All Star Construction Company, Inc. v. Mark Koehn and Alicia Garcia

Summary

The Supreme Court of South Dakota reviewed a dispute between a construction company and homeowners concerning unpaid contract amounts, unfinished work, change orders, allowance overruns, and overhead markups. The court held that the trial court improperly ordered specific performance without adequate opportunity to litigate that remedy and improperly denied mandatory prejudgment interest. It affirmed rulings denying an eight percent markup on certain charges and held that the homeowners waived the written-change-order requirement for requested or known changes.

Holdings

1. The circuit court abused its discretion by ordering specific performance because the remedy was first raised after the evidence had been submitted and was not tried by express or implied consent.
2. The circuit court erred by denying prejudgment interest; relabeling an award of contract damages as specific performance does not defeat the statutory entitlement to interest.
3. The homeowners did not stipulate to an eight-percent overhead markup on change order five, and the circuit court properly refused to award that markup.
4. The circuit court properly denied an eight-percent overhead markup on allowance overruns because the ambiguous phrase "actual costs" could not be construed to include overhead against the homeowners, the non-drafting parties.
5. The homeowners waived the contractual requirement that changes be made in writing when they requested or knew of the changes, failed to object to them or to the absence of written change orders, and accepted the additional work and materials.

Questions Presented

1. Whether the circuit court could order specific performance when the remedy was not pleaded or tried by the parties.
2. Whether prejudgment interest was mandatory on the contract damages despite the circuit court's characterization of the award as specific performance.
3. Whether the homeowners stipulated to an eight-percent overhead markup on change order five.
4. Whether the contract's allowance provision entitled All Star to an eight-percent overhead markup on allowance overruns.
5. Whether the homeowners waived the contractual requirement that changes be documented in writing.

Disposition

reversed_and_remanded