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Steinrock Roofing & Sheet Metal, Inc. v. McCulloch

March 30, 2012


APPEAL FROM THE FLOYD SUPERIOR COURT The Honorable Maria D. Granger, Judge Cause No. 22D03-1002-CC-327

The opinion of the court was delivered by: Baker, Judge



After the defendant-homeowner's roof was severely damaged in a windstorm, the plaintiff-contractor undertook to repair the damages. The homeowner failed to pay the entire amount due under the contract because of the contractor's allegedly deficient workmanship. The contractor sued and the homeowner counterclaimed. Substantial evidence was presented at trial establishing that the contractor's work was deficient in a number of respects. And the trial court, as the fact finder, properly awarded damages to the homeowner on his counterclaim. The trial court also properly concluded that the contractor had waived any claim to reduce the damage award under the Home Improvement Warranties statute.

Appellant-plaintiff Steinrock Roofing & Sheet Metal, Inc. (Steinrock), appeals the trial court's judgment entered in favor of appellee-defendant James S. McCulloch, and PNC Bank, N.A.*fn1 Specifically, Steinrock argues that the trial court erred in excluding discovery and the potential testimony of an insurance agent who inspected the work and made the payments for repairs on the roof. Steinrock also maintains that the trial court should have found in his favor on his defamation claim and that the trial court erred in finding a material breach of contract by Steinrock. Moreover, Steinrock argues that the trial court should have limited McCulloch's damages to the difference in fair market value in accordance with Indiana Code section 32-27-1-14, the Home Improvement Warranties statute.

Concluding that the trial court correctly determined that Steinrock breached the contract, properly awarded damages to McCulloch, and finding no other error, we affirm.


McCulloch owned an older home in New Albany. On September 14, 2008, the clay tile roof of the residence was severely damaged in a wind storm. Thereafter, McCulloch made a claim for the damage to the roof with Westfield Insurance Company, his homeowner's insurance carrier.

Westfield estimated that the costs of repairs amounted to approximately $95,000. Thereafter, McCulloch contracted with Steinrock to repair the tile roof. The contract amount was for $95,367.13, which required 2% interest per month for late payments, plus the filing fee and reasonable attorney's fees.

Steinrock commenced work in May 2009, and completed it in August 2009. Pursuant to the contract, McCulloch made two payments totaling $75,270.60. However, McCulloch withheld $15,000 from the second check in light of concerns that he had regarding various deficiencies in the roof. Those deficiencies included leaking, falling, cracked, and warped tiles, and other tiles that were improperly installed. As a result of McCulloch's failure to pay the last draw under the contract, Steinrock filed a mechanic's lien against McCulloch.

Thereafter, Steinrock filed suit against McCulloch, seeking an unpaid balance on the contract in the amount of $29,096.53. McCulloch denied owing this amount and filed a counterclaim, asserting that Steinrock had installed the roof in a negligent and unworkmanlike manner.

McCulloch hired Gilbert Arnold, a roofing expert from Louisville, Kentucky, to consult about the damages. At a bench trial that commenced on December 2, 2009, Arnold testified many of the field tiles were not attached properly to the wood deck, and many of the hip and ridge tiles were not embedded properly in the mortar and were loose. Mortar was missing in other tiles that resulted in open joints. Arnold further testified that field tiles were spaced too close together in many areas, and some of them appeared to be cupped, broken, and cracked. Arnold was of the opinion that the roof could only be restored by removing all of the tiles and replacing the underlayment and clay tile roofing. In sum, the entire roof needed to be removed and reinstalled.

During the pendency of the action, a second expert that both parties chose inspected the roof. The expert, Richard Spalding, of the Merrick-Kemper Company in Louisville, testified in a videotaped deposition. Spalding's findings coincided with those of Arnold. Spalding's primary concern was that the hip and ridge tiles were not properly installed, and he noted that they were poorly embedded in their mortar beds and their fasteners were insufficient. Spalding easily removed the screw holding in one of the hip joints with his fingers because it had failed to engage the wood to a depth of 3/4 inches per the manufacturer's recommendation. Rather, the hip and tile screws that Steinrock installed penetrated only 3/8 inch.

Spalding testified that he actually removed a hip tile, examined the underlayment, and determined that the tiles were not correctly installed. Spalding stated that two pieces of the underlayment met at a "point" at the hip and ridge, and commented that such was not the proper way to install the underlayment. Tr. p. 168. Spalding also testified that the tile spacing was not correctly laid out, in that there was some overlap and they were laid too tightly or too far apart from each other. Spalding was also of the opinion that the flashing at the chimney was not installed correctly and required replacement.

In sum, Spalding testified that while he did not believe that the entire roof needed to be replaced, many repairs had to be undertaken so the roof would last within its seventy-year life expectancy. Spalding estimated the repair costs at $75,059.00.

At a bench trial that commenced on March 1, 2011, McCulloch introduced photographic evidence that a rather large leak was coming from below the hip tiles. McCulloch testified to the many deficiencies including tiles that were cracked, chipped, warped, or cupped. Mortar was falling out of the hip and ridge joints and fasteners were sticking out of the top pieces of tile. Tile fasteners were being driven into empty joint spaces between the planks on his roof. McCulloch testified that he withheld the last payment because of these deficiencies.

It was also established at trial that during the pendency of the proceedings, McCulloch had heard that Steinrock had gone out of business and telephoned the company to ascertain its status. The phone call was received by a Ms. Tara Hunter who testified at trial. Hunter was the receptionist at Electric Blue, which is a blueprint company that rents office space from Steinrock. Hunter testified that she received a brief phone call from McCulloch, inquiring as to whether Steinrock was still in business.

Hunter further testified she assured McCulloch that the business was still in operation and began to search for Steinrock's phone number. However, Hunter testified that she stopped looking for the number when McCulloch stated that he was checking because one of Steinrock's former employees allegedly stated that everyone had been laid off and the business was closing. Hunter testified that she spoke with her boss and an employee at Steinrock's office who verified that the business was still open. Hunter did not inform anyone else of this telephone conversation that she had with McCulloch, and simply dismissed the matter.

Tim Steinrock testified that none of his customers were informed about McCulloch's telephone call and stated that he did not lose any business as a result of the call. Moreover, Steinrock did not have to explain this conversation to any colleague, customer, or otherwise.

Steinrock admitted that not all of the roofing work was done correctly. During both direct and cross examination, Steinrock acknowledged that his crew used the wrong fasteners to attach the hip and ridge tiles. Steinrock also admitted that all the cracked, chipped, and broken tiles needed replaced. He also testified that some fasteners that were used by the crew were not correct and should not have been used. Steinrock then conceded that some of the flashing was not installed correctly, that it did not comply with industry standards, and needed to be redone.

Steinrock admitted to the deficiencies in the roof, yet he believed that the cost of replacing the items would be $6,500 to $7,500. He testified that it would take two men about one week to repair the deficiencies. Following a bench trial on March 1, 2011, the trial court entered judgment for McCulloch on his counter-claim against Steinrock. The trial court determined, among other things, that

23. The inquiry of whether Steinrock is still open made by McCulloch to Tara Hunter does not qualify ...

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