NO. 93-489
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
WESTFORK CONSTRUCTION COMPANY,
Plaintiff and Appellant,
NELCON, INC., and UNITED STATES
FIDELITY AND GUARANTY COMPANY,
Defendants and Respondents.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable John S. Henson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James C. Bartlett, Hash, O'Brien & Bartlett,
Kalispell, Montana
For Respondents:
Robert J. Phillips, Phillips & Williams,
Missoula, Montana
Submitted on Briefs: ~ p r i l14, 1994
Decided: June 28, 1994
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Subcontractor Westfork Construction Company filed an action in
the Fourth Judicial District, Missoula County, for contract damages
against contractor Nelcon, Inc., and its bonding company, United
States Fidelity and Guaranty (Fidelity). Westfork alleged that it
was entitled to damages arising out of its subcontract agreement
with Nelcon for Westfork to clear acreage and retain the timber on
the acreage, and the subsequent discovery that timber had been
removed. Westfork appeals the directed verdict and judgment and
attorney fee award entered for Nelcon and Fidelity.
We affirm.
The sole issue on appeal is whether the District Court erred
when it granted respondentst motion for a directed verdict on the
basis that the evidence established that appellant received all the
payment it was entitled to under the written agreement.
On October 5, 1987, Nelcon entered an agreement with the State
of Montana to complete a highway construction project known as Elk
Hills-Lyon Springs in Lincoln County, and granting Nelcon the
standing timber within the right-of-way. The project required the
highway to be straightened and widened. Prior to this agreement,
in mid-September 1987, Nelcon inspected the project and found
timber to be standing on the site.
Westfork placed a bid for a subcontract with Nelcon to clear
and grub the project grounds in preparation for excavation.
Westforkts written bid dated October 2, 1987, offered a price of
$1200 per acre on the approximately 70 acre project area, plus the
right-of-way timber.
As a result of the bid, Nelcon and Westfork entered into a
subcontract dated October 5, 1987, providing for payment of $84,000
for clearing and grubbing the approximately 70 acre area at $1200
per acre. The subcontract did not refer to the timber. However,
Nelcon concedes that its representatives agreed that Westfork
"could do with the timbertt it "pleased."
as
In mid-October 1987, it became known to the State, Nelcon, and
Westfork that the timber was owned by Champion International and
had been removed from the area. In response to this information,
Westfork sent a letter to Nelcon stating that it would complete the
job for $1700 per acre due to the absence of timber. Although the
letter was received by Nelcon, no response was ever given.
Westfork commenced the job and completedthe clearing and grubbing.
At about the same time that Westfork sent the letter to
Nelcon, Nelcon filed a claim with the State concerning the missing
timber. After negotiations, the State offered to settle the issue
with Nelcon by paying them $22,359.63 for the missing timber, which
included the value of the timber, plus Nelcon's costs in
determining the amount of missing timber in the area. Of the
$22,359.63 timber settlement, Nelcon paid Westfork $19,859.63 after
retaining $2500 as markup costs.
Westfork filed an action against Nelcon and Fidelity alleging
damages due to the modified contract terms wherein Nelcon agreed to
pay at the rate of $1700 per acre due to the absence of timber,
thus owing Westfork $15,277.47, plus interest. In the alternative,
if the contract was found to have not been modified, then Westfork
alleged it was entitled to receive damages for the missing
right-of-way timber under the subcontract agreement with Nelcon.
A jury trial began February 10, 1993. At the close of
Westfork's case-in-chief, the District Court granted Nelcon's and
Fidelity's motion for a directed verdict. In granting the directed
verdict, the court noted that Westfork did not argue that the
agreement should not be enforced because it was unconscionable or
fraudulent, and found that the subcontract between Nelcon and
Westfork constituted the entire agreement. The court found that
Sections 7 and 8 of the subcontract between Nelcon and Westfork
specifically provided for the resolution of any changed
circumstances or construction claims, and Section 8 specifically
provided that Westfork was bound to Nelcon to the same extent that
Nelcon was bound to the State whenever any claims or disputes arise
out of the performance of the contract. The court also found that
the subcontract provided that Nelcon could not be liable to
Westfork for its work on the project for any amount greater than
the amount recovered from the State by Nelcon, less markup, and
that Westfork received all the payments it was entitled to under
the subcontract. Judgment was entered on March 22, 1993.
Did the District Court err when it granted respondent's motion
for a directed verdict on the basis that the evidence established
that appellant received all the payment entitled to under the
written agreement?
When this Court reviews a directed verdict granted pursuant to
Rule 50(a), M.R.Civ.P., it looks to see if the evidence leads to
only one conclusion. "If only one conclusion is reasonably proper,
then the directed verdict is proper." Semenza v. Leitzke (1988),
232 Mont. 15, 18, 754 P.2d 509, 511 (quoting Cremer v. Cremer Rodeo
Land & Livestock Co. (1979), 181 Mont. 87, 92, 592 P.2d 485, 488).
A directed verdict is properly granted when the "evidence is so
insufficient in fact to be insufficient in law. Semenza, 754 P.2d
at 511 (quoting Parini v. Lanch (l966), 148 Mont. 188, 191, 418
P.2d 861, 863). In our review of a directed verdict for a
defendant, we will view the evidence in the light most favorable to
the plaintiff, and if the evidence tends to establish the case
according to the plaintiff's pleading, this Court will reverse the
district court's order. Cremer, 592 P.2d at 488.
Both Westfork and Nelcon agree that although there is no
written agreement concerning the grant of timber to Westfork, both
parties understood that the main contract between Nelcon and the
State provided that Nelcon could retain any merchantable timber on
the right-of-way, and Nelcon conceded that Westfork we could do with
the timber" as it "pleased." Westfork argues that the parties
resolved their dispute concerning the missing timber by modifying
the subcontract price from $1200 per acre to $1700 per acre, as
evidenced by the letter Westfork sent to Nelcon on October 28,
1987. Westfork also contends that Nelcon representatives were
aware that Westfork was performing the job, and therefore, Nelcon
impliedly accepted the $1700 modification by its failure to
respond. Therefore, Westfork asserts that there was sufficient
evidence for the jury to conclude that the parties resolved their
dispute concerning the absent timber and agreed that the job would
be completed for $1700 per acre.
Nelcon, on the other hand, argues that the written contract
was clear and unambiguous and provided all the terms of the
agreement between the parties, and that both Westfork and Nelcon
are experienced in the area of bidding and contracting construction
jobs. Nelcon also argues that there is no evidence in the record
that Nelcon executed any acceptance of Westfork's letter to modify
the subcontract price terms.
A written contract may be altered by another written contract
or by an executed oral agreement. Section 28-2-1602, MCA. The
record reveals that during the trial the District Court did not
allow Westfork's offer of the October 28, 1987, letter as evidence
that the parties modified their agreement price to $1700 per acre.
The court limited the letter's relevance to show the parties were
aware the timber was gone and were negotiating the value of the
timber. The court also determined that the letter was evidence of
a proposal, not a modification. Westfork does not argue that the
court erred when it limited the letter's relevance, and our search
of the record provides no evidence of written acknowledgement or
acceptance by Nelcon to Westfork's proposal.
An oral agreement modifying the written agreement must be
fully executed to meet with the provision within 5 28-2-1602, MCA.
Additionally, an executed oral agreement requires full execution on
both sides of the agreement. Kraft v. Hodson (1992), 254 Mont.
262, 264, 836 P.2d 1234, 1236. Here, Nelcon paid Westfork $1200
per acre for the clearing and grubbing completed, the amount
specified in the written subcontract--not the alleged modified
amount of $1700 per acre. Therefore, the alleged modification
amount was not fully executed by both parties.
The District Court found that the subcontract between Nelcon
and Westfork provided all the terms of the agreement. The
following provision in the agreement provides for disputes
concerning changes and extra work:
7A. Contractor [Nelcon] may at any time by written order
of Contractor's authorized representative, and without
notice to the Subcontractor's [Westforkls] sureties, make
changes in, additions to, and deletions fromthe work to
be performed under this Subcontract and Subcontractor
shall promptly proceed with the performance of this
Subcontract so changed. Any increase or decrease of the
Subcontract price or time resulting from such change or
extra work shall be agreed upon in writing by the parties
hereto and, if mutual agreement is not possible, the
questions of entitlement to additional time or to a
change in compensation and the amount thereof shall be
determined as provided in the Disputes Clause of this
Agreement ....
The provision in Section 8 is titled I1Disputes1land states in
pertinent part:
8A. In the event of any dispute or claim between the
Contractor [Nelcon] and the Owner [the State] which
directly or indirectly involves the work required to be
performed by Subcontractor [Westfork] under this
subcontract, or in the event of any dispute or claim
between Contractor and Subcontractor which directlv or
indirectlv involves a claim aaainst the Owner for either
additional com~ensation and/or an extension of time under
the Contract Documents. Subcontractor aarees to be bound
to Contractor and Contractor asrees to be bound to
Subcontractor to the same extent that Contractor is bound
to the Owner bv the terms of the Prime Contract and bv
anv and all ~rocedures and resultins decisions, findinas
or determinations made thereunder by the person so
authorized in the Prime Contract or by an administrative
agency, board or court of competent jurisdiction, whether
or not Subcontractor is a party to the proceedings before
said person, agency, board or court. . . . It is
expressly understood and agreed in connection with the
determination of such claims or disputes that as to any
work done by the Subcontractor. ... Contractor shall
never be liable to Subcontractor to any ureater extent
than Owner is liable to Contractor, less any markups on
costs incurred bv Contractor.
8C. In the event either party institutes suit in court
against the other party, or against the surety of such
party, in connection with any dispute or matter arising
under this Subcontract, the prevailing party shall be
entitled to recover its attorneys' fees, in addition to
other relief granted by the court. [Emphasis added].
Where the language of the subcontract terms relative to the
dispute resolution and recovery limits was plain and its meaning
apparent, the trial court had the duty to declare that meaning and
not leave it to the speculation of the jury. Section 1-4-101, MCA;
Martin v. Community Gas and Oil Co., Inc. (1983), 205 Mont. 394,
399, 668 P. 2d 243, 245. Where contract provisions are unambiguous,
the courts have no authority to insert provisions in, or delete
provisions from, the contract. In re Marriage of McKeon (1992),
252 Mont. 15, 826 P.2d 537. In the interpretation of contracts,
each provision within the contract must be given effect. First
Security Bank of Anaconda v. Vander Pas (1991), 250 Mont. 148, 818
P.2d 384.
The language of Section 7 was not ambiguous or vague, but
provided for any dispute contingency in the work to be done or
payments to be made, to be resolved by the procedure in Section 8.
Section 8 was not ambiguous or vague, but provided that the parties
were bound to each other to the same extent that Nelcon is bound to
the State by the prime contract terms, and by all procedures and
resulting decisions, findings, or determinations made thereunder,
and that Westfork could not recover more from Nelcon than Nelcon
could recover from the State. Section 8 also provided that the
party who prevails in a court proceeding shall be awarded attorney
fees.
Westfork contends that Section 8 does not apply because Nelcon
never invoked the claim procedure provided within the subcontract.
However, the record shows Nelcon submitted a Notice of Potential
Claim to the State and subsequently entered negotiations and
resolved the timber dispute. After the State paid Nelcon the
$22,359.63 timber settlement, pursuant to the agreement terns,
Nelcon paid Westfork $19,859.63--the entire settlement amount less
Nelcongsmarkup total of $2500.
We hold that the record supports the District Court Is
interpretation of the subcontract and the evidence was legally
sufficient to withdraw the case from the jury. The evidence within
the record provides only one reasonable conclusion--that the
written subcontract provided the terms of the agreement between the
parties.
We hold that the District Court properly granted the directed
verdict in favor of Nelcon and ~idelity, and properly granted
attorney fees.
Af fimed .
we concur: