Jim's Excavating Service, Inc. v. HKM Associates

NO. 93-166
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994

JIM'S EXCAVATING SERVICE, INC.,
a Montana Corporation,
Plaintiff/Respondent/
Cross-Appellant
v.
HEM ASSOCIATES, a Montana
Corporation,
Defendant/Appellant.

APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Robert W. Holmstrom, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Neil G. Westesen and Donald L. Harris,
Crowley, Haughey, Hanson, Toole & Dietrich,
Billings, Montana
For Respondent:
Stephen D. Bell and Robert L. Sterup,
Dorsey & Whitney, Billings, Montana
For Amicus:
John F. Sullivan, Hughes, Kellner,
Sullivan & Alke, Helena, Montana
(Consulting Engineers Council of Montana
and Montana Technical Council)

Submitted on Briefs: April 21, 1994
Decided: July 12, 1994
Filed:
Justice James C. Nelson delivered the Opinion of the Court.

Jim's Excavating Service, Inc. (JES) , brought this action
against the engineering firm of HKM Associates, WW r in the
District Court of the Thirteenth Judicial District, Yellowstone
County, claiming delay and extra work damages as a result of HKM's
negligent design and supervision of the Lockwood Water User's
Association water pipeline project. The jury returned a verdict in
the amount of $301,000.00. HKM appeals and JES cross appeals on
the issue of prejudgment interest. We affirm.
The following issues are raised on appeal:
I. Did the District Court err by permitting JES to sue HKM
in tort to recover purely economic damages?
II. Did the District Court err by refusing to admit evidence
that J-M's pipe representative, Vince Pacifico, informed JES at the
beginning of the construction project that J-M's 24-inch PVC pipe
could not be deflected?
III. Did the District Court err by permitting JES's damage
expert to give his opinion concerning the damages JES incurred
where the expert relied upon business records and long-accepted
methodology?
IV. Did the District Court err by denying HKM's motion for a
judgment notwithstanding the verdict (JNOV) or in the alternative
a motion for a new trial?
V. Did the District Court err by failing to reduce the jury
award against HKM by the amount JES received from settling with
LWUA, J-M, and Northwest Pipe?
VI. Did the District Court err in denying JES's motion for
prejudgment interest?
FACTUAL BACKGROUND
This litigation arises out of the construction of a water
transmission pipeline for the Lockwood Water Users Association
(LWUA). LWUA retained HKM, a Billings based engineering firm, to
2
design the plans and specifications for the project. HKM also
acted as project engineer through the entire project, from the

design stage through completion. JES , a Billings construction

contractor, was the low bidder on the project, and LWUA awarded the

contract to JES in August 1985. The contract required JES to

construct a water transmission main using 16-inch and 24-inch pipe.

A portion of the pipeline was to be laid through what is known

as the l'S1* curve on Cerise Road. To negotiate this curve, the pipe

would either have to be capable of being deflected at the joint, or
special fittings would have to be installed. The project was
originally designed to use ductile iron pipe, which is capable of
deflection at the joint. Therefore, the plans and specifications

on the original bidding and contract requirement forms issued in

July 1985, did not call for fittings for the "S" curve on Cerise
Road. Six days prior to releasing the bid, HKM issued an addendum

to the bid forms requesting an alternate bid using polyvinyl
chloride (PVC) pipe.

While designing the pipeline, J-M Manufacturing Co., Inc.

(J-W, informed HKM's principal engineer Steve Quail, that the

24-inch PVC pipe could be deflected at the joint up to 3'. Relying

on this information, Quail determined that the PVC pipe could be

laid through the "S" curve without special fittings. Therefore,

the addendum to the bid forms did not include any specifications

that fittings be used for the "S" curve on Cerise Road.

JES submitted a bid which included the alternative bid for PVC

pipe, and as stated above, was awarded the contract. JES decided

3
to buy PVC pipe manufactured by J-M, from Northwest Pipe Fittings,
Inc. (Northwest Pipe). JES had Northwest Pipe provide the required
pipe information and certification to HKM. The submittal informed
HKM that 24-inch PVC pipe manufactured by J-M would be used on the
project. Included in the submittal was a deflection table
indicating that the 24-inch pipe could be deflected up to 3' at the
joint without fittings. Steve Quail called Northwest Pipe to
verify that the deflection table applied to PVC pipe, and upon
Northwest Pipe‘s assurance that the PVC pipe net the criteria
listed in the deflection table, Quail determined that the proposed
submittal satisfied the design plans and specifications, and
approved the submittal without exception.
Construction on the project began in September 1985. By the
spring of 1986, JES was ready to lay the pipe at Cerise Road. The
24-inch pipe to be installed for this part of the project was
delivered on April 10, 1986. Shortly thereafter, on April 18,
1986, a J-M representative told JES the pipe could not be
deflected. Therefore fittings would have to be installed in order
to negotiate the Cerise Road "S1' curve. Because fittings had not
been indicated for the Cerise Road portion of the project, JES had
not ordered any, and none were immediately available. Construction
of the pipeline effectively stopped until the fittings arrived.
JES did complete the straight sections of the project while waiting
for the fittings, and continued to work until May 6 or 7, 1986.
The fittings arrived on July 14, 1986. However, JES was not able
to resume work until their subcontractors had Worker's Compensation

4
insurance. JES resumed work August 28, 1986. on September 4,
1986, there was a break in the Cenex gas line in the immediate area

of the project. The area was evacuated by the sheriff, and the
project was shut down. On September 10, HKM inspected the 24-inch

fittings and discovered that the cement linings of the fittings

were cracked and had to be returned for repair. The new fittings

did not arrive on the project until October 5, or 6, 1986.

While waiting for the equipment, JES could not do other work

because its bonding was tied up, and because it had to keep its

equipment on standby so that it would be available to begin work
once the fittings did arrive. JES felt it was not free to use the

equipment on a long-term basis on any other job. Due to the delay
JES suffered economic loss.

PROCEDURAL BACKGROUND

JES filed a complaint against HKM and LWIJA on May 8, 1987.

The complaint contained a series of Counts, some in the nature of
alternate theories of recovery, some in the nature of separate

claims, some applicable to defendant HKM only, some applicable to

defendant LWDA only, and some applicable to both defendants

jointly. LWDA counterclaimed against JES and JES filed a third

party complaint against Northwest Pipe and J-M, asking to be

indemnified from the claims set forth in the LWDA's counterclaim.

Prior to trial, JES entered into a settlement agreement with

LWDA whereby LWUA paid JES a total of $135,000 and dismissed the
counterclaim asserted against JES. JES also entered into a
settlement agreement with Northwest Pipe and J-M, whereby the sum

5
of $135,000 was paid to JES in satisfaction of the claims asserted

by JES against Northwest Pipe and J-M. By the terms of the
agreements, JES did not release the claims it possessed against

HEM. Therefore the remaining parties to the action were JES and

HEM.

Following the settlements, JES filed an amended complaint

against HEM only on March 7, 1989. The amended complaint

incorporated some of the theories contained in the original
complaint which named LWUA as co-defendant. The amended complaint

alleged among other things, that HEM as project engineer owed JES,
as contractor, a duty to act as a reasonable prudent member of its

profession in its preparation of the contract plans and
specifications, in its overall design of the project, in its
direction, supervision and administration of the contract work, and

its recommendations to the Project Owner with regard to contract

payments and disputes. JES sought recovery of direct and
consequential damages incurred as a result of HEM's negligent

design.

A jury trial was held August 3 through 13, 1992. After
certain pretrial motions, the case was submitted to a jury upon a

negligence theory and the jury was asked to determine whether HKM

was negligent in preparing the plans and specifications of the

project and if so: whether HEM's negligence was a cause in fact of

JES's damages: whether HEM's negligence was the proximate cause of

damages to JES; and the amount of damages sustained by JES as a

result of HKM's negligence. The jury was also asked whether JES

6
was negligent, and if so, was the negligence of JES the cause in
fact of its damages. The jury by its special verdict, determined
that HKM was negligent and that its negligence was the cause in
fact and proximate cause of JES's damages. The jury also
determined that JES was negligent, but its negligence was not the
cause in fact of its damages. The jury determined JES's damages to
be in the amount of $381,000.
After trial HKM moved for a pro tanto reduction of the jury
verdict. HKM argued that the $381,000 damage award should be
reduced by $270,000, to reflect the compensation JES received from
settling with LWDA, J-M, and Northwest Pipe. The District Court
denied the motion, and entered judgment in favor of JES on October

30, 1992. HKM then moved for a judgment notwithstanding the
verdict or in the alternative for a new trial. HKM based its
motion in part on the argument that absent privity of contract, as
a matter of law, HKM owed no duty to JES, and therefore JES could
not bring a negligence action directly against HKM. After
considering the briefs of both parties, the District Court denied
this motion on December 17, 1992.
HKM appealed to this Court from this judgment, and JES cross
appealed an order denying JES's motion for prejudgment interest.
I. ECONOMIC LOSS DOCTRINE
Did the District Court err by permitting JES to sue HKM
in tort to recover purely economic damages?
HKM argues that because there was no contractual privity
between JES and HKM, the District Court could not, as a matter of

law, impose purely economic tort liability upon HRM. Our standard
7
of review relating to conclusions of law is whether the trial
judge's interpretation of the law is correct. Steer, Inc. v.

Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601,
603. Therefore, we must determine if the District Court erred in

determining that JES was not as a matter of law precluded from

bringing a negligence action against HKM absent privity of contract

between the two.

HKM asks this Court to adopt the economic loss doctrine which

provides that a contractor or subcontractor may not sue a design

professional in tort for economic damages, i.e., delay damages and
the cost of extra work. Rather, HKM argues, the parties should be

required to pursue their contract remedies, and resolve the dispute

in accordance with the law of contracts. Although this Court has
not addressed this specific question, the majority of jurisdictions

have done so and have rejected the economic loss doctrine. See

generally Annotation, Tort Liabilitv of Project Architect for
Economic Damages Suffered bv Contractor, 65 A.L.R.3d 249 (1975).

In the instant case, the District Court rejected HKM's

arguments that the economic loss doctrine precluded JES as a matter

of law, from recovering economic damages from HKM. The District

Court determined that HKM "had a duty to use ordinary care and

diligence in rendering its professional services in the preparation

of the plans and specifications," and allowed JES to establish a

breach of that duty and the resulting damage to it, entitling JES
to recover. HKM alleges that this decision was in error.

Montana law requires that engineers exercise the care and

8
competence expected of members of their profession. Morrison-
Maierle, Inc. v. Selsco (1980), 186 Mont. 180, 185, 606 P.2d 1085,
1088. HKM argues however, that an engineer only has a duty to the
owner, and that duty arises from the contract between them.
Because there was no contractual privity between HI@l and JES, HKM
contends that it owes no duty to JES.
This argument ignores the established law in Montana
abolishing the requirement of privity of contract to maintain an
action in tort. Hawthorne v. Kober Con&. Co. (1982) t 196 Mont.
519, 640 P.2d 467; Tynes v. Bankers Life Co. (1986), 224 Mont. 350,
730 P.2d 1115. In Hawthorne, the case rejecting the privity
requirement, a subcontractor asserted claims against the general
contractor and the general contractor's steel supplier. The
subcontractor alleged that he suffered economic damages as a result
of the steel supplier's delay in delivering steel. The District
Court granted partial summary judgment in favor of the steel
supplier finding that the subcontractor could not maintain an
action against the steel supplier because there was no privity of
contract. This Court reversed the District Court holding that
privity of contract is not required to maintain an action grounded
in negligence. We adopted the following reasoning from Prosser,
Law of Torts, 5 93 (4th ed. 1971):
. . . by entering into a contract with A, the defendant
may place himself in such a relation toward B that the
law will impose upon him an obligation, sounding in tort
and not in contract, to act in such a way that B will not
be injured. The incidental fact of the existence of the
contract with A does not negative the responsibility of
the actor when he enters upon a course of affirmative
conduct which may be expected to affect the interests of
9
 another person.

. . . there are situations in which the making of the
contract creates a relation between the defendant and the
promisee, which is sufficient to impose a tort duty of
reasonable care. By the same token, there are situations
in which the making of a contract with A may create a
relation between the defendant and B, which will create
a similar duty toward B, and may result in liability for
failure to act.
Hawthorne, 640 P.2d at 470.

In addition, as stated above, the clear trend in other
jurisdictions is to allow a negligence action for economic loss

without direct privity of contract. See for example, Mattingly v.

Sheldon Jackson College (Alaska 1987), 743 P.2d 356; Donnelly
Const. Co. v. Oberg/Hunt/Gilleland (Ariz. 1984), 677 P.2d 1292;
Bacco Const. Co. v. American Colloid Co. (Mich.App. 1986), 384

N.W.2d 427; A. Moyer, Inc. v. Graham (Fla. 1973), 285 So.2d 397.
For example, in Bacco Con&r. Co. v. American Colloid, the Michigan

Court of Appeals allowed a contractor to bring a negligence action

against a project engineer absent contractual privity. Bacco, 384

N.W.2d at 434. The Michigan court concluded that:
It is certainly foreseeable that an engineer's failure to
make proper calculations and specifications for a
aonstruction job may create a risk of harm to the third-
party contractor who is responsible for applying those
specifications to the job itself. The risk of harm would
include the financial hardship created by having to cure
the defects which may very well not be caused by the
contractor.

Bacco, 384 N.W.2d at 434. Bacco adopted the reasoning of an

Arizona case, Donnelly Con&. Co. v. Oberg/Hunt/Gilleland. In that

case, a contractor brought a negligence claim against the

architects alleging that the architect's plans and specifications

10
contained errors which resulted in increased construction costs.
Donnelly, 677 P.2d at 1293-94. The architect moved to dismiss the
action based in part on the fact that there was no privity of
contract. The district court granted the motion. Donnelly, 677
P.2d at 1294. The Supreme Court of Arizona reversed and remanded,
holding that the claim should be allowed, in spite of the lack of
privity. Donnellv, 677 P.2d at 1296. The Arizona court concluded
that it was foreseeable that the contractor, hired to follow the
plans and specifications prepared by the architect, would incur
increased costs if those plans were not accurate. Donnellv, 677
P.2d at 1295-96.
HKM argues that our decision in Thayer v. Hicks (1990), 243
Mont. 138, 793 P.2d 784, which addressed the extent of negligence
liability accountants have to third parties with whom they are not
in privity of contract, is applicable to the instant case. HKM
maintains that Thaver stressed the necessity of some sort of
connection or "quasi-privity" before tort liability could be
imposed on a professional.
In Thaver, this Court examined three approaches to accountant
liability to third parties: (1) the "near privity" concept from
Credit Alliance Corp. v. Arthur Andersen & Co. (N.Y. 1985), 483
N.E.Zd 110, which limits the duty of care to those third parties
who are actually known to the accountant: (2) the "actually
foreseen" rule from the Restatement (Second) of Torts § 552 (1977),
which provides that the accountant foresee and intend members of a
limited class will rely on his representations: and (3) the

11
"ordinary negligence rule" which holds accountants liable to all
who might reasonably and foreseeably obtain and rely upon the
accountant‘s work product. Thaver, 793 P.2d at 788-89.
Thaver adopted a modified version of the Credit Alliance test,
which provides:
. . .[A]n accountant may owe a duty of care to third
parties with whom he is not in privity of contract.
However, this duty exists only if the accountant actually
knows that a specific third party intends to rely upon
his work product and only if the reliance is in
connection with a particular transaction or transactions
of which the accountant is aware when he prepares the
work product.
Thaver, 793 P.2d at 791. Because the facts of Thaver met the
strictest of the three tests, we declined to adopt one of the more
liberal standards at that time.
The jury in this case found that HIU4 was negligent in
preparing the project's plans and specifications. Therefore, the
negligent act, according to the special jury verdict, occurred
before HKM actually knew JES, specifically, would be relying on the
negligently prepared plans and specifications. The facts of this
case therefore do not meet the test we adopted in Thaver.
However, HKM should not escape from liability simply because
it did not actual.ly know JES would receive the bid, when it knew
that some contractor would be relying on its plans and
specifications. We conclude that in this case, and in other cases
wherein a contractor brings a suit against the project engineer or
architect, the approach set forth in 5 552 of the Restatement
should control. Section 552 of the Restatement provides:
(1) One who, in the course of his business, profession
12
 or employment, or in any other transaction in which he
has a pecuniary interest, supplies false information for
the guidance of others in their business transactions, is
subject to liability for pecuniary loss caused to them by
their justifiable reliance upon the information, if he
fails to exercise reasonable care or competence in
obtaining or communicating the information.

(2) Except as stated in Subsection (3), the liability
stated in Subsection (1) is limited to loss suffered

(a) by the person or one of a limited group of
persons for whose benefit and guidance he intends to
supply the information or knows that the recipient
intends to supply it: and

(b) through reliance upon it in a transaction that
he intends the information to influence or knows that the
recipient so intends or in a substantially similar
transaction.
(3) The liability of one who is under a public duty to
give the information extends to loss suffered by any of
the class of persons for whose benefit the duty is
created, in any of the transactions in which it is
intended to protect them.

We adopted this section of the Restatement in State Bank of

Townsend v. Maryann's, Inc. (1983), 204 Mont. 21, 664 P.2d 295,

where we noted the following language from the comment to the
Restatement:

. . .[I]t does not follow that every user of commercial
information may hold every maker to a duty of care.
Unlike the duty of honesty, the duty of care to be
observed in supplying information for use in commercial
transactions implies an undertaking to observe a relative
standard, which may be defined only in terms of the use
to which the information will be put, weighed against the
magnitude and probability of loss that might attend that
use if the information proves to be incorrect. A user of
commercial information cannot reasonably expect its maker
to have undertaken to satisfy this obligation unless the
terms of the obligation were known to him. Rather, one
who relies upon information in connection with a
commercial transaction may reasonably expect to hold the
maker to a duty of care only in circumstances in which
the maker was manifestly aware of the use to which the
information was to be put and intended to supply it for

13
 that purpose. . .

State Bank of Townsend, 664 P.2d at 302.
In addition, in discussing Subsection (Z), the comments to the
Restatement note that it is not necessary that the maker of the
negligent misrepresentation have any particular person in mind as
the intended, or even the probable, recipient of the information.
. . .[I]t is not required that the person who is to
become the plaintiff be identified or known to the
defendant as an individual when the information is
supplied. It is enough that the maker of the
representation intends it to reach and influence either
a particular person or persons, known to him, or a group
or class of persons, distinct from the much larger class
who might reasonably be expected sooner or later to have
access to the information and foreseeably to take some
action in reliance upon it.
We find illustration 9, of the comments to Subsection (2) to be
particularly applicable:
The City of A is about to ask for bids for work on a
sewer tunnel. It hires B Company, a firm of engineers,
to make boring tests and provide a report showing the
rock and soil conditions to be encountered. It notifies
B Company that the report will be make available to
bidders as a basis for their bids and that it is expected
to be used by the successful bidder in doing the work.
Without knowing the identity of any of the contractors
bidding on the work, B Company negligently prepares and
delivers to the City an inaccurate report, containing
false and misleading information. On the basis of the
report C makes a successful bid, and also on the basis of
the report D, a subcontractor, contracts with C to do a
part of the work. By reason of the inaccuracy of the
report, C and D suffer pecuniary loss in performing their
contracts. B Company is subject to liability to B and to
D.
Thus, we hold that a third party contractor may successfully
recover for purely economic loss against a project engineer or
architect when the design professional knew or should have foreseen
that the particular plaintiff or an identifiable class of
14
plaintiffs were at risk in relying on the information supplied.
II. HEARSAY EVIDENCE
Did the District Court err by refusing to admit evidence
that J-M's pipe representative, Vince Pacifico, informed
JES at the beginning of the construction project that J-
M's 24-inch PVC pipe could not be deflected?
At trial, HKM offered the deposition testimony of Rex Mishler,
a J-M sales representative, and a letter allegedly written by
Mishler. According to HKM, the deposition testimony and the letter
would prove that Vince Pacifico, a J-Mtechnical representative who
was deceased at the time of trial, informed JES at the project
start-up that the 24-inch pipe could not be deflected. HFM alleges
that the District Court erred when it refused to admit the
deposition testimony and the letter. In reviewing the alleged
error, we begin with the principle that questions of admissibility
of evidence are left to the sound discretion of the trial court,
and are subject to review only in the case of manifest abuse.
Mason v. Ditzel (1992), 255 Mont. 364, 370-71, 842 P.2d 707, 712.
The District Court excluded Rex Mishler's deposition testimony
as hearsay. On appeal, HKM sets forth two arguments to support its
position that the deposition testimony was not hearsay. First, HKM
contends that the deposition testimony was not offered to prove the
truth of the statements, but to show that JES had notice of the
pipe's non-deflectability.
Hearsay is defined as 'la statement, other than one made by the
declarant while testifying at the trial or hearing, offered in
evidence to prove the truth of the matter asserted." Rule 801(c),

15
M.R.Evid. If a statement is not offered to prove the truth of its
contents, but to show whether the statement was made, the statement
is not hearsay under the definition. Commissioner's Comments to
Rule 801(c), M.R.Evid. HKM contends the deposition testimony was
not offered to prove the truth of what was said, that the pipe
could not be deflected, but to prove that JES had notice of the
pipe's non-deflectability before April 1986.
HKM relies on Moats Trucking Co. v. Gallatin Dairies (1988),
231 Mont. 474, 753 P.2d 883, to support its position that the
statements should have been admitted not to prove they were true,
but to demonstrate the effect they had on the listener, JES.
However, the hearsay statement in Moats is distinguishable from
Mishler's hearsay statement. In Moats, the district court allowed
a witness to testify about a conversation his employee had with the
plaintiff. The district court permitted the testimony to show the
resulting effect the conversation had on the witness. Here, HKM
attempted to have Mishler testify to a conversation Vince Pacific0
had with JES to prove the effect the conversation should have had
on JES, not Mishler.
In addition, while HKM argues to the contrary, we conclude
that the content of Pacifico's conversation with JES cannot be
separated from the fact that he had the conversation, i.e, his
sivinq of the "notice". Without knowing what Pacific0 said to JES
about deflectability, the mere fact that he had the conversation is
meaningless. The offered testimony is probative only if the jury
is told that JES was advised by Pacific0 that the pipe could p& be

16
deflected. Accordingly, it is clear that Mishler's statements
about what Pacific0 said were offered, not simply to show that
Pacific0 made statements to JES about deflectability, but to prove
that Pacific0 said the pipe could not be deflected. Mishler's
statements were offered for the truth of the matters asserted and
are therefore, hearsay.
Second, HKM claims that the deposition testimony is not
hearsay under Rule 801(d)(l)(A), M.R.Evid, because it is a prior
inconsistent statement. After reviewing both Mishler's deposition
and trial testimony, we conclude that, taken as a whole, the two
are not clearly inconsistent. For example, at trial when
questioned about Vince Pacifico's statements concerning the pipe's
deflectability Mishler testified as follows:
Q: [by HKM's counsel] Do you have a general
recollection?
A: [by Mishler] Of what Vince Pacific0 said on the
jobsite?

Q: Yes.
A: At start-up?

Q: Yes.
. . .

A: I really don't remember what was said, no.
At his deposition, Mishler essentially said the same thing:
Q: [by counsel] Now, tell me your best recollection of
what you presented at that meeting and any questions,
answers, whatever.
A: [by Mishler] Vince made the presentation and told
them about the pipe and how to put it in.

Q: Explained to them that you couldn't deflect at the
17
 joint no matter what, right?
A: I'm sure he did.

Q: Do you remember it?

A: Not specifically.

Because the deposition testimony and the trial testimony are

not clearly inconsistent, we conclude that the District Court did

not manifestly abuse its discretion in refusing to allow HEM to
impeach Mishler with his deposition testimony. See, Walsh-Anderson

Co. v. Keller (1961), 139 Mont. 210, 220, 362 P.2d 533, 538.
Finally, HEM contends that the District Court erred by

refusing to admit a letter allegedly written by Mishler because the

court concluded it was hearsay. This contention ignores the
District's Court's ruling. The District Court excluded the letter

because of lack of foundation, therefore, HEM's hearsay arguments

concerning the letter are irrelevant.

HEM's counsel attempted to introduce the letter as a recorded

recollection under Rule 803(5), M.R.Evid. That rule allows the
admission of:

A memorandum or record concerning a matter about which a
witness once had knowledge but now has insufficient
recollection to enable the witness to testify fully and
accurately, shown to have been made or adopted by the
witness when the matter was fresh in the witness' memory
and to reflect that knowledge correctly. . .

Marron v. Great Northern Ry. Co. (1913), 46 Mont. 593, 129 P. 1055,
is the leading case outlining the foundational requirements for a

recorded recollection:

(a) The entries must have been written by the witness
himself, or under his direction: (b) they must have been
written at the time the facts occurred, or at a time when

18
 the facts were fresh in the witness' memory: and (c) the
witness must have known at the time the entries were made
that they correctly stated the facts.

Marron, 129 P. at 1057.

Mishler's testimony revealed that he wrote a draft of the

letter and sent it to his employer for approval. Mishler also

testified that changes were made to the letter but he could not

identify which portions were changed or who actually authored the
changes. Mishler also could not remember if the changes would have

been in accord with his memory at the time of the writing.
Finally, the letter was dated January 8, 1988, over two years after

the project start-up meeting would have occurred.

In light of these facts, it is clear that the letter does not

meet the foundational requirements for recorded recollection, as

the letter was not written when the facts were fresh in Mishler's

memory, because all of the entries were not made by him or under

his direction, and because Mishler could not state that the entries

accurately reflected his memory. We therefore conclude that the

District Court did not err when it refused to admit the letter due

to lack of foundation.
III. EXPERT TESTIMONY

Did the District Court err by permitting JES's damage
expert to give his opinion concerning the damages JES
incurred where the expert relied upon business records
and long-accepted methodology?

During trial, JES called Bruce Knudsen as an expert witness to

express his opinion concerning JES's extra work and delay damages.

HKM alleges it was error to permit Knudsen to express his opinion

because of lack of foundation, his opinion being based in part on

19
data supplied to him by JES's counsel.
The test for admissibility of expert testimony is whether the
matter is sufficiently beyond common experience that the opinion of
the expert will assist the trier of fact to understand the evidence
or to determine a fact in issue. Rule 702, M.R.Evid; Wagner v.
Cutler (1988), 232 Mont. 332, 339, 757 P.2d 779, 783. It is within
the discretion of the trial court to determine if an expert is
qualified to testify, and absent an abuse of discretion, the
court's determination will not be disturbed on appeal. State v.
Evans (1991), 247 Mont. 218, 228-29, 806 P.2d 512, 519.
HKM alleges Knudsen's expert testimony lacked foundation
because the records and testimony Knudsen relied upon were not of
a type reasonably relied upon by experts in that field. Under Rule
703, M.R.Evid, an expert may base his or her opinion on facts or
data perceived by or made known to him at or before the hearing.
If the facts or data are "of a type reasonably relied upon by
experts in a particular field in forming opinions or inferences
upon the subject, the facts or data need not be admissible in
evidence." Rule 703, M.R.Evid; Krueger v. General Motors Corp.

(1989), 240 Mont. 266, 783 P.2d 1340.
In addition, according to Rule 705, M.R.Evid., an expert may
give his opinion "without prior disclosure of the underlying facts
or data, unless the court requires otherwise." It is then a matter
for the cross-examiner to determine the underlying facts on which
the expert bases his opinion and expose the weaknesses if any of
the underlying facts for the consideration of the jury. Wollaston

20
v. Burlington Northern, Inc. (1980), 188 Mont. 192, 201, 612 P.2d
1277, 1282. In Wollaston, this Court held:

A s long as the cross-examiner is given adequate
opportunity to bring forth for the jury's consideration
the weaknesses of any assumptions or facts underlying the
opinion, the weight to be given the expert's testimony
even on the ultimate issue, is now for the jury to
determine.
Wollaston, 612 P.2d at 1282.

At trial, Knudsen testified he began his review of the damage

claim by examining the final claim prepared in part by JES's
counsel and submitted to HKM's counsel. He then verified the

information through an independent review of time cards, the field

notes of the engineer and the supervisor, and through discussions
with the superintendent and JES's office manager to test the

reasonableness of the claim. Knudsen testified that this type of

verification was a type of information upon which an accountant

would rely, and in fact he had done this type of verification work

in the past, and that it was reasonable in the instant case. Over
HKM's objection that the opinion testimony lacked foundation, the

District Court ruled that Knudsen's opinion regarding JES's delay

and extra work damages were based upon statistical sampling, which

is a type of data which is reasonably relied upon by experts in the

accounting field.

In addition, HKM was allowed to fully cross-examine Knudsen,

and was able to reveal through cross-examination that Knudsen based

his opinion in part upon the final claim which was prepared by

JES's counsel. HKM was also given the opportunity to discredit

Knudsen's testimony through its own witness, Loring Gurney, HKM's

21
field inspector. Gurney's testimony concerning delay damages
conflicted with Knudsen's testimony. HKM now asserts that because
Gurney's testimony was based on his observations and field notes,
it was superior to Knudsen's damage calculation based upon accepted
accounting methodology.
It is the province of the jury, not this Court to determine
the credibility and the weight of conflicting evidence. Silvis
Through Silvis v. Hobbs (1992), 251 Mont., 407, 411-12, 824 P.2d
1013, 1015-16. As we concluded in Silvis, "[t]his Court will not
retry this case because the jury chose to believe the respondents'
evidence over that of the appellants. It is within the jury's
province to adopt testimony presented on behalf of one side at the
exclusion of the other." Silvis, 824 P.2d at 1016.
Given the fact that Knudsen based his expert testimony upon
methodology accepted in the accounting field, and that HKM was
allowed adequate opportunity to cross-examine Knudsen, or otherwise
expose any weaknesses in his opinion, we hold that the District
Court did not err in allowing Knudsen*s testimony.
IV. INCONSISTENT VERDICT
Did the District Court err by denying HKM's motion for a
judgment notwithstanding the verdict (JNOV) or in the
alternative a motion for a new trial?
Subsequent to trial, HKM moved for a judgment notwithstanding
the verdict, or in the alternative a motion for a new trial. The
District Court denied both motions. On appeal, HKM contends that
the District Court erred by failing to grant HKM a new trial. HKM
did not raise any arguments concerning the District Court's denial

22
of its motion JNOV, therefore, we will limit our discussion to the
argument raised on appeal. HKM alleges it is entitled to a new
trial pursuant to 5 25-ll-102(6), MCA, which provides that a new
trial may be granted if the verdict is against the law. HKM
contends that the jury verdict violated the law because it was
totally inconsistent. HKM claims that the jury verdict was
inconsistent because the verdict found that JES and/or its agent,
Northwest Pipe, was negligent, but that JES's negligence was not a
cause-in-fact of JES's damages. HKM maintains that the only
negligence asserted against JES at trial was JES's selection of
pipe that it knew or should have known was non-deflectable. JES's
damage claim was for extra work and delay damages caused by the use
of the non-deflectable pipe. Therefore, according to HKM, JES's
negligence had to contribute to its damages. While HKM
acknowledges that negligence without causation is possible, HKM
claims that JES's negligence did cause JES's delay damages. See,
DeVerniero v. Eby (1972), 159 Mont. 146, 496 P.2d 290.
The decision to grant or deny a new trial is within the sound
discretion of the trial judge and will not be disturbed absent a
showing of manifest abuse of that discretion. Nelson v. Flathead
Valley Transit (1992), 251 Mont. 269, 274, 824 P.2d 263, 266. HKM
relies on Rudeck v. Wright (1985), 218 Mont. 41, 709 P.2d 621, in
support of its argument that a new trial may be granted when a
jury's verdict is so totally inconsistent that it is contrary to
the mandates of the law. While Rudeck is a correct statement of
the law, the facts of that case do not support HKM's position.

23
 Rudeck involved a medical malpractice action where the surgeon
failed to remove a piece of surgical gauze placed in Mr. Rudeck
during surgery. Rudeck, 709 P.2d at 623. During the months after
surgery, Mr. Rudeck's physical condition deteriorated, and he
eventually died from complications resulting from having the gauze
inside his body. Rudeck, 709 P.2d at 623. After his death,
Rudeck's wife initiated a wrongful death action and a survival
action against the surgeon. Rudeck, 709 P.2d at 623. The jury
awarded damages on the wrongful death claim, but did not award
damages on the survival claim. This Court concluded that the
verdict was totally inconsistent because the same negligence that
caused Rudeck's personal injury also caused his death. Therefore,
we held that the jury should have been compelled to award damages
for both the survival action (arising out of the personal injury
claim) and the wrongful death claim. Rudeck, 709 P.2d at 624. In
sum, we found that the same negligence of the same defendant was
the basis for both the wrongful death action and the survival
action. Rudeck, 709 P.2d at 625.
The facts of the instant case are clearly distinguishable from
the facts of Rudeck. Here the jury found negligence on the part of
both the defendant, HKM and the plaintiff JES. JES's and HKM's
negligence did not arise out of one event. HIU4 had a duty to
determine whether the design for the Cerise Road would accommodate
the characteristics of the 24-inch PVC pipe. HKM also had a duty
when reviewing JES's submittal to determine whether the pipe
satisfied HKM's design plans and specifications. The jury found

24
that HI(M failed to meet these duties, which is entirely separate

from the negligence on the part of JES, in submitting a bid and
shop drawings using the non-deflectable pipe.

This Court's function in reviewing a jury's verdict is

limited. We review the evidence in a light most favorable to the

prevailing party to determine whether substantial evidence supports

the jury's verdict, and we cannot reweigh the evidence or disturb

the jury's findings unless the evidence is so inherently impossible

or improbable as not to be entitled to belief. Sizemore v. Montana
Power Co. (1990), 246 Mont. 37, 48, 803 P.2d 629, 636. (Citations

omitted). We will not speculate on how the jury viewed the

evidence or how it reached its decision. Suffice it to say that
there was substantial evidence from which the jury could have

concluded that JES's damages were not so much caused by its choice

of pipe as by HKM's failure to adequately prepare the plans and
specifications for the project.

We therefore conclude that the jury verdict was not
inconsistent when it found that JES's negligence was not the cause-

in-fact of its damages, and that the District Court did not abuse

its discretion in denying HKM's motion for a new trial.

V. PRO TART0 REDUCTION

Did the District Court err by failing to reduce the jury
award against HKM by the amount JES received from
settling with LWUA, J-M, and Northwest Pipe?

The jury awarded JES $381,000.00 for damages JES incurred as

a result of HICM's negligence in preparing the plans and

specifications for the water transmission project. HKN alleges

25
that the $381,000.00 damage award should be reduced by $270,000.00,
to reflect the amount JES received in settlement from LWA, and

jointly from J-M and Northwest Pipe.

Prior to trial, JES entered into a settlement agreement with
LWA wherein LWA agreed to pay JES $75,000.00 as final payment for

work JES performed on the contract. LWA also agreed to release

the $60,000.00 retainage which had been withheld under the contract
to ensure performance by JES. JES and LWA also stipulated to

dismiss with prejudice all claims JES had asserted against LWA and
all counterclaims LWA had asserted against JES.
JES also entered into a settlement agreement with J-M and

Northwest Pipe wherein J-M and Northwest Pipe paid JES $135,000.00
in satisfaction of the claim that J-M and Northwest Pipe had

supplied JES with defective pipe. In both agreements, JES

specifically reserved the right to pursue its claims for damages

against HKM.

Subsequent to trial, HKM moved the trial court to reduce the

$381,000.00 jury award by $270,000.00, the amount JES received from

the settlement agreements. The District Court denied the motion,

concluding that JES sustained injuries which were separate and

distinct, resulting from certain independent acts of HKM, LWA, J-M

and Northwest Pipe. HKM argues the District Court erred in

concluding that this was not a case where one injury was sustained

as a result of the concurrent negligence of HKM and the settling

parties.

HKM contends that because JES asserted claims against the

26
settling parties :for which it sought delay damages and lost profits
and because JES sought the same damages from HKM at trial, the
injuries suffered by JES were not divisible, and HKM is entitled to
an offset. HIQl further alleges that JES was able to avoid a pro
tanto reduction by crafting its settlement agreements to reflect
that it received compensation for claims which were distinct from
the claims it asserted against HKM at trial.
The principle of pro tanto reduction provides that "when a
joint tort-feasor settles with a claimant, the claimant's recovery
against the remaining tort-feasor is to be reduced dollar-for-
dollar by the consideration paid by the settling tort-feasor."
Boyken v. Steele (1993), 256 Mont. 419, 421, 847 P.2d 282, 284.
(Citations omitted). The pro tanto rule applies only if two or
more concurrent or joint tort-feasors cause a single "indivisible"
harm. Azure v. City of Billings (1979), 182 Mont. 234, 248, 596
P.2d 460, 468.
In Azure, we distinguished between situations where damages
should be divided between two or more parties because each is
responsible for a portion of the injuries inflicted and the
consequent damages, and joint and several liability. We concluded
that a pro tanto deduction is not allowed where the plaintiff's
injuries are divisible.
If liability is joint and several the plaintiff is
entitled to only one recovery. In that event deduction
of an amount already paid by a joint tortfeasor is
proper. But if apportionment of damages applies, each
defendant must pay his contribution to the whole, and
therefore a deduction is not allowed for what another
tortfeasor has paid.

27
, 596 P.2d at 468. (Citations omitted).
Azure
We hold that the District Court was correct in finding that
HKM was not entitled to a pro tanto reduction because JES sustained
separate and distinct injuries as a result of independent acts of
HKM, J-M, and Northwest Pipe.
During trial, both parties introduced evidence, without
objection, of the previous settlements and their amounts. The
District Court also held a hearing on the motion for pro tanto
reduction. The evidence presented at trial and the hearing
disclosedthatthe $270,000.00 JES received from LWUA was comprised
of $60,000 as payment for a percentage of progress payments which
had been withheld as retainage pursuant to the contract, and
$75,000.00 for work JES had performed under the contract for which
it had not received payment.
The money JES received from J-M and Northwest Pipe was payment
for JES's claim against them for supplying JES with pipe which was
out of round. As a result of the pipe being out of round, JES
incurred extra expenses as it had to repair leaks caused by the
defective pipe. These damages were distinct and separate from the
extra work and delay damages awarded to JES as a result of HKM's
negligence in preparing the plans and specifications for the
project. Because the damages JES sustained as a result of HKM's
negligence were separate and divisible from the compensation it
received from the settling defendants, we hold the District Court
did not err in denying HlZM's motion for a pro tanto reduction.
VI. PREJUDGMENT INTEREST

28
 Did the District Court err in denying JES's motion for
prejudgment interest?
Subsequent to trial, JES moved the District Court for an award

of prejudgment interest. After considering the briefs and

arguments of counsel the District Court denied the motion. JES
argues that it is entitled to prejudgment interest according to the

provisions of § 27-l-210, MCA, which allows the payment of

prejudgment interest on certain tort claims. Section 27-l-210,

MCA, provides:
Interest on torts. (1) Subject to subsection (2), in an
action for recovery on an injury as defined in 27-l-106,
a prevailing claimant is entitled to interest at a rate
of 10% on any claim for damages awarded that are capable
of being made certain by calculation, beginning from the
date 30 days after the claimant presented a written
statement to the opposing party or his agent stating the
claim and how the specific sum was calculated.

According to the statute, prejudgment interest is only allowed

for claims which are "capable of being made certain by

calculation." Although this Court has not ruled on that portion of
the statute, the same language is found in 5 27-1-211, MCA. In

construing the meaning of the same language found in that statute,

this Court has found that when a claimant alleges an award which is

substantially different from the amount ultimately awarded by the

trial court, the damages are not capable of being made certain by

calculation. See, Maddux v. Bunch (1990), 241 Mont. 61, 67, 784

P.2d 936, 940; Northwestern Nat. Bankv. Weaver-Maxwell (1986), 224

Mont. 33, 43-44, 729 P.2d 1258, 1264; Swenson v. Buffalo Bldg. Co.

(1981), 194 Mont. 141, 153, 635 P.2d 978, 985. For example, in

Maddux, the plaintiff claimed the loss of the value of a gravy

29
product in the amount of $35,614.08. Because the jury awarded the
plaintiff $23,378.95, this Court found that the amount of damages
due upon breach was not clearly ascertainable until determined by

the trial court. We therefore concluded that prejudgment interest
was not appropriate. Maddux, 784 P.2d at 940.
In the instant case, JES did not offer any evidence prior to

trial regarding how the specific sum of delay and extra work
damages at the Cerise Road "S" curve would be calculated. At trial

JES's damages expert calculated the damages to be $510,899.00.
However, the jury only awarded JES $381,000.00. We therefore
conclude that JES did not show that the damages it sustained as a

result of HEM's negligence in designing the portion of the pipeline
along the Cerise Road 1'S" curve was "capable of being made certain
by calculation,tq and hold that the District Court did not err in
denying JES prejudgment interest.
AFFIRMED.

We Concur-

Justices

30
Justice Terry N. Trieweiler specially concurring.
I concur with the result of the majority opinion. However, I
specially concur with the majority's resolution of issues numbered
1 and 2.
I agree with the majority's conclusion that the plaintiff was
entitled to sue in tort to recover economic damages from the
defendant. Based on the facts in this case, I also agree that a
duty was proven, pursuant to the stricter standard set forth in the
Restatement (Second) of Torts § 552 (1977). However, I would not
limit an engineer's duty to exercise reasonable care to that class
of people set forth in § 552. Section 27-l-701, MCA, provides that
"everyone is responsible not only for the results of his willful
acts but also for an injury occasioned to another by his want of
ordinary care or skill . . . .I1 I see no reason to treat engineers
differently than anyone else, and therefore, would apply ordinary
negligence rules to determine the scope of liability of the
defendant in this case. I would conclude that the defendant owed
a duty to exercise reasonable care to all who might reasonably and
foreseeably obtain and rely upon his or her work product.
I also disagree with the majority's conclusion that Rex
Mishler's deposition was hearsay. I believe the testimony was
offered to simply prove that Vince Pacifico's statement was made,
and that because it was made, the plaintiff had notice that the
pipe could not be deflected. Whether or not Pacifico's statement
was true was immaterial. However, when considered in the entire
context of Mishler's deposition testimony, the statement that

31
defendant sought to offer was eguivocal and did not clearly
contradict Mishler's trial testimony. Its probative value was

questionable, and therefore, I agree that the District Court did

not abuse its discretion when it excluded the deposition testimony.

Furthermore, even if the District Court had erred by excluding the

testimony, it was of no value to the defendant, and therefore,

there was no prejudice from its exclusion.
For these reasons, although.1 do not agree with all that is

said in the majority opinion,, I concur with its result.

* LP%..
us ice

32
 July 12, 1994

CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mail, prepaid,
to the following named:

NEIL G. WESTESEN and DONALD L. HARRIS
CROWLEY, HAUGHEY, HANSON, TOOLE & DIETRICH
P.O. BOX 2529
BILLINGS, MT 59103-2529

STEPHEN D. BELL and ROBERT L. STERUP
DORSEY & WHITNEY
P.O. Box 7188
Billings, MT 59103-7188

JOHN F. SULLIVAN
HUGHES, KELLNER, SULLIVAN & ALKE
P. 0. Box 1166
Helena, MT 59624-1166

ED SMITH
CLERK OF THE SUPREME COURT