BM Co v Avery [2001] GUSC 27; 2001 Guam 27 (27 December 2001)

IN THE SUPREME COURT OF GUAM

B.M. Co.,
A Guam Partnership
Plaintiff-Appellant/Cross-Appellee

vs.

JIMMY K. AVERY AND MARIA F. AVERY
Defendants-Appellees/Cross-Appellants

Supreme Court Case No.: CVA00-026
Superior Court Case No.: CV0422-95

OPINION

Filed: December 27, 2001

Cite as: 2001 Guam 27

Appeal from the Superior Court of Guam
Argued and submitted on September 21, 2001
Hagåtña, Guam

Appearing for Plaintiff-Appellant/ Cross-Appellee: Ron Moroni, Esq. Law Office Thomas M. Tarpley, Jr. A Professional Corp. Suite 201, American Life Bldg. 137 Murray Blvd. Hagåtña, Guam 96910

Appearing for Defendants-Appellees/ Cross-Appellants: Maria T. Cenzon-Duenas, Esq. Mair, Mair, Spade, & Thompson A Professional Corp. Suite 807, GCIC Bldg. 414 W. Soledad Ave. Hagåtña, Guam 96910

BEFORE: F. PHILIP CARBULLIDO, Chief Justice (Acting)[1], JOHN A. MANGLONA, Designated Justice, and RICHARD H. BENSON, Justice Pro Tempore.

CARBULLIDO, J.:

[1] The Appellant, B.M. Co., A Guam Partnership (hereinafter, ABM Co.@), appeals from a judgment entered in the Superior Court awarding damages to the Appellees, Jimmy and Maria Avery (hereinafter AAverys@) in a breach of contract action. BM Co. argues that the trial court erred in excluding two expert witnesses. BM Co. further contends that the trial court erred in denying its post-verdict motions in which BM Co. made the following arguments: (1) the evidence did not support the award of damages for the cost of repairing construction defects; (2) BM Co. was not legally obligated to indemnify the Averys for damage caused to a neighboring property; (3) BM Co. was not legally obligated to pay damages for loss rentals; and (4) the jury's verdict was the product of passion or prejudice. The Averys filed a cross-appeal, arguing that the trial court erred in reducing the jury's award of liquidated damages. We reject the Averys' argument on cross-appeal. We similarly reject BM Co.'s challenge to part of the jury's award for construction defects and its argument that the jury's award was based on passion or prejudice. We agree with B.M. Co.'s challenges to the trial court's exclusion of its expert witnesses, which we hold was an abuse of discretion, and the jury's award for lost rentals and the indemnity claim, which we hold were erroneous as a matter of law. Accordingly, we affirm in part, reverse in part, and remand for a new trial as to the Averys' claim for damages for certain construction defects.

I.

[2] The instant appeal arises out of a breach of contract action filed by BM Co. against the Averys. The parties entered into a construction contract on July 23, 1992. Under the contract, BM Co. was required to build a two-story commercial building with a warehouse in Barrigada, Guam. The original contract price was $975,000.00. The Averys were obligated to make monthly progress payments and to deduct five percent of each payment as retainage due at the end of the project. Shortly after signing the contract, the parties added a supplement which included a clause which allowed for liquidated damages of $265.00 per day in the event BM Co. inexcusably failed to complete the work by the completion date.[1]

[3] BM Co. was required to construct the building Aper the approved contract drawings,@