No. 84-362 INTHE SUPREMECOURTOF THE STATE OF MONTANA 1985

E.F. MATELICH CONSTRUCTION CO., a Montana corp., Plaintiffand Respondent,

-vsGOODFELLOW BROTHERS, INC., Defendant? andAppellants,

-vsSTATEOF MONTANA, Cross-Claimant and Respondent.

APPEAL FROM: District Court of the Fourth Judicial District, Inand for the County of Mineral, TheHonorable DouglasHarkin,Judgepresiding.

COUNSELOF RECORD:

ForAppellants: Wellcome & Frost; PageWellcome argued, Bozeman, Montana

For Respondents: Murphy, Robinson,Heckathorn & Phillips;Donald R. Murray,Kalispell,Montana W. D. Hutchison argued,Dept. of Highways, Helena, Montana

Submitted: April 11, 1985 Decided: ~uly 8, 1985
Filed: 

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.- ClerkMr. Justice John C. Sheehy, delivered the Opinion of the Court.

This appealby Goodfell-owBrothers, Inc. froma judgment of the Fourth Judicial District,Mineral County, raises the following: I. Is Goodfellow entitled to recover from the State sums itwas required to pay to a subcontractor,Matelich,on a highway construction project that was redesigned while constructionwas inprogress? 2. Was the delay of the District Court in making a decision in this case from the hearing date of September 30, 1983 to March 23, 1984,a denial of fundamentaldue process to Goodfellow under Art. 11, 5 16, of the Montana Constitution? On November 23, 1970, Goodfellow, as a general contractor,contracted with the defendant, State of Montana, to construct a segment of interstate highway. Thereafter, Goodfellow contracted with E. F. Matelich Construction Company, a subcontractor, for the construction of certain bridges and concrete work on theproject. Matelich, prior to submitting its bid to Goodfellow, abtained a bid for the concrete work required on the constructionproject fromRobert OIConner. Thebid submitted by OIConnerstated that the estimates given were conditioned upon concrete being available at the job site. Matelich accepted OIConner'ssub-bid on April 12, 1971. In certain portions of the highway project, cuts were designed by the State through themountainous area. Several of the cuts were designed with a steep backslope. It was found that some of the cuts were unstable. Some of thesecuts were redesignedby the State toprovide fora less steep backslope but the changes in design required further excavation in excess of 125% of the original contract specification. All sides admit that the increa.sedexcavation delayed or postponed the hoped for date of completion of the project. On November 6, 1972, Goodfellow and the State entered into a supplemental agreement described as a "novation covering the said excess quantities and work items affected by such excess." The supplemental agreement contained the following language: "(6) The CONTRACTOR waives any and all claims for payment in excess of those contemplated by said contract of November 23, 1970, and this novation, except those claims which may be based upon conditions not presently within the knowledge of eitherparty orwhich arenot within the ability of eitherparty to anticipate." Goodfellow, because of the delay, did not complete the necessary preparatory work until September 1973. When the preparatory work was finally done, there was no longer a
source of concrete a-vailableat the jobsite. By reason thereof,O'Conner refused to perform the concrete work under his agreement with Matelich. There had been a source of concrete availableat the jobsiteduring the 1971work season and for most of the 1972 season. Since OIConnerrefused to perform the work under his bid, Matelich was forced to comp1et.ethe concretework under anotherarrangement. After the work was completed, Matelich brought suit against Goodfellow and the State of Montana in the District Court of Mineral County. Matelich alleged itwas prevented fromperforming itswork within a time limit specified in its subcontractwith Goodfellow because thework schedule for the project had been changed by Goodfellow and the State.Matelich sought damages for the increased costs which were caused by the delay in the performance of the preparatory work within the time limit specified in its subcontract. Goodfellow cross-claimed against the State for indemnificationonMatelich's claim. Originally, the District Court dismissed Matelich's claim. In the first trial, the District Court refused to permit damages to be established on the basis of O1Conner's bid because O'Conner had not prequalified with the Montana State Department of Highways as required by the specifications. That decision was appealed to this Court, and in E. I?. Matelich Construction Company v. Goodfellow Brothers and State of Montana (Mont. 1982), 645P.2d 391, 39 St.Rep. 831, this Court reversed and remanded for further proceedings. At the second trial, the District Court found that PJlatelich was entitled to a judgment of $19,153.19 against Goodfellow but that Goodfellow was not entitled to reimbursement from the StateofMontana because of the waiver of the November 6, 1972 supplemental agreement. Goodfellow paid the Matelich judgment, and now contends that it is entitled to reimbursement from the State notwithstanding the waiver clause. Goodfellow, on appeal, claims it is entitled to reimbursement or indemnity from the State essentially on two grounds: (1 the waiver clause in the supplemental agreement of November 6, 1972 did not operate to bar its claim under the Matelich subcontract, and (2) the issue of wa.iver has been decided adversely against the State in another DistrictCourt action in the same district, involving the sameproject. Goodfellow claims that the State isbarredby res judicata and collateral estoppel from disputing Goodfellow's right to indemnityreimbursement. The companion action on which Goodfellow claims either

res judicata or collateral estoppel is Goodfellow, Inc. v. State of Montana, through its Highway Commission, cause no. 41911 in theMissoula DistrictCourt. There,Goodfellow sued for and on behalf of its subcontractor, Yardley Drilling Company for $52,060.00 and for itself $10,412.00 for costs brought about because of additional excavation required between stations 573 plus and 577 plus on the highway project. Yardley Drilling Company was the drilling and blasting subcontractor forGoodfellow. The District Court in that case concluded that the November 6, 1972 supplemental agreement referred only to excavation required at the "400 cut" and that any waiver contained in the supplemental agreement could not affect the delay and changes in design that were required between stations 573 and 577. The District Court entered judgment in favor of Goodfellow and its subcontractor,Yardley. It i.s not necessary for us to decide the contentions with respect to res judicata and collateral estoppel because we determine that the waiver clause contained in the supplemental agreement of November 6, 1972 does not pertain to thedifficulty that Matelich facedwhen the subcontractor, O'Conner,refused to go through with his subcontract because

no concrete was available at the jobsite. Waiver is a voluntary relinquishment of a known right, Rase v. Cattle Mountain Ranch, Inc. (Mont. 19811, 38 St.Rep. 992, 631 P.2d 680; Kelly v. Lovejoy (Mont. 19771, 172 Mont. 516, 565 P.2d 321. Waiver is an affirmative defense (~ule8(c), M.R.Civ.P.) and thus the burden of proof is on the partyraising the affirmativedefense. Thewaiver clause itself in the supplemental agreement excepts "those claimswhichmay be based on conditions not presently within the knowledge of eitherparty or arenotwithin the ability of eitherparty to anticipate." Although the record is clear that at the time of the execution of the supplemental agreement on November 6, 1972, Goodfellow knew that there would be delays in the completion of the contract, nothing in the record indicates that either party anticipated that concrete would not be available to O'Conner when, some 10 months later, he was called upon to complete his subcontractwith Matelich. Nor does the State dispute anywhere in the record that if the project had not been redesigned, and the project carried on according to schedule, that OIConner would have had the concrete available toperform his subcontract. We therefore hold that the District Court was clearly erroneous,Rule 52(b),M.R.Civ.P., in finding that Goodfellow is precluded by the waiver clause in the supplemental agreement from indemnityreimbursement from the State. Any judgment against the State,of course, is subject to the provisions of S 18-1-404, MCA, that the State is not liable for interest prior to or after judgment or for punitivedamages. We turn next to the issue raised by Goodfellow that the delay of theDistrictCourt of approximately nine months from the time of hearing to the time of decision was a denial of due process to Goodfellow. Because we have otherwise determined that Goodfellow should prevail on this appeal,we have no occasion to examine the issue whether a District Court delay of such duration had the effect ofunconstitutionally denying due process. The issuehas become moot.Accordingly, we reverse the District Court and remand the cause for entry of judgment in favor of Goodfellow and against the State of Montana in accordance with this opinion.

We Concur:

Chief'JusticeMr. Justice L. C. Gulbrandson, dissenting.

I respectfully dissent. The majority has, in effect,ruled that as a matter of law Goodfellow did not have the ability to anticipate that concretewould not be available at the job site. Inmy view, the record is clear that at the time Goodfellow executed the supplemental agreement on November 6, 1972, Matelich's 270 day construction period had already ended. It is also clear that Matelich had not entered a subcontract with O'Conner, but was relying on a bid proposal from OIConner dated November 5, 1970, which was conditioned upon concrete being available at the job site. O'Conner testified that his bid proposal would have been good through the 1971period. When he was asked by Matelich to perform the final concretework in September, 1973, he advised Matelich that his quoted figures were no longer adequate, and he and his crew were then employed by Matelich to complete thework. O'Conner had

no legal obligation of any kind to Goodfellow,and Goodfellow

was not aware of the conditional language in OIConner's proposal toMatelich. In my opinion, Goodfellow, in November, 1972, having negotiated the supplemental agreement for additional services, for which Goodfellow was to receive an additional $624,418,knew that the concretework had to be performed as the last stage of the project. Goodfellow also would have known that a11 other concrete projects in the area had been completed and there was no reason for a concrete batch plant operation to remain in the area. I would, therefore, affirm the judgment of the trial judge that Goodfellow was not entitled to recover from the

'7 State ofMontana.

Justice/ ,/'