IN THE SUPREME COURT
STATE OF NORTH DAKOTA
|Supreme Court No. 20090109|
|Plaintiff/Appellee,||District Court No. 31-07-C-215|
|Gary J. Schmidt and Schmidt|
|Construction of Stanley, Inc,|
APPEAL FROM THE DISTRICT COURT OF MOUNTRAIL COUNTY
NORTHWEST JUDICIAL DISTRICT
DISTRICT COURT NO. 31-07-C-215
THE HONORABLE GARY H. LEE
|Bryan Van Grinsven||Tom P. Slorby|
|ID# 05357||ID# 03122|
|PO Box 998||PO Box 3118|
|Minot, ND 58702||Minot, ND 58702|
|Attorney for Plaintiff/Appellee||Attorney for Defendant/Appellant|
|TABLE OF CONTENTS|
|Table of Authorities||i|
|Statement of the Case||2|
|Statement of Facts||3|
|Law and Argument|
|I. The Trial Court Erred in Failing to Require the Plaintiff's Expert|
|Opinion to be Based Upon the Standards of the Trad||6|
|II. The Evidence was Insufficient to Support or Jus||11|
|III. The Court Erred in Submitting Both the Individual and Corporate|
|Defendant to the Jury||12|
|Certificate of Service||13|
|TABLE OF AUTHORITIES|
|Anderson v. A.P.I. Co. of Minnesota, 1997 ND 6, 559 NW2d 204 (ND 97)||6|
|Bachmeier v. Wallwork Truck Centers, 544 NW2d 122 (ND 96)||6|
|Endresen v. Scheels Hardware and Sports Shop, Inc., 1997 ND 38, 560 NW2d|
|225 (ND 97)||6|
|Funk v. General Motors Corporation, 220 NW2d 641 (Mich.App. 641)||10|
|Hamilton v. Robert Oppen, 2002 ND 185, 653 NW2d 678, 2002 ND Lexis 243||9|
|Harriri v. Morris Rubber Products Company, 465 NW2d 546 (Iowa App. 1990)||10|
|Hille v. Wright County, 400 NW2d 477, Minn.App. 87||10|
|Horstmeyer v. Golden Eagle Fireworks, 534 NW2d 835 (ND 95)||6|
|Iowa-Illinois Gas and Electric Company v. Black and Veatch, 497 NW2d 821|
|Johnson v. City of Detroit, 261 NW2d 295, 79 Mich.App. 295 (77)||10|
|Kluck v. Kluck, 1997 ND 41, 561 NW2d 263 (ND 97)||6|
|Oldham by Oldham v. Shenahdoah Community School District, 461 NW2d 207|
|(Iowa Appellant 1990)||10|
|Potts v. Shepard Marine Construction Company, 391 NW2d 357,|
|Rowe v. Goldberg, 435 NW2d 605 at 607, Minn.App. 89||11|
|Steiner v. Beaudry Oil and Service Incorporation, 545 NW2d 39 (Minn. App. 96)||10|
|Strzelecki v. Blaser's Lakeside Industries of Rice Lake Incorporated, 348 NW2d 311, 133 Mich.App. 191 (84)||10|
|Wanner v. Getter Trucking Inc., 466 NW2d 833 at 836 (ND 91)||10|
|STATUES AND RULES:|
|Rule 702 NDRules of Evidence||6|
STATEMENT OF THE CASE
This case pertains to the construction of the home of the plaintiff and specifically as to the quality of the construction and the amounts charged to the plaintiff.
The action was commenced by Summons and Complaint. (App.3-8) The defendants served an Answer and Counterclaim. (App.9-14) The case was initially venued in Ward County District Court. Venue was changed upon motion of the defendants to Mountrail County. (App.15)
The case was ultimately tried to a jury on the 26th day of January, 2009 to the 28th day of January, 2009. The jury returned a verdict in favor of the plaintiff and against the defendants in an amount of $239,545.14 and Judgment was entered accordingly. (App.31-32)
The defendant appeals from that Judgment. (App.33)
STATEMENT OF THE FACTS
The defendant, Gray Schmidt, individually, was a licensed contractor doing business in the State of North Dakota in the Spring of 2006. (App. 18)
The plaintiff, hereinafter referred to as "Westby" and the defendant Schmidt, hereinafter referred to as either "Schmidt" or "the Corporation", entered into discussions pertaining to the building of a home for Westby in early 2006. (App.35) Westby eventually selected a house and obtained the plans. (App. 36, 37) Schmidt provided Westby an estimate in late May 2006 (App. 17) and Westby and Schmidt/dba Schmidt Construction, executed an Owner/Contractor Agreement on June 21, 2006. (App.16) The estimated cost was $435,362.95. (App.17) Construction began in early July 2006. (App. 38)
Schmidt had begun the process of forming a corporation during the early stages of his transactions with Westby. His accountant, Minerva Paige, provided the professional services including the preparation of the necessary documents for forming the corporation. (App. 132) The conduct of Ms. Paige most likely constituted the unlawful practice of law.
The Corporation came into existence on June 5, 2006, (App. 130) but Schmidt was not aware of such until some time after the parties had executed the Owner/Contractor Agreement, Exhibit 1. (App. 131, 132, 133) That fact is corroborated by the earlier invoices being issued by Schmidt Construction on November 6, 2006 and January 4, 2007, (App. 21-30) while the remaining invoices starting on February 11, 2007 were issued in the name of Schmidt Construction of Stanley, Incorporated. (App 21-30)
Westby had directed that a significant number of substantial changes be made from the plan all of which created a substantial increase to the total cost. The changes included the expanding of the garage from 3 stalls to 5, (App. 104, 105) adding tinting to the windows, (App. 106) adding skylights, (App. 107) changing the attic space above the garage to living space, (App. 108) upgrading the plumbing, (App. 109, 110) adding a second furnace due to the addition of the living space above the garage, (App. 110) and upgrading the cabinets and flooring to expensive cherry wood. (App. 112, 113, 114, 115) There also was work that would be required but the character and cost of such was unknown at the time of the Owner/Contractor Agreement. This included site work, concrete work, soils test, the cost of water and sewer, building permit, builder's risk insurance and a few other miscellaneous items. (App. 116-121)
These changes and the resulting additional costs would result in the final cost being well in excess of the original estimate. Schmidt made efforts to discuss the matter with Westby, but Westby didn't seem to be interested in discussing the growing costs. (App. 122, 123, 124, 125, 126) Schmidt provided Westby an estimate of the over runs in May 2007. (App. 20, 126, 127) He also gave Westby a billing dated May 14, 2007. Westby's expert acknowledged that a contractor's bid is nothing more than estimate and that the final cost is always greater because of changes made by customers. (App. 101, 102)
Westby met Schmidt at the home site a few days later, told him that he was not happy with the work and that he was to pack his tools and leave. Schmidt did as instructed and was never called back to the job. (App. 128) Construction on the home at the time had progressed to between 60% to 75% complete. (App. 44,03, 128, 129) There were a few minor defects at that time that needed to be redone. (App. 129)
Westby then hired Mindt Construction as successor general contractor to finish the job. (App. 39) The work done by Mindt consisted of finishing the project and redoing some of Schmidt's work for aesthetic or personal taste reasons. (App. 57, 59, 60, 61, 62, 63, 69, 70-74, 75-97)
Westby claims that he suffered $250,443.34 in damages. (App. 40, 41) The majority of that claim is based upon the $219,462.68 he paid Mindt Construction (App. 41) The jury awarded him nearly the entire amount claimed, $239,595.14. (App.31-32)
LAW AND ARGUMENT
I. THE TRIAL COURT ERRED IN FAILING TO REQUIRE THE PLAINTIFF'S EXPERT OPINION TO BE BASED UPON THE STANDARDS OF THE TRADE OR INDUSTRY
The Rule addressing admissibility of expert testimony envisions the generous allowance of the use of such testimony if the witness is shown to have some degree of expertise in the relevant field. Rule 702 NDRules of Evidence. Kluck v. Kluck, 1997 ND 41, 561 NW2d 263 (ND 97). The Rule does not require the expert to have a formal title or be licensed in a particular field, but recognizes that it is the witness's actual qualifications that count. The witness can be qualified by knowledge, skill, experience, training or education. Anderson v. A.P.I. Co. of Minnesota, 559 NW2d 204 (ND 97) Whether a witness qualifies as expert and whether testimony will assist a trier of fact are decisions within the sound discretion of the trial Court. Kluck v. Kluck, supra.; Horstmeyer v. Golden Eagle Fireworks, 534 NW2d 835 (ND 95) The trial Court determination will not be reversed on appeal unless the discretion was abused. Endresen v. Scheels Hardware and Sports Shop, Inc., 1997 ND 38, 560 NW2d 225 (ND 97); Bachmeier v. Wallwork Truck Centers, 544 NW2d 122 (ND 96); Horstmeyer v. Golden Eagle Fireworks, 534 NW2d 835 (ND 95)
Schmidt objected a number of times on direct examination to the opinion of Westby's primary expert witness, Bryan Mindt, not being based upon industry standards. (App. 47, 48, 53, 98) The Court initially sustained the objection (App. 48, 98) but then overruled the objection. (App. 53)
Mindt testified to a knowledge of industry standards as to a few claimed defects, but for the most part was allowed to testify as to his own personal practice. He acknowledged a number of times that he was not aware of the industry practice. His testimony was extensively based upon his personal preference.
"A. ....You know, we kind of noticed a few things around the house that again, were different or not exactly as we would do them....
"...conditions being not what we're used to seeing...." (App. 42, 43)
"A. It's unacceptable to me." (bearing wall, house wrap, soffit, fascia, shingles, flashing, stairway, concrete floor) (App. 45)
"A. No, because I like everything nice and straight and lined up." (Window alignment)(App.46)
"Q. Did you find it acceptable that the floor was off by an inch and a half?
A. No" (floor elevation)(App.49)
"Q. In your opinion, is it a wise or prudent practice to use Masonite on a curved surface like that?
A. We have tried it. ..." (Masonite) (App.50)
"A. Just a temporary power outside. We wanted it in the building. Our own personal preference." (power access)(App.51)
"A. Some contractors mark them on the floor, some put galvanized retainers...Some guys leave it to chance. I don't particularly care for that." (marking for vents, duct work)(App. 52-53)
"A. ...We found some heat runs. Again, they have floor heat, and everybody says, well, you don't really need it, and I say what do you do when air conditioning comes? So we made a determination to - - I believe we removed the furnace, some of the duct work, found a way to get cold air returns into the master bedroom area." (cold air returns)(App. 53)
Mindt acknowledged on cross examination that there were varying ways and practices within the industry. (App. 56) He frequently either admitted that he was not familiar with the industry standards or that Schmidt's work that he criticized was consistent with Code requirements or the industry standards. In that respect, he admitted that the placement of the bearing wall did not violate Code standards, (App. 57, 58) and that the use of Visqueen, a vapor barrier, was not required by the Code in North Dakota, (App. 70, 101)
He was not familiar with the industry standards regarding the alignment of the window above the door, (App. 66) the installing of shingles and flashing, (App.69) or the roof line. (App. 98) He conceded there are different industry standards for cold air returns and the marking of duct work (App.70, 71) and that there are no industry standards regarding a door return or the requiring of dirt and concrete work to be included in an estimate. (App.73, 102) He further acknowledged that the roof line that he complained of did not violate industry standards. (App. 73, 74) The Court also allowed him to testify as to what he includes in his bids rather than what industry standards require. (App. 99)
In some respects, Mindt's criticism bordered on being trivial if not trivial. He criticized the large window over the front door being improperly aligned. He stated that the average person probably would not have noticed it. (App. 46) He moved the window 3/4 of an inch. (App. 65) Windows on the short wall on the bay wall were also moved slightly for aesthetic reasons. (App.61)
It is well established that expert witnesses in malpractice cases such as medical, legal or accounting must base their opinion testimony in the context of the standard of care or duty of the profession. This action is essentially a construction malpractice case. As such, experts should be required to base their opinion testimony on the standard of the industry or trade. A standard of care deals with negligence while standards of an industry deals with contractual compliance.
Although counsel has been unable to find a case directly on point Hamilton v. Robert Oppen, 2002 ND 185, 653 NW2d 678, 2002 ND Lexis 243 is analogist. This Court affirmed the trial Court's refusal to allow an expert witness to testify because of his unfamiliarly with the applicable standards relating to farming, combines and augers, inferring that the expert must testify as to the standards applicable to a case.
Other jurisdictions have addressed the issue at least indirectly or by dicta. See Iowa-Illinois Gas and Electric Company v. Black and Veatch, 497 NW2d 821 (Iowa 93) (Standards of Engineering Profession); Harriri v. Morris Rubber Products Company, 465 NW2d 546 (Iowa App. 1990) (Standards established by the National Electrical Code and Occupational Safety Health Administration); Potts v. Shepard Marine Construction Company, 391 NW2d 357, 151 Mich.App. 1986, Appeal denied. (Standards of safety engineering practices in a marine operation); Steiner v. Beaudry Oil and Service Incorporation, 545 NW2d 39 (Minn. App. 96) review denied, (Standards in the home heating oil delivery business); Wanner v. Getter Trucking Inc., 466 NW2d 833 at 836 (ND 91) (Standard of care in the moving of heavy equipment in the oil field industry); Funk v. General Motors Corporation, 220 NW2d 641 (Mich.App. 641) (construction practices and safety standards and standard of conduct); Strzelecki v. Blaser's Lakeside Industries of Rice Lake Incorporated, 348 NW2d 311, 133 Mich.App. 191 (84) (Industry standards for the design of wood burning stoves); Johnson v. City of Detroit, 261 NW2d 295, 79 Mich.App. 295 (77) (Safety standards for golf courses);
Court's have excluded the testimony of witnesses who although they might be experts in some field are not qualified in others. See Oldham by Oldham v. Shenahdoah Community School District, 461 NW2d 207 (Iowa Appellant 1990) Oldham referred to the standard of care for playground operations and at least by implication required an expert opinion to be based on that standard.
In Hille v. Wright County, 400 NW2d 477, Minn.App. 87 review denied the Court excluded the testimony of an expert in administration and consulting in that he was not familiar with the standards for jail monitoring.
In Rowe v. Goldberg, 435 NW2d 605 at 607, Minn.App. 89, the Court did not allow an expert witness to testify as to the circumstances of a stairway where a fall had occurred even though he was qualified to state that the stairs did not comply with either the Uniform Building Code or the Life Safety Code. The Court did not allow him to testify because he was not able to establish what the industry standards were at the time the stairway was constructed.
II. THE EVIDENCE WAS INSUFFICIENT TO SUPPORT OR JUSTIFY THE JURY'S VERDICT.
The jury warded Westby nearly the entire amount that he requested, $239,594.14. $219,462.68 of that was attributable to the billings from Mindt. (App. 40, 41)
The discussion of the previous issue establishes that much of Mindt's work involved redoing work previously done by Schmidt based upon either aesthetic reasons or Mindt's personal preference. That work was not required by industry standards and was therefore not required. Schmidt should not be responsible for the cost of that work. Mindt was not able to apportion his billing between the cost of finishing work and the cost of the work her redid. (App. 82)
Therefore, the evidence is insufficient as a matter of law to justify or support the verdict.
III. THE COURT ERRED IN SUBMITTING BOTH THE INDIVIDUAL AND CORPORATE DEFENDANT TO THE JURY
A written contract may be altered by a contract in writing or by an executed oral agreement but not otherwise. NDCC 9-09-06. The burden of an obligation can not be transferred without the consent of a party entitled to the benefit. NDCC 9-11-03.
The Owner/Contractor Agreement was between Westby and Schmidt/dba Schmidt Construction. The Corporation, although in existence at the time was not a party to the Agreement.
The Agreement provided that the Contract could not be assigned without first obtaining the written permission of Westby. Schmidt and Westby never discussed substituting the Corporation let alone agree to it.
The Court essentially added the Corporation even thought it was not a party to the contract. There was no consideration given for the addition of the Corporate defendant. It would seem that either Schmidt individually was the proper defendant or the Corporation was substituted for Schmidt as a party. It can not be both.
Gary Schmidt as an individual must be dismissed if it was the intent of the parties to substitute the Corporation for him or the Corporation must be dismissed as a party if that was the intent.
The trial Court must be reversed and the judgment vacated and the matter remanded for a new trial and dismissal of the claim as to one of the party defendants.
|Respectfully Submitted this14th day of September, 2009.|
|Tom P. Slorby (ID#03122)|
|Attorney for the Defendant/Appellant|
|PO Box 3118|
|Minot, ND 58702|