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 h 1 5 1Wi
U!
Mr. 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
Court.
P l a i n t i f f s S t e n e r s o n and S c h m i d t , 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 C o u r t , F l a t h e a d C o u n t y , s e e k i n g 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
j u d g e 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 r o u g h g r a d i n g job on t h e B u f f a l o H i l l s G o l f C o u r s e .
The C i t y a p p e a l s .
I n March 1 9 7 5 , t h e C i t y o f K a l i s p e l l a s k e d f o r b i d s f o r
r o u g h g r a d i n g and r e l a t e d work on a n a d d i t i o n t o 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 p r o p o s e d work, including a
b o o k l e t e n t i t l e d "Rough G r a d i n g 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 G r a d i n g P l a n s " . Based on t h e s e d o c u m e n t s , r e s p o n d e n t s sub-
m i t t e d a b i d of $ 9 4 , 9 9 1 . 5 0 .
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 o f $ 9 4 , 9 9 1 . 5 0 , w i t h a u n i t cost of
$ 1 . 1 0 p e r c u b i c y a r d f o r a n y a d d i t i o n a l work. P l a i n t i f f s began
w o r k i n g s h o r t l y t h e r e a f t e r and c o m p l e t e d 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
w o r k w h i c h 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 p a i d f o r by t h e
City. 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 P h a s e Two, w h i c h was t e r m i n a t e d a f t e r p a r -
t i a l c o m p l e t i o n because of l a c k of f u n d s .
W h i l e e n g a g e d i n P h a s e 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 o n 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
m a t e r i a l t h a n was c o n t e m p l a t e d 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 c h a n g e o r d e r , n o r demand e x t r a c o m p e n s a t i o n b e f o r e
c o n t r a c t i n g f o r P h a s e TWO, n o r d i d t h e y e v e r r e f u s e t o c o n t i n u e
working.
F i n a l payment f o r P h a s e s One and Two was c o m p l e t e d p r i o r
t o J a n u a r y 1976. On J a n u a r y 7, 1 9 7 6 , 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 c o m p e n s a t e them f o r t h e e x t r a 2 7 , 4 7 7 c u b i c
y a r d s o f e a r t h which t h e y had moved which had n o t b e e n computed
i n t o the bid price. The C i t y r e f used t o pay and t h e c o n t r a c t o r s
filed suit.
The C i t y moved t o d i s m i s s , and f o l l o w i n g p l a i n t i f f s '
f i l i n g o f an amended c o m p l a i n t , moved f o r summary j u d g m e n t . The
C i t y a r g u e d t h a t by r e a s o n o f 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 b i d and c o u l d n o t h o l d 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 t h e 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 G r a d i n g P l a n " were
" a p p r o x i m a t e , " 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 g r a d i n g work t o be
done before submitting a bid," the City a s s e r t s t h a t the contrac-
tors c a n h a v e no c l a i m f o r t h e a d d i t i o n a l work d o n e .
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 i n £ o r m a t i o n p r o v i d e d i n t h e s p e c i f i c a -
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
w h i c h would h a v e t o be moved. H e awarded $ 2 8 , 3 0 1 . 3 1 t o p l a i n -
t i f f s t o c o m p e n s a t e f o r t h e o v e r r u n 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 w e f r a m e a s
follows :
1) Did t h e d i s t r i c t judge e r r i n n o t g r a n t i n g
d e f e n d a n t ' s m o t i o n f o r summary j u d g m e n t ?
2 ) Does t h e e v i d e n c e 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 t o judgment u n d e r t h e l a n g u a g e
of the contract?
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 c o m p l a i n t , t h e
C i t y moved f o r summary j u d g m e n t . The C i t y a r g u e d t h a t t h e
c o n t r a c t documents p l a i n l y a d v i s e d 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 n o t 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 t h e m s e l v e s t o d o t h e r o u g h
g r a d i n g a t t h e p r i c e b i d and c a n g e t no a d d i t i o n a l c o m p e n s a t i o n .
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
c l a i m , t h e r e c a n be no i s s u e s of m a t e r i a l f a c t b e f o r e t h e c o u r t ,
and summary j u d g m e n t s h o u l d h a v e b e e n g r a n t e d .
R u l e 56, M.R.Civ.P. p r o v i d e s t h a t a d e f e n d i n g p a r t y may
move f o r summary j u d g m e n t . Summary j u d g m e n t s h a l l be r e n d e r e d 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 ... interrogatories
. . . admissions . . . [and] a f f i d a v i t s , i f a n y , show t h a t t h e r e is
n o g e n u i n e i s s u e as t o a n y m a t e r i a l 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 t o judgment as a m a t t e r o f l a w . " Here t h e
d i s t r i c t j u d g e d e n i e d summary j u d g m e n t , w i t h o u t memorandum. His
r e a s o n a p p e a r s t o be o b v i o u s : a g e n u i n e i s s u e o f material f a c t
e x i s t e d i n t h i s case. Based o n a r e c e n t l i n e o f cases from t h i s
C o u r t , t h e d i s t r i c t j u d g e d e t e r m i n e d 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 t o f i n d w h e t h e r 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 o n 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
into the contract. S e e S a n d k a y C o n s t . C o . v . S t a t e Highway
Comm'n ( 1 9 6 5 ) , 1 4 5 Mont. 1 8 0 , 399 P.2d 1002; Haggart Const. Co.
v . S t a t e Highway Comm'n ( 1 9 6 5 ) , 1 4 9 Mont. 422, 427 P.2d 686; Hash
v. Sundling & Son#, Inc. ( 1 9 6 7 ) , 1 5 0 Mont. 388, 436 P.2d 8 3 ;
S o r n s i n C o n s t . Co. v. S t a t e ( 1 9 7 8 ) , 1 8 0 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 j u d g e was c o r r e c t i n d e n y i n g
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 o f f a c t and c o n c l u -
s i o n s of law, arguing t h a t the evidence does not support the
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 d o n o t s u p p o r t
t h e judgment. I n making t h i s a r g u m e n t , a p p e l l a n t a g a i n u r g e s
t h i s C o u r t t o i g n o r e t h e l o n g l i n e o f cases from t h i s C o u r t 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 o n 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 j o b . 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 b a s e d h i s f i n d i n g s and c o n c l u s i o n s o n t h e e v i d e n c e
presented. W e f i n d no e r r o r .
I n 1 9 6 5 , i n t h e case of S a n d k a y C o n s t . Co. v . State
Highway Comm'n ( 1 9 6 5 ) , 1 4 5 Mont. 1 8 0 , 399 P.2d 1002, t h i s Court
addressed the following issue :
" [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
a r e u s e d 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 b e e n l e d t o 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 s u c h 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 e x p e n s e s n e c e s s a r y
b y c o n d i t i o n s b e i n g o t h e r t h a n as r e p r e s e n t e d
b y s u c h p l a n s ? " S a n d k a y , s u p r a , 1 4 5 Mont. a t
1 8 4 , 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 irmative, finding t h e r e t h a t the conditions a c t u a l l y encountered
by 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, in e f f e c t , put the contractors into
t h e p o s i t i o n o f 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 o n e upon which t h e y b i d . 'I' Sandkay,
s u p r a , 1 4 5 Mont. a t 1 8 5 , 399 P.2d a t 1005. S e e a l s o Hash v.
S u n d l i n g and S o n s , I n c . ( 1 9 6 7 ) , 1 5 0 Mont. 388, 436 P.2d 8 3 .
S e v e r a l o t h e r cases h a v e p r e s e n t e d t h e i s s u e o f t h e
e f f e c t o f 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 H a g g a r t C o n s t . C o . v . S t a t e Highway Comm'n ( 1 9 6 7 ) , 1 4 9 Mont.
422, 427 P.2d 686, H a g g a r t b i d on a h i g h w a y c o n s t r u c t i o n j o b and
w a s t o l d t h a t he c o u l d u s e 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 R e p o r t s . " The
g r a v e l was l a t e r f o u n d t o 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 elsewhere. The
d e f e n d a n t d i d n o t d e n y t h a t t h e m a t e r i a l s 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 t o t h e q u a l i t y and quan-
t i t y o f t h e m a t e r i a l s 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 c h o s e t o f u r n i s h h i s own m a t e r i a l s , 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
m a t e r i a l t h a t would a c t u a l l y h a v e t o be moved . . . the bidder
would h a v e had t o h a v e a r e s u r v e y o f t h e whole s i t e , a t con-
s i d e r a b l e e x p e n s e and d e l a y . "
Additionally, t h e j u d g e found t h a t t h e r e was no i n f o r -
m a t i o n 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 b a s e d
o n a n a e r i a l map w i t h a c o n t o u r i n t e r v a l o f f i v e f e e t , w h i c h 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 o f o n e f o o t .
W e a l s o n o t e t h a t as i n t h e H a g g a r t case, t h e b i d d e r s had l e s s
t h a n t h r e e weeks t o s u b m i t 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 j u d g e f o u n d 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 s i g n e d by S t e n e r s o n and
S c h m i d t , 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 o n 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
specifications . B o t h S c h m i d t 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 i n c l u d e d 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 t o b i d d i n g , and c o u l d see no d i s c r e p a n c y be-
t w e e n t h e g r o u n d e l e v a t i o n s a s s e e n on t h e g r o u n d and t h e g r o u n d
e l e v a t i o n s as shown o n t h e p l a n s . Mr. 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 o n t h e
p l a n s b e c a u s e " i n my b u s i n e s s w e h a v e to r e l y o n t h e e x p e r t i s e o f
t h e p e o p l e 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 w e r e i n a c c u r a t e , and had n o way o f
s o determining without surveying. Mr. Stenerson t e s t i f i e d t h a t
i n t h e c o u r s e o f h i s work career, h e had b i d o n j o b s p e r h a p s 2 0 0
t i m e s , 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 s u c h a s t h e s e a s t h e b a s i s
of h i s bid. H i s t e s t i m o n y a l s o 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
e a r t h m o v i n g it w a s n o t c u s t o m a r y t o d o u b l e - c h e c k t h e a r c h i t e c t o r
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 j u d g e 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 . He noted t h a t Haggart received t h e
m a t e r i a l s 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 i n d e p e n d e n t l y . H e f u r t h e r found t h a t
f e w c o n t r a c t o r s b i d d i n g on s u c h p r o j e c t s h a v e s u f f i c i e n t t i m e o r
t e s t f a c i l i t i e s t o make a n i n t e l l i g e n t a p p r a i s a l o f m a t e r i a l s .
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 t o show t h a t a p p e l l a n t
e x p e c t [ e d ] less t h a n c o m p l e t e 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 a l l o w e d
t o r e l y o n 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 p u r p o s e f o r which s u c h r e p o r t s
a r e 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 p r o c e e d i n r e l i a n c e o n s u c h 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 g u a r d
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-
mally warrant." H a g g a r t , s u p r a , 1 4 9 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
noted :
"We are n o t h e r e h o l d i n g t h a t s u c h e x c u l p a t o r y
c l a u s e s may n o t be e n f o r c e d 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
a s s u m e d i n a l l cases, o r t h a t p a r t i e s t o s u c h
c o n t r a c t s are bound t o e x e r c i s e a n y t h i n g l e s s
t h a n r e a s o n a b l e and p r u d e n t j u d g m e n t . In
o t h e r w o r d s we w i l l l o o k t o j u s t i f i a b l e
reliance.'" H a g g a r t , 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 j u d g e i n t h e i n s t a n t case n o t e d f a c t o r s
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 o f j u s t i f i a b l e r e l i a n c e , s i m i l a r 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
o r s h o u l d h a v e known t h a t t h e i n f o r m a t i o n o n 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 No. 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 s u c h f i g u r e s were a p p r o x i m a t e o n l y , s u c h f i g u r e s d i d n o t
a p p e a r t o be r o u n d , b a l l p a r k f i g u r e s b u t i r r e g u l a r a m o u n t s t h a t
a p p e a r t o 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 , h e found t h a t
t h e on-site i n s p e c t i o n s would n o t h a v e r e v e a l e d a n y 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 o n t h e p l a n s , and t h a t " t o h a v e
e r r o n e o u s i n f o r m a t i o n p r o v i d e d to them by d e f e n d a n t . W e w i l l not
o v e r t u r n t h e d i s t r i c t j u d g e w h e r e 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 . M a r t a v. Smith ( 1 9 8 0 ) ,
Mont . , 622 P.2d 1011, 1015, 38 St.Rep. 28, 32.
The o r d e r o f t h e D i s t r i c t C o u r t a w a r d i n g t h e c o n t r a c t o r s
t h e t o t a l cost o f o v e r r u n is a f f i r m e d .
Chief J u s t i c e