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2004-UP-188 - REA Construction v. Columbia Country Club
PREHEARING REPORT

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


REA Construction Company,        Respondent,

v.

Columbia Country Club,        Appellant.


Appeal from Richland County
Joseph M. Strickland, Master-in-Equity


Unpublished Opinion No. 2004-UP-188
Submitted November 3, 2003 – Filed March 22, 2004


AFFIRMED


Richard D. Ries and John S. Nichols, both of Columbia, for Appellant.

James Coffas and James D. Cooper, Jr., both of Columbia, for Respondent.

PER CURIAM:  In this contract case, REA Construction Company (“REA”) sued Columbia Country Club (“Country Club”) for the remaining balance due on a construction contract, plus interest and attorney’s fees.  The master-in-equity granted judgment to REA, finding Country Club owed REA a total of $135,221.55.  Country Club appeals, arguing: 1) the contract was ambiguous as to whether it was a unit price contract; 2) even assuming the contract was not ambiguous, the contract was orally modified into a fixed price contract; 3) Country Club was not bound by the portions of the contract requiring it to pay interest on past due amounts and attorney’s fees connected with the collection of past due amounts; and 4) REA breached the implied covenant of good faith and fair dealing.  We affirm.

FACTUAL/PROCEDURAL BACKGROUND

In 1998, Country Club solicited bids for a construction project that entailed resurfacing a parking lot, repairing cart paths along a golf course, and completing miscellaneous work to other areas of its business. 

Although REA faxed its proposal to Country Club in July of 1998, Country Club’s board of directors did not approve the project for more than a year. 

On August 11, 1999, Don Litchford, a member of Country Club’s board of directors, signed the “Proposal and Contract Form” (“the contract”) on behalf of Country Club.  William Rosengarten, a commercial manager for REA, signed the contract on REA’s behalf.

The contract provided prices for various units of work to be performed and listed $135,182.50 as the estimated price for the total project. The contract also contained provisions authorizing REA to collect interest on past due amounts and attorney’s fees.

After the parties signed the contract, Ray Ross, Country Club’s representative on the project, met with Tim Metz, an employee of REA, to discuss the scope of work to be completed pursuant to the contract.  

When the work on the project was finished, REA sent a final bill in the amount of $208,406.94.  Country Club made a payment to REA in the amount of $117,407.50, but refused to make additional payments. 

REA commenced this action on October 11, 2000, alleging Country Club breached the contract.  As damages, REA sought the difference between the amount of the final bill and the amount paid by Country Club, as well as interest on the outstanding balance and attorney’s fees.  Country Club answered, denying the breach of contract claim, and counterclaimed for breach of the covenant of good faith and fair dealing, negligence, and unfair trade practices pursuant to the South Carolina Unfair Trade Practices Act. [1]  

In an order dated July 25, 2002, the master found the parties entered into a valid unit price contract, and Country Club had breached that contract by refusing to pay the invoice amount.  Accordingly, REA was awarded a judgment against Country Club for $135,221.55, which consisted of the remainder of the amount billed, plus interest and attorney’s fees.  Country Club appeals.

STANDARD OF REVIEW

“An action to construe a contract is an action at law.”  Pruitt v. South Carolina Med. Malpractice Liab. Joint Underwriting Assoc., 343 S.C. 335, 339, 540 S.E.2d 843, 845 (2001).  In an action at law, the appellate court will correct any error of law, but it must affirm the master’s factual findings unless there is no evidence that reasonably supports those findings.  Sea Cabins on the Ocean IV Homeowners Ass’n v. City of N. Myrtle Beach, 337 S.C. 380, 388, 523 S.E.2d 193, 197 (Ct. App. 1999).

LAW/ANALYSIS

I.          Ambiguous Contract

Country Club argues the master erred by finding the contract was not ambiguous as to whether it was a unit price contract.  We disagree.

If a contract is clear on its face and reasonably susceptible to only one interpretation, it is not ambiguous.  Padgett v. South Carolina Ins. Reserve Fund, 340 S.C. 250, 254, 531 S.E.2d 305, 307 (Ct. App. 2000).  Conversely, “[a] contract is ambiguous when the terms of the contract are reasonably susceptible of more than one interpretation.”  South Carolina Dept. of Natural Res. v. Town of McClellanville, 345 S.C. 617, 623, 550 S.E.2d 299, 302 (2001).  When the language of the contract is ambiguous, parol evidence is allowed to determine the intent of the parties.  Southern Atlantic Fin. Servs. v. Middleton, 349 S.C. 77, 81, 562 S.E.2d 482, 484-85 (Ct. App. 2002). 

The determination of whether the language of a contract is ambiguous is a question of law.  McClellanville, 345 S.C. at 623, 550 S.E.2d at 302-03.

Initially, we note, Country Club does not deny the contract is clear on its face.  The front page of the contract stated the price was “estimated” and the contract was “a unit price contract.”

Instead, Country Club argues these two terms, estimated and unit price contract, each have more than one reasonable meaning, rendering the contract ambiguous.  Specifically, Country Club argues these words in the contract could mean REA was only allowed to charge the estimated amount, and any additional work authorized by Country Club would be billed at a unit price.  The master disagreed with this argument, as do we.

The meaning proposed by Country Club for the term estimated would render the term meaningless.  Further, nothing in the contract required REA to seek Country Club’s approval to exceed the estimated total listed on the front page of the contract. 

Additionally, as to the term unit price contract, the attachment to the contract outlined estimated expenditures.  For each type of work to be performed, a subsection provided the price per unit, the estimated number of units to be used, and the estimated total price for that subsection. [2]   A statement on the front page of the contract instructed measurements to be taken to determine the total amount to charge for the work performed pursuant to the contract.  Further, the contract contained no language suggesting the estimated number of units could only be increased if Country Club authorized additional work.

We conclude the master correctly held the contract was not ambiguous.  Therefore, the master did not err in deciding the contract was a unit price contract. [3]   Id. at 623, 550 S.E.2d at 302-03 (“It is a question of law for the court whether the language of a contract is ambiguous.”).

II.      Oral Modification

Country Club argues even assuming the contract originally was a unit price contract, the master erred by failing to find the contract was orally modified into a fixed price contract.  We disagree.

After the contract was signed, Ross, Country Club’s representative on the project, and Metz, an employee of REA, discussed modifications to the contract.  Ross testified Country Club wanted to increase the size of a parking lot, as well as add parking-lot islands and several man-hole covers.  He also testified Country Club had decided against installing several cart paths.  According to Ross, these changes would result in a total cost of $121,000.00 for the project.  Ross testified Metz agreed with Ross that the price of the project was to remain within Country Club’s $121,000.00 budget.  Based on this conversation between Ross and Metz, Country Club argues the unit price contract was modified into a fixed price contract.

Generally, a written contract may be orally modified.  Roberts v. Gaskins, 327 S.C. 478, 483, 486 S.E.2d 771, 773 (Ct. App. 1997).  “Any modification of a written contract must satisfy all requisites of a valid contract.”  Player v. Chandler, 299 S.C. 101, 104, 382 S.E.2d 891, 893 (1989).  However, a person who enters into a contract on behalf of a company must have authority to do so for the contract to be valid.  Pee Dee Nursing Home v. Florence Gen. Hosp., 309 S.C. 80, 81-85, 419 S.E.2d 834, 835-37 (Ct. App. 1992). 

The master found no evidence to suggest Metz had the authority to negotiate contracts on behalf of REA and concluded these discussions between Ross and Metz did not result in a valid contract modification.

The record supports this conclusion.  Ross testified he assumed Metz was the project manager for REA, but that Metz did not make such a representation.  Ross also testified he, not REA, had given Metz a copy of the contract.

Because the evidence supports the master’s conclusion that there was no modification of the written contract, we hold the master did not abuse its discretion. 

Country Club also contends that because the testimony of Litchford and Ross as to the modification was not contradicted by REA, the master erred by failing to rule the contract had been modified.  However, the trier of fact is not required to accept uncontradicted testimony as true.  Black v. Hodge, 306 S.C. 196, 198, 410 S.E.2d 595, 596 (Ct. App. 1991).  Therefore, the master did not err by ruling against Country Club on this issue.  

III.           Contract Provisions Concerning Interest and Attorney’s Fees

Country Club argues there is no evidence in the record from which the master could have concluded Country Club agreed to be bound by the portions of the contract requiring it to pay interest on past due amounts and attorney’s fees connected with the collection of past due amounts.  We disagree.

“A person signing a document is responsible for reading the document and making sure of its contents. Every contracting party owes a duty to the other party to the contract and to the public to learn the contents of a document before he signs it.”  Regions Bank v. Schmauch, 354 S.C. 648, 663, 582 S.E.2d 432, 440 (Ct. App. 2003); see Munoz v. Green Tree Fin. Corp., 343 S.C. 531, 541, 542 S.E.2d 360, 365 (2001) (“[A] person who can read is bound to read an agreement before signing it.”). 

Although Litchford admits signing the contract on behalf of Country Club, Litchford testified that he did not read the “General Terms and Conditions” section, the section relating to interest and attorney’s fees.  Because Litchford failed to read this section of the contract, Country Club argues it should not be required to pay interest or attorney’s fees.

Litchford’s signature is located on the front page of the contract.  Above Litchford’s signature, there is a provision that states “[REA] propose[s] to furnish all the necessary supervision, labor, equipment and materials required to complete the following work as outlined below, subject to terms and conditions stated below and on reverse side hereof and incorporated as part of this proposal.” (emphasis added). 

The “General Terms and Conditions” section is located on the back of the first page of the contract.  One of its subsections authorizes REA to collect interest on past due accounts, while another subsection allows REA to recoup attorney’s fees related to the collection of past due amounts. 

Because Litchford acknowledged signing the contract, the master did not err by concluding Country Club was bound by the “General Terms & Conditions” section of the contract. 

Country Club also argues the “General Terms & Conditions” section of the contract was not conspicuous, and as such, Country Club should not be bound by it.  To support this proposition, Country Club relies on Kumpf v. United Tel. Co. of Carolinas, 311 S.C. 533, 429 S.E.2d 869 (Ct. App. 1993). 

In Kumpf, this court was confronted with the task of determining whether a contract disclaimer in an employee handbook was sufficiently conspicuous to assure the promises in the handbook were nonbinding.  Id. at 537, 429 S.E.2d at 872.  To assist in its determination, this Court looked to the South Carolina Uniform Commercial Code (“UCC”) for guidance as to the definition of conspicuous.  Id.  

In Kumpf, we did not hold all contract provisions must be conspicuous, and we decline to do so now.  Further, because Kumpf does not discuss contract provisions concerning interest or attorney’s fees, and we have found no South Carolina cases specifically requiring contract provisions regarding interest or attorney’s fees to be conspicuous, we hold there is no requirement that these provisions be conspicuous.  Thus, Country Club’s argument is without merit.

IV.          Implied Covenant of Good Faith and Fair Dealing

Country Club argues REA’s failure to obtain approval before increasing the price of the project was a breach of the implied covenant of good faith and fair dealing.  We disagree.

“[T]here exists in every contract an implied covenant of good faith and fair dealing.”  Commercial Credit Corp. v. Nelson Motors, 247 S.C. 360, 367, 147 S.E.2d 481, 484 (1966).  “However, there is no breach of an implied covenant of good faith where a party to a contract has done what provisions of the contract expressly gave him the right to do.”  Adams v. G.J. Creel & Sons, 320 S.C. 274, 277, 465 S.E.2d 84, 85 (1995).

Because we have concluded the master was correct in finding the parties entered into an unambiguous unit price contract and Country Club was bound by it, there is no evidence to support bad faith on the part of REA. 

The attachment to the contract outlined estimated expenditures.  For each type of work to be performed, a subsection provided the price per unit, the estimated number of units to be used, and the estimated total price for that subsection.  Both the number of units and the total price for the subsection were labeled as estimates.  Although REA increased the number of units used in the project and this increase in units was reflected in the final bill, the unit price did not increase.  Because only estimated terms increased, REA performed according to the contract.  Therefore, the master did not err by finding that REA did not breach the implied covenant of good faith and fair dealing.

CONCLUSION

For the foregoing reasons, the master’s decisions are

AFFIRMED.

HEARN, C.J., HOWARD, and KITTREDGE, JJ., concurring.


[1] The master found Country Club failed to prove its claims for negligence and unfair trade practices.  These rulings are not appealed.

[2] Under the heading “Resurfacing Lot and Related Work,” for example, the price for the parking lot resurfacing was shown as “$36.00 per ton. We estimated 12.070 square yards.  This yields approximately 1,000 tons.  Subtotal estimated price = $36,000.00.”   (emphasis added).

[3] Country Club further argues both parties intended a fixed price contract, and thus, the contract should be reformed.  Because Rosengarten signed the contract on behalf of REA, and Rosengarten testified REA intended to create a unit price contract, there is evidence that reasonably supports the master’s implicit decision that there was no mutual mistake as to the type of contract entered into by the parties.  See Crosby v. Protective Life Ins. Co., 293 S.C. 203, 206, 359 S.E.2d 298, 300 (Ct. App. 1987) (“A contract may be reformed on the ground of mistake when the mistake is mutual. . . . A mistake is mutual where both parties intended a certain thing and by mistake in the drafting did not obtain what was intended.”).