Circle B Enterprises, Inc. v. Steinke

1998 ND 164, 584 N.W.2d 97, 1998 N.D. LEXIS 181, 1998 WL 612809
CourtNorth Dakota Supreme Court
DecidedSeptember 15, 1998
DocketCivil 970384
StatusPublished
Cited by10 cases

This text of 1998 ND 164 (Circle B Enterprises, Inc. v. Steinke) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Circle B Enterprises, Inc. v. Steinke, 1998 ND 164, 584 N.W.2d 97, 1998 N.D. LEXIS 181, 1998 WL 612809 (N.D. 1998).

Opinions

MESCHKE, Justice.

[¶ 1] Jim Steinke, doing business as Heritage Corvette, appealed a judgment awarding Circle B Enterprises, Inc. $20,161.01 for his breach of a contract to restore a classic car. We modify the judgment and, as modified, we affirm.

[¶ 2] In 1990, Steinke and Circle B, through its president, Jerald Bugliosi, orally agreed Steinke would restore Circle B’s 1961 Corvette. When Steinke failed to do the restoration timely, Steinke and Circle B ■wrote an agreement, dated October 26, 1994, requiring Steinke to finish the work by April 21, 1996. The written agreement recited Circle B had paid Steinke $13,815, including $1,600 for a hard top and $2,161.01 as credit for unfinished work on the car. The agreement identified $14,094.43 in remaining work on the car and agreed, after credit for payments already made by Circle B, the balance due for the remaining work was $10,333.42. The parties’ agreement specified:

In the event [Steinke] fails to complete and deliver the vehicle no later than April 21, 1995, there will then be a penalty of $100.00 per day assessed and deducted from the amount of $10,333.42, plus or minus items which have been added to the cost as set out in this agreement. Further, Circle B will then be free to contact a third party to perform what [Steinke] had agreed to perform on this vehicle, and any amount which Circle B does have to pay to that third party will be the responsibility of [Steinke]. Upon the vehicle being restored as provided in this agreement, however, Circle B will then pay to [Steinke] $10,333.42, plus or minus items which have been added to the cost as set out in this agreement.

The agreement declared “Time is of the essence in the performance of each and every term of this agreement.”

[¶ 3] Steinke did not finish restoring the car by April 21, 1995. In July 1995, Circle B sued Steinke to enforce the agreement and recover possession of the car. They then provisionally agreed to extend the deadline for completion of the car to September 27, 1995, but Steinke did not finish the car by then, and it was returned to Circle B on September 28, 1995. Circle B hired another company to complete the work for $9,251.13.

[¶4] The trial court ruled Steinke had breached “all agreements” with Circle B. The court found Steinke had performed $11,-653.99 in work on the car, and Circle B had paid for that work, leaving a credit on account with Steinke of $2,161.01. The court ordered Steinke to pay Circle B $2,161.01 for that credit. The court decided damages for Steinke’s breach of contract were difficult to ascertain when the contract was made, but refused to enforce the $100 per day assessment against Steinke because it “related to the reduction in the final payment for the Corvette. The services were never completed by [Steinke] and the payment of $10,333.42 was not made to [Steinke]. The penalty clause relates to reducing the final payment for late completion of the project.” The court nevertheless decided Steinke’s breach resulted in Circle B not having the car available to promote its restaurants and awarded Circle B $18,000 in damages for loss of use at $3,000 per year for six years. Steinke appealed.

[¶ 5] Steinke primarily contests the $18,000 loss-of-use damages as unfounded in the pleadings and the evidence. Steinke argues he did $3,756.64 in work on the car after October 26, 1994, and the trial court erred in failing to recognize that work as an offset against the $2,161.01 credit Circle B had with Steinke at the time of the contract. Steinke contends he is entitled to be paid for that work as a matter of contract or, alternatively, as a matter of unjust enrichment. Steinke also argues the court erred in not awarding him the $1,118.29 difference between the agreed amount of $10,333.42 for the remain[100]*100ing work and the actual amount of $9,251.13 that Circle B paid to complete the work.

[¶ 6] A contractor who fails to substantially perform may not recover at all under the contract. Dittmer v. Nokleberg, 219 N.W.2d 201, 206 (N.D.1974). Substantial performance means a contractor has pei’formed in good faith, except as to unimportant and unintentional omissions or deviations that are the result of mistake or inadvertence. All Seasons Water Users Ass’n v. Northern Improvement Co., 399 N.W.2d 278, 281 (N.D.1987); Gross v. Star-Rite Industries, 336 N.W.2d 359, 361 (N.D.1983). As we explained in All Seasons at 280, whether a contractor has substantially performed is a question of fact.

[¶ 7] Here, the trial court found Steinke had breached “all agreements” with Circle B. The court also found Steinke had furnished $11,653.99 in services and goods for the car. Their agreement recognized Steinke had done $10,053.99 in work on the car before October 26, 1994. Thus, the court effectively found that, after October 26, 1994, Steinke furnished only $1,600 in services and goods, an amount equal to the price of the hard top. Although the court did not make a finding about substantial performance, the written agreement specified that $14,094.43 in work remained to be done on the car on October 26, 1994. Both the court’s implicit finding that Steinke furnished only $1,600 in services and goods after October 26, 1994, and Steinke’s claim for $3,756.64 thereafter, represent completion of less than one-third of the work remaining on the ear. We decline to characterize the magnitude of the deviations from this contract as unimportant. We hold as a matter of law Steinke failed to substantially perform his contract with Circle B, and he is not entitled to recover in contract for work performed after October 26, 1994.

[¶8] Still, we have recognized a contractor who has not substantially performed may often be entitled to recover outside the contract for the value of the benefit conferred under a theory of quantum meruit or unjust enrichment. Kulseth v. Rotenberger, 320 N.W.2d 920, 922 (N.D.1982). We there recognized such an action was an equitable one governed by considerations of natural justice, and we said Dittmer did not necessarily preclude recovery in quantum meruit, as distinguished from recovery in contract, for the reasonable value of goods and services rendered. Kulseth, at 922-23. In Kulseth, at 923, we cited Restatement (2nd) Contracts § 374(1) (1981) as authority for the principle that a breaching contractor may often be entitled to restitution for a benefit conferred by part performance. Under Restatement (2nd) Contracts § 374(2), however, the parties may agree that a breaching contractor is not entitled to restitution if the value of the part performance is integrated into a liquidated damages agreement.

[¶ 9] Thus, Steinke’s quantum me-ruit argument needs an examination of the parties’ written agreement, particularly the clause for assessment of $100 a day against Steinke for failure to complete the ear by April 21,1995. Primarily the construction of a written contract to determine its legal effect is a question of law. Pamida, Inc. v. Meide, 526 N.W.2d 487, 490 (N.D.1995). Contracts are construed to give effect to the mutual intention of the parties at the time of contracting. N.D.C.C. § 9-07-03; Pamida, at 490.

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Cite This Page — Counsel Stack

Bluebook (online)
1998 ND 164, 584 N.W.2d 97, 1998 N.D. LEXIS 181, 1998 WL 612809, Counsel Stack Legal Research, https://law.counselstack.com/opinion/circle-b-enterprises-inc-v-steinke-nd-1998.