Opinion
No. CX-98-1675.
Filed March 30, 1999.
Appeal from the District Court, Hennepin County, File No. 9715902.
Michael L. Puklich, (attorney for appellant)
Jeffrey R. Brauchle, Sherry Davis White, (attorneys for respondent)
Considered and decided by Davies, Presiding Judge, Peterson, Judge, and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellant GEH Construction, Inc. (GEH) appeals the district court's grant of summary judgment in favor of respondent Suburban Hennepin Regional Park District (Park District) and dismissal of GEH's claim for payment owing on a construction contract. It alleges genuine issues of material fact exist as to whether the parties agreed to extend the time to complete the contract and whether the Park District used reasonable diligence to mitigate its damages. We affirm the district court's grant of summary judgment on the issue of the extension of time to complete the contract, and reverse on the issue of the Park District's efforts to mitigate damages.
FACTS
This case arises out of a construction project at Hyland Hills Ski Chalet in Bloomington, Minnesota. In April 1996, the Park District contracted with GEH to renovate and expand the ski chalet. The contract required GEH to start construction by April 15, 1996 and complete construction by October 1, 1996 in time for the ski season.
Due to difficulty scheduling subcontractors and ordering materials, GEH fell behind on the construction schedule. Between September 4, 1996 and November 13, 1996, the Park District sent GEH nine letters expressing concern about the timely completion of the project. On two occasions, the Park District requested that GEH submit updated construction progress schedules. GEH submitted two revised schedules, one on September 5, 1996, calling for completion on October 15, 1996, and one on October 8, 1996, promising completion on November 1, 1996. GEH failed to meet either completion date.
On October 1, 1996, the Park District sent a letter to GEH stating the Park District had not authorized an extension of the October 1, 1996 completion date, and would begin assessing liquidated damages. On November 15, 1996, GEH sent a letter to the Park District disputing the assessment of liquidated damages.
GEH substantially completed the project on November 27, 1996, and a certificate of substantial completion was obtained at that time. Following issuance of the certificate of substantial completion, the Park District provided GEH with a "punch list" of items not yet completed on the project.
On February 11, 1997, GEH Construction wrote a letter to the project architect stating 25 additional days were needed for completion. On February 12, 1997, the Park District terminated GEH's contract, and assessed liquidated damages from October 1 until November 27, 1996.
After terminating GEH's contract, the Park District contacted three construction companies to determine their availability and willingness to complete the project's punch list items. Only W.H. Cates Construction Co. (Cates) was available and provided the Park District with a bid to complete the work. The Park District paid Cates $24,680 to complete the remaining punch list items.
The original contract sum for the project was $524,900. This amount increased to $533,987.96 due to change orders requested by the Park District. The Park District paid GEH $464,882.96. GEH brought an action for payment of $69,105, the remaining balance owing on the construction contract. The Park District brought a motion for summary judgment contending the money was properly withheld to cover the cost of completing the contract and for liquidated damages as follows:
Liquidated damages at $500 per day for 58 days $29,000.00
Cost to complete contract work:
(a) Money paid to replacement contractor 24,680.00
(b) Park District costs:
(1) seeding 1,000.00
(2) signage 943.81
(3) turnstile 4,110.00
Additional architectural costs 9,370.00
$69,103.81
The district court granted summary judgment for the Park District. This appeal followed.
DECISION
On appeal from summary judgment, this court determines whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. State by Cooper v. French , 460 N.W.2d 2, 4 (Minn. 1990); see Minn.R.Civ.P. 56.03 (setting forth court's standard for summary judgment). When a motion for summary judgment is made and supported, the nonmoving party must "present specific facts showing that there is a genuine issue for trial." Minn.R.Civ.P. 56.05.
[T]here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party's case to permit reasonable persons to draw different conclusions.
DLH, Inc. v. Russ , 566 N.W.2d 60, 71 (Minn. 1997).
1. Extension of time to complete the contract
GEH contends a genuine issue of material fact exists as to whether the parties extended the contract's completion date. Under the "General Conditions" of the parties' contract, an extension may only be granted by a change order to the contract. The contractor's request for an extension of time must be "made in writing to the Park District not more than five working days after the contractor has notice of the delay." The contractor was required to include full details and documentation regarding the cause of the delay within 15 days of the initial notice of delay. Any failure to provide notice or supporting documentation resulted in a waiver of the claim for an extension of time.
GEH argues on three occasions it orally informed the Park District it required additional time to complete the project, and the Park District agreed to the extensions. As evidence of the extension, GEH provided: (1) the affidavit and deposition testimony of Todd Hendricks, its secretary/treasurer, that he orally requested an extension; (2) the revised construction schedules it submitted to the Park District; and (3) the Park District's November 5, 1996 letter.
Based on this evidence, reasonable persons could not conclude a written extension with documentation existed. See Illinois Farmers Ins. Co. v. Tapemark Co. , 273 N.W.2d 630, 634 (Minn. 1978) (holding summary judgment is inappropriate when reasonable persons might draw different conclusions from the evidence presented).
Under the terms of the contract, GEH's oral requests are clearly not sufficient. See Buchman Plumbing Co. v. Regents of the Univ. of Minn. , 298 Minn. 328, 339, 215 N.W.2d 479, 486 (1974) (holding a contract provision requiring a contractor to provide written notice for claims of extra cost was a condition precedent to the contractor's contractual claim, and the contractor's claim of oral notice was not sufficient). The contract specifically requires a written request for an extension.
Likewise, the revised construction schedules cannot be construed to meet the contractual requirements of a written extension. They do not request an extension of time to complete construction, nor do they provide details or supporting documentation regarding the cause of delay. They simply indicate when GEH estimated it could complete construction.
GEH's claim that its oral request for an extension is memorialized in the Park District's November 5, 1996 letter also fails to meet the contract's requirements. Extensions of the time for completion of the contract were required to be in change orders. The letter was not a change order, and nothing in it indicates GEH requested an extension or the Park District granted one. There is also nothing in the letter providing "full details and supporting documentation" regarding the cause of the delay. The letter is an expression of the Park District's concern that a substantial amount of work remained to be completed and GEH would not meet its proposed completion dates.
We conclude GEH has failed to satisfy its burden of presenting sufficiently probative evidence that a material issue of fact exists regarding the extension of time. The district court properly granted summary judgment on this issue.
2. Reasonableness of mitigation
GEH contends a genuine issue of material fact exists as to whether the Park District took reasonable steps to mitigate its damages. It alleges the amount charged by the replacement contractor to complete the work was unreasonable and the Park District violated Minn. Stat. § 471.345, subd. 4 (1998), by failing to obtain more than one quotation for the completion of the work.
When a breach of contract occurs, the "injured party must use reasonable diligence to minimize his damages." Costello v. Johnson , 265 Minn. 204, 208, 121 N.W.2d 70, 74 (1963) (citing Lanesboro Produce Hatchery Co. v. Forthun , 218 Minn. 377, 381, 16 N.W.2d 326, 328 (1944)). However, the breaching party bears the burden of demonstrating the damages were or could have been mitigated by reasonable diligence. Lanesboro Produce , 218 Minn. at 381, 16 N.W.2d at 328 (citations omitted).
GEH presented an affidavit indicating the remaining work on the project could have been completed for $8,730, an amount $15,950 less than Cates' bid. Also, the Park District admitted Cates was the only contractor to provide a bid for completion of the project. We conclude this evidence raises a material fact issue regarding the Park District's reasonable diligence to mitigate its damages with respect to the work performed by Cates. See Deutz-Allis Credit Corp v. Jensen , 458 N.W.2d 163, 166 (Minn.App. 1990) (holding there was a genuine issue of material fact relating to a lender's efforts to minimize his losses on the resale of a combine after a farmer defaulted on his lease where the lender's affidavit was conclusory regarding mitigation and was only signed by the attorney, the lender sold the combine for approximately half of the fair market value, and the scope of the lender's advertising was restricted).
GEH argues the Park District violated Minn. Stat. § 471.345, subd. 4 and the alleged violation is evidence it did not take reasonable steps to mitigate its damages. Because we find GEH presented evidence raising a material issue regarding the Park District's mitigation of damages, we need not reach the question of whether the Park District's failure to obtain more than one bid violated Minn. Stat. § 471.345, subd. 4. We remand this case for a trial on the reasonable value of the services provided by the replacement contractor, W.H. Cates Construction.