Jirak Construction, LLC v. Daniel H. Balk and Katherine J. Balk, and First Security Bank and Trust Co. ( 2015 )

IN THE COURT OF APPEALS OF IOWA
No. 14-0416
Filed February 25, 2015
JIRAK CONSTRUCTION, LLC,
Plaintiff-Appellee,
vs.
DANIEL H. BALK and KATHERINE J.
BALK,
Defendants-Appellants,
and
FIRST SECURITY BANK AND TRUST CO.,
Defendant.
________________________________________________________________
Appeal from the Iowa District Court for Chickasaw County, Richard D.
Stochl, Judge.
Homeowners appeal the entry of judgment for a construction company for
its work and materials and foreclosure of a mechanic’s lien on their property.
AFFIRMED.
Christopher F. O’Donohoe of Elwood, O’Donohoe, Braun & White, New
Hampton, for appellants.
Kevin J. Kennedy of Kennedy & Kennedy, New Hampton, appellee.
Considered by Danilson, C.J., and Doyle and Tabor, JJ.
2
TABOR, J.
This appeal involves a contract dispute between Daniel and Katherine
Balk, owners of a 1900s-era farmhouse in Chickasaw County, and Jirak
Construction, which undertook a remodeling project for the Balks. The district
court entered judgment in favor of Jirak and against the Balks in the amount of
$55,609.49, plus interest, and foreclosed a mechanic’s lien. The Balks appeal,
contending Jirak should have been held to its initial estimate of the project’s cost
and—when their payments and costs to properly complete the work are
subtracted—Jirak actually owes them $4325.84.
Because the district court properly applied Iowa contract law to the facts of
this case, we affirm its ruling by memorandum opinion. See Iowa Court Rule
21.26(a), (b), (c), and (e).
In early 2012, the Balks approached Jirak about building an addition to
their home in Lawler, Iowa. On February 9, 2012, Jirak provided the Balks with
an initial estimate of $45,975 for the cost of building the new addition. After
meeting with a designer, the Balks’ plans changed slightly. Jirak began
construction on June 19, 2012. After construction began, Daniel Balk made
significant changes to the building plan—including increasing the size of the
addition, upgrading the windows, adding new windows, and replacing the siding
on part of the house. Jirak had not considered these plans in its original
estimate.
As construction progressed, Jirak and the Balks continued to discuss the
project and make additional alterations to the initial plan; the parties agreed on
3
the changes. Jirak provided regular invoices to the Balks about ongoing costs.
In November 2012, the Balks began to question the overall cost of the project
and requested an itemized breakdown of the work performed. Jirak provided that
information. Through November 15, 2012, the Balks paid Jirak $67,000.00 for
work performed. But, according to Jirak, the Balks still owed $55,000.00 in labor
and materials. The Balks refused to make additional payments. Jirak
acknowledged the project was incomplete, but left the job due to the Balks’
refusal to pay.
On December 12, 2012, Jirak filed a mechanic’s lien against the Balks’
real estate for the unpaid balance. On January 23, 2013, Jirak filed a petition
demanding judgment against the Balks for $55,609.49, plus interest. The Balks
filed an answer and counterclaim. The district court held a trial on September 20,
2013.
On January 30, 2014, the court foreclosed the mechanic’s lien and
entered judgment for Jirak in the amount requested. The court determined Jirak
performed the work according to the Balks’ specifications and their agreement
was “clearly for payment of time and materials. It was not a firm bid price job.”
The court concluded Jirak was entitled to payment for the work and materials
provided and rejected the Balks’ allegations that claimed defects were due to
substandard work by Jirak. The Balks appeal.
An action to enforce a mechanic’s lien is heard in equity and we review
the district court’s decision de novo. Flynn Builders, L.C. v. Lande, 814 N.W.2d
4
542, 545 (Iowa 2012). We give weight to the district court’s findings of fact, but
are not bound by them. Id.
On appeal, the Balks contend Jirak’s initial written estimate constituted an
offer and their acceptance of the offer locked in the quoted price. The Balks
argue: “The parties each provided consideration in the form of a promise—one to
perform, the other to pay. The actual cost of construction ultimately exceeded
the bid amount, and to the extent that is due to a mistake in Jirak’s judgment or
quote process, the mistake is attributable to Jirak.” The Balks argue any costs
over the initial estimate amount are the responsibility of Jirak and we should
award them $4325.84.
We follow the lead of the district court in rejecting the Balks’ contention.
Jirak’s initial estimate of $45,975 was expressly an approximation. The
description delivered to the Balks on February 9, 2012 stated: “These are approx.
costs until we get final details.” The estimate was not a binding offer. See
Denniston & Partridge Co. v. Mingus, 179 N.W.2d 748, 752 (Iowa 1970). The
discussion in Mingus is useful here:
The “estimated cost” of a building means the reasonable cost of a
building erected in accordance with plans and specifications
referred to and not necessarily the amount agreed upon by the
parties or an offer accepted by defendant. . . . An estimate is
equivalent of “more or less” and does not pretend to be based on
absolute calculations. Use of the word precludes accuracy. “To
make an estimate” ordinarily means to calculate roughly or to form
an opinion as to amount from imperfect data.
Id. (citations omitted).
The parties in this case entered into oral modifications of the initial
estimate, which ultimately formed the binding contract. See Seneca Waste
5
Solutions, Inc. v. Sheaffer Mfg. Co., 791 N.W.2d 407, 413 (Iowa 2010) (noting
consent to modification “may be either express or implied from acts or conduct”).
“When a party to a contract modifies the scope of the work by requesting ‘extras’
or additional work, the party must pay the fair and reasonable value of the extra
work.” Id. (citing DeMuth Landscaping & Design v. Heggestad, 461 N.W.2d 354,
356 (Iowa Ct. App.1990) (contract implied from the evidence when contractor
hired to landscape north side of lakeshore bank but then requested additional
landscaping of south side of bank)). The Balks made significant changes to the
building plans; Jirak agreed to the changes, began performance, and sent
invoices to the Balks, which they paid. The Balks are responsible for the fair and
reasonable value of the modifications they requested.
AFFIRMED.