Cathedral Group v. Gen. Construction Management Co.
Respondent General Construction Management Company (General), a general contractor, completed a 40-unit condominium project for appellant Cathedral Group, Ltd. (Cathedral), a real estate developer, after another contractor left the job. The parties signed a “Cost of the Work Plus a Fee†contract on American Institute of Architects (AIA) Document A114 (the AIA contract). The AIA contract did not expressly authorize General to be paid for “general conditions†expenses, but section 7.7.1 authorized payment for “[o]ther costs incurred . . . to the extent, approved in advance in writing†by Cathedral.
A dispute arose concerning whether the parties agreed, before they signed the AIA contract, that General would be paid the fixed sum of $42,640 per month for its estimated general conditions expenses, including its project-related staff time and off-site office overhead. Cathedral claimed there was no such parol agreement: the AIA contract governed the issue; the AIA contract did not authorize payment for any estimated general conditions expenses; and no off-site office overhead or off-site staff time was either identified in or compensable under the AIA contract.
General claimed the parties’ principals, Gary Covel for General and Moe Nasr for Cathedral, agreed General would be paid $42,640 per month, its estimated general conditions expenses, before the AIA contract was signed, and that Nasr confirmed the agreement both in writing and by his conduct. Thus, General argued, section 7.7.1 of the AIA contract, the “other costs†provision, required Cathedral to pay General the agreed upon, fixed monthly sum for estimated general conditions expenses.
Following a bench trial, the trial court found in favor of General and awarded it $401,035.85, plus interest, for Cathedral’s breach of the AIA contract. Among other things, the court credited Covel’s testimony that he and Nasr agreed General would be paid $42,640 per month for general conditions expenses, with no requirement for “backup†documentation, and found Nasr’s testimony denying the agreement not credible.
Cathedral asserts three claims of error on this appeal: (1) the trial court misinterpreted the AIA contract and violated the parol evidence rule in construing section 7.7.1 as authorizing payment for General’s estimated general conditions; (2) the AIA contract is inconsistent with and therefore precludes the court’s additional finding that Cathedral was barred from denying the prior oral agreement based on waiver and estoppel principles; and (3) General failed to prove its damages with competent evidence.
We interpret the AIA contract de novo and conclude, with the aid of extrinsic evidence, including the principal’s testimony, that section 7.1.1 is reasonably susceptible to the interpretation urged by General: it authorizes payment for General’s estimated general conditions expenses. We also conclude substantial evidence supports the trial court’s conclusion that the parties did in fact intend and agree that section 7.7.1 required Cathedral to pay General $42,640 per month for general conditions expenses. We reject Cathedral’s other claims of error and affirm the judgment in all respects.
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