W. F. Construction Company v. Charlotte

W. F. Construction Company, Inc. brought suit to foreclose a contractor's lien against real property owned by Charlotte Kalik in Sun Valley, Idaho. The district court found that the owner was indebted to the contractor for the amount claimed in the lien, minus a small offset. The owner appeals from the judgment allowing foreclosure of the lien and granting the contractor its attorney fees. We affirm. In September of 1977, the parties entered into an oral agreement for the construction of a house by the contractor on the owner's property. The contractor prepared and delivered to the owner a standard contract form recommended by the American Institute of Architects (AIA) which contained terms relating to the total cost of the project and the contractor's fee. Neither party signed the AIA contract, but the court admitted it into evidence to outline the contents of the parties' oral agreement. The AIA form contract stated that the owner was to reimburse the contractor for the cost of the work, plus a contractor's fee of 10% of the direct and indirect costs of the work. The direct costs were the actual costs of material and labor expended by the contractor to build the house. The indirect costs were a portion of the contractor's general overhead allocated to the job, and they were set at 5% of the direct costs. Thus, under the AIA form contract, the contractor was to be paid a total fee of approximately 15% of the direct construction costs. The trial court found that this 15% fee term was part of the parties' initial oral agreement. The form contract also provided that the maximum cost to the owner, including the contractor's fee, would not exceed $106,000, subject to increase or decrease if changes were made in the plans.