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Associated Builders v. Oczkowski et al.
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MAINE SUPREME JUDICIAL COURT					                        Reporter of Decisions
Decision:	2002 ME 115
Docket:	   Han-01-590
Submitted
On Briefs: 	March 26, 2002
Decided:	July 25, 2002	

Panel:     SAUFLEY, C.J., and CLIFFORD, RUDMAN, DANA, ALEXANDER, CALKINS, and
               LEVY, JJ.



                                                                  ASSOCIATED BUILDERS, INC.

                                                                                           v.

                                                                  RICHARD OCZKOWSKI et al.


CLIFFORD, J.

	[¶1]  Richard and Helen Oczkowski appeal from a judgment entered in the
District Court (Ellsworth, Staples, J.) in favor of Associated Builders, Inc. on
Associated Builders's claim arising out of construction work performed for the
Oczkowskis.{1}  The court also denied recovery to the Oczkowskis on their
counterclaims for breach of contract and breach of warranty.  We affirm the
judgment.  

	[¶2]  The Oczkowskis owned a building in Bar Harbor that had previously
been used as a restaurant.  They decided to convert it into a motel, and contacted
Associated Builders, a contracting firm with whom they had previously dealt. 
The Oczkowskis presented Associated Builders with detailed drawings of the
construction that they wanted, and in January of 2000, Associated Builders, acting
through its agent Douglas King, agreed to undertake the construction work.  The
only written evidence of the agreement is an unsigned document prepared by
Associated Builders.  Both parties agree that it outlines their understanding of the
terms of the agreement and the work to be completed.  The document begins with
the following statement:


We will Complete the following Work on a Time and Material Basis,
The work detailed below will be as per the plans provided by owner.


	[¶3]  The document, under the heading "Carpentry," lists the work that
would be done and the materials supplied.  At the end of the "Carpentry" section,
is the following statement:


Note: Contractor is not responsible for the Engineering of the 2nd
floor Additions Creating Snow load on the Existing Roof Structures.
And will assume no liability for same.

Toward the end of the document is an "estimated" cost of $55,000 to $60,000.  

	[¶4]  Construction began in February of 2000.  In March of 2000, before
the project was completed, the Bar Harbor Code Enforcement Officer expressed
concern about whether the proposed construction plans would fully comply with
building codes dealing with structural support for roofs bearing snow loads.  At
the request of King, the Oczkowskis hired an engineer to evaluate the problem,
and the engineer proposed several modifications to the original construction plan.

	[¶5]  There was no discussion between the parties at that time about how the
engineer's modifications would affect the estimate submitted to the Oczkowskis,
even though the recommended work would require some of the completed work
to be undone and would significantly increase the scope of the project.  Associated
Builders continued working on the building, and submitted two invoices to the
Oczkowskis dated June 15, 2000, totalling $21,707.81.  Combined with an earlier
invoice dated April 24 for $62,970.63, the total of the invoices was $84,678.44.  

	[¶6]  The Oczkowskis disputed with Associated Builders that they owed any
amount over $50,000.  The parties engaged in a series of conversations about the
matter, and the Oczkowskis contend that an agreement was reached on June 23,
2000, that changed the original agreement.  Pursuant to this modification, the
project would be completed after the 2000 motel season, the Oczkowskis would
pay Associated Builders $20,000, which was in addition to $30,000 that had
already been paid, and the Oczkowskis would make a final payment of $5000 to
Associated Builders at the completion of the project.  The Oczkowskis also claim
that King told them that they could disregard the invoices totalling $84,678.44.

	[¶7]  Later in the summer, the Oczkowskis began to receive demands from
Associated Builders for payment of the $84,678.44.  They testified that when they
spoke with King about the demands he told them that he was repudiating the
June 23 modification to the original agreement and would be placing a mechanic's
lien on their property to secure full payment.  Associated Builders placed a lien on
the property in October of 2000, and brought this suit.  The Oczkowskis filed
counterclaims for breach of contract and breach of warranty.

	[¶8]  At the completion of the nonjury trial, the court found that the
January agreement between Associated Builders and the Oczkowskis was the final
agreement of the parties, and that it was a time and materials contract.  The court
found that the price quoted was an estimate for the work originally represented,
and was not persuaded that Associated Builders agreed to do any additional work
without additional compensation.  The court further found that the additional
structural support work that the Oczkowskis authorized to be done was not
included in the $60,000 estimate, and that the scope of the work was substantially
changed to deal with structural support for snow loads; the extra work increased
the amount due and owing to Associated Builders to $84,678.44.  The court
entered a judgment for that amount based on quantum meruit,{2} and against the
Oczkowskis on the counterclaims, and the Oczkowskis appealed.

                                                              I.

	[¶9]  The Oczkowskis contend that the parties agreed to a modification in
the terms of their original agreement that dealt with who was to be responsible for
the additional work required to handle snow loads.  At trial they presented
evidence that King, who was acting on behalf of Associated Builders, agreed to a
change in the agreement.  The Oczkowskis testified that King agreed that
Associated Builders would do the additional construction work for the original
cost estimate of $55,000.  During their testimony, the court initially ruled that
discussions leading up to the alleged modification to the agreement constituted a
compromise or offer to compromise (in effect, were settlement negotiations) and
were consequently inadmissible under M.R. Evid. 408.{3}

	[¶10]  The Oczkowskis contend that this was error, and that they should
have been allowed to testify in full and without restriction as to the discussions
leading to a change in the original agreement and to describe the terms of the new
agreement.  A review of the record, however, reveals that, although the court did
strike some of the initial testimony of the Oczkowskis about the alleged change,
this was not the end of the matter.  The court heard testimony from the
Oczkowskis about how, on June 23, 2000, the parties agreed to change the
agreement, and heard the alleged terms of that modified agreement, namely that
Associated Builders agreed to complete the job, including the additional work, and
that the full cost would be only $55,000.{4}  Despite the court's initial indication
that it was going to exclude evidence concerning how the June 23 modification
was reached, the essential facts and circumstances leading up to and including
what the Oczkowskis asserted was a change to the original agreement with
Associated Builders were ultimately presented to the court.  King denied that
Associated Builders agreed to increase its responsibility without additional
compensation, and testified that the only agreement reached was on June 23 that
the $50,000 to be paid by the Oczkowskis was a payment toward the cost of
construction and not a payment in full.  The court, in deciding in favor of
Associated Builders on quantum meruit, and against the Oczkowskis on their
breach of contract counterclaim, was not persuaded that there was any change that
reduced the liability of the Oczkowskis to pay to Associated Builders in full for all
labor and materials.{5} 

	[¶11]  The Oczkowskis did not make a distinct offer of proof as to any
evidence they believed was wrongly excluded by the court, nor did they file a
motion for further findings of fact or conclusions of law to test whether the court
excluded any evidence from its consideration.  We must assume that the court
considered all the evidence before it relating to the asserted June 23 modification
that was not specifically stricken, and found in favor of Associated Builders on all
factual issues necessary to support its decision.  Powell v. Powell, 645 A.2d 622,
623-24 (Me. 1994) (absent request for specific findings of fact, we assume that
court made all necessary findings that could be gleaned from the evidence before
it).  Accordingly, any error by the trial court in excluding testimony about the
modification to the agreement is harmless.

                                                                  II.

	[¶12]  The Oczkowskis also contend that the District Court erred when it
ruled against them on their counterclaim for breach of warranty because every
construction contract contains an implied warranty that the building will comply
with all applicable building codes.  "Ordinarily, a contractor who completes a
construction project in a workmanlike manner and in strict compliance with plans
furnished by the owner will not be held liable for damages resulting from defects
in the owner's specifications."  Paine v. Spottiswoode, 612 A.2d 235, 238 (Me.
1992).  Although some states recognize an exception to this rule in commercial
contracts and impose on the contractor a duty to discern any reasonably obvious
defects in the plans and bring them to the attention of the customer, see Marine
Colloids, Inc. v. M.D. Hardy, Inc., 433 A.2d 402, 406 (Me. 1981), in this case the
court found that Associated Builders explicitly disclaimed any liability for
problems associated with the engineering of the second floor structures, negating
any warranty that might be implied by law.  The court correctly decided the
Oczkowskis' breach of warranty claim in favor of Associated Builders.

	The entry is:

				Judgment affirmed.

Attorney for plaintiff:

Philip R. Foster, Esq.
Foster Law Offices
P O Box 919
Ellsworth, ME 04605-0919

Attorney for defendants:

Christopher J. Whalley, Esq.
P O Box 516
Ellsworth, ME 04605-0516

FOOTNOTES******************************** 
{1} . Associated Builders sought recovery pursuant to several theories: (1) enforcement 
of a mechanics lien pursuant to 10 M.R.S.A. § 3251 (Supp. 2001), (2) breach of 
contract, (3) quantum meruit, and (4) unjust enrichment. The factual basis for 
all these theories was the same, and the District Court concluded that Associated 
Builders was entitled to recover under quantum meruit. {2} . Quantum meruit requires 
proof "that (1) services were rendered to the defendant by the plaintiff; (2) 
with the knowledge and consent of the defendant; and (3) under circumstances that 
make it reasonable for the plaintiff to expect payment." Paffhausen v. Balano, 
1998 ME 47, ¶ 8, 708 A.2d 269, 271. {3} . Rule 408(a) provides, in its entirety: 
Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting 
or offering or promising to accept, a valuable consideration in compromise or 
attempting to compromise a claim which was disputed as to either validity or amount, 
is not admissible to prove liability for, invalidity of, or amount of the claim 
or any other claim. Evidence of conduct or statements made in compromise negotiations 
including mediation is also not admissible on any substantive issue in dispute 
between the parties. {4} . The first time that this issue came up was when Richard 
Oczkowski was testifying about the June 23, 2000, discussions. During direct examination, 
Richard Oczkowski testified about the substance of those discussions. Associated 
Builders objected, and the court indicated that its initial impression was that 
the conversation was in the nature of a settlement negotiation, and that it would 
be stricken. The Oczkowskis argued that the testimony was offered to establish 
that the parties reached a new agreement on June 23, 2000. At that point the District 
Court allowed Richard Oczkowski to testify about the new agreement allegedly reached. 
Later when Richard Oczkowski testified about conversations leading to the change 
to the original agreement, the District Court admonished the Oczkowskis to limit 
the evidence to the ultimate agreement reached on June 23 and excluded only some 
of the testimony about the settlement discussions themselves. None of the essentials 
of what the Oczkowskis assert to be the new agreement were excluded by the court. 
{5} . It is not surprising that the court was not persuaded that Associated Builders 
agreed to change a time and materials agreement and to assume an obligation to 
complete substantially more work for the same amount it estimated would be the 
cost for less work.