Date: 07-11-2013

Case Style: Rick Wolfe Roofing & Construction, Inc. v. Copperchase Condominium Owners' Association

Case Number: CJ-2011-1627

Judge: Lisa T. Davis

Court: District Court, Oklahoma County, Oklahoma

Plaintiff's Attorney: Rick L. Denker and Jack Dawson and Amy Lynn Alden, Joi McClendon

Defendant's Attorney: Gregory Pierre Chansolme, L. David Pomeroy, Lance E. Schneiter, Leif Eric Swedlow

Description: Rick Wolfe Roofing & Construction, Inc. sued Copperchase Condominium Owners' Association on a breach of contract theory claiming:

1. That Wolfe is an Oklahoma Corporation doing business in the State of Oklahoma; that the Defendant, CCOA, is an Oklahoma Domestic Not for Profit Corporation doing business in the State of Oklahoma; and that the cause of action herein complathcd of arose in Oklahoma County, State of Oklahoma; and this Court has proper jurisdiction and venue over the subject matter and parties hereto.

2. That at the request of CCOA, Wolfe provided temporary repairs to the roof at Copperchase Condominiums in Oklahoma County, Oklahoma, during the months of April and May, 2010.

3. That Wolfe completed the temporary repairs to the said roof, but CCOA has refused and failed to pay Wolfe for such labor and materials.

4. That on or about June 16, 2010, Wolfe and CCOA entered into a Contract For Roofing Instailation for the premises located at 11300 N. Pennsylvania in Oklahoma City, Oklahoma County, Oklahoma.

5. That pursuant to the said Contract, Wolfe was to provide equipment, labor and materials to re-roof the premises for an estimated cost of $1,034,586.

6. After Wolfe had completed a substantial amount of work on the roofing project, Wolfe’s services were terminated without just cause or reason and in breach of the said Contract.

7. That as a result of the acts of CCOA as aforesaid, Wolfe was prohibited from completing the roofing project.

8. That as a result of the said acts of CCOA and their breach of the Contract, Wolfe has sustained damages in an amount in excess of Ten Thousand Dollars ($10,000.00) for non-payment of labor and services rendered and for loss of profits.

9. That Wolfe is entitled to attorney fees for labor and services provided pursuant to 12 0.8. § 936.

WHEREFORE, premises considered, the Plaintiff, Rick Wolfe Roofing & Construction, Inc., prays for judgment against the Defendant, Copperchase Condominium Owners Association, Inc., for actual damages in an amount in excess of $10,000.00, with pre-judgment and post-judgment interest thereon, for its attorney fees and costs ofthis action, and for such other, further and different relief which the Court may deem just and proper.

CCOA for its answer states as follows:

1. CCOA admits the allegations contained in Paragraph 1 of the Petition.

2. CCOA denies the allegations contained in Paragraph 2 of the Petition.

3. CCOA denies the allegations contained in Paragraph 3 of the Petition.

4. CCOA admits the allegations contained in Paragraph 4 of the Petition.

5. Admit.

6. Deny.

7. Deny

8. CCOA denies the allegations contained in Paragraph 8.

9. CCOA denies the allegations contained in Paragraph 9.

AFFIRMATIVE DEFENSES

10. Wolfe breached the parties’ contract and is not entitled to any relief.

11. Failure to state a claim for relief.

12. Failure of consideration.

13. Setoff.

14. Payment.

15. Waiver.

16. Acquiescence.

17. Accord and satisfaction.

18. Such fiwther defenses as discovery may reveal.

WHEREFORE, premises considered, Defendant Copperchase Condominium Owners’ Association, Inc. prays that the Plaintiff take nothing from this action, and that CCOA be accorded the relief set forth below, together with reasonable attorney’s fees and costs of this action and such other and fbrther relief as the Court deems just.

COUNTERCLAIM

CCOA for its Counterclaim against Wolfe, states:

19. CCOA entered into a contract with Wolfe on June 16, 2010, whereby Wolfe agreed to provide labor and materials to repair storm damage to the premises located at 11300 N. Pennsylvania Avenue in Oklahoma City, Oklahoma County, Oklahoma.

20. Wolfe’s work was substandard and not performed in a workmanlike manner as agreed.

21. The effects of the defective work and materials, include, but are not limited to:

a. water intrusion into the attics of buildings;

b. water intrusion into the interior of several units;

c. improperly installed flashing;

d. improperly installed decking;

e. defective venting pipes and pipe caps; and

f. improper fastening of roofing materials.

22. Wolfe thereafter refhsed to correct the defects and ultimately refbsed to perform the work or supply the materials agreed upon.

23. As a result of Wolfe’s breach of contract and defective work and material, CCOA terminated the parties’ contract on or• about October 11, 2010. Prior to termination, CCOA had paid Wolfe $296,267.20.

24. CCOA has been required to correct the defective work and to complete the job agreed upon by using other contractors, at additional expense.

25. The costs to remedy Wolfe’s defective work to date exceed $1,000,000.00 and are continuing to accrue.

26. Wolfe’s failure to perform constitutes breach of contract for which CCOA’s damages exceed $75,000.00.

27. Wolfe made representations to CCOA concerning its specific ability to perform the work needed, which it knew were untrue, in order to induce CCOA to enter into the contract.

28. Wolfe expressly warranted all work to be free of defects in material or workmanship for (5) years.

29. As a putatively skilled contractor, Wolfe made specific recommendations and selections of materials and methods, thereby creating a warranty of fitness for the CCOA’s specific purpose of restoring leak-free roofing at the premises capable of lasting thirty (30) years.

30. Wolfe breached its express warrant.

31. Wolfe breached the implied warranty of merchantability.

32. Wolfe breached the implied warranty of fitness for ordinary and/or specific purpose.

33. CCOA has been damaged by Wolfe’s multiple breaches of warranty in an amount in excess of $75,000.00.

34. As a result of all the above, CCOA has incurred and continues to incur liability to third parties, namely, condominium owners to whom CCOA owes Kial duties.

35. CCOA is entitled to recover from Wolfe all amounts it suffers in liability to its owners/members, as a matter of indemnity for such losses.

36. The amount of damage suffered by CCOA for which Wolfe owes indemnity exceeds $10,000.00.

WHEREFORE, premises considered, Copperchase Condominium Owners’ Association, Inc. prays for judgment against Rick Wolfe Roofing & Construction, Inc. in the amount of the costs to correct the defective work and materials and the costs of completion of the job, together with its attorney’s fees and costs of this action and such other and further relief as the Court deems just.

Plaintiff responded to Defendant's counterclaim as follows:

1. Plaintiff admits the allegations contained in Paragraph 19 of Defendant’s Counterclaim.

2. Plaintiff denies the allegations contained in Paragraphs 20,21 and 22 of Defendant’s Counterclaim.

3. Plaintiff denies that CCOA terminated the parties contract on or about October II, 2010 as a result of breach of contract and defective work material, but Wolfe does admit that CCOA has paid Wolfe $296,267.00 as stated in Paragraph 23 of Defendant’s Counterclaim.

4. Plaintiff denies the allegations contained in Paragraphs 24,25,26,27,28,29,30, 31,

32, 33, 34, 35, and 36 of Defendant’s Counterclaim.

AFFIRMATIVE DEFENSES

5. Breach of Contract by the Defendant

6. Waiver and estoppel.

7. Failure of consideration.

8. Failure to state a claim for relief.

9. Laches.

10. Statute of limitations.

11. Setoff.

12. Payment.

13. Acquiescence

14. Accord and Satisfaction

15. The Plaintiff reserves the right to raise such additional defenses as they are discovered.

WHEREFORE, having fully answered, Plaintiff, Rick Wolfe Roofing & Construction, Inc., prays the Court dismiss the Defendant, Copperchase Condominium Owners’ Association, Inc’s Counterclaim and that the Defendant recover nothing, and the Plaintiff be awarded its attorney fees, costs and other relief the Court may deem just and proper.

Defendant moved for summary judgment, asserting:

Copperchase Condominium Owners Association (“Copperchase”), pursuant to Okia. Stat. tit. 12 §2056 and Rule 13, Rules for the District Courts of Oklahoma, respectfully moves this Court for judgment in its favor and against Rick Wolfe Roofing and Construction, Inc. (“RWRC”), as there exists no substantial controversy as to any material facts and Copperchase is entitled to judgment as a matter of law. The Court authorized submission of this Motion after granting dismissal of RWRC ‘S claims for failure to appear at Pretrial Conference on April 3, 2013.

INTRODUCTION

In May, 2010, a massive hailstorm damaged the 19 residential buildings and clubhouse building that comprise the Copperchase condominiums in Oklahoma City. Through its property manager Copperchase sought bids for the re-roofing of the property. RWRC made a written proposal and represented that it had the experience and staff to do the job by August. Based on these claims, Copperchase signed a Contract. However, RWRC had never roofed a property so large, all of its work was subcontracted out, and it ignored critical specifications.

Perhaps unsurprisingly, complaints arose even while the work was ongoing. Though the Contract contemplated completion by August, only one third of the project had been roofed by the end of July. In September, Copperchase retained both a general contractor and a professional engineer. The engineer uncovered serious underlying problems with the parts of the property that had been roofed to that point. These problems could only be corrected by removing all of the roofing, fixing the underlying defects, and then re-roofing properly. The problems included matters of poor workmanship and outright breaches of the roofing contract. Despite being given an opportunity to correct these problems, RWRC did not do so. Copperchase terminated the relationship in October, 2010.

Before this lawsuit began Copperchase had paid RWRC $296,267.20 and had paid $76,247.64 to satisfy the lien of RWRC’s unpaid roof material supplier. Although re-doing the defective work plus completion of the rest of the roof replacement was more than RWRC’s contract price, the money actually paid to RWRC and its supplier is a definite measure of Copperchase’s damages based solely on undisputed facts.

This Court has previously ruled that because this lawsuit was filed after the Oklahoma Roofing Contractors Act went into effect, RWRC had to maintain a valid registration with the Oklahoma Construction Industries Board in order to pursue its claims. RWRC made no attempt to obtain the required registration. Copperchase’ s claims are mutually exclusive of RWRC’ s claim, which primarily sought the balance of the roofing contract price.

STATEMENT OF UNDISPUTED FACTS

1. After a major hailstorm in May, 2010, Mark Mann, acting as the contracted property manager for Copperchase, sought proposals for re-roofing the Copperchase property generally located at 11300 N. Pennsylvania Avenue. Rick Wolfe, owner of RWRC, provided a written proposal (Exhibit 1) and represented to Mann, for the purpose of inducing acceptance of his proposal, that his company would perform the roofing work as detailed in the written proposal, and that RWRC had the experience, skill, and staff to handle the project, as compared to other bidders who would have to rely on subcontractors. He also promised that four roofing crews would be devoted to the project until its completion. Mann passed along those representations to the Board Members of Copperchase. Exhibits 2, 3 (Affidavits of Hopkins, Prime).

2. In reliance on the Proposal and the representations made by RWRC, Copperchase and RWRC entered into a written Contract. Exhibit 4.

3. Contrary to the representations made to induce the Contract:

a. RWRC had never before contracted for or completed a roofing project even one third the size of Copperchase. Exhibit 5, Deposition of Wolfe, pp. 33, line 14 top. 40, line 21;

b. The entirety of the labor needed to fulfill the Contract was subcontracted to Miguel Flores. Exhibit 5, pp. 37, line 24 to p. 38, line 8; Exhibit 6, Depo. of Flores, pp. 12, line 19 to p. 13, line 14; Exhibit 7 (RWRC/Flores subcontract);

c. Given that Mr. Wolfe testified that a “crew” consisted of 9 workers (Exhibit 5, p. 153, lines 11-20), four roofing crews (thus, a total of 36 workers) were never deployed at Copperchase, to wit, the checks produced by Flores as his records of all of the labor costs incurred upon the Contract reflect payments to a cumulative total of only 23 individuals. Exhibit 6, p. 21, lines 9-24 (acknowledging that checks show all payments made to workers); Exhibit 8 (Pli-redacted checks produced by Flores);

d. Wolfe, as President of RWRC, did not have sufficient basic knowledge of standard shingle roofing practices. For example, at his deposition he claimed that 1/8 inch spacing of decking sheets — as explicitly required by the shingle manufacturer and by warnings printed on the sheathing itself — was unnecessary. He claimed that spacing provides “ventilation” which would be provided instead by ridge vents. Exhibit 5, pp. 254, line 22 to p. 256, line 7. The spacing required by both the shingle manufacturer and the decking supplier allows for expansion and contraction of decking material with temperature changes, preventing buckling and failure of the shingled roof surface. It has nothing to do with ventilation. Exhibit 9, Affidavit of Parker, ¶4a.

4. RWRC breached the Contract by:

a. Not ordering or purchasing any skylights as required by the Contract, despite admittedly having received sufficient funds to have placed such an order. Exhibit 5, pp. 99, 145-146, 155, 263-264.

b. Not specifying, in the Flores Subcontract, the use of “H-clip” decking spacers. Exhibits 1,4, 7.

c. Not using any H-clip decking spacers. Exhibit 5, pp. 84-85.

5. The workmanship of the partial work performed upon the Contract was deficient. For example, but without limitation:

a. For the manufacturer’s warranty on the shingles to be valid, the decking had to be installed with a specified minimum space between each sheet. Exhibit 9, ¶4 (Affidavit of Parker). The particular decking used by RWRC typically had this instruction stamped directly on the material. Exhibit 9, ¶4a and referenced photos. The decking was not installed with the minimum spacing. Exhibit 9, ¶4. Using the “H-clips” called for in the Contract would have ensured the minimum spacing. Exhibit 9, ¶4b, and Exhibit 9-C, TECO TechTip manufacturers’ info, for H-clips, page 2.

b. RWRC failed to properly or sufficiently install felt underlayment and flashing on several of the roofing areas which RWRC claimed it had fully shingled. Exhibit 9, ¶4d, f.

c. On the various roofing slopes that RWRC claimed to have fully shingled there were numerous over and under-driven nails, incorrectly installed vents, missing components, and incorrectly installed ridge vents. Exhibit 9, ¶4.

d. None of the above defects are tolerated as being consistent with good and workmanlike quality. Exhibit 9, ¶4.

6. RWRC was paid $296,267.20 for invoices submitted to Copperchase for partial completion of work. Exhibit 10 (invoices & checks).

7. Several of the roofs RWRC claimed to have fully shingled began leaking by October, 2010, before any remedial work on them had been started and without any additional severe weather occurring since the May 2010 storm. Exhibit 11 ¶2 (Affidavit of Lowther).

8. In August, Copperchase hired CR1 Roofing to serve as a general contractor as to all damages at Copperchase (excluding interiors of individual units), which was to include supervision of the correction and completion of work for which RWRC was responsible pursuant to its Contract. Exhibit 11 ¶2 (Affidavit of Lowther). CR1 Roofing gave RWRC an opportunity to return to Copperchase to repair its defective work, but RWRC failed to do so, leading to RWRC’s termination in October, 2010. Id.; Exhibit 12 (Termination letter).

9. After termination of RWRC, Copperchase paid $76,247.64 to satisfy the lien of RWRC ‘S unpaid roof material supplier. Exhibit 11, ¶6; Exhibit 13 (check)

10. CR1 Roofing removed the defective RWRC roofing work from 55 residential units and completed the re-roofing of all 93 units of the Copperchase property. The material used by RCRW was unsalvageable except that improperly installed decking was substantially salvaged by cutting appropriate gaps into the un-spaced joints. Exhibit 9, ¶5.

11. The total cost of CRJ’s re-roofing work exceeded $2,100,000.00, not including work on other aspects of the Copperchase property included in CRI’s general contract for repairs of all of the storm-related damage. Exhibit 11 ¶8 (Affidavit of Lowther).

ARGUMENTS AND AUTHORITIES

Summary judgment should be granted when the evidentiary submissions show that no substantial controversy exists upon any material facts. Dist. Ct. Rule 13; Weeks v. Wedgewood Village, Inc., 1976 OK 72, 554 P.2d 780. Once the movant tenders its sufficient materials, the non-movants caimot rest on their pleading or make conclusory denials, but must show that evidence is available which will justify a trial. Weeks, 554 P.2d at 785; Runyon v. Reid, 1973 OK 25; 510 P.2d 943, 946; Loper v. Austin, 1979 OK 84, 596 P.2d 544, 545.

I. RWRC BREACHED THE CONTRACT.

Failure to perform what has been promised in a written contract constitutes a breach. Generally, Okla. Unif. Jury Inst. 23.21. Breach of a contract permits recovery of damages by the aggrieved party. Okia. Stat. tit. 23, §21. The Contract required, inter alia, the replacement of all of the skylights in the condominium property (Exhibit 4, §1(A)(12)), the use of “Hurricane clips” (also known as “H-clips”) with the specified decking (Id., §1(A)(3)), 3(B)), and the completion of all work “in a workmanlike manner.” Id. at §2(B). No payments would be due without a successful inspection. Id. at §5 and p.3. RWRC was to “make every reasonable attempt” to complete the entire project by August 15, 2010. Id. at p. 1 and §2(A).

Though over $296,000 was paid to RWRC, and another $76,247.64 was later paid to clear the lien claim of RWRC’s unpaid supplier, the undisputed facts show that no skylights were ever purchased or even ordered and no H-clips were mentioned as a requirement when RWRC subcontracted the project to Miguel Flores, nor were any ever used.

The poor workmanship in this case is beyond reasonable debate. The decking lacked required spacing, leaving the shingle manufacturer’s warranty doubtful; the underlayment was insufficient in some areas and missing in others; nails were overdriven and under-driven in large numbers, flashing was not installed correctly; ridge vents were literally installed upside down. See, Exhibit 9. Leaks arose before the work was finished. One striking example of RWRC’s poor workmanship is the following photograph taken by roofing specialist Kelly Parker:

* * * Photo omitted

This photograph shows a 4x8 foot sheet of roof decking protruding above the ridge of a shingled roof, with its underside and several nails exposed to the elements. No reasonable fact finder could deem this to be good workmanship. Copperchase’s damages from RWRC’s breach could be measured by over $2.lmillion cost of correcting and completing the work. However, to avoid any doubt about how much of the CRI’s contract was specifically tied to correction of RWRC ‘ s defective work, or whether that cost was reasonable, a conservative measure of the actual damages incurred by Copperchase would be the amount it actually paid to Wolfe and his supplier: $372,514.84. Okla. Stat. tit. 23 §21; Smoot v. B & J Restoration Services, Inc., 2012 OKC CIV APP 58, 279 P.3d 805 (upholding verdict for refund of paid contract price).

II. RWRC BREACHED ITS WARRANTY.

The Contract RWRC signed included a five year warranty, promising to repair or replace any defective work. RWRC failed to correct the defective work when demand was made in September 2010. Again, a refund of the money paid to RWRC and its supplier would be a proper measure of Copperchase’s actual damages.

III. RWRC FRAUDULENTLY INDUCED THE CONTRACT.

RWRC made several express representations to Copperchase’s contracted property manager, Mark Mann, with the intention that they be passed along to the Copperchase Board of Directors to induce them to decide to select RWRC’s proposal over several others. Included in those representations were assertions that RWRC was experienced and capable, that it would staff the project with four 9-person crews, that it would use H-clips on the new decking and that it would replace all of the skylights. RWRC had never completed a roofing project even one third the size of Copperchase before. RWRC did not actually have any staff, nor did RWRC’s sole labor subcontractor, Flores, ever actually deploy at least 36 workers to the project. RWRC never used a single H-clip or bought a single skylight. These undeniable facts are sufficient to support the conclusion that RWRC had fraudulent intent when it induced Copperchase to enter into the Contract. See, Z D. Howard Co. v. Cartwright, 1975 OK 89, 537 P.2d 345 (allowing

buyer’s fraud counterclaim in addition to counterclaims sounding in contract and warranty). Copperchase’s damages arising from RWRC’s fraudulent inducement of the Contract include, at the very least, the money Copperchase paid for work and materials which later had to be removed and re-done.

CONCLUSION

Copperchase seeks final judgment based on indisputable facts. The Contract was obtained by false premises. RWRC failed to comply with several express details of the Contract and left Copperchase’s roofs so defective that the job had to be redone. RWRC cannot recover on the balance of the grossly incomplete Contract. Instead, Copperchase is entitled — at the very least — to a full refund. Because the amount paid upon the failed Contract is known with certainty, a further evidentiary hearing on damages should not be needed.

Outcome: Before the Court is the Defendant’s Motion for Summary Judgment. The Court has previously nled that a partial judgment should be allowed upon Plaintiffs claims by default for failure to appear at the Pretrial Conference. No Respohse to the Defendant’s Motion was filed. Having considered the Motion and attached evidentiary materials, pursuant to OkIa. Stat. tit. 12 §2056, the Court finds that the Defendant’s Motion for Summary Judgment should be granted. It is therefore the order and judgment of this Court:

1. That judgment is entered in Defendant’s favor on Plaintiffs claims;

2. That judgment is entered in Defendant’s favor against Plaintiff on Defendant’s counterclaims for breach of contract, breach of warranty and fraud

3. Actual damages are hereby awarded to Defendant in the amount of $372,514.80.

4. Pursuant to Okla. Stat. tit. 23 §9.1, the Court further enters an evidentiary hearing to be conducted at a later date.

5. That pursuant to OlcIa. Stat. tit. 12 §936, §939, §940(A) and §942, Defendant is to apply for attorneys’ fees at a later date.

Plaintiff's Experts:

Defendant's Experts:

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