No. 93-396
IN THE SUPREME COURT OF THE STATE OF MONTANA
DICK LEWE
DENISE HUYSER, ANTHONY HUYSER, BARBARA
HUYSER, AIMEE HUYSER, JOHN C.
MALPELI, JR., and BOB BIGGERSTAFF, "W.
d/b/a BIGGERSTAFF CONSTRUCTION,
Defendants and Respondents.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Thomas A. Olson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James J. Screnar, Attorney at Law,
Bozeman, Montana
For Respondent:
Wayne Jennings, Attorney at Law,
Bozeman, Montana
Submitted on Briefs: December 16, 1993
~ecided: March 15, 1994
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Plaintiff/appellant, Dick Lewis, appeals from a judgment of
the Eighteenth Judicial District Court, Gallatin County, finding
that his actions in refusing to continue the contract were a breach
of the parties' construction contract and awarding respondent,
Biggerstaff Construction, its costs, disbursements, attorney fees,
and ordering release of its posted bond on the subject property.
Affirmed and remanded for a determination and award of
respondents1 additional attorney fees on this appeal.
The dispositive issue is whether appellant breached his
contract with respondent Biggerstaff Construction when he refused
to continue work because of his belief that the work required of
him would be in violation of Montana building codes, and his
further belief that the parties1 contract was unlawful.
Appellant Lewis is a licensed electrical contractor with his
principal place of business in Big Sky, Gallatin County, Montana.
Respondent Biggerstaff is a building contractor whose principal
place of business is also in Big Sky. John Malpeli, Jr., is a
developer of the property, San Marino Subdivision, at issue in this
case. Denise, Anthony, Barbara, and Aimee Huyser are the current
record owners of the San Marino Subdivision. The subdivision
consists of eight residential lots, upon which Malpeli developed
eight single-family log residences with common areas. The units in
San Marino Subdivision are not commercial buildings or buildings to
house five or more families.
In 1989, Malpeli contracted with respondent to construct the
homes. Respondent proceeded with construction of the units as
needed by Malpeli, with several units under construction at one
time. Later in 1989, respondent and appellant entered into a real
estate improvement contract in which appellant w a s to provide
electrical supplies and perform the electrical services on the
units. Appellanttstasks included completing the "rough-inw phase
of the electric wiring and ordering an inspection from the state
electrical inspector when the wiring was completed. The rough-in
phase consists of installing all of a building's meter services,
wiring, and electrical boxes and circuits before installation of
insulatian and interior walls. As the electrical contractor,
appellant had the option of ordering a preliminary inspection of
the rough-in phase of the wiring. Respondent and appellant agreed
that their contract price was $5302. From 1989 to early 1990,
appellant completed electrical work on four of the units. In March
1990, appellant began work on the fifth unit.
On about May 7, 1990, respondent's construction supervisor was
asked by the purchaser of unit three to remove kitchen cabinets
being stored there for later placement in unit five. In so doing,
the construction supervisor hung the cabinets in unit five after
installing tongue and groove boards and covering a portion of the
wiring, despite appellant's warning not to do so.
portions of the wiring in the first four units which appellant
had completed also had been covered, but the electrical inspector
had not required that all the wiring be visible upon inspection of
the rough-in wiring.
Appellant discussed the boards covering the wiring in unit
five with several of respondent's employees. The employees
suggested to appellant that the work in unit five remain covered
until the state electrical inspector was ready to view the work.
Appellant did not accept this proposal and refused to proceed with
the job until respondent's employees removed all the wallboards
covering the wiring in unit five. Appellant contended that if they
did not remove the wallboards, he could lose his electrical
contractor's license because the action was illegal. For several
days and nights, appellant checkedto see if respondent's employees
had removed the wallboards covering the rough-in wiring, but they
had not.
On May 12, 1990, appellant met with respondent and another of
respondent's employees at respondent's office. Appellant had not
contacted the state electrical inspector prior to this meeting. At
the meeting, appellant became agitated and complained that the
covered wires in unit five had jeopardized his electrical
contractor's license. Respondent informed appellant that some of
the wallboards had been removed. Respondent testified that
throughout the meeting he attempted, without success, to work out
a resolution with appellant in order to get him to finish the job.
However, when appellant told respondent that he already had
contacted an attorney about a construction lien for the work he had
completed, respondent informed appellant that he should leave his
office. Before leaving the office, appellant presented a prepared
bill to respondent for the services he had provided on the project,
stating that he had completed about 55 percent of the wiring for
unit five and that he was through with the project.
Appellant did not return to the job. He contacted the state
electrical inspector to inform him of the conflict and to discuss
the situation. The inspector told appellant that the covered
wiring would not jeopardize the inspection or appellant's
electrical contractor's license.
Respondent gave appellant several weeks to cool down, but
appellant did not return. Respondent then hired a substitute
electrical contractor to finish the job. In order to complete the
job, the substitute electrical contractor was required to determine
where all the wires ended, locate dead shorts, supply the fixtures
which appellant had retained, and complete the wiring. Their bill
to respondent to complete work on unit five and the remaining units
was $5344, or $42 more than the total of respondent's original
contract with appellant.
On May 16, 1990, after appellant left the project, he filed a
notice of right to claim lien with the all at in County Clerk and
Recorder for electrical services and electrical fixtures he had
provided for unit five. The amount of the lien was $2916.10.
Appellant testified that he had installed meter services to the
unit as early as two months prior to May 12, 1990. The
construction lien statutes required appellant to file his lien no
later than 20 days after he first provided services or supplies.
Appellant mailed the notice to Malpeli more than 20 days after he
had begun work on the project.
On December 5, 1990, and May 7, 1992, respondent posted two
substitute bonds to replace and release appellant's lien on the
subject property, totaling one and one-half times the amount of the
lien.
On May 3, 1993, the District Court found that appellant
breached the parties' contract without justification because
appellant left the project after the electrical inspector had
informed him that if no other problems existed, appellant could
complete the rough-in and the inspector would not order a
compliance, and would approve it. In addition, the court found
that nothing had prevented appellant from completing the rough-in
and calling for an inspection of the wiring, other than his failure
to keep his temper under control. On June 8, 1993, the court
entered its judgment awarding respondent $42 in damages, $251 in
costs and disbursements, and $3931.50 in attorney fees, pursuant to
S 71-3-124, MCA. The court also awarded the Huysers and Malpeli
$250 in costs and disbursements, and $810 in attorney fees.
Further, the court ordered that respondent's posted bond, which had
replaced and released appellant's construction lien, be released to
respondent.
On July 2, 1993, appellant filed this appeal from the judgment
of the District Court.
Did appellant breach his contract with respondent Biggerstaff
Construction when he refused to continue work because of his belief
that the work required of him would be in violation of Montana
building codes, and his further belief that the parties' contract
was unlawful?
Appellant asserts that respondent flaunted the law and
performed an illegal act when it covered up the rough-in wiring in
unit five which in turn prevented him from future performance of
the parties' contract. Appellant also asserts that respondent's
actions violated his responsibility as an electrician and
jeopardized his electrical contractor's license.
Appellant contends that the effect of the District Court's
decision is to allow general contractors to interfere with
electrical contractors' responsibilities and legal duties.
Montana's Building Code Bureau guides electrical contractors
and electrical inspectors regarding rough-in inspections as
follows:
COVER (ROUGH-IN1 INSPECTIONS (1) Cover (rough-in)
inspections are made by a state electrical inspector
wherever ~ossible. Insulation and wallboard shall not be
applied before inspection unless 48 hours, excluding
Saturdays, Sundays, and holidays, have expired after
notice to inspect has been received.
(2) Whenever violations are found upon inspection, the
inspector will notify the installer verbally or with a
written compliance order as to the nature of the
violations. [Emphasis added].
8.70.405, ARM.
Appellant argues that the statute clearly prohibits covering
the rough-in electrical wiring by insulation or wallboard before an
inspector may waive a called-for inspection. Although the
regulation provides that electrical wiring shall not be covered
before inspection, a reasonable reading is that the rough-in cannot
be covered at the time of the inspection, and that the electrical
inspector, in his discretion, may waive an inspection of covered
rough-in wiring.
The record is clear that the parties had established a course
of conduct allowing for the covering of some of the rough-in wiring
in some of the other units completed before unit five, and that the
electrical inspector approved. In addition, the former chief
electrical inspector for the State of Montana, who was the
inspector in the spring of 1990, when problems on unit five first
arose, testified that an inspector must be given discretion in
complying with the regulations:
Q: Is it physically possible for Mr. Lamke [the
electrical inspector in Gallatin County] within a forty
to forty-five hour week to do every inspection called for
in the code?
A: I wish it were. No it isn't.
Q: Okay. And that's understood right from the
beginning, isn't it?
A: Yes, sir.
Q: Now, the administrative rule that Mr. Screnar read
to you contemplates some discretion on the part of the
inspector does it not?
A: Yes, sir.
At trial, appellant acknowledged that electrical inspectors
are vested with discretion as to whether they will inspect all of
the wiring prior to some of it being covered up. In addition, he
testified that the wiring in the ceiling and all the wiring around
the window and door openings in unit five had been covered prior to
an inspection, based on a pre-agreement with the inspector.
The record is clear that appellant had been assured by the
Gallatin County Electrical Inspector that t h e covered work in unit
five was not a problem, and he gave no indication that he would
issue a verbal or written warning or compliance order to appellant.
The inspector testified that the technical.violation by respondent
in covering some of the rough-in wiring in unit five was not very
serious. In fact, respondent removed some of the wallboards, as
requested by appellant, in unit five before appellant left the job.
Yet, appellant did not return. Because respondent cooperated by
taking down the wallboards in unit five and attempted to resolve
the problem by the time the parties met to discuss the situation on
May 12, 1990, respondent did not interfere with appellant's
responsibilities as an electrician.
As to appellant's argument that respondent's actions
jeopardized his electrical license, the regulations do not provide
that an electrical contractorlslicense can be suspended or revoked
because the wiring is covered prior to inspection. Reasons for
which an electrical contractor's license may be suspended or
revoked are:
(1) violation of this chapter, the national
electrical code, or the rules of the [state electrical]
board [Title 30, chapter 681;
(2) any cause for which issuance of the license
could have been denied had it existed and been known to
the board ;
(3) commission of any act of gross negligence,
incompetency, or misconduct as may be determined by the
board in the practice of a master, journeyman, or
residential electrician or the business of an electrical
contractor; or
(4) making a material misstatement, misrepresenta-
tion, or fraud in obtaining a license.
Section 37-68-321, MCA. Respondent's actions did not jeopardize
appellant's electrical contractor's license.
Finally, appellant was not prevented from completing the
project by any other of respondent's actions. Both appellant and
respondent testified that no one at Biggerstaff Construction told
him that he could not finish the project. The evidence is that
respondent asked appellant to complete the job. No other evidence
was presented at trial to indicate that respondent jeopardized
appellant's electrical contractor's license.
Appellant was not reasonable in his assumption that the
situation as of May 12, 1990, prevented him from performing the
contract and jeopardized his electrical contractor's license.
After respondent removed the wallboards in unit five and offered
solutions to the problem at the May 12 meeting, completion of the
parties' contract was in appellant's hands alone. Appellant's
obligation was to act in good faith and observe reasonable
commercial standards of fair dealing in the trade. Section
28-1-211, MCA; Kuhns v . Scott (1993), 259 Mont. 68, 75, 853 P.2d
1200, 1205; Story v. City of Bozeman (1990), 242 Mont. 436, 450,
791 P.2d 767, 775. After May 12, 1990, when appellant still
refused to perform the remainder of the contract, he did not act in
good faith.
In addition to the foregoing arguments, appellant argues that
the parties1 entire contract is void because the object of the
contract was unlawful. He cites case law interpreting rules
against unlawful contracts and the Montana Uniform Commercial Code
to support this proposition. Appellant's application of the UCC,
applicable to the sale of goods, is misplaced. Further, nothing in
the partiesr contract was contrary to an express provision of law,
contrary to the policy of express law though not expressly
prohibited, or otherwise contrary to good morals. Section
28-2-701, MCA. We hold that the parties1 construction contract was
not unlawful.
In sum, w e hold that appellant breached the contract and
justified respondent's recovery and release from his posted bond.
Affirmed and remanded for a determination and award of
respondentsv additional attorney fees on this appeal.
Justice
We concur:
March 15, 1994
CERTIFICATE OF SERVICE
I hereby that the following order was sent United States mail, prepaid, the following
named:
James J. Screnar
Angel, Screnar, Coil & Bartlett
125 West Mendenhall
Bozeman, MT 59715
Wayne Jennings
Attorney at Law
P.O. Box 1625
Bozeman, MT 59715
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONT NA
BY
Depu