O'Byrne v George [1999] FMKSC 3; 9 FSM Intrm. 62 (Kos. S. Ct. Tr. 1999) (26 February 1999)

KOSRAE STATE COURT
TRIAL DIVISION
Cite as O’Byrne v. George, 9 FSM Intrm. 62 (Kos. S. Ct. Tr. 1999)

[9 FSM Intrm. 62]

JUSTINA O’BYRNE,
Plaintiff,

vs.

JACOB Z. GEORGE,
Defendant.

CIVIL ACTION NO. 40-97

MEMORANDUM OF DECISION

Aliksa B. Aliksa
Acting Chief Justice

Trial: February 18, 26, 1999
Decided: February 26, 1999

APPEARANCES:

For the Plaintiff:
Patrick Olter
P.O. Box 245
Lelu, Kosrae FM 96944

For the Defendant:
Lyndon L. Cornelius
Micronesian Legal Services Corporation
P.O. Box 38
Lelu, Kosrae FM 96944

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HEADNOTES

Contracts
A contract is a promise between two parties for the future performance of mutual obligations, which the law will enforce in some way. For the promise to be enforceable, there must be an offer and an acceptance, definite terms, and consideration for the promise (that which the performance is exchanged for). When one party fails to perform their promise, there is a breach of contract. O'Byrne v. George, 9 FSM Intrm. 62, 64 (Kos. S. Ct. Tr. 1999).

Contracts - Conditions; Contracts - Interpretation
The time for completion of a house is not a material term of the parties' agreement when nothing in the parties' oral agreement indicated that the "time was of the essence" for completion of the house

[9 FSM Intrm. 63]

within two months and when the plaintiff pointed out no particular day of completion as being crucial. Therefore, late completion of the house should not be seen as a failure of a condition to further obligations under the contract. O'Byrne v. George, 9 FSM Intrm. 62, 64 (Kos. S. Ct. Tr. 1999).

Contracts
Problems regarding the timing of performance will not necessarily interfere with the enforceability of a contract. O'Byrne v. George, 9 FSM Intrm. 62, 64 (Kos. S. Ct. Tr. 1999).

Contracts
A breach of contract which is material justifies a halt in performance under the contract by the injured party. Whether a breach is material is a question of fact depending on several factors, particularly when the breach deprives the injured party of the benefits of the contract. O'Byrne v. George, 9 FSM Intrm. 62, 65 (Kos. S. Ct. Tr. 1999).

Contracts
When the defendant’s estimate of the construction materials' cost was a material term in the parties' agreement and the plaintiff paid the defendant the total amount due for materials, the plaintiff’s refusal to provide more funds for materials does not constitute a breach of the contract because the plaintiff did not have any obligation to pay defendant any additional sums for construction materials. Therefore the defendant breached his promise to provide all necessary construction materials for the sum the plaintiff paid him. O'Byrne v. George, 9 FSM Intrm. 62, 65 (Kos. S. Ct. Tr. 1999).

Contracts - Damages
The trial court has wide discretion in determining the amount of damages in a contract case. O'Byrne v. George, 9 FSM Intrm. 62, 65 (Kos. S. Ct. Tr. 1999).

Contracts - Damages
When the plaintiff has paid the defendant in full the entire sum due for construction materials and when because of the defendant's breach the plaintiff has hired a second contractor to finish her house and was required to buy certain materials necessary to complete her house, the plaintiff has suffered damages in the amount of the materials purchased by the second contractor. O'Byrne v. George, 9 FSM Intrm. 62, 65 (Kos. S. Ct. Tr. 1999).

Contracts; Contracts - Damages
A defendant who has completed substantial performance in constructing the plaintiff's house is entitled to payment for the second of three installments for labor and the plaintiff's failure to pay is a breach of her promise to pay the defendant the agreed amount for labor costs. O'Byrne v. George, 9 FSM Intrm. 62, 65 (Kos. S. Ct. Tr. 1999).

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COURT'S OPINION

ALIKSA B. ALIKSA, Acting Chief Justice:

This matter was called for trial on February 18, 1999. Closing arguments were heard on February 26, 1999. Plaintiff was represented by Patrick Olter. Lyndon Cornelius, of MLSC, appeared on behalf of the Defendant. Based upon the evidence presented at trial, this Court makes the following findings of fact and conclusions of law.

[9 FSM Intrm. 64]

I. Findings of Fact.

Plaintiff Justina O’Byrne and Defendant Jacob George entered into an oral agreement whereby Defendant agreed to build Plaintiff’s house for the total amount of $15,500. Of that amount, it was agreed that $10,000 would be spent for construction materials and $5,500 would be paid for labor. It was also agreed that the payments for Defendant’s labor cost would be made in three installments. The labor cost, divided into three equal payments, consists of approximately $1,800 for each payment.

Plaintiff made several payments to the Defendant. The exact amount of each payment and the date of the payments were disputed by the parties. Based upon the testimony of the witnesses, I find that the total amount paid by the Plaintiff to the Defendant was $11,800. Out of that total amount paid by the Plaintiff to the Defendant, the amount of $10,000 was intended to be applied to the purchase of construction materials, and $1,800 was the first installment payment to be applied to labor costs. Defendant had requested that his labor payment be made in three installments: therefore, this payment of $1,800 was made as Defendant’s first payment for labor.

At some point during the construction, Defendant was unable to purchase the remaining construction materials necessary for the completion of Plaintiff’s house. Construction materials were required to complete the doors, room partitions, windows and portions of the ceiling in Plaintiff’s house. Plaintiff refused to give any more money to the Defendant. Plaintiff then hired a second contractor to complete the unfinished items in her house. Plaintiff paid the second contractor $6240.64 for materials and labor to complete the unfinished items in her house.

II. Conclusions of Law and Analysis.

A contract is a promise between two parties for the future performance of mutual obligations, which the law will enforce in some way. For the promise to be enforceable, there must be an offer and an acceptance, definite terms, and consideration for the promise (that which the performance is exchanged for). When one party fails to perform their promise, there is a breach of contract. Ponape Constr. Co. v. Pohnpei, 6 FSM Intrm. 114, 123 (Pon. 1993). In this case, the Plaintiff and Defendant had entered into a contract. Plaintiff agreed to pay the Defendant a total amount of $15,500. In exchange for the Plaintiff’s promise of payment, Defendant agreed to build her house according to the plans. Plaintiff did make certain substantial payments to the Defendant in the total amount of $11,800. Defendant also constructed a substantial portion of the Plaintiff’s house. Several factors relating to the enforcement of the contract and alleged breaches by both parties are now examined.

Plaintiff testified that Defendant breached his contract by failing to complete the house within a two month period. Defendant testified that he told the Plaintiff he was working with other construction projects and could work on her house during his leisure time only. The time for completion of Plaintiff’s house is disputed by the Defendant. Plaintiff testified that she told the Defendant that she wanted to have the house finished in two months. Defendant testified that he did not agree to the two month time period for completion. This Court concludes that the time for completion of the house is not a material term to the agreement between the parties. Nothing in the oral agreement between the parties indicated that the "time was of the essence" for completion of the house within two months. No particular day of completion was pointed out by the Plaintiff as being crucial. Therefore, late completion of the house should not be seen as a failure of a condition to further obligations under the contract. See Panuelo v. Pepsi Cola Bottling Co. of Guam, 5 FSM Intrm. 123, 127 (Pon. 1991). This approach is consistent with other cases involving timing of performance of a contract. Problems regarding the timing of performance will not necessarily interfere with the enforceability of a contract. Iriarte v. Micronesian Developers, Inc., 6 FSM Intrm. 332, 335 (Pon. 1994). This Court concludes that the two month period for construction of Plaintiff’s house is not a material term and does not interfere

[9 FSM Intrm. 65]

with the enforceability of the contract. Therefore, Defendant’s failure to complete Plaintiff’s house in two months is not a breach of their contract.

A breach of contract which is material justifies a halt in performance under the contract by the injured party. Whether a breach is material is a question of fact depending on several factors, particularly where the breach deprives the injured party of the benefits of the contract. Panuelo, 5 FSM Intrm. at 128. In this case, both parties claim that the other party breached the contract. Plaintiff claims that the Defendant breached the contract by failing to complete the house, since all necessary funds were given to Defendant for purchase of construction materials. Defendant claims he was unable to complete the house because Plaintiff refused to give him additional funds to purchase the necessary construction materials and that Plaintiff’s refusal to provide funds for materials constitutes a breach of the contract.

Defendant was properly paid the agreed amount for construction materials by the Plaintiff in the amount of $10,000. Defendant’s estimate of the cost for the construction materials is a material term in the agreement between the parties. Plaintiff paid the Defendant the total amount due for materials, therefore Plaintiff did not have any obligation to pay Defendant any additional sums for more construction materials. Defendant’s estimate of $10,000 for construction materials was a material term in the agreement and binding upon the parties. There was no evidence presented at trial to support any changes to the amount agreed upon for construction materials. Defendant breached his promise to provide all necessary construction materials for the $10,000 paid to him by the Plaintiff.

The trial court has wide discretion in determining the amount of damages in a contract case. Kihara Real Estate, Inc. v. Estate of Nanpei (III), 6 FSM Intrm. 502 (Pon. 1994). Plaintiff has suffered damages. Plaintiff paid the Defendant the entire sum due for the construction materials in the amount of $10,000. This amount of $10,000 was intended to pay for all materials necessary for construction of the house. When Plaintiff hired the second contractor, Plaintiff was again required to purchase certain materials necessary to complete the house: doors, windows, materials for the room partitions and the ceiling. Plaintiff was required to pay a second time for those materials that should have been purchased by the Defendant with the $10,000 payment. The Court finds that of the $6,240 that Plaintiff paid to the second contractor, a portion of that amount was used to pay for materials. Plaintiff has suffered damages in the amount of the materials purchased by the second contractor.

Defendant did complete substantial performance of the contract. Except for the doors, windows, room partitions and portions of the ceiling, the construction of the Plaintiff’s house was complete. Therefore, based upon this substantial performance, Defendant was entitled to payment of the second installment for labor. Plaintiff has paid the Defendant only the first installment for labor; therefore the second payment is due to the Defendant in the amount of $1,800. Plaintiff breached her promise to pay the Defendant the agreed amount for labor costs. Defendant has suffered damages, in the amount of $1,800.

This Court concludes that the Defendant breached his contract with the Plaintiff by failing to provide all the construction materials for the house, which were paid for by the Plaintiff in the amount of $10,000. Plaintiff suffered damages from that breach because Plaintiff was required to re-purchase construction materials again for use by her second contractor. Plaintiff also breached her contract with the Defendant by failing to pay him the second installment payment due for his labor, which was due, based upon substantial completion of the house by the Defendant.

III. Conclusion.

The Court finds that neither party is entitled to recover anything from the other. Therefore all

[9 FSM Intrm. 66]

claims are dismissed.