AQUA PALACE, LLC, an Iowa Limited Liability Company, d/b/a AQUA PALACE SPA & POOL, Plaintiff-Appellee,
ROB and LISA JOHNSON, Defendants-Appellants.
from the Iowa District Court for Pottawattamie County,
Kathleen A. Kilnoski, Judge.
appeal from the district court's ruling on the
plaintiff's breach-of-contract action.
J. Rater of Rater Law Office, Council Bluffs, for appellants.
A. Harvat of Houghton Bradford Whitted PC, LLO, Omaha,
Nebraska, for appellee.
Considered by Vaitheswaran, P.J., and Potterfield and Tabor,
VAITHESWARAN, PRESIDING JUDGE.
Lisa Johnson contracted with Aqua Palace, LLC to design and
install a custom swimming pool in connection with a
large-scale renovation of their home in Omaha, Nebraska. The
project was plagued by delays, changes, and cost overruns.
Eventually, the Johnsons stopped making payments to Aqua
Palace and terminated the contract.
Palace sued the Johnsons for breach of contract. Following
trial, the district court entered a $92, 439.66 judgment in
favor of Aqua Palace and ordered the Johnsons to pay Aqua
Palace's attorney fees of $54, 143.89.
appeal, the Johnsons challenge (1) Aqua Palace's
entitlement to charges included in a running change order;
(2) amounts they characterize as an illegal penalty; (3) an
$18, 000 charge they view as a "duplicate bill";
(4) the amount of sales taxes; (5) Aqua Palace's failure
to treat a $5000 "design fee" as a deposit; (6) the
amount of the attorney-fee award; and (7) the computation of
the contract, any changes were to be in writing. Pursuant to
this provision, the Johnsons signed several change orders for
specific items. The Johnsons do not take issue with the
charges in these change orders. They challenge a
"running change order," given to them several
months into the project and listing additional charges for a
variety of items. They assert, "Aqua Palace had a duty
to notify [them] they were being charged extra over and above
the contract and agreed upon change orders on the day in
question or very soon thereafter," so they could
"make changes to the project or . . . elect cost saving
measures." In their view, "The running change order
was never signed by [them]" and "was never a valid
contract between the parties."
district court was not persuaded by this argument. The court
cited "the contract," which "explicitly stated
that additions to the contract were due when they were
invoiced." The court further stated: "Whether or
not the parties had written change orders, running change
orders, or no change orders, the written contract was clear
that once the 'extras' were ordered and installed,
the amount invoiced was due." The district court
determined the contract authorized the invoicing of work
requested by the Johnsons "with or without a written
district court's reading of the contract was not
erroneous. See NevadaCare, Inc. v. Dep't of Human
Servs., 783 N.W.2d 459, 465 (Iowa 2010) (setting forth
standard of review); see also In re Estate of
Woodroffe, 742 N.W.2d 94, 106 (Iowa 2007) ("The
intent of the parties is controlling, and intent is to be
determined from the language of the contract, when
possible."). The contract obligated the Johnsons to pay
for the items included in the running change order whether or
not the order was signed or given to them on or before the
charges were incurred.
contract expressly stated invoices would satisfy the
change-order requirement. The pertinent language was as
follows: "Extras constructed or installed by the
Contractor at the request of the Owner with or without a
written change order, shall be deemed additions to this
contract, and once ordered or installed an invoice for the
order shall be given satisfying the written change
requirement and billed accordingly." The contract
additionally stated, "Extras, including Electrical,
Plumbing w/ required permits are in addition to the contract
price and shall be paid as billed. Progress payments and
payments for extras are due as requested and/or billed."
And, the contract stated:
If the Owner request changes or modifications in the pool
plan requiring additional expenses or charges to the
Contractor, the Owner shall pay the Contractor the amount
invoiced for these extras upon being invoiced or upon
installation, which ever shall be requested. The cost of all
extras, if any, shall be in addition to the contract price.
question becomes whether the Johnsons requested the changes
contained in the running change order. See Nepstad Custom
Homes Co. v. Krull, 527 N.W.2d 402, 407 (Iowa Ct. App.
1994) ("A builder may recover from an owner for extras
ordered or agreed upon which were not covered by the
contract."); Palmer v. Glasbrenner, No.
03-0492, 2004 WL 1159736, at *3 (Iowa Ct. App. May 26, 2004)
("A contractor may recover for extra work only if it was
performed with the knowledge or consent of the adverse
party."). The district court found, "[T]he extra
work performed by Aqua Palace after the written contract was
executed was done at Johnsons' request." The court
gave little weight to Lisa Johnson's testimony that she
had "no idea there was a running change order." The
court stated, "While Johnsons were disgruntled about
Aqua Palace's timing in providing the written invoices or
change orders, they presented no evidence that the materials
they ordered were not supplied or that the work by Aqua
Palace was not done at their request." Substantial
evidence supports the court's finding. See
NevadaCare, Inc., 783 N.W.2d at 465 (reviewing fact
findings for substantial evidence).
Johnsons began making changes to the original plan almost
immediately after the contract was executed. Aqua
Palace's co-owner, Scott Rolenc, recalled that, as of the
first day on the job, "the whole scope . . .
changed." The Johnsons expanded the project to include a
"retaining wall . . . and pavers." The change
required Aqua Palace to "[s]upply 40 ton of selected
gray natural limestone blend . . . and [i]nstall a 3-tiered
design retaining wall, with excavation work, and selective
backfill material." The company was forced to
"re-change [its] excavation position." The Johnsons
also "[i]ncrease[d] [the] patio area around [the] spa,
including adding [a] concrete base." They added three
"staircases of solid stone," "a custom
spa," barbecue walls, and a ¶]et system" for
the pool. In light of the changes, the Johnsons'
architect insisted on adding drain lines behind the retaining
walls. Rolenc testified he "talked about the additional
charges" with the Johnsons. The Johnsons concededly
approved these modifications in writing.
the modifications included in the running change order flowed
from these approved modifications or were necessary to comply
with instructions from the general contractor or architect.
For example, the general contractor limited access to the
pool area, forcing Aqua Palace to incur costs for the rental
of a truck to run concrete to the upper deck. Planned
landscaping was also altered, requiring the installation of
additional drain lines and an increased number of pavers. In
sum, the district court as fact finder reasonably found that
the Johnsons authorized the substantive work billed in the
running change order.
changes, combined with required coordination among the
various home-renovation projects, resulted in delays. The
running change order included charges for the delays. The
district court approved these charges after finding "the
delays were caused by Johnsons or their agents."
Substantial evidence supports the finding.
Johnson agreed "communication" on the projects
"was poor." Although she laid the blame for the
lack of coordination at Aqua Palace's feet, many of the
delays were occasioned by the contractor, subcontractors, or
architect the Johnsons hired. For example, Aqua Palace
workers had to wait for painters to finish their work on a
garage and were forced to repair a sand bed that was damaged
in the process. Rolenc testified, "When that contractor