PREHEARING REPORT
THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE
239(d)(2), SCACR.
THE STATE OF SOUTH CAROLINA
In The Court of Appeals
REA Construction
Company, Respondent,
v.
Columbia Country
Club, Appellant.
Appeal from Richland County
Joseph M. Strickland, Master-in-Equity
Unpublished Opinion No. 2004-UP-188
Submitted November 3, 2003 Filed March
22, 2004
AFFIRMED
Richard D. Ries and John S. Nichols, both of Columbia, for
Appellant.
James Coffas and James D. Cooper, Jr., both of Columbia, for
Respondent.
PER CURIAM: In this contract case, REA
Construction Company (REA) sued Columbia Country Club (Country Club) for
the remaining balance due on a construction contract, plus interest and attorneys
fees. The master-in-equity granted judgment to REA, finding Country Club owed
REA a total of $135,221.55. Country Club appeals, arguing: 1) the contract
was ambiguous as to whether it was a unit price contract; 2) even assuming the
contract was not ambiguous, the contract was orally modified into a fixed price
contract; 3) Country Club was not bound by the portions of the contract requiring
it to pay interest on past due amounts and attorneys fees connected with the
collection of past due amounts; and 4) REA breached the implied covenant of
good faith and fair dealing. We affirm.
FACTUAL/PROCEDURAL BACKGROUND
In 1998, Country Club solicited bids for
a construction project that entailed resurfacing a parking lot, repairing cart
paths along a golf course, and completing miscellaneous work to other areas
of its business.
Although REA faxed its proposal to Country
Club in July of 1998, Country Clubs board of directors did not approve the
project for more than a year.
On August 11, 1999, Don Litchford, a member of
Country Clubs board of directors, signed the Proposal and Contract Form (the
contract) on behalf of Country Club. William Rosengarten, a commercial manager
for REA, signed the contract on REAs behalf.
The contract provided prices for various units
of work to be performed and listed $135,182.50 as the estimated price for the
total project. The contract also contained provisions authorizing REA to collect
interest on past due amounts and attorneys fees.
After the parties signed the contract, Ray Ross,
Country Clubs representative on the project, met with Tim Metz, an employee
of REA, to discuss the scope of work to be completed pursuant to the contract.
When the work on the project was finished,
REA sent a final bill in the amount of $208,406.94. Country Club made a payment
to REA in the amount of $117,407.50, but refused to make additional payments.
REA commenced this action on October 11, 2000,
alleging Country Club breached the contract. As damages, REA sought the difference
between the amount of the final bill and the amount paid by Country Club, as
well as interest on the outstanding balance and attorneys fees. Country Club
answered, denying the breach of contract claim, and counterclaimed for breach
of the covenant of good faith and fair dealing, negligence, and unfair trade
practices pursuant to the South Carolina Unfair Trade Practices Act. [1]
In an order dated July 25, 2002, the master
found the parties entered into a valid unit price contract, and Country Club
had breached that contract by refusing to pay the invoice amount. Accordingly,
REA was awarded a judgment against Country Club for $135,221.55, which consisted
of the remainder of the amount billed, plus interest and attorneys fees. Country
Club appeals.
STANDARD OF REVIEW
An action to construe a contract is an
action at law. Pruitt v. South Carolina Med. Malpractice Liab. Joint Underwriting
Assoc., 343 S.C. 335, 339, 540 S.E.2d 843, 845 (2001). In an action at
law, the appellate court will correct any error of law, but it must affirm the
masters factual findings unless there is no evidence that reasonably supports
those findings. Sea Cabins on the Ocean IV Homeowners Assn v. City of N.
Myrtle Beach, 337 S.C. 380, 388, 523 S.E.2d 193, 197 (Ct. App. 1999).
LAW/ANALYSIS
I. Ambiguous
Contract
Country Club argues the master erred by finding
the contract was not ambiguous as to whether it was a unit price contract.
We disagree.
If a contract is clear on its face and reasonably
susceptible to only one interpretation, it is not ambiguous. Padgett v.
South Carolina Ins. Reserve Fund, 340 S.C. 250, 254, 531 S.E.2d 305, 307
(Ct. App. 2000). Conversely, [a] contract is ambiguous when the terms of the
contract are reasonably susceptible of more than one interpretation. South
Carolina Dept. of Natural Res. v. Town of McClellanville, 345 S.C. 617,
623, 550 S.E.2d 299, 302 (2001). When the language of the contract is ambiguous,
parol evidence is allowed to determine the intent of the parties. Southern
Atlantic Fin. Servs. v. Middleton, 349 S.C. 77, 81, 562 S.E.2d 482, 484-85
(Ct. App. 2002).
The determination of whether the language of a
contract is ambiguous is a question of law. McClellanville, 345 S.C.
at 623, 550 S.E.2d at 302-03.
Initially, we note, Country Club does not deny
the contract is clear on its face. The front page of the contract stated the
price was estimated and the contract was a unit price contract.
Instead, Country Club argues these two terms, estimated
and unit price contract, each have more than one reasonable meaning, rendering
the contract ambiguous. Specifically, Country Club argues these words in the
contract could mean REA was only allowed to charge the estimated amount, and
any additional work authorized by Country Club would be billed at a unit price.
The master disagreed with this argument, as do we.
The meaning proposed by Country Club for the term
estimated would render the term meaningless. Further, nothing in the contract
required REA to seek Country Clubs approval to exceed the estimated total listed
on the front page of the contract.
Additionally, as to the term unit price contract,
the attachment to the contract outlined estimated expenditures. For each type
of work to be performed, a subsection provided the price per unit, the estimated
number of units to be used, and the estimated total price for that subsection. [2] A statement on the front page of the contract instructed measurements
to be taken to determine the total amount to charge for the work performed pursuant
to the contract. Further, the contract contained no language suggesting the
estimated number of units could only be increased if Country Club authorized
additional work.
We conclude the master correctly held the contract
was not ambiguous. Therefore, the master did not err in deciding the contract
was a unit price contract. [3] Id. at 623, 550 S.E.2d at 302-03 (It
is a question of law for the court whether the language of a contract is ambiguous.).
II. Oral Modification
Country Club argues even assuming the contract originally
was a unit price contract, the master erred by failing to find the contract
was orally modified into a fixed price contract. We disagree.
After the contract was signed, Ross, Country Clubs
representative on the project, and Metz, an employee of REA, discussed modifications
to the contract. Ross testified Country Club wanted to increase the size of
a parking lot, as well as add parking-lot islands and several man-hole covers.
He also testified Country Club had decided against installing several cart paths.
According to Ross, these changes would result in a total cost of $121,000.00
for the project. Ross testified Metz agreed with Ross that the price of the
project was to remain within Country Clubs $121,000.00 budget. Based on this
conversation between Ross and Metz, Country Club argues the unit price contract
was modified into a fixed price contract.
Generally, a written contract may be orally
modified. Roberts v. Gaskins, 327 S.C. 478, 483, 486 S.E.2d 771, 773
(Ct. App. 1997). Any modification of a written contract must satisfy all requisites
of a valid contract. Player v. Chandler, 299 S.C. 101, 104, 382 S.E.2d
891, 893 (1989). However, a person who enters into a contract on behalf of
a company must have authority to do so for the contract to be valid. Pee
Dee Nursing Home v. Florence Gen. Hosp., 309 S.C. 80, 81-85, 419 S.E.2d
834, 835-37 (Ct. App. 1992).
The master found no evidence to suggest Metz had
the authority to negotiate contracts on behalf of REA and concluded these discussions
between Ross and Metz did not result in a valid contract modification.
The record supports this conclusion. Ross testified
he assumed Metz was the project manager for REA, but that Metz did not make
such a representation. Ross also testified he, not REA, had given Metz a copy
of the contract.
Because the evidence supports the masters conclusion
that there was no modification of the written contract, we hold the master did
not abuse its discretion.
Country Club also contends
that because the testimony of Litchford and Ross as to the modification was
not contradicted by REA, the master erred by failing to rule the contract had
been modified. However, the trier of fact is not required to accept uncontradicted
testimony as true. Black v. Hodge, 306 S.C. 196, 198, 410 S.E.2d 595,
596 (Ct. App. 1991). Therefore, the master did not err by ruling against Country
Club on this issue.
III.
Contract Provisions Concerning Interest and Attorneys Fees
Country Club argues there is no evidence in the record
from which the master could have concluded Country Club agreed to be bound by
the portions of the contract requiring it to pay interest on past due amounts
and attorneys fees connected with the collection of past due amounts. We disagree.
A person signing a document is responsible for reading
the document and making sure of its contents. Every contracting party owes a
duty to the other party to the contract and to the public to learn the contents
of a document before he signs it. Regions Bank v. Schmauch, 354 S.C.
648, 663, 582 S.E.2d 432, 440 (Ct. App. 2003); see Munoz v. Green
Tree Fin. Corp., 343 S.C. 531, 541, 542 S.E.2d 360, 365 (2001) ([A] person
who can read is bound to read an agreement before signing it.).
Although Litchford admits signing the contract
on behalf of Country Club, Litchford testified that he did not read the General
Terms and Conditions section, the section relating to interest and attorneys
fees. Because Litchford failed to read this section of the contract, Country
Club argues it should not be required to pay interest or attorneys fees.
Litchfords signature is located on the front page
of the contract. Above Litchfords signature, there is a provision that states
[REA] propose[s] to furnish all the necessary supervision, labor, equipment
and materials required to complete the following work as outlined below, subject
to terms and conditions stated below and on reverse side hereof and incorporated
as part of this proposal. (emphasis added).
The General Terms and Conditions section is located
on the back of the first page of the contract. One of its subsections authorizes
REA to collect interest on past due accounts, while another subsection allows
REA to recoup attorneys fees related to the collection of past due amounts.
Because Litchford acknowledged
signing the contract, the master did not err by concluding Country Club was
bound by the General Terms & Conditions section of the contract.
Country Club also argues
the General Terms & Conditions section of the contract was not conspicuous,
and as such, Country Club should not be bound by it. To support this proposition,
Country Club relies on Kumpf v. United Tel. Co. of Carolinas, 311 S.C.
533, 429 S.E.2d 869 (Ct. App. 1993).
In Kumpf, this court
was confronted with the task of determining whether a contract disclaimer in
an employee handbook was sufficiently conspicuous to assure the promises in
the handbook were nonbinding. Id. at 537, 429 S.E.2d at 872. To assist
in its determination, this Court looked to the South Carolina Uniform Commercial
Code (UCC) for guidance as to the definition of conspicuous. Id.
In Kumpf, we did
not hold all contract provisions must be conspicuous, and we decline to do so
now. Further, because Kumpf does not discuss contract provisions concerning
interest or attorneys fees, and we have found no South Carolina cases specifically
requiring contract provisions regarding interest or attorneys fees to be conspicuous,
we hold there is no requirement that these provisions be conspicuous. Thus,
Country Clubs argument is without merit.
IV. Implied Covenant of Good Faith and
Fair Dealing
Country Club argues REAs
failure to obtain approval before increasing the price of the project was a
breach of the implied covenant of good faith and fair dealing. We disagree.
[T]here exists in every
contract an implied covenant of good faith and fair dealing. Commercial
Credit Corp. v. Nelson Motors, 247 S.C. 360, 367, 147 S.E.2d 481, 484 (1966).
However, there is no breach of an implied covenant of good faith where a party
to a contract has done what provisions of the contract expressly gave him the
right to do. Adams v. G.J. Creel & Sons, 320 S.C. 274, 277, 465
S.E.2d 84, 85 (1995).
Because we have concluded
the master was correct in finding the parties entered into an unambiguous unit
price contract and Country Club was bound by it, there is no evidence to support
bad faith on the part of REA.
The attachment to the contract
outlined estimated expenditures. For each type of work to be performed, a subsection
provided the price per unit, the estimated number of units to be used, and the
estimated total price for that subsection. Both the number of units and the
total price for the subsection were labeled as estimates. Although REA increased
the number of units used in the project and this increase in units was reflected
in the final bill, the unit price did not increase. Because only estimated
terms increased, REA performed according to the contract. Therefore, the master
did not err by finding that REA did not breach the implied covenant of good
faith and fair dealing.
CONCLUSION
For the foregoing
reasons, the masters decisions are
AFFIRMED.
HEARN, C.J., HOWARD, and KITTREDGE, JJ., concurring.
[1] The master found Country Club failed to prove its claims for negligence
and unfair trade practices. These rulings are not appealed.
[2] Under the heading Resurfacing Lot and Related Work, for example,
the price for the parking lot resurfacing was shown as $36.00 per ton. We
estimated 12.070 square yards. This yields approximately 1,000
tons. Subtotal estimated price = $36,000.00. (emphasis added).
[3] Country Club further argues both parties intended a fixed price contract,
and thus, the contract should be reformed. Because Rosengarten signed the
contract on behalf of REA, and Rosengarten testified REA intended to create
a unit price contract, there is evidence that reasonably supports the masters
implicit decision that there was no mutual mistake as to the type of contract
entered into by the parties. See Crosby v. Protective Life Ins.
Co., 293 S.C. 203, 206, 359 S.E.2d 298, 300 (Ct. App. 1987) (A contract
may be reformed on the ground of mistake when the mistake is mutual. . . .
A mistake is mutual where both parties intended a certain thing and by mistake
in the drafting did not obtain what was intended.).