### No. 80-320



### IN THE SUPREME COURT OF THE STATE OF MONTANA 1981

CHARLES STENERSON and F. 

### W. SCHMIDT, joint venturers under the name of STENERSONAND SCHMIDT CO-PARTNERS, Plaintiffs and Respondents,

THE CITY OF KALISPELL, a municipal corporation of Montana, Defendant and Appellant.

Appeal from: District Court of the Eleventh Judicial District, In and for the County of Flathead,The Honorable James M. 

### Salansky, Judgepresiding.

Counsel of Record: 

### ForAppellant: Warden, Christiansen & 

### Johnson,Kalispell,Montana For Respondent: Cumming & 

### Weaver, Columbia Falls,Montana

Submitted on Briefs: April 15, 1981 Decided: 

## JUN

## 15

# 1981

Filed: 

## JUh!15

# 1WiMr. Chief JusticeFrank I. Haswell delivered the Opinion of the Court. Plaintiffs Stenerson and Schmidt, contractors, brought thisaction inDistrict Court, Flathead County, seeking to

recover $28,301.31 from the City of Kalispell. The district judge entered judgment for the contractors for the total cost

overrun on a rough grading job on the Buffalo HillsGolf Course. The City appeals. InMarch 1975, the City of Kalispell asked forbids for rough grading and related work on an addition 

### to the Buffalo HillsGolf Course. Respondent contractors obtained copies of the plans and specifications for the proposed work, including a booklet entitled "Rough Grading Specifications" and a map entitled "Rough Grading Plans". Based on these documents, respondents submitted a bid 

### of $94,991.50. On April 18, 1975, respondents entered into a contract with the City for the lump sum of $94,991.50, with a unit cost of $1.10 per cubic yard for any additional work. Plaintiffsbegan working shortly thereafter and completed the work inthe allotted 60 days. During thisperiod, respondents performed additional work which 

### was negotiated separately and 

### was paid forby the City. They also entered into a contract for additional construction, called Phase Two, which 

### was terminated af

### ter partial completion because of lack of funds. While engaged inPhase One, the contractors apparently advised the City on several occasions that they 

### were moving 

### more material than was contemplated in the contract. They did not request a change order, nor demand extra compensation before contracting forPhase TWO,nor did they ever refuse to continue working. Final payment for Phases One and Two was completed prior 

### to January 1976. On January 7, 1976, contractors demanded by letter that the City compensate them for the extra 27,477 cubic yards of earthwhich they had moved which had not been computedinto the bid price. The City refused to pay and the contractors filed suit. The City moved to dismiss, and following plaintiffs' filingof an amended complaint, moved for summary judgment. The City argued that by reason of certain exculpatory clauses in the grading contract, the contractors had assumed the risk of making

an erroneous bid and could not hold the City responsible. Because of the provisions in the contract documents indicating that the calculations on the "Rough Grading Plan" were "approximate," and that the contractors "shall make [their] own determination as to the amount of topsoil and grading work 

### to be done before submitting a bid," the City asserts that the contrac

### tors can have no claim for the additional work done. The districtjudge found that plaintiff contractors justifiably relied on the in£ ormation provided in the speci fications and plans inmaking their bid, and that the specifications and plans were in error in setting forth the amount of material which would have 

### to be moved. He awarded $28,301.31 to plaintiffs

### to compensate for the overrun of 27,477 cubic yards moved. The City appeals, raising several issueswhich 

### we frame as follows: 1)Did the district judge err in not granting defendant's motion for summary judgment? 2)Does the evidence support the findings of the District Court? 3) Is the City entitled to judgment under the language of the contract? After the contractors filed their amended complaint, the Citymoved for summary judgment. The City argued that the contract documents plainly advised all bidders to make their own determination as to the amount of material to be moved and not 

### to relyon the figures on the plans and specifications. By entering into the contract, the bidders bound themselves to do the roughgrading at the price bid and can get no additional compensation. Thus, the City argues, the plaintiffs' complaint fails

### to state a 

### claim, there can be no issues of material fact before the court, and summary judgment should have been granted. Rule 56, M.R.Civ.P. provides that a defending party may

move for summary judgment. Summary judgment shall be rendered by the judge "if the pleadings, depositions

# .

# .. interrogatories



# ..

# . admissions

# .. . [and] affidavits, if any, show that there is no genuine issue as to anymaterial fact and thatthe moving party is entitled to judgment as a matter of 

### law." Here the districtjudge denied summary judgment, without memorandum. His reason appears 

### to be obvious: a genuine issue of 

### material fact existed in this

### case. Based on a recent lineof 

### cases from this Court, the districtjudge determined that the fact finder had to hear the evidence in order 

### to find whether 

### or not the contractors justifiably relied on the plans and specifications inentering into the contract. See Sandkay Const. Co. v. StateHighway Comm'n (1965), 145Mont. 180, 399 P.2d 1002; Haggart Const. Co.

v. StateHighway Comm'n (1965), 149Mont. 422, 427 P.2d 686; Hash

v. Sundling & Son#, Inc. (1967), 150Mont. 388, 436 P.2d 83; Sornsin Const. Co. v. State (1978), 180Mont. 248, 590 P.2d 125, 35 St.Rep. 2001. With this factual determinationnecessary to



### a decision in the 

### case, the districtjudge 

### was correct indenying defendant's motion. Appellant next attacks the findings of fact and conclusions of 

### law, arguing that the evidence does not support the findings, and that the findingsand conclusions do not support the judgment. In making thisargument, appellant again urges thisCourt 

### to ignore the long lineof cases from this Court which give a contractor the right to relyon plans and specifications furnished to him inbidding on and contracting 

### a job. The districtjudge here considered the evidence in lightof these decisions and based his findings and conclusions on the evidencepresented. We find no 

### error. In 1965, in the 

### case of Sandkay Const. Co. v. State Highway Comm'n (1965), 145Mont. 180, 399 P.2d 1002, thisCourt addressed the following issue: 

### "[W] here plans and 

### estimates or specifications 

### are used as a basis for bids, is a contractor who has been led 

### to believe that the conditions indicated in such plans exist, able 

### to relyon them and recover for expenses necessary by conditionsbeing other than as represented by such plans?" Sandkay, supra, 145Mont. at 184, 399 P.2d at 1005. In Sandkay, 

### we answered thatquestion in the affirmative, finding there that the conditions actuallyencountered by the contractors inperforming the contract could not have been reasonably anticipated, which, in effect, put the contractors into the position of having 

### to "'perform an entirelydifferent contract than [sic] the one upon which they bid. 'I' Sandkay

## , supra, 145Mont. at 185, 399 P.2d at 1005. See alsoHash 

### v. Sundling and Sons, Inc. (1967), 150Mont. 388, 436 P.2d 83. Several other 

### cases have presented the issue of the effectof exculpatory clauses on a contractor's right 

### to recover in situations inwhich reliance 

### is alleged by the contractor. In Haggart Const. Co. v. StateHighway Comm'n (1967), 149Mont. 422, 427 P.2d 686, Haggart bid on a highway construction job and

was told thathe could use gravel inState-optioned pits as described in the "Available Surfacing Materials Reports.

### " The gravel 

### was later found 

### to be unsuitable and the plaintiff incurred additional expense inobtaining gravel elsewhere. The defendantdid not deny that the materials reportswere misleading, but rather relied on exculpatory provisions in the contract as a defense 

### to the suit. Those provisions indicated thatthe Commission made no guaranty as to the quality and quantityof the 

### materials available, and further that if the contrac

### tor chose to furnish hisown 

### materials, he would be responsible 

### toproduce satisfactory

### material.learned that the plans failed to show truthfullythe amount of 

### material thatwould actuallyhave to be moved

# ... the bidder would have had to have 

### a resurvey of the whole site, at considerable expense and delay.

### " Additionally, the judge found that there 

### was no information in the specifications indicating that the plans 

### were based

on an aerial map with a contour interval of five feet, which 

### was then depicted on the plans with a contour interval of one foot. We alsonote that as in the Haggart 

### case, the bidders had 

### less than three weeks to submit bids, and allon-site inspection

### was conducted during the spring break-up. In sum the districtjudge found thatdespite the exculpatory clauses in the contract signed by Stenerson and Schmidt, the contractors

### were justified inrelying on the representationsmade by defendant in furnishing the plans and specifications

# . Both Schmidt and Stenerson testi£ ied that they bid thisjob in the usual manner, which included relying on the plans and specifications. They testified to making on-site inspections prior to bidding, and could see no discrepancy between the ground elevations as seen on the ground and the ground elevations as shown on the plans. Mr. Schmidt indicated on cross-examination thathe and hispartner used the figures on the plans because "in my business

### we have 

### to relyon the expertise of the people who make these.I' He testified thathe had no reason 

### tobelieve that the figures were inaccurate, and had no way of

sodetermining without surveying. Mr. Stenerson testified that inthe course of hiswork 

### career, he had bid on jobs perhaps 200 times, using plans and specifications such as these as the basis of hisbid. Histestimony also indicated that inhisbusiness of earthmoving it was not customary to double-check the architect or engineer by resurveying. We find thisevidence 

### to be sufficient

### to support the judge's finding that the contractors justifiably relied on theThe districtjudge found that the exculpatory provisions



### were not enforceable. He noted thatHaggart received the 

### materials reports only 14 days before bid letting, giving him little

### timeto investigate independently. He further found that few contractors bidding on such projects have sufficient

### time or test facilities to make an intelligent appraisal of materials. Despite the exculpatory clauses, the districtjudge concluded: 

### "[TIhere 

### is nothing to show that appellant expect[ed] 

### less than complete reliance on its 

### materials reports. "If the StateHighway Commission 

### were allowed to relyon the exculpatory provisions of the contract, the purpose forwhich such reports 

### are offered would be sadly frustrated, if not totallydestroyed. No prudent contractor would proceed in reliance on such reports at hisabsolute peril; the necessity to guard against unforeseen deficiencies would result inmuch higher bids than conditions would normally warrant." Haggart, supra, 149Mont. at 425, 427 P.2d at 687-688. We affirmed the districtjudge in thatdecision but noted: "We 

### are not here holding that such exculpatory clauses may not be enforced inother situuations, that detrimental reliancemay be assumed in all 

### cases, orthatparties to such contracts 

### are bound to exercise anything 

### less than reasonable and prudent judgment. In otherwords 

### we willlook 

### to justifiable reliance.'" Haggart, supra, i49Mont. at428, 427 P.2d at 689. The districtjudge in the instant case noted 

### factors supporting hisdetermination of justifiable reliance, 

### similar to those 

### we approved inHaggart. He found that the defendant knew



### or should have known that the information on the plans and specificationswould be used by prospective bidders. Finding No. 6 notes that 

### "[a]lthough the rough grading specifications stated that such figures 

### were approximate only, such figures did not appear to be round, ball park figures but irregular amounts that appear 

### to be precisely calculated." Additionally, he found that the on-site inspections would not have revealed any information 

### to the bidders that

### was not on the plans, and that "to haveerroneous information provided 

### to them by defendant. Wewillnot overturn the district judge where there is substantial evidence to support his findings and conclusions. Marta v. Smith (1980), Mont

# . , 622 P.2d 1011, 1015, 38 St.Rep. 28, 32. The order of the District Court awarding the contractors the total 

### cost of overrun is affirmed.

Chief Justice