Scott County District Court File No. C011499
Considered and decided by Anderson, Presiding Judge, Schumacher, Judge,
and Willis, Judge.
Written notice of the discovery of an unknown or concealed condition is not required by subparagraph 4.3.6 of the standard American Institute of Architecture's construction contract.
The opinion of the court was delivered by: G. Barry Anderson, Judge
Both parties to this contractual dispute allege the district court decision following a bench trial was in error. Appellant contends that the district court erred in finding that the contract did not require respondent to provide written notice of a concealed or unknown condition. Both parties contest the district court's damage award. Appellant also argues the district court abused its discretion by not awarding attorney fees. We affirm.
In 1997, appellant German Evangelical Lutheran St. Paul's Congregation of the Unaltered Augsburg Confession at Jordan began exploring a roof-reconstruction project. Prior to bidding, interested contractors were allowed to inspect portions of the roof. But appellant, fearing that the cost to replace the roof might be more than it could afford, and in an effort to minimize the damage to the attic area if the project did not proceed, refused to remove attic insulation, thus denying access to a substantial portion of the roof. In fact, appellant refused to allow its own architect access to the entire roof while he was preparing the plans for the project. Following a competitive bidding process, respondent Robert W. Carlstrom Company, Inc. was awarded the contract, valued at $213,900.
Respondent's crew began removing the old roof on May 6, 1998, and was surprised by the poor condition of the roof. Although respondent expected to find bird-mouth cuts*fn1 in the framing, the unusual depth of the cuts was not expected. At first respondent believed that the cuts were merely inconvenient, but as the project progressed, respondent determined that the depth of these cuts seriously threatened the structural integrity of the roof. Respondent quickly concluded, because of the depth of the bird-mouth cuts and the roof's bizarre blocking and framing, that additional work, material, and labor would be required.
Respondent contacted the architect and verbally reported the unusual condition of the roof. On May 22, 1998, after determining it would need to do additional work respondent immediately verbally notified appellant of the problem. Respondent again verbally reported the condition of the roof, this time on May 27, to appellant's building committee and also outlined the expected delays and additional costs necessary to correct the conditions. At a building committee meeting in July, appellant requested that respondent submit one request for additional funds, as opposed to several incremental requests. Work continued on the roof from May until project completion in August.
In August, respondent submitted a "change order request" seeking an additional $51,680.94. This detailed break down of the additional costs was the first time respondent had submitted any kind of written documentation about the unknown condition of the roof. Appellant's architect concluded that the condition of the roof constituted a concealed or unknown condition and recommended that appellant pay the additional funds. Appellant refused to make the additional payment, claiming that respondent was required under the contract to submit written notice of the concealed or unknown conditions.
Respondent and appellant both allege breach of contract. Appellant alleged that respondent failed to complete all the work it was obligated to perform, and respondent contended that it was not paid the money it was owed for the extra work it performed. Appellant also alleged violation of Minnesota's consumer-protection statute and sought reimbursement for project-completion costs. Appellant asserted also that respondent should have known about or discovered the unusual conditions prior to beginning work on the project. During the three-day court trial, respondent sought to amend its complaint to conform to the evidence that the additional work, caused by the unknown conditions, actually totaled $55,055.17.
The parties stipulated to a $4,000 settlement of appellant's counterclaim. The district court dismissed appellant's consumer-fraud claim with prejudice. Critically, the district court found that respondent encountered unknown conditions materially different from conditions commonly found in similar buildings. The district court concluded that the contract did not require a written notice of these unknown conditions and held that respondent's verbal report satisfied the obligation to report these conditions within 21 days after discovery. ...