NO. 93-489 IN THE SUPREME COURT OF THE STATE OF MONTANA 1994

WESTFORK CONSTRUCTION COMPANY, Plaintiff and Appellant,

NELCON, INC., and UNITED STATES FIDELITYAND GUARANTY COMPANY, Defendants and Respondents.

APPEAL FROM: District Court of the Fourth Judicial District, 

### In and for the County of Missoula, The Honorable John S. Henson, Judgepresiding.

COUNSEL OF RECORD: For Appellant: James C. Bartlett,Hash, O'Brien & Bartlett, Kalispell, Montana For Respondents: Robert 

### J. Phillips, Phillips & Williams, Missoula, Montana

Filed: Submitted on Briefs: ~pril 14, 1994 Decided: June 28, 1994

### JusticeWilliam E. 

### Hunt, Sr., delivered the opinion of the Court. SubcontractorWestforkConstruction Company filedan actionin theFourthJudicial District,Missoula County, forcontractdamages against contractor Nelcon, Inc., and its bonding company, United StatesFidelity and Guaranty (Fidelity). Westfork alleged that it

was entitled to damages arising out of its subcontract agreement with Nelcon forWestfork to clear acreage and retain the timber on the acreage, and the subsequent discovery that timber had been removed. Westfork appeals the directed verdict and judgment and attorney fee award entered for Nelcon and Fidelity. We affirm. The sole issue on appeal is whether the District Court erred when it granted respondentstmotion for a directed verdict on the basis that the evidence established thatappellant received all the payment it was entitled to under the written agreement. OnOctober 5, 

### 1987,Nelcon entered an agreementwith theState of Montana to complete a highway construction project known as Elk Hills-Lyon Springs in Lincoln County, and granting Nelcon the standing timber within the right-of-way. The project required the highway to be straightened and widened. Prior to this agreement, in mid-September 1987, Nelcon inspected the project and found timber to be standing on the site. Westfork placed 

### a bid for 

### a subcontract with Nelcon to clear and grub the project grounds in preparation for excavation. Westforktswritten bid dated October 2, 

### 1987, offered a price of$1200 per acre on the approximately 70 acre project area,plus the right-of-way timber. As a result of the bid, Nelcon and Westfork entered into a subcontractdated October 5, 1987,providing for payment of $84,000 for clearing and grubbing the approximately 70 acre area at $1200 per acre. The subcontract did not refer to the timber. However, Nelcon concedes that its representatives agreed that Westfork "could do with the timbertt as it "pleased." Inmid-October 1987, itbecame knownto the State,Nelcon,and Westfork that the timber was owned by Champion International and had been removed from the area. In response to this information, Westfork senta letter toNelcon statingthat itwould complete the job for $1700 per acre due to the absence of timber. Although the letter was received by Nelcon, no response was ever given. Westfork commencedthe joband completedtheclearing and grubbing. At about the same time that Westfork sent the letter to Nelcon, Nelcon filed a claimwith the State concerning themissing timber. After negotiations, the State offered to settle the issue with Nelconby paying them $22,359.63 for themissing timber,which included the value of the timber, plus Nelcon's costs in determining the amount of missing timber in the area. Of the $22,359.63 timber settlement,NelconpaidWestfork $19,859.63 after retaining $2500 as markup costs. Westfork filed an action againstNelcon and Fidelity alleging damages due to themodified contract terms whereinNelcon agreed to pay at the rate of $1700 per acre due to the absence of timber,thus owingWestfork $15,277.47, plus interest. Inthe alternative, if the contract was found to have not been modified, thenWestfork alleged it was entitled to receive damages for the missing right-of-way timber under the subcontract agreement with Nelcon. A jury trial began February 10, 1993. At the close of Westfork's case-in-chief,the District Court granted Nelcon's and Fidelity's motion foradirectedverdict. Ingranting thedirected verdict, the court noted that Westfork did not argue that the agreement should not be enforced because it was unconscionable or fraudulent, and found that the subcontract between Nelcon and Westfork constituted the entire agreement. The court found that Sections 7 and 8 of the subcontract between Nelcon and Westfork specifically provided for the resolution of any changed circumstances or construction claims, and Section 8 specifically provided that Westfork was bound to Nelcon to the same extent that Nelconwasbound to the State whenever any claims ordisputes arise out of theperformance of the contract. The court also found that the subcontract provided that Nelcon could not be liable to Westfork for its work on the project for any amount greater than the amount recovered from the State by Nelcon, less markup, and that Westfork received all the payments it was entitled to under the subcontract. Judgment was entered on March 22, 1993. Did theDistrict Court errwhen it granted respondent'smotion for a directed verdict on the basis that the evidence established that appellant received all the payment entitled to under the written agreement?When thisCourt reviewsadirected verdict granted pursuant to Rule 50(a), M.R.Civ.P., it looks to see if the evidence leads to only one conclusion. "Ifonly one conclusion is reasonablyproper, then the directed verdict is proper." Semenza v. Leitzke (1988), 232Mont. 15, 18, 754 P.2d 509, 511 (quotingCremerv. Cremer Rodeo Land & Livestock Co. (1979),181Mont. 87, 92, 592 P.2d 485, 488). A directed verdict is properly granted when the "evidence is so insufficient in fact tobe insufficient in law. Semenza,754 P.2d at 511 (quoting Parini 

### v. Lanch (l966), 148 Mont. 188, 191, 418 P.2d 861, 863). In our review of a directed verdict for a defendant,we will view the evidence in the light most favorableto the plaintiff, and if the evidence tends to establish the case according to theplaintiff'spleading, this Court will reverse the district court's order. Cremer, 592 P.2d at 488. Both Westfork and Nelcon agree that although there is no written agreement concerning the grant of timber to Westfork,both parties understood that the main contract between Nelcon and the State provided that Nelcon could retain anymerchantable timber on the right-of-way,andNelcon conceded thatWestfork we could do with the timber" as it "pleased." Westfork argues that the parties resolved their dispute concerning the missing timber by modifying the subcontract price from $1200 per acre to $1700 per acre, as evidenced by the letter Westfork sent to Nelcon on October 28, 1987. Westfork also contends that Nelcon representatives were aware that Westfork was performing the job, and therefore, Nelcon impliedly accepted the $1700 modification by its failure torespond. Therefore, Westfork asserts that there was sufficient evidence for the jury to conclude that the parties resolved their dispute concerning the absent timber and agreed that the jobwould be completed for $1700 per acre. Nelcon, on the other hand, argues that the written contract

was clear and unambiguous and provided all the terms of the agreement between the parties, and that both Westfork and Nelcon

are experienced inthe area ofbidding and contracting construction jobs. Nelcon also argues that there is no evidence in the record that Nelcon executed any acceptance of Westfork's letter tomodify the subcontractprice terms. A written contractmay be altered by another written contract

or by an executed oral agreement. Section 28-2-1602, MCA. The record reveals that during the trial the District Court did not allow Westfork's offer of the October 28, 1987, letter as evidence that the parties modified their agreement price to $1700 per acre. The court limited the letter's relevance to show the parties were

aware the timber was gone and were negotiating the value of the timber. The court also determined that the letterwas evidence of

a proposal, not a modification. Westfork does not argue that the court erred when it limited the letter's relevance, and our search of the record provides no evidence of written acknowledgement or acceptance by Nelcon to Westfork's proposal. An oral agreement modifying the written agreement must be fully executed tomeet with the provisionwithin 

### 5 28-2-1602, MCA. Additionally,an executed oral agreement requires full execution on

### both sides of the agreement. Kraft v. Hodson (1992), 254 Mont. 262, 264, 836 P.2d 1234, 1236. Here, Nelcon paid Westfork $1200 per acre for the clearing and grubbing completed, the amount specified in the written subcontract--not the alleged modified amount of $1700 per acre. Therefore, the alleged modification amount was not fully executed by both parties. The District Court found that the subcontractbetween Nelcon and Westfork provided all the terms of the agreement. The following provision in the agreement provides for disputes concerning changes and extra work: 7A. 

### Contractor [Nelcon]may at anytimebywritten order of Contractor's authorized representative, and without noticetotheSubcontractor's [Westforkls] sureties,make changes in,additions to, and deletions fromthework to be performed under this Subcontract and Subcontractor shall promptly proceed with the performance of this Subcontract so changed. Any increase or decrease of the Subcontractprice or time resulting from such change or extrawork shallbe agreedupon inwritingby theparties hereto and, if mutual agreement is not possible, the questions of entitlement to additional time or to a change in compensation and the amount thereof shall be determined as provided in the Disputes Clause of this Agreement 

# . . . . The provision in Section 8 

### is titled I1Disputes1l and states in pertinent part: 8A. In the event of any dispute or claim between the Contractor [Nelcon] and the Owner [the State] which directly or indirectly involves the work required to be performed by Subcontractor [Westfork] under this subcontract, or in the event of any dispute or claim between Contractor and Subcontractor which directlv or indirectlv involves a claim aaainst the Owner for either additional com~ensation and/or an extension of time under the Contract Documents. Subcontractor aarees to be bound to Contractor and Contractor asrees to be bound to Subcontractorto the sameextent that Contractor isbound to the Owner bv the terms of the Prime Contract and bv anv and all ~rocedures and resultinsdecisions, findinas

### or determinations made thereunder by the person so authorized in the Prime Contract orby an administrative agency,board orcourtof competent jurisdiction,whether or not Subcontractor isaparty totheproceedings before said person, agency, board or court. 

# . 

# . . It is expressly understood and agreed in connection with the determination of such claims or disputes that as to any work done by the Subcontractor. 

# . . . Contractor shall never be liable to Subcontractor to any ureater extent than Owner is liable to Contractor, less any markups on costs incurred bv Contractor.

8C. In the event either party institutes suit in court against the other party, or against the surety of such party, in connectionwith any dispute or matter arising under this Subcontract, the prevailing party shall be entitled to recover its attorneys' fees, in addition to other relief granted by the court. [Emphasis added]. Where the language of the subcontract terms relative to the dispute resolution and recovery limits was plain and its meaning apparent, the trial court had the duty to declare thatmeaning and not leave it to the speculationof the jury. Section 1-4-101, MCA; Martin v. Community Gas and Oil Co., Inc. (1983), 205 Mont. 394, 399, 668P.2d 243,245. Where contract provisions are unambiguous, the courts have no authority to insert provisions in, or delete provisions from, the contract. In re Marriage of McKeon (1992), 252 Mont. 15, 826 P.2d 537. In the interpretation of contracts, each provision within the contract must be given effect. First Security Bank of Anaconda v. Vander Pas (1991),250Mont. 148, 818 P.2d 384. The language of Section 7 

### was not ambiguous or vague, but provided for any dispute contingency in the work to be done or payments to be made, to be resolved by the procedure in Section 8. Section 8 wasnot ambiguous orvague,but provided that theparties

### were bound to each other 

### to the same extent thatNelcon is

### bound to 

### the State by the prime contract terms, and by all procedures and resulting decisions, findings, or determinations made thereunder, and that Westfork could not recover more from Nelcon than Nelcon could recover from the State. Section 8 

### also provided 

### that the party who prevails in a courtproceeding shall be 

### awarded attorney fees.Westfork contends that Section 8

### doesnot apply because Nelcon

never 

### invoked the claimprocedureprovided within 

### the subcontract. However, the record shows Nelcon submitted a Notice of Potential Claim to the State and subsequently entered negotiations and resolved the timber dispute. After the State paid Nelcon 

### the $22,359.63 

### timber settlement, pursuant to 

### the agreement terns, Nelconpaid Westfork 

### $19,859.63--the entire settlement amount less 

### Nelcongs markup total of $2500. 

### We hold that the record supports 

### the District CourtIs interpretation of the subcontract and the 

### evidence was legally sufficient 

### towithdraw the 

### case fromthe 

### jury. The evidencewithin 

### the record provides only one reasonable conclusion--that the written subcontractprovided theterms of the agreementbetween the parties. 

### We hold 

### that the District Court properly granted the directed verdict 

### in favor of Nelcon and ~idelity,and properly granted attorney fees. Aff imed

# .we concur: