Title: STENERSON v CITY OF KALISPELL
Citation: N/A
Docket Number: 80-320
State: Montana
Issuer: Montana Supreme Court
Date: June 15, 1981

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: J U h ! 1 5 1Wi M r . Chief J u s t i c e Frank I. H a s w e l l d e l i v e r e d t h e Opinion of t h e C o u r t . P l a i n t i f f s S t e n e r s o n and Schmidt, c o n t r a c t o r s , b r o u g h t t h i s a c t i o n i n D i s t r i c t Court, Flathead County, seeking to r e c o v e r $28,301.31 from t h e C i t y of K a l i s p e l l . The d i s t r i c t judge e n t e r e d judgment f o r t h e c o n t r a c t o r s f o r t h e t o t a l cost o v e r r u n on a rough g r a d i n g job on t h e B u f f a l o H i l l s Golf Course. The C i t y a p p e a l s . I n March 1975, t h e C i t y of K a l i s p e l l asked f o r b i d s f o r rough g r a d i n g and r e l a t e d work on an a d d i t i o n to t h e B u f f a l o H i l l s Golf Course. Respondent c o n t r a c t o r s o b t a i n e d c o p i e s of t h e p l a n s and s p e c i f i c a t i o n s f o r t h e proposed work, i n c l u d i n g a b o o k l e t e n t i t l e d "Rough Grading S p e c i f i c a t i o n s " and a map e n t i t l e d "Rough Grading Plans". Based on t h e s e documents, r e s p o n d e n t s sub- m i t t e d a b i d of $94,991.50. On A p r i l 18, 1975, r e s p o n d e n t s e n t e r e d i n t o a c o n t r a c t w i t h t h e C i t y f o r t h e lump sum of $94,991.50, w i t h a u n i t cost of $1.10 p e r c u b i c yard f o r any a d d i t i o n a l work. P l a i n t i f f s began working s h o r t l y t h e r e a f t e r and completed t h e work i n t h e a l l o t t e d 60 d a y s . During t h i s p e r i o d , r e s p o n d e n t s performed a d d i t i o n a l work which w a s n e g o t i a t e d s e p a r a t e l y and was paid f o r by t h e C i t y . They a l s o e n t e r e d i n t o a c o n t r a c t f o r a d d i t i o n a l c o n s t r u c t i o n , c a l l e d Phase Two, which was terminated a f ter par- t i a l completion because of l a c k of funds. While engaged i n Phase One, t h e c o n t r a c t o r s a p p a r e n t l y a d v i s e d t h e C i t y on s e v e r a l o c c a s i o n s t h a t t h e y were moving more material t h a n was contemplated i n t h e c o n t r a c t . They d i d n o t r e q u e s t a change o r d e r , n o r demand e x t r a compensation b e f o r e c o n t r a c t i n g f o r Phase TWO, n o r d i d t h e y e v e r r e f u s e to c o n t i n u e working. F i n a l payment for Phases One and Two was completed p r i o r t o J a n u a r y 1976. On J a n u a r y 7, 1976, c o n t r a c t o r s demanded by l e t t e r t h a t t h e C i t y compensate them f o r t h e e x t r a 27,477 c u b i c y a r d s of e a r t h which t h e y had moved which had not been computed i n t o t h e bid p r i c e . The C i t y ref used t o pay and t h e c o n t r a c t o r s f i l e d s u i t . The C i t y moved t o d i s m i s s , and following p l a i n t i f f s ' f i l i n g of an amended complaint, moved f o r summary judgment. The C i t y argued t h a t by reason of c e r t a i n e x c u l p a t o r y c l a u s e s i n t h e g r a d i n g c o n t r a c t , t h e c o n t r a c t o r s had assumed t h e r i s k of making a n e r r o n e o u s bid and could not hold t h e C i t y r e s p o n s i b l e . Because of t h e p r o v i s i o n s i n the c o n t r a c t documents i n d i c a t i n g t h a t t h e c a l c u l a t i o n s on t h e "Rough Grading Plan" were "approximate," and t h a t t h e c o n t r a c t o r s " s h a l l make [ t h e i r ] own d e t e r m i n a t i o n a s t o t h e amount of t o p s o i l and grading work to be done b e f o r e s u b m i t t i n g a b i d , " the C i t y a s s e r t s t h a t t h e contrac- tors can have no c l a i m f o r t h e a d d i t i o n a l work done. The d i s t r i c t judge found t h a t p l a i n t i f f c o n t r a c t o r s j u s t i f i a b l y r e l i e d on t h e in£ ormat i o n provided i n t h e s p e c i f ica- t i o n s and p l a n s i n making t h e i r b i d , and t h a t t h e s p e c i f i c a t i o n s and p l a n s were i n e r r o r i n s e t t i n g f o r t h t h e amount of m a t e r i a l which would have to be moved. H e awarded $28,301.31 t o p l a i n - t i f f s to compensate f o r t h e overrun of 27,477 c u b i c y a r d s moved. The C i t y a p p e a l s , r a i s i n g s e v e r a l i s s u e s which we frame a s f o l l o w s : 1) Did t h e d i s t r i c t judge err i n not g r a n t i n g d e f e n d a n t ' s motion f o r summary judgment? 2 ) Does t h e evidence s u p p o r t t h e f i n d i n g s of t h e District Court? 3 ) Is t h e C i t y e n t i t l e d to judgment under t h e language of t h e c o n t r a c t ? A f t e r t h e c o n t r a c t o r s f i l e d t h e i r amended complaint, t h e C i t y moved f o r summary judgment. The C i t y argued t h a t t h e c o n t r a c t documents p l a i n l y advised a l l b i d d e r s t o make t h e i r own d e t e r m i n a t i o n a s t o t h e amount of m a t e r i a l to be moved and not to r e l y on t h e f i g u r e s on t h e p l a n s and s p e c i f i c a t i o n s . By e n t e r i n g i n t o t h e c o n t r a c t , t h e b i d d e r s bound themselves t o do t h e rough g r a d i n g a t t h e p r i c e b i d and can g e t no a d d i t i o n a l compensation. Thus, t h e C i t y a r g u e s , t h e p l a i n t i f f s ' c o m p l a i n t f a i l s to s t a t e a claim, t h e r e can be no i s s u e s of material f a c t b e f o r e t h e c o u r t , and summary judgment should have been g r a n t e d . Rule 56, M.R.Civ.P. p r o v i d e s t h a t a defending p a r t y may move f o r summary judgment. Summary judgment s h a l l be rendered by t h e judge " i f t h e p l e a d i n g s , d e p o s i t i o n s . . . i n t e r r o g a t o r i e s . . . admissions . . . [and] a f f i d a v i t s , i f any, show t h a t t h e r e is no genuine i s s u e as t o any material f a c t and t h a t t h e moving p a r t y is e n t i t l e d to judgment as a matter of l a w . " Here t h e d i s t r i c t judge denied summary judgment, w i t h o u t memorandum. H i s r e a s o n a p p e a r s to be obvious: a genuine i s s u e of material f a c t e x i s t e d i n t h i s case. Based on a r e c e n t l i n e of cases from t h i s C o u r t , t h e d i s t r i c t judge determined t h a t t h e f a c t f i n d e r had to h e a r t h e e v i d e n c e i n o r d e r to f i n d whether or n o t t h e c o n t r a c t o r s j u s t i f i a b l y r e l i e d on t h e p l a n s and s p e c i f i c a t i o n s i n e n t e r i n g i n t o t h e c o n t r a c t . See Sandkay Const. Co. v. S t a t e Highway Comm'n ( 1 9 6 5 ) , 1 4 5 Mont. 180, 399 P.2d 1002; Haggart Const. Co. v. S t a t e Highway Comm'n ( 1 9 6 5 ) , 149 Mont. 422, 427 P.2d 686; Hash v . Sundling & Son#, Inc. ( 1 9 6 7 ) , 150 Mont. 388, 436 P.2d 83; S o r n s i n Const. Co. v. S t a t e ( 1 9 7 8 ) , 180 Mont. 248, 590 P.2d 125, 35 St.Rep. 2001. With t h i s f a c t u a l d e t e r m i n a t i o n n e c e s s a r y to a d e c i s i o n i n t h e case, t h e d i s t r i c t judge was c o r r e c t i n denying d e f e n d a n t ' s motion. A p p e l l a n t n e x t a t t a c k s t h e f i n d i n g s of f a c t and conclu- s i o n s of l a w , a r g u i n g t h a t t h e e v i d e n c e does n o t s u p p o r t t h e f i n d i n g s , and t h a t t h e f i n d i n g s and c o n c l u s i o n s do n o t s u p p o r t t h e judgment. In making t h i s argument, a p p e l l a n t a g a i n u r g e s t h i s Court to i g n o r e t h e long l i n e of cases from t h i s Court which g i v e a c o n t r a c t o r t h e r i g h t t o r e l y on p l a n s and s p e c i f i c a t i o n s f u r n i s h e d t o him i n b i d d i n g on and c o n t r a c t i n g a job. The d i s t r i c t judge h e r e c o n s i d e r e d t h e e v i d e n c e i n l i g h t of t h e s e d e c i s i o n s and based h i s f i n d i n g s and c o n c l u s i o n s on t h e e v i d e n c e p r e s e n t e d . W e f i n d no error. I n 1965, i n t h e case of Sandkay Const. Co. v. S t a t e Highway Comm'n ( 1 9 6 5 ) , 1 4 5 Mont. 180, 399 P.2d 1002, t h i s Court a d d r e s s e d t h e f o l l o w i n g i s s u e : " [W] h e r e p l a n s and estimates o r s p e c i f i c a t i o n s are used as a b a s i s f o r b i d s , is a c o n t r a c t o r who h a s been l e d to b e l i e v e t h a t t h e con- d i t i o n s i n d i c a t e d i n such p l a n s e x i s t , a b l e to r e l y on them and r e c o v e r f o r expenses n e c e s s a r y by c o n d i t i o n s being o t h e r t h a n as r e p r e s e n t e d b y such plans?" Sandkay, s u p r a , 1 4 5 Mont. a t 184, 399 P.2d a t 1005. I n Sandkay, we answered t h a t q u e s t i o n i n t h e a f f i r m a t i v e , f i n d i n g t h e r e t h a t t h e c o n d i t i o n s a c t u a l l y encountered b y t h e c o n t r a c t o r s i n performing t h e c o n t r a c t could n o t have been r e a s o n a b l y a n t i c i p a t e d , which, i n e f f e c t , p u t t h e c o n t r a c t o r s i n t o t h e p o s i t i o n of having to " ' p e r f o r m an e n t i r e l y d i f f e r e n t c o n t r a c t t h a n [ s i c ] t h e one upon which t h e y b i d . ' I ' Sandkay , s u p r a , 145 Mont. a t 185, 399 P.2d a t 1005. See a l s o Hash v. S u n d l i n g and Sons, Inc. ( 1 9 6 7 ) , 150 Mont. 388, 436 P.2d 8 3 . S e v e r a l o t h e r cases have p r e s e n t e d t h e i s s u e of t h e e f f e c t of e x c u l p a t o r y c l a u s e s on a c o n t r a c t o r ' s r i g h t to r e c o v e r i n s i t u a t i o n s i n which r e l i a n c e is a l l e g e d by t h e c o n t r a c t o r . I n Haggart Const. Co. v . S t a t e Highway Comm'n ( 1 9 6 7 ) , 149 Mont. 422, 427 P.2d 686, Haggart bid on a highway c o n s t r u c t i o n job and w a s t o l d t h a t he could use g r a v e l i n S t a t e - o p t i o n e d p i t s as d e s c r i b e d i n t h e " A v a i l a b l e S u r f a c i n g Materials Reports. " The g r a v e l was later found to be u n s u i t a b l e and t h e p l a i n t i f f i n c u r r e d a d d i t i o n a l expense i n o b t a i n i n g g r a v e l e l s e w h e r e . The d e f e n d a n t d i d n o t deny t h a t t h e materials r e p o r t s were m i s l e a d i n g , b u t r a t h e r r e l i e d on e x c u l p a t o r y p r o v i s i o n s i n t h e c o n t r a c t as a d e f e n s e to t h e s u i t . Those p r o v i s i o n s i n d i c a t e d t h a t t h e Commission made no g u a r a n t y as to t h e q u a l i t y and quan- t i t y of t h e materials a v a i l a b l e , and f u r t h e r t h a t i f t h e c o n t r a c - t o r chose t o f u r n i s h h i s own materials, he would be r e s p o n s i b l e t o produce s a t i s f a c t o r y material. l e a r n e d t h a t t h e p l a n s f a i l e d t o show t r u t h f u l l y t h e amount of material t h a t would a c t u a l l y have t o be moved . . . t h e b i d d e r would have had t o have a r e s u r v e y of t h e whole site, a t con- s i d e r a b l e expense and d e l a y . " A d d i t i o n a l l y , t h e judge found t h a t t h e r e was no i n f o r - mation i n t h e s p e c i f i c a t i o n s i n d i c a t i n g t h a t t h e p l a n s were based on an aerial map w i t h a c o n t o u r i n t e r v a l of f i v e f e e t , which was t h e n d e p i c t e d on t h e p l a n s w i t h a c o n t o u r i n t e r v a l of one f o o t . W e a l s o n o t e t h a t as i n t h e Haggart case, t h e b i d d e r s had less t h a n t h r e e weeks t o submit b i d s , and a l l o n - s i t e i n s p e c t i o n was conducted d u r i n g t h e s p r i n g break-up. I n sum t h e d i s t r i c t judge found t h a t d e s p i t e t h e e x c u l p a t o r y c l a u s e s i n t h e c o n t r a c t signed by S t e n e r s o n and Schmidt, t h e c o n t r a c t o r s were j u s t i f i e d i n r e l y i n g on t h e r e p r e - s e n t a t i o n s made by d e f e n d a n t i n f u r n i s h i n g t h e p l a n s and s p e c i f i c a t i o n s . Both Schmidt and S t e n e r s o n tes t i £ i e d t h a t t h e y b i d t h i s job i n t h e u s u a l manner, which included r e l y i n g on t h e p l a n s and s p e c i f i c a t i o n s . They t e s t i f i e d to making o n - s i t e i n s p e c t i o n s p r i o r to b i d d i n g , and could see no d i s c r e p a n c y be- tween t h e ground e l e v a t i o n s as s e e n on t h e ground and t h e ground e l e v a t i o n s as shown on t h e p l a n s . M r . Schmidt i n d i c a t e d on cross-examination t h a t he and h i s p a r t n e r used t h e f i g u r e s on t h e p l a n s because " i n my b u s i n e s s we have to r e l y on t h e e x p e r t i s e of t h e people who make t h e s e .I' H e t e s t i f i e d t h a t he had no r e a s o n t o b e l i e v e t h a t t h e f i g u r e s were i n a c c u r a t e , and had no way of s o d e t e r m i n i n g w i t h o u t surveying. M r . S t e n e r s o n t e s t i f i e d t h a t i n t h e c o u r s e of h i s work career, he had bid on jobs p e r h a p s 200 times, u s i n g p l a n s and s p e c i f i c a t i o n s such as t h e s e as t h e b a s i s o f h i s b i d . H i s t e s t i m o n y also i n d i c a t e d t h a t i n h i s b u s i n e s s of earthmoving it w a s n o t customary to double-check t h e a r c h i t e c t or e n g i n e e r by r e s u r v e y i n g . W e f i n d t h i s e v i d e n c e to be s u f f i c i e n t to s u p p o r t t h e judge 's f i n d i n g t h a t t h e c o n t r a c t o r s j u s t i f i a b l y r e l i e d on t h e The d i s t r i c t judge found t h a t t h e e x c u l p a t o r y p r o v i s i o n s were n o t e n f o r c e a b l e . H e noted t h a t Haggart r e c e i v e d t h e materials r e p o r t s o n l y 1 4 d a y s b e f o r e b i d l e t t i n g , g i v i n g him l i t t l e t i m e to i n v e s t i g a t e independently. H e f u r t h e r found t h a t few c o n t r a c t o r s b i d d i n g on such p r o j e c t s have s u f f i c i e n t t i m e o r test f a c i l i t i e s to make an i n t e l l i g e n t a p p r a i s a l of materials. D e s p i t e t h e e x c u l p a t o r y c l a u s e s , t h e d i s t r i c t judge concluded : " [TI h e r e is n o t h i n g to show t h a t a p p e l l a n t e x p e c t [ed] less t h a n complete r e l i a n c e on its materials r e p o r t s . " I f t h e S t a t e Highway Commission were allowed t o r e l y on t h e e x c u l p a t o r y p r o v i s i o n s of t h e c o n t r a c t , t h e purpose f o r which such r e p o r t s are o f f e r e d would be s a d l y f r u s t r a t e d , i f n o t t o t a l l y d e s t r o y e d . No p r u d e n t c o n t r a c t o r would proceed i n r e l i a n c e on such r e p o r t s a t h i s a b s o l u t e p e r i l ; t h e n e c e s s i t y to guard a g a i n s t u n f o r e s e e n d e f i c i e n c i e s would r e s u l t i n much h i g h e r b i d s t h a n c o n d i t i o n s would nor- m a l l y warrant." Haggart, s u p r a , 149 Mont. a t 425, 427 P.2d a t 687-688. W e a f f i r m e d t h e d i s t r i c t judge i n t h a t d e c i s i o n but n o t e d : "We are n o t h e r e holding t h a t such e x c u l p a t o r y c l a u s e s may n o t be enforced i n o t h e r s i t u - u a t i o n s , t h a t d e t r i m e n t a l r e l i a n c e may be assumed i n a l l cases, o r t h a t p a r t i e s t o such c o n t r a c t s are bound to e x e r c i s e anything less t h a n r e a s o n a b l e and p r u d e n t judgment. In o t h e r words we w i l l look to j u s t i f i a b l e r e l i a n c e . ' " Haggart, s u p r a , i 4 9 Mont. a t 428, 427 P.2d a t 689. The d i s t r i c t judge i n t h e i n s t a n t case noted factors s u p p o r t i n g h i s d e t e r m i n a t i o n of j u s t i f i a b l e r e l i a n c e , similar to t h o s e w e approved i n Haggart. H e found t h a t t h e d e f e n d a n t knew or should have known t h a t t h e i n f o r m a t i o n on t h e p l a n s and s p e c i - f i c a t i o n s would be used by p r o s p e c t i v e b i d d e r s . Finding N o . 6 n o t e s t h a t " [ a ] l t h o u g h t h e rough g r a d i n g s p e c i f i c a t i o n s s t a t e d t h a t such f i g u r e s were approximate o n l y , such f i g u r e s d i d n o t a p p e a r to be round, b a l l park f i g u r e s b u t i r r e g u l a r amounts t h a t a p p e a r to be p r e c i s e l y c a l c u l a t e d . " A d d i t i o n a l l y , he found t h a t t h e o n - s i t e i n s p e c t i o n s would n o t have r e v e a l e d any i n f o r m a t i o n t o t h e b i d d e r s t h a t was n o t on t h e p l a n s , and t h a t "to have e r r o n e o u s i n f o r m a t i o n provided to them by d e f e n d a n t . W e w i l l n o t o v e r t u r n t h e d i s t r i c t judge where t h e r e is s u b s t a n t i a l e v i d e n c e t o s u p p o r t h i s f i n d i n g s and c o n c l u s i o n s . Marta v. Smith ( 1 9 8 0 ) , Mont . , 622 P.2d 1011, 1015, 38 St.Rep. 28, 32. The o r d e r of t h e District Court awarding t h e c o n t r a c t o r s t h e total cost of o v e r r u n is a f f i r m e d . Chief J u s t i c e