North Central Utilities, Inc. v. East Columbia Water District

497 So. 2d 326, 1986 La. App. LEXIS 8016
CourtLouisiana Court of Appeal
DecidedOctober 29, 1986
DocketNo. 18074-CA
StatusPublished
Cited by3 cases

This text of 497 So. 2d 326 (North Central Utilities, Inc. v. East Columbia Water District) 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
North Central Utilities, Inc. v. East Columbia Water District, 497 So. 2d 326, 1986 La. App. LEXIS 8016 (La. Ct. App. 1986).

Opinion

MARVIN, Judge.

The plaintiff utility contractor appeals a judgment rejecting its demand against the water district for the $5,600 balance owed on a contract for extending water lines. The issues relate to the admissibility and sufficiency of evidence and as to why the $5,600 was not paid. We reverse and render judgment in favor of plaintiff utility contractor.

FACTS

The contract, signed in 1981, required the work to be completed by April 30, 1982. The parties signed three change orders for the work which increased the contract price. The first change order was not placed in evidence. The second change order was executed in May 1982 and provided that the contract period provided for completion would be unchanged. The third change order of August 10, 1982, which was later signed, extended the contract period 10 days.

Plaintiff notified defendant’s engineers in an August 18, 1982, letter that all work required by the contract and the three change orders had been completed and was ready for inspection. The engineers inspected the site on August 30, 1982, and found the work to be substantially completed. The water district formally accepted the work about September 21, 1982.

The water district paid plaintiff the final payment on the contract ($34,725.27) in mid-October 1982 but exacted plaintiff’s check in return in the amount of $5,600. These developments then ensued:

On November 8, 1982, the clerk of court certified that no liens had been filed against the project. Plaintiff sued defendant on January 7, 1983, alleging that the $5,600 represented the amount defendant retained for liens until the lien period expired and that defendant refused to pay this amount to plaintiff even though the lien certificate showed that no liens had been filed. Defendant admitted only that the parties had entered into the contract and otherwise answered in a general denial.

Plaintiff’s president testified on direct examination as the petition alleged. On cross-examination, he explained that in a telephone conversation, when he requested the final payment, he was told by defendant's project engineer that the $34,725.27 would not be released unless an amount was withheld as liquidated damages for failure to complete the work on time. Plaintiff’s president told the engineer he understood that any “squabbles about any time” had already been settled at the meeting on August 10, 1982. Because the engineer persisted that the owner would not release all of the final payment, plaintiff said he agreed to accept all but $5,600 but with the understanding or upon the condition that a meeting would be held in the hear future to resolve the dispute. This meeting was never held.

When the above discussion about the final payment was had, the Farmers Home Administration, which funded the project, had written its check for $34,725.27. Plaintiff’s president testified that he had obtained a “letter of credit” guaranteeing that amount so the payment could be released before the lien period expired. Rather than having the FHA check and the [329]*329letter of credit rewritten, plaintiff gave defendant a cashier’s check for $5,600 in exchange for the FHA check.

Under the described circumstances, the contractual provision stating that the contractor’s acceptance of final payment shall operate as a release of all claims against the owner, is not applicable or pertinent to the dispute over the $5,600.

On October 13, 1982, plaintiff wrote to defendant’s engineer, stating the understanding that the $5,600 would be “held in escrow by the Water District until the lien period has been satisfied” and that plaintiff would have a claim to the $5,600 once a clear lien certificate was produced.

The testimony conflicted whether a copy of this letter was given to defendant’s president when he gave plaintiff the FHA check in exchange for the $5,600 check. Even the testimony of plaintiff’s president indicates, however, that defendant considered the $5,600 as liquidated damages for delay in completing the contract and not as retainage for liens.

When defense counsel began cross-examining plaintiff’s president about whether the job had been completed on time, plaintiff objected on the grounds that defendant had not raised the issue of liquidated damages as an affirmative defense or as a reconventional demand. The objection was overruled and evidence of delays was presented by both sides, subject to plaintiff’s objection.

ADMISSIBILITY OF EVIDENCE OF DELAYS

A claim for liquidated damages is generally required to be raised as an affirmative defense or as a reconventional demand. Kean v. Lemaire, 451 So.2d 151 (La.App. 1st Cir.1984). The purpose of requiring affirmative defenses to be raised in the answer is to prevent surprise by giving the plaintiff fair notice of the nature of the defense and avoiding unexpected issues. Bank of Coushatta v. Evans, 313 So.2d 644 (La.App.2d Cir.1975).

This issue was not a surprise, because plaintiff knew defendant had claimed the $5,600 as liquidated damages when the checks were exchanged in mid-October 1982. Additionally, the objection to evidence of delays was raised after plaintiff’s president had testified at length about being told in the October telephone discussion with the engineer that the $5,600 represented liquidated damages. Plaintiff did not request a continuance that CCP Art. 1154 allows when a showing is made that the admission of evidence on issues not raised by the pleadings would cause prejudice.

We find no error in the trial court’s overruling plaintiff’s objection and admitting the testimony. Brown v. Sambo’s of Louisiana, Inc., 403 So.2d 813 (La.App.2d Cir.1981).

LIQUIDATED DAMAGE CLAIM

When a contractor has substantially performed a building contract, he is entitled to recover the contract price less whatever damages the owner may establish as attributable to a breach. Graham v. Lieber, 191 So.2d 204 (La.App.2d Cir.1966), writ denied.

The parties do not dispute that plaintiff completed or performed this contract. In such circumstances, the owner bears the burden of proving it is entitled to the amount withheld from the contract price.

Defendant calculated the $5,600 by counting the number of days between the stipulated completion date (April 30, 1982) and the date the work was certified as substantially complete by defendant’s engineer (August 30, 1982), or 122 days, less 10 days granted as an extension in the third change order. Defendant claimed 112 days at the contractual rate of $50 per day, or $5,600, as liquidated damages.

Plaintiff produced evidence of many delays caused other than by plaintiff, including the engineer’s delay in approving the list of materials submitted by plaintiff; the lack of certain permits which defendant [330]*330was required to obtain; deficiencies in the plans and specifications for the easing that linked the water plant to a tank; defendant’s requests for additional work to be done; and bad weather.

Plaintiff insisted that these matters automatically extended the completion date as long as defendant knew or was notified of the reason for the delay. This interpretation is not supported by the contract, which provides:

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Related

O & M Construction, Inc. v. State, Division of Administration
576 So. 2d 1030 (Louisiana Court of Appeal, 1991)
O & M CONST. v. State, Div. of Admin.
576 So. 2d 1030 (Louisiana Court of Appeal, 1991)
North Central Utilities v. East Columbia Water District
501 So. 2d 229 (Supreme Court of Louisiana, 1987)

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Bluebook (online)
497 So. 2d 326, 1986 La. App. LEXIS 8016, Counsel Stack Legal Research, https://law.counselstack.com/opinion/north-central-utilities-inc-v-east-columbia-water-district-lactapp-1986.