Vaughn Coltrane & Associates, Inc. v. LaM Distribution, LLC

THIS OPINION HAS NO PRECEDENTIAL
VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT
AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

Vaughn Coltrane & Associates, Inc.,       
Plaintiff,

v.

LaM Distribution, LLC and Fidelity & Deposit Company of Maryland,       
Defendants.

LaM Distribution, LLC,       
Appellant,

v.

Vaughn Coltrane & Associates, Inc., KCV Construction Services, Inc.;
Albert V. Coltrane, P.E.,        Respondents.

Appeal From Calhoun County

James C. Williams, Jr., Circuit Court
Judge

Unpublished Opinion No. 2004-UP-309

Submitted April 12, 2004 – Filed May
7, 2004

REVERSED

Henry W. Brown and John W. Davidson,
both of Columbia, for Appellant.

R. Davis Howser, George V. Hanna, IV and Andrew E. Haselden,
all of Columbia, for Respondents.

PER CURIAM:  In this dispute relating to
the construction of a freezer facility, Appellant LaM Distribution (LaM) contends
the trial court erred in concluding Respondent Vaughn Coltrane & Associates
(VCA) had not breached its contract with LaM and in discounting the award of
damages to LaM for fees not paid to VCA.  We reverse.
[1]

FACTS

On March 30, 1998, LaM secured a building permit
for a $6,500,000.00 refrigerated warehouse facility to be constructed in Calhoun
County, South Carolina.  Employing temperatures as low as -25 degrees Fahrenheit,
the facility freezes and stores food products and other perishables.  To design
and manage construction of the facility, LaM contracted for the services of
VCA, a consulting engineering firm specializing in food industry services. 
The agreement between the parties contained the following clause:

3.  VCA will be responsible for exercising the degree of skill
and care required by customarily accepted, good professional engineering practices
and procedures.

Construction of the facility took longer than planned. 
When the project was approximately sixty-five percent complete, LaM discovered
various design and construction problems.  A dispute then arose regarding lack
of payment of some of the construction management fees owed to VCA.  As a result
of the dispute, VCA left the job prior to the completion of construction, thereby
leaving unfulfilled its contractual obligations.  All told, LaM paid VCA $284,498.21
for the work, but did not pay approximately $89,000.00 in fees charged during
the last portion of the construction management phase of the project.

After construction was complete and the facility
went into operation, LaM discovered additional problems with the design and
construction of the facility.  To assess the condition of the facility, LaM
engaged the services of Facilities Design, Inc., an engineering company with
experience in the design of cold storage facilities and construction management. 
Over the course of its investigation, Facilities Design found nineteen defects
in the facility’s design and construction.  These deficiencies included various
instances of inadequate insulation, improper wiring, insufficient emergency
lighting, lack of proper drainage, and various code violations.

VCA eventually filed suit against LaM to collect
the unpaid fees, alleging causes of action for breach of contract, quantum meruit,
and foreclosure of mechanic’s lien.  LaM answered and counterclaimed, alleging
causes of action for breach of contract, negligence, fraudulent misrepresentation,
constructive fraud, negligent misrepresentation, breach of implied warranty,
and breach of express warranty.

By order dated May 30, 2001, the trial court granted
LaM’s motion for summary judgment on all causes of action alleged against it
by VCA.  In so ruling, the court noted VCA was not properly licensed to practice
engineering in South Carolina because it lacked a Certificate of Authorization
as required by statute.  Because VCA had not complied with the statutory mandate,
the court held “VCA is prohibited from enforcing this contract and collecting
its fees.”  VCA did not appeal the order.

With only LaM’s counterclaims remaining, the parties
tried the matter without a jury in February 2002.  The trial court ruled in
favor of LaM on only its negligence cause of action, finding VCA liable for
eight of the alleged nineteen design and construction defects.  Of the eight
defects found, however, the court awarded LaM compensation for only six and
also reduced damages to account for VCA’s unpaid fees, thereby arriving at a
total award of $34,140.00.  LaM now appeals.

STANDARD OF REVIEW

An action for breach of contract is an action at
law.  Roberts v. Gaskins, 327 S.C. 478, 483, 486 S.E.2d 771, 773 (Ct.
App. 1997).  “In an action at law, on appeal of a case tried without a jury,
the findings of fact of the judge will not be disturbed upon appeal unless found
to be without evidence which reasonably supports the judge’s findings.”  Townes
Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775
(1976).

LAW/ANALYSIS

Contract

LaM asserts the trial court erred in failing
to find VCA had breached its contract with LaM.  We agree.

In concluding VCA had not breached its
contract by discontinuing work on the project, the trial court stated, “the
evidence further discloses that LaM failed to pay VCA and/or KCV for the work
it performed under the contract, thereby giving VCA and KCV the legal right
to pull off of the job based on this non-payment of agreed to fees.”  The court
also indicated other actions by LaM that contributed to affording VCA the legal
right to discontinue its performance under the contract.  In essence, the court
ruled LaM’s non-payment and other actions amounted to a material breach of the
contract, thereby relieving VCA of its obligation to perform. 

While the trial court is correct that the legal
consequences of one party’s material breach is to relieve the other contracting
party of its performance obligation, that rule has no application in the present
case.  As previously noted, VCA failed to appeal the court order of May 30,
2001, dismissing its breach of contract claim against LaM.  As an unappealed
order, all the findings of fact and legal conclusions contained therein—including
the ruling that LaM did not breach the contract—are now the indisputable law
of the case.  See Charleston Lumber Co. v. Miller Housing Corp.,
338 S.C. 171, 175, 525 S.E.2d 869, 871 (2000) (unappealed ruling is law of the
case).  Because the prior order established as a matter of law that LaM did
not breach the contract, VCA cannot take a second bite at the apple by defending
itself on the grounds that LaM materially breached the contract.

Because VCA offered no other defense or excuse
for its nonperformance, and the incontrovertible evidence before the court established
that VCA did not fulfill its contractual obligation, LaM’s breach of contract
cause of action must succeed as a matter of law.  The trial court’s failure
to rule accordingly amounts to an error of law. 

Moreover, the trial court’s decision on this matter
must be reversed because its conclusion that VCA acted negligently in performance
of its duties cannot be squared with the implied conclusion that VCA did not
breach its contractual obligation to exercise “the degree of skill and care
required by customarily accepted, good professional engineering practices and
procedures.”

Offset

LaM next asserts the trial court erred
in reducing LaM’s damages to account for VCA’s unpaid fees.  We agree.

Although the trial court found VCA liable
on LaM’s negligence cause of action, the court also found LaM was comparatively
negligent:

I find that the Plaintiff has proven both negligent design
and/or negligent construction management as to certain of the nineteen items
litigated in this trial as set forth in the discussion, which follows.  I further
find that the Plaintiff was comparatively negligent as to certain of the nineteen
items litigated at trial.

The trial court concluded LaM’s comparative negligence
extended to six of the items.  The court reduced LaM’s award for one item by
twenty percent and reduced the award for the remaining five by fifty percent. 
For each incident of comparative negligence, the court stated the reason for
reducing the damages award was because LaM failed to pay VCA’s full fee and
that some of the defects would have been avoided had VCA remained on the job.

While comparative negligence provides
a sound basis for reducing tort damages, the concept has no application outside
tort law.  Indeed, under contract theory, comparative negligence provides no
basis for reducing a damages award.  See Smoak v. Carpenter Enters.,
Inc., 319 S.C. 222, 224, 460 S.E.2d 381, 383 (1995) (“Further, a charge
on contributory negligence, a tort concept, would have been inappropriate and
confusing in the breach of contract and breach of warranty actions.”).  Given
our conclusion above that LaM is entitled to recover on its breach of contract
claim, LaM is entitled to recover in full for each item.

REVERSED.

ANDERSON, HUFF, and KITTREDGE, JJ., concur.

[1] We decide this case without oral argument pursuant to Rule 215, SCACR.