Case Information
*1 January 15 2013 DA 11-0769
IN THE SUPREME COURT OF THE STATE OF MONTANA
TOTAL INDUSTRIAL PLANT SERVICES,
INC., an Oklahoma corporation,
Plaintiff, Appellant, and Cross-Appellee,
v.
TURNER INDUSTRIES GROUP, LLC.,
a Louisiana limited liability company;
CHS, INC., a Minnesota corporation;
and FIDELITY AND DEPOSIT COMPANY
OF MARYLAND, a Maryland corporation,
Defendants and Appellees, and Cross-Appellants.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and For the County of Yellowstone, Cause No. DV 09-1688 Honorable Gregory R. Todd, Presiding Judge COUNSEL OF RECORD:
For Appellant:
Jon E. Doak, Doak & Associates, P.C., Billings, Montana Norman A. Abood, Attorney at Law, Toledo, Ohio For Appellee:
Alan L. Joscelyn; KD Feeback; Gough, Shanahan, Johnson &Waterman, PLLP, Helena, Montana Submitted on Briefs: October 10, 2012 Decided: January 15, 2013 Filed:
__________________________________________ Clerk
Justice Michael E Wheat delivered the Opinion of the Court.
¶1 Total Industrial Plant Services, Inc. (“TIPS”), appeals the District Court’s entry of judgment in favor of defendants Turner Industries Group, LLC (“Turner”), and Fidelity and Deposit Company of Maryland (“Fidelity”), dismissing TIPS’s claims for additional compensation under either quantum meruit or breach of contract, awarding fees and costs to Turner, and finding TIPS’s construction lien time barred by operation of § 71-3-535, MCA. Turner cross-appeals, arguing the District Court erred both by granting TIPS partial summary judgment on the return of retainage and by dismissing Turner’s bill of costs as being untimely filed.
ISSUES
¶2 We restate the issues on appeal as follows:
¶3 1. Did the District Court err by denying TIPS’s claim for additional compensation under a theory of eithеr quantum meruit or breach of contract?
¶4 2. Did the District Court err by failing to find that TIPS was the prevailing party and awarding costs and fees to Turner?
¶5 3. Did the District Court err by finding TIPS’s construction lien was barred by the 90-day statute of limitations found in § 71-3-535, MCA?
¶6 4. Did the District Court err by granting partial summary judgment to TIPS and ordering Turner to return the retainage? 5. Did the District Court err by dismissing Turner’s bill of costs for being untimely
filed pursuant to § 25-10-501, MCA?
FACTUAL AND PROCEDURAL BACKGROUND *3 ¶8 This appeal stems from a construction contract dispute between TIPS, an Oklahoma corporation, and Turner, a limited liability company formed in Louisiana. Fidelity and Deposit Company of Maryland (“Fidelity”) is the surety for Turner’s substitution bond filed in November of 2008 in lieu of TIPS’s construction lien. Turner entered into a written subcontract with TIPS to install insulation at a “coker”
unit at a refinery in Laurel, Montana, on April 14, 2007. Turner also entered into two other subcontracts with TIPS for fireproofing and painting the coker, neither of which is at issue. Cenex Harvest States (“CHS”) owns the refinery and hired Turner to act as the general contractor on the coker project. The initial subcontract between Turner and TIPS was to be paid as a fixed price totaling $2,336,967.00, with payment rendered by percentage of completion. The subcontract further provided that TIPS was responsible for the costs of all labor, services, and materials.
¶10 The original subcontract contemplated a start date in May of 2007 and a completion date of December 31, 2007. While TIPS began work fireproofing structural steel in May, Turner did not release TIPS to start insulating until October of 2007. It soon became apparent that TIPS would not meet the completion date. Both sides acknowledge that this was due to delays in the work of other subcontractors, a harsh winter, a change in insulation material, and an inability to obtain pipe and cable following Hurricane Katrina. Specifically, TIPS testified at trial that the cold weather reduced productivity because workers would periodically take breaks to warm in tents, and Turner also requested that TIPS not insulate welds on the piping to accommodate hydrostatic pressure testing that had run behind schedule. TIPS could thereafter only insulate straight-run piping in the first pass and had to *4 leave the welded sections of pipe without insulation, returning to finish the job once the welds were tested. In response to the increasing delays, Turner repeatedly requested that TIPS increase the number of workers on the job.
¶11 The subcontract did address how the parties were to deal with delays, changes to the scope of work, jobsite conditions, and the costs of “manning up.” The recitals provided that “SUBCONTRACTOR shall furnish and pay for all labor, services and/or materials and perform all the work necessary or incidentally required for the completion of” the project. Section 7.2 directed that TIPS was to supply “a sufficient number of properly qualified workers” to perform the work “efficiently and promptly.” Section 11.2 stated that TIPS was to “take all measures necessary to eliminate . . . delays,” including hiring extra personnel, “at no cost” to Turner or CHS. Section 10 allowed Turner to make alterations to the scope of work and required TIPS to submit written change orders to cover any additional costs or time extensions that resulted. Moreover, Section 3 required TIPS to assume responsibility for unanticipated costs stemming from the location of the project and general and local conditions.
¶12 Despite these provisions, TIPS claimed that Turner’s requested changes resulted in inefficiencies and extra costs not covered by the original fixed price subcontract and not paid for after the switch to time and materials. As noted, Section 10 specifically addressed how the parties were to handle Turner’s requested changes to the project, and required TIPS to submit written change orders describing the nature and cost of the extra work. TIPS did submit a number of change orders following some of Turner’s requests, and uncontested testimony at trial established that Turner paid every change order that TIPS submitted. *5 Indeed, the parties had agreed that TIPS would have to submit a change order to cover the additional costs stemming from leaving welds without insulation. Whether TIPS submitted written change orders to cover the requested changes and increased costs was contested, however, and TIPS has instead argued that Turner made oral promises of compensation that obviated the need for written change orders.
¶13 Turner and TIPS also agreed to several increases in the compensation paid to TIPS, eventually revising the subcontract five times to increase TIPS’s pay. On January 4, 2008, Turner and TIPS agreed to a revised fixed price payment of $4,224,278.96, an increase of $1,887,311.96 over the original subcontract. This increase consisted of $38,300.00 for extra insulation, $1,460,756.00 for work approved over the original bid amount, $36,078.76 in additional equipment, and $352,177.20 for mineral wool.
¶14 TIPS and Turner subsequently began discussing changing from fixed price payment to “time and materials” invoicing in January of 2008. TIPS sought the change to realize direct compensation for the additional manpower and work it claims Turner was requesting. CHS and Turner agreed to the change on February 6, 2008, retroactive to February 4, 2008, believing that it would incentivize TIPS to increаse manpower and allow Turner to exact more control over the project. Turner also believed the change would eliminate issues concerning unknown extra costs, remove the need for future payment negotiations, and potentially preclude a claim by TIPS over compensation.
¶15 TIPS began to submit invoices based on time and materials costs on February 4, 2008. At that time, Turner calculated that TIPS had completed 47% of the insulation project under the fixed price subcontract. TIPS contested this calculation and payment, and also argued *6 that it has not been compensated for losses it suffered from inefficiencies that resulted from Turner’s requests.
¶16 Thereafter, on March 10, 2008, a second revision increased payment to TIPS to $7,000,000.00. This increase included payment of $94,685.00 for hydraulic power manifolds, $148,500.00 in filtration system matеrials, $347,051.90 in extra work, and $2,185,484.14 in estimated future time and materials work. This revision also incorporated a $4.00 per hour increase in the labor rate agreed to on February 13, 2008, bringing the hourly rate to $43.45. This was apparently done at TIPS’s request to enable them to attract more qualified insulators.
¶17 A third revision increased TIPS’s payment to $10,000,000 on April 17, 2008. This increase was based on an invoice TIPS submitted for additional work. A fourth revision on June 6, 2008, increased TIPS’s pay to $13,000,000.00, and was similarly based on a TIPS invoice for work under time and materials. A final, fifth, revision on July 25, 2008, increased TIPS’s payment to $13,250,000.00. It is uncontested that TIPS was paid the final revised amount, and all time and materials claims from February 4, 2008, onward have been paid.
¶18 TIPS began to claim additional compensation was owed in the spring of 2008 despite these modifications. In particular, Turner refused to pay TIPS’s invoice 1895-1, which claimеd a payment of $700,095.00 for “inefficiencies,” and Turner thereafter left the work site on June 25, 2008. TIPS remained at CHS through July, and while the end date of TIPS’s work under contract was in dispute, the parties do not dispute that TIPS completed its work under the subcontract. TIPS thereafter filed a construction lien against the CHS refinery on *7 September 24, 2008, alleging Turner owed TIPS $1,283,704.08. Turner then filed a substitution bond for 1.5 times the lien.
¶19 TIPS filed its complaint on December 3, 2009, alleging theories of breach of contract, quantum meruit and unjust enrichment, breach of the covenant of good faith and fair dealing, and seeking foreclosure of the lien. The complaint sought $1,283,704.08.
¶20 Prior to trial, the parties filed cross-motions for summary judgment. The court granted TIPS’s motion for partial summary judgment, ordering Turner to return the $374,225.82 in retainage it had withheld. The court also denied Turner’s motion alleging that TIPS’s lien was void and requesting the court dismiss the complaint, arguing venue in Montana was not proper and the court lacked subject matter jurisdiction.
¶21 A bench trial was held on July 11, 12, and 29, 2011. At trial, TIPS sought additional compensation for what it claimed was uncompensated additional work Turner requested under the fixed price contract, payment owed under the fixed price agreement for percentage completed, and unpaid time and materials work between January 1, 2008, and February 4, 2008. Turner presented testimony that TIPS was paid $13,250,000.00, argued that TIPS bore responsibility for extra costs under the fixed price contract, and presented evidence that TIPS had not submitted written change orders as required for the additional compensation it sought. The District Court entered its Findings of Fact and Conclusions of Law on November 22, 2011, and found for Turner on each allegation in TIPS’s complaint.
STANDARD OF REVIEW
“We review the findings of a trial court sitting without a jury to determine if the
findings are clearly erroneous. Rule 52(a), M. R. Civ. P,” and we review the court’s
*8
conclusions of law for correctness.
Lewistown Miller Constr. Co. v. Martin
,
DISCUSSION
1. Did the District Court err by denying TIPS’s claim for additional compensation under a theory of either quantum meruit or breach of contract?
¶24 TIPS alleges on appeal that the District Court erred by not finding that it was owed additional compensation under either a theory of breach of contract or quantum meruit and unjust enrichment. TIPS’s claim specifically involves three sources of allegedly owed compensation. First, TIPS disputes that it was adequately paid for the 47% of the project Turner calculated it had completеd at the time of the switch to time and materials invoicing on February 4, 2008. Second, TIPS asserts that cold weather and changes in the scope of work increased costs, which TIPS contends Turner orally promised to pay for. Last, TIPS argues that it is owed for additional man hours provided in January of 2008. As a result, TIPS alleges that it is still owed $2,102,878.25 above the $13,250,00.00 it acknowledges receiving. In response, Turner argues that TIPS did not submit the required written change *9 orders for the payments it is requesting, and that pre-February 4, 2008 labor costs were TIPS’s responsibility.
¶25 At the outset, we find that the District Court properly concluded that because all of the
work completed by TIPS was done pursuant to an express contract, there was no basis for
TIPS’s claims under the theory of
quantum meruit
or unjust enrichment. Theories of quasi-
contractual obligations are premised on the absence of an express сontract, and as such, do
not apply here.
See Estate of Pruyn v. Axmen Propane, Inc.
,
¶26 The District Court also determined that TIPS’s contract-based claims were “directly refuted by the plain language of the Subcontract.” The court based this conclusion on findings that the subcontract required written modifications, placed responsibility for site conditions on TIPS, allowed Turner to change the scope of work, and provided that written change orders were the exclusive mechanism by which TIPS could seek extra compensation in response to these changes. As noted above, we review the court’s findings of fact for clear error, Lewistown Miller Constr. Co. ¶¶ 15, 17, and its legal conclusions for correctness. Richards, ¶ 14. a. TIPS’s Claimed Percent of Completion Payment
¶28 TIPS claims that Turner did not fully compensate it for the 47% of piping TIPS insulated prior to February 4, 2008, asserting that Turner’s payments for “materials” could not be applied to sums owing for labor. Essentially, TIPS contests the characterization of fixed price payments as applying generally towards one “bucket” of owed money, and claims *10 that invoices paid for rentals, vehicles, or storage cannot count towards money owed for labor. Turner counters that payments made under fixed price invoicing are essentially fungible and are applied towards the total contract price.
¶29 The District Court rejected TIPS’s argument, finding that the evidence established that funds paid under the fixed price subcontract, whether labeled as for materials or labor, were interchangeable and applied to the total owed under the contract. On appeal, TIPS has not presented any authority, legal or otherwise, in support of their argument. While we recognize that the appellant, rather than this Court, is obligated to conduct legal research or develop legal analysis supporting their position, M. R. App. P. 12(1)(f), it is clear that the original fixed price subcontract contemplated a total payment of $2,336,967.00 to TIPS, all costs included. Indeed, under fixed price contracts generally, “[t]he [sub]contractor receives one fixed price for performing the work no matter how costly it is to perform,” and periodic payments “are typically based upon the percentage of the project completed.” Philip L. Bruner & Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law vol. 2, § 6:71, 621-22, (West 2002) (emphasis added). Because fixed price contracts consist of essentially indistinguishable periodic payments applied towards a set price, it is clear that TIPS places undue significance on the labels affixed to various payments. In light of the nature of fixed price contracts generally and, more specifically, the subcontract at issue, the court cоrrectly concluded that payments made under the fixed price subcontract were functionally indistinguishable, and we affirm the District Court’s dismissal of TIPS’s claim for owed completion pay. b. TIPS’s Claimed Inefficiency and Change in Scope Costs
*11 ¶31 TIPS also claims Turner owes for pre-2008 changes in scope and costs resulting from various inefficiencies. However, the subcontract required TIPS to submit written change orders for such costs under the fixed price scheme, and it is undisputed that TIPS did not submit written change orders to Turner referencing these costs. TIPS instead claims that Turner made oral representations to TIPS promising payment and disputes that the fixed price scheme made TIPS responsible for the costs of additional labor.
¶32 i. Fixed Price vs. Time and Materials Contracts
Initially, TIPS’s argument mischaracterizes the nature of fixed price contracts, and the
District Court concluded that costs for additiоnal personnel and inefficiencies were the
express responsibility of TIPS under the fixed price subcontract. As noted, the nature of
fixed price contracts placed the burden of additional or unexpected costs on TIPS.
See
Sperry Rand Corp. v. United States
,
¶36 Despite the foregoing, TIPS contends that it is owed payment for inefficiencies and
changes in scope because Turner made oral promises of payment that should be considered
executed oral modifications. In support of this argument, TIPS asserts Turner should not be
allowed to avoid executing these oral agreements by withholding payment, citing our
decisions in
Dalakow v. Geery
,
¶38 However, in
Dalakow
, we found that “the record [was] replete” with evidence that the
defendant knew an oral modification had been effected,
Dalakow
,
¶39 TIPS’s claims are also contradicted by the testimony of Ted Estraca (“Estraca”), President of TIPS. Estraca’s testimony indicates that he did not understand Turner’s communications to say that Turner would pay the additional workers brought on in January outside of the payments provided according to the subcontract’s fixed price scheme. Estraca also testified that when Turner asked TIPS to increase manpower in January he asked to convert to time and materials, but Turner said no, revealing that both parties understood that the additional labor was TIPS’s responsibility. This testimony cannot be reconciled with TIPS’s claim to the contrary, and Estraca admitted that TIPS did not submit written change orders for the costs of “manning up.” Thus, the record does not support TIPS’s claims for additional pay prior to February 4, 2008, and we find that the District Court correctly dismissed TIPS’s claims.
¶40 c. TIPS’s Claimed Additional Pay for January 2008
¶41 TIPS finally claims Turner owes pay for additional labor provided between January 1 and February 4, 2008. The District Court found that TIPS failed to prove non-payment for any additional work performed by TIPS that complied with “the plain language” of thе subcontract requiring written change orders. Again, the subcontract expressly required TIPS to submit written change orders for costs, like those for additional labor, incurred in response to Turner’s changes in scope. Also again, TIPS admits it did not submit any change orders referencing these costs. It is further undisputed that time and materials invoicing did not begin until February 4, 2008. Thus, in January of 2008, TIPS was working under a fixed price contract. As we noted, fixed price contracts place all responsibility for additional costs on the subcontractor, namely TIPS. Because TIPS’s claimed costs for additional labor occurred under the fixed price contract without the necessary written change orders, and because TIPS failed to establish oral agreements providing payment for these costs, we hold that the District Court correctly concluded these costs “were the responsibility of TIPS.” 2. Did the District Court err by failing to find that TIPS was the prevailing party and awarding costs and fees to Turner?
¶43 TIPS claims the District Court abused its discretion by concluding Turner was the
prevailing party in the litigation. We have previously held that the “ ‘prevailing party is the
one who has an affirmative judgment rendered in his favor
at the conclusion of the entire
case
.’ ”
Avanta Fed. Credit Union v. Shupak
,
day filing deadline found in § 71-3-535, MCA?
¶45 The District Court found that TIPS’s construction lien was filed at least one day after the 90 day statute of limitations found in § 71-3-535, MCA. The statute directs that a construction lien must be filed “not later than 90 days after” the person’s “final furnishing of services or materials” or the owner files a notice of completion. Section 71-3-535(1), MCA.
Here, the District Court found that Turner left the job site on June 25, 2008, and that while TIPS continued to work at the refinery, it did so under a series of purchase order contracts with CHS and not undеr the Turner subcontract. Because TIPS filed the construction lien on September 24, 2008, 91 days after the Court determined TIPS had stopped working for Turner, the Court found that the lien was barred by operation of law. We agree.
¶46 TIPS claims the court erred by finding that TIPS was off the site no later than June 25, 2008. In support, TIPS claims that the court ignored testimony that TIPS was on the job site after June 25th, and argues that because it “was performing essentially the same insulation duties before and after Turner left the site,” its later work for CHS should provide the relevant date for § 71-3-535(1), MCA. TIPS finally claims the court erred by relying on hearsay to find a separate contract existed.
¶47 Conversely, Turner argues TIPS’s work under the subcontract ended on June 25, 2008. In support, Turner proffered a notice of final completion sent to CHS dated June 24, 2008. Turner also argues that TIPS entered into a separate contract with CHS after June 25th, and asserts this work therefore did not toll the 90 day time limit with respect to the Turner subcontract.
¶48 The court based its finding that TIPS finished its obligations under the Turner subcontract prior to June 25, 2008, on Turner’s June 24, 2008, Notice of Completion, evidence that the last payment Turner made to TIPS was for work on June 25th, testimony by TIPS Project Superintendant Rumaldo Herrera that TIPS left the site on June 25th and began insulating for CHS on June 30th, testimony by Richard Day that TIPS was off the site on June 25th, and an affidavit by Pat Kimmet, CHS plant manager, that TIPS’s work after June 25th was under a separate CHS contract.
¶49 As noted above, we review the court’s findings of fact for clear error. A finding of a trial court sitting without a jury is clearly erroneous if it is not supported by substantial credible evidence, if the trial court misapprehended the effect of the evidence, or if a review of the record leaves this Cоurt with the definite and firm conviction that the trial court made *17 a mistake. Lewistown Miller Constr. Co. , ¶ 15. From a review of the record, it is clear that the court’s findings concerning the timeliness of the lien were supported by substantial credible evidence. Several parties testified that TIPS left the job site, and completed the subcontract with Turner, by June 25, 2008. TIPS’s own Project Superintendant testified that the company quit insulating under Turner on June 25, 2008, and TIPS’s Estraca testified that after Turner left, TIPS submitted an estimate to CHS and CHS issued a separate purchase order for TIPS’s work. Significantly, Turner’s admitted final notice of completion clearly shows a date of June 24, 2008. It was not clear error for the court to find TIPS finished working under Turner on June 25, 2008.
¶50 We are also not persuaded by TIPS’s argument that the District Court erred by finding
that its work at the refinery after June 25, 2008, was under a separate contract and could not
toll the 90 day time limit. It is well-estаblished that if work is performed under separate
contracts, “ ‘the lien should be filed within the time prescribed by the statute after the
delivery under each of such contracts.’ ”
See Frank J. Trunk & Son v. De Haan
, 143 Mont.
442, 445,
¶51 TIPS is also incorrect to argue that the District Court solely relied on inadmissible
hearsay to find that TIPS’s work after June 25th came under a separate contract. A review of
the court’s findings shows the court referenced testimony by Mr. Herrera, testimony by Mr.
Day, invoices, and admitted correspondence between CHS and Turner,
in addition to
the Pat
Kimmet affidavit. Even if, as TIPS claims, the Kimmet affidavit was inadmissible hearsay,
its reference by the trial court was harmless error because the finding was supported by other
admissible evidence that proved the same facts. M. R. Civ. P. 61;
State v. Sanchez
, 2008 MT
27, ¶ 22,
filed its construction lien on September 24, 2008, 91 days after it furnished services under
the Turner subcontract, the lien was barred by operation of law.
See
Section 71-3-535(1),
MCA;
Johnston v. Palmer
,
ordering Turner to return the retainage?
¶54 Turner cross-appeals the District Court’s grant of TIPS’s motion for partial summary judgment seeking the return of contractual retainage. Turner asserts that the District Court erred because the subcontract authorized retaining money in anticipation and defense of “any lien or claim.” In granting TIPS’s motion for partial summary judgment on the retainage, the District Court found that because Turner had filed a substitution bond in lieu of TIPS’s lien, the lien was discharged by operation of § 71-3-552, MCA. Section 71-3-552, MCA, provides that “[u]pon thе filing of a bond as provided in 71-3-551, the lien against the real property shall forthwith be discharged and released in full and the bond shall be substituted for such lien.” The District Court thus concluded that by filing a substitution bond, Turner obviated the need for TIPS to submit a final release of lien because § 71-3-552, MCA, effected a release by operation of law.
¶55 Here, the subcontract allowed Turner to withhold 10 percent of payments to TIPS as
retainage until TIPS provided “a final release of lien.” Turner had retained $364,757.32
when TIPS filed its construction lien on September 24, 2008. Turner subsequently filed a
substitution bond in an amount 1.5 times the lien. Section 71-3-551, MCA, provides that a
“contracting owner of any interest in the property” may file a bond in an amount 1.5 times
the lien, and § 71-3-552, MCA, declares that this bond discharges and releases the lien in
full. However, Turner is not a “contracting owner” pursuant to § 71-3-522(4)(a), MCA, and
therefore does not fall within the operation of § 71-3-551, MCA. While this is so, it is
generally recognized that the purpose of allowing a construction lien to attach to a release
*20
bond is to “allow the property to be entirely free of liens” and allow “a general contractor,
acting on the owner’s behalf, to substitute a bond for the property.” 53 Am. Jur. 2d
Mechanics’ Liens
§ 307 (2012);
see also AAA Constr. of Missoula, LLC v. Choice Land
Corp.
,
¶56 TIPS in turn claims it is owed prejudgment interest on the retainage, arguing that the
court’s decision to the contrary was clear error. TIPS alleges that interest is appropriate
because the retainage was a liquidated sum payable under a construction contract, citing
James Talcott Constr., Inc. v. P&D Land Enterprises
,
¶57 A district court’s decision concerning prejudgment interest is a question of law, and as
such, we review it for correctness.
Am. Music Co. v. Higbee
,
¶58 Here, Turner filed the substitution bond in November of 2008, and, as noted above, this bond discharged TIPS’s lien by operation of law. Because a final release of lien was rendered unnecessary by the substitution bond, Turner was required to remit the retainage once the bond was filed. However, Turner failed to do so until so ordered by the District Court on October 12, 2010.
¶59 A party is entitled to prejudgment interest if they establish “(1) the existence of an
underlying monetary obligation; (2) the amount of recovery is certain or capable of being
made certain by calculation; and (3) the right to recover the obligation vests on a particular
day.”
Talcott
, ¶ 40. Moreover, § 27-1-211, MCA, provides a right to prejudgment interest
that arises independent of contractual authorization,
see Turner
, ¶ 44, and the statute
“mandates interest as long as the legal situation fits within the broad guidelines of the
statute.”
Price Bldg. Serv. v. Holms
,
¶60 5. Did the District Court err by dismissing Turner’s bill of costs for being untimely filed pursuant to § 25-10-501, MCA?
¶61 The District Court dismissed and denied Turner’s bill of costs, finding it was filed
after the statutory deadline, lacked a signature or notary, and was “unintelligible and not in a
form of separately delineated costs pursuant to § 25-10-501.” On appeal, Turner argues that
Subsection 24 of the subcontract displaces the requirements of § 25-10-501, MCA, based on
freedom of contract, citing
Arrowhead Sch. Dist. No. 75 v. Klyap
,
*23
¶63 At the outset, a party’s entitlement to costs in a civil action is governed by Title 25,
chapter 10, MCA. Under chapter 10, a defendant must be allowed costs “upon a judgment in
the defendant’s favor in the actions mentioned in 25-10-101.” Section 25-10-102, MCA.
One of the “actions” mentioned in § 25-10-101, MCA, is “an action for the recovery of
money or damages, exclusive of interest, when a plaintiff recovers over $50.” Section
25-10-101(3), MCA. We previously construed the interaction of § 25-10-101 and -102,
MCA, in
Rodgers v. Mony Life Ins. Co.
,
As TIPS’s claim against Turner is clearly an action for money or damages under § 25-10-101(3), MCA, Turner’s claim for costs is enabled by § 25-10-102, MCA, and our decision in Rodgers .
¶64 While
Rodgers
and § 25-10-102, MCA, establish a statutory basis for Turner’s claim
for costs, we have frequently allowed parties to contract for costs not allowed by Title 25,
chapter 10. Section 25-10-201, MCA, enumerates the types of costs “generally allowable” in
a party’s bill of costs, but we have long held that the list of items in that section “is exclusive
*24
except as to cases taken out of its operation
by special statute, by stipulation of parties, or by
rule of court.”
Roseneau Foods v. Coleman
, 140 Mont. 572, 580, 374 P.2d 87 (1962)
(emphasis added);
accord Kuhr v. City of Billings
,
Should CONTRACTOR employ an attorney to enforce any of the provisions hereof, or to protect its interest in any matter arising under this SUBCONTRACT, or to collect damages for the breach of this SUBCONTRACT, or to prosecute or defend any suit resulting from this SUBCONTRACT or to recover on the performance bond given by SUBCONTRACTOR under this SUBCONTRACT, SUBCONTRACTOR and his surety, jointly, and severally, agree to pay CONTRACTOR all reasonable costs and attorney’s fees expended or incurred therein.
Thus, while Turner’s bill of costs falls within the ambit of § 25-10-102, MCA, following our decision in Rodgers , Turner and TIPS have also enterеd into a stipulation allowing costs regardless of statutory authority, a practice that we have frequently upheld.
¶65 However, while we have long recognized a party’s freedom to contract for costs not allowed by § 25-10-201, MCA, the District Court’s denial of Turner’s bill of costs was based on the procedural requirements of § 25-10-501, MCA. Section 25-10-501, MCA, specifically requires:
The party in whose favor judgment is rendered and who claims the party’s costs shall deliver to the clerk and serve upon the adverse party, within 5 days after the verdict or notice of the decision of the court . . . a memorandum of the items of the party’s costs. . . . The memorandum must be verified by the oath of the party, the party’s attorney or agent, or the clerk of the party’s attorney . . . .
Section 25-10-501, MCA (emphasis added). Here, the District Court issued its final
Findings of Fact and Conclusions of Law on November 22, 2011. Turner filed a notice of
entry judgment on November 29, 2011. This notice both acknowledged the date of the
judgment and attached a copy of it. Turner filed its bill of costs, without either a signature or
notary, on December 12, 2011, well more than 5 days after Turner had notice of the
judgment. Turner clearly failed to adhere to the requirements of § 25-10-501, MCA, and
failure to file a timely bill of costs results in waiver of the right to receive an award of costs.
Pastimes, LLC v. Clavin
,
procedural requirements of § 25-10-501, MCA. As support, Turner cites our prior holdings
that parties are free to contract
what
costs may be awarded.
See Kuhr
, ¶ 37 (“Section
25-10-201, MCA, is an exclusive list of costs which may be taxed to an opponent unless the
case is taken out of its operation by a more specialized statute, by stipulation of the parties,
or by rule of the court.”);
Bovee v. Helland
,
procedure for which the party in whose favor judgment is rendered claims his costs,” and
routinely hold parties to its requirements.
Sage v. Rogers
,
By its caption, and by the terms of the statutes contained therein, [Title 25, chapter 10,] Part 5 provides the means and manner in which costs are to be claimed. Nothing in those statutes makes a distinction or exception for costs being claimed in different types of actions. . . . The language of the statute is plain and unequivocal in encompassing all claims for costs .
In re Lande , ¶ 22 (emphasis added). Section 25-10-501, MCA, clearly applied to Turner’s bill of costs.
¶68 Additionally, even if we were to accept Turner’s argument that Subsection 24’s
allowance of costs displaces § 25-10-501, MCA, the subcontract’s language is utterly devoid
of any indicаtion whatsoever of what procedures the parties intended to replace those found
in § 25-10-501, MCA. We all recognize the language of a contract governs its interpretation,
however there is nothing in Subsection 24 that either addresses or purports to replace the
*27
requirements of § 25-10-501, MCA. Accepting Turner’s argument would therefore require
us to infer that the
lack
of contractual procedures for filing a bill of costs necessarily implies
that the parties had some other procedures in mind. What those procedures would be,
however, is a mystery. Without the application of § 25-10-501, MCA, to the subcontract,
Turner would seemingly be free to submit the bill of costs at any time, in any form, and
without either Turner or Turner’s counsel attesting to its accuracy. We have previously
recognized that the requirements of § 25-10-501, MCA, serve an important informational
functiоn, in that filing a bill of costs pursuant to § 25-10-501, MCA, facilitates the uniform,
timely notification of what costs are claimed and enables the opposing party to enter an
objection.
See Sherner v. Nat’l Loss Control Servs. Corp.
,
¶69 In light of the plain language of the subcontract, we cannot conclude that the parties intended to displace the procedural requirements of § 25-10-501, MCA. This decision does not restrict the parties’ freedom of contract. See Klyap , ¶ 20. Because the subcontract contained no procedural language concerning how to file the bill of costs, it could not displace § 25-10-501, MCA. We conclude that Turner was correctly required to abide by the procedures contained in § 25-10-501, MCA, and therefore hold that the District Court’s denial of Turner’s bill of costs was not an abuse of discretion. b. Effect of M. R. Civ. P. 58(a)
¶71 We also disagree that Turner’s bill of costs was nonethеless timely filed. Turner claims that because it filed a bill of costs on January 20, 2012, five days after the court issued *28 its January 16, 2012 Notice of Entry of Judgment, we must reverse the District Court’s order dismissing and denying their claim for costs. However, to do so we would have to disregard both Turner’s prior recognition of the November 22, 2012 date of judgment and our holdings interpreting the language of § 25-10-501, MCA.
¶72 First, Turner filed a notice of entry of judgment on November 29, 2011, acknowledging November 22, 2011, as the date of judgment. Turner now argues that we should disregard this “premature” filing made before its counsel engaged in “close review of the newly revised Montana Rules of Civil Procedure.” As the District Court observed, “Turner not only filed a notice of entry of judgment but referred to the Court’s Findings and Conclusions as a judgment. That judgment was from November 22, 2011.” Turner is bound by this recognition.
¶73 Second, § 25-10-501, MCA, requires a bill of costs to be delivered to the clerk and
servеd upon the adverse party “within 5 days after the verdict
or notice of the decision of the
court
. . . .” We have previously found that “notice” under the statute “indicated knowledge
of the court’s decision and that formal notification was not necessary.”
Karell v. American
Cancer Soc’y
,
CONCLUSION
¶74 We accordingly affirm the decisions of the District Court regarding TIPS’s claims for additional compensation, TIPS’s claim it was the prevailing party, whether the construction lien was time barred, the return of the retainage, and Turner’s bill of costs. We reverse the District Court’s decision denying TIPS prejudgment interest on the retainage.
¶75 Affirmed in part, reversed in part, and remanded for further proceedings consistent with this Opinion.
/S/ Michael E Wheat We Concur:
/S/ Patricia O. Cotter
/S/ Jim Rice
/S/ Beth Baker
/S/ Brian Morris