MORTON BUILDINGS, INC., ) Plaintiff, ) ) vs. ) Case No. 98CV 1579 ) RICHARD CRONISTER, ) JUDY CRONISTER, ) Defendants. ) _________________________)
The above entitled matter was tried before this court on April 25, 2000. Both plaintiff and defendants requested an opportunity to file proposed findings of fact and conclusions of law subsequent to trial. The court granted the request and both parties filed proposals and also other objections to the other party's proposals or supplemental proposals. The matter is now ready for ruling. The court, after careful consideration, makes the following findings of fact and conclusions of law:
1. In November 1997, Richard and Judy Cronister entered into negotiations with Morton Buildings, Inc. (Morton) for the construction of a pre-engineered metal building for use as an office/shop for a business operated by the Cronisters called Cronister & Company.
2. During the negotiations, Morton knew that the Cronisters intended to use a portion of the proposed structure as finished office space for the business.
3. During the negotiations, Morton, acting through Randy Ward, a sales representative employed by Morton, provided the Cronisters with sales brochures that represented that Morton's "company-trained and employed construction crews are the best in the business" and that "Morton train[ed] them to use the most efficient methods . . . to erect Morton Buildings and represented to the Cronisters in writing that Morton would, "be here, if you have any problems."
4. Morton also represented to the Cronisters that the building would be constructed in 4 to 6 weeks (maybe 8 weeks if there was bad weather) after the materials were delivered to the construction site.
5. On December 22, 1997, Morton and the Cronisters entered in to a contract for the construction of the 60' x 100' building. The building was to include 4200 sq. ft. (60' x 70', the south two thirds of the building) of shop space and 1800 sq. ft. (60' x 30', the north one-third of the building) of office space. The finish work (sheetrock, painting, carpeting, etc.) in the office space was to be performed by the Cronisters after Morton completed its work under the contract. The building was also to include four 14' x 14' overhead doors and a concrete floor with a 3' x 20' service pit.
6. The written contract further provided in part as follows:
(a) The total price for the building was to be $82,000.00 plus an additional $2,500.00 if the payment schedule set out in the contract was not met by the Cronisters.
(b) Payment for the building was to be made as follows: $8,200.00 as a down payment, $41,000.00 upon delivery of materials to the job site and a final payment of $32,800.00 upon the building being occupied by the owners.
(c) That no representation, warranty, condition or agreement of any kind or nature whatsoever would be binding upon Morton Buildings, Inc. unless incorporated in the written agreement.
(d) That the buyers use or occupancy of the building shall constitute acceptance and acknowledgment of satisfactory completion of the building.
(e) That owner can occupy the building only upon making payment in full.
(f) That in the event of default by the buyer, Morton Buildings, Inc., shall be entitled to a 1½% per month service charge (18% annual rate) from the date of default, plus a reasonable amount for Morton Buildings, Inc.'s costs and attorney fees incurred to enforce the terms of the contract.
7. That at the time the contract was entered into between the parties the contract was presented to the Cronisters for their review prior to signing and the terms and conditions of the agreement were discussed and explained to the Cronisters by Randy Ward. Following said discussion and explanation, both Richard and Judy Cronister signed the agreement.
8. The building was to be constructed on the following property owned by Mr. and Mrs. Cronister:
A tract of land in the Northwest Quarter of Section 32, Township 12 South, Range 16 East of the 6th P.M., Shawnee County, Kansas, described as follows:
Beginning at the Southwest corner of said Northwest Quarter; thence North 0 degrees 00 minutes 00 seconds East (assumed bearing, 760.66 feet along the West line of said Northwest Quarter; thence South 89 degrees 05 minutes 38 seconds East, 755.70 feet; thence South 9 degrees 44 minutes 59 seconds East, 254.52 feet; thence South 89 degrees 23 minutes 15 seconds East, 527.29 feet; thence South 0 degrees 09 minutes 33 seconds West, 504.03 feet to a point on the South line of said Northwest Quarter; thence North 89 degrees 29 minutes 23 seconds West, 1324.62 feet along said South line to the point of beginning. Containing 19.87 acres of land, more or less.
9. On January 6, 1998, Morton prepared and sent an invoice to the Cronisters requesting payment of $8,200.00.
10. On February 5, 1998, Morton received payment from the Cronisters in the amount of $8,200.00.
11. On March 16, 1998, Morton and the Cronisters executed a change order to eliminate for (4) overhead doors from the work that Morton was to provide under the contract. Pursuant to the Change Order, Morton agreed to deduct $9,233.00 from the amount due under the contract thereby leaving an outstanding contract balance of $64,567.00 as of March 16, 1998.
12. On April 17, 1998, Morton prepared and sent an invoice to the Cronisters requesting payment of $41,000.00.
13. On or about April 20, 1998, Morton delivered the materials for the building to the property.
14. On April 23, 1998, Morton received payment from the Cronisters in the amount of $41,000.00 (approximately 70% of the total adjusted contract sum) thereby leaving an outstanding contract balance of $23,567.00.
15. At approximately 8:00 a.m. on May 8, 1998, the Cronisters visited the property to inspect the building that Morton was constructing. Mr. Cronister pointed out to Morton's crew that the frame was crooked and that they should not do anymore work until the frame was straightened.
16. The Cronisters returned to the building site at the end of the day on May 8, 1998, and discovered that Morton's crew had proceeded with installation of the steel roofing on the building without straightening the frame.
17. Mr. Cronister immediately contacted Jamie Crow, a claims representative of Morton Buildings. Mr. Crow inspected the building and confirmed the frame was crooked. Mr. Crow required the Morton crew to remove sixty (60) feet of roofing materials, move trusses, dig up vertical columns, and change out several base boards in the structure.
18. The remedial work required to straighten the frame of the building delayed completion of the project and thereby caused the Cronisters to incur not only additional office rent ($580.00/mo.), which is the subject of the Cronister's claim against Morton but also, for a period of three months, shop ($350.00/mo.), and yard ($200.00/mo.) rental expenses.
19. After Morton attempted to straighten the frame of the building, the Morton crew proceeded to reinstall the roof using the same steel panels that had been installed prior to Morton's attempt to straighten the building frame.
20. Due to the fact that certain framing trusses were moved during Morton's attempt to straighten the building, several nail holes in the old roofing steel no longer lined-up with the newly placed framing trusses.
21. Morton attempted to seal the extra nail holes in the old roofing steel with caulking.
22. Mr. Cronister, upon viewing Morton's attempt to rework the roof steel, notified Morton that he would not accept the roof.
23. Mr. Cronister again met with Mr. Crow, Morton's claims representative, regarding the poor workmanship with respect to the roof. Mr. Crow conceded for a second time workmanship and materials of Morton were not acceptable and agreed to order new steel for the roof.
24. The remedial work required to correct the improperly installed roof steel again delayed completion of the project and thereby caused the Cronisters continue to incur additional rental expenses.
25. Morton, in an attempt to cut a hole for installation of a furnace duct, erroneously cut the hole too big and in the wrong location. As a result of Morton's error, the Cronisters incurred the expense of having DeBacker's Heating and Cooling ($165.51) modify the ductwork in order to accommodate the mislocated hole as well as having to purchase a new seal from Knox Supply ($47.77).
26. The Cronisters deleted one of the windows and Morton agreed to give the Cronisters a $300.00 credit for the deleted window.
27. The Cronisters deleted an entry way that was included in the contract and Morton agreed to give the Cronisters a $400.00 credit for the deleted entry way.
28. On June 29, 1998, Mr. Cronister notified Morton that the Cronisters were incurring costs due to the delay in construction of the building.
29. Shortly after Morton installed the eight (8) windows in the office portion of the building, the Cronisters noticed that all of the windows leaked. The Cronisters also noticed water was leaking into the office area around a point where the exterior canopy or "eyebrow" attached to the building and along the wainscot portion of the walls.
30. The Cronisters met with Steve Hall and Darrel Meyer, representatives of Morton Buildings, regarding the leaks in the office area. During the meeting, water was sprayed on the windows. All of the windows leaked. The cause of the leaks could not be determined so Mr. Hall told Mr. Meyer to order new windows. Mr. Hall also told Mr. Meyer to order new steel for the entire north end of the building because the eyebrow had not been installed properly.
31. A few days after the meeting, Mr. Hall notified the Cronisters that Morton was not going to furnish new windows but rather Morton had determined that its work crew had installed the windows improperly.
32. On October 14, 1998, Morton removed the steel siding off the entire north end of the building and reinstalled the windows. At the time of this installation, Morton installed the "plugs" around the windows and the windows no longer leaked, but the eyebrow continued to leak. Morton left the site without fixing the continued leak around the eyebrow and the wainscot.
33. The continued water leaks in the office area of the building prevented the Cronisters from beginning completion of the interior finishes in the office portion of the building and thereby required the Cronisters to maintain their old office facilities at Forbes to operate the business. As a result, the Cronisters incurred additional office rent expense ($580.00/mo.).
34. On or about October 14, 1998, Mr. Cronister had a conversation with Mr. Hall in an attempt to get the work done and pay the contract balance. Morton was unwilling to do anything further to remedy the leaks and Mr. Cronister was unwilling to pay the outstanding contract balance until the leaks were fixed. Mr. Hall ended the negotiation with the statement "we'll see you in court."
35. On October 20, 1998, Morton filed a Mechanic's and Materialman's Lien against the property in the amount of $25,367.00, plus interest at 1.5% per month and attorneys fees.
36. On November 12, 1998, Morton was notified that "the Cronisters still cannot occupy the office portion of the building because of water leaks" and that the Cronisters were incurring office of $600.00 a month. The notice further states that "as soon as the leaks can be fixed and the office can be started we will know how much may remain due under the contract" after set off for the on-going office rent incurred by Cronister.
37. On April 15, 1999, Morton was again notified that the building was continuing to leak "very badly." Morton was invited to the site to inspect the leaks.
38. On April 28, 1999, over a year after the building was begun, Randy Ward, a representative of Morton, met with the Cronisters at the building to discuss the continued leaking of the planned office area. Morton's agent, Mr. Ward, prepared a diagram of the office area of the building indicating "leak[s]" at four locations on the north wall, an area that was "wet" at door, and a "drip" along the east wall.
39. During the April 28th meeting, Mr. Ward told the Cronisters that Morton would do "whatever it takes" to fix the building. Mr. Cronister inquired how Morton intended to fix the building since Morton had already taken the entire north end off and this failed to fix the leaks. Mr. Ward's response was that "[Morton] would use a better crew." Mr. Cronister then asked Mr. Ward if Morton had had problems with the crew on other projects. Mr. Ward stated that "Morton has had trouble with that crew on several projects" and that the "crew no longer works for Morton Buildings."
40. During the April 28th meeting, Mr. Cronister also asked Mr. Ward to send plugs so that the Cronisters could install the plugs in the corrugations in the steel along the wainscoting to stop the leaks and they could then begin finishing the office area.
41. On June 15, 1999, Morton returned to the jobsite and applied additional black caulking on top of the already applied white caulking, and thereby eliminated the leaks occurring around the "eyebrow."
42. On June 24, 1999, the Cronisters' counsel again notified Morton that, in an effort to mitigate the damages, the Cronisters would be willing to have someone repair the leaks or repair the leaks themselves so that the Cronisters could begin finishing the office area.
43. On January 4, 2000, the Cronisters' counsel again provided Morton with additional notice and pictures of continued leakage (in the form of snow). The notice also states that "Morton's representative has repeatedly indicated they would provide some form of seal or plug to try and resolve this leakage" and "if Morton is not now willing to provide this [repair], advise and they will proceed to mitigate their losses by seeking repair from others."
44. On February 7, 2000, the Cronisters' counsel again contacted Morton to confirm Morton's failure to respond to the January 4, 2000, letter. Cronisters' counsel again notified Morton that the Cronisters "continued to incur rental costs and has not proceeded to repair the problems because Morton was going to provide the 'plugs' that go into the corrugations."
45. In March 2000, on the eve of trial and two years after the project began, Morton supplied and installed the "plugs" for the corrugations in the steel around the office area.
46. Upon installation of the plugs by Morton in March 2000, the Cronisters immediately began completion of the office area of the building.
47. As a result of the leaks in the office area of the building, Mr. and Mrs. Cronister incurred $13,340.00 office rent plus $1,650.00 for shop and yard rent due to the earlier delays.
48. The calculation of the adjusted contract balance due from the Cronisters to Morton (stipulated by the parties at trial) less the damages sustained by the Cronisters result in a contract balance of $7,660.72.
49. The Cronisters have stipulated that the complaints they had with regard to one wall of the building not being straight and the window and eyebrow leaks have been resolved to their satisfaction and that their counterclaim herein is in no way related to those issues. They have further stipulated that the only basis for their counterclaim is the moisture which they contend has been able to infiltrate into that area of the building which was to be finished by them for office space.
1. In enforcement of mechanics' liens, courts apply equitable as well as legal principles when circumstances justify or require such action. Boyce v. Knudson, 219 Kan. 357, 548 P.2d 712 (1976).
2. While mechanics' liens and the rights thereunder are statutory, their foreclosure and adjustment are not governed exclusively by the rigid rules of law, but the principles of equity are also applied to them. Elder Mercantile Co. v. Ottawa Inv. Co., 100 Kan. 597, 165 P. 279 (1917).
3. In a suit by a subcontractor to enforce a lien against the owner of a building, the owner may set off actual damages which he has sustained by the contractor's failure to complete the building where the damages are such as may be said to have been in contemplation of the parties when the contract was made. Fossett v. Rock Island Lumber & Mfg. Co., 76 Kan. 428, 92 P.2d 833 (1907).
4. In an action to foreclose a mechanics' lien, the question of whether plaintiff had completed the [work] required by his contract was for the court as trier of the facts. Thompson v. Matthews, 163 Kan. 434, 183 P.2d 216 (1947).
5. Morton failed to provide a completed office to the Cronisters for a period of almost two years. Morton is therefore not entitled under the contract to recover attorney's fees or interest on the outstanding contract inasmuch as the weight of the evidence indicates that:
a) Morton had knowledge the Cronisters intended to utilize the north thirty (30) feet of the building for the purpose of housing finished office space.
b) The Cronisters provided Morton with continued notice that the office portion remained unusable due to water leaks at the windows, eyebrow, and along the wall base boards.
c) Due to continued water leaks, the Cronisters were forced to incur unnecessary expenses in the form of rent for office space until the leaks in the office portion of the building were corrected by Morton and repeatedly told Morton that these costs were being incurred and repeatedly requested the plugs so they could mitigate the cost.
d) The Cronisters, upon installation by Morton of certain plugs to eliminate the water leaks, immediately commenced finishing the office space thereby properly mitigating the damages Morton had caused to occur through its failure to address the Cronisters' complaints.
e) The Cronisters, in addition to the rental costs, are entitled to a set off against the unpaid contract balance for the following items: 1) deleted window $300.00, 2) deleted entry $400.00, and 3) repair of furnace duct $216.28.
6. Morton did not present any evidence to support its claims for rent from the Cronisters inasmuch as the weight of the evidence indicates that:
a) The Cronisters owned the property.
b) The Cronisters paid for 67% of the contract balance.
c) There is no lease agreement between the Cronisters and Morton for use of the shop portion of the building.
d) There are no provisions in the contract that allow recovery of rent by Morton from the Cronisters.
e) Morton failed to present any evidence as to a reasonable rental rate given the fact that the Cronisters owned the building.
7. Pursuant to Kansas law, the Cronisters are entitled to set off actual damages that were sustained by Morton's failure to complete the water-proofing of the building (particularly the office area) since the evidence is clear that finished office space was well known by Morton as reflected on their own drawing. The weight of the evidence indicates that the Cronisters incurred the following actual damages as a result of Morton's failure to complete the building:
a) Rental expense for alternate office, shop, and yard facilities during the period of June 1, 1998, through August 30, 1998, totaling $1,130.00 a month, or a total of $3,390.00 for the period.
b) Rental expense for alternate office facilities during the period of September 1, 1998, through April 30, 2000, totaling $580.00 a month, or a total of $11,600.00.
8. Defendants argue that plaintiff Morton has committed a violation under the Kansas Consumer Protection Act (K.S.A. 50-623 et seq.) (KCPA).
9. The Cronisters are "consumers" within the meaning of the KCPA in that they are individuals who sought to acquire property and services for business purposes. (K.S.A. 50-624(b))
10. Morton is a "supplier" within the meaning of the KCPA in that Morton is a distributor, dealer, and/or seller in the ordinary course of business that engages in consumer transactions. (K.S.A. 50-624(i))
11. The contract between Morton and the Cronisters constitutes a "consumer transaction" within the meaning of KCPA in that it was a sale of property for value within this state to a consumer. (K.S.A. 50-624(c))
12. The KCPA provides that "No supplier shall engage in any deceptive act or practice in connection with a consumer transaction. (K.S.A. 50-626(a)) Deceptive acts and practices listed under K.S.A. 50-626 are declared to be violations of the KCPA include: "[r]epresentations made knowingly or with reason to know that ... services are of a particular standard [or] quality, if they are of another which differs materially from the representation."
13. Defendants allege that due to Morton's repeated acts of defective materials and workmanship, Morton has violated KCPA by knowingly misrepresenting the quality and skill of the crew that was to construct the building for the defendants.
14. This court, however, does not find based on the evidence presented that plaintiff Morton knowingly or with reason to know or intentionally committed deceptive acts as described in K.S.A. 50-626. While Morton's statements in their brochures, etc. as to the quality and skill of their crew ultimately may have not lived up to their claims with respect to the crew that worked on the Cronister building, there was no evidence that Morton knew of the shortcomings of this crew at the time the claims were made.
15. Therefore, this court denies defendants' counterclaim under KCPA.
16. Plaintiff, Morton Buildings, Inc., has perfected a mechanic's lien on the subject property pursuant to the provisions of K.S.A. 60-1101, et seq., within the time period acquired by the Kansas Statutes.
17. This action to foreclose plaintiff's lien against the subject property was commenced within one year of the filing of the lien statement as required by K.S.A. 60-1105.
18. Morton Buildings, Inc. has sustained its burden of proof and established by a preponderance of the evidence that defendants Richard and Judy Cronister owe Morton Buildings, Inc. $23,567.00 which is the remaining amount due under the agreement entered into between the parties on December 22, 1997.
19. Likewise, Richard and Judy Cronister have sustained their burden of proof and established by a preponderance of the evidence that they are entitled to offset the amount due and owing under their agreements with Morton by the amount of $7,660.72 which is the total of expenses incurred by the Cronister's due to the delay in completion of the building contracted for with Morton plus the miscellaneous repairs and credits due to the Cronisters.
20. The court denies any claim by Morton for interest, attorney's fees, or penalty for failing to make payments according to the schedule since the court has found that the office portion of the building was not completed until late April, 2000, ie. shortly before trial in this matter.
21. Plaintiff, Morton Buildings, Inc. is entitled to a judgment foreclosing its mechanics and materialman's lien on the subject property in the amount of $7,660.72.
The above constitutes the court's findings of fact and conclusion of law in this case. The foregoing memorandum shall serve as the court's final journal entry of judgment and no further journal entry is required.
IT IS SO ORDERED.
Dated this 4th day of August, 2000.
________________________
Nancy Parrish
Judge, Third Judicial District
Division Fourteen
I hereby certify that a copy of the above and foregoing MEMORANDUM DECISION AND ORDER was mailed this 4th day of August , 2000, to the following:
Mark L. Bennett
1605 SW 37th Street
Topeka, Kansas 66611
Michael L. Entz
Stewart L. Entz
3300 SW Van Buren
Topeka, Kansas 66611
_________________________
Norma J. Dunnaway
Administrative Assistant