Florida’s Fourth District Court of Appeal partially reversed a dismissal with prejudice of all of a general contractor’s claims against a subcontractor, finding that the credit agreement between the parties did not preclude claims for breach of an implied in fact contract or negligence. The case is an important reminder that not only do the terms of contracts matter, but so do when they are signed, who signs them, and how they are referred to in pleadings.
SBP Homes LLC v. 84 Lumber Company, arises from a dispute between a general contractor and a subcontractor over claims the subcontractors defectively installed windows and doors at a home built by the general contractor. The general contractor hired the subcontractor to provide and install windows, doors, and hardware at the home. After installation, the homeowner sued the general contractor for construction defects and damages. The general contractor then sued multiple subcontractors through a third-party complaint for their role in the performing the work that was the subject of the claimed damages.
Background
With regard to the window and door subcontractor, the general contractor sued it for breach of a contract implied in fact, negligence, and contractual indemnity. The general contractor attached to its third-party complaint its subcontract agreement (unsigned by the subcontractor) and the cost estimate from the subcontractor. The third-party complaint also referred to, but did not attach, a credit agreement between it and the subcontractor.
The subcontractor moved to dismiss the third-party complaint, claiming that it never signed the subcontract agreement attached to the third-party complaint, and attaching a copy of the credit agreement that pre-dated the subcontract agreements by several months and was signed by both parties. The credit agreements, in relevant party contained the following terms:
The entire agreement of the parties is set forth in this written document and there are no other oral or written understanding, promises, representation, or agreements. This Agreement cannot be modified or amended except that [subcontractor] may change the terms and conditions of this Agreement as set forth in Paragraph 8 above; and this Agreement shall supersede all previous communications, representations, or agreements, either verbal or written, between the parties hereto. This Agreement shall take precedence, supersede and control over any conflicting or additional terms contained in purchase orders, contracts or other similar documents issued by the parties and no such documents shall be binding upon [subcontractor] unless approved and signed by an authorized officer of [subcontractor]. . . .
In no event shall [subcontractor] be liable for liquidated, incidental, punitive or consequential damages in connection with building materials or installation purchased by Applicant, [subcontractor] disclaims any express or implied warranties of merchantability or fitness for a particular purpose on building materials or installation purchased by Applicant. In no event shall [subcontractor]'s liability exceed the replacement cost of building materials or installation.
Based on the credit agreement, the trial court dismissed the third-party complaint against the subcontractor in its entirety, with prejudice. The general contractor appealed the dismissal.
The Appeal
As an initial matter, the general contractor argued that the trial court erred in considering the credit agreement because it was not attached to the complaint. The appellate court disagreed with this argument, finding that because the complaint referred to the credit agreement, it was acceptable for the trial court to consider it in ruling on the subcontractor’s motion to dismiss.
Turning to the breach of the contract implied in fact claim, the appellate court reversed the dismissal of that count. The Court found that the allegations of verbal and written agreements culminating in the partially signed subcontract agreement, the accepted cost estimate, and the ultimate installation of the windows and payment for them sufficiently pleaded the claim. The court rejected the subcontractor’s argument that the credit agreement between parties negated the implied in fact contract, because (1) the credit agreement and its integration clause (see above) pre-dated the subcontract agreement and performance by the parties, and (2) the credit agreement did not involve the specific undertaking at issue in the lawsuit. On this second point, the court held that
[Subcontractor] argues the Credit Agreement is the only express agreement between the parties, and that it negates any contract implied in fact based on the general proposition that “a plaintiff cannot pursue an implied contract theory . . . if an express contract exists.
. . .
As [general contractor] argued, the Credit Agreement did not involve the specific undertaking in this case. The proposal submitted by [subcontractor] applied specifically to the [general contractor] project upon which the complaint was based. The proposal provided a signature line for acceptance of the proposal, which the [general contractor] representative signed. [subcontractor] made a definite proposal to furnish and install windows and doors for [general contractor] on the construction of the homeowners' residence. [Subcontractor] performed and was paid, as alleged in the complaint. From the documents, as well as the conduct of the [subcontractor] in supplying and installing the doors and windows, it can be inferred that a contract implied in fact existed.
As to the general contractor’s negligence claim, the appellate court also reversed the dismissal, holding that the allegations of the complaint sufficiently alleged duties independent of any of the agreements between the parties (implied or express), to survive the motion to dismiss.
Finally, as to the general contractor’s claim for contractual indemnity, the appellate court affirmed the dismissal, finding that the credit agreement’s language precluded reliance on terms in documents not signed by its officers.
It’s important to note that procedurally, this case was very early in the litigation process. The appellate court’s decision indicates that two of the general contractor’s claims can proceed through litigation, which does not necessarily mean that the general contractor will prevail on those claims. The key takeaway for most in the construction industry from this case should be that the terms of the documents they sign, the order in which they are signed, and whether they are signed or not are all very critical factors that will impact any future dispute between the parties.