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Shaw Hofstra & Associates v. Ladco Development

March 12, 2012


Appeal from the United States District Court for the Western District of Missouri.

The opinion of the court was delivered by: Bye, Circuit Judge.

Submitted: February 16, 2012

Before LOKEN, BYE, and MELLOY, Circuit Judges.

This case concerns the payment for architectural services provided by Shaw Hofstra & Associates (SHA) to Ladco Development, Inc. (Ladco) in conjunction with a large office building project. In its breach of contract claim, SHA contends it was not paid for the services it completed under the project. The district court*fn1 denied Ladco's motion for summary judgment, and the case proceeded to trial. Ultimately, the jury found in favor of SHA and assessed damages of $250,000. In this appeal, Ladco contends this court should reverse the district court's denial of its motion for judgment as a matter of law and remand the case for entry of judgment for SHA and against Ladco, but only for $25,617.50 in unpaid invoices, rather than the $250,000 awarded by the jury. In the alternative, Ladco requests a new trial. We affirm.


On August 28, 2007, SHA, an architectural firm, submitted a written "fee proposal" to Ladco to provide architectural services for a 75,000 square foot multi-tenant office building project in Kansas City, Kansas. The proposal, submitted by SHA owner Craig Shaw to Ladco Development Manager Mike Belew, was divided into three separate scopes of services, with three corresponding fee structures.

The first part, titled Site Development Plan/TIF Process, pertained to obtaining the requisite governmental approvals to build the project, and it covered the design of the project to the point the project could be submitted to the city for approval and consideration for tax and other incentives. In return for the site planning, architectural concept and presentation drawings, landscape preliminary design drawings, and coordination with the city planning department, this scope proposed a flat fee of $35,000, which was based on the number of projected hours involved in the scope. The scope also provided "SHA shall invoice against the overall estimate on a percentage completion basis at a standard billing rate of $100.00/hr." J.A. at 25.

The second part, titled Construction Documents, concerned architectural and engineering services for the design and construction of the building. This scope proposed "a percentage based fee of 6.0% of the Construction Cost assuming a projected cost of $92.00/sq. ft. for the building shell." Id. Instead of providing hourly rates, the second part divided the services into five phases, each with a corresponding percentage of the overall fee:

Schematic Design Phase 15% Design Development Phase 20% Construction Document Phase 40% Permitting and Sub-Contractor Bidding Phase 5% Construction Administration Phase 20%

Id. This scope also included a $7,500 credit for schematic design work included in the $35,000 fee for part one.

The third part, titled Tenant Finish Documents, proposed a fee of $0.12 per square foot for "Initial Space Planning as Marketing to Secure Tenant." Id. Under this scope, the parties planned for SHA to design the tenant space, with future tenants being able to separately contract with SHA for further work if they desired.

The last paragraph of the fee proposal stated: "Upon acceptance of this proposal SHA/SDC will prepare a standard AIA contract for the project. We ask that you sign below and on the attached Statement of Intent and return to SHA prior to SHA/SDC commencing with the services described above." Id. at 26.*fn2 The Statement of Intent provided SHA would work at "standard hourly rates and under the terms and conditions contained in this proposal until such time as a final agreement is in place or until SHA is notified that its services are no longer needed." Id. at 27. Belew and Shaw signed the proposal, and Belew signed the statement of intent, on September 12, 2007.

Shortly thereafter, SHA began work on the site development plan, design of the three-story building, and an initial space plan for a law firm that would occupy 50,000 square feet of the building. Shaw anticipated it would take six weeks to complete the schematic design phase, which he testified he completed on the initial three-story 75,000 square foot building. However, Shaw was tasked with multiple redesigns of the project due to certain tenants being relocated within the building for various reasons. At the same time, Ladco was recruiting additional tenants that enlarged the scope of the project. As a result, Shaw testified SHA completed schematic design multiple times over the course of several months:

In my opinion [the documents shown to the jury] constitute[] schematic design about three times. We described the building, its size, its relationship to the site, its functions and how tenants could fit into it for an initial building. The criteria changed. Another building joined us. We redid the schematics to accommodate that. The rules changed again and we couldn't use a portion of the site so we redid the buildings in the site plan with that scheme. Then the ...

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