Desert Valley Contracting, Inc. v. In-Lo Props. ( 2022 )

IN THE SUPREME COURT OF THE STATE OF NEVADA
DESERT VALLEY CONTRACTING, INC., No. 83338
A NEVADA CORPORATION,
Appellant,
vs.
IN-LO PROPERTIES, A NEVADA F L E U
LIMITED LIABILITY COMPANY; AUG 11 2022
EUGENE INOSE, AN INDIVIDUAL; AND
JEFFREY LOUIE, AN INDIVIDUAL,
Respondents.
ELIZARH PH A. BROWN |
OF PUPREME COURT
EPUTyY CLERK
ORDER OF AFFIRMANCE
This is an appeal from a final judgment in a contract dispute.
Eighth Judicial District Court, Clark County; Joseph Hardy, Jr., Judge.}
Respondents (collectively, Inose) hired appellant Desert Valley
Contracting, Inc., to repair and restore a home after it suffered extensive
water damage.? Their contract required Desert Valley to perform the
restoration work in a good and workmanlike manner, while Inose agreed to
immediately forward insurance proceeds to Desert Valley and instruct the
insurer to make Desert Valley a payee on all insurance drafts for the work.
Desert Valley performed extensive work on the home but made mistakes
and decisions that increased costs and resulted in additional damage.
Meanwhile, Inose requested changes and upgrades that were not in the
scope of the repair work, believing those costs could be offset. Throughout
the restoration work, Inose turned over some, -but not all, of the insurance
1Pursuant to NRAP 34(f)(1), we have determined that oral argument
is not warranted in this appeal.
Respondent Eugene Inose is the principal of In-Lo Properties, which
owns the subject property.
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proceeds to Desert Valley. Eventually Desert Valley stopped work on the
home. Inose thereafter worked with Desert Valley's subcontractors directly
to complete the work. Desert Valley filed the underlying lawsuit alleging
breach of contract and related claims; Inose responded with similar
counterclaims. Following a seven-day bench trial, the district court
dismissed both parties’ claims. The district court found that both parties
breached the contract and concluded that neither party was entitled to
damages. In relevant part, the district court concluded that a scrivener’s
error in the parties’ contract rendered the contract ambiguous, construed
the ambiguity against Desert Valley, and found that Desert Valley failed to
establish damages because it was paid for the work it completed.
On appeal, this court concluded that the district court erred by
finding the scrivener’s error made the contract ambiguous such that it
should be construed against Desert Valley, and by concluding that the
ambiguity barred Desert Valley from seeking damages for its expected
profits. Nevertheless, because this court could not determine whether the
error was harmless, we reversed and remanded for further proceedings on
two issues. First, “the [district] court did not determine who breached first
or if the breaches were mutual, thereby precluding relief.” Desert Valley
Contracting, Inc. v. In-Lo Props., No. 79751, 2021 WL 818191 (Nev. Mar. 3,
2021) (Order of Reversal and Remand). Second,
because the district court erred in determining the
profit provision was ambiguous and that Desert
Valley therefore could not establish damages, the
district court did not address whether, in light of
the evidence presented, the contract, once reformed
to omit the scrivener’s error, entitled Desert Valley
to its expected profit and overhead in the event of
termination by Inose.
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On remand, the district court largely incorporated its findings
of fact from its previous order. It also made three alternative legal
conclusions, that: (1) both parties materially breached their contract,
precluding recovery by either side; (2) Desert Valley is barred from
recovering because it committed the first material breach of the contract by
stopping work and instructing the subcontractors to also stop working on
Inose’s project; and (3) that regardless of whether it materially breached the
contract, Desert Valley failed to demonstrate its damages by a
preponderance of the evidence. The district court also found that its
previous order awarding fees and costs to Inose—based on Desert Valley
not obtaining an award more than Inose’s offer of judgment—remained in
effect.
Desert Valley appeals, arguing the district court erred by
concluding that it materially breached the contract first, or at all. But the
record supports the district court’s finding that the parties mutually
breached the contract, and that Desert Valley therefore is not entitled to
damages for lost profits.2 See Wells Fargo Bank, N.A. v. Radecki, 134 Nev.
619, 621, 426 P.3d 593, 596 (2018) (holding that we will not overturn a
district court’s findings of fact “unless they are clearly erroneous or not
supported by substantial evidence”); State, Univ. & Cmty. Coll. Sys. v.
Sutton, 120 Nev. 972, 983, 103 P.3d 8, 15 (2004) (“Factual disputes
regarding breach of contract are questions for [the factfinder] to decide.”);
Westinghouse Elec. Corp. v. Garrett Corp., 601 F.2d 155, 158 (4th Cir. 1979)
(observing that, under general contract law, “in proper circumstances a
3The record does not contain substantial evidence regarding which
party breached first, but, because we can affirm on an alternative basis, the
lack of evidence on this issue is inconsequential.
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court may refuse to allow recovery by either party to an agreement because
of their mutual fault”); see also Restatement (Second) of Contracts § 244
(2022) (explaining that a party’s responsibility for damages is discharged
where the injured party would not have performed the contract).
Specifically, as to Desert Valley’s breach, the contract required that “[i]f any
requests for additional work to be performed are made during the scope of
the job, all such requests must be put in writing so that these costs will be
added to the Scope of Work.” (Emphasis added). Desert Valley’s owner
confirmed that without written and approved change orders signed by the
homeowner, Desert Valley would have no obligation to, and would not pay
the subcontractor for, any change to its scope of work. And both the owner
and another Desert Valley representative testified that Desert Valley failed
to obtain Inose’s approval or signature on any change orders throughout the
course of its work on Inose’s property.
Additionally, there was evidence that Desert Valley breached
the contract by failing to perform in a good and workmanlike manner. For
example, there was testimony——-deemed credible by the district court—that
Desert Valley’s decision to paint before installing tile resulted in the paint
being damaged and having to be redone at an additional cost. See Castle v.
4Desert Valley argues that Inose was aware of the change orders but
fails to provide relevant authority or cogent argument as to why this would
excuse it from performing under the terms of the contract, which required
Inose’s signed approval. See Edwards v. Emperor’s Garden Rest., 122 Nev.
317, 330 n.38, 130 P.3d 1280, 1288 n.38 (2006) (holding that we need not
address arguments not cogently argued or supported by relevant authority).
Additionally, there was evidence that Inose refused to sign the change
orders because Desert Valley consistently represented to Inose that it could
offset the costs of certain changes in scope by removing other items that
were part of the original scope without affecting the total cost of the project.
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(0) 147A 120 Nev. 98, 103, 86 P.3d 1042, 1046 (2004) ((W]e will not
reweigh the credibility of witnesses on appeal; that duty rests within the
trier of fact’s sound discretion.”). There was also testimony that Desert
Valley left the home unlocked and failed to supervise the workers, resulting
in items being stolen from the home and additional water damage from a
rainstorm. And that Desert Valley then incorporated the cost of repairs for
this damage and missing items into the cost it sought to collect from Inose.
Thus, substantial evidence supports the district court’s finding that Desert
Valley’s contractual breaches precluded it from any award of damages.> We,
therefore,
ORDER the judgment of the district court AFFIRMED.®
Parraguirre ¥
Biber? ai ~
Silver Gibbons
cc: Hon. Joseph Hardy, Jr., District Judge
William C. Turner, Settlement Judge
Hurtik Law & Associates
Holley Driggs/Las Vegas
Eighth District Court Clerk
5Based on this conclusion, we need not consider the argument that
the district court erred in concluding Desert Valley failed to prove its
damages by a preponderance of the evidence.
6The Honorable Mark Gibbons, Senior Justice, participated in the
decision of this matter under a general order of assignment.
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