No. 84-362
IN THE SUPREME COURT OF THE STATE OF MONTANA
1985
E.F. MATELICH CONSTRUCTION CO.,
a Montana corp.,
Plaintiff and Respondent,
-vs-
GOODFELLOW BROTHERS, I N C . ,
Defendant? and Appellants,
-vs-
STATE OF MONTANA,
Cross-Claimant and Respondent.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Mineral,
The Honorable Douglas Harkin, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Wellcome & Frost; Page Wellcome argued, Bozeman,
Montana
For Respondents:
Murphy, Robinson, Heckathorn & Phillips; Donald R.
Murray, Kalispell, Montana
W. D. Hutchison argued, Dept. of Highways, Helena,
Montana
Submitted: April 11, 1985
Decided: ~ u l y8, 1985
Filed:
t ua- 8 5985
-.
Clerk
Mr. Justice John C. Sheehy, delivered the Opinion of the
Court.
This appeal by Goodfell-ow Brothers, Inc. from a judgment
of the Fourth Judicial District, Mineral County, raises the
following:
I. Is Goodfellow entitled to recover from the State
sums it was required to pay to a subcontractor, Matelich, on
a highway construction project that was redesigned while
construction was in progress?
2. Was the delay of the District Court in making a
decision in this case from the hearing date of September 30,
1983 to March 23, 1984, a denial of fundamental due process
to Goodfellow under Art. 11, 5 16, of the Montana
Constitution?
On November 23, 1970, Goodfellow, as a general
contractor, contracted with the defendant, State of Montana,
to construct a segment of interstate highway. Thereafter,
Goodfellow contracted with E. F. Matelich Construction
Company, a subcontractor, for the construction of certain
bridges and concrete work on the project.
Matelich, prior to submitting its bid to Goodfellow,
abtained a bid for the concrete work required on the
construction project from Robert OIConner. The bid submitted
by OIConner stated that the estimates given were conditioned
upon concrete being available at the job site. Matelich
accepted OIConner's sub-bid on April 12, 1971.
In certain portions of the highway project, cuts were
designed by the State through the mountainous area. Several
of the cuts were designed with a steep backslope. It was
found that some of the cuts were unstable. Some of these
cuts were redesigned by the State to provide for a less steep
backslope but the changes in design required further
excavation in excess of 125% of the original contract
specification. All sides admit that the increa.sed excavation
delayed or postponed the hoped for date of completion of the
project.
On November 6, 1972, Goodfellow and the State entered
into a supplemental agreement described as a "novation
covering the said excess quantities and work items affected
by such excess." The supplemental agreement contained the
following language:
"(6) The CONTRACTOR waives any and all claims for
payment in excess of those contemplated by said
contract of November 23, 1970, and this novation,
except those claims which may be based upon
conditions not presently within the knowledge of
either party or which are not within the ability of
either party to anticipate."
Goodfellow, because of the delay, did not complete the
necessary preparatory work until September 1973. When the
preparatory work was finally done, there was no longer a
source of concrete a-vailable at the jobsite. By reason
thereof, O'Conner refused to perform the concrete work under
his agreement with Matelich. There had been a source of
concrete available at the jobsite during the 1971 work season
and for most of the 1972 season. Since OIConner refused to
perform the work under his bid, Matelich was forced to
comp1et.e the concrete work under another arrangement.
After the work was completed, Matelich brought suit
against Goodfellow and the State of Montana in the District
Court of Mineral County. Matelich alleged it was prevented
from performing its work within a time limit specified in its
subcontract with Goodfellow because the work schedule for the
project had been changed by Goodfellow and the State.
Matelich sought damages for the increased costs which were
caused by the delay in the performance of the preparatory
work within the time limit specified in its subcontract.
Goodfellow cross-claimed against the State for
indemnification on Matelich's claim.
Originally, the District Court dismissed Matelich's
claim. In the first trial, the District Court refused to
permit damages to be established on the basis of O1Conner's
bid because O'Conner had not prequalified with the Montana
State Department of Highways as required by the
specifications. That decision was appealed to this Court,
and in E. I?. Matelich Construction Company v. Goodfellow
Brothers and State of Montana (Mont. 1982), 645 P.2d 391, 39
St.Rep. 831, this Court reversed and remanded for further
proceedings.
At the second trial, the District Court found that
PJlatelich was entitled to a judgment of $19,153.19 against
Goodfellow but that Goodfellow was not entitled to
reimbursement from the State of Montana because of the waiver
of the November 6, 1972 supplemental agreement. Goodfellow
paid the Matelich judgment, and now contends that it is
entitled to reimbursement from the State notwithstanding the
waiver clause.
Goodfellow, on appeal, claims it is entitled to
reimbursement or indemnity from the State essentially on two
grounds : (1 the waiver clause in the supplemental
agreement of November 6, 1972 did not operate to bar its
claim under the Matelich subcontract, and ( 2 ) the issue of
wa.iver has been decided adversely against the State in
another District Court action in the same district, involving
the same project. Goodfellow claims that the State is barred
by res judicata and collateral estoppel from disputing
Goodfellow's right to indemnity reimbursement.
The companion action on which Goodfellow claims either
res judicata or collateral estoppel is Goodfellow, Inc. v.
State of Montana, through its Highway Commission, cause no.
41911 in the Missoula District Court. There, Goodfellow sued
for and on behalf of its subcontractor, Yardley Drilling
Company for $52,060.00 and for itself $10,412.00 for costs
brought about because of additional excavation required
between stations 573 plus and 577 plus on the highway
project. Yardley Drilling Company was the drilling and
blasting subcontractor for Goodfellow. The District Court in
that case concluded that the November 6, 1972 supplemental
agreement referred only to excavation required at the "400
cut" and that any waiver contained in the supplemental
agreement could not affect the delay and changes in design
that were required between stations 573 and 577. The
District Court entered judgment in favor of Goodfellow and
its subcontractor, Yardley.
It i s not necessary for us to decide the contentions
.
with respect to res judicata and collateral estoppel because
we determine that the waiver clause contained in the
supplemental agreement of November 6, 1972 does not pertain
to the difficulty that Matelich faced when the subcontractor,
O'Conner, refused to go through with his subcontract because
no concrete was available at the jobsite. Waiver is a
voluntary relinquishment of a known right, Rase v. Cattle
Mountain Ranch, Inc. (Mont. 19811, 38 St.Rep. 992, 631 P.2d
680; Kelly v. Lovejoy (Mont. 19771, 172 Mont. 516, 565 P.2d
321. Waiver is an affirmative defense ( ~ u l e 8(c),
M.R.Civ.P.) and thus the burden of proof is on the party
raising the affirmative defense. The waiver clause itself in
the supplemental agreement excepts "those claims which may be
based on conditions not presently within the knowledge of
either party or are not within the ability of either party to
anticipate." Although the record is clear that at the time
of the execution of the supplemental agreement on November 6,
1972, Goodfellow knew that there would be delays in the
completion of the contract, nothing in the record indicates
that either party anticipated that concrete would not be
available to O'Conner when, some 10 months later, he was
called upon to complete his subcontract with Matelich. Nor
does the State dispute anywhere in the record that if the
project had not been redesigned, and the project carried on
according to schedule, that OIConner would have had the
concrete available to perform his subcontract.
We therefore hold that the District Court was clearly
erroneous, Rule 52(b), M.R.Civ.P., in finding that Goodfellow
is precluded by the waiver clause in the supplemental
agreement from indemnity reimbursement from the State.
Any judgment against the State, of course, is subject to
the provisions of S 18-1-404, MCA, that the State is not
liable for interest prior to or after judgment or for
punitive damages.
We turn next to the issue raised by Goodfellow that the
delay of the District Court of approximately nine months from
the time of hearing to the time of decision was a denial of
due process to Goodfellow. Because we have otherwise
determined that Goodfellow should prevail on this appeal, we
have no occasion to examine the issue whether a District
Court delay of such duration had the effect of
unconstitutionally denying due process. The issue has become
moot.
Accordingly, we reverse the District Court and remand
the cause for entry of judgment in favor of Goodfellow and
against the State of Montana in accordance with this opinion.
We Concur:
Chief' Justice
Mr. Justice L. C. Gulbrandson, dissenting.
I respectfully dissent.
The majority has, in effect, ruled that as a matter of
law Goodfellow did not have the ability to anticipate that
concrete would not be available at the job site. In my view,
the record is clear that at the time Goodfellow executed the
supplemental agreement on November 6, 1972, Matelich's 270
day construction period had already ended. It is also clear
that Matelich had not entered a subcontract with O'Conner,
but was relying on a bid proposal from OIConner dated
November 5, 1970, which was conditioned upon concrete being
available at the job site. O'Conner testified that his bid
proposal would have been good through the 1971 period. When
he was asked by Matelich to perform the final concrete work
in September, 1973, he advised Matelich that his quoted
figures were no longer adequate, and he and his crew were
then employed by Matelich to complete the work. O'Conner had
no legal obligation of any kind to Goodfellow, and Goodfellow
was not aware of the conditional language in OIConner's
proposal to Matelich.
In my opinion, Goodfellow, in November, 1972, having
negotiated the supplemental agreement for additional
services, for which Goodfellow was to receive an additional
$624,418, knew that the concrete work had to be performed as
the last stage of the project. Goodfellow also would have
known that a1 1 other concrete projects in the area had been
completed and there was no reason for a concrete batch plant
operation to remain in the area.
I would, therefore, affirm the judgment of the trial
judge that Goodfellow was not entitled to recover from the
7
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State of Montana.
Justice /
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