Shelter Products v. Steelwood Construction

When a contract is terminated "for convenience" and not "for cause," a general contractor cannot deduct their damages from the amount awarded for work completed by a subcontractor.

General contractor appeals summary judgment in favor of subcontractor. General contractor contracted with subcontractor for work on a roof. Included in their contract was a provision allowing the general contractor to terminate agreement with seven days notice "without cause and without prejudice" and, if terminated, the general contractor would pay for work completed. General contractor terminated contract "for convenience" and refused to pay for work completed or supplies. The trial court held that when the contract was terminated "for convenience," the subcontractor should have had the opportunity to fix defects and was never given the opportunity to do so. On appeal, the general contractor cites five assignments of error. The general contractor claimed the subcontractor failed to show costs claimed the trial court erred in awarding overhead costs. The first two issues were unpreserved by the general contractor for appeal. The general contractor then claimed the trial court should have offset the award with costs to repair defective work done by the subcontractor. The Court of Appeals found the trial court correct, and held the general contractor was not entitled to offset costs caused by termination "for convenience." This finding was based on persuasive authority only. Errors four and five dealt with a provision in the contract stating the subcontractor was responsible for liens by suppliers. The trial court found because the chain of events stemmed from the general contractor, the subcontractor was not responsible for the subsequent liens, and the Court affirmed. Limited judgment affirmed, appeal for "supplemental limited judgment" dismissed.