Tim Kruse and Russell Bries d/b/a Kruse "N" Bries Construction v. Don Krumwiede and Molly Krumwiede

• Court: Court of Appeals of Iowa
• Decided: March 20, 2019
• Docket: 18-0173
• Status: Published

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 18-0173 Filed March 20, 2019

TIM KRUSE and RUSSELL BRIES d/b/a KRUSE "N" BRIES CONSTRUCTION, Plaintiffs-Appellants,

vs.

DON KRUMWIEDE and MOLLY KRUMWIEDE, Defendants-Appellees. ________________________________________________________________

Appeal from the Iowa District Court for Allamakee County, John J.

Bauercamper, Judge.

The plaintiffs appeal the district court’s ruling that they failed to prove the

defendants breached their written contract or an implied contract. AFFIRMED.

Jeffrey E. Clements, West Union, for appellants.

Laura J. Parrish of Miller, Pearson, Gloe, Burns, Beatty & Parrish, PLC,

Decorah, for appellees.

Considered by Potterfield, P.J., Doyle, J., and Danilson, S.J.*

*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2019). 2

POTTERFIELD, Presiding Judge.

The plaintiffs, Tim Kruse and Russell Bries, who do business as Kruse “N”

Bries Contruction, were hired by Don and Molly Krumwiede to build and finish the

Krumwiede’s new home. The plaintiffs filed suit against the Krumwiedes for

breach of contract and promissory estoppel or unjust enrichment, maintaining

they performed construction services pursuant to written and verbal contracts

and the Krumwiedes failed to compensate them fully. The district court denied

the plaintiffs’ claim,1 finding they failed to prove their case. On appeal, the

plaintiffs claim the district court “was incorrect in the conclusions of law

necessary for plaintiffs to establish their cause of action.”

I. Background Facts and Proceedings.

The original Krumwiede home was totally destroyed by fire in September

2012. The home was insured for replacement cost, and the insurance policy also

included coverage for up to one year of living expenses while the home was

rebuilt. The Krumwiedes contacted Kruse “N” Bries Construction to build a new

home on their acreage, relying on the insurance proceeds to finance the

construction, with the cooperation of their mortgage lender.

Later, the Krumwiedes met Kruse and showed him a picture of a home

called the “Woodsman,” which they had obtained from advertising materials

distributed by Menards. The Krumwiedes discussed their interest in having a

home similar in appearance to that home built; they did not ask that the materials

1 The Krumwiedes filed countersuits against the Kruse and Bries, claiming a breach of duty of implied warranty of workmanlike construction and defective construction. The district court denied their claims, and the Krumwiedes did not appeal that decision. 3

and plans for this particular home be obtained from Menards or that this specific

“Woodsman” home be built.

After meeting with the Krumwiedes, Kruse obtained the materials list for

the “Woodsman” model home from a nearby Menards store. It is disputed as to

when Kruse actually purchased the plans for the Woodsman home from

Menards, but at some point Kruse “N” Bries Construction did purchase the

detailed blueprints from Menards. Kruse did not rely on the materials list

obtained from Menards. Instead, he prepared his own materials list based upon

the suppliers he customarily used and the home and features he proposed to

provide. He then prepared a preliminary document and showed it to the

Krumwiedes. The preliminary document, dated September 26, 2012, indicated a

price of $175,000 to construct and finish the home.

Kruse revised that first document and presented a final five-page version

to the Krumwiedes, which was dated October 1, 2012. Each of the five pages

contained four columns, called description, quantity, price, and amount. The

description column on each page included a list of items commonly associated

with the building of a home, including, but not limited to, these items: cement and

digging, footings, walls, floors, electrical, plumbing and heating, building

materials, siding. Nothing was listed in the other three columns opposite these

items. At the bottom of the last page, a line called “Total Materials and Labor”

showed $175,000 in both the price and amount column. The $175,000 was

crossed out and replaced, in handwritten numbers, with $190,000.00 for both the

price and amount column. Under the total, typewritten in all capital letters and 4

heavy bold face type, it stated, “This is a bid not an estimate. 50% downpayment

[sic] required. We are registered in State of Iowa as general contract[o]rs.”

The document did not state that it was a contract between one party as

“builder” and the other as “owner” for the construction of a home. It included no

other terms of payment or anything in addition to what was included in the bold

face type. It was not signed by either party. No completion date was listed. No

description of the plans or specifications were included. There was no reference

to the Menards “Woodsman” model. The only indication of what was to be done

was what one could imply from the type of products to be provided as listed in

the description columns. Additionally, the document did not include a procedure

to follow for the addition or subtraction of any features or materials from the

house project nor the effect on the stated price for the house due to changes.

Both parties acknowledged in their testimony that they had an agreement

to build a house for $190,000.00 and it was to look like the Menard’s picture of a

“Woodsman” model home.

Construction on the house began in mid-November of 2012. The

Krumwiedes made a down payment of $92,000.00 before work began.

In testimony, Kruse outlined what he described were changes to the

original plan and extra items or upgrades that were added to the project at the

request of the Krumwiedes after his initial bid was accepted and construction

began. He asserted that it was understood that there would be additional costs

because of the changes. None of these changes were documented by written

plans or a change order. Molly Krumwiede testified there were no changes made

after the date they accepted the bid for $190,000 and that Kruse was told all of 5

the things they wanted that were different than the Woodsman design before

they hired Kruse “N” Bries Construction by accepting the $190,000 bid.

The ultimate changes to the Woodsman design were substantial and

significant, including changing the garage from a one stall to two stalls, which

then enlarged the living space above the garage, and adding a walk-out

basement.

In addition to the down payment of $92,000, throughout the construction

process, Kruse asked for additional payments from the Krumwiedes totaling

$76,000. The Krumwiedes made the additional payments, and ultimately paid

Kruse “N” Bries Construction $168,000.

Then, in August 2013, while construction was still ongoing, Kruse

requested another payment. He did not provide a written bill or invoice detailing

for what items the funds were needed. Disputes arose regarding the requests for

additional payments. The work was not completed and the one-year period of

living-expenses reimbursement provided to the Krumwiedes by their insurance

company was running out. Additionally, the Krumwiedes’s mortgage lender was

concerned about being asked to disburse more funds without any documentation

to support the requests. The Krumwiedes refused to pay additional funds before

the home was finished. As a result of the disagreement, Kruse “N” Bries

Construction quit working on the project.

The Krumwiedes received their first bill from Kruse “N” Bries, which

included costs for changes Kruse maintained they made after construction

began, in September 2013. The bill showed that “all receipts” for the home

totaled $246,500. Based on what the Krumwiedes had already paid and 6

subtracting $12,600 for cabinets, Kruse “N” Bries Construction demanded

payment of $69,500 within ten days. The Krumwiedes did not pay the bill.

The Krumwiedes ultimately hired other contractors to complete work on

the house. The total cost of completing the construction of the house to their

satisfaction was about $250,000, including the sums previously paid to Kruse “N”

Bries.

After the home was finished, in spring 2014, Don Krumwiede obtained a

job in another state and the Krumwiedes decided to move. The house was listed

for sale and it sold, together with only about half of the acreage and other

existing outbuildings, for the sum of $330,000.00.

Kruse and Bries filed suit on December 1, 2014, alleging breach of a

construction contract and requesting compensation. A timely answer was filed

resisting the claims and asserting a counterclaim for damages for alleged breach

of contract.

At trial, Kruse testified they were seeking $96,815.30 in damages.

The district court denied the plaintiffs’ claims and the defendants’

counterclaims. Only Kruse and Bries appeal.

II. Standard of Review.

We review a breach-of-contract claim tried at law to the district court for

correction of errors at law. NevadaCare, Inc. v. Dep’t of Human Servs., 783

N.W.2d 459, 465 (Iowa 2010). “We will reverse a district court’s judgment if we

find the court has applied erroneous rules of law, which materially affected its

decision.” Id. “In contrast, the district court’s findings of fact are binding on us if

they are supported by substantial evidence.” Id. 7

III. Discussion.

A. Breach of Contract.

In a breach-of-contract claim, the plaintiff has the burden to prove all of the

following:

(1) the existence of a contract, (2) the terms and conditions of the contract, (3) that the plaintiff performed all the terms and conditions required under the contract, (4) that the defendant breached the contract in some particular way, and (5) the plaintiff has suffered damages as a result of defendant’s breach

Royal Indem. Co. v. Factory Mut. Ins. Co., 786 N.W.2d 839, 846 (Iowa 2010)

(listing elements for claim of breach of contract); see also Holliday v. Rain and

Hail L.L.C., 690 N.W.2d 59, 64 (Iowa 2004) (“The burden of proof on the plaintiffs

was to prove a breach of contract by a preponderance of evidence.”).

Here, the district court found that “[t]here was clearly an agreement to

build a house for a certain price” but stated it was otherwise impossible for the

court to determine “the exact terms of what was to be provided” “due to lack of

details spelled out by the parties and their failure to both agree on the work to be

done.” On appeal, the plaintiffs take issue with this ruling, arguing these “are not

the required legal conclusions to be determined to decide whether plaintiffs have

proven their case.” We disagree. We understand the district court’s statement to

mean the plaintiffs failed to prove the terms and conditions of the contract and,

because the terms are unclear, to prove the defendants breached those terms.

Moreover, we believe substantial evidence supports these conclusions. 8

Kruse and Bries contend the Krumwiedes breached the contract when

they refused to make an additional payment when asked in August 2013. But we

have no evidence of any agreement about when or how the Krumwiedes were

supposed to make payments. Both the bid, which was submitted into evidence,

and the testimony at trial were silent on any terms of a payment schedule.

Kruse and Bries also contend the Krumwiedes committed an anticipatory

breach by indicating their refusal to pay Kruse and Bries more than $190,000.

See Lane v. Crescent Beach Lodge & Resort, Inc., 199 N.W.2d 78, 83 (Iowa

1972) (“Anticipatory breach requires a definite and unequivocal repudiation of the

contract. It is committed before the time for performance and ‘is the outcome of

words or acts evincing an intention to refuse performance in the future.’”

(citations omitted)). According to the plaintiffs, this is a breach because the

original construction contract was for $190,000 and then the changes by the

Krumwiedes resulted in additional costs, for which the Krumwiedes knew they

were responsible. The problem is, as the district court stated, the original bid that

was accepted is too vague to determine what Kruse and Bries promised to

construct for $190,000. And Kruse’s testimony about what constituted changes

was questionable, at best. Three of the items Kruse identified as changes, which

made up a large part of the additional $74,815.30 the plaintiffs were claiming—on

top of the bid price—were the adding of septic, the change to a walk-out

basement, and the enlargement from a one-stall garage to a two-stall garage.

But both the septic and the walk-out basement were included on Kruse’s

September 26 bid of $175,000. Additionally, the building permit, which had to be 9

obtained before any construction began, lists the size of the garage as a two-stall

garage.

The plaintiffs have not proved the existence of an agreement regarding a

payment schedule, nor have they proved that the “changes” or “additions” they

identify were not included in the $190,000 bid. Thus, we agree with the district

court that Kruse and Bries have not established the Krumwiedes breached the

contract.

B. Breach of Implied Contract.

Kruse and Bries maintain the Krumwiedes breached an implied contract.

But “[o]ne who pleads an express oral contract cannot ordinarily recover under

an implied contract or quantum meirut.” Giese Const., Inc. v. Randa, 524

N.W.2d 427, 431 (Iowa Ct. App. 1994). “An express contract and an implied

contract cannot coexist with respect to the same subject matter, and the law will

not imply a contract where there is an express contract.” Id.

Moreover, “[t]he doctrine of unjust enrichment is based on the principle

that a party should not be permitted to be unjustly enriched at the expense of

another or receive property or benefits without paying just compensation.” State

ex rel. Palmer v. Unisys. Corp., 637 N.W.2d 142, 154 (Iowa 2001). But Kruse

and Bries did not prove that the terms of the original contract did not include the

Krumwiedes’s changes to the original Woodman design, so we cannot say the

Krumwiedes received anything they were not entitled to receive under the

contract. The plaintiffs were only paid $168,000 of the $190,000 contemplated

by the contract, but it is undisputed the home was not finished when they quit 10

working on it, and the Krumweides were required to pay other parties additional

sums to finish the work.

This claim fails.

IV. Conclusion.

Because Kruse and Bries did not meet their burden to prove the

Krumwiedes breached the contract, and because a claim of breach of implied

contract cannot coexist with a claimed breach of express contract on the same

subject matter, we affirm the district court’s denial of the plaintiffs’ suit.

AFFIRMED.