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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