Summary 2011 WY 27

Summary of Decision February 18, 2011

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Case Name: Knight v. TCB Construction and Design, LLC

Citation: 2011 WY 27

Docket Number: S-10-0173

URL: http://wyomcases.courts.state.wy.us/applications/oscn/DeliverDocument.asp?CiteID=461772

Appeal from the District Court of Albany County, Honorable Jeffrey A. Donnell, Judge

Representing Appellant (Plaintiff): Jason M. Tangeman of Nicholas & Tangeman, , Laramie, Wyoming.

Representing Appellee (Defendants): Megan L. Hayes and Allen Gardzelewski of Corthell and King, Laramie, Wyoming.

Date of Decision: February 18, 2011

Appellant appeals a district court’s damages award and findings relating to liability arising out of a construction contract.

Issues: Whether the district court erred as a matter of law when it determined that a second contract superseded the first and relieved the individual Appellee of personal liability. Whether the district court erred as a matter of law in the method it used to calculate damages.

Holdings: Generally, contracts―even fully executed ones―can be cancelled or rescinded by the mutual consent of the parties. Rescission generally must be exercised in toto and is applied to the contract in its entirety with the result that what has been done is wholly undone and no contract provisions remain in force to bind either of the parties. The intent to rescind a contract does not need to be express or in writing, but can be inferred from the conduct of the parties and the surrounding circumstances. In the present action, the parties’ conduct, including organizing TCB Construction, LLC, materially changing the terms of the contract, and changing the parties, demonstrates that the parties intended to rescind the Agreement, thus leaving the subsequent Addendum to control. Consequently, because the Agreement was rescinded, and the individual Appellee was not a party to the Addendum, he is not personally liable for any damages resulting from the breach of the Addendum and the district court did not err in finding the same.

It is a common and necessary practice for contracts to refer to and obtain meaning from other documents. A contract may refer elsewhere for full understanding of its terms, just as it may adopt another document by reference. The Addendum did incorporate by reference the provisions pertaining to the construction of the house that were listed in the original Agreement. However, it was not the parties’ intent to incorporate the entire Agreement by reference, because they materially changed some of the terms, including the contract price. Incorporating by reference some of the provisions of the Agreement does not change the fact that the parties had rescinded the Agreement when they entered into the Addendum. Incorporating by reference some of the provisions from that Agreement was done as a matter of convenience, but that act alone did not make the Agreement, as a whole, operative again.

Appellant also argues that the district court was bound by a pre-trial summary judgment ruling in which the district court refused to grant the individual Appellee a summary judgment on the issue of his liability. He relies on the law of the case doctrine to support his argument that the district court was bound by its summary judgment ruling. The law of the case doctrine provides that a court’s decision on an issue of law made at one stage of a case becomes a binding precedent to be followed in successive stages of the same litigation. However, the district court never made a final determination at the summary judgment stage as to personal liability. What the district court was considering at the summary judgment stage was whether factual issues existed that could give rise to personal liability, without considering the effect of the Addendum. The district court ultimately made a determination of liability at the end of the trial after it had considered evidence relating to the subsequent Addendum. Accordingly, the law of the case doctrine does not apply in this situation and the district court was not bound by the initial summary judgment ruling. The district court did not err in finding that the Addendum controlled and that only TCB Construction, LLC was liable for damages for breach of contract.

Legal remedy for a breach of contract is the award of damages designed to place the plaintiff in the same position in which he would have been had the contract been fully performed, less proper deductions. The plaintiff has the burden of producing sufficient evidence to prove his damages. Damages must be proven with a reasonable degree of certainty, and a court may not resort to speculation or conjecture in determining the proper amount to award. Appellant concedes in his brief that the district court’s damages calculation “may be a proper methodology for calculating damages in a breach of contract/unfinished construction case.” Nevertheless, he takes exception with the district court’s damages calculation and implies that this is a novel damages case which the district court failed to identify appropriately and that the measure of damages should be whatever money was left in TCB Construction, LLC’s bank account rather than a calculation of the actual damages proved to have been suffered by Knight. There is no authority for application of this novel damages calculation. The methodology employed by the district court to calculate damages comported with the above-stated law and accurately reflected Appellant’s provable damages.

The district court correctly held that the Addendum superseded the Agreement, because the record supports the conclusion that the parties intended to rescind the Agreement. Consequently, the individual appellee and his successor estate were relieved of personal liability arising out of the breach of the Addendum. The district court used the appropriate method to calculate damages, and it did not abuse its discretion in the amount of damages awarded as the damages award accurately reflected Appellant’s proven damages.

Affirmed.

J. Voigt delivered the opinion for the court.