Appeal from Superior Court, Chittenden Unit, Civil Division
Robert A. Mello, J.
G. Hall of Paul Frank Collins P.C., Burlington, for
Michael B. Clapp, Middlebury, for Defendant-Appellant.
PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll,
1. This is a contractual dispute between J & K Tile Co.,
a subcontractor, and Wright & Morrissey, a general
contractor. After a bench trial, the court issued a judgment
and order on February 23, 2018, which held, among other
things, that Wright & Morrissey owed J & K Tile Co.
$42, 000 plus interest under a Memorandum of Understanding
(MOU) between the parties, and that Wright & Morrissey
unlawfully withheld J & K Tile Co.'s
retainage check in violation of the Vermont Prompt
Pay Act. Following this decision, on May 31, 2018, the court
further held that each party was the prevailing party in a
portion of the litigation and should be awarded
attorney's fees regarding that portion. Wright &
Morrissey appeals, and J & K Tile Co. cross-appeals. We
affirm in part and reverse and remand in part.
2. The general factual background is as follows. The parties
entered a contract for Texas-based J & K Tile Co. to
install flooring for Wright & Morrissey's
construction project in Vermont. J & K Tile Co. began
work, expecting to complete its job within two months. Soon
afterward, anticipating there might be general delays in
construction, the parties agreed to an MOU providing that
Wright & Morrissey would make additional payments to J
& K Tile Co. if delays arose that were beyond J & K
Tile Co.'s control. The anticipated delay occurred, and J
& K Tile Co. requested three payments under the MOU.
Wright & Morrissey denied two of these requests. After
construction was completed, Wright & Morrissey sent the
subcontractor a retainage check as its final payment.
3. Three disputes are raised in this appeal: (1) J & K
Tile Co.'s claim that it is owed $42, 000 under the MOU;
(2) a dispute about the retainage check; and (3) a dispute
about attorney's fees under the Prompt Pay Act. We
discuss each in turn and recount additional facts as needed.
I. Claim for $42, 000
4. The first dispute addresses whether Wright & Morrissey
breached its contract by failing to pay J & K Tile Co.
$42, 000 under the MOU.
5. The parties entered into a construction contract in
December 2014; following discussions about anticipated
delays, the parties agreed to an MOU in April 2015, outside
the amendment process set forth in the contract. The MOU
provided that the general contractor would pay two additional
costs. One was the "cost for travel and downtime"
if Wright & Morrissey suspended the project. After Wright
& Morrissey suspended the subcontractor's work and J
& K Tile Co. returned to Texas, the subcontractor
requested additional payment, pursuant to the MOU, for
leaving and returning to the job site. The general contractor
approved this payment.
6. The other was a daily additional cost, provided by the MOU
as follows: "If J & K Tile is delayed beyond May 21,
2015 through no fault of its own, Wright & Morrissey
agrees to pay not to exceed documented daily costs of $2,
000.00 per day." The subcontractor worked twenty-one
days past May 21, 2015, due to delays it did not cause. It
documented that each day resulted in more than $2000 in labor
and fixed costs. On September 23, 2015, the subcontractor
requested a $42, 000 payment based on the MOU for the
twenty-one days that it worked past May 21. Wright &
Morrissey denied the payment. J & K Tile Co. sued,
alleging in its complaint that Wright & Morrissey had
breached its contract by failing to approve the September 23
request. The complaint did not specifically identify the MOU,
although it did identify the September 23 request, which in
turn identified the MOU.
7. In the litigation that ensued, both parties, as well as
the trial court, acknowledged that J & K Tile Co.'s
claim regarding the $42, 000 was based on the MOU. However,
the parties contested whether the MOU was part of the
contract. Wright & Morrissey argued in its
summary-judgment briefing that the MOU was not an amendment,
and therefore not part of the contract; thus, when the
subcontractor alleged in its complaint that Wright &
Morrissey had breached the "contract," it had not
alleged a breach of the MOU. J & K Tile Co. countered
that the MOU was an amendment and also that it did not
matter; in whatever way they characterized the document,
Wright & Morrissey's actions constituted a breach of
contract. Later, at trial, Wright & Morrisey's
witness testified that the MOU was a "standalone
understanding," rather than an "agreement" or
an amendment to the contract.
8. In J & K Tile Co.'s post-trial proposed findings
of fact and conclusions of law, it adopted the view, raised
by Wright & Morrissey's witness, that the MOU was a
standalone document. It concluded that the MOU was an
independently enforceable contract. Wright & Morrissey
disagreed, stating in its proposed findings of fact and
conclusions of law that the MOU was not a standalone contract
and that the question was irrelevant because J & K Tile
Co. never alleged breach of the MOU in its complaint. Wright
& Morrissey then filed a motion for clarification
requesting that the court rule the original complaint did not
allege a breach of the MOU. J & K Tile Co. responded with
motions to clarify and to amend the complaint, arguing that
the original complaint sufficiently notified Wright &
Morrissey of its claim, but, in the alternative, asking the
court to amend the complaint to conform to the evidence
pursuant to Vermont Rule of Civil Procedure 15(b).
9. In the trial court's February 23 judgment and order,
it held that the MOU was an enforceable contract and granted
J & K Tile Co.'s motion to amend. It further
determined that Wright & Morrissey breached the MOU by
failing to pay J & K Tile Co. $2000 per day for
twenty-one days, and it accordingly awarded the subcontractor
$42, 000 plus interest.
10. On appeal, Wright & Morrissey challenges this
judgment with three legal arguments: (1) the MOU is an
"interpretive gloss" on the original contract, not
an independent contract, and therefore the timing and waiver
provisions of the original contract bar the claim; (2) the
court erred in allowing J & K Tile Co. to amend the
complaint to expressly cite the MOU as the basis for J &
K Tile Co.'s claims; and (3) the $2000-per-day cost
outlined in the MOU does not include labor costs. We do not
address the third argument because it was not raised below.
State v. Ovitt, 2005 VT 74, ¶ 13, 178 Vt. 605,
878 A.2d 314 (mem.) ("An issue is not preserved for
appeal unless a party raises it with specificity and clarity
below, thereby ensuring that the trial court will have an
opportunity to fully develop the relevant facts and to reach
considered legal conclusions.").
11. First, we address Wright & Morrissey's argument
that the MOU was not an independent contract, and therefore
the timing and waiver provisions of the original contract bar
the $42, 000 claim. The question is whether the MOU is an
amendment, an independent contract, or some other category of
agreement. "[T]he existence of an agreement is
ordinarily a question of fact," but the "legal
interpretation" of an agreement-such as whether it
constitutes an enforceable contract-is a question of law.
Kellogg v. Shushereba, 2013 VT 76, ¶ 17, 194
Vt. 446, 82 A.3d 1121 (quotation omitted). "We review
questions of law de novo without deference to the trial
court." Doe v. Vt. Office of Health Access,
2012 VT 15A, ¶ 12, 191 Vt. 517, 54 A.3d 474; see also
Kellogg, 2013 VT 76, ¶ 17 (reviewing de novo
whether agreement constituted rental agreement as matter of
law); Prue v. Royer, 2013 VT 12, ¶ 18, 193 Vt.
267, 67 A.3d 895 ("Our review of the trial court's
interpretation of the parties' agreement is
nondeferential."). Insofar as this issue requires review
of the court's factual findings, we review for clear
error. Quenneville v. Buttolph, 2003 VT 82, ¶
11, 175 Vt. 444, 833 A.2d 1263. "We will overturn a
factual finding of the trial court only where there is no
credible evidence to support it . . . ." Id.
12. To be an enforceable contract, the agreement must
manifest the parties' intention to be bound and its terms
must be sufficiently definite. Miller v.
Flegenheimer, 2016 VT 125, ¶ 13, 203 Vt. 620, 161
A.3d 524 (addressing whether exchange of emails constituted
enforceable contract). Intent is "a question of fact to
be determined by examining the objective words and deeds of
the parties." Quenneville, 2003 VT 82, ¶
17 (addressing whether oral agreement constituted enforceable
contract). Partial performance of the contract can indicate
intent to be bound. Miller, 2016 VT 125, ¶ 17.
As for the terms, "a binding agreement need not contain
each and every contractual term," but "it must
contain all of the material and essential terms."
Quenneville, 2003 VT 82, ¶ 16; see also
Miller, 2016 VT 125, ¶ 17 (stating that
"whether all of the terms of the alleged contract have
been agreed upon" can indicate whether parties intended
to be bound (quotation omitted)). The agreement must leave no
"material term . . . left for future negotiations."
Miller, 2016 VT 125, ¶ 21 (quotation omitted).
13. The trial court here found that the parties intended to
be bound by the MOU, and the record supports that finding.
The parties reduced to writing an oral agreement to manage
delays, and at no time did either party express an intent not
to be bound. Additionally, Wright & Morrissey partially
performed the MOU by authorizing a payment for the removal
and return of J & K Tile Co.'s workers, which was
also provided by the MOU; this demonstrates its intent to be
bound. See id. ¶ 17. Furthermore, as the trial
court found, the MOU "contains all the terms needed for
a complete understanding of the parties' rights and
obligations in the event of a suspension, and those terms are
clear and definite." Given these facts, the court did
not err in concluding that the MOU is an enforceable
contract. Nor did the court err in finding that the MOU was
not an amendment to the original contract, given that the
parties did not follow the amendment process set forth in the
contract when adopting the MOU.
14. Because the MOU is an independent contract, the timing
and waiver provisions of the original contract do not apply
to the MOU. J & K Tile Co.'s
breach-of-contract claim ...