No. 52-434 INTEE SUPREME COURT OF THE STATE OF MONTANA 1983

ACE PLCJ;I.IBING& HEATING, INC.

### , Plaintiff,andRespondent,

HELENA FLATS SCHOOL DISTRICT 15, a political subdivision of Flathead County, and STEWART & JANES, general contractors,Defendants and Respondent,:,

W. C. SIMONS & ASSOCIATES, Third-Party Defendant and Appellant.

Appeal from: DistrictCourt of theEleventh Judicial District, In and for theCounty of Flathead, The Honorable Robert C. Sykes, Judge presiding.

Counsel of Record: For Appellant: Warden, Christiansen, Johnson & Berg; Steve Berg, Kalispell, Montana For Respondent: T,ed0, Lympus, Couhby Atkorn&y,Rali$pell, Montqna Montana (Lane Bennett, Deputy) Thomas Q. Johnson, Helena, Montana William Evan Jones, Missoula, Montana Richard DeJana, Kalispell, Montana

Submitted on Briefs: March 3, 1933 Decided: Way 12, 1983

Filed: 

### ;. .:, 

### 1 ?

## 1983 dMr. Justice John C. Sheehy delivered the Opinion of the Court.

This is an appeal from a judgment issued by the District Court of the Eleventh Judicial. District, Flathead County, ordering in part that the third-party defendant, Simons and Associates (Simons) topay the defendant, Helena Flats School District 15 (Helena Flats) $1,806.49 for a debt incurred in the construction of a school building. We affirm the judgmentof theDistrict Court in all respects. Helena Flats received a federal grant for expansion and remodeling of the Helena Flats elementary school. The school district contracted with Simons for architectural, planning and supervisory services. Simons provided all the contract documents and design specifications. Included within the plans and specifications and contracts for the project were requirements for a well andwater system. DefendantStewartand Janes, was selectedas the general contractor. PlaintiffAce Plumbing & Heating, Inc. (Ace)was selected by Stewart & Janes asmechanical subcontractor. Ace subcontracted the drilling of a water well to OIKeefe drilling. On August 25, 1978,Helena Flats and Simons entered into

a supplemental agreement. This agreement provided that Simons was responsible for "insuring" completion of the project. This obligation included "insuring" that the contractors performed in accordance with the contract documents. This agreement also increased Simons' fee. In the summer of 1978 problems developed in the water system. Sand was being pumped into the tanks and lines rendering the water unusable for drinking purposes anddamaging and clogging the fixtures. The cause of theproblem

was disputedby theparties. Simons claims the well was improperly drilled. He sent repeated requests to the general contractor suggesting the general contractor require the subcontractors to comply with the specifications, and provide an additional screen for the sand.The school district claimed the problem was Simons' faulty design. On February 13, 1979, the school district decided to ask Ace to correct the plumbing. Thereafter,Ace installed five extra tanks and a cut-off valve at a cost of $1,806.49. The problem was corrected. Ace sent a bill to the school district, the school district refused to pay. Ace filed this action against the school district and Stewartand Janes seekingpayment. The school district filed

a third-party complaint against Simons for the amount claimed by Ace. A non-jury trial was had on the third-party complaint. The District Court held against Simons and for the school district. The District Court found that the storage system,as designed,was inadequate to assure proper recycling and by reason of the recycling system, continued turbidity in the well itself caused excessive sand to permeate the entire system. The District Court further found that the school board discussed the problem with the architectand general contractormany times. The District Court concluded that by reason of the contract,Simons failed to take action thatwould resolve the problem and that any inadequacy in the specificationswas the responsibility of the architect to the school board. The District Court ordered Simons to pay the school board theamount paid to Ace for installation of the tanks and other parts. Simonsappeals. The issuespresented for review are: 1. Whether it is mandatory to invoke a sta.ndardized arbitration clause in an architect's servicecontract. 2. Who is responsible for payment to Ace for the subsequent modification of thewater system. 3. Whether the tenpercent contingency fund provided in the contract should be used topay the debt. The first question iswhether Simons can now claim that since the school district did not arbitrate they cannot now seek reimbursement for the payment to Ace. It is well settled inMontana that when there are issuesof law or mixed issues of law and fact,arbitration is notmandatory without the consent of the parties involved. In this case, the underlying questions to be resolved by the District Court

were: Was the architect negligent in his workmanship and inspection of the building? Does liability attach if the plans and specifications of the architect were properly followed? Who is responsible for payment to Simons? These

are questions of law and mixed questions of law an.dfact. Section 28-2-708,MCA,provides: "Restraints upon legal proceedings void. Every stipulation or condition in a contractby which any party thereto is restricted from enforcing his rights under the contract by the usual proceedings in the ordinary tribunals or which limits the time within which he may thus enforce his rights is void.

### " This Court has held that contract provisions which require parties to submit futured.isputesas to questions of law or mixed questions of law and fact are void under this section. Palmer Steel Structures v. Westech, Inc. (1978), 178Mont. 347, 350, 584 P.2d 152, 154. In this case,neitherparty consented to arbitrate the dispute. Without the consent of theparties the clausewasunenforceable. Furthermore, the defense of the arbitration provision of the contract was not raised by Simons in his answer and third-party complaint. The right to raise enforcement of the arbitration clausemay be waived by failureto assert it in a timely manner. If a party fails to raise the right to arbitrate in his pleadings, he waives his right. 5 Am.Jur. Arbitration and Award S 51, at 556, 557. In this case, Simons did not raise the issue of arbitration until much later in theproceedings. For these reasons Simons is precluded from claiming that the dispute should have been submitted to arbitration. The second issue is who is responsible for payment for the construction.andmodification of thewater system. The District Court found that: "The specifications submitted pertaining to the drilling of the well, the development of the water supply, storage and water system, were inadequate; and were not in sufficient detail compared to specificationson other matters relating to saidproject." There was testimony presented at trial to show that the plans and specificationswere insufficient,thereby rendering the system inoperative. Tom Smith,an expert in the field of well drilling, testified that the system was installed as provided in the plans and specificationsand that this system

was inadequate. He further testified that he felt the problem was apparent from the outset of the project. Simons testified that the tanks and pumpwere installed according to the architect'sdesign. On review, this Court must determine whether there is sufficient evidence in the record to sustain the findings ofthe District Court. Only when the findings of the District Court are clearly erroneous will they be set aside. Rule 52(a)

## ,M.R.Civ.P. ; McConnell v. Dempster (1982)

## , Mont

# .

In the present case there was sufficient evidence to support the findings of the District Court that the specifications of the architect with regard to the water supply,storageandwater systemwere inadequate. The contra.ctoris not responsible for errors or defects in the plans and is not liable, absent negligence on his part, where the owner's plans and specifications prove defective. Sandkay ConstructionCo. v. StateHighway C~mm'n.

(1965),145Mont. 180,188-189, 399 P.2d 1002, 1007. In that case the State was found responsible for the defects in the plans and specifications as the owner/architect. In the present case the District Court found that: "Ordinarily the drilling of a well,development of same and establishment of water supply is not considered by contractors and the construction industry as part of any expansion, remodeling and additionproject. However, itwas required as such by reason of the EDA monies which included same. "By reason of said requirement, the Third-Party Defendant, W. C. Simons & Associates assumed the same responsibilities and duties as the architect for the project as it related to all other specifications, performances, etc. for construction, additionand remodeling." Simons testified that well systems are not normally included in the architect's contract but that thiswas one of the requirements necessary to obtain an EDA grant. William Janes, of Stewart and Janes also testified that the water well and water systemnotusually included in the architect's plans and specificationswas included in this contract. Given the terms of the original contract, the supplemental agreement and the testimony presented therewassufficient evidence presented to uphold.the findings of the District Court that Simons was responsible for the performance of the architectural duties which were found to be deficient. When Simons directed the general contractor to remedy the problem, the plans were not sufficiently detailed to inform the general contractorofwhat changeswere necessary. As a result, the school district was forced to hire Ace to remedy the problem in accordance with the advice of Tom Smith. Simonsargues thathe informed Stewart and Janes that they had to comply with state, federal and local laws requiring potable water. He argues that these laws were incorporated into the contract and were therefore binding on Stewartand Janeswithout furtherdirection fromhim. In Sandkay, the State argued that the provisions of the "Standard Specifications"were incorporatedby reference into the construction contra-ct. The "Sta-ndardSpecifications" consisted of aprinted book containing 502pages. This Court agreedwith theDistrictCourt: "That the provisions of the Standard Specifications

# ... as part of said contract were intended by both parties and can only be construed to allow the Project Engineer to make those normal and anticipated changes in the plans and drawings required by the exigencies of ordinary and anticipated highway construction and were not intended by the parties and cannot be construed to apply to conditions which are abnormal, unanticipated and substantially different from those shown in the contract plans and drawaings,or to authorize or allow defendant to require different and more difficult excavation without additional compensation." 145Mont. at 187. Simons argues that Sandkay does not apply in this case because the condition was not abnormal, unanticipated or substantially different from those in the contract plans and drawings. The remedy in this case was the installation ofseveral new tanks and other parts at a cost of $1,806.49. Sand in thewater system does not appear tobe anormal or an anticipated condition. Installation of additional tanks and other parts does not appear to be normal or anticipated. Therefore the assertion that the rule in Sandkay does not apply iswithoutmerit. The third issue concerns the application of the EDA contingency fund. Simons argues that the 10 percent contingency fund,required as a condition to federal funding, should be used to pay for the subsequent installment of the

new tanks and other parts. The owner/architect contract provides: "When a fixed limit of Construction Cost is established as a condition of this Agreement, it shallbe inwriting signedby the parties and shall includea bidding contingency of tenpercent unless another amount is agreed upon in writing. When such a fixed limit is established, the Architect shall be permitted to determine what materials, equipment, component systems and types of construction are to be included in the Contract Documents, and to make reasonable adjustments in the scope of the Project to bring it within the fixed limit. The architectmay also include in the Contract Documents alternate bids to adjust the ConstructionCost to the fixed limit." Since Simon did not make the specific order to install the additional tanks and otherparts andwas uncooperative in his attempt to remedy the situation he cannot avail himself of the benefits of the contingency fund. The contract specifically provides that the architect may require the money in the fundbe used to include contingencies. However, it was the school district that hired Ace to remedy the problem. Itdid so in accordance with the recommendation of Tom Smith to insurenormal operation the facility. The judgment of the District Court is affirmed in all respects.' Justice 

# d o

We Concur: