Cardinal Development Co. v. Stanley Construction Co.

Present: All the Justices

CARDINAL DEVELOPMENT COMPANY
OPINION BY JUSTICE LEROY R. HASSELL, SR.
v. Record No. 971001 February 27, 1998

STANLEY CONSTRUCTION COMPANY, INC.

FROM THE CIRCUIT COURT OF HANOVER COUNTY
Richard H. C. Taylor, Judge

I.

In this appeal, we consider issues that arose during

the trial of an action for breach of a construction

contract.

II.

Stanley Construction Company, Inc. (Stanley

Construction), filed its amended motion for judgment against

Cardinal Development Company (Cardinal). Stanley

Construction alleged that Cardinal breached its construction

contract by refusing to pay Stanley Construction for certain

additional work it had performed. Stanley Construction also

alleged that it was entitled to recover damages from

Cardinal under a theory of quantum meruit. Cardinal denied

that it was indebted to Stanley Construction and filed a

counterclaim seeking to recover monies that it purportedly

overpaid to Stanley Construction.
At the conclusion of a bench trial, the trial court

found that Cardinal had breached the contract, entered a

judgment in favor of Stanley Construction in the amount of

$99,894.80, and denied Cardinal’s counterclaim. Cardinal

appeals.

III.
 A.

We will review the evidence in the light most favorable

to Stanley Construction, the prevailing party below. Horton

v. Horton, 254 Va. 111, 115, 487 S.E.2d 200, 203 (1997).

Because the trial court heard the evidence ore tenus, its

findings based on an evaluation of the testimony have the

same weight as a jury verdict. Id. We will affirm the

trial court’s judgment unless it appears from the evidence

that the judgment is plainly wrong or without evidence to

support it. Code § 8.01-680; Horton, 254 Va. at 115, 487

S.E.2d at 203, Tuomala v. Regent Univ., 252 Va. 368, 375,

477 S.E.2d 501, 505-06 (1996).

B.

Cardinal planned to develop a residential subdivision

called Battlefield Green on a tract of land in Hanover

County. Cardinal divided the subdivision into several

sections: B-5, B-6, A-7, and A-8. Sections A-7 and A-8 are

the subjects of this dispute. Cardinal intended to

construct single-family homes in Section A-7 and townhouses

in Section A-8.

Cardinal executed a contract with Holly & Associates,

Ltd., an engineering and surveying firm, to prepare the

subdivision plats and construction plans for the streets,

sanitary sewer, storm drainage, water distribution, and

erosion control. Cardinal also executed a contract with

Stanley Development to construct all the “improvements

required by [Hanover] County to each section to include but
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not limited to the roads, water, sewer, curbs, gutters,

sidewalks, [and] drainage all pursuant to the plans and

specifications prepared by Cardinal's engineers, Holly &

Associates, Ltd.” This contract was “subject to [Hanover]

County not making any substantial changes to the storm

drainage system in either Section A-7 or Section A-8.”

Cardinal agreed to pay Stanley Construction $1,025,000 for

performance of the work.

Holly & Associates provided Stanley Construction with a

building plan for Section A-7 in February 1991, before

Stanley submitted its bid to Cardinal. This building plan

indicated that 42 lots would be created in Section A-7.

Even though a plat existed which indicated that 62 lots

would be constructed on Section A-7, this plat was not a

building plan, and Stanley Construction based its price on

the building plan for Section A-7. Subsequently, Holly &

Associates developed a building plan for Section A-7 which

increased the number of lots from 42 to 62.

Hanover County approved Cardinal’s subdivision plans

for Section A-7 in 1993. The approved plan differed

substantially from the 42-lot plan that Holly & Associates

had supplied to Stanley Construction in February 1991.

Randolph L. Middleton, Stanley Construction’s

estimator, testified that he compared the 1991 A-7 building

plan with the County-approved plan and determined that the

later plan significantly increased the scope of the work

that Stanley Construction would be required to perform. The
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County-approved plan increased the number of building lots

from 42 to 62, added a pedestrian path which was not shown

in the original building plan, increased the amount of work

necessary for erosion control and “clearing and grubbing”

sites, added changes to the storm sewer system, and created

an additional grade basin and an off-road right-of-way.

Calvin L. Stanley, president of Stanley Construction,

sent a letter dated November 9, 1993 to Charles E. Ayers,

Cardinal’s vice-president, director, and major stockholder,

which summarized the substantial changes in the scope of the

work. Later that November, Calvin Stanley met with Ayers,

A. Wayland Stanley (chairman of the board of Stanley

Construction), Middleton, and Vincent G. Robinson (a real

estate broker and developer who performed work for

Cardinal). During this meeting, A. Wayland Stanley and

Calvin Stanley informed Ayers about the changes in the scope

of work in Section A-7. After a discussion among the

persons at the meeting, Ayers directed Stanley

Construction’s employees to proceed with the work.

A. Wayland Stanley testified that during the November

1993 meeting, Ayers “told us to go ahead and proceed with

the work, proceed with it. The only thing he would expect

from us was to treat him fairly . . . . To my knowledge,

the only thing he ever told us was to proceed with the work

and . . . be fair with him in the billing. That’s the only

thing I remember him saying.” Middleton and Calvin Stanley

testified that Ayers directed them to proceed with the work.
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Middleton testified that Ayers told him to bill Cardinal

fairly for performance of the work.

Hanover County also made changes to the plans for

Section A-8 of the subdivision. Middleton, who compared the

County-approved plans to the original plans that Holly &

Associates had provided to Stanley Construction for purposes

of bidding on the contract, identified substantial

differences in the plans. The approved plans required,

among other things, additional paving, curbs and gutters;

construction of a turning lane; changes in sanitary sewer

encasement; changes in the sewer system; clearing and

grubbing; grading; soil erosion control; traffic control,

and patching and excavation.

Stanley Construction performed some of the additional

work and submitted invoices to Cardinal for payment. Some

of those invoices specifically stated that the work

performed was “extra work versus contract or original scope

of work.” On one invoice, the notation “extra work”

appears. Cardinal paid the invoices for extra work, even

though occasionally it paid the bills late. Calvin Stanley

testified that in the fall of 1995, Charles Ayers informed

him that Cardinal would pay the outstanding bills for

Section A-7 “before Christmas” of 1995.

Connie Z. Hawkes, Stanley Construction’s former office

manager and secretary of the corporation, testified that the

total amount of additional work that Stanley Construction

performed because of changes in the scope of the work to
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Sections A-7 and A-8 totaled $151,905.50. Although Calvin

Stanley testified that Stanley Construction expected the

County to make some changes in the plans that Stanley

Construction relied upon to make its bid, Stanley

Construction did not expect that Cardinal or the County

would significantly expand the scope of the project.

IV.

Cardinal argues that “[t]he [t]rial [c]ourt erred by

admitting parol evidence to interpret the parties’

unambiguous lump sum, fixed price written contract.”

Cardinal asserts that “[u]nder the parties’ contract,

Stanley [Construction] bore the risk that performance might

turn out to be more difficult or more expensive than it

predicted,” and that “[p]arol or extrinsic evidence is

generally inadmissible to alter, contradict, or explain the

terms of a written contract . . . .” We do not consider

this assignment of error because Cardinal did not argue in

the trial court that the parol evidence rule barred

admission of any evidence. Rule 5:25.

V.

Cardinal argues that Stanley Construction failed to

present sufficient evidence to support the trial court’s

finding that Cardinal agreed to modify the lump sum, fixed

price contract and pay Stanley Construction for the

additional work. We disagree.

In Stanley’s Cafeteria, Inc. v. Abramson, 226 Va. 68,
73, 306 S.E.2d 870, 873 (1983), we stated the following
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principles which are relevant here:

“[A] course of dealing by contracting parties,
considered in light of all the circumstances, may
evince mutual intent to modify the terms of [a]
contract. See Kent v. Kent, 2 Va. Dec. 674, 678,
34 S.E. 32, 33 (1899) . . . . But the
circumstances surrounding the conduct of the
parties must be sufficient to support a finding of
a ‘mutual intention’ that the modification be
effective, Warren v. Goodrich, 133 Va. 366, 388,
112 S.E. 687, 694 (1922), and such intention must
be shown by ‘clear, unequivocal and convincing
evidence, direct or implied’, id. at 389, 112 S.E.
at 694. And when one party claims that the other
party has surrendered a right guaranteed by the
contract, the party asserting such modification
must prove either passage of valuable
consideration, estoppel in pais, or waiver of the
right. See Atlantic Coast Line v. Bryan, 109 Va.
523, 65 S.E. 30 (1909).”

Applying these principles, we hold that there is clear,

unequivocal, and convincing evidence in the record which

shows that Cardinal and Stanley Construction intended to

modify the terms of their contract and that Cardinal agreed

to pay for the additional work that Stanley Construction had

performed. As we have already stated, the building plan

that Holly & Associates provided to Stanley Construction in

February 1991 indicated that 42 lots would be created in

Section A-7, but the County-approved plan provided for the

creation of 62 lots, as well as other substantial changes.

Upon receiving these plans, Calvin Stanley forwarded a

letter to Ayers, Cardinal’s vice-president, and at a

subsequent meeting, Ayers directed Stanley Construction to

“proceed with the work” on Section A-7 and to “treat

[Cardinal] fairly” in billing Cardinal for the additional

work. Cardinal’s clear instructions that Stanley
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Construction bill Cardinal fairly mean that Cardinal agreed,

by its conduct, to expand the scope of the work and to pay

for the additional work. Cardinal paid Stanley

Construction’s detailed invoices for the additional work for

one and one-half years without complaint and Ayers, on

behalf of Cardinal, promised to pay for the completed work

on A-7 “before Christmas of” 1995. Cardinal’s agreement to

pay for the additional work, along with Stanley

Construction’s actual performance of that work, constitutes

valuable consideration sufficient to modify the contract.

After Calvin Stanley sent a letter to Ayers complaining

about the substantial changes in the scope of the work for

Section A-8, Cardinal further agreed to modify the contract

when Ayers informed Stanley by letter: “I am in receipt of

your letter with the price increases and assuming that they

are items that you could not determine initially we will pay

whatever the cost increase is based on unit pricing.”

Calvin Stanley and Middleton testified that the changes in

the scope of the work, including the substantial increases

in the quantity of work and the materials required by the

County-approved plans, were not items that they could have

determined when the construction contract was executed.

Cardinal also paid bills that Stanley Construction had

submitted to it for work performed for Section A-8.

VI.

Cardinal argues that Stanley Construction “presented

insufficient evidence to prove ‘substantial changes to the
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storm drainage systems’” and, thus, the trial court erred by

awarding Stanley Construction damages for additional work

associated with these items. We disagree. As we have

already stated twice, at least two witnesses testified on

behalf of Stanley Construction that the scope of the work

shown on the County-approved plans for Section A-8 changed

substantially, including the scope of the storm drainage

work. Additionally, Cardinal, by its conduct, agreed to

enlarge the scope of the work and pay Stanley Construction

for that work. Thus, we find no merit in this contention.

VII.

We reject Cardinal’s argument that the “trial court

erred by allowing Stanley to recover on a theory not raised

in Stanley’s motion for judgment.” Cardinal says that the

trial court’s judgment is “flawed because it appears to be

based on some sort of estoppel or waiver theory -- theories

never raised by Stanley . . . .” Our review of the record

indicates that the trial court considered this case as a

breach of contract action and that the trial court’s

judgment was not based upon principles of estoppel or

waiver.

VIII.

Cardinal argues that Stanley Construction presented

insufficient evidence to prove its damage claims. We

disagree.

Stanley Construction adduced extensive testimony in

support of its damages. Stanley Construction presented
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evidence of the amounts it billed to Cardinal for additional

work performed on Sections A-7 and A-8, payments made by

Cardinal, and the balance due. In addition, the trial court

admitted Stanley Construction’s billing records in evidence.

The trial court considered this evidence, which was disputed

by Cardinal, and awarded Stanley Construction $54,319.76 in

damages for work performed in Section A-7 and $45,575.04 for

damages related to Section A-8. We cannot say, from our

review of the record, that the trial court’s award is

plainly wrong or without evidence to support it. Horton,

254 Va. at 115, 487 S.E.2d at 203.

We also disagree with Cardinal’s contention that the

trial court made an erroneous damage calculation. Cardinal

argues that one of Stanley Construction’s trial exhibits

contained mathematical errors and that the trial court

relied upon this erroneous exhibit when calculating the

award of damages. However, Stanley Construction responded

at trial, and here, that its evidence of damages was based

on actual work performed and invoices mailed, not on the

errors contained in the challenged exhibit. Upon our review

of this record, which contains disputed evidence, we cannot

say that the trial court, as the trier of fact, erred by

accepting Stanley Construction’s explanation of the errors

contained in the challenged exhibit. *

*
During a colloquy between counsel at trial, Stanley
Construction’s counsel offered to make certain stipulations
if Cardinal’s counsel could identify mathematical errors.
The record is devoid of a stipulation of any figures which
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 IX.

Cardinal argues that the trial court erred by failing

to grant judgment on its counterclaim. Cardinal contends

that the undisputed evidence adduced at trial demonstrated

that it made overpayments to Stanley Construction in the

amount of $87,346.67 and that Cardinal is entitled to

repayment of those funds. The trial court, however,

implicitly held that the monies that Cardinal purportedly

overpaid were actually payments that Cardinal made to

Stanley Construction for the additional work that Stanley

Construction had performed. This is a factual issue which

was resolved by the trial court, and we cannot say, based

upon the evidence of record, that the trial court was

plainly wrong.

X.

For the foregoing reasons, the judgment of the trial

court will be affirmed.

Affirmed.

would form the basis for any credits or deductions related
to the alleged errors.
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