Opinion
No. 59957.
February 11, 1992.
APPEAL FROM THE CIRCUIT COURT, ST. CHARLES COUNTY, JON A. CUNNINGHAM, J.
Deebra Sauter Herd, Mary Elizabeth Dorsey, St. Louis, for plaintiff/appellant.
Rollings, Gerhardt, Borchers, Stuhler, Carmichael Kircher, P.C., Donald A. Baerveldt, Jr., St. Charles, for defendants-respondents.
Custom Builders Corporation (builder) filed a petition against Lawrence and Nancy Chesebro (homeowners) to enforce a settlement agreement on disputed claims. Builder alleged: (1) the parties entered into an agreement for a mutual release on February 23, 1988; (2) builder fulfilled its obligations under the agreement; and (3) homeowners refused to complete the settlement. The trial court entered judgment in favor of homeowners. Builder appeals. We affirm.
Except for conflicting testimony of the parties' attorneys, the relevant facts are simple and essentially not disputed because they are based on documents. In August 1986, homeowners contracted with builder for construction of a custom shell home. Homeowners refused to pay the $6,404.28 balance claimed by builder on the contract because of complaints surrounding builder's performance under the contract founded on homeowners' belief the roofing was improperly installed. Both parties retained counsel and initiated settlement negotiations.
On December 22, 1987, following settlement negotiations builder's attorney sent homeowners' attorney a document entitled "Mutual Release" and a cover letter stating: "We have in our file the original Lien Waivers of Custom Builders Corporation and its subcontractors and we will deliver them to you upon receipt of your client's cashier's check for $3,200.00 and two duly executed Mutual Releases."
Homeowners did not execute the proposed release which released builder from any guarantee on material and workmanship pertaining to the roof. Homeowners amended builder's release, executed and mailed copies to builder. The only relevant change was the deletion of the words "material and" from builder's proposed release which had the effect of not releasing builder from an obligation on the roofing materials. Homeowners set a deadline of February 26, 1988, for builder's acceptance of the amended release. By letter dated February 23, 1988, builder's attorney sent homeowners' attorney two executed copies of homeowners' release. However, builder changed the release by reinserting by interlineation the words "material and." In a letter accompanying the re-altered release, builder's attorney wrote:
Pursuant to our recent telephone conversation, enclosed you will find the 2 fully executed copies of the Mutual Release in the captioned matter wherein I amended the Release on page 2 thereof by inserting, as you can see, "material and" between "on" and "workmanship" and initialed same. Please have your client initial the change and return a fully executed copy to us along with a cashier's check in the amount of $3,200.00 made payable to our client, Custom Builders Corporation.
Builder also delivered the lien waivers with the express condition that homeowners' attorney not deliver the lien waivers unless a check in the amount of $3,200 was sent to builder. Homeowners never executed the re-altered release or gave builder a check. Their attorney did not deliver or misuse the lien waivers.
Builder's attorney attempted to contact homeowners' attorney many times by letter and telephone. Finally on May 16, 1988, homeowners' attorney wrote builder's attorney to inform him a check was being held until the manufacturer's warranty on the roofing materials was issued. The parties corresponded for several months. Builder emphasized it never warranted roofing materials. The original contract provided the only warranty on roofing materials was the manufacturer's warranty. However, homeowners learned the only way to obtain the manufacturer's warranty was through papers filed by builder. Builder insisted the manufacturer routinely warranted roofing material without the proper documentation. Homeowners refused to release builder on roofing materials unless it provided a warranty for them or helped them obtain a written warranty from manufacturer.
Builder attempted to secure a manufacturer's warranty for homeowners but failed. Meanwhile, homeowners hired an expert to view their roof. Homeowners learned the roof was improperly installed and proper installation was a prerequisite for the manufacturer's warranty. This lawsuit ensued. On June 16, 1989, homeowners' attorney returned the original lien waivers to builder's attorney in anticipation of trial.
In its first point, builder alleges the court erred in failing to find a settlement agreement. Builder argues the disagreement over the insertion of the words "material and" by builder in homeowners' proposed release is a mere technicality because builder never warranted roofing materials. We review the judgment of the trial court under the standards set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).
A settlement agreement is a species of a contract. Randall v. Harmon, 761 S.W.2d 278, 279 (Mo.App. 1988). Therefore, this appeal is governed by contract law. Id. "An offer must be accepted as tendered to result in a contract." F.S. Crook v. C. R. Heating Serv., 787 S.W.2d 763 (Mo.App. 1990). "Where the purported acceptance of an offer introduces new or variant terms or omits, enlarges or modifies the terms of the offer, no contract has been formed and a response amounts to a counter offer and rejection of the original offer." Id. at 764. In this case the evidence is insufficient to support a finding the parties entered into a contract, oral or written. Nor was the subject of dispute, the quality of the roofing materials or a warranty by the manufacturer, a mere technically. It was the heart of the dispute and involved a part of the construction contract.
Homeowners offered evidence they were not satisfied with the installation of two-way glass, contrary to specifications for one-way glass, and were upset over improper installation of the shingles, unevenness of the roof, and the resulting improper drainage. The roof was the major item of dispute between the parties.
Builder's original mutual release of December 1987 was an offer of settlement rejected by homeowners. Homeowners' amended mutual release of February 1988 was a counter offer rejected by builder. The re-insertion by builder of the terms "material and" was a counter offer, mirroring their first offer. Homeowners never accepted builder's last offer.
Builder argues: (1) homeowners accepted their mutual release by accepting delivery of the lien waivers; (2) homeowners' silence coupled with their failure to act is tantamount to acceptance under an exception to the general rule; and (3) it was justified in expecting a reply and in concluding homeowners' silence indicated assent, not rejection. In support of its position, builder relies on Moore v. Kuehn, 602 S.W.2d 713 (Mo.App. 1980).
In that case, Moore, a repairman, sued the Kuehns, husband and wife, for repair work on a fire-damaged building where the couple lived and operated a business. The Kuehns did not sign the written estimate submitted by the repairman. The court found:
[T]he evidence indicates that the writing was the sole offer made by Moore to Kuehn; that Kuehn was aware of the terms of that offer; that he instructed Moore to complete one of the items proposed; that he subsequently permitted Moore, without objection, to complete all the work proposed in the writing and in fact cooperated with him in one facet of the job; and that [Kuehns] accepted the benefit of Moore's performance. There is no evidence that appellants either questioned the necessity of any of the proposed repairs or contested the proposed contract price. In view of this evidence, we do not believe that Kuehn's contemporaneous refusals to sign the proposal (for the stated reasons that he believed Poole should sign it first or that his wife had it at home) were such that they indicated that he did not in fact impliedly assent to Moore's full performance in accordance with the proposal. Id. at 719.
The instant case is readily distinguishable from Moore where the Kuehns accepted performance of Moore's services without dispute and refused to pay the value therefore. In the present case, the condition of the roof and the value of the installation was in dispute. Undisputed acceptance of the work is not involved.
Although homeowners' attorney held the lien waivers in trust by placing them in his file he did so subject to express conditions. Neither the attorney nor homeowners exercised control over the waivers in a manner inconsistent with builder's rights or instructions. The escrow was not an acceptance of builder's offer. Moreover, builder was not justified in concluding homeowners' silence was an assent to the re-altered release because in its letter builder prescribed a certain mode of acceptance. See Sargent v. Wekenman, 374 S.W.2d 635, 638 (Mo.App. 1964). Homeowners did not initial the change, return an executed copy or send a cashier's check. Nor did homeowners' attorney deliver the mutual release or lien waivers to anyone.
Accordingly, the court did not err in ruling against builder on the claim of enforcement of settlement agreement. The evidence supported a finding there was no settlement contract, oral or written.
Next, builder alleges the court erred in overruling its objection to homeowners' attorney acting as a witness and an advocate during the trial. See Rule 4, adopting Rule 3.7 of the Rules of Professional Conduct. It claims the attorneys agreed before trial other counsel would conduct the trial. Homeowners' attorney testified and conducted direct examination of builder's attorney and of another witness. He also argued homeowners' motion for directed verdict at the close of builder's case. Builder's attorney testified and argued against homeowners' motion for directed verdict. He also gave directions to trial counsel for builder. Homeowners' response to the objection consisted of a denial of an oral agreement and a contention that homeowners' "negotiating" attorney was necessary to the defense so as to prevent a substantial hardship.
Whether there was an oral agreement was a matter for the trial court as the fact finder. The claim of substantial hardship appears frivolous in a court tried case where the only dispute involved the simple issue of whether there was a written or oral agreement of settlement, and the evidence on the fact issue consisted of undisputed documents in regard to a written settlement and the testimony of two attorneys in regard to an oral agreement.
We reject this claim of error only because we find no prejudice in allowing both attorneys to testify and in some respects advocate. In this court tried case other counsel appeared on behalf of both parties. Counsel for builder testified he "cleared that [reinsertion of release on materials] with [homeowners' attorney] and sent him a letter and the mutual releases as changed" as evidence the attorneys orally agreed to withdraw a release of builder on roofing materials. Homeowners' attorney testified he never told builder's attorney homeowners "had accepted [builder's] terms of settlement." On these facts the only disputed fact issue for the court was resolved by an implied finding there was no oral agreement. Both parties confirmed by their evidence no written agreement was ever executed by both parties. Accordingly, we find no prejudice to builder in the court ruling which allowed homeowners' attorney to act as a witness on disputed facts and an advocate together with co-counsel.
This holding is confined to the facts in the present case and represents no precedent that the provisions of Rule 3.7 should not be strictly followed. The ruling was erroneous. The rule is founded on solid principles of fairness and represents a source of protection for parties, attorneys and the trier of fact. In the present case, both attorneys were witnesses and advocates regarding a single contested issue. A study of the trial does not support a finding the trier of fact was in any way hindered in this case by the dual role adopted by counsel for both sides. Only because we find no prejudice, we reject the request for a new trial based on the ruling.
Finally, builder alleges the court erred in allowing homeowners to present evidence constituting an affirmative defense not properly pled. Homeowners denied the existence of a contract of settlement. There was evidence from which the court could find no oral agreement, and undisputed evidence from which the court did find no written agreement of settlement. In view of the finding and judgment, any dispute regarding any issue of affirmative defense is moot.
Judgment is affirmed.
SMITH, P.J., and AHRENS, J., concur.