Folgers Architects Ltd. v. Kerns

612 N.W.2d 539, 9 Neb. Ct. App. 406, 2000 Neb. App. LEXIS 193
CourtNebraska Court of Appeals
DecidedJune 27, 2000
DocketA-98-1326, A-98-1327, A-98-1328
StatusPublished
Cited by8 cases

This text of 612 N.W.2d 539 (Folgers Architects Ltd. v. Kerns) is published on Counsel Stack Legal Research, covering Nebraska Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Folgers Architects Ltd. v. Kerns, 612 N.W.2d 539, 9 Neb. Ct. App. 406, 2000 Neb. App. LEXIS 193 (Neb. Ct. App. 2000).

Opinion

Inbody, Judge.

I. INTRODUCTION

Folgers Architects Limited (FAL), assignee of Folgers Architects & Facility Design, Inc. (FAFD), a Delaware corporation, brought an action against the defendants to collect unpaid architectural fees, reimbursable expenses, and termination fees relating to several apartment construction projects. FAL asserted causes of action under theories of breach of oral and written contracts, promissory estoppel, and quantum meruit. The district court for Douglas County entered judgment in favor of FAL against the defendants. This timely appeal followed.

II. STATEMENT OF FACTS

1. Factual Background

Sometime in late 1992 or early 1993, Jeffrey Anderzhon, an architect with Anderzhon Architects, Inc. (AAI), first met with Richard A. Kerns, to discuss the possibility of AAI’s providing architectural services for the development of several apartment complexes. Weekly meetings were held to discuss the development of the apartment complexes and were attended by Anderzhon; Kerns; Gene Wilczewski, a developer; and Larry Hagewood, an engineer.

During the meetings, Kerns and Anderzhon came to a verbal agreement that Anderzhon would provide architectural services for apartment construction projects being developed. The apartment projects were known as Thomberry, Burwick, Walton Heath, Ashberry, Sussex Place, Greely, Wingpoint, Devonshire, Reno, and Kennamare. It was agreed that the design of the apartment projects would be based on two other apartment projects that Anderzhon had designed and that the fees for the architectural services would be on a per unit basis. It was further agreed that Anderzhon would be paid a $5,000 initial startup fee for each project and that Anderzhon would issue invoices for his services as the architectural services progressed.

*409 Anderzhon and Kerns further agreed that as each apartment project progressed, a written form contract prepared by the American Institute of Architects, known in the industry as a B181 contract, would be executed in compliance with requirements of Housing and Urban Development (HUD). HUD required that a B181 contract be executed for all projects that sought HUD coinsurance for the private financing of multiple-unit dwellings.

In March 1993, Anderzhon began the architectural services for the apartment projects. On February 1,1994, Anderzhon and Kerns executed a B181 contract for the Burwick project. The contract was entered into by Burwick Apartments, Ltd., as the owner and AAI as the architect. The contract outlined among other things the architect’s services and responsibilities, the administration of the contract, the owner’s responsibilities, the construction cost, payments to the architect, ownership and use of documents, termination of the agreement, and the basis of compensation.

In July 1994, AAI merged its operation with FAFD. However, Anderzhon kept the accounts receivable for the work AAI had performed on these projects prior to July 1994. All services provided by Anderzhon and FAFD after July 1994 were billed by FAFD. The evidence further shows that Anderzhon informed Kerns that his practice had merged with FAFD and that all future work relating to the apartment projects would be performed and billed by FAFD. FAFD, along with Anderzhon, continued to provide architectural services for the apartment projects. The evidence shows that Kerns made no objection to FAFD performing the architectural design work or billing for the services provided and reimbursable expenses incurred.

On November 1, 1994, Anderzhon and Kerns executed a B181 contract for the Walton Heath project. The contract was executed by Walton Heath Apartments, Ltd., as the owner and FAFD as the architect.

As each project began, Anderzhon would set up a billing system for the project. As architectural services were provided on a particular project, invoices were issued to Kems. The invoices reflected the percentage of the work that had been completed on the project, the amount due, and the amount of the reimbursable *410 expenses due. Kems then issued checks for the payment of the invoices from checking accounts that were set up for each project.

Apparently, Kems felt that the apartment projects were over budget, and he was having difficulty raising enough capital to cover all of the apartment construction projects. So, Kems notified Anderzhon and FAFD that none of the apartment projects would be completed and that no additional architectural fees or reimbursable expenses associated with the apartment projects would be paid. Anderzhon and FAFD made several demands to Kems for payment of the architectural fees due, and Kerns responded that he was “tapped out.”

On May 5, 1995, Anderzhon sent Kerns a letter of termination, notifying Kems that FAFD was terminating its services on the apartment projects because of Kems’ failure to proceed with the projects. On May 17, FAFD’s legal counsel also sent Kerns a demand letter for the payment of the outstanding accounts receivable owed on the projects. No further payments were made on the projects.

In late 1995, 1996, and 1997, FAFD filed lawsuits against Kems; Burwick Apartments, Ltd.; Thomberry Apartments, Inc.; Sussex Place Apartments, Inc.; Ashberry Apartments, Inc.; and Walton Heath Apartments, Inc., for breach of oral and written contracts relating to the nonpayment of the accounts receivable relating to the architectural work performed on the apartment projects. These suits were later consolidated for trial.

On or about May 1, 1997, Anderzhon resigned his position with FAFD. At the time Anderzhon resigned, he assigned to FAFD the accounts receivable of AAI for architectural services provided on the apartment projects prior to July 1994.

In August 1997, FAFD discontinued its operations because of financial difficulties. At this time, FAFD assigned its accounts receivable to JLK, “an assignment entity.” These receivables included the receivables related to the apartment projects at issue.

Subsequently, Ken Folgers, the former president of FAFD, formed FAL, an Illinois corporation. FAL then repurchased the accounts receivable previously assigned by FAFD to JLK. The receivables repurchased by FAL included the receivables at issue in this case.

*411 The record reflects that the trial court allowed FAFD to amend the petitions to identify FAL as the assignee of FAFD and also granted the defendants leave to further plead or stand on their prior answers.

Trial on this matter was held before the Douglas County District Court without a jury on August 13, 14, and 27, 1998. Although several witnesses testified, for purposes of our review, we need only summarize the testimony of Anderzhon and Kerns below.

2. Testimony of Anderzhon

Anderzhon testified that in late 1992 or early 1993, he and Kerns entered into a verbal agreement that Anderzhon would provide architectural services in connection with the construction of several apartment complexes being developed by Kerns.

Anderzhon described the type and the amount of work that he performed on each apartment project.

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612 N.W.2d 539, 9 Neb. Ct. App. 406, 2000 Neb. App. LEXIS 193, Counsel Stack Legal Research, https://law.counselstack.com/opinion/folgers-architects-ltd-v-kerns-nebctapp-2000.