No. 90-194
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
MORNING STAR ENTERPRISES, INC.,
Plaintiff and Appellant,
-vs-
R. H. GROVER, INC.,
Defendant and Respondent.
APPEAL.F'ROM: District Court of the Fourth ~udicialDistrict,
In and for the County of Missoula,
The Honorable John S. Henson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
J. David Penwell, Esq., Bozeman, Montana
For Respondent:
Ronald A. Bender, Esq. ; Worden, Thane, & Haines,
P.C., Missoula, Montana
Submitted on Briefs: November 29, 1990
Filed: . Decided: January 31, 1991
Justice John Conway Harrison delivered the Opinion of the Court.
This is an appeal from a final judgment enforcing a contract
in favor of respondent, entered by the District Court of the Fourth
Judicial District for Missoula County. We affirm in part and
reverse in part.
The issues presented for review are as follows:
(1) Whether the District Court erred in its interpretation of
the contract between Morning Star Enterprises, Inc. and R. H.
Grover, Inc.
(2) Whether the District Court abused its discretion in
allowing Thomas Pew to testify as an expert witness for R. H.
Grover, Inc.
(3) Whether the District Court erred in granting R. H. Grover,
Inc. prejudgment interest on the sums awarded.
(4) Whether the District Court abused its discretion in
awarding costs which are not allowed by statute and by allowing
attorney's fees far in excess of the amount recovered.
The appellant, Morning Star Enterprises, Inc., initiated this
suit in 1984 seeking sums it claimed were due from R. H. Grover,
Inc. (Grover) arising from the construction of a sludge
stabilization and dewatering facility in Missoula. Morning Star
was the subcontractor on that project and Grover was the general
contractor. Grover has counterclaimed against Morning Star
alleging that Morning Star owes Grover additional sums on the
Missoula project and also additional sums from a waste water
treatment project in Glacier Park wherein Morning Star was the
2
general contractor and Grover was the subcontractor.
On the 8th day of June, 1982 Morning Star entered into an
agreement as a subcontractor with Grover whereby Morning Star was
to perform certain work on the expansion of the waste water
treatment plant for the City of Missoula. Morning Star began
construction under the subcontract by the end of June, 1982.
The three page subcontract was prepared by Grover. A
provision of the subcontract at issue here required Morning Star
to perform the following work: ''Division 504 -- Doors, Windows,
Frames--Install contractor furnished material complete.
Subcontractor to furnish supports and accessories as necessary for
installation." At trial, Morning Star contended that this
provision did not obligate them to seal an alleged two-inch gap
between the windows and the walls which was caused, according to
Morning Star, by Grover's own oversight. Grover disputed the
existence of a two-inch gap. In addition, Grover as contractor
would ''furnish an adequate crane with operator for subcontractor's
use as normally required on a project of this type, excluding
concrete placement." (Emphasis added.) The question regarding
this portion of the subcontract is how to define l'excluding
concrete placement. At trial, Morning Star contended that the
subcontract obligated Grover to allow Morning Star to use Grover's
crane to put in place precast concrete panels.
The court, sitting without a jury, found in favor of Grover
and awarded a judgment in the sum of $7,067.54 plus prejudgment
interest at the rate of ten percent per annum from August 31, 1984
until the date of the judgment, for the Missoula project. The
court awarded the further sum of $880.64 plus interest from the
date of judgment, for the balance due on the retainage from the
Glacier National Park job. In addition, the court awarded Grover
attorney's fees in the sum of $28,865.63 and costs and
disbursements in the amount of $1,724. It is from that judgment
that Morning Star now appeals, claiming that the District Court's
decision was unreasonable, contrary to the parties1 intentions and
improper under the rules of contract construction.
I
Whether the District Court abused its discretion in allowing
Thomas Pew to testify as Grover's expert witness.
In March of 1986, Grover was required under interrogatories
and Rules 33 and 34 of the Montana Rules of Civil Procedure to
provide Morning Star with a list of any and all expert witnesses
with whom they expected to call at the trial. In addition, Grover
was required to list in detail the subject matter of any testimony
that an expert witness would make. Twelve days prior to trial,
which began on May 24, Grover notified Morning Star that Grover
would be bringing Thomas Pew before the District Court to testify
as an expert in this matter. Grover also supplemented his answers
pursuant to Rule 26(e), M.R.Civ.P., by a formal supplement, dated
May 12, 1989, in terms of Pew's background, what he would testify
to and disclosed the underlying facts to which he would testify.
Grover, furthermore, made Pew available for deposition by Morning
Star. Then, on May 26, 1989, at a bench discussion, counsel for
Grover informed Morning Star that Pew would be called as a witness
on June 15, 1989, the next scheduled trial date. During the June
15 hearing, after objections and an extensive discussion, the
District Court allowed a recess in order to give Morning Star an
opportunity to discuss Pew's testimony with Pew. Then, over
another objection, Pew was allowed to testify. Morning Star now
argues that the District Court abused its discretion by admitting
Pew's testimony because such admission amounted to unfair surprise.
Admissibility of evidence is within the sound discretion of
the District Court and we will not reverse the District Court's
admission of evidence unless the ruling amounts to an abuse of that
discretion. Massman v. City of Helena (1989), 237 Mont. 234, 773
P.2d 1206. It is uncontested that counsel for Morning Star knew
of Pew's existence and potential testimony as early as May 12,
1989. Furthermore, Pew's May 22, 1989 deposition was videotaped.
This videotape as well as the transcribed copy of the deposition
was available to Morning Star. In addition, Pew testified on June
15, 1989. Lastly, Morning Star had its own expert, Mr. Springer,
available to testify in order to rebut any claims made by Pew. In
view of the disclosure of the testimony of Pew, the availability
of the depositions and the actual opportunity to examine Pew prior
to his testimony, we find no error. We hold that there was no
abuse of discretion by the District Court in allowing the testimony
of Mr. Pew.
Whether the District Court erred in its interpretation of the
contract.
As its first assignment of error, Morning Star argues that the
District Court erred by finding that the subcontract in question
did not provide for Morning Star's use of Grover's crane to pick
up and put in place precast concrete panels which would become the
walls of the structure. Under the terms of the subcontract, Grover
was to provide to Morning Star an adequate crane and qualified
operator, for Morning Star's use, llexcluding
concrete placement.I1
During construction of the sewage plant, Grover refused to allow
Morning Star to use the crane for placement of precast concrete
panels. At trial, Mr. Grover testified as follows:
I discussed and, in fact, negotiated the entire
agreement with Morning Star with Mr. Ray Murphy. We
discussed the scope of their work, what - who would be
on the job, what Mr. Murphy had included in his price.
These negotiations took place during several telephone
conversations. . . . I had worked with Mr. Murphy on
other projects before he went to work for Morning Star
and he was aware of the equipment that R. H. Grover
owned. . .. We both agreed that it was not adequate to
place concrete, either to place concrete in the forms
with the bucket, to pour the concrete, or place the
precast-concrete panels. . . . I came up with the
wording that was put in the contract and discussed it
with Ray before I wrote the contract. . . . He was well
aware of the capacities of the crane, what the crane was
able to do, and that's why the contract was written as
it was.
Conversely, Morning Star contends that they meant to contract
for the use of Grover's crane to place precast concrete panels in
position as the walls of the sludge handling building.
When the language of a contract is clear and unambiguous, the
contract does not require the application of the rules of
construction and it is the court's duty to enforce the contract as
made by the parties. Schulz v. Peake (1978), 178 Mont. 261, 583
P.2d 425. Where the words are clear, certain, and unambiguous, the
language alone controls and there is nothing for the courts to
interpret or construe. The language employed must be given its
ordinary meaning. Payne v. Buechler (1981), 192 Mont. 311, 628
P.2d 646. We may resort to the usual rules of construction to
ascertain what the parties intended by the language they employed
only when an ambiguity exists. An ambiguity exists when the
contract taken as a whole in its wording or phraseology is
reasonably subject to two different interpretations. Lemley v.
Bozeman Community Hotel, Co. (1982), 200 Mont. 470, 651 P.2d 979.
In interpreting a written contract, the intention of the parties
must be ascertained, first and foremost from the writing alone,
taken as a whole if possible, and resort to extrinsic evidence in
aid of discovering the parties' intent may be had only when the
contract appears on its face to be ambiguous or uncertain in this
regard. Glacier Campground v. Wild Rivers, Inc. (1978), 182 Mont.
389, 597 P.2d 689; unmodified by Bain v. Williams (Mont. 1990), 800
P.2d 693, 695, 47 St.Rep. 2049, 2052. Furthermore, in the
construction of contracts, the courts may look not only to the
language employed but to the subject matter and the surrounding
circumstances and may avail themselves of the same light which the
parties possessed when the contract was made. Kintner v. Harr
(1965), 146 Mont. 461, 408 P.2d 487.
In applying the above rules, it is clear that this issue does
not involve contract interpretation because there exists no
ambiguity in the contract. The District Court found that the term
llconcretell
included, specifically, precast concrete panels. The
District Court then enforced the contract in favor of Grover. We
have reviewed the record before us and find no error on behalf of
the District Court. We hold that the court properly enforced the
contract in this regard.
Morning Star next assigns error to the District Court's
enforcement of the contract in Grover's favor regarding sealing
windows and installing ladders on the roof.
The District Court found that Morning Star failed to perform
its work in a reasonable and workmanlike manner as required by the
subcontract. The District Court specifically found that Morning
Star wrongfully failed to seal seventeen windows and failed to
install ship ladders on the roof of an existing building. The
subcontract, regarding windows, calls for the installation of
windows supplied by the contractor (Grover). Concerning installa-
tion of the ship ladders, the record shows through testimony and
documentation that a change order which was signed by Morning
Star's president, Mr. Thomas Trusler, obligated Morning Star to
install the ladders.
Testimony was heard regarding the windows and the ship ladders
by Grover's expert, Mr. Thomas Pew. Pew has been a general
contractor for approximately ten years. Pew testified that under
the contract and change orders between Morning Star and Grover,
Morning Star was responsible for sealing the installed windows as
well as installing the ship ladders.
Furthermore, during cross-examination of Mr. Pew, Morning
Star's counsel acknowledged that there was indeed a provision in
a change order which obligated Morning Star to install the ladders.
Q. [By Mr. Penwell] I'm handing you what is Plaintiff's
Exhibit No. 19, which is the change order that we're
talking about . . . . It says ship's ladders, two
thousand dollars, furnish and install?
Mr. Bender: Let the record show that it's signed by
Thomas W. Trusler dated August 3, 1983.
Q. [By Mr. Penwell] Where does it show on that that the
rails are in addition to the cost of installing that
ship's ladder? There is a provision for the installinq
of a ship's ladder, yes. (Emphasis added.)
Testimony conflicts regarding the installation of windows. Morning
Star claimed that, due to Grover's mistake, a two-inch gap existed
between the side of the window frame and the panels. Morning Star
argued that this two-inch gap was created by Grover's error and
Morning Star was not obligated under the contract to cure this
problem. Morning Star asserted that although they did contract to
install and caulk the windows, they did not, however, contract to
seal a two-inch gap caused by Grover's oversight. Conversely, Mr.
White, Grover's engineer, testified that prior to trial he visited
the construction site again and that the actual space between the
window and the wall was approximately 3/4 of an inch as opposed to
the statement by Mr. Trusler, that the space amounted to two
inches. The District Court found Mr. White's and Mr. Pew's
testimony to be:
[Vlery credible in view of their experience and continued
familiarity with the construction industry, and in
particular, construction of sewer plants and digesters
similar to the one in question.
Both witnesses were candid, frank and impartial
witnesses not related to the parties nor having any
interest in the outcome of the lawsuit. In particular,
Mr. White's candid and frank observations based upon his
physically being on the job daily and observing and
reporting the progress of the work was extremely
credible.
The credibility and weight accorded evidence and witnesses by
the trial court must be given great weight on appeal. Rule 52(a),
M.R.Civ.P.; Corscadden v. Kenney (1977), 175 Mont. 98, 572 P.2d
1234. Based on the evidence presented at trial, the District Court
found that ~orning Star was obligated under the subcontract to
completely install and seal the windows, and to install the ship
ladders as well. We have reviewed the entire record before us and
we find no error. We hold that there was no abuse of discretion
and that the District Court properly enforced the contract in these
respects.
I11
Did the District Court abuse its discretion in awarding
attorney's fees and costs?
Morning Star claims that the District Court's award of
attorney's fees in the amount of $28,865.63, approximately four
times the amount of damages recovered, is excessive. In
determining the reasonableness of attorney's fees the trial court
should consider the following factors: (1) the amount and character
of the services rendered; (2) the labor, time, and trouble
involved; (3) the character and importance of the litigation in
which the services were rendered; (4) the professional skill and
experience required; (5) the character and standing of the
attorneys in their profession; and (6) the result secured by the
services of the attorneys. Majers v. Shining Mountains (1988), 230
Mont. 373, 379-80, 750 P.2d 449, 453. These guidelines are not
necessarily exclusive; the trial court may consider other factors
as well. Talmage v. Gruss (1982), 202 Mont. 410, 413, 658 P.2d
419, 421.
Morning Star cites Carkeek v. Ayer (1980), 188 Mont. 345, 613
P.2d 1013, for the proposition that attorney's fees should not
exceed the amount of the judgment. In Carkeek we upheld a trial
court's decision to disapprove fees which were greater than the
amount of damages awarded and noted:
We interpret the District Court's memorandum as saying
that while a fee of $5,773.20 is fair and reasonable, it
would be unreasonable to assess this entire amount
against the lienholder under the circumstances of this
case. (Emphasis added.)
Carkeek, 188 Mont. at 348-49, 613 P.2d at 1016. If Carkeek stands
for anything, it stands for the concept that reasonableness of
attorney's fees must be ascertained under the facts of each case.
The "result secured1'factor is only one of the factors which the
district court should weigh in arriving at a reasonable fee.
Western Media, Inc. v. Merrick (1988), 232 Mont. 480, 484, 757 P.2d
1308, 1311.
The District Court specifically addressed each factor set
forth in Majers and, relying on expert testimony, found the fees
requested reasonable in light of the complexity of the litigation
and time spent in preparing the case. Initiated in 1984, this suit
concerned two contracts worth $436,000, and requests by Morning
Star and Grover for damages totalling $122,679.90 and $72,943.17
respectively. The case involved five days of trial, seven
witnesses, 169 exhibits, and numerous issues.
We will not disturb a district court's award of attorney's
fees absent abuse of discretion. DeVoe v. Gust Lagerquist & Sons,
Inc. (Mont. 1990), 796 P.2d 579, 582, 47 St.Rep. 1527, 1530.
''In determining whether the trial court abused its
discretion, the question is not whether the reviewing
court agrees with the trial court, but rather did the
trial court in the exercise of its discretion act
arbitrarily without the employment of conscientious
judgment or exceed the bounds of reason, in view of all
the circumstances, ignoring recognized principles
resulting in substantial injustice."
Carkeek, 188 Mont. at 348, 613 P.2d at 1015 (quoting Porter v.
Porter (1970), 155 Mont. 451, 457, 473 P.2d 538, 541). We find
that under the circumstances of this case the District Court did
not abuse its discretion in awarding attorney's fees.
Morning Star also protests the amount the District Court
awarded for costs. The District Court refused to consider this
issue because Morning Star's objections were not timely filed
pursuant to 5 25-10-502, MCA. Our examination of the record does
not reveal abuse of discretion by the District Court.
IV
Did the District Court err in granting Grover prejudgment
12
interest on damages?
Grover sought damages in the amount of $59,621.16 for twelve
items, the largest of which were $26,600 for use of a Grover crane
and $21,728.54 prejudgment interest. The District Court ordered
Morning Star to pay for the first eight of the twelve items sought,
comprised of the following:
a) roll-up door $2,582.00
b) frame work on cone fan support 116.96
c) seal 17 windows 640.00
d) repair roof damage, caused
by plaintiff
e) repair damage to yard island
caused by plaintiff 109.89
f) install ship ladders on roof
of existing building 876.00
g) temporary utilities 147.53
h) rental of 50 ton crane 2,500.00
These damages totaled $7,067.54. Grover also sought $13,321.98 for
retainages withheld by Morning Star. Since Grover had retained
$12,441.34 for amounts paid by Grover for performing ~orningStar's
work, the District Court awarded Grover the difference, $880.64
plus interest from the date of judgment. The District Court
ordered that prejudgment interest be paid on the $7,067.54 in
damages on the basis that the sums were "fixed, definite and
certain as of August 31, 1984.11
The statute governing prejudgment interest provides:
Every person who is entitled to recover damages
certain or capable of being made certain by calculation
and the right to recover which is vested in him upon a
particular day is entitled also to recover interest
thereon from that day except during such time as the
debtor is prevented by law or by the act of the creditor
from paying the debt.
Section 27-1-211, MCA. In order for prejudgment interest to be
awarded, the following criteria must be met: (1) an underlying
monetary obligation exists; (2) the amount of recovery is capable
of being made certain by calculation; and (3) the right to recover
the obligation vests on a particular day. Albers v. Bar ZF Ranch,
Inc. (1987), 229 Mont. 396, 408, 747 P.2d 1347, 1354.
The trial court determined damages owing for work which
Morning Star llfailed to perform . . . in a reasonable and
workmanlike manner." Since the sums were not for items set forth
in the contract, the damages were not certain until the court
delivered its judgment. We therefore reverse the District Court's
award of prejudgment interest to Grover and remand for entry of an
order consistent with this opinion. We affirm the District Court
in all other respects.
We concur: /
1 Chief Jus