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Goodrich Quality Theaters, Inc. v. Fostcorp Heating & Cooling, Inc.

Court of Appeals of Indiana

August 20, 2014


APPEAL FROM THE PORTER SUPERIOR COURT. The Honorable William Alexa, Judge. Cause No. 64D02-0705-PL-4298.

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[Copyrighted Material Omitted]

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ATTORNEY FOR APPELLANTS: CHARLES P. RICE, Boveri Murphy Rice, LLP, South Bend, Indiana.

ATTORNEY FOR APPELLEE, Fostcorp Heating and Cooling, Inc.: THOMAS L. KIRSCH, Thomas L. Kirsch & Associates, P.C., Munster, Indiana.

ATTORNEYS FOR APPELLEE, Wilson Iron Works, Inc.: PAULA E. NEFF, CHRISTINA J. MILLER, Lucas, Holcomb & Medrea, Merrillville, Indiana.

ATTORNEY FOR APPELLEE, Johnson Carpet, Inc., d/b/a Johnson Commercial Interiors: TIMOTHY W. WITHERS, Philip D. Burroughs & Associates, LLC, Indianapolis, Indiana.

ROBB, Judge. RILEY, J., and BRADFORD, J., concur.

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ROBB, Judge

Case Summary and Issues

Goodrich Quality Theaters, Inc. (" Goodrich" ) and Roncelli, Inc. (" Roncelli" ) (collectively, " Roncelli" ) appeal the trial court's judgment in favor of Fostcorp Heating and Cooling, Inc. (" Fostcorp" ), Wilson Iron Works, Inc. (" Wilson Iron" ), and Johnson Carpet, Inc. d/b/a Johnson Commercial Interiors (" Johnson Carpet" ) (collectively, " the appellees" ) on various breach of contract claims, foreclosure of mechanics' liens, and the award of attorney fees that all stem from construction of the Portage 16 IMAX movie theater (" the theater" ). Roncelli raises the following issues, which we consolidate and restate as: (1) whether the trial court's retroactive decree that its May 1, 2012 order was a final judgment renders Roncelli's appeal untimely; (2) whether the trial court erred in interpreting Roncelli's contract with Wilson Iron; (3) whether the trial court erred in interpreting Roncelli's contract with Johnson Carpet; and (4) whether the trial court erred in awarding attorney fees to the appellees. Concluding the appeal was timely filed and the judgments are supported by the findings, but it was an abuse of discretion for the trial court to award attorney fees, we affirm in part and reverse in part.

Facts and Procedural History

Goodrich leased a property in Portage, Indiana, from Spirit Master Funding III, LLC (" Spirit Master" ) with permission to construct the theater upon the land. Goodrich hired the architectural firm Paradigm Design, Inc. (" Paradigm" ) to create design drawings for the theater. Roncelli was hired as the general contractor. Roncelli engaged Wilson Iron, Fostcorp, and Johnson Carpet as contractors. Wilson Iron was to provide the work, materials, and labor for the structural steel of the theater; it contracted Falpeg Capital, LLC, d/b/a Gooder-Henrichsen, Inc. (" Gooder" ) and Gateway Construction as subcontractors. Fostcorp was to provide and install all necessary elements of the heating, ventilation, and air conditioning systems (" HVAC" ); Fostcorp engaged Sheet Metal Werks, Inc. and Air Temp Mechanical as subcontractors. Johnson Carpet was contracted for the carpet installation in the theater. Construction on the theater began in the summer of 2006, with an anticipated completion date of November 2006. Due to delays in construction and poor weather, the theater did not open until January 12, 2007.

Roncelli and Wilson Iron

In July 2006, Roncelli and Wilson Iron executed a contract in the amount of $1,095,000 for Wilson Iron's portion of building the theater. Wilson Iron was responsible for all of the structural steel and roof decking for the project, including joists and joist girders. The contract documents included a Purchase Order Contract, a Project Manual, Paradigm's

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Design Drawings, and the Steel Joist Institute Manual (" the SJI" ). Two of the particular drawings that contributed to construction delays were structural drawings S105 and S106, depicting roof framing plans. These plans were " top down" drawings, drawn from the perspective of one looking down on the roof of the theater. The plans show the joist girders and roof deck, among other things. Paradigm's intent in designing the building was to have the HVAC pass through openings in the joist girders.[1] Paradigm used a broken or dashed line in the shape of an hourglass on top of the joist girder with the word " opening" and a dimension to indicate where the HVAC ductwork would pass through (the " hourglass mark" ). This marking was not standard for the industry and did not appear in the SJI, in the legend of the diagram, or anywhere else in the contract materials. Per the SJI, the industry standard, " SP" is supposed to mark any joist girder that is not standard on a structural drawing and the drawing should include a designation, note, or additional drawing to describe what makes the joist girder non-standard or special.

The hourglass mark was meaningless to Wilson Iron as it related to the structural steel, so Wilson Iron ignored it. Wilson Iron and its subcontractors generated shop drawings and erection or placement drawings for all of the structural steel work. The shop and erection drawings approved by Roncelli and Paradigm called only for standard joist girders. These drawings were submitted to, and approved by, Roncelli and Paradigm. Gooder then created the joists and joist girders in accordance with those drawings. On August 28, 2006, Wilson Iron delivered the first set of joist girders to the theater site, and at that time, an employee from Paradigm told Wilson Iron the girders were to have non-standard openings. Wilson Iron wanted to shut the project down while the joist girder situation was resolved, but both Roncelli and Paradigm insisted the erection continue using the standard joist girders. The next day, Wilson Iron submitted a concept sketch to Roncelli and Paradigm to modify the joist girders that would cost an additional $28,000 for Wilson Iron to make the changes. Roncelli did not respond to this sketched proposal. Wilson Iron sent a fax to Gooder, placing Gooder on notice of a claim for non-conforming work; Roncelli, though, did not issue a notice of non-conforming work to Wilson Iron.

On October 3, Roncelli requested a meeting with Gooder and Wilson Iron and asked if a fix could be done in place. The structural steel had been fully installed at this point, and Gooder responded that the fix could not be done as proposed. The work was eventually completed and Roncelli paid Wilson Iron's invoices for the joist girder work; in February 2007 Roncelli refused to make further payments to Wilson Iron for work performed after the joist girder installation. Wilson Iron timely filed its Sworn Statement and Notice of Intention to Hold Mechanic's Lien on April 14, 2007 for $275,475.

Roncelli and Fostcorp

In July 2006, Roncelli executed a contract with Fostcorp in the amount of $760,000 for Fostcorp to install

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the HVAC system in the theater. The installation of the HVAC system was delayed due to the confusion surrounding the joist girders. Fostcorp eventually received three proposed modifications for how to adjust the HVAC to accommodate the standard joist girder openings. Fostcorp prepared cost estimates for the three changes, totaling $277,799.42. Roncelli approved these estimates. Due to the changes, Fostcorp did not have sufficient manpower to complete the modifications in Roncelli's timeframe, so Roncelli contracted Area Sheet Metal to assist Fostcorp. Roncelli approved changes to Fostcorp's initial contract by an additional $283,896 to cover the expense of the modifications and extra labor. Roncelli paid Fostcorp a total of $552,000. Fostcorp then recorded a Mechanic's Lien on April 4, 2007 in the amount of $379,985.56, the amount unpaid under the contract. Fostcorp also served upon Goodrich a Notice to Hold Owner Personally Liable, plus interest and services for the work performed on the theater.

Roncelli and Johnson Carpet

In October 2006, Roncelli asked Johnson Carpet to quote a price to install carpet in the theater. Roncelli informed Johnson Carpet that Milliken was the carpet manufacturer, and Johnson Carpet received specifications from Milliken. Johnson Carpet determined that the specifications from Milliken did not match Paradigm's drawings and alerted Roncelli of the apparent calculations error. Roncelli directed Johnson Carpet to use Milliken's specifications. Johnson Carpet's proposal on October 10 specified it would install 4970 square yards of Milliken carpet for $41,808.55, subject to the following conditions:

1. Price for installation of owner supplied carpet.
2. Price includes the cost of carpet adhesive.
3. Price does not include any trims, vinyl base, transitions or other flooring types.
4. Price includes minor floor prep based on an estimate of 20 total man hours. If additional time or materials are required approval by the GC will be obtained in the form of an AWA.

Appendix of Appellee Johnson Carpet, Inc. d/b/a Johnson Commercial Interiors at 6. On November 23, Johnson Carpet submitted a revised proposal to Roncelli (" November 23 Contract" ) in the amount of $42,297.20 which added " cut-ins," reduced installation costs, and added a fifth qualification: " 5. Price does not include CTP-2 @ IMAX studio entry. If IMAX entry is to have CPT-2 as shown on print add $580.00." Id. at 1. Roncelli accepted this proposal then later tendered to Johnson Carpet a Purchase Order Contract dated December 22, 2006 (" Purchase Order Contract" ). The Purchase Order Contract varied from the November 23 Contract in several ways: it required Johnson Carpet to complete the carpet installation work for the theater (not just 4970 square feet as in the November 23 Contract) and it added the terms of the Roncelli Project Requirements, Project Insurance Requirements, Emergency Numbers, and Project Schedule as part of the contract. Appendix of Appellants Goodrich Quality Theaters, Inc. and Roncelli, Inc. at 486. The Purchase Order Contract also added in the terms of two additional attachments, and decreased the value of the contract to $42,297.00. Id. On January 11, Johnson Carpet made another proposal to Roncelli, this time in the amount of $62,156 (" January 11 Proposal" ). This included the original $42,297.20, plus additional costs for walk-off carpet in the entry, floor prep costs for work in excess of twenty hours, travel, and down-time during a union discrepancy. On January 15, Roncelli and

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Johnson Carpet spoke again about the carpet material calculations and the supply shortage. Roncelli ordered an additional 900 square yards of carpet to complete the theater. After making the January 11 Proposal, Johnson Carpet signed the Purchase Order Contract on January 19, 2007. Id.

On January 24, Johnson Carpet submitted a Contractor's Application for Payment and Change Order Request to Roncelli. In March 2007, Roncelli issued a check to Johnson in the amount of $35,340.30 (the same amount listed as due on the Application for Payment) but stopped payment on the check before it was negotiated. Johnson Carpet timely recorded its Sworn Statement and Notice of Intention to Hold Mechanic's Lien for the sum of $55,420.00 on May 27, 2009.

Trial Court Proceedings

On May 14, 2007, Fostcorp filed a complaint to foreclose its mechanic's lien, be awarded costs and attorney fees, be declared to have priority over all other claimants, and demanding judgment against Roncelli for $379,985.56, plus interest, and demanding judgment against Spirit Master as owner. Spirit Master, Goodrich, Roncelli, Wilson Iron, and others were all named as defendants in the suit as they had interests in the property.[2] Wilson Iron filed a cross-claim and counterclaim to foreclose its mechanic's lien and recover costs and attorney fees, and be declared to have priority over other lienholders. Wilson Iron also sought to recover money from Spirit Master, Goodrich, and Roncelli jointly and severally under theories of quantum meruit and unjust enrichment, and against Roncelli for breach of contract. Roncelli then cross-claimed against Wilson Iron for breach of contract. Johnson Carpet was allowed to join the suit as an intervening plaintiff and, like the ...

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