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 

STENERSON AND 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, Judge presiding. 

Counsel of Record : 

For Appellant: 

Warden, Christiansen & Johnson, Kalispell, Montana 

For Respondent: 

Cumming & Weaver, Columbia Falls, Montana 

Submitted on Briefs: April 15, 1981 

Decided : JUN 1 5 1981 

Filed: JUh! 15 1Wi 
Mr. Chief Justice Frank I. Haswell delivered the Opinion of the 

Court. 

Plaintiffs Stenerson and Schmidt, contractors, brought 

this action in District 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 Hills Golf Course. 

The City appeals. 

In March 1975, the City of Kalispell asked for bids for 

rough grading and related work on an addition to the Buffalo 

Hills Golf 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. Plaintiffs began 

working shortly thereafter and completed the work in the allotted 

60 days. During this period, respondents performed additional 

work which was negotiated separately and was paid for by 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 in Phase 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 for Phase 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 earth which they had moved which had not been computed 
into the bid price. The City ref used to pay and the contractors 

filed suit. 

The City moved to dismiss, and following plaintiffs' 

filing of 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 contractors can have no claim for the additional work done. 

The district judge found that plaintiff contractors 

justifiably relied on the in£ ormat ion provided in the speci f ications and plans in making 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 issues which 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 

City moved 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 

rely on the figures on the plans and specifications. By entering 

into the contract, the bidders bound themselves to do the rough 
grading 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 any material fact and that the moving 

party is entitled to judgment as a matter of law." Here the 

district judge 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 line of cases from this 

Court, the district judge 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 in entering 

into the contract. See Sandkay Const. Co. v. State Highway 

Comm'n (1965), 145 Mont. 180, 399 P.2d 1002; Haggart Const. Co. 

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

v. Sundling & Son#, Inc. (1967), 150 Mont. 388, 436 P.2d 83; 

Sornsin Const. Co. v. State (1978), 180 Mont. 248, 590 P.2d 125, 

35 St.Rep. 2001. With this factual determination necessary to 

a decision in the case, the district judge was correct in denying 

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 findings and conclusions do not support 

the judgment. In making this argument, appellant again urges 

this Court to ignore the long line of cases from this Court which 

give a contractor the right to rely on plans and specifications 

furnished to him in bidding on and contracting a job. The 

district judge here considered the evidence in light of these 

decisions and based his findings and conclusions on the evidence 
presented. We find no error. 

In 1965, in the case of Sandkay Const. Co. v. State 

Highway Comm'n (1965), 145 Mont. 180, 399 P.2d 1002, this Court 

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 

rely on them and recover for expenses necessary 

by conditions being other than as represented 

by such plans?" Sandkay, supra, 145 Mont. at 

184, 399 P.2d at 1005. 

In Sandkay, we answered that question in the 

af f irmative, finding there that the conditions actually encountered 

by the contractors in performing the contract could not have been 

reasonably anticipated, which, in effect, put the contractors into 

the position of having to "'perform an entirely different 

contract than [sic] the one upon which they bid. 'I' Sandkay , 

supra, 145 Mont. at 185, 399 P.2d at 1005. See also Hash v. 

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

Several other cases have presented the issue of the 

effect of exculpatory clauses on a contractor's right to recover 

in situations in which reliance is alleged by the contractor. 

In Haggart Const. Co. v. State Highway Comm'n (1967), 149 Mont. 

422, 427 P.2d 686, Haggart bid on a highway construction job and 

was told that he could use gravel in State-optioned pits as 

described in the "Available Surfacing Materials Reports. " The 

gravel was later found to be unsuitable and the plaintiff 

incurred additional expense in obtaining gravel elsewhere. The 

defendant did not deny that the materials reports were 

misleading, but rather relied on exculpatory provisions in the 

contract as a defense to the suit. Those provisions indicated 

that the Commission made no guaranty as to the quality and quantity of the materials available, and further that if the contractor chose to furnish his own materials, he would be responsible 

to produce satisfactory material. 
learned that the plans failed to show truthfully the amount of 

material that would actually have 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 also note that as in the Haggart case, the bidders had less 

than three weeks to submit bids, and all on-site inspection was 

conducted during the spring break-up. 

In sum the district judge found that despite the 

exculpatory clauses in the contract signed by Stenerson and 

Schmidt, the contractors were justified in relying on the representations made by defendant in furnishing the plans and 

specifications . Both Schmidt and Stenerson tes ti£ ied that they 

bid this job 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 that he and his partner used the figures on the 

plans because "in my business we have to rely on the expertise of 

the people who make these .I' He testified that he had no reason 

to believe that the figures were inaccurate, and had no way of 

so determining without surveying. Mr. Stenerson testified that 

in the course of his work career, he had bid on jobs perhaps 200 

times, using plans and specifications such as these as the basis 

of his bid. His testimony also indicated that in his business of 

earthmoving it was not customary to double-check the architect or 

engineer by resurveying. 

We find this evidence to be sufficient to support the 

judge 's finding that the contractors justifiably relied on the 
The district judge found that the exculpatory provisions 

were not enforceable. He noted that Haggart received the 

materials reports only 14 days before bid letting, giving him 

little time to 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 district judge concluded : 

" [TI here is nothing to show that appellant 

expect [ed] less than complete reliance on its 

materials reports. 

"If the State Highway Commission were allowed 

to rely on the exculpatory provisions of the 

contract, the purpose for which such reports 

are offered would be sadly frustrated, if not 

totally destroyed. No prudent contractor 

would proceed in reliance on such reports at 

his absolute peril; the necessity to guard 

against unforeseen deficiencies would result 

in much higher bids than conditions would normally warrant." Haggart, supra, 149 Mont. at 

425, 427 P.2d at 687-688. 

We affirmed the district judge in that decision but 

noted : 

"We are not here holding that such exculpatory 

clauses may not be enforced in other situuations, that detrimental reliance may be 

assumed in all cases, or that parties to such 

contracts are bound to exercise anything less 

than reasonable and prudent judgment. In 

other words we will look to justifiable 

reliance.'" Haggart, supra, i49 Mont. at 428, 

427 P.2d at 689. 

The district judge in the instant case noted factors 

supporting his determination of justifiable reliance, similar to 

those we approved in Haggart. He found that the defendant knew 

or should have known that the information on the plans and specifications would 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 have 
erroneous information provided to them by defendant. We will not 

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