Gough Construction Co. v. Tri-State Supply Co.

Citations: 493 N.E.2d 1283; 1986 Ind. App. LEXIS 2652Docket: 3-985A256

Court: Indiana Court of Appeals; June 18, 1986; Indiana; State Appellate Court

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Gough Construction Company, Inc. (Gough) appeals a judgment from the Court of Appeals of Indiana, which awarded Tri-State Supply Company, Inc. (Tri-State) $80,463.00 on its counterclaim. Gough initially sued Tri-State in December 1980 for $5,984.86, claiming a balance owed under a construction contract. Tri-State counterclaimed in January 1981, alleging improper performance and seeking exemplary damages for misrepresentation. 

The case involved a contract for constructing a 48' X 48' Stran-Steel loading dock and a vestibule. Upon completion, significant defects were noted, including a leaking roof, unsecured walls, improperly bolted girders, and a vestibule lacking a ceiling. An expert testified that repair costs would likely equal or exceed the cost of a new building, and repairs would not restore the building to its original Stran-Steel specifications. 

The trial court ruled in favor of Tri-State in June 1985. Gough raises three issues on appeal: (1) whether the court erred in basing its damage award on the removal and reconstruction of the loading dock, (2) whether it erred in finding a breach of contract, and (3) whether Gough should receive a new trial or reduced damages due to newly discovered evidence. Gough argues that the court's measure of damages was inappropriate, but failed to present alternative evidence for this claim. The court referenced the standard for measuring damages from prior case law, stating that if substantial work must be undone, damages should reflect the difference in market value between the work performed and what was required under the contract.

The court in Sanborn Elec. v. Bloomington Athletic Club determined that the burden of proof regarding the difference in property value as an alternative measure of damages lies with the appellant if they claim permanent damage to the building. The appellant failed to provide evidence of such damage, thereby waiving the issue. The appellee successfully proved restoration costs, and the appellant could not request a remand for market value assessment due to lack of evidence. Economic waste is a critical factor in breach of construction contract cases, with the burden on the builder to show that the owner's proposed damage measure results in economic waste. The court found no evidence presented regarding alternative damage measures or economic waste, supporting the trial court's findings.

Regarding Gough's breach of contract claim, the court found no evidence that Tri-State authorized modifications to the building, which Gough argued were acceptable. Testimonies indicated that the modifications were inadequate, affecting the building's intended use, as significant measures were required to protect the carpeting from water damage. The court referenced a precedent where a similar situation led to an upheld breach of contract ruling. Finally, Gough's request for a new trial based on newly discovered evidence was denied because this claim was not included in its motion for error correction.

Gough asserts that the existence and details of certain documents were communicated to the trial court, yet there is no transcript of the hearing or supporting affidavits in the record. The purported newly discovered evidence is included in Gough's appellant's brief and an affidavit in the reply brief. However, the record lacks indication that the trial court received this evidence, and Gough does not reference any legal authority to support the claims, leading to a waiver of the argument. Tri-State seeks dismissal of Gough's appeal and a ten percent damages assessment. The court finds no basis to deem the appeal frivolous or the record misstatements as constituting obdurate conduct, thus denying both dismissal and damages. The trial court's judgment is affirmed. Additionally, Gough's other issues are rendered moot by this decision. Various construction problems were also noted by Berger, including work disruptions due to rain, a malfunctioning vestibule door in winter, lack of a ceiling, exposed construction, and sidewalk replacements costing approximately $3,000.