Houser v. American Paving Asphalt

Citation: 299 Neb. 1Docket: S-16-778

Court: Nebraska Supreme Court; February 15, 2018; Nebraska; State Supreme Court

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Tom Houser filed a breach of contract lawsuit against American Paving Asphalt, Inc. after his asphalt driveway deteriorated prematurely. The county court ruled in favor of Houser, but the district court later reduced the monetary award. The appeal raised issues regarding whether the review of the county court's decision should be limited to plain error due to the asphalt company's untimely filing of a statement of errors. The parties also contested the sufficiency of evidence supporting the homeowner's necessity for a temporary patch repair and a subsequent 2-inch overlay of the driveway. Additionally, American Paving disputed the attorney fees awarded to Houser related to the company's failure to comply with a document production order in county court. The case originated from a 2008 contract where Houser engaged American Paving to overlay his limestone driveway with asphalt, addressing traction concerns with the co-owner of the company. The district court affirmed part of the ruling while reversing and remanding other aspects with directions.

Hall proposed the addition of traction indentations to approximately 300 feet of Houser's driveway by raking through the asphalt and suggested an extra 2 inches of asphalt depth for these strips. Although there was no written contract for this work, American Paving charged Houser $1,500 for it. Hall also recommended seal-coating the driveway, and Houser later paid an additional $1,500 for seal-coating and crack repairs. The invoice assured that any cracks arising from the seal-coating would be filled at no extra cost. In total, Houser paid American Paving $19,000 for the driveway. Despite this, cracks continued to appear, and by 2010, significant deterioration occurred, prompting Houser to sue American Paving for breach of contract after they stopped responding to repair requests.

During the trial, expert witness Douglas Dreessen testified that the driveway was defective and did not conform to contract specifications. He highlighted two critical elements for asphalt paving: proper subgrade compaction and adequate pavement thickness. Dreessen noted that the driveway's thickness varied between 1¾ to 2½ inches, averaging 2 inches, which he deemed insufficient. He classified the observed failures, including “alligatored” areas, as "premature" given the driveway's age of only five years. Dreessen concluded that the driveway's issues stemmed from inadequate thickness and poor subgrade compaction, indicating a lack of substantial compliance with contract specifications. He emphasized that asphalt depth should be measured post-compaction to ensure adherence to plans and specifications. Houser indicated that he attempted to seal the cracks himself after American Paving ceased repairs.

In 2012, Houser contracted Asphalt Maintenance, Inc. for driveway repairs, paying $5,110 for replacing severely damaged sections and $550 for sealing cracks. He selected Asphalt Maintenance based on its lowest bid, viewing the repairs as a temporary solution before winter due to ongoing deterioration. A 2013 inspection by Dreessen’s firm indicated further deterioration risk from oxidation and raveling, leading Houser to pursue a 2-inch asphalt overlay for the entire driveway. He paid $26,189.09 for this overlay, also selecting the lowest bidder. Although some sections remained in good condition, Houser deemed most of the driveway unacceptable due to unevenness and anticipated future repairs. After 1.5 years post-overlay, he noted improved overall appearance but acknowledged minor cracks. Houser had previously seal-coated the original asphalt as instructed by American Paving and recently contracted for further seal-coating at $3,250. He submitted costs associated with expert inspection ($1,705), expert testimony ($2,886.10), and depositions ($792.75), totaling $40,551.94 in claimed damages. American Paving filed motions for mistrial and judge disqualification, citing alleged misconduct during trial, which the court overruled.

Hall filed a complaint with the Nebraska Commission on Judicial Qualifications, which was under investigation. The court overruled a related motion, and on June 17, 2015, ruled in favor of Houser, awarding $40,551.94. Following the judgment, a hearing was scheduled for Houser’s request for attorney fees. Houser submitted an affidavit for costs related to discovery delays and motions to disqualify, resulting in the court ordering $1,514 in sanctions and fees to be paid to Houser on September 22. American Paving's motion for a new trial was overruled on October 22, and they filed a notice of appeal on November 10, 2015, along with a praecipe for the bill of exceptions.

American Paving failed to file its statement of errors on time, as required by Neb. Ct. R. 6-1518, which mandates filing within 10 days of the bill of exceptions. The bill was filed on January 7, 2016, and the parties were not notified. On February 1, 2016, the district court issued a notice of intent to dismiss the appeal if a proposed scheduling order was not submitted within 30 days. American Paving filed its brief on March 21 and subsequently requested permission to file a statement of errors out of time on April 15, citing good cause under Neb. Ct. R. 6-1519. The attorney claimed he was unaware of the bill's filing until March 2 and assumed notification would occur, noting that past practices had included such notifications. The court expressed frustration over American Paving’s lack of inquiry about the bill's status before March 2, emphasizing the attorney’s acknowledgment of potential diligence in checking for updates.

The attorney for American Paving contended that the filing of its statement of errors on April 15, 2016, was untimely following a letter dated February 1, 2016. The court subsequently allowed the late filing. In its statement of errors, American Paving claimed the county court erred in several respects: (1) accepting sufficient evidence of breach of contract by American Paving regarding an asphalt driveway installation, (2) validating the reasonableness and necessity of repair costs, (3) awarding costs to Houser that are legally impermissible, (4) not recusing a biased judge, (5) deeming sanctions against American Paving appropriate, and (6) awarding attorney fees to Houser.

The district court found no abuse of discretion by the county court in denying American Paving's motions for disqualification and mistrial, and upheld the imposition of attorney fees as a sanction for delayed document production in accordance with Neb. Ct. R. Disc. 6-337, which allows such sanctions unless justified. The court affirmed the finding that American Paving breached its contract, causing damages to Houser, amounting to $5,660, while deeming the evidence insufficient for a 2-inch overlay’s necessity. The court also determined the county court improperly awarded costs for expert testimony, limiting recoverable costs to $861.75. The case was remanded for judgment reflecting total damages of $6,521.75. 

A subsequent hearing on Houser's motion for attorney fees related to the late filing was held, where Houser provided an affidavit for $2,756.75 in costs. The district court overruled this motion, prompting an appeal from Houser and a cross-appeal from American Paving. Houser's assignments of error included the grant of additional time for filing, the reasonableness of the 2-inch overlay, and the unreasonableness of its cost. American Paving's cross-appeal challenged the sufficiency of evidence for damages and the award of attorney fees to Houser. The standard of review involves assessing whether the county court's decisions conformed to the law, were supported by competent evidence, and were not arbitrary or unreasonable.

Plain error is defined as an evident mistake from the record that, while unaddressed at trial, adversely affects a significant right of a party and could lead to a miscarriage of justice or harm the judicial process's integrity. In the case at hand, American Paving submitted a statement of errors after the district court extended the deadline for filing, which Houser argues was erroneous based on the suspension rule. Houser claims the review should have focused solely on plain error. However, both parties incorrectly assume that the district court, acting as an appellate court, lacks the authority to extend the filing period except under the suspension rule.

The analysis identifies two main flaws in this assumption. First, the statement of errors rule does not explicitly prohibit the district court from extending the 10-day filing period; it outlines the responsibilities of the appellant without restricting the court's authority to grant extensions. Second, there is no statutory basis for the assumption that limits the district court's discretion. Nebraska statutes establish the appeal process, indicating the district court's review is based on errors in the record and that the filing of a statement of errors is not jurisdictional. This suggests that the district court has the discretion to extend filing deadlines, consistent with statutory guidelines and case law interpretations.

The excerpt identifies several critical flaws related to the application of the suspension rule within the context of the Uniform District Court Rules of Practice and Procedure. First, it highlights inconsistencies between the suspension rule and other procedural sections that allow district courts to grant relief without relying on the suspension rule. For instance, while citation rules specify the inclusion of North Western Reporter citations, courts have the discretion to accept citations solely from Nebraska Reports or Nebraska Appellate Reports, demonstrating the absurdity of strictly applying the suspension rule.

Second, it emphasizes the inherent powers of district courts, which are essential for their function and administration of justice. These inherent powers allow district courts, when acting as intermediate appellate courts, to modify opinions and accept supplemental materials, consistent with common-law principles that permit reconsideration until jurisdiction is divested.

Lessons from case law further illustrate the district court's power to extend filing deadlines for statements of errors, contrary to the suspension rule. Historically, the court has not limited this power, viewing the suspension rule as a procedural tool rather than a restriction. Additionally, when no statement of errors is filed, higher appellate courts have reviewed cases for plain error, and issues raised by the district court in such scenarios may still be considered by appellate courts. Specific cases indicate that even in instances of untimely filings, appellate courts have reviewed the substantive issues raised, reinforcing the notion that procedural strictness should not undermine the pursuit of justice.

The district court granted a motion to file a statement of errors out of time, with the Court of Appeals affirming that the district court had the discretion to allow this late filing and consider the associated issues. In a related criminal case, new defense counsel submitted an untimely statement of errors that excluded a claim of trial counsel ineffectiveness. The Court of Appeals reversed the district court's judgment due to counsel's ineffectiveness, prompting the State to seek further review. The State argued that the Court of Appeals incorrectly addressed the ineffectiveness claim since it was not included in the untimely statement of errors. The court justified the new counsel's failure to include this claim and the delay as excusable. Contrastingly, in Miller v. Brunswick, the court refused to consider errors on appeal due to an untimely statement of errors, with no indication that the district court had allowed the late filing.

The case law indicates that while there is flexibility in applying the statement of errors rule, the district court's discretion to extend filing times and consider errors should not be overly restricted. This discretion is guided by specific circumstances, including whether the omissions were due to the moving party's negligence. The district court's ruling on extending the filing time for a statement of errors will be reviewed for an abuse of discretion. In this instance, American Paving sought to file a statement of errors only after its opponent responded to its initial brief, suggesting that the delay was due to its own neglect.

The bill of exceptions was filed on January 7, 2016, and a notice regarding the hearing date and briefing deadlines was sent by the district court on February 1. Although the notice did not explicitly mention the bill of exceptions, it should have prompted the parties to inquire further. American Paving failed to act until March 2 and offered no justification for its delay. After submitting a brief on March 21 without a statement of errors, American Paving sought an extension only after Houser had already filed his brief on the appeal merits. The district court abused its discretion by granting the extension, indicating that its review should have been restricted to plain error. 

In Houser's appeal, he contests the district court's reversal of the county court's award of $26,189.09 for damages related to a 2-inch overlay, arguing that under the plain error standard, the county court's assessment was valid. The court agreed, finding no plain error, and determined that the district court erred in reversing this portion of the award. Houser did not challenge the district court's decisions regarding the costs for seal-coating the driveway, expenditures for expert reports, or attorney fees related to American Paving’s motion, and thus these issues were not revisited.

In American Paving's cross-appeal, it claimed the district court incorrectly affirmed the county court's damage assessments for patchwork repairs prior to the overlay and an award of $1,514 in sanctions for late discovery materials. However, these issues were not properly assigned as errors, leading to a review limited to plain error, where the court found no such error concerning the reimbursement for patchwork repairs.

The district court's judgment is affirmed regarding the award of $1,514 in sanctions against American Paving for failing to timely provide discovery materials and $5,660 for repairs. American Paving did not contest the $861.75 in costs awarded by the county court in its cross-appeal, leading to affirmation of that aspect as well. However, the district court's reversal of the county court’s award of $26,189.09 for a 2-inch overlay is reversed. The case is remanded to the district court with instructions to return to the county court for judgment consistent with this ruling. The judgment is affirmed in part and reversed and remanded in part with directions.