English Estates, Inc. v. Champion Kearney, LLC

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English Estates, Inc., doing business as ServPro of Lincoln, appellee, v. Champion Kearney, L.L.C., appellant.

No. A-22-074

Court of Appeals of Nebraska

December 6, 2022

THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).

Appeal from the District Court for Buffalo County: Ryan C. Carson Judge, on appeal thereto from the County Court for Buffalo County: Gerald R. Jorgensen, Jr., Judge. Judgment of District Court affirmed.

Jared J. Krejci, of Smith, Johnson, Allen, Connick & Hansen for appellant.

David C. Briese, of Crary, Huff, Ringgenberg, Hartnett & Storm P.C., for appellee.

Moore and Riedmann, Judges.

MEMORANDUM OPINION AND JUDGMENT ON APPEAL

Riedmann, Judge.

INTRODUCTION

Following severe flooding in the city of Kearney in July 2019, English Estates, Inc., doing business as ServPro of Lincoln, (ServPro) performed restoration work at the AmericInn, owned by Champion Kearney, LLC (Champion). A dispute arose as to the work being performed and Champion terminated ServPro's services. Thereafter, ServPro brought suit in the county court for Buffalo County to collect unpaid amounts under the alternate theories of breach of contract and quantum meruit. A jury returned a verdict in favor of ServPro in the amount of $28,598.01. Champion appealed to the district court for Buffalo County, which affirmed the county court's judgment. Assigning various evidentiary errors and errors in instructing the jury, Champion appealed to this court. We affirm.

BACKGROUND

ServPro is a disaster recovery team that provides restoration and remediation services following physical damage to real property. It is owned by Matthew Marchese. Once ServPro's services are requested, it assesses the damage on site. Oftentimes, they are unaware of the extent of services needed until day two or three of a job. Consequently, ServPro is unable to provide an estimate of cost upon initial assessment. Instead, they issue a rough order of magnitude (ROM), which is a "guesstimate" of the cost. That allows the owner to decide whether they can afford the repair work, whether financing is needed, or if an insurance claim should be filed. By definition, the ROM can decrease 25 percent or increase 50 percent.

As it relates to a flooding event, ServPro's services can include an assessment, mitigation services, mold remediation demolition, and rebuild services. Its mitigation efforts are to help prevent further damage or secondary damages and are considered emergency service.

Following the Kearney flooding of July 9, 2019, ServPro was called by another agency to perform work on its building. When it arrived in Kearney on July 10, the only available parking was in Champion's parking lot, so the ServPro employees asked if they could park their trailer in the hotel parking lot. The employees then discovered that the Champion staff was trying to mitigate the flood damage at the hotel themselves, so ServPro's marketing manager offered ServPro's assistance to Misty Lingle, Champion's hotel manager at AmericInn. Champion accepted their offer. ServPro ultimately provided its services to a number of businesses in the Kearney area.

After Lingle indicated she would like ServPro's assistance, project manager, Mike Vogel, took over. Lingle did not have approval authority, so she contacted the area manager of the hotel, Viral Patel, who was in Texas. Via a speakerphone conversation among Lingle, Vogel, and Patel, ServPro was authorized to begin work. Lingle testified that when she arrived at work on July 11, ServPro was already there tearing up carpet.

The parties dispute the events that occurred subsequent to Champion retaining ServPro's services; therefore, we will set forth each party's version.

ServPro's Account of Events.

According to Marchese, Vogel sent a ROM to Patel to be signed on July 12, 2019, along with ServPro's contract and authorization to proceed, but they were not returned. Marchese testified that Patel indicated he was unable to print the documents and that he would print them when he arrived at the site. Patel's arrival to Kearney was delayed, and by the time he arrived in Kearney, ServPro was about 3 days into the project and 75 to 85 percent of the work had been completed.

The email message that accompanied the ROM indicated that it was a "rough pre-lim estimate to get the facility dry, and mold free." It indicated it was "very rough" due to ServPro's uncertainty "of all that [Champion] want[s] us to do at this point." The ROM set forth a description of the work and the cost for each item. It reflected a total price of $63,462.72. Marchese testified that using the percentage variation of a ROM, the estimate equated to somewhere around a "90-plus-thousand-dollar top end of the estimate" which he probably would have increased if they were going to see the project through to the end.

Marchese arrived at the hotel on July 11 or 12, 2019, and identified the hotel as "grossly contaminated and destroyed." He described couches and chairs floating with dead fish on the lobby floor with instant mold growth. "It was a disaster." Marchese planned to do a walk-through of the hotel with Patel when Patel arrived to explain what had been done and what was left to do, but Patel immediately requested that Marchese discount the price. As Marchese attempted to advise him on the measures that needed to be taken, Patel was resistant to his proposed work. Marchese walked him through other buildings where both ServPro and a competitor were performing services to show him the difference between the proper way to mitigate and the improper way.

According to Marchese, at one point in their initial meeting, Patel offered to "just write [Marchese] a $5,000 check right now and we call it good." Marchese declined based upon the financial investment ServPro had already made in the mitigation and because his company does not do "sweetheart deals." Patel then threatened to pay him nothing and let him "fight for the whole thing in court."

At some point, Patel told Marchese he was only paying $50,000. When Marchese realized that he might be out everything they had already expended, he agreed to Patel's offer. Marchese expressed his doubt that Patel would actually pay him. Therefore, he sent Patel a text message on July 16, 2019, outlining the conditions to which they had agreed. The message began "I need you to commit to $50,000 to Execute the plan that we discussed yesterday." He then set out the work to be included and what would be excluded. He requested payment "half today and the remaining half in 2 days when [sic] are complete with that process." He requested confirmation of their agreement within 2 hours and stated "This is the absolute best I can do for you. I estimate the project total to be between $70,000 and $80,000 without the pool area included."

According to Marchese, the $50,000 was a settlement agreement and not an agreed price for the work. Also, Marchese explained that $50,000 would cover some of his costs that he already had into the project. Despite Patel's reply to the text agreeing to pay $50,000, Champion did not make any additional payment at that time.

When Marchese had not received payment, he called Patel but was unable to reach him. The following day, he sent a text message advising that ServPro had reached substantial completion and requesting payment. Marchese called Patel on July 18, 2019, to discuss the nonpayment to which Patel responded that 15 percent of the work was uncompleted. Patel indicated he was willing to pay an additional $35,000 for a total of $45,000 ($10,000 having previously been paid on July 16). Marchese advised him that he was not reducing the amount any further. Marchese followed up with a text message at 11:48 a.m., reiterating that he was not willing to accept anything less than $50,000 and that he needed the remaining balance paid that day. He offered to accept a payment of $45,000 if that was what Patel was willing to pay and asked Patel to let him know when the transfer was complete and that they would "discuss the rest at that time."

Instead of responding to Marchese, Patel emailed Vogel at 12:13 p.m. on July 18, 2019, although Patel had not had any contact with him since the second day ServPro was on the project. Patel advised Vogel that ServPro did not finish the project and that Champion was stopping any additional work by ServPro. He continued, stating he would

transfer a total of $35,000 ($10,000 of which has already been charged on my credit card) to the routing and accounting number you provided. Reply back with your agreement that the hotel will no longer owe any sum beyond that and that it will be clear of anny [sic] additional charges.

Patel forwarded a copy of that email to Marchese at 12:42 p.m.

Patel then called the ServPro office, indicating that he wanted an invoice showing he owed $35,000. He was transferred to Jennifer Adkisson, an account representative, who called Marchese to see if that would be OK, and Marchese authorized an invoice for $35,000. He recalled specifically advising Adkisson that Patel knew it was not the final invoice, but if he wanted something that said he needed to pay $35,000 now that would be fine. Adkisson issued the invoice and a cover letter that contained release language dictated by Patel that stated "Receipt of the payment in full will hold AmericInn free and clear of any other charges." Marchese denied knowing anything about requested release language at the time Adkisson requested permission to send the invoice. Once he saw the invoice after the money transfer had been received, he questioned Adkisson about the release language and she told him Patel told her to include...