CLOUD CONST., INC. v. Schneider, Inc.

491 So. 2d 32, 1986 La. App. LEXIS 6923
CourtLouisiana Court of Appeal
DecidedMay 14, 1986
Docket85-247
StatusPublished
Cited by5 cases

This text of 491 So. 2d 32 (CLOUD CONST., INC. v. Schneider, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CLOUD CONST., INC. v. Schneider, Inc., 491 So. 2d 32, 1986 La. App. LEXIS 6923 (La. Ct. App. 1986).

Opinion

491 So.2d 32 (1986)

CLOUD CONSTRUCTION, INC., Plaintiff-Appellee,
v.
SCHNEIDER, INC. and Aetna Casualty and Surety Company, Defendants-Appellants.

No. 85-247.

Court of Appeal of Louisiana, Third Circuit.

May 14, 1986.
Rehearing Denied June 24, 1986.
Writ Denied October 3, 1986.

*33 Victor E. Stilwell and Brian Erikson, Ofdeutsch, Kerrigan & Stiles, New Orleans, for defendants-appellants.

McHale, Bufkin & Dees, Louis D. Bufkin, Lake Charles, for plaintiff-appellee.

Before STOKER, DOUCET and FALKENHEINER[*] JJ.

W.C. FALKENHEINER, Judge Pro Tem.

Plaintiff-Appellee, Cloud Construction, Incorporated, (Cloud) sued Defendant-Appellants, Schneider Incorporated, (Schneider) and its surety, Aetna Casualty and Surety Company, (Aetna) for the sum of $102,344.18 plus interest, attorney's fees, and costs allegedly owed on a contract for labor and materials furnished on a construction project. Schneider filed an answer in the form of a general denial and later filed a reconventional demand for $1,279.38 plus attorney's fees, interest and cost.

After trial, Judgment was rendered in favor of Cloud and against the Defendants, insolido, in the amount of $89,014.78 and for all costs. The reconventional demand of Schneider was dismissed.

Schneider and Aetna have appealed.

FACTS

Schneider had a contract for work at the PPG Industries, Incorporated Plant located in Calcasieu Parish. This contract required Schneider to do certain site preparations which it desired to subcontract. Cloud was contacted and subsequently Schneider and Cloud entered into a written contract dated 20 August, 1982. This contract was executed on Schneider's part by S. Byrne Doyle, its Senior Vice-President and by the Purchasing Manager, whose signature is illegible. It was executed on the part of Cloud by Leonard Cloud, its President.

The work to be performed under the contract was listed in an Exhibit C attached to the printed contract form furnished by Schneider. Exhibit C referred to certain drawings which were not attached to the original contract and contained the detailed description of the work to be done. Cloud was to be paid $43,500.00 for performing its obligation under the contract.

Cloud immediately began work, but Schneider began to request change orders and additional work. These change orders ultimately totalled nine in number and amounted to $114,944.85. All of the change orders were in writing and were consented to by Cloud. They were executed on Schneider's part by Richard Kalinowski. In addition to the nine change orders there were also thirty-four time and material change orders totalling $10,903.57, all of which were paid in full.

Schneider's home office is located in Pittsburg, Pennsylvania and the original contract and the change orders were executed by its stated officers who were located at its home office.

After Cloud had begun work and had begun to receive the change orders, time and material change orders and the detailed drawings, he realized that the contract was undergoing material changes with which he expressed dissatisfaction to the extent that he advised Schneider's people he was considering quitting the job or defaulting on the contract. At this point Cloud conducted oral negotiations with Don Mills, the Regional Manager of Schneider. Mills was in contact with his immediate supervisor in Pennsylvania, a man named McCahill. McCahill was the Director of Marketing for Schneider and Don Mills was *34 its Regional Manager, neither of whom technically had the authority from Schneider to bind it contractually. Nevertheless, first Don Mills, and subsequently McCahill, at a crawfish boil, advised Cloud to continue work, and that if he kept proper records of the work done and the cost, he would be paid his actual cost for labor and materials plus a 5% profit.

Cloud was satisfied with these representations and continued to work, subsequently completing all of the work during the month of April, 1983. No complaint was made with respect to the quality of the work done.

As heretofore stated, Schneider paid Cloud all of the time and material change orders and paid all of the initial contract price of $43,500.00 and the nine change orders totalling $114,944.85 with the exception of the sum of $17,803.52 which was withheld by Schneider and which it admits to be owed. When the contract was completed Cloud billed Schneider and Schneider presented Cloud with a lien affidavit and waiver of liens which it required to be executed before final payment. Because of the dispute with respect to the additional work, Cloud refused to execute the waiver of lien and subsequently filed a lien for the amounts claimed.

Schneider then had the lien bonded with Aetna in accordance with Louisiana law and this litigation resulted.

ISSUES

The Defendant-Appellants have stated that the two issues presented here are:

(1) Whether the trial Court properly invoked the doctrine of equitable estoppel to permit appellee to recover its costs incurred plus 5%.

(2) Whether the trial Court properly denied Schneider's reconventional demand.

OPINION

The trial Court first found that there was no verbal contract between Cloud and Schneider for the additional work. Although the Court found that Mills and McCahill had apparent authority to bind Schneider, and Cloud was entitled to rely upon their verbal representations, there was no oral contract because Cloud did not prove any specific agreement as to the work to be done and the amount to be paid for it. Nevertheless, the trial Court found that Cloud was entitled to recover on the basis of equitable estoppel.

THE AUTHORITY OF MILLS AND MCCAHILL TO BIND SCHNEIDER

The trial Court found that Mills and McCahill had apparent authority to bind Schneider, and Cloud was entitled to rely upon it.

The record reveals that Schneider had been doing business in the Lake Charles area for some time, and had resident agents locally. An individual named Al Jackson was the Regional Manager and was replaced by Don Mills. The internal structure of Schneider was such that Jackson and Mills were in the Sales and Marketing Division headed by McCahill in Pittsburg, none of whom were empowered to bind Schneider to the type of contract involved here.

Cloud knew both Jackson and Mills, and was uncertain as to their precise authority with Schneider and their positions within the organization of that corporation. Schneider had placed a large advertisement in the local press with Mills' picture, identifying him as its Regional Manager and containing other promotional information (Exhibit P-4).

It is true that all of the written change orders had been executed by Richard Kalinowski in Pittsburg on Schneider's behalf, but it is also true that the original contract had been executed by S. Byrne Doyle, Schneider's Senior Vice-President and by its Purchasing Manager whose signature on the contract is not legible (Exhibit D-1, tr. pg. 16). Thus, when Cloud was told by Mills to continue the work being requested of him by Schneider's people on the ground, and this was verified by Mills' superior, *35 McCahill, at the crawfish boil, he was justified in proceeding to do the work of which Schneider was fully cognizant.

The doctrine of apparent authority requires:

(1) The manifestation of the authority by the principal.
(2) Reasonable reliance upon the purported authority of the agents as a result of the manifestation.

See Byles Welding and Tractor, Incorporated v.

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Bluebook (online)
491 So. 2d 32, 1986 La. App. LEXIS 6923, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cloud-const-inc-v-schneider-inc-lactapp-1986.