## Facts

- Aiello Construction, Inc. and Smithfield Peat Co., Inc., as joint venturers, entered a written contract with Nationwide Tractor Trailer Training and Placement Corp. to perform site work on Nationwide’s property for use as a tractor-trailer training yard.
- The work included hauling and grading fill, removing ledge, placing specified gravel layers, and applying an oil seal coat with peastone and rolling.
- Nationwide agreed to pay $33,000 in five monthly installments of $6,600 due from April 15 through August 15, 1973, and to pay a 1.5% monthly service charge on unpaid amounts.
- Plaintiffs began work in late March 1973 and worked until about May 10, 1973, completing the preliminary work but stopping before the final crushed gravel and oiling steps to allow the ground to settle.
- Nationwide paid only the first installment and made intermittent partial payments totaling $10,500, then indicated it lacked funds to make remaining payments.
- Plaintiffs treated the nonpayment as a breach, stopped work, and sued for damages including expenditures and lost profits.
- Nationwide counterclaimed for breach and negligence, alleging plaintiffs failed to complete and improperly performed the work.

## Issues

1. Whether Nationwide’s failure to make required installment payments, coupled with its stated inability to pay, was a material breach excusing plaintiffs from further performance.
2. Whether the trial court properly awarded expectation damages including reimbursement of expenditures and anticipated profits.
3. Whether the trial court properly rejected Nationwide’s counterclaim and acted within its discretion on evidentiary rulings.
4. Whether the trial court properly awarded interest under a statutory rate rather than applying the contract’s 1.5% monthly service charge.

## Decision

- The Supreme Court of Rhode Island affirmed the judgment for plaintiffs.
- Nationwide’s nonpayment and inability to pay constituted a material breach going to the essence of the contract and excused plaintiffs from completing performance.
- The damages award, including costs incurred (less payments received) and reasonably supported anticipated profits, was upheld.
- The rejection of Nationwide’s counterclaim and the challenged evidentiary rulings were upheld as within the trial justice’s fact-finding authority and discretion.
- The interest award under a lawful rate rather than the contract’s service-charge provision was affirmed; any arguable error was nonprejudicial because the rate imposed was less burdensome than the contractual charge.

## Legal Principles

- Failure to make required installment payments under a construction contract, especially when accompanied by an admission of inability to pay, may constitute a material breach excusing the contractor’s further performance.
- A contractor wrongfully prevented from completing performance may recover expectation damages, including expenditures incurred (offset by payments received) and anticipated net profits proven with reasonable certainty.
- Appellate review defers to the trial court’s factual findings and evidentiary rulings absent clear error or abuse of discretion.
- A contractual service-charge clause for overdue payments does not necessarily control post-judgment interest; courts may apply applicable statutory interest rules, and a party must show prejudice to obtain reversal on interest calculations.

## Conclusion

The court held that the owner’s nonpayment and inability to pay materially breached the construction contract, excusing further performance and supporting an award of costs and reasonably certain lost profits, while affirming the trial court’s handling of counterclaims, evidence, and interest.


Aiello Construction, Inc. v. Nationwide Tractor Trailer Training & Placement Corp., 413 A.2d 85 (R.I. 1980)