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Kelly v. Wagner

Supreme Court of Idaho

March 2, 2017

MICHAEL L. KELLY, d/b/a CHS ELECTRIC, Plaintiff-Counterdefendant-Respondent,

         2017 Term 2017 Opinion No. 26

         Appeal from the District Court of the First Judicial District of the State of Idaho, Kootenai County. Hon. Richard C. Christensen, District Judge.

         The judgment of the district court is affirmed. Costs on appeal are awarded to respondent.

          Bistline Law, PLLC, Coeur d'Alene, attorneys for appellant.

          Cameron Phillips, Coeur d'Alene, attorneys for respondent.

          JONES, Justice

         I. Nature of the Case

         This appeal arises out of a lawsuit brought by a contractor, Michael L. Kelly ("Kelly"), against his former client, Pamela Wagner ("Wagner"), alleging nonpayment of amounts due to him for the performance of construction work on certain property (the "Property"). The district court found in favor of Kelly and awarded him a total judgment of $13, 762.54 ($4, 694.64 of damages and $9, 067.90 of prejudgment interest). On appeal, Wagner argues that the district court erred in finding that Kelly was owed for the construction work. She further argues that the district court erred in awarding prejudgment interest to Kelly.

         II. Factual and Procedural Background

         In 2004, Wagner purchased the Property at a foreclosure sale. Shortly thereafter, Wagner approached Kelly, a licensed electrical contractor doing business as CHS Construction, with a list of repairs and other remodeling projects needed for the Property. Kelly provided Wagner with proposals for the projects listed. Over a period of 18 months, Kelly submitted roughly 40 proposals for various projects on the Property. This included converting two bedrooms into offices, installing French doors in the master bedroom, sanding and refinishing cabinets, constructing a rear entrance, painting the interior, and repairing water and mold damage. After each job was completed, Kelly submitted an invoice to Wagner and then reviewed the invoice with her line by line. After each invoice was reviewed, Wagner paid Kelly for the work done and let him know if she had additional jobs.

         In late 2005, Kelly failed to pay a bill that he owed to a subcontractor hired to work on a heating system on the Property. Id. The subcontractor filed a lien on the Property, notification of which was delivered to Wagner in November 2005. Id. Although the lien was eventually removed after Kelly paid the subcontractor the amount owed, the relationship between Kelly and Wagner did not recover. Wagner terminated Kelly shortly thereafter.

         On February 27, 2009, Kelly filed a complaint with the district court (the "Complaint"). The Complaint alleged that Wagner had failed to pay certain invoices in an amount exceeding $10, 000. Therein, Kelly requested money damages in the amount of the unpaid invoices along with pre and post judgment interest. On October 20, 2011, Wagner filed an answer and counterclaim (the "Answer" and the "Counterclaim"). The Answer provided that "[Wagner] admits that she has refused to pay certain invoices and affirmatively alleges she was justified in withholding payment." The Counterclaim alleged that Kelly "failed to perform in a workmanlike manner and failed to complete certain aspects of the agreed upon scope of work."

         On April 9, 2013, the district court conducted a hearing. At that hearing, Kelly submitted six invoices for the following work he had performed on the Property: (1) installing French glass doors; (2) moving furniture and appliances; (3) repairing water leaks on an exterior deck; (4) scraping snow and ice off of the deck; (5) custom woodwork; and (6) painting the middle floor. He then went through the invoices, one by one, and testified that he had not been paid for any of the work described therein. The amounts in the invoices totaled $10, 635, 32.

         On cross examination, Wagner's attorney questioned Kelly with respect to how he knew the invoices were unpaid. Kelly responded:

Because I would sit down with her when I gave her the invoice and she would pay me. She would get a copy of it and I would have a copy of it. She pretty much paid me on - when I gave her the invoices all the way up until the last batch she was given, we sat down and went over every one line per line.

         Later at the same hearing, Wagner's attorney asked "On those invoices that we have in evidence today, did you sit down with her and go over those invoices?" Kelly answered, "I don't know which exact invoices I sat down with her on or not. I can't testify either way."

         Wagner also provided testimony at the April 9, 2013 hearing. She testified that all of the invoices she had received from Kelly were paid. When confronted with her statement in the Answer that "Defendant admits she has refused to pay certain invoices, " she responded that "I did not owe him any money." Wagner then attempted to address each of the invoices individually, but was unable to match any of the submitted invoices with the checks she had paid to Kelly.

         In addition to receiving testimony at the April 9, 2013 hearing, the district court also addressed a motion to dismiss filed by Wagner. Therein, Wagner argued that the business transactions between Wagner and Kelly constituted an "open account" under Idaho law. Wagner reasoned that in order to recover on an open account, a claimant must provide evidence of all amounts received during the existence of the open account as well as proof of the services rendered. The district court rejected the motion. It reasoned that "I don't believe that the evidence of the law requires [Kelly] to break down each and every job that he ever did and how much he received and how much he applied each payment to . . . what work he performed."

         On July 15, 2013, the district court issued a Decision Upon Court Trial (the "Decision"). Therein, the district court held that:

Kelly has the burden to prove the unpaid invoices, and has testified to contractual practices between the parties and method of receiving payment. The court finds that testimony persuasive in establishing that Kelly performed work for Wagner for which he has not been paid in the amount of $9, 429.64.

         The $9, 429.64 amount constituted the sum of the allegedly unpaid invoices submitted to the district court excepting the invoice for custom woodwork. With respect to the woodwork invoice, the district court found that:

That invoice confuses because it reflects work ordered on two dates. At the top of the invoice it notes 12-05 and that the bottom it shows 1-3-06 with a 12-05 completion date. Possibly the January entry was an error which should have reflected work requested in November. Kelly's proof falls short on that invoice.

         With respect to Wagner's argument that she had paid the amounts due in the ...

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