Millis Construction Co. v. Fairfield Sapphire Valley, Inc.

North Carolina Court of Appeals · Contracts

Contractsanticipatory breachrepudiationmaterial breachjury instructionscontractsanticipatory breachanticipatory repudiation

Facts

The parties had construction contracts under which plaintiff sought payment for work and retainage. According to defendant’s evidence, at a November 16 meeting Millis stated he was "busted," "belly-up," and could not complete the contracts unless he received retainage on building 7, even though the contract did not entitle plaintiff to that retainage until 30 days after building 7 was completed and building 7 was not yet complete. Plaintiff had performed work, invoiced it, and defendant had approved certain amounts as of November 16, but plaintiff never satisfactorily completed buildings 8, 9, and 10. The jury was asked only whether defendant breached the contract and whether plaintiff breached the contract, and was not instructed on anticipatory breach.

Issue

Did the trial court commit reversible error by refusing defendant’s requested jury instruction on anticipatory breach? More specifically, was there sufficient evidence that plaintiff repudiated the contracts before performance was due, thereby potentially excusing defendant from further performance?

Rule

A trial court must instruct on the law arising from the evidence, and failure to give a properly tendered written instruction that is correct in itself and supported by the evidence is reversible error if not given at least in substance. Repudiation occurs when a party makes a sufficiently positive statement that it will not or cannot substantially perform; a statement that performance will occur only if the other party satisfies a condition outside the contract constitutes repudiation. If that repudiation occurs before the time for performance, it is an anticipatory breach, and the non-repudiating party is relieved from further performance, though obligations to pay for work already performed, invoiced, and approved remain unaffected.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Blue Mesa Framing agreed to complete roof trusses for three townhomes in Boise, with 10% retainage payable 20 days after each unit passed final inspection. Two weeks before the completion date for the last two units, Blue Mesa's owner told the developer, Nora Vance, that the company was 'out of cash' and would not finish unless Nora released the retainage immediately, even though none of the units had yet passed final inspection.

If Blue Mesa later sues Nora for wrongfully hiring another framing company to finish the work, which is the strongest analysis?

Explanation. Repudiation occurs when a party makes a sufficiently positive statement that it will not or cannot substantially perform. A statement that the party can perform only if the other side satisfies a condition outside the contract qualifies as repudiation. Because Blue Mesa demanded retainage before it was due and did so before the time for finishing the remaining units, a jury could find anticipatory breach excusing Nora from further performance. But that would not automatically erase any obligation to pay for work already performed, invoiced, and approved. (Derived from Millis Construction Co. v. Fairfield Sapphire Valley, Inc. (n.d.).)