JACOB HATCH, an Individual, and DIAMOND POINT CONSTRUCTION, INC., a Wyoming Corporation, Appellants (Defendants),
CHRISTOPHER P. WALTON and TAMMARA DUHN, Appellees (Plaintiffs). CHRISTOPHER P. WALTON and TAMMARA DUHN, Appellants (Plaintiffs),
JACOB HATCH, an Individual, and DIAMOND POINT CONSTRUCTION, INC., a Wyoming Corporation, Appellees (Defendants). CHRISTOPHER P. WALTON and TAMMARA DUHN, Appellants (Plaintiffs),
JACOB HATCH, an Individual, and DIAMOND POINT CONSTRUCTION, INC., a Wyoming Corporation, Appellees (Defendants)
Appeal fro the District Court of Johnson County. The Honorable William J. Edelman, Judge.
Representing Jacob Hatch and Diamond Point Construction, Inc.: Jeffrey J. Gonda and Amanda K. Roberts of Lonabaugh and Riggs, LLP, Sheridan, Wyoming. Argument by Ms. Roberts.
Representing Christopher P. Walton and Tammara Duhn: Nathaniel S. Hibben of Doby & Hibben, Torrington, Wyoming.
Before BURKE, C.J., and HILL, KITE, DAVIS, JJ.[*]
[¶1] Christopher Walton and Tammara Duhn (Walton and Duhn) hired Jacob Hatch and his Buffalo, Wyoming construction company, Diamond Point Construction (collectively, Hatch), as the general contractor to build a custom home in the Powder Horn subdivision in Sheridan County. Unguided by a written contract, their relationship deteriorated, and Walton and Duhn sued Hatch and recovered a judgment. In No. S-14-0114, Hatch challenges the damages the district court awarded to Walton and Dunn. In Nos. S-14-0115 and 0116, Walton and Duhn challenge the district court's denial of a request for attorney fees. We reverse and remand on the two damages issues raised by Hatch, and we affirm the portion of the decision denying an award of attorney fees.
[¶2] The two issues raised by Hatch can be summarized as follows:
I. Did the district court err in calculating the damages that Walton and Duhn suffered as a result of Hatch's improper billing practices when it subtracted the amounts that should have been billed from the amounts Hatch actually billed, without taking into account that Walton and Duhn never paid the full amount billed?
II. Did the district court err in finding liability and awarding damages for breach of an implied warranty that the Walton and Duhn home would be built in a workmanlike manner?
The issue raised by Walton and Duhn can be best summarized by the following question:
I. Did the district court err in denying Walton's and Duhn's application for attorney fees, which was premised on the so-called " punitive damages exception" to the American rule that parties must pay their own attorney fees unless a contract or statute allows recovery?
[¶3] Sometime in mid-2007, Walton and Duhn obtained house plans prepared by an architect from the internet. The plans seemed well-suited to their sloping home site because they would allow all family members to live comfortably on the main floor, and they would permit the home to be oriented on the site so as to regulate its exposure to wind and sunlight. A friend recommended Hatch as the general contractor, so they contacted him and began to plan the construction of their home with him. After Walton and Duhn decided on changes they wanted made to the stock plans and specifications, Hatch incorporated them into sketches and had a local draftsman revise the plans accordingly.
[¶4] Hatch drew up two proposed written contracts, one in which he would agree to build the home for a definite price, and one in which he would agree to build it for his cost plus 13%. Walton and Duhn would not sign either one. Nevertheless, construction began, evidently with both parties believing that Hatch would bill Walton and Duhn on a " cost-plus" basis.
[¶5] To Walton and Duhn, that vague arrangement meant that Hatch would bill them for the amounts of invoices submitted to Hatch by various subcontractors and providers of construction materials, plus an additional charge of 13% of the total. To their understanding, the 13% would be Hatch's only profit. In Hatch's mind, however, his costs included a 10% markup on the subcontractors' and materialmen's invoices, which would cover his overhead on office expenses, insurance, fuel, and other expenses related to the use of company vehicles and other equipment. The 13% would then be calculated on the total of the invoices and the 10% markup.
[¶6] Although the parties disagreed as to whether Hatch ever communicated his understanding of the term " costs" to Walton and Duhn, portions of the record indicate that he did not. For instance, Hatch did not expressly define that term in the draft unsigned written " cost plus" contract he submitted to Walton and Duhn. More importantly, he engaged in deceptive billing practices which came to be the primary source of the friction that eventually ended the relationship and set the course of litigation that was to follow.
[¶7] Hatch instructed his bookkeeper to mark the invoices received from each individual subcontractor and materialman up by 10%. However, that markup was not separately set out in any clear and obvious manner in the bills Hatch submitted. Furthermore, when Walton and Duhn requested copies of the invoices submitted to Hatch by the subcontractors and material providers, he provided recreated or fabricated substitutes, most often using accurate simulations of each company's letterhead and billing forms, but with 10% added to what had been charged on the original invoices.
[¶8] Walton and Duhn eventually discovered that Hatch was billing them for what, in their minds, was more than they had agreed to pay for their home's construction. As a result, they began to pay some of the subcontractors directly, and they began to question Hatch's calculations of what they owed other subcontractors and material providers. They withheld payment for any amounts they disputed.
[¶9] By the end of July 2008, the dispute over what Walton and Duhn owed Hatch led him to terminate his and Diamond Point Construction's involvement in the project before the house was finished. He made arrangements for Walton and Duhn to deal directly with the subcontractors who were to complete the structure.
[¶10] Walton and Duhn sued Hatch in the district court for Sheridan County on September 8, 2011. They made claims of breach of contract (both in billing and in construction of the house), conversion, unjust enrichment, fraud, and breach of warranty. Hatch's answer and counterclaim asserted that there had been no meeting of the minds between the parties as to the terms of any oral contract and that Walton and Duhn suffered no damages because they owed him money for the work he had done. Hatch alleged that they had withheld payment of a substantial portion of the amounts billed in the final invoice he submitted to them. He counterclaimed, contending that when all was taken into account, Walton and Duhn had been unjustly enriched by at least $28,935.83.
[¶11] On November 12, 2013, after considering the testimony and exhibits presented at a two-day bench trial in mid-September of that year, the district court issued Findings of Fact, Conclusions of Law and Judgement [sic]. It attached a spreadsheet it had created which identified, by Hatch's invoice numbers, his charges to Walton and Duhn, what he actually paid to subcontractors and materialmen for the charged items, his 13% contractor's fee, and the difference between the two.
[¶12] Chief among the district court's determinations is that Hatch and Walton and Duhn were bound by an oral contract that required Hatch to build the home for 13% above what he paid for materials and to subcontractors. The court also determined that Hatch had billed Walton and Duhn for more than the agreed price, and that he committed fraud by misrepresenting the amounts of the invoices he received from suppliers and subcontractors. It found that Hatch billed Walton and Duhn a total of $628,264.43, but that the oral cost-plus contract only allowed him to bill a total of $565,885.56. Consequently, the court awarded Walton and Duhn the difference between those sums, $62,378.67, in damages for Hatch's misrepresentations.
[¶13] The district court also determined that the parties' contract carried an implied warranty that Hatch would build the house in a skillful and workmanlike fashion, and that Walton and Duhn had carried their burden of proving that a deck, concrete in the driveway, and an in-floor electrical heating system needed repair as a result of poor workmanship. The court therefore awarded the ...