Vaughn Coltrane & Associates, Inc. v. LaM Distribution, LLC ( 2004 )

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

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Vaughn Coltrane & Associates, Inc., Plaintiff,

v.

LaM Distribution, LLC and Fidelity & Deposit Company of Maryland, Defendants.

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LaM Distribution, LLC, Appellant,

v.

Vaughn Coltrane & Associates, Inc., KCV Construction Services, Inc.; Albert V. Coltrane, P.E.,        Respondents.

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Appeal From Calhoun County
James C. Williams, Jr., Circuit Court Judge

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Unpublished Opinion No. 2004-UP-309
Submitted April 12, 2004 – Filed May 7, 2004

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REVERSED

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Henry W. Brown and John W. Davidson, both of Columbia, for Appellant.

R. Davis Howser, George V. Hanna, IV and Andrew E. Haselden, all of Columbia, for Respondents.

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PER CURIAM:  In this dispute relating to the construction of a freezer facility, Appellant LaM Distribution (LaM) contends the trial court erred in concluding Respondent Vaughn Coltrane & Associates (VCA) had not breached its contract with LaM and in discounting the award of damages to LaM for fees not paid to VCA.  We reverse. [1]

FACTS

On March 30, 1998, LaM secured a building permit for a $6,500,000.00 refrigerated warehouse facility to be constructed in Calhoun County, South Carolina.  Employing temperatures as low as -25 degrees Fahrenheit, the facility freezes and stores food products and other perishables.  To design and manage construction of the facility, LaM contracted for the services of VCA, a consulting engineering firm specializing in food industry services. The agreement between the parties contained the following clause:

3.  VCA will be responsible for exercising the degree of skill and care required by customarily accepted, good professional engineering practices and procedures.

Construction of the facility took longer than planned. When the project was approximately sixty-five percent complete, LaM discovered various design and construction problems.  A dispute then arose regarding lack of payment of some of the construction management fees owed to VCA.  As a result of the dispute, VCA left the job prior to the completion of construction, thereby leaving unfulfilled its contractual obligations.  All told, LaM paid VCA $284,498.21 for the work, but did not pay approximately $89,000.00 in fees charged during the last portion of the construction management phase of the project.

After construction was complete and the facility went into operation, LaM discovered additional problems with the design and construction of the facility.  To assess the condition of the facility, LaM engaged the services of Facilities Design, Inc., an engineering company with experience in the design of cold storage facilities and construction management. Over the course of its investigation, Facilities Design found nineteen defects in the facility’s design and construction.  These deficiencies included various instances of inadequate insulation, improper wiring, insufficient emergency lighting, lack of proper drainage, and various code violations.

VCA eventually filed suit against LaM to collect the unpaid fees, alleging causes of action for breach of contract, quantum meruit, and foreclosure of mechanic’s lien.  LaM answered and counterclaimed, alleging causes of action for breach of contract, negligence, fraudulent misrepresentation, constructive fraud, negligent misrepresentation, breach of implied warranty, and breach of express warranty.

By order dated May 30, 2001, the trial court granted LaM’s motion for summary judgment on all causes of action alleged against it by VCA.  In so ruling, the court noted VCA was not properly licensed to practice engineering in South Carolina because it lacked a Certificate of Authorization as required by statute.  Because VCA had not complied with the statutory mandate, the court held “VCA is prohibited from enforcing this contract and collecting its fees.”  VCA did not appeal the order.

With only LaM’s counterclaims remaining, the parties tried the matter without a jury in February 2002.  The trial court ruled in favor of LaM on only its negligence cause of action, finding VCA liable for eight of the alleged nineteen design and construction defects.  Of the eight defects found, however, the court awarded LaM compensation for only six and also reduced damages to account for VCA’s unpaid fees, thereby arriving at a total award of $34,140.00.  LaM now appeals.

STANDARD OF REVIEW

An action for breach of contract is an action at law.  Roberts v. Gaskins, 327 S.C. 478, 483, 486 S.E.2d 771, 773 (Ct. App. 1997).  “In an action at law, on appeal of a case tried without a jury, the findings of fact of the judge will not be disturbed upon appeal unless found to be without evidence which reasonably supports the judge’s findings.”  Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976).

LAW/ANALYSIS

Contract

LaM asserts the trial court erred in failing to find VCA had breached its contract with LaM.  We agree.

In concluding VCA had not breached its contract by discontinuing work on the project, the trial court stated, “the evidence further discloses that LaM failed to pay VCA and/or KCV for the work it performed under the contract, thereby giving VCA and KCV the legal right to pull off of the job based on this non-payment of agreed to fees.”  The court also indicated other actions by LaM that contributed to affording VCA the legal right to discontinue its performance under the contract.  In essence, the court ruled LaM’s non-payment and other actions amounted to a material breach of the contract, thereby relieving VCA of its obligation to perform. 

While the trial court is correct that the legal consequences of one party’s material breach is to relieve the other contracting party of its performance obligation, that rule has no application in the present case.  As previously noted, VCA failed to appeal the court order of May 30, 2001, dismissing its breach of contract claim against LaM.  As an unappealed order, all the findings of fact and legal conclusions contained therein—including the ruling that LaM did not breach the contract—are now the indisputable law of the case.  See Charleston Lumber Co. v. Miller Housing Corp., 338 S.C. 171, 175, 525 S.E.2d 869, 871 (2000) (unappealed ruling is law of the case).  Because the prior order established as a matter of law that LaM did not breach the contract, VCA cannot take a second bite at the apple by defending itself on the grounds that LaM materially breached the contract.

Because VCA offered no other defense or excuse for its nonperformance, and the incontrovertible evidence before the court established that VCA did not fulfill its contractual obligation, LaM’s breach of contract cause of action must succeed as a matter of law.  The trial court’s failure to rule accordingly amounts to an error of law. 

Moreover, the trial court’s decision on this matter must be reversed because its conclusion that VCA acted negligently in performance of its duties cannot be squared with the implied conclusion that VCA did not breach its contractual obligation to exercise “the degree of skill and care required by customarily accepted, good professional engineering practices and procedures.”

Offset

LaM next asserts the trial court erred in reducing LaM’s damages to account for VCA’s unpaid fees.  We agree.

Although the trial court found VCA liable on LaM’s negligence cause of action, the court also found LaM was comparatively negligent:

I find that the Plaintiff has proven both negligent design and/or negligent construction management as to certain of the nineteen items litigated in this trial as set forth in the discussion, which follows.  I further find that the Plaintiff was comparatively negligent as to certain of the nineteen items litigated at trial.

The trial court concluded LaM’s comparative negligence extended to six of the items.  The court reduced LaM’s award for one item by twenty percent and reduced the award for the remaining five by fifty percent. For each incident of comparative negligence, the court stated the reason for reducing the damages award was because LaM failed to pay VCA’s full fee and that some of the defects would have been avoided had VCA remained on the job.

While comparative negligence provides a sound basis for reducing tort damages, the concept has no application outside tort law.  Indeed, under contract theory, comparative negligence provides no basis for reducing a damages award.  See Smoak v. Carpenter Enters., Inc., 319 S.C. 222, 224, 460 S.E.2d 381, 383 (1995) (“Further, a charge on contributory negligence, a tort concept, would have been inappropriate and confusing in the breach of contract and breach of warranty actions.”).  Given our conclusion above that LaM is entitled to recover on its breach of contract claim, LaM is entitled to recover in full for each item.

REVERSED.

ANDERSON, HUFF, and KITTREDGE, JJ., concur.

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[1] We decide this case without oral argument pursuant to Rule 215, SCACR.