Title: Western Utility Contractors, Inc. v. City of Casper

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Western Utility Contractors, Inc. v. City of Casper1986 WY 222731 P.2d 24Case Number: 86-26, 86-27Decided: 12/31/1986Supreme Court of Wyoming
WESTERN UTILITY 
CONTRACTORS, INC., APPELLANT (PLAINTIFF),

v.

THE CITY OF 
CASPER, WYOMING, APPELLEE (DEFENDANT AND THIRD-PARTY 
PLAINTIFF),

v.

C.E.I., INC., 
(THIRD-PARTY DEFENDANT).

C.E.I., INC., APPELLANT 
(THIRD-PARTY DEFENDANT),

v.

THE CITY OF CASPER, WYOMING, APPELLEE (DEFENDANT AND THIRD-PARTY 
PLAINTIFF), WESTERN UTILITY CONTRACTORS, INC. (PLAINTIFF).

Appeal from the District 
Court, NatronaCounty, Dan Spangler and 
Harry E. Leimback, JJ.

B.J. Baker, of 
Brown, Drew, Apostolos, Massey & Sullivan, Casper, for Western Utility Contractors, 
Inc.

G.G. Greenlee, 
of Murane & Bostwick, Casper, for The City of Casper.

Cameron Walker, 
of Schwartz, Bon, McCrary & Walker, Casper, for C.E.I., Inc.

Before THOMAS, C.J., and BROWN, CARDINE, URBIGKIT 
and MACY, JJ.

URBIGKIT, 
Justice.

[¶1.]     This City of Casper, 
3,000-foot, $1.5 million, storm-sewer construction project came to litigation 
for a ten-day trial from a dispute among the contractor, the city, and the 
engineer as supervisor-designer, about contract specification terminology and 
claimed inaccuracies in a soils report creating a contractor "extra" claim of 
$213,933, first disapproved by the engineer, next by the city, and then denied 
by the trial court, and now affirmed.

Issues

Appellant 
(Western 
Utilities Contractors, Inc., the contractor):

"1. The court disregarded 
and failed to give effect to the written contract between [appellant] and 
[appellee]."

2. The trial Court's 
Finding No. 1, which states: "There was no evidence that the report was 
incorrect," is totally contrary to the evidence because all the substantial 
evidence disclosed that the soils report was incorrect insofar as it indicated 
where ground water would be encountered. Further, the legal conclusion implied 
in Finding No. 1 that the plaintiff could not rely on the report but had some 
duty to obtain more information is contrary to law.

Appellee (City of Casper):

1. "Did the District 
Court err in its findings and judgment below that Appellee did not breach the 
terms of its contract with Appellant?"

2. The failure of the 
contractor to comply with provisions of the contract requiring notice of claim 
constituted waiver.

3. The decision of the 
trial court was correct in holding, in addition to lack of contractual breach, 
that the contractor as plaintiff failed to prove damages.

Cross-appellant (C.E.I., Inc., the 
engineer):

The district court erred 
in its failure to enter judgment in favor of third-party defendant C.E.I., Inc. 
on the third-party complaint of the city requesting indemnity when judgment for 
the city was granted.

FACTS

[¶2.]     The City of Casper (city) entered into 
a contract with C.E.I., Inc. (engineer), a municipal facilities engineering firm 
under which C.E.I. was to design and supervise the construction of a $1.5 
million, 3,000-foot storm sewer project. After completing the planning and 
design, C.E.I. managed the project's public bidding at which Western Utilities 
Contractors, Inc. (contractor) was the successful low bidder. The bidders relied 
in part on a soils report prepared for the engineer, which indicated ground 
water conditions from test borings.

[¶3.]     Following completion of 
the project and receipt of payment under the contract, the contractor filed an 
additional compensation claim against the city for $213,933. The city impleaded 
the engineer, claiming indemnity for any damage award which might result from 
the contractor's complaint. The trial court denied the contractor's claim 
against the city, and refused to enter judgment on the city's third-party claim 
against the engineer, ruling that its decision in the first claim rendered the 
third-party claim moot. The contractor appeals the trial court's denial of its 
claim in favor of the city, and the engineer appeals the trial court's refusal 
to rule in its favor on the city's claim for indemnity.

[¶4.]     Initial litigation was 
based on both negligence and contract, but, following the adverse trial court 
decision, appeal has been taken only on a contractual 
theory.

Bedding Material 
Controversy

[¶5.]     Explicit answers in 
oral argument refined the contested issues which succinctly are whether § 
703.16(b) or § 603.14 of a reference-incorporated Specifications for Road & 
Bridge Construction, Wyoming Highway Department, 1980 ed., apply to the bedding 
material required in the trench for the large 6' 6" and 7' 6" concrete drain 
tile underground installation. The contractor complains that the engineer, and 
consequently the city, applied the wrong requirement, causing substantial time 
loss and consequent damage in delayed installation, constituting the amount 
claimed for recovery.

[¶6.]     The problem was not 
material cost, since what the contractor wanted to use, sized gravel (drain 
rock), was more expensive by the expressed amount of perhaps three times than 
the sand actually utilized. The claim theory was that the installation was 
significantly delayed in using the finer sand material in areas where the work 
was "in the wet," meaning below underground water levels.

[¶7.]     Ancillary to the 
specification controversy was a dispute about how much "in the wet" should have 
been expected from information supplied by a soils test report obtained pre-bid 
by the engineer from a third-party testing service that provided a test boring 
profile. The contractor claimed an indicated total footage of an expected 
approximate 500 feet, compared to an actual 1,500 footage. Interpretation of the 
soils report was also conflicting in trial evidence, as was the water trench 
footage actually encountered in work construction.

[¶8.]     Originally, the 
pleadings and trial posture raised a separate claim about this wet trench as a 
compensable "unanticipated condition," but oral appellate argument made clear, 
as did the trial evidence on proof of damages, that the contended erroneous 
soils report served only as a factor of the total damage arising from the 
improper material requirement devolving from the owner's misinterpretation of 
the job specifications.

[¶9.]     Those specifications 
were designated by the construction contract as incorporated by reference from 
Specifications for Road & Bridge Construction, supra. The contractor argued 
that it could use drain rock for the bedding material, and the engineer 
disagreed and established smaller sized material, including variable substance, 
as its standard. Additionally, the engineer contended as contract performance 
requirements that it had agreed to permit the contractor to use material 
included within the normal criteria of the Casper Board of Public Utilities as 
"equal or better," which was slightly more coarse but generally about the same 
as the asserted requirement provided by the Highway specification; and, 
furthermore, that the contractor was never required to use 
sand.

[¶10.]  The two provisions (differentiated 
sections) which came to the trial court for review as being the proper 
contractual criteria are, by the contractor: § 703.16(b):

"(b) Bed course material 
for culverts, sewer lines, and water lines shall be a porous, free-draining 
material consisting of sand, gravel, cinders, crushed stone, or other approved 
free-draining material. This material shall be uniformly graded and of such size 
that 100 percent of the material will pass through a sieve having 1 1/2 inch 
(37.5 mm) square openings." (Drain rock) Specifications for Road & Bridge 
Construction, supra, at 637;

by the city and 
also the engineer: § 603.04:

"The conduit bedding 
shall conform to one of the classes described below:

"Class B and Class C 
Bedding shall consist of placing the conduit in bedding material shaped to fit 
the bottom of the conduit. The depth of shaping shall be not less than 0.15 of 
the vertical height of the pipe for Class B Bedding and not less than 0.10 of 
the vertical height of the pipe for Class C Bedding. Recesses in the trench 
bottom shall be shaped to accommodate the bell and spigot when such type of 
conduit is used.

"Class B Bedding material 
shall consist of a layer of not less than six inches (150 mm) of sand or 
selected sandy soil, all of which will pass a 3/8 inch (9.5 mm) sieve and not 
more than ten percent of which will pass a No. 200 (0.075 mm) sieve. Class C 
Bedding material shall consist of uniformly compacted earth material or 
undisturbed trench bottom excavated to fit the conduit as provided above." (Soil 
bedding material) Id. at 447.

[¶11.]  Those specifications were part of the 
agreement for the purpose of ascertaining what kind of bedding was to be used 
because "reference in a contract to extraneous writings renders them part of the 
agreement for indicated purposes." Busch Development, Inc. v. City of Cheyenne, Wyo., 645 P.2d 65, 70 
(1982).

[¶12.]  The essential operational claim of the 
contractor was that drain rock would have expedited dewatering and pipe laying. 
Responsively, the engineer contended that drain bed coarse material was 
unsatisfactory unless diked as potentially causing future street settling and 
pipe damage problems. Extensive testimony on both operational disputes during 
work progress and contract specification criteria was introduced.1 The claim in issue is derived from 
alleged work-progress delay in inability to use drain 
rock.

[¶13.]  This appeal decision requires a 
determination whether the trial court was right in accepting the engineer's 
explanation of applicable specifications for the bedding material. Each litigant 
produced extensive evidence on his view of which section of the Highway 
specification applied.

[¶14.]  Was this "bed course material" for sewer 
lines and water lines under § 703.16(b) (drain rock), or "bedding material" 
under § 603.04 (amorphous mixed material)?

[¶15.]  It would be inane for this court to fail 
to discern the ten-day trial dispute in interpretation or to resolve that 
dispute now as additional storm sewer installation experts. If the applicable 
section is clearly determinable from the written document as a matter of law, we 
find no basis to make that decision differently than did the trial court. If, 
however, as we anticipate, there really was an ambiguity to be resolved, then we 
search for substantial evidence to see if support of the court's decision is to 
be found in the evidence. Mobil Coal Producing, Inc. v. Parks, Wyo., 704 P.2d 702 
(1985).

[¶16.]  The plaintiff contractor called, in 
person or by deposition, ten witnesses; the city called five; and the 
engineering firm four (each of whom was separately called by the contractor for 
the city), so that the testimony of 15 people was introduced at trial, producing 
a seven-volume, 1,462-page transcript for our review. More than 100 exhibits 
were introduced, including multiple photographs, a videotape, and a 
professionally prepared schematic and work schedule time-progress display with 
overlays.

[¶17.]  Principal witnesses with categorically 
differing testimony on the interpretation issues were Michael Ellis, President 
of the contractor firm, and Michael Bell, the design and supervisory project 
engineer, employed by the engineering firm.

[¶18.]  Critical and conflicting evidence 
developed about pre-bid discussions involving the bedding material criteria and 
about the dispute as later pursued in correspondence and oral communication. 
Particularly significant was a pre-bid inspection meeting, wherein discussion 
about the Highway specification provision occurred.

[¶19.]  The record before us raises the issue of 
whether or not the contract is ambiguous. The determination of whether a 
contract is ambiguous is for the court as a matter of law. Amoco Production 
Company v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463, 465 
(1980).

"* * * An `ambiguous 
contract' is one capable of being understood in more ways than one. It is an 
agreement which is obscure in its meaning because of indefiniteness of 
expression, or because a double meaning is present." Bulis v. Wells, Wyo., 565 P.2d 487, 490 
(1977).

None of the 
parties claimed an ambiguity, as all agreed that the Highway specifications were 
clear, but disagreed as to which section applied to this construction 
application.

[¶20.]  Where a contract is ambiguous, its 
interpretation is a mixed question of law and fact. Goodman v. Kelly, Wyo., 390 P.2d 244, 
247 (1964); WorlandSchool District v. Bowman, Wyo., 445 P.2d 364, 366 
(1968). The legal question is the ambiguity; thereafter, "there exists a 
question of intent which the trier of fact must resolve." Goodwin v. Upper Crust 
of Wyoming, Inc., Wyo., 624 P.2d 1192, 1195 (1981). Further, 
when a contract is ambiguous the court will look to all of the surrounding 
circumstances and extrinsic evidence introduced in order to ascertain its true 
meaning. Rouse v. Munroe, Wyo., 658 P.2d 74, 78 (1983); Mountain Fuel Supply Co. 
v. Central Engineering & Equipment Co., Wyo., 611 P.2d 863, 868 (1980); 
Amoco Production Company v. Stauffer Chemical Company of Wyoming, 
supra.

[¶21.]  The trial court, without specifically 
finding that the contract was ambiguous, conducted an extensive trial at which 
it examined the surrounding circumstances and reviewed extrinsic evidence in 
order to ascertain the contract's true meaning. The trial court issued its 
decision letter, later incorporated in the judgment, containing the following 
findings and conclusions:

"1. On or about January 
11, 1982, plaintiff and defendant entered into a contract to construct a storm 
sewer. Before bidding, plaintiff examined a soils report with information about 
potential interference from ground water. There was no evidence that the report 
was incorrect. If it was incomplete or needed to be updated, plaintiff had the 
opportunity to obtain more information. It was unreasonable for plaintiff to 
conclude that ground water would not be a substantial problem. The extra 
expense, if any, caused to plaintiff by ground water was not unforeseen 
work.

"2. To dewater the 
trench, plaintiff proposed laying a very coarse material under the pipe. 
Plaintiff claims that defendant misrepresented the contract terms and required 
use of a material which was too sandy for wet conditions. Defendant did not 
require use of material as fine as that installed by plaintiff. Plaintiff failed 
to mitigate its damages, if any. Plaintiff could have used more coarse material 
with no objection from defendant. Plaintiff's use of a very fine material was 
its own choice. Any resulting difficulties were not unforeseen work. There was 
no breach of contract or negligence by defendant.

"3. Plaintiff's alleged 
damages were not established with a reasonable degree of certainty. Plaintiff 
claims damages for areas where plaintiff expected to encounter groundwater and 
for delays upon which claims were made and satisfied by 
defendant.

"4. Therefore, plaintiff 
did not prove its allegations by a preponderance of the evidence. Judgment will 
be entered in favor of defendant, together with court 
costs."

[¶22.]  The contractual right to use drain rock 
was the pivotal issue and created a factual conflict at trial as a heavy-weight 
dispute.

[¶23.]  After reviewing the record, we see no 
reason to upset the determinations of the trial court. This court has often 
stated that we will not substitute our view of the facts for that of the trier 
of fact, and, a trial court's findings of fact will be set aside only if they 
are clearly erroneous or contrary to the great weight of evidence. Walter v. 
Moore, Wyo., 700 P.2d 1219, 1222 (1985); Plains Tire and Battery Co. v. Plains A 
to Z Tire Co., Inc., Wyo., 622 P.2d 917, 920 (1981). We have likewise often 
stated that when reviewing the sufficiency of the evidence to support the trial 
court's findings, we are bound to accept the evidence of the prevailing party as 
true, leaving out of consideration evidence presented in conflict therewith. 
Denhert v. Arrow Sprinklers, Inc., Wyo., 705 P.2d 846, 851 (1985); Shanor v. Engineering, Inc. of Wyoming, Wyo., 705 P.2d 858 (1985); Walter v. Moore, supra; Scott v. 
Fagan, Wyo., 684 P.2d 805 
(1984).

[¶24.]  In this case, the trial court's findings 
were not very detailed and may be considered conclusory, but we have held that 

"[e]ven if there are no 
specific findings of fact, a judgment carries with it every finding of fact 
supporting the successful party that `can be reasonably and fairly drawn from 
the evidence.'" Plains Tire and Battery Co. v. Plains A to Z Tire Co., Inc., 
supra, 622 P.2d  at 920.

See also Kvenild 
v. Taylor, Wyo., 594 P.2d 972, 976 
(1979).

[¶25.]  After reviewing the record, we hold that 
the evidence, when considered in the light most favorable to the city, is 
sufficient to sustain the trial court's judgment. The trial court's factual 
determination that the city did not violate the contract in refusing to permit 
drain rock as trench bedding material was not clearly erroneous or contrary to 
the great weight of evidence. Both parties presented considerable evidence to 
support their positions. We find that the trial court had sufficient evidence to 
rule as it did, and was not clearly wrong. Now, on this review, we will not 
interpret the contract to require the application of § 703.16(b) of the 
Specifications for Road & Bridge Construction, supra, as a matter of law, 
contrary to the material requirement established and enforced by the supervising 
engineer. Wangler v. Federer, Wyo., 
714 P.2d 1209 (1986); Denhert v. Arrow Sprinklers, Inc., 
supra.

Damages - Waiver - Soils 
Test

[¶26.]  The city's second defense is failure of 
proof of damages. After a comprehensive review of the evidence, we could find a 
factual basis to support the finding of the trial court, but having affirmed the 
trial court on the issue of breach of contract, review and evaluation of the 
damage evidence is unnecessary. Likewise, we do not reach the city's contention 
that the contractor waived his right to claim additional compensation by failing 
to comply with procedural requirements for processing supplemental 
claims.

[¶27.]  The other issue extensively presented at 
trial and on appeal is the application of the soil test as a factor of 
contractual responsibility for the city. We concur with the decision of the 
trial court, in practical result, that the issue was not separately dispositive. 
Consequently, our consideration and discussion of these extensively and 
carefully briefed contentions would now be only academic or potentially 
determinative in other cases. Bryant v. Hornbuckle, Wyo., 728 P.2d 1132 (1986); Reese v. Dow Chemical Company, Wyo., 728 P.2d 1118 (1986); Wallace v. Casper Adjustment Service, Wyo., 500 P.2d 72, 73 
(1972).

[¶28.]  In affirming the judgment of the trial 
court, we would additionally conclude that the engineering firm, C.E.I., Inc. 
cannot be liable, and, considering bonding and balance-sheet concerns, an order 
of dismissal should be entered to document the termination of C.E.I.'s 
involvement in the litigation.

[¶29.]  The judgment is affirmed, except to 
remand for entry of an order dismissing the third-party 
complaint.

FOOTNOTES

1 The position of the city 
was stated by recommendation of the engineer in a letter of June 16, 
1982:

"Responding to 
your requests made at our meeting on June 15, 1982, we advise you as 
follows:

"The bedding 
material which you have requested (1 1/8" uniformly graded rock) may be used 
provided that compacted clay cut-off dikes are installed at intervals of 25 
feet, and that this large rock bedding is enclosed in a filter fabric material 
such as Typar, all at no additional cost to the City. If this alternate is 
desired please notify us and we will prepare a change order to this effect; 
or

"The bedding 
material specified in the sanitary sewer specifications may be used at no 
additional cost to the City; or

"The material 
specified for Class B bedding Paragraph 603.04 of the specifications may, of 
course, be used.

"Concern 
regarding the long-term effects of ground water migration and its ability to 
produce settlement in either the pipe or the overlying pavement prevents 
acceptance of the large uniformly-graded drain rock, if 
unprotected.

"We are 
therefore unable to approve additional time or cost requests claimed for delay 
due to the bedding material specifications."

The initial 
position of the contractor was stated in a claim dated January 31, 
1983:

"Extra crew 
hours on City of Casper, 
Wyoming, Project 

No. 22-181, 
Jefferson-Yellowstone Storm Sewer, caused by defective test boring results 
furnished by City of Casper and by wrongful 
interpretation of specifications by City of Casper officials. See itemization attached 
hereto and by this reference, made a part hereof. This claim is submitted under 
the Wyoming Governmental Claims Act."