Storms, Inc. v. Mathy Construction Co.
883 N.W.2d 772
Minn.2016Background
- MnDOT awarded a highway-repair contract to Mathy; Mathy subcontracted excavation/fill work to Storms based on MnDOT’s estimated quantities.
- Subcontract incorporated the general contract and MnDOT Standard Specifications; subcontract stated it governs when inconsistent with the general contract.
- Actual field quantities proved substantially less than MnDOT’s estimates; Storms completed work in May 2011.
- MnDOT issued a deductive change order reducing Mathy’s contract by $327,064.42 to reflect actual quantities; Mathy issued a corresponding deductive change order reducing Storms’ subcontract.
- Storms sued Mathy for breach, seeking the original subcontract price; district court granted Storms summary judgment on breach but later (after trial on damages) concluded Storms failed to prove fixed-cost damages; court of appeals affirmed breach but remanded on damages. Minnesota Supreme Court granted review.
Issues
| Issue | Plaintiff's Argument (Storms) | Defendant's Argument (Mathy) | Held |
|---|---|---|---|
| Whether Mathy breached the subcontract by passing MnDOT’s deductive change order to Storms | Subcontract (and Specification 1402) requires alterations only "during progress of the work"; deductive change after completion violated subcontract | MnDOT Specification 1901 permits the Engineer to correct incorrect plan quantities even after construction; subcontract incorporates specifications and does not conflict | Mathy did not breach: Specification 1901 governs quantity corrections and allows post-construction adjustments; subcontract contains no conflicting temporal limit |
| Whether Specification 1402 (Alteration of Work) prohibits post‑completion quantity reductions | Changes must be made "during the progress of the work" so post‑completion reductions are impermissible | Specification 1402 applies only to scope/alterations of the work, not to corrections of estimated quantities; Specification 1901 controls | 1402 inapplicable: it concerns scope changes; 1901 governs correction of incorrect quantities (including after construction) |
| Whether any subcontract clause (e.g., §10.A) creates a temporal limit on issuing change orders to subcontractor | §10.A requires notice of modifications and, implicitly, that changes be made during the subcontractor’s performance | §10.A addresses scope-change procedures and post-modification obligations but contains no temporal restriction preventing deductive change orders after completion | §10.A is not inconsistent with Specification 1901 and contains no temporal limitation; it does not prevent passing a deductive quantity change to Storms |
| Availability of damages given Specification 1903.2(A) (fixed costs) | Storms sought full subcontract price; argues entitlement to recover lost contract price | Mathy contends Storms failed to prove fixed costs as required by Specification 1903.2(A) and district court found no evidence presented | Court recognized Storms might have claimed fixed costs under Spec. 1903.2(A) but upheld district court’s finding that Storms failed to prove such damages; remanded for remaining issues |
Key Cases Cited
- Commerce Bank v. W. Bend Mut. Ins. Co., 870 N.W.2d 770 (Minn. 2015) (standard for appellate review of summary judgment)
- Carlson v. Allstate Ins. Co., 749 N.W.2d 41 (Minn. 2008) (contract ambiguity is a question of law)
- Dykes v. Sukup Mfg. Co., 781 N.W.2d 578 (Minn. 2010) (interpretation of contract language and enforcement of unambiguous terms)
- Travertine Corp. v. Lexington-Silverwood, 683 N.W.2d 267 (Minn. 2004) (intent derived from plain contractual language)
- Valspar Refinish, Inc. v. Gaylord’s, Inc., 764 N.W.2d 359 (Minn. 2009) (courts should not rewrite clear contract terms)
- Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522 (Minn. 1990) (contract construed as a whole; harmonize clauses)