*1
Appellant,
CONTRACTORS,
CLARK BROS.
Plaintiff
Respondent.
v. STATE OF
MONTANA,
Defendant
No. 85-220.
Sept.
Submitted on Briefs
1985.
Decided Dec.
Gough, & Johnson Ronald *2 Helena, Cashatt, Washing- Sullivan, Spokane, & Patrick A. Winston ton, plaintiff appellant. for Hutchinson, Helena, Highways, Dept, of for defendant
W.D. respondent. Opinion of Court.
MR. MORRISON delivered the the JUSTICE February 25, the 1985 de- appeals Plaintiff Bros. Clark Contractors State cision of Judicial District in favor of the defendant the Sixth judgment and remand of Montana. We vacate the District Court trial. (Clark Bros.) corporation a
Clark is Montana Bros. Contractors engaged business for which has been in the many years, including highway projects for the State Montana (State). March, 1979, early In out February the State sent late or near segment of interstate bid invitations for the construction of a description Timber, a of the Big Montana. The invitation included project, data was available from and notice that subsurface March Materials Bureau Helena. Bids were to be submitted 28, 1979. Bros, pro- preparing cross-sections of the Clark obtained Bureau, subsurface data
ject area but not the from the Materials Bros, inspec- on site which was of Clark did an available. Officers tion, area. soil in the with ranchers about conditions talked local segment to be of interstate This was an area of concern because the re- valley, through lying irrigated ran farm and would built low (dirt adjacent or quire secured from substantial amounts of borrow foundation, embankment, sources) nearby construct road. provides of borrow
Typically, estimates of the amount figure is arrived project proposal. borrow be used its bid soil in of the step process: calculating the subsidence a three 2) calculating built; place which the road is to be to be used shrinkage, compaction, borrow shrinkage embankment; estimate using the subsidence to de- embankment the road how much borrow will raise determine sign specifications. typical A shrink factor for 10%. borrow about Big project, unusually 40%, Timber high an shrink factor of areas, and 55% in propo- some was State in estimated its bid provision proposal sal. A figure stated the borrow only. an estimate Bros, work, In calculating its costs for the borrow used the Bros, provided by the State. Clark submitted the
lowest bid and was awarded the which was executed on April provisions 1979. Pertinent allowing included devia- tions quantities, payment to 25% in estimated be for performed, units of work pro- borrow vided the contractor. Bros, began May, completed the excava-
tion, borrow, year. and embankment work end Mea- pits substantially surement of the borrow showed that less borrow estimated, had been than change so the State issued a order on Bros, February 13, 1980, reflecting signed that fact. Clark order protest under approxi- June borrow underrun was 18%, mately significantly reduced the amount to Clark Bros, under the contract. Clark filed a claim on December *3 1980, alleging a loss on the borrow work due to fixed costs and over- settle, head. The claiming State refused to obligated it was pay performed, for units of work and the contract further allowed Bros, for 25%. deviations Clark filed suit. 1) negligent pre- issues at trial were: whether the State was paring shrinkage proposal; factor included the bid whether Bros, Clark was entitled to be for extra work incurred not con- templated contract; exculpatory language whether the contract barred the claims asserted Clark Bros. The District Court found in favor of State on each issue. Bros, following appeal: asserts the issues on
1. opinion supported by Was the District Court substantial evi- dence or was it erroneous?
2. Did the properly deposition District Court refuse to consider testimony managing employees of of the State? liability
3. Can the State of Montana avoid for material mistakes supplied information upon by highway to and relied bidders means of language? Bros, opinion. assert numerous errors in the District Court computation, court found that Clark Bros.’ se- method of soils, independently testing lection of a borrow site without
493 a Bros. While on Clark risk an underrun placed the of loss caused findings, evidence reading may support of the contract these improperly excluded. because was not taken into account Bros, trial, attempted to introduce twice During counsel for Clark agents deposition testimony managing of certain into evidence the admission, Court relied refusing the District of the State. In (1)a of- depositions lack of notice the State (3) conducted, fered, (2) could be that no cross-examination showing that the witnesses were unavaila- that Clark made no Court was in error. ble. The District a 32(a)(2), part: deposition “The of reads in
Rule M.R.Civ.P. deposition anyone taking was an party the time of or of who at officer, may director, . . an adverse managing agent. 32(a)(2), any provision in party purpose.” There is Rule no unavailability requires finding of of the witness M.R.Civ.P. which deposition trial. given the intended use of a at notice was of 32(a)(2), governs depositions of Rule M.R.Civ.P. the use Eding misplaced. See on Rule 804 M.R.Evid. State’s reliance 41 ton v. Creek Co. 112,] Oil Mont. [213 2000. managing agent Whether one to be considered factors, right of depends including on several the individual’s control, department; general authority, judgment within his of be those are identified to whether the interests of individual State; authority possesses any higher person of Terry v. Modern Wood issue. See knowledge about the matters at 141; and Carroll v. Wis (W.D.Mo.1972), men America 57 F.R.D. (Wisc. 1956) Light consin Power & Co. N.W.2d Wis. case, depositions offered were those of Section, Bureau, Design chief of Materials head of Location Road Bureau, Geology supervisor of the Preconstruction and assistant jobs, these Section. We find the shows one, super possible entail sufficient exception with the the latter visory place within the status responsibility these individuals question managerial might agents for One managing the State. *4 only Section, need supervisor but we Geology status of assistant of Materials Bureau. deposition of the chief focus on the Bureau testimony of of Materials We find the The wit- reliance. justifiable on the issue to be useful evidence acknowledge State is aware that ness’s statements rely on State preparing estimates in bids. was their We find it error testimony. to exclude this exculpatory
The final language issue whether the of the contract liability damages by relieves the State from caused the borrow previously applied underrun. The test by this in Court similar cases has justifiably been whether plans relied in preparing executing its bid and the contract. company
William Clark testified that his on relied the estimates provided by preparing the State in because had neither the time independently nor investigating project resources be data. Clark also testified that he did not obtain all the subsurface data Department, which was made Highway available but he did investigation conduct on site and talked to area ranchers about the local soil conditions. justifiable Bros., District Court found no reliance
part exculpatory due to language contained contract. The 1) explicitly provided: proposal that the bid only; 2) payment that be for units of performed; work deviations less than 25% of the equitable estimate were not adjustment; cause borrow source was to be secured the contractor.
This is the concerning first case before this Court the effect of an right clause on damages the contractor’s to recover caused underrun. cases Previous dealt with overruns but analagous. City In Stenerson v. Kalispell (1981), 629 P.2d prevailed city’s the contractor where it had relied on the esti- done,
mate of the grading yet amount of doing be ended faulty much more due to appeal estimates. One issue on exculpatory language city. holding exonerated the language to determining justifiable be a factor in reliance but not to controlling this Court said: presented
“Several other cases have the issue of the effect of excul patory right clauses on a contractor’s recover situations Haggart Const. Co. v. alleged reliance is contractor. Highway Comm’n Hag 149 Mont. gart job and was told that he could gravel State-optioned use pits as described the ‘Available Sur facing Reports’. gravel Materials later to be unsuita found plaintiff expense obtaining ble gravel and the incurred additional deny reports elsewhere. The defendant did not the materials
495 exculpatory provisions misleading, but rather relied on the provisions indicated Those as a defense to suit. quantity of quality guaranty made as to the Commission no to available, fur- if contractor chose further materials materials, responsible produce satisfac- to nish he would be his own tory material. not exculpatory provisions were judge found that
“The district reports the materials Haggart received He noted that enforceable. investigate him time to days letting, giving little 14 before bid bidding on He found that few independently. further make an intelli- to projects such have time test facilities sufficient clauses, exculpatory the dis- Despite gent appraisal of materials. judge trict concluded: “ less than appellant expect[ed] nothing is to show that ‘[T]here reports. complete reliance its material “ rely on Highway ‘If the Commission were allowed purpose such for which exculpatory provisions of the frustrated, totally reports sadly if not are de offered would be proceed in reliance on such stroyed. prudent No would necessity guard against reports peril; unfore at his absolute higher bids than conditions seen deficiencies would result much Haggart, supra, 149 427 normally Mont. at warrant.’ P.2d at 687-688. noted: judge affirmed the district in that decision but
“We “ may holding are not clauses ‘We here situations, may be as be enforced in other that detrimental reliance cases, parties contracts are bound sumed all or that to such prudent judgment. anything reasonable and exercise less than Haggart, supra, “justifiable reliance.”' words we will look to 149 427 689.” Mont. at P.2d at 775, 776, Exculpatory Stenerson rationale persuasive. lan
We find the determining reliance justifiable guage the contract factor controlling. but not justifiable find which to evidence here
There considerable weeks two to three that he had reliance. William Clark testified perform his adequate own was not which submit estimates, he relied on the State’s made investigation and on site preparing his bid. Clark conducted area, no reason not inquiry but found further about soils improperly re- testimony, Deposition use State’s estimates. fused at the Materials Bureau indicated the rely analysis. State is aware contractors on the State’s Neverthe- soil less, justifiable we reluctant to make finding reliance as a matter law. considering The case should be retried applying legal principles herein set forth.
We judgment vacate the of the District Court and remand for a new trial.
MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HUNT and WEBER concur. *6 GULBRANDSON,
MR. JUSTICE dissenting. respectfully
I dissent. I would affirm judge the decision of the exclude the offered trial to depositions employees. of State propounded State had interrogatories plaintiff, two sets of to
asking for depo- identification of witnesses. Plaintiff never identified proposed nents as although witnesses interrogatories were con- nature, tinuing deponents in pre-trial failed list in proposed to just prior order to subpoena depo- and made no effort to said Court, Kopischke (1980), nents. This in Corp. v. First Continental 471, 510-511, 187 Mont. at upheld at exclu- 32(a) sion of a which would indicate that Rule should implemented be nor construed in judge’s finding a void. The trial fact no. 40 discretionary he exercising indicates that power prevent Court, discovery. to an abuse of v. This Massaro 404-405, Dunham 184 Mont. P.2d at 251- 252, stated:
“The discretionary power District Court has the inherent to con- discovery. trol power authority That based the District Court’s controlling discovery, control trial administration ... the Dis- trict regulate Court must traffic to insure a fair trial all con- cerned, according party advantage placing neither one an unfair nor party disadvantage. at a Discovery
“. . . fulfills purpose by assuring knowl- the mutual edge of all gathered parties relevant facts essen- both which are (Citations omitted.)” proper litigation. tial to I majority’s also do not apply concur the Stener- decision view, my són rationale to the underrun situation this case. the trial support the record there is substantial evidence judge’s findings fact conclusions of law. pertinent findings read as follows:
Several specifications called “12. The invitation to bid and standard state’s work items price work items. Two contract for unit bids on listed Borrow) (Excavation-Unclassified listed item 111-030-000 (Com- 1,658,857 yards, and item 112-001-000 the amount cubic Roadbed) 1,930,034 yards. The paction cubic the amount of quanti- concerning . . . schedule State’s standard ties state: “ QUANTITIES BID SCHED- OF IN ‘02.04 INTERPRETATION approximate quantities appearing in bid schedule are ULE. The prices to only comparison The unit prepared and are for the of bids. expressly for be tendered the bidder are to be tendered they may quantities as or decreased within scheduled be increased restricting stipulated. Payment to the percentage hereinafter per- contractor will made for the actual accepted or in accordance with the formed and materials furnished contract.’ was to come
“13. The material to be used as unclassified borrow in- sources, from was not unusual furnished sources, dustry. until after the con- Since such were not identified awarded, mate- tract could not test unclassified borrow state actually prior estimating rial that would be used the bid schedule. *7 prices, esti- basing “16. Rather than its bid on unit constructing mated the total cost of embankment place, quantities then of unclassified and used the state’s estimated projected into compaction divisors its total borrow and roadbed as compaction. using By prices costs to obtain unit for the borrow and method, specs, plain- specified standard such instead of that an underrun below claiming a if there were tiff assured itself of loss if paid more claiming should be quantities, and it estimated for these there an above the estimated were overrun that contrac- acknowledged his awareness items. William Clark also tors not submit unbalanced bids. were ig- prices by plaintiff compute unit also
“17. The method used (a) equipment Less if there were an underrun: nored these factors (b) period, needed, a shorter or it would be needed for would be incurred, hauling, (c) manpower expense Less fuel would Less royalty paid landowner would have to be for borrow. plain meaning
“30. intent of clear standard 02.04, changes quantity may 04.02 and occur in 09.03 are performance actual anticipated of or contract work between esti- quantities, quantities used, event, mated and actual and in such prices contractor will be contracted unit actual changes used and will bear the risk of of of loss less 25%, for major changes than items. The unclassified borrow 25%, compaction and road in this less than case both and the Roger Blossom not uncommon. indicated “31. justifiably Plaintiff cannot be said have on relied exact compaction propos- amounts borrow work to do when the bid specifically provided als and contract the amounts were estimates decrease, subject plaintiff’s increase when officers were acquainted conditions, well with such terms William when an testified overrun or much underrun didn’t affect total project plaintiff’s cost of a been have much different figure specific the state estimated a round amount of compaction.” unclassified borrow or road judge, explanatory findings, trial an comment stated:
“It is difficult any to see how make the state could clearer to bidding highway jobs parts of the various done, to be compaction, just as borrow excavation and esti- specific mates and not supplied. amounts of If materials provisions contract terms and in allowing are too loose for a 25% items, variation on such the contractor’s association or the individ- request ual bidder should amendment thereof before execution, signed, but after the court is ‘not to insert what has been (Section 1-4-101, omitted or omit what has been inserted’ MCA 1983). experienced contractor, plaintiff As an bidder and must be held plain to the terms as well as defendant.” I concur in that statement and would affirm the decision of the judge. trial