Iowa Court of Appeals Affirms Townhome Developer’s Termination of Contractor and Award of Attorney Fees
In Spring Crest Townhomes WDM, LLC v. Mickle Elec. & Heating Co., Inc., 2024 WL 3290392 (Iowa Ct. App. 2024), the Iowa Court of Appeals affirmed the district court’s ruling that a townhome developer properly terminated its contractor, and it upheld the district court’s award of attorney fees to the townhome developer. Spring Crest Townhomes WDM, LLC owned a townhome development, and it hired Mickle Electric & Heating, LLC to complete electrical work in three buildings in the development. Mickle failed to complete the electrical work by the written contract’s deadline, and in response to Spring Crest’s inquiries into the issue, Mickle provided a new updated schedule for completion. Under that new schedule, the electrical work was to be completed on one of the townhomes by August 12, and by August 31 for the other two townhomes. By August 12, Mickle had not completed the electrical work on the first townhome, so Spring Crest sent Mickle a letter on August 13 with a deadline of August 15 to complete all work on the three buildings. Mickle failed to meet that deadline, so Spring Crest sent Mickle a notice of termination for cause on August 16. Spring Crest then hired a replacement contractor to complete the electrical work.
Spring Crest then sued Mickle for the additional amounts it paid the replacement contractor to complete the work, and Mickle counterclaimed for payment of work completed before termination but not yet billed. After a bench trial, the district court ruled that Mickle breached the contract and awarded Spring Crest its damages, but it offset that damage amount by the amount Mickle was due for work completed prior to termination. The district court also awarded Spring Crest attorney fees as the prevailing party, per the parties’ written contract. Mickle appealed and argued that it did not breach the contract and that Spring Crest was not the sole prevailing party so it should not have been awarded attorney fees. Spring Crest cross-appealed and argued that its damage amount should not have been offset by the amount Mickle said it was owed for work performed prior to termination.
On the issue of Mickle’s breach of contract, the court stated that under the parties’ written contract “Spring Crest had the right to terminate the contract if Mickle ‘at any time and for any reason’ failed to perform its work under the contract ‘in a diligent, efficient, timely, workmanlike, safe and careful manner.’” The court concluded that Mickle’s failure to meet its own August 12 deadline on its own updated schedule qualified as “cause” for Spring Crest to terminate Mickle under that contract provision. In rejecting Mickle’s argument that it was impossible for it to complete the work by the deadline because of the fault of others, the court stated, “In order to excuse nonperformance, the term must be objectively impossible to perform. The impossibility of performance cannot be due to the fault of the nonperforming party.” Because the evidence did not show that it was objectively impossible for Mickle to timely complete its work by the deadline, the court concluded that the termination was proper.
On the attorney fee issue, the court noted that the parties’ contract provided for an award of attorney fees to “the” prevailing party. The court explained that “the use of ‘the prevailing party’ makes clear only a singular party can be the prevailing party rather than multiple parties.” Therefore, either Spring Crest or Mickle can be the prevailing party, not both as Mickle contends.” Because Spring Crest “prevailed as a whole after establishing Mickle breached the contract,” even though Mickle prevailed on its offset claim, the court concluded that Spring Crest was “the” prevailing party and entitled to attorney fees.
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