributing to the dispute between Parkway and Blackline. The trial court found that, as of the email on May 8, 2015, Parkway told Blackline that it had already reached the fifty-percent threshold. The trial court determined that Parkway "substantially performed its obligations under the Contract" and awarded Parkway damages of $9763.97 on Count III. Specifically, the trial court awarded Parkway $8712.97 as the remaining payment due for the work performed under the Contract, less the amount Blackline paid the second contractor to complete the Project after Parkway halted its work. The trial court also found that Blackline owed Parkway $1051 for certain "shower-valve work" discussed during trial, and that Blackline refusal to pay Parkway for this work constituted a second breach ...

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