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COURT OF APPEALS DECISION DATED AND RELEASED AUGUST 8, 1995 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 94-2862
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
HARVEY E. SIEGEL AND
PATRICK T. COWAN,
BOTH INDIVIDUALLY AND
AS TENANTS
IN COMMON AND AS
OFFICERS, DIRECTORS,
AND SHAREHOLDERS OF
SUPERIOR VENTURES,
INC., CARLYLE L.
ECKART AND SUPERIOR
VENTURES, INC., A
WISCONSIN CORPORATION,
Plaintiffs-Respondents,
v.
RON ALLEN, A/K/A
RONALD E. ALLEN,
D/B/A RONALD E. ALLEN
CONTRACTING,
RON ALLEN CONTRACTORS,
AND RON ALLEN
CONSTRUCTION, A SOLE
PROPRIETORSHIP,
AND GLOBE INDEMNITY
COMPANY, A FOREIGN
(DELAWARE) INSURANCE
CORPORATION,
Defendants-Appellants.
APPEAL from a judgment
and an order of the circuit court for Douglas County: MICHAEL T. LUCCI, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
LaROCQUE, J. Ron Allen and his insurer appeal a money
judgment and order in favor of the plaintiffs, Harvey Siegel and Patrick Cowan,
owners of Beaner's Bar, for $25,000, and Carlyle Eckart, bar lessee, for $16,765. The court ruled that Allen's negligent
performance of a demolition contract caused damage to Beaner's. The court also held that the three
plaintiffs were third-party beneficiaries of the contract between Allen and the
City of Superior. Allen did not join
the city as a party to this appeal. We
conclude that neither the trial court's finding that Allen was the only
negligent party nor the damages finding is clearly erroneous, and we need not
address the contract issues. We
therefore affirm the judgment and order.
The City of Superior
entered into a written contract in 1989 with Allen, who was to raze an
abandoned building (Tony's Cabaret) that shared a common inner wall with
Beaner's Bar. Following the demolition,
the plaintiffs brought this action alleging that water and aesthetic damages
resulted due to the city's and Allen's negligence. The complaint also alleged Allen's failure to comply with the
demolition specifications of the contract.
Following a bench trial, the court ruled in favor of the plaintiffs,
awarding Siegel and Cowan damages of $25,000 and lessee Eckart damages of
approximately $16,000.
The court's initial
memorandum decision found Allen negligent.
In its second decision disposing of a motion for reconsideration, the
court stated that although its initial decision was primarily grounded upon the
theory of contract law and a belief that the defendants were third-party
beneficiaries of the demolition contract with the city, its earlier finding
that the evidence demonstrated Allen's negligence was confirmed.
Allen's first argument
is that the court erred by interpreting an indemnification provision in his
contract with the city.[1] Allen contends that the provision means only
that he was liable for "improper performance" of the contract. In
pursuit of this argument, Allen claims "If there was responsibility to the
owners of the Beaner's building to protect against future water damage, that
responsibility was not Mr. Allen's."
We initially conclude that a contractor is not immune from damages to a
third party merely because he is performing the work pursuant to the express
terms of a contract. Negligent injury
to third parties can certainly occur whether or not the provisions of a
contract are met. While the early common
law rejected the responsibility of a contracting party to a third party with whom
he has no contract, present law is well established that "The incidental
fact of the existence of the contract ... does not negative the responsibility
of the actor when he enters upon a course of affirmative conduct which may be
expected to affect the interests of another person." Prosser
& Keeton on Torts, § 93 at 668 (5th ed. 1984).
We also hold that
because the city is not a party to this appeal, we need not resolve any dispute
between Allen and the city over contribution or indemnity.
Allen next challenges
the court's finding that he was negligent because he failed "to perform
more than the contract required."
The court made these findings regarding Allen's negligence:
(1) The contractor failed to remove
the concrete floor and foundation walls below grade which contributed to the
water problems including the basement flooding.
(2) Following the demolition which
changed the party wall into an exterior wall on the east side of Beaner's, the
contractor failed to take steps to waterproof said wall or to otherwise protect
it from the weather, which contributed substantially to the water problems.
(3) The contractor failed to repair
the roof where the flashing had been cut along the area where the buildings
were joined, which caused loose flashing to be blown about damaging signs and
skylights, all of which caused leaking from the area of the roof.
(4) The contractor failed to
properly backfill and grade the area where Tony's had stood, which contributed
to the flooding which occurred in the basement.
(5) The
contractor knew or reasonably should have known that the unusual nature of this
project could negatively affect the appearance and aesthetic condition of the
Beaner's building, and yet upon completion left said building aesthetically
impaired as evidenced by photographs of the exterior wall on the east side as
well as the east edge of the roof.
Allen argues that with
the exception of paragraph (1) above, the findings of negligence are
"fundamentally failures to perform extra-contractual work." Allen concedes that paragraph (1) "was
a slight variation from the written specifications, but it was fully approved
by the City inspectors." Allen
concludes that "The thrust of the trial judge's findings is not to the
effect that Mr. Allen failed to use the requisite skill in performing the
requirements of the contract. The
thrust of the findings is to the effect that more work should have been done to
prevent the ultimate damage."
The court expressly
found Allen guilty of ordinary negligence.
Among the court's findings were these:
It was very apparent that the demolition
of one side of an existing structure could substantially affect the condition
of the other side.
....
Based
upon the totality of circumstances in this matter, the court is satisfied that
the contractor was negligent in the manner in which he performed the demolition
work.
As
noted, mere performance of a contract does not insulate the actor from
negligent injury to third parties.
Allen next maintains
that if this court sustains the trial court's negligence findings, those
findings are incomplete because the court failed to apply the necessary
comparative negligence considerations.
We respectfully disagree.
In its decision denying
the reconsideration motion, the court stated:
Although
the court does not believe it was necessary to also support its finding of liability
upon principles of negligence, there is sufficient evidence to support the
proposition that the only acts of negligence were those of the contractor who
performed the work. There was no basis
upon which to find any other party negligent.
Contrary
to Allen's contention, the court did consider and reject a finding of
negligence by other parties.
Finally, Allen contends
that the damages awarded were uncertain, speculative, lacking in foundation,
and contrary to the weight of the evidence and the law. Again we disagree. The owner of a damaged building may recover either the diminution
in value, or the reasonable cost of repair, provided the latter does not exceed
the diminution in value. Zindell
v. Central Mut. Ins. Co., 222 Wis. 575, 583, 269 N.W. 327, 330-31
(1936).
The court awarded the
building owners, Cowan and Siegel, a judgment of $25,000 for cost of repair
after reducing their claim for failure to mitigate their flood damages once it
was discovered. Allen addresses the damage
awards only briefly, asserting only that:
[D]amages
may well have been awarded for the cost of weatherproofing the east wall of the
Beaner's building. This is not a cost
of restoration. ... [T]his is a material improvement to the building .... Exhibits 18 and 19, the written reports of
Michael Endres, Plaintiffs' expert, clearly outline a course of construction to
the Beaner's building that far exceeds a restoration to its prior condition.
The court heard evidence
that the Beaner's building was rendered substantially unusable and that its
commercial potential and marketability was effectively destroyed. There was evidence upon which the court
could reasonably conclude that the cost of repairs of $40,000 to $44,000 was
well below the difference between the pre-demolition fair market value and its
diminished value. This evidence
included the purchase price of the original building, the amounts spent on
improvements, the opinions of the owners as well as that of an expert witness. The testimony was supported with various
detailed written estimates and photographs as well. Allen does not explain why the cost of weatherproofing the wall
which was formerly an interior wall was not a legitimate cost of restoration in
light of the exposure to the weather.
After reducing the claim of Cowan and Siegel to $25,000 for failure to
mitigate, the court's award for cost of repairs as less than the diminished
value of the property is not clearly erroneous.
The court awarded the
building tenant, Eckart, a judgment of $16,000. This figure represented an award of $10,000 for loss of personal
business property, including beer, pop, liquor stock and inventory, and other
business equipment; the sum of $1,765 for repair to signs damaged by roof
flashing, and the sum of $5,000 as reasonable compensation for loss of time and
expense of clean up. Again, the claim
was substantiated by testimony and detailed exhibits showing the damage. Allen, in his cursory challenge to the
damage award, does not explain why these figures were unsupported by the
evidence. We therefore conclude that
Eckart adequately proved the damages awarded.
By the Court.—Judgment
and order affirmed.
Not recommended for
publication in the official reports.