Court Opinion

ID: 9850802
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:03:11.241206+00
Date Added: 2024-06-11T09:20:43.781857
License: Public Domain

JUSTICE TRIEWEILER,
dissenting:
I dissent from the opinion of the majority.
*287If the facts are as alleged by the plaintiff (and for purposes of this proceeding we must assume that they are), then the result of this case is that no party can be held accountable for its fraudulent conduct so long as it is in a sufficiently superior bargaining position to compel its victim to sign a document relieving it of liability.
The facts, as alleged by the plaintiff, offend any reasonable sense of fairness. No court should be so bound by a 58-year-old precedent that it cannot adapt to circumstances such as those presented in this case.
The plaintiff was informed by Lou Castino, the construction manager for Schlekeway and Associates, that the project he was being asked to bid on involved moving 25,000 cubic yards of dirt. It was based on that information that he submitted his bid. It was based on his bid that he was given an oral request to proceed with the work.
After commencing work on the project, plaintiff realized that the amount of earth that had to be moved greatly exceeded 25,000 cubic yards, and was actually more than twice that amount. He had conversations with representatives of both COP Construction and Schlekeway and Associates, during which it was agreed that the amount of work to be performed would be recalculated, and during which the defendants agreed to compensate plaintiff on the basis of the actual amount of work done, rather than the price which was originally agreed upon.
By May 22,1985, plaintiff had already been working on the project and had incurred substantial expenses and obligations to his own employees. He had not been paid for his work, and was still operating without a written agreement. It was on that date that he was requested by COP Construction’s superintendent to sign the written contract which the defendants now assert as a bar to his cause of action. He was advised that if he did not sign the agreement he would not receive the progress payment in the amount of $70,372.80 which was due. Without the progress payment he would not have been able to pay his current expenses and payroll.
He was further advised that he would not be bound by the terms of the written agreement, but that he would be paid for the actual work done at the rate of $3.90 per cubic yard.
Thereafter, the amount of earth work to be done was recalculated at approximately 50,000 cubic yards. On that basis, plaintiff tried to recover the full amount due, but payment was refused. Instead, the defendants raised the written agreement as a bar to any further payment to the plaintiff.
*288Because of the defendants’ failure to pay the plaintiff the additional $100,000 to $120,000 which they owed him, plaintiff’s business lost its ability to borrow money, lost its bonding, and was unable to complete additional contracts because of a lack of operating capital. Plaintiff was unable to bid on contracts that required bonding, and completely lost its ability to carry on business as it had in the past. As a direct result of the defendants’ failure to pay the amounts due, plaintiff was unable to continue in business as a construction company, which it had done for the previous 30 years.
If the plaintiff’s allegations are true, then defendant COP Construction Company’s conduct, at least, satisfies the elements of fraud. See Poulsen, et al. v. Treasure State Industries, 192 Mont. 69, 626 P.2d 822 (1981). COP’s employees represented to the plaintiff that he would be paid for the full amount of work done, regardless of the written terms of the contract. That representation was untrue and material, and COP’s superintendent either knew it was untrue or had no reason to believe that it was true. COP Construction intended that the plaintiff act in reliance upon that representation. Plaintiff did rely on it, and had no reason to believe that COP’s superintendent would mislead him. As a result, plaintiff has sustained the total loss of his business and substantial damages.
The majority has affirmed the dismissal of plaintiff’s claim based solely on the parol evidence rule found at § 28-2-904, MCA. That rule provides that a written agreement supersedes all oral negotiations which preceded or accompanied the execution of the instrument. Furthermore, § 28-2-905, MCA, provides that the terms of a written agreement cannot be proven by evidence other than what is contained in the written document.
However, an important exception is found at § 28-2-905(2), MCA, which provides, in relevant part, as follows:
“This section does not exclude other evidence of the circumstances under which the agreement was made or to which it relates... or other evidence to explain ... fraud.”
In addition, § 28-2-1611, MCA, provides as follows:
“When, through fraud or a mutual mistake of the parties or a mistake of one party while the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons in good faith and for value.”
(Emphasis added.)
*289In this case, in spite of the exceptions to the parol evidence rule set forth by statute above, the majority has chosen to rely on this Court’s 58-year-old decision in Continental Oil v. Bell, 94 Mont. 123, 133, 21 P.2d 65, 68 (1933). In that case, this Court held that parol evidence of fraud was not admissible when the oral promise directly contradicts a provision of the written contract.
I would not follow this Court’s previous decision in Continental Oil for two reasons:
1. That decision made no specific reference to the statute which is controlling, and yet adds qualifications to the statute which were not included by the legislature. The legislature provided that parol evidence could be offered to establish that a contract was induced by fraud. It made no exception where evidence of the fraudulent oral agreement contradicted a term in the written agreement.
2. To follow the decision in Continental Oil creates a terrible injustice, rewards fraudulent parties who are in a superior bargaining position, and totally defeats the purpose for which the fraud exception was provided to the parol evidence rule.
Based on this decision, and our previous decision in Continental Oil, all that a fraudulent party needs to do in order to avoid accountability for fraudulent conduct is to obtain the signature of his defrauded victim on a written agreement.
The majority expresses concern that but for this decision general contractors would not be able to rely on written agreements with their subcontractors. However, general contractors who induce subcontractors to enter into a written agreement by fraudulent representations should find no security in the piece of paper which resulted from their culpable conduct. Furthermore, a justice system worth its salt should have equal compassion for Montana’s many subcontractors who, while operating without the benefit of legal advice, sign whatever is necessary in order to keep their operations afloat and their crews at work. When what they have signed results from an obvious misrepresentation and causes them the kind of substantial damages and hardship that have resulted in this case, those subcontractors are entitled to the protection of Montana’s laws and its courts.
For these reasons, I dissent from the majority opinion. I would reverse the judgment of the District Court and remand for a jury trial to determine the merits of the plaintiff’s claim. That is really all the protection that Montana’s general contractors need.
JUSTICE HUNT concurs in the foregoing dissent.