IN THE SUPREME COURT
STATE OF NORTH DAKOTA
|Terence Barrett and Rachel Barrett,|
|Supreme Court No. 20120279|
|District Court No. 09-2010-CV-02587|
|Harry Gilbertson, d.b.a.,|
|Harry Gilbertson Construction,|
BRIEF OF PLAINTIFFS-APPELLANTS
APPEAL FROM THE JUDGMENT OF THE DISTRICT COURT ENTERED ON APRIL 30, 2012, AND THE DENIAL OF ATTORNEY FEES TO TERENCE BARRETT AND RACHEL BARRETT RELATING TO THEIR DEFENSE OF A SLANDER COUNTERCLAIM WHICH WAS DENIED TO THEM IN THE ORDER DENYING CROSS-MOTIONS FOR ATTORNEY'S FEES ENTERED MAY 16, 2012
CASS COUNTY DISTRICT COURT, EAST-CENTRAL JUDICIAL DISTRICT
HONORABLE WICKHAM CORWIN
|GARAAS LAW FIRM|
|Attorneys for Plaintiffs-Appellants|
|Office and Post Office Address|
|DeMores Office Park|
|1314 - 23rd Street South|
|Fargo, ND 58103|
|North Dakota ID # 03219|
|TABLE OF CONTENTS|
|ISSUES ON APPEAL|
|STATEMENT OF THE CASE|
|STATEMENT OF FACTS|
|LAW AND ARGUMENT|
|Standard of Review|
|The Barretts have established a breach of contract by Gilbertson|
|concerning the headroom of the basement.||12|
|Barretts' lawsuit is based on matters that contractually survived|
|The Barretts have established a breach of contract by Gilbertson|
|concerning construction defects that could be repaired.||18|
|Any duty that Barretts had to mitigate damages has been excused|
|because of Gilbertson's actions or positions.||19|
|Gilbertson's failure to promptly correct defects excused|
|the Barretts' duty to mitigate damages.||20|
|Gilbertson's requirement of a release excused the Barretts'|
|duty to mitigate damages.||22|
|The Barretts were excused from their duty to mitigate|
|because they acted reasonably when they refused to risk|
|further injury by Gilbertson.||22|
|The trial court's finding of the market value of the building is|
|In this case, one cannot rely upon market value alone to determine|
|The Barretts should have been awarded attorney fees relating to|
|Gilbertson's counterclaim for slander and emotional distress.||27|
|TABLE OF AUTHORITIES|
|North Dakota Cases|
|B.D.H. ex rel. S.K.L. v. Mickelson, 2010 ND 235, 792 N.W.2d 169|
|City of Bismarck v. Mariner Const., Inc., 2006 ND 108, 714 N.W.2d 484|
|Dittmer v. Nockleberg, 219 N.W.2d 201 (N.D. 1974)|
|Karlinski v. P.R. & H. Lumber & Const. Co., 281 N.W. 898 (N. D. 1938)|
|Kjelland v. Kjelland, 2000 ND 86, 609 N.W.2d 100|
|Langer v. Bartholomay, 2008 ND 40, 745 N.W.2d 649|
|Malarchik v. Pierce, 264 N.W.2d 478 (N.D. 1978)|
|Mike Golden, Inc. v. Tenneco Oil Company, 450 N.W.2d 716 (N.D. 1990)|
|New York Life Ins. Co. V. Hansen, 2 N.W.2d 163 (N.D. 1941)|
|US Bank Nat'l Assoc. v. Arnold, 2001 ND 130, 631 N.W.2d 150)|
|Cases of Other Jurisdictions|
|Am. Nat. Self Storage, Inc. v. Lopez-Aguiar, 521 So. 2d 303|
|(Fla. Dist. Ct. App. 1988)||17|
|Forest Const. Co., LLV v. Laughlin, 337 S.W.3d 211 (Tenn.Ct.App. 2009)|
|Metro Group Const. Corp. v. Town of Hempstead, 24 A.D.3d 632,|
|808 N.Y.S.2d 393, 394 (2005)||17|
|Stanspec Corp. v. Jelco., 464 F.2d 1184 (10th Cir. 1972)|
|Westec Const. Management Co. v. Postle Enterprises I, Inc.,|
|68 P3d 529 (Colo.App 2002)||19, 22|
|N.D.C.C. § 9-07-08||14|
|N.D.C.C. § 9-07-09|
|N.D.C.C. § 9-12-12|
|N.D.C.C. Chap. 32-43|
|N.D.C.C. § 28-26-01|
|N.D.C.C. § 32-03-09.1|
|N.D.C.C. § 32-43-03|
|N.D.C.C. § 32-43-03(1)|
|N.D.C.C. § 32-43-05|
|N.D.C.C. § 43-07-26|
|6, 16, 20|
ISSUES ON APPEAL
1. Did the Barretts establish a breach of contract by Gilbertson concerning the headroom of the basement?
2. Was Barretts' lawsuit against Gilbertson based on matters that contractually survived their closing?
3. Did the Barretts establish a breach of contract by Gilbertson concerning his duty to correct work that was defective?
4. Have the Barretts been excused from their duty to mitigate damages?
a. Did Gilbertson's failure to promptly correct defects excuse the duty to mitigate damages?
b. Did Gilbertson's requirement of a release excuse the duty to mitigate damages?
c. Did the Barretts act reasonably when they refused to risk further injury by Gilbertson and thereby excuse their duty to mitigate damages?
5. Was the trial court's finding of the market value of the building clearly erroneous?
6. Under the circumstances of this case, do damages based upon market value alone produce a fair and just result?
7. Should the Barretts be awarded their attorney fees relating to Gilbertson's counterclaim for slander and emotional distress?
STATEMENT OF THE CASE
This appeal involves a variety of issues that arise from the construction of a residential home in rural Cass County, North Dakota, and the strained relationship between the residential owners and the construction contractor.
Terence and Rachel Barrett [hereinafter "Barretts"] initiated a breach of contract action against contractor Harry Gilbertson [hereinafter "Gilbertson"] seeking damages because the home he constructed did not comply with the specifications of their plans, and he failed to correct construction deficiencies as warranted. Appendix, pages 11-15.
Gilbertson submitted an Answer and Counterclaim to the Barretts' complaint. Appendix, page 38-43. Counts One and Two of Gilbertson's Counterclaim are mistakenly designated counterclaims, but were actually defenses asserted by Gilbertson to Barretts' breach of contract action. Count One of the Counterclaim was the affirmative defense of release, and was mistakenly designated a counterclaim. No damages were alleged by Gilbertson concerning Count One of his Counterclaim. Count Two of the Counterclaim, entitled "Impossibility of Performance", raises the issue of whether Barretts should be denied some of their claimed damage because of a failure to mitigate damages. Counts Three and Four of the Counterclaim, entitled "Defamation" and "Emotional Distress," sought damages for alleged slander without ever identifying the alleged statement made, and without complying with N.D.C.C. § 32-43-03.
On September 14, 2011, the Barretts moved to dismiss Gilbertson's Counterclaim. Their motion resulted in Gilbertson voluntarily dismissing Count Four "Emotional Distress". Appendix, page 73. Summary Judgment dismissing Count Three of the Counterclaim was granted by the trial court. Appendix, page 82.
The Honorable Wickham Corwin, District Judge, presided over a bench trial that occurred on March 6, 2012 and ended on March 7, 2012. After concluding briefs submitted by the parties outlining their respective positions, the trial court issued his Memorandum Opinion. Appendix, page 150-154. Pursuant to the trial court's Memorandum Opinion, a judgment for dismissal of Barretts' claims, with prejudice, was entered on April 30, 2012. Appendix, page 156.
On May 2, 2012, subsequent to judgment, the Barretts moved for their reasonable attorney fees arising out of their defense to Gilbertson's counterclaim for defamation and emotional distress. Appendix, pages157-160. On May 16, 2012, the trial court denied Barretts' motion for attorney fees. Appendix, page 162-163.
On June 26, 2011, the Barretts timely filed their Notice of Appeal from the judgment of April 30, 2012, and the order that denied the Barretts their attorney fees. Appendix, page 165.
STATEMENT OF FACTS
1. On or about May 4, 2007, the Barretts entered into a written contract [Plaintiffs' Exhibit 9; Appendix, page 83-91] with Gilbertson for the purchase by Barretts from Gilbertson of a dwelling house to be constructed by Gilbertson on a lot near Kindred, North Dakota, that at that time was owned by the Barretts. The Plaintiffs transferred their lot to Gilbertson at that time. Appendix, page 23; Transcript, pages 108-109; 116-117.
2. An expressed term of the May, 2007, contract was that Gilbertson would "at its own cost and expense, erect and complete a one family dwelling on the premises substantially similar to building specifications blueprint on exhibit .." Paragraph 2 of the May 4, 2007, contract; Appendix, page 83.
3. On or about October 8, 2007, the Barretts and Gilbertson closed on the purchase and sale of the dwelling house and Gilbertson executed and delivered to the Barretts a warranty deed conveying their lot back to them. The agreed closing price was $326,882.35 for the building alone, taking into consideration certain credits and discounts agreed to by both Gilbertson and the Barretts. Appendix, page 44.
4. When the Barretts closed with Gilbertson, they did not enjoy a prior "walk through" or an inspection with Gilbertson. At the time of closing, there were several construction matters that should have been addressed by Gilbertson, but were not. Within the one year period from the time of closing, the Barretts developed a list of 49 contract and construction deficiencies [Plaintiffs' Exhibit 127], with many of the deficiencies known to all at the time of closing. At trial, both Terence Barrett and Gilbertson acknowledged that most deficiencies that the Barretts listed were in existence at the time of the October 8, 2007, closing.
Even Gilbertson's chosen inspector, Lars Knobloch of Nordic Home Inspection, confirmed most of these construction problems in his October 1, 2010, report. Defendant's Exhibit D205.
5. Paragraph 3(a) of the May 4, 2007, contract [Plaintiffs' Exhibit 9] reference "excavation for basement and driveway." The foundation plan agreed to by both, the Barretts and Gilbertson, showed thirteen (13) risers. Defendant's Exhibit D203. If constructed with thirteen (13) risers and the normal height of riser [or even the average of 7.5" riser height used by Gilbertson when constructing the stairway (Plaintiffs' Exhibit 129)], the basement would have been able to be habitable with at least a seven foot (7') floor-to-ceiling height. As stated by Architect Dick in his report [Plaintiffs' Exhibit 24; Appendix, page 93]:
3. Basement Reference:
The Owner/Builder Contract references a partial basement. No reference was made on the drawings except a stairway extending downward was shown with 13 risers. Since the height can vary from 7" to 7-3/4" by IRC R311, it appears that the basement head room could have been equal to 7'-0" based on the number of treads and risers.
6. Terence Barrett testified as to his expectation for the basement, "Unfinished basement. At some point if we wanted an extra room we could put in an extra room." Transcript, page 44.
7. The basement generally had only six feet two inches (6'2") of floor-to-ceiling clearance, and would not be a habitable space without modifying the existing construction. Plaintiffs' Exhibit 24, page 3. Architect Dick testified that other than one commercial building, due to that buildings limitations, he had never seen a basement [or crawlspace] with a floor-to-ceiling height of 6'2".
The basement stairway, as constructed, does not provide for adequate headroom at the bottom of the stairs. Plaintiffs' Exhibit 24, page 3; Plaintiffs' Exhibit 129.
The cost to provide sufficient floor-to-ceiling head room, to provide a habitable space, would be "difficult, time consuming, and expensive to resolve." Plaintiffs' Exhibit 24, page 3; Appendix, page 36. To help establish their home has been diminished in value by the substandard basement [as constructed by Gilbertson], the Barretts submitted one bid they received that showed it may cost from $21,000 to $23,000 to obtain habitable basement space without any consideration for the cost of utility, plumbing or electrical relocation. Plaintiffs' Exhibit 131; Appendix, page 145.
8. Pursuant to the May 4, 2007, contract, Gilbertson had duties to the Barretts that survived the closing. Paragraph 3 of said contract [Appendix, page 84] states in pertinent part:
...Buyer acknowledges that it is normal and not uncommon that minor portions of the improvements may not be fully completed as of the date of closing, and so long as improvements are completed to the point the premises are habitable, such minor and incomplete portions shall not delay the closing, but Seller shall thereafter promptly complete such items. Further, Seller shall promptly correct any work or materials failing to comply with the specifications of the blueprints or which are otherwise defective so long as the reported to Seller in writing within 12 months from the Date of closing.
9. There was no statement, or agreement, within the October 4, 2007, "Final Settlement Offer" that amends the May 4, 2007, contract between the parties. Appendix, page 44. The Barretts did not waive any of their contractual rights in the October 4, 2007, "Final Settlement Offer." Although Gilbertson's Answer [Count One (Breach of Contract); Appendix, page 40] alleged this release and the Barrett's acceptance of the Deed constituted a full release, both Gilbertson and his banker testified that Gilbertson, post-closing, intended to honor his duties under N.D.C.C. § 43-07-26 .(1) Transcript, pages 252 and 386.
10. Gilbertson acknowledged that there were many matters in the Barretts' home that had to be resolved post-closing. Appendix, page 126-127. His expert, Lars Knobloch found legitimacy to the Barretts' complaints. Transcript, pages 283, 290-293. Gilbertson estimated that he would need three days to fix the items that he was willing to fix. Transcript, page 385. Gilbertson, though, offered no evidence in an attempt to quantify the cost of material and labor for three days worth of repairs.
The only defect that Gilbertson attempted to quantify the cost of repair was relates to the squeak in the floor. Gilbertson, himself, offered a solution for that squeak that would cost $1,960.00 to repair. Appendix, page 127-128.
11. Although Gilbertson testifies [Transcript, page 386-87] that he would have made repairs if he had been allowed to by the Barretts, his pre-lawsuit letters [through his attorney] establishes that he expected a full release of the Barretts as a condition of performance. Appendix, pages 104 and 127. Within his March 13, 2008, letter [Plaintiffs' Exhibit 39, appendix, pages 105-106], Gilbertson's attorney conditioned Gilbertson's repair work, as follows:
A. The partes shall execute a Stipulation setting forth the terms of the agreement amongst the parties.
B. One of the provision to the Stipulation will be release language whereby the Barretts shall release Harry Gilbertson Construction and Harry Gilbertson, individually, from any further liability or claims for the bullet items addressed to the satisfaction of the Barretts. We do not expect the Barretts to release Harry Gilbertson Construction or Harry Gilbertson, individually, from liability concerning the foundation arising out of the repair methods used for certain elements of the foundation near windows and would specifically agree to except that matter from the release language.
On May 8, 2008, Gilbertson's attorney again addresses the offered repair work by Gilbertson: "We would expect these terms to be set forth in an agreement that provides for a release of Harry Gilbertson and Harry Gilbertson Construction for any further liability on the items fixed." Appendix, page 127.
12. Because the Barretts viewed Gilbertson's offer too vague, and open to differing interpretation as to how Gilbertson intended to fix the flaws [use of terms such as "fixed in a commercially reasonable manner"], the Barretts expressly requested Gilbertson to provide them with "a written, detailed description to each discrepancy explaining the intended corrections so that we [Barretts] might have some certainty about the quality of the corrections prior to the completion." Appendix, page 130. In the same May 14, 2008, letter, the Barretts provided Gilbertson with their view of how many of their discrepancies should be resolved. Appendix, pages 130-131.
13. Gilbertson did not make any attempt to respond to Barretts' May 14, 2008, letter until four (4) months later, on September 23, 2008. Appendix, page 134. Within his September 23, 2008, letter, Gilbertson did not honor the Barretts' prior request that he provide them with "a written, detailed description to each discrepancy explaining the intended corrections." Appendix, page 130.
It is apparent from the trial testimony of the Barretts and Gilbertson that their relationship was strained even during construction. Because of the tardiness, and lack of detail, of Gilbertson's response to the Barretts' May 14, 2008, letter, it is clear that the strained relationship could not be revived.
As their trial testimony and initiation of their lawsuit reveals, the Barretts concluded that Gilbertson would not honor his post closing contractual commitment to them and repair the defects in the home many of which were apparent at time of the October 4, 2007, closing. Appendix, pages 132-133.
14. Terence Barrett testified that, due to the deficiencies in the home as constructed by Gilbertson, the value of the home was not $326,000, as Gilbertson constructed it, but rather valued from $280,000 to $290,000. Transcript, page 171. Rachel Barrett testified that the value of the home left them by Gilbertson was only $280,000. Appendix, page 274. Terry Barrett testified as to the diminishment of value to the home for the basement being $20,000.00, and for the laundry room $2,000. Transcript, page 174. Terence Barrett's testimony of diminished value was based upon his knowledge that the estimated costs to make the basement conform to the blueprints would be $21,000 to $23,000. Appendix, page 144. His determination of value was based upon an estimate he received in 2008 that it would cost about $17,700.00 to correct the deficiencies that could be corrected. Transcript, page 173. At the time of trial, Barretts had spent about $7,000 to correct the discrepancies, and there was about $10,000.00 more that they would have to spend in order to correct only the discrepancies that could be corrected. Transcript, page 172-173.
At the time of his trial testimony, Terence Barrett also knew that had Gilbertson constructed the home under the specifications of the blueprints, with a partial basement [with normal headroom height], the building's valuation would be $315,000.00 at time of closing. Plaintiffs' Exhibit 25. If the approximate costs to repair, and costs to conform, are subtracted from the market value of the building the home, it becomes consistent with both Rachel and Terence Barrett's estimate of diminished value.
15. There is no evidence in the record to support the following statements of the trial court concerning the valuation of the residential building:
The property was appraised for loan purposes, and determined to have a fair market value of $370,000. Exhibit 25. This valuation reflects an adjustment for the reduced headroom in the mechanical/storage area. This was the best and most credible evidence offered as to the value of the structure. It establishes plaintiffs received property that is worth more than they paid, not less.
Appendix, page 153.
The appraisal was for both the house and lot. The Barretts had purchased the lot prior to their dealings with Gilbertson. The lot, owned and purchased by the Barretts before their dealings with Gilbertson, was valued at $55,000.00. Transcript, page 26. Subtracting the land price from the total purchase price, results in a $315,000 building when constructed with the partial basement and not a crawlspace. Appraiser William Triebwasser testified that there would be a $5,000.00 to $10,000.00 deduction from the appraisal between a crawlspace and a partial basement under a market appraisal. Transcript, page 35. This $5,000.00 to $10,000.00 deduction was not reflected in the market valuation of the residential building set forth in Exhibit 25.
LAW AND ARGUMENT
Standard of Review
The Barretts respectfully submit that most the of issues relating to their breach of contract action against Gilbertson involve questions of law. The appellate issues relate to the interpretation of the contract between the parties, and the contractual duties each has towards the other. All of these issues are matters of law and fully reviewable by this Court. B.D.H. ex rel. S.K.L. v. Mickelson, 2010 ND 235, ¶ 4, 792 N.W.2d 169. Forest Const. Co., LLV v. Laughlin, 337 S.W.3d 211 (Tenn.Ct.App. 2009). It is respectfully submitted that, in this case, whether a contractual duty has been breached, and which party was first to materially breach a contractual duty, involves mixed questions of fact and law and is reviewable, by this Court without deference to the clearly erroneous standard. As stated in Malarchik v. Pierce, 264 N.W.2d 478, 479 (N.D. 1978).
We have said a number of times that labels are not binding upon us in our review of trial court findings and conclusions, e.g., Jahner v. Jacob, 233 N.W.2d 791 (N.D. 1975). Malarchick argues that whether there is an accord and satisfaction is entirely a question of fact, citing Frank v. Daimler-Benz, A.G., Stuttgart, 226 N.W.2d 143, 147 (N.D. 1975). A question may be entirely one of law or one of fact or it may be mixed. Finding ultimate facts may require more than a theoretical application of logical reasoning from the evidence-it may require the application of legal principles. See Bd. of Ed. of Long Beach, Etc. v. Jack M., 139 Cal.Rptr. 700, 566 P.2d 602, 606 (1977). When the evidence is such that reasonable men can draw but one conclusion therefrom, a question of fact becomes a question of law. Schatz v. Jerke, 199 N.W.2d 908, 910 (N.D. 1972). See also, McKechnie v. O'Neil, 252 N.W.2d 875 (N.D. 1977); Buehner v. Hoeven, 228 N.W.2d 893 (N.D. 1975); and Schan v. Howard Sober, Inc., 216 N.W.2d 793 (N.D. 1974).
A mixed question of fact and of law may, in a jury case, be "for the jury," but it does not necessarily follow that mixed questions of fact and of law, in a court case, are to be reviewed by this Court under the strictures of Rule 52(a), NDRCivP. 9 Wright and Miller, Federal Practice and Procedure, § 2589, says "there is substantial authority that they [mixed questions of fact and of law] are not protected by the 'clearly erroneous' rule and are freely reviewable." We have said that if the question is "more a question of law than a question of fact," we are not required to follow Rule 52(a). Dolajak v. State Auto. & Cas. Underwriters, 252 N.W.2d 180, 182 (N.D. 1977). See also, University Hills, Inc. v. Patton, 427 F.2d 1094, 1099 (6th Cir. 1970).
Issues of damages are generally determined under the clearly erroneous standard. Under a clearly erroneous standard, an appellant must show that a finding of fact is: (1) made under an erroneous view of the law; (2) made without evidence to support it, (3) the entire evidence leaves the appellate court with a definite and firm conviction that a mistake has been made. Kjelland v. Kjelland, 2000 ND 86, ¶ 8, 609 N.W.2d 100. In this case though, the trial court's resort to a market valuation alone, should allow this Court to review the damages that Barretts seek that will compensate them for their costs of repair as a matter of law. Mike Golden, Inc. v. Tenneco Oil Company, 450 N.W.2d 716 (N.D. 1990).
Whether the Barretts should have been awarded attorney fees relating to their defense of Gilbertson's slander claim is reviewed under an abuse of discretion standard. A trial court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner, or when it misinterprets or misapplies the law. US Bank Nat'l Assoc. v. Arnold, 2001 ND 130, ¶ 21, 631 N.W.2d 150).
1. The Barretts have established a breach of contract by Gilbertson concerning the headroom of the basement.
In his Memorandum Opinion, the trial court writes, "Much of the dispute focuses on the headroom in the below grade storage/mechanical space. Plaintiffs claim they contracted for, but did not receive a full depth basement." Appendix, page 151. After noting the large area of the dispute between the parties, the trial court found that Gilbertson did not breach his contractual duties. Such finding stems from the trial court's interpretation of the subject contract, "There is nothing in writing that specifies a minimum headroom. However, the testimony establishes that the design and dimensions of the below grade space were discussed on numerous occasions by Rachel and Gilbertson." Appendix, page 150.
Paragraph 3 of the Construction/Purchase Agreement of the parties provided for an allowance for "Dirt work (Stripping lot and excavation for basement and driveway)". Appendix, page 16; bolding supplied for emphasis. Paragraph 2 of the Construction/Purchase Agreement provided, "Such dwelling shall be erected in accordance with the approved plans and specifications of record with the Seller." Appendix, page 16. The foundation plan, that both the Barretts and Gilbertson approved when entering their contract [Exhibit D103], provided for thirteen (13) risers from floor to floor. Appendix, page 108; Transcript, page 57. As constructed, there were only twelve (12) risers with an average riser height of 7.5 inches from floor to floor. Appendix, page 144. Transcript, page 61. Although, a riser can vary in height, Architect Ronald Dick testified a typical riser he would design would be 7.5 inches in height. Appendix, page 57. Architect Dick described the space as a "crawlspace", and concluded it needed a mere four (4) inches to become an occupiable basement. Transcript, page 58. In other words, if the basement height had been constructed so that there could be thirteen risers of a typical height of 7.5 inches, the basement height would have had sufficient headroom from the floor to have an occupiable basement. Transcript, pages 99- 100.
The stairway to the "crawlspace" did not have sufficient headroom to comply with building codes. Appendix, page 94.
The subject contract unambiguously used the term "basement" and called for thirteen (13) risers, yet there were only twelve (12) risers that were constructed. As stated by this Court in City of Bismarck v. Mariner Const., Inc., 2006 ND 108, ¶11, 714 N.W.2d 484:
The object of interpreting and construing a contract is to ascertain and give effect to the parties' mutual intention at the time of contracting. N.D.C.C. § 90703; Fargo Foods, Inc. v. Bernabucci, 1999 ND 120, ¶ 13, 596 N.W.2d 38. The interpretation of a written contract to determine its legal effect is a question of law. Bernabucci, at ¶ 13. Except as otherwise provided by law, public and private contracts are interpreted by the same rules of interpretation. N.D.C.C. § 90701. The parties' intention must be ascertained from the writing alone, if possible. N.D.C.C. § 90704; Bernabucci, at ¶ 13. A contract must be construed as a whole to give effect to each provision, if reasonably possible. N.D.C.C. § 90706; Bernabucci, at ¶ 13. A contract must be interpreted to make it lawful, operative, definite, reasonable, and capable of being carried into effect. N.D.C.C. § 90708. Words in a contract must be construed in their ordinary and popular sense. N.D.C.C. § 90709; Bernabucci, at ¶ 13. If a contract is uncertain, the language of the contract should be interpreted most strongly against the party who caused the uncertainty to exist; however, for contracts between a public entity and a private party, it is presumed that all uncertainty was caused by the private party. N.D.C.C. § 90719. See Kaler v. Kraemer, 1999 ND 237, ¶ 19, 603 N.W.2d 698. Under N.D.C.C. § 90802.1, any provisions in a construction contract which would make the contractor liable for the owner's errors or omissions in the plans and specifications of the contract are against public policy and void.
There is no ambiguity as to the number of risers called for in this contract. If the height of the requisite risers is considered to be an ambiguity, the riser height would be governed by N.D.C.C. § 9-07-09 or N.D.C.C. § 9-07-08. If the height of thirteen (13) risers, reflected upon the agreed blueprints, is interpreted to be an ordinary term, the ordinary riser is a 7.5 inch riser. If the height of the risers is considered a technical term, the person who installed the risers installed them at the average height of 7.5 inches. Architect Dick also confirmed that a typical riser he would use in a residential dwelling would be 7.5 inches.
Under the parties' contract it was reasonable for the Barretts to believe that they would have installed a basement with a stairway that led to it and which complied with all applicable building codes. Nothing within the contract, or agreed drawings, would suggest that the Barretts's basement area would be a crawlspace. Even Sakry, the building inspector called by Gilbertson for testimony, agreed that the Barretts were provided a crawlspace. Transcript, page 360. Nothing in the parties' contract, nor common experience of men, would suggest that the parties' expressed mutual intention to have a basement could lead to height dimensions so unique that an architect with over thirty years of experience had not seen a residential dwelling constructed with that headroom height. Transcript, page 68. The trial court errs, as a matter of law, in his interpretation of the parties' contract.
"A breach of contract is a failure to perform all or any part of what is warranted or required in a contract." City of Bismarck v. Mariner Const., Inc, supra., page 491. Gilbertson breached the contract by not constructing the basement with sufficient headroom to accommodate thirteen (13) risers of typical height so that there is a basement and not a crawlspace.
2. Barretts' lawsuit is based on matters that contractually survived the closing.
A second reason that the trial court advanced for denying Barretts' claims related to the trial court's misguided belief that the Barretts and Gilbertson mutually released the claims that Barretts asserted against Gilbertson. The trial court writes, "The evidence was convincing, and establishes that the written agreement (Exhibit 208) was mutually intended to resolve any claim the dimensions of the structure did not conform to the contract." Defendant's Exhibit 208 is the same document that is found at Appendix, page 81. This document does not support the trial court's interpretation. Nothing within said trial exhibit contains a waiver made by the Barretts of anything relating to the Gilbertson's contractual duty to "promptly correct any or materials failing to comply with the specifications of the blueprints..." Appendix, page 84. The parties contemplated that, at closing, adjustments would be made to the contract price. Paragraph 3 of the Construction/Purchase Agreement provides, in part:
Purchaser acknowledges that certain improvements items are designated as allowance items, and that the actual costs of such items (and therefore the final purchase price of the premises) may be greater or less the state [sic.] amounts, depending upon the quality and quantity of items chosen by Purchaser. If the actual costs of such designated items are less than the amounts chosen by Purchaser. If the actual costs of such designated items are less than the amount provided, Purchaser shall receive a purchase price credit. If the actual cots [sic.] of such designated items are greater than the amounts provided, the purchase price shall increase and Purchaser shall pay any such greater amount upon receipt of corresponding Invoices from Seller. ...
Appendix, page 84.
Defendant's Exhibit 208 merely reflects the parties' agreement as to the adjustments to the construction costs. Nothing within that agreement was intended to require the Barretts to waive that portion of Paragraph 3 of the parties' contract that specifically placed a duty upon Gilbertson to "promptly correct any work or materials failing to comply with the specifications of the blueprints or which are otherwise defective so long as the reported to Seller [Gilbertson] within 12 months from the Date of closing". Appendix, page 84.
Barretts' lawsuit concerns Gilbertson's breach of this provision of the contract. The Barretts sued for the construction work that did not comply with the blueprints, and what they perceive to be construction defects that were not repaired by Gilbertson post-closing. Nothing within the contractual warranty provision, nor N.D.C.C. § 43-07-26, suggests that structural variations from the blueprint would not be covered under the warranty.
The following excerpt, within Metro Group Const. Corp. v. Town of Hempstead, 24 A.D.3d 632, 633, 808 N.Y.S.2d 393, 394 (2005) is pertinent to Gilbertson's post-closing duties to the Barretts:
Contrary to the Town's contentions, the plaintiff's causes of action survived the closing of title. Paragraph 26(i) of the agreement specifically provided that the construction provisions of the agreement "shall survive closing of title" (see Goldsmith v. Knapp, 223 A.D.2d 671, 637 N.Y.S.2d 434; Davis v. Weg, 104 A.D.2d 617, 479 N.Y.S.2d 553).
Or, as stated in Footnote 1of Am. Nat. Self Storage, Inc. v. Lopez-Aguiar, 521 So. 2d 303, 305 (Fla. Dist. Ct. App. 1988):
We reject the seller's separate contention that, even if the warranty did not merge in the deed, the purchaser waived its rights by silently going through with the closing. The same reasons which lead us to conclude that there is no merger also lead us to conclude that silence does not constitute a waiver. Obviously, if the parties intended that the warranty survive the closing and delivery of the deed, then the purchaser's knowledge that the water and sewer lines were not available at the property line and its concomitant silence are immaterial since the purchaser understandably would be relying on the seller's living up to his undertaking after the closing. See Opler v. Wynne, 402 So.2d 1309 (Fla. 3d DCA 1981) (a party does not waive its right to enforce an express warranty of ingress and egress by accepting a deed in part performance of the contract); Annotation, Merger of Contract in Deed, 38 A.L.R.2d 1310, 1312 (1954). If, on the other hand, the parties intended that the contract be merged in the deed, then the warranty is extinguished and there is nothing to enforce, and thus no right of enforcement which could be waived by the purchaser's knowledge and silence before closing.
The Barretts were able to close on the purchase price and still reasonably rely upon Gilbertson's contractual duty to "promptly correct any work or materials failing to comply with the specifications of the blueprints or which are otherwise defective." The Barretts' silence at time of the October 4, 2007, closing [concerning the basement, laundry room dimensions, or other construction defects] is not a waiver nor material to the Barretts' claim(s) against Gilbertson.
3. The Barretts have established a breach of contract by Gilbertson concerning construction defects that could be repaired.
In the contract, Gilbertson assumed the duty to the Barretts, to "erect and completed a one family swelling on the premises ...". Appendix, page 83. Under the contract, Gilbertson agreed to "promptly correct any work or materials failing to comply with the specifications of the blueprints or which are otherwise defective so long as the reported to Seller in writing within 12 months from the Date of closing."
Other than the basement height, and other dimensional issues, Barretts' complained of construction defects. For example, the Barretts had problems with every exterior and interior door in the home. Transcript, page 137. Sheetrock was cracked. There was a forty-two inch sheetrock crack along a ceiling. Transcript, page 138. Baseboards were of different type. Some baseboards had base shoes, while others did not. Transcript, page 136. The words of architect Ronald E. Dick best summarizes the construction defects the Barretts faced:
During the walk through inspection, Rachel and Terry pointed out various areas of concern. These issues included doors which were not square in the frames, door latches which would not seat in the strike, space between the base and wood floor, some cracks in the gypsum wallboard near the ceiling, opening around the garage allow entry of varmints, the entry of water around or under the garage door off the east patio, entry of water around patched in areas below basement windows, etc. It is my opinion that many of these issues were caused by careless construction techniques.
Gilbertson's expert, Lars Knobloch, confirmed most of the construction defects claimed by the Barretts. Exhibit D205. In other words, the evidence was clear - and undisputed - that there were construction defects [whether cosmetic or otherwise] in which Gilbertson had a duty to correct to repair under the terms of the parties' contract.
The trial correctly determined, "Under the terms of the written contract, Gilbertson did agree to correct any defective work or materials reported within 12 months of the closing." Appendix, page 152. Gilbertson did not correct the defective work or materials that were reported to him by the Barretts under the terms of the contract.
The trial court's determination that Barretts' claims, relating to non-structure construction defects, were of minor cosmetic conditions would not relieve Gilbertson of this contractual duty. Even Gilbertson recognized that it would take three (3) days to repair the residential dwelling without any attempt to quantify that cost.
4. Any duty that Barretts had to mitigate damages has been excused because of Gilbertson's actions or positions.
The real issue is not whether there were defects that Gilbertson needed to repair under the warranty, but whether the Barretts failed to mitigate their damages by not letting Gilbertson fix them. The trial court found, "Furthermore, to the extent defects were reported, it is undisputed that Gilbertson was never given an opportunity to fix them." Appendix, page 152.
The Barretts respectfully submit that any duty they had to mitigate their damages against Gilbertson [by affording him an opportunity to fix them] has been excused as a matter of law. The Barretts recognize their duty to mitigate damages, but respectfully submit, they have been excused from that duty under the undisputed facts of this case. In Westec Const. Management Co. v. Postle Enterprises I, Inc., 68 P3d 529, 532 (Colo.App 2002), a Colorado court outlined when the duty to mitigate damages may be excused in a construction defect case:
A party seeking recovery under a contract has a duty to mitigate its damages. La Casa Nino, Inc. v. Plaza Esteban, 762 P.2d 669 (Colo.1988). The defense of failure to mitigate damages applies when a plaintiff has failed to exercise reasonable care and diligence to minimize or lessen damages occasioned by defendant's conduct. Berger v. Sec. Pac. Info. Sys., Inc., 795 P.2d 1380, 1385 (Colo.App.1990).
A plaintiff's failure to mitigate damages is excused, however, if mitigation would require inordinate or unreasonable measures or if there were reasonable grounds for the failure to mitigate. Fair v. Red Lion Inn, 943 P.2d 431, 437 (Colo.1997). For example, a party need not accept a modified contract in mitigation of its damages when the modified offer includes abandonment of any right of action for a prior breach as a condition of acceptance. Stanspec Corp. v. Jelco, Inc., 464 F.2d 1184, 1187 (10th Cir.1972)
The undisputed facts of this case suggests three separate reasons why Barretts have been excused from their duty to mitigate damages.
A. Gilbertson's failure to promptly correct defects excused the Barretts' duty to mitigate damages.
The failure of Gilbertson to promptly make repairs some matters known to him a the time of the October 2007 closing is in itself a breach of duty to the Barretts. Although the word "promptly" is not defined in the contract, if one incorporates the provisions of N.D.C.C. § 43-07-26 into the parties' contract, thirty (30) business days is suggested as a reasonable time for Gilbertson to respond to the Barretts. When Gilbertson failed to respond to the Barretts from mid-May 2008, to late September 2008, he failed in his contracted duty to act promptly, or in a reasonable time period. Time was of the essence for all time periods stated in the contract. Plaintiffs' Exhibit 9, ¶24; Appendix, page 87. For the defects that were repairable, Gilbertson's failure to "promptly" correct defective work known to him some known at closing was a breach of contract in itself that renders his September 23, 2008, offer to perform too late. See, N.D.C.C. § 9-12-12. Gilbertson's tardy offer to perform precludes his reliance upon his defense that the Barretts have refused him entry to their home. He had never timely offered to correct any work "promptly". Gilbertson did not challenge Barretts' position that he had a contractual duty to "promptly correct any work or materials failing to comply with the specifications of the blueprints or which are otherwise defective" that were reported to him within one year of closing. At trial, Gilbertson adds nothing to the discussion as to what is meant by the word "promptly" within the parties' contract. Gilbertson did not challenge Barretts' assertion that thirty (30) days is a reasonable time for a contractor to address a homeowners' complaints. Gilbertson had never addressed the Barretts' complaints within thirty (30) days of the time that they were made known to him. Some defects were known by Gilbertson at the time the parties closed, yet Gilbertson did not attempt to repair his work at the time of closing, or within thirty (30) days thereafter. When the Barretts submitted a list of discrepancies on December 27, 2007, Gilbertson waited until February 6, 2008, to write a letter in response more than thirty (30) days. By letter of May 14, 2008 [Defendant's Exhibit D219], the Barretts requested "a written, detailed description to each discrepancy explaining the intended corrections so that we ["Barretts"] have some certainty about the quality of the workmanship is commensurate with the value of our home ..." Gilbertson never supplied the requested list, and did not respond to the Barretts' letter until September 23, 2008.
As stated in Langer v. Bartholomay, 2008 ND 40, ¶ 11, 745 N.W.2d 649: "A party has breached a contract when it fails to perform a contractual duty when it is due." Gilbertson cannot assert that Barretts are not entitled to their damages for Gilbertson's breach of contract just because they failed to accept Gilbertson's tardy offer of partial performance. As a matter of law, the Barretts need not accept a modified contract in mitigation of their damages when Gilbertson's modified offer includes the abandonment of Barretts' right to require prompt performance. Westec Const. Management Co. v. Postle Enterprises I, Inc., supra.
B. Gilbertson's requirement of a release excused the Barretts' duty to mitigate damages.
Barretts were excused from their duty to mitigate damages because Gilbertson's offer performance required them to release Gilbertson from liability for his performance. Requiring the Barretts to release Gilbertson from liability, as a condition of Gilbertson's warranty performance, is a modified offer of performance. It is clear that Gilbertson offered performance his contractual duty, under the one year warranty, only if Barretts gave him a release of liability. Appendix, pages 104, 127. Gilbertson's offer to perform his contractual duty if Barretts released him from further liability excuses the duty to mitigate damages. Stanspec Corp. v. Jelco., 464 F.2d 1184, 1187, (10th Cir. 1972); Westec Const. Management Co. v. Postle Enterprises I, Inc., supra.
C. The Barretts were excused from their duty to mitigate because they acted reasonably when they refused to risk further injury by Gilbertson.
A failure to mitigate damages can also be excused if the injured party acts reasonably. As stated in Forrest Const. Co., LLC v. Laughlin, 337 S.W.3d 211, 230 (Tenn. Ct. App. 2009):
We also find the case of Salley v. Pickney Co., 852 S.W.2d 240 (Tenn.Ct.App.1992) supports the finding that the Laughlins were excused from the duty to mitigate. In Salley v. Pickney, we reversed the trial court's dismissal of the homeowners' claim due to their failure to give notice to the contractors in order to mitigate their damages. Id. We noted that the duty to mitigate exists in order to "to put the injured party in as good as a position as he would have occupied had complete performance been rendered by the defaulting party at the least necessary cost." Id. at 244. We then noted that the duty to mitigate contains a "reasonableness" standard:
[t]he critical factor in determining fulfillment of a plaintiff's duty to mitigate is whether the method which he employed to avoid consequential injury was reasonable under the circumstances existing at the time. The rule with respect to the mitigation of damages may not be invoked by a contract breaker "as a basis for hypercritical examination of the conduct of the injured party, or merely for the purpose of showing that the injured person might have taken steps which seemed wiser or would have been more advantageous to the defaulter. As stated in McCormack, Damages, Sec. 35 (1935), "a wide latitude of discretion must be allowed to the person who by another's wrong has been forced into a predicament where he is faced with a probability of injury or loss. Only the conduct of a reasonable man is required of him."
Id. (citing Action Ads, Inc. v. William B. Tanner Co., 592 S.W.2d 572 (Tenn.Ct.App.1979) (quoting Tampa Electric Co. v. Nashville Coal Co., 214 F.Supp. 647, 652 (M.D.Tenn.1963))). We then held that the homeowners acted reasonably in refusing to allow the contractors to come back and work on their home as "the record [was] replete with evidence of the defects in the Contractors' work." Id. As in this case, "[t]he plaintiffs' expert testimony showed that the cumulative effect of the defects caused by the Contractor rendered the Contractors' performance unworkmanlike, thereby constituting a breach of contract." Id.
In this case, the cumulative effect of necessary cosmetic defects and structural defects, complained of by the Barretts, led them to the conclusion that Gilbertson's product was unworkmanlike. Transcript, page 273. When coupled with Gilbertson's lack of specificity as to how he would make necessary repairs, after inquiry, and the delay in Gilbertson's performance, it cannot be said that the Barretts acted unreasonably.
5. The trial court's finding of the market value of the building is clearly erroneous.
When construction defects cannot be remedied, the proper measure of damages is the difference between the value of the defective building and what its value would have been if it had been constructed according to the contract. Dittmer v. Nockleberg, 219 N.W.2d 201 (N.D. 1974). Under the general rule, diminishment in value is the proper method to measure the damages suffered by the Barretts that related to the basement, stairway, and other matters that cannot be repaired without reconstructing a portion of the building at great expense.
In this case the trial court misconstrued the evidence relating to the diminishment in value of the building. Again, there is no evidence in the record to support the following statements of the trial court concerning the valuation of the residential building:
The property was appraised for loan purposes, and determined to have a fair market value of $370,000. Exhibit 25. This valuation reflects an adjustment for the reduced headroom in the mechanical/storage area. This was the best and most credible evidence offered as to the value of the structure. It establishes plaintiffs received property that is worth mor than they paid, not less.
Appendix, page 153.
The trial court is clearly erroneous because the $370,000 market value appraisal includes the market value of the constructed dwelling house and the market value of the lot upon which it sits. The Barretts had purchased the lot prior to their dealings with Gilbertson. The lot, owned and purchased by the Barretts before their dealing with Gilbertson, was valued at $55,000.00. Transcript, page 26. Subtracting the land price from the total purchase price, results in a $315,000 building when constructed with the partial basement not a crawlspace. Appraiser William Triebwasser testified that there would be a $5,000.00 to $10,000.00 deduction from the appraisal between a crawlspace and a partial basement under a market appraisal. Transcript, page 35. This $5,000.00 to $10,000.00 deduction was not reflected in the market valuation of the $315,000.00 residential building.
Contrary to the trial court's statement, the building's market value appraisal [without consideration for the cost of cosmetic repairs] was $305,000.00 to $310,000.00. When closing, Barretts paid Gilbertson $326,882.35 for the residential building. Thus, under the market value approach alone, Barretts' damages range from $21,882.35 to $16,882.35 the difference between what was paid and the value of the building. In this case, the testimony of appraiser Triebwasser also suggests that the sum of $10,000.00 should be subtracted from the appraised building value of $315,000.00 due to the lack of a basement. Triebwasser testifies that there is usually a 50 percent reduction between a crawlspace and a full basement Transcript, pages 34-35. Triebwasser further testified as to the market value deduction from a full basement to a crawlspace, "Well, it would be roughly $10,000.00 based on the size of this basement." Transcript, page 35.
Since it would take in excess of $21,000.00-$23,000.00 to rebuild only the basement to conform to contract [Appendix, page 145], the loss of the market value of $21,862.35 of the home - as built - appears to be the appropriate damage award for the basement and laundry room. N.D.C.C. § 32-03-09.1.
6. In this case, one cannot rely upon market value alone to determine damages.
As noted by this Court in Karlinski v. P.R. & H. Lumber & Const. Co., 281 N.W. 898 (N.D. 1938), on page 900, "Any measure of damage of the allowance to the plaintiff must necessarily be a sum that will compensate him for the injury resulting from the omissions and variations due to the fault of the defendant." The proper measure of damages is "one which will be most likely to produce a fair and just result." Id. The problem with a market value approach, alone, is that a market value appraisal does not take into account the costs for necessary repairs. Appraiser Triebwasser's testimony, page 131. Using a market value approach alone, in a action pursuing cosmetic defects under a construction warranty, would render most construction warranties meaningless. It would not produce a fair and just result, nor would it fully compensate the Barretts for their injury. Other measures for damage may apply if market value does not fully compensate an injury. Mike Golden, Inc. v. Tenneco Oil. Co, Inc., supra., footnote 1.
In this case, the cost to repair the cosmetic defects should be added to the loss of the fair market value of the building to produce a fair and just result. In this case, only Terence Barrett attempted to quantify the damages he and his wife suffered for the repair of the cosmetic damage that Gilbertson warranted to correct. Terence Barrett testified that he received information in 2008 that it would cost about $17,700.00 to correct the deficiencies that could be corrected. Transcript, page 173. Terence Barrett testified that he had spent about $7,000 to correct the discrepancies and there was about $10,000.00 that he would have to spend in order to correct only the discrepancies that could be corrected. Transcript, page 172-173. Gilbertson, a contractor, presented no evidence attempting to quantify the cost of the warranty work. Because Gilbertson, a contractor, did not offer any evidence that would go to the cost of the cosmetic repairs, Terence Barrett's uncontradicted testimony of the costs should be deemed to be admitted by Gilbertson. The Barretts rely upon the rule of law expressed in New York Life Ins. Co. V. Hansen, 2 N.W.2d 163 (N.D. 1941), at pages 400-401:
Omission to call or interrogate an available witness, especially if the witness possesses peculiar knowledge, and would naturally be friendly to the party's contention, "raises a strong presumption that the testimony, if elicited, would be unfavorable" to the party who fails to call or interrogate such witness. 22 C.J. p. 115 et seq.; 1 Jones Commentaries on Evidence, 2nd Ed., p. 156; 9 Ency. of Evidence, p. 965 et seq.; 20 Am.Jur. p. 192.
"The scope of the rule is illustrated by the fact that it applies even to failure to combat adverse inferences. Where evidence has been introduced affording legitimate inferences going to establish the ultimate fact that the evidence is designed to prove, and the party to be affected by the proof, with an opportunity to do so, fails to deny or explain such facts, they may well be taken as admitted with all the effect afforded by the inferences." 1 Jones Commentaries on Evidence, 2nd Ed., pp. 156, 157.
Bolding supplied for emphasis.
Gilbertson is a contractor who possesses peculiar knowledge of the cost of the warranty work. Gilbertson, though, offered no evidence quantifying that cost. As a matter of law, Terence Barrett's testimony concerning that cost of $17,000.00 should be viewed as an admitted fact by an experienced contractor.
7. The Barretts should have been awarded attorney fees relating to Gilbertson's counterclaim for slander and emotional distress.
Gilbertson's answers to interrogatories did not reveal any economic damages he suffered as a result of any statement made by the Barretts. Gilbertson did not comply with N.D.C.C. § 32-43-05(2) prior to the institution of his counterclaim against the Barretts. Gilbertson's Counterclaim, itself, was so vague as to what was the statement he found slanderous, that the Counterclaim could not be considered proper compliance with the Uniform Correction or Clarification of Defamation Act [N.D.C.C. Chap. 32-43]. Appendix, pages 39-43. Neither Gilbertson's Answer and Counterclaim, nor his answers to interrogatories [Appendix, pages 53-68] revealed any form of special damages that resulted from any statement made by either of the Barretts. Because Gilbertson failed to show he suffered any economic damage or compliance with the Uniform Correction or Clarification of Defamation Act, the trial court dismissed Gilbertson's Counterclaim prior to trial. Appendix, page 82.
When relying to the Defendant's Counterclaim, the Barretts plead:
11. Defendant's Counterclaim is frivolous in that there is such an absence of actual facts, or law, that no reasonable person could not have though[t] a court would render judgment in the Defendant's favor.
Prior to the dismissal of the Counterclaim by the trial court, Gilbertson did not establish any fact or law that would support his counterclaim against the Barretts when he did not suffer any economic loss. The reasonable attorney fees to defend against the allegations of the Counterclaim were $2,362.50.
North Dakota Century Code section 28-26-01, paragraph 2, provides:
2. In civil actions the court shall, upon a finding that a claim for relief was frivolous, award reasonable actual and statutory costs, including reasonable attorney's fees to the prevailing party. Such costs must be awarded regardless of the good faith of the attorney or party making the claim for relief if there is such a complete absence of actual facts or law that a reasonable person could not have thought a court would render judgment in that person's favor, providing the prevailing party has in responsive pleading alleged the frivolous nature of the claim. This subsection does not require the award of costs or fees against an attorney or party advancing a claim unwarranted under existing law, if it is supported by a good-faith argument for an extension, modification, or reversal of the existing law.
Under this statute, regardless of the defendant's good faith, the trial court had the authority to award actual attorney fees when the following circumstances appear: (1) the prevailing party in a responsive pleading has alleged the frivolousness of the claim; and (2) there is complete absence of actual facts or law that a reasonable person could not have thought a court would render judgment in that person favor.
As to the Gilbertson's Counterclaim for slander and emotional distress, the Barretts are prevailing parties. The Barretts alleged in their responsive pleading to the Counterclaim that it was frivolous. Before bringing his Counterclaim, based upon allegedly slanderous statements, Gilbertson did not comply with the Uniform Correction or Clarification of Defamation Act. Under N.D.C.C. § 32-43-03(1), Gilbertson had no right to bring his asserted counterclaim for defamation because he did comply with statutory duties. Again, the Counterclaim is too vague in detail as to any alleged statement to be considered in compliance with the Uniform Correction or Clarification of Defamation Act; Gilbertson failed to show any economic damage he suffered from any statement made by the Barretts. Without asking for a correction or clarification of any statement, and without economic damage suffered because of a statement, it is respectfully submitted that there is a complete absence of fact and law to support the Counterclaim. When there is a complete absence of fact and law that would support a claim and no right to bring the form of action, no reasonable person could think any court would render judgment in his favor.
The trial court denied attorney fees to Barretts because he did "not feel the issue of defamation had been asserted in a frivolous manner." It is respectfully submitted that the trial court abused his discretion when it failed to award attorney fees to the Barretts. In this case, the defamation action is brought by a party who has no statutory to bring it because of his failure to adhere to statutory duty, and without any allegation of any economic loss or identification of the alleged slanderous statement. No matter what the trial court feels, it is frivolous.
The Judgment of Dismissal with Prejudice of April 30, 2012, should in all ways be reversed. This Court should properly construe the parties intended that a basement would be built not a crawlspace. As a matter of law, the Barretts should be awarded damages against Gilbertson in the amount of $21,882.35 for the diminishment in value of the building for matters that cannot reasonably be repaired.
This Court should determine that an award of damages, based upon market value alone, would not provide the Barretts with full compensation for Gilbertson's breach of his duty to correct work. Because Gilbertson did not quantify the cost of repair that would challenge Terence Barrett's testimony, the amount $17,000.00 for the repair cost should be deemed an admitted fact. Damages of $17,000.00 should be awarded to the Barretts as a matter of law for the breach of the warranty work.
In other words, as a matter of law, this Court should award damages to the Barretts in the amount $38,882.35.
This Court should also reverse the denial of attorney fees arising out of the defense to Gilbertson's counterclaim for defamation, and award the Barretts their attorney fees in the additional amount of $2,362.50.
|Respectfully submitted this 19th day of October, 2012.|
|Garaas Law Firm|
|Attorneys for Plaintiffs-Appellants|
|Office and Post Office Address:|
|DeMores Office Park|
|1314 23rd Street South|
|Fargo, North Dakota 58103|
|Telephone: (701) 293-7211|
|North Dakota Bar ID # 03219|
1. The contractual warranty varies in time for notice and performance as compared to the statutory warranty found in N.D.C.C. § 43-07-26. The statute reads:
43-07-26. Warranty repairs - Required notice.
Before undertaking any repair, other than emergency repair, or instituting any action for breach of warranty in the construction of a one-family or two-family dwelling, or an improvement with a value exceeding two thousand dollars to a dwelling, the purchaser or owner shall give the contractor written notice by mail, within six months after knowledge of the defect, advising the contractor of any defect and giving the contractor a reasonable time to comply with this section. Within a reasonable time after receiving the notice, the contractor shall inspect the defect and provide a response to the purchaser or owner, and, if appropriate, remedy the defect within a reasonable time thereafter. The contractor shall provide the purchaser or owner written notice of the requirements of this section at the time of closing for the property or, in the case of an improvement, at the time of completion of the improvement. For the purposes of this section,"reasonable time" means within thirty business days after the notice is mailed or any shorter period of time as may be appropriate under the circumstances.
2. N.D.C.C. § 32-43-03 provides:
1. A person may maintain an action for defamation only if the person has made a timely and adequate request for correction or clarification from the defendant or the defendant has made a correction or clarification.
2. A request for correction or clarification is timely if made within the period of limitation for commencement of an action for defamation. However, a person who, within ninety days after knowledge of the publication, fails to make a good-faith attempt to request a correction or clarification may recover only provable economic loss.
3. A request for correction or clarification is adequate if the request:
a. Is made in writing and reasonably identifies the person making the request;
b. Specifies with particularity the statement alleged to be false and defamatory and, to the extent known, the time and place of publication;
c. Alleges the defamatory meaning of the statement;
d. Specifies the circumstances giving rise to any defamatory meaning of the
statement which arises from other than the express language of the publication; and
e. States that the alleged defamatory meaning of the statement is false.
4. In the absence of a previous adequate request, service of a summons and complaint stating a claim for relief for defamation and containing the information required in subsection 3 constitutes an adequate request for correction or clarification.
5. The period of limitation for commencement of a defamation action is tolled during the period allowed in section 32-43-06 for responding to a request for correction or clarification.