Kadrmas, Lee & Jackson, Inc. v. Morris , 2010 S.D. 61 ( 2010 )

#25289-rev & rem-JKK
2010 SD 61IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
* * * *
KADRMAS, LEE AND JACKSON, INC.,
a North Dakota Corporation, Plaintiffs and Appellees,
v.
MITCH MORRIS a/k/a MITCHEL
E. MORRIS, individually and
doing business as MORRIS
RANCH GROUP, Defendants and Appellants.
* * * *
APPEAL FROM THE CIRCUIT COURT
OF THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA
* * * *
HONORABLE JOHN J. DELANEY
Judge
* * * *
RONDA MILLER Attorney for plaintiffs
Belle Fourche, South Dakota and appellees.
BRAD A. SCHREIBER Attorney for defendants
Pierre, South Dakota and appellants.
* * * *
CONSIDERED ON BRIEFS
ON APRIL 26, 2010
OPINION FILED 07/21/10
#25289
KONENKAMP, Justice
[¶1.] In this breach of contract action, plaintiff alleged that defendant failed
to pay on two written contracts, but defendant claimed that he paid a $10,000
retainer on those contracts. Plaintiff responded that the $10,000 payment was on
an oral contract that had been completed. The circuit court instructed the jury that
if it found that the oral contract existed, “the $10,000 must be applied to the claim
for work performed under that contract.” Because the court told the jury that it
must apply the payment only to the purported oral contract, it took from the jury
the job of resolving a disputed issue of fact. We reverse and remand for a new trial.
Background
[¶2.] Mitch Morris sought to develop some land two miles south of Rapid
City, South Dakota. His real estate agent, Stan Hauck, put Morris in touch with
Kadrmas, Lee and Jackson, Inc., a regional engineering and planning firm.
Kadrmas began preliminary work in December 2004. Rodney Senn, an engineer
with Kadrmas, sent Stan Hauck a letter indicating that the cost of the preliminary
work would be $12,000. Morris later testified that Hauck had no authority to make
a binding contract on Morris’s behalf. The preliminary work was completed in July
2005. Morris paid Kadrmas $10,000 in October of that year, and later in the same
month Kadrmas and Morris executed two written contracts. One contract was for
the design on extending water services to the land; the other was for the design of
the sewer system.
[¶3.] Beginning in November 2005, Kadrmas sent Morris invoices for
services provided on the design of the water line extension. In February 2006,
Kadrmas sent invoices to Morris for services related to the sewer lines. These
invoices were later offered in evidence along with summaries of the hours worked
on the Morris project. The charges on these services were: preliminary work —
$9,625.73; water line extension — $20,136.66; sewer line extension — $7,650.72.
[¶4.] At some point, Morris telephoned Kadrmas to say that he was not
receiving any invoices. Senn later testified that he sat down with Morris and
showed him the invoices. Except for the initial $10,000 he paid in October 2005,
Morris made no other payments. In February 2006, Kadrmas stopped work on the
project.
[¶5.] Kadrmas brought suit against Morris for breach of contract. At trial,
Morris claimed that the $10,000 he paid to Kadrmas was a retainer for the two
October 2005 contracts. Kadrmas, on the other hand, claimed that the $10,000 was
payment for the preliminary work and that Morris breached the two contracts when
he failed to pay on the invoices. The jury awarded $27,787.38 in damages to
Kadrmas. After trial, the circuit court denied Morris’s renewed motion for
judgment as a matter of law or in the alternative a new trial. He appeals asserting
that the court improperly instructed the jury in two respects and that Kadrmas
failed to prove its damages. 1 We find only one assertion of error meritorious.
Analysis and Decision
1. We review for abuse of discretion a trial court’s decision to grant or deny a
motion for new trial and a renewed motion for judgment as a matter of law.
SDCL 15-6-50(b); SDCL 15-6-59(a); Duda v. Phatty McGees, Inc., 2008 SD
115, ¶19, 758 NW2d 754, 759-60 (citations omitted). We review the court’s
wording and arrangement of jury instructions for an abuse of discretion.
Carlson v. Const. Co., 2009 SD 6, ¶6 n1, 761 NW2d 595, 597 n1 (citations
omitted). But a court has no discretion to give incorrect or misleading
instructions, and to do so prejudicially constitutes reversible error. Id.(citations omitted).
[¶6.] At trial, the parties contested the purpose of the $10,000 payment.
Kadrmas asserted that the payment was for preliminary work done before the two
contracts were signed. Morris maintained that the $10,000 was a retainer for the
two October 2005 contracts; that he made no oral agreement to pay for preliminary
work; and that Hauck was not his agent for the purpose of contracting for
preliminary engineering services.
[¶7.] On appeal, Morris argues that the circuit court improperly instructed
the jury to apply the $10,000 to the preliminary contract if it found such contract
existed. 2 Kadrmas claims that Morris failed to object to this instruction, and
2. On page three of the instructions, the court charged the jury on the burden of
proof:
One asserting a claim must prove that claim by the greater
convincing force of the evidence. If the evidence is evenly
balanced so that you conclude that neither party has produced
the greater convincing force, then you must find against the
party who has the burden of proof.
In this case, the Corporation has the burden of proving:
a. As to the preliminary contract that the parties created either
an express or an implied contract. If that contract exists, the
$10,000 must be applied to the claim for work performed under
that contract.
b. That Mr. Morris had a contractual obligation to pay the
Corporation for work it had performed pursuant to each of the
written contracts; and
c. That he breached those contracts by failing and refusing to do
so; and
d. The damages which were incurred as a result of that breach.
Mr. Morris has the burden of proving that the Corporation has
not performed the work or services which entitled it to all or
some of the payments the Corporation claims are due and owing
under the contract.
(continued . . .)
therefore, waived the issue. From our review of the record, however, Morris
sufficiently objected to preserve the issue.
[¶8.] At the time of settling jury instructions, the court did not have its
prepared instructions. Rather, the court and parties were reviewing Kadrmas’s
proposed instructions. Morris objected to two instructions that related to the
written contracts and alleged oral contract. The court responded,
It seems to me that I would instruct that there are three
contracts at issue. There is a question of a contract for
preliminary work. And there are two written contracts.
As to the contract for preliminary work, the instruction
relevant to quantum meruit may apply.
As to contracts two and three, the written contracts - - I
mean, by its terms that instruction would only apply to that.
Because if I talk to the jury, I would say that there is one oral
contract alleged and two written ones. The written contracts are
admitted; and there is a dispute over the existence of the oral
contract.
In either event, there is $10,000 that has been paid and
admitted and that needs to be deducted from the damages you
find, if any, on behalf of the plaintiff. I think I need an
instruction to that end of some sort. So that’s basically what I
am inclined to do.
As part of his objection, Morris’s counsel argued, “So the only issue, I think, is
whether or not the $10,000 applies to those [two written] contracts or not and we
don’t need to discuss the validity or invalidity of a prior agreement. So I would
object to both of these on that basis. And simply an instruction either the jury
thinks the $10,000 gets applied or it doesn’t get applied.”
__________________
(. . . continued)
(Emphasis added.)
[¶9.] After listening to the parties’ arguments, the court recessed to draft its
own jury instructions. Upon reconvening, counsel for Morris objected to page three
of the court’s instructions: “I think the issue is much simpler than that. . . . I think
the jury can be instructed that there was $10,000 that has been paid and they can
be instructed that it’s either been paid for the work that was performed beforehand
or it was paid for the work that was performed under the two contracts.” The court
denied Morris’s objection. 3
[¶10.] It is undisputed that Morris argued that the $10,000 applied to the two
written contracts and that Kadrmas maintained that the $10,000 applied to a
previously completed oral agreement for preliminary work. There is also no dispute
that the jury was left to determine if such a preliminary contract existed. When the
court then instructed the jury that it was required to apply the $10,000 paid to such
preliminary agreement, the court took away from the jury the question whether
Morris proved that the $10,000 applied to the two written contracts. Certainly, the
3. There was a latent ambiguity in the court’s instructions. In the last
instruction, the court reminded the jury: “Remember in reaching a damage
figure that Mr. Morris has paid and the Corporation has received the sum of
$10,000.” Neither side suggests how this should be resolved.
jury could have found that a preliminary agreement existed, that Kadrmas
performed under that agreement free of charge, and that the $10,000 was paid as a
retainer on services to be provided under the two written contracts. Therefore, it
was error for the court to instruct the jury that if it found a preliminary contract to
exist it must apply the $10,000 to that contract. Morris was prejudiced by this error
as the jury was not free to apply the $10,000 where it deemed warranted. Morris is
entitled to a new trial.
[¶11.] Reversed and remanded.
[¶12.] GILBERTSON, Chief Justice, and ZINTER, MEIERHENRY, and
SEVERSON, Justices, concur.