Clark Bros. Contractors v. State

710 P.2d 41, 218 Mont. 490, 1985 Mont. LEXIS 951
CourtMontana Supreme Court
DecidedDecember 4, 1985
Docket85-220
StatusPublished
Cited by4 cases

This text of 710 P.2d 41 (Clark Bros. Contractors v. State) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clark Bros. Contractors v. State, 710 P.2d 41, 218 Mont. 490, 1985 Mont. LEXIS 951 (Mo. 1985).

Opinions

MR. JUSTICE MORRISON

delivered the Opinion of the Court.

Plaintiff Clark Bros. Contractors appeals the February 25, 1985 decision of the Sixth Judicial District in favor of the defendant State of Montana. We vacate the District Court judgment and remand for trial.

Clark Bros. Contractors (Clark Bros.) is a Montana corporation which has been engaged in the highway construction business for 20 years, including many highway projects for the State of Montana (State). In late February or early March, 1979, the State sent out bid invitations for the construction of a segment of interstate near Big Timber, Montana. The invitation included a description of the project, and notice that subsurface data was available from the Materials Bureau in Helena. Bids were to be submitted by March 28, 1979.

In preparing its bid, Clark Bros, obtained cross-sections of the project area from the Materials Bureau, but not the subsurface data which was available. Officers of Clark Bros, did an on site inspection, and talked with local ranchers about soil conditions in the area. This was an area of concern because the segment of interstate to be built ran through a low lying irrigated farm valley, and would require substantial amounts of borrow (dirt secured from adjacent or nearby sources) to construct the foundation, or embankment, for the road.

Typically, the State provides estimates of the amount of borrow to be used in a project in its bid proposal. The borrow figure is arrived at by a three step process: 1) calculating the subsidence of the soil in place upon which the road is to be built; 2) calculating the shrinkage, or compaction, of the borrow that is to be used in the embankment; and 3) using the subsidence and shrinkage estimate to determine how much borrow will raise the road embankment to de[492]*492sign specifications. A typical shrink factor for borrow is about 10%. In the Big Timber project, an unusually high shrink factor of 40%, and 55% in some areas, was estimated by the State in its bid proposal. A provision in the proposal clearly stated the borrow figure was an estimate only.

In calculating its costs for the borrow work, Clark Bros, used the quantity estimates provided by the State. Clark Bros, submitted the lowest bid and was awarded the contract, which was executed on April 4, 1979. Pertinent contract provisions included allowing deviations of up to 25% in estimated quantities, that payment would only be for units of work performed, and that the borrow was to be provided by the contractor.

Clark Bros, began work in May, 1979, and completed the excavation, borrow, and embankment work by the end of the year. Measurement of the borrow pits showed that substantially less borrow had been used than estimated, so the State issued a change order on February 13, 1980, reflecting that fact. Clark Bros, signed the order under protest on June 5, 1980. The borrow underrun was approximately 18%, which significantly reduced the amount paid to Clark Bros, under the contract. Clark Bros, filed a claim on December 14, 1980, alleging a loss on the borrow work due to fixed costs and overhead. The State refused to settle, claiming it was only obligated to pay for units of work performed, and the contract further allowed for quantity deviations up to 25%. Clark Bros, filed suit.

The issues at trial were: 1) whether the State was negligent in preparing the shrinkage factor included in the bid proposal; 2) whether Clark Bros, was entitled to be paid for extra work incurred not contemplated by the contract; and 3) whether exculpatory language in the contract barred the claims asserted by Clark Bros. The District Court found in favor of the State on each issue.

Clark Bros, asserts the following issues on appeal:

1. Was the District Court opinion supported by substantial evidence or was it clearly erroneous?

2. Did the District Court properly refuse to consider the deposition testimony of managing employees of the State?

3. Can the State of Montana avoid liability for material mistakes in information supplied to and relied upon by highway construction bidders by means of exculpatory contract language?

Clark Bros, assert numerous errors in the District Court opinion. The court found that Clark Bros.’ method of computation, and selection of a borrow site without independently testing the soils, [493]*493placed the risk of loss caused by an underrun on Clark Bros. While a reading of the contract may support these findings, other evidence was not taken into account because it was improperly excluded.

During trial, counsel for Clark Bros, twice attempted to introduce into evidence the deposition testimony of certain managing agents of the State. In refusing admission, the District Court relied upon

(1)a lack of notice to the State that the depositions were to be offered, (2) that no cross-examination could be conducted, and (3) that Clark Bros, made no showing that the witnesses were unavailable. The District Court was in error.

Rule 32(a)(2), M.R.Civ.P. reads in part: “The deposition of a party or of anyone who at the time of taking the deposition was an officer, director, or managing agent. . . may be used by an adverse party for any purpose.” There is no provision in Rule 32(a)(2), M.R.Civ.P. which requires a finding of unavailability of the witness or that notice was given of the intended use of a deposition at trial. Rule 32(a)(2), M.R.Civ.P. governs the use of depositions at trial, and the State’s reliance on Rule 804 M.R.Evid. is misplaced. See Edington v. Creek Oil Co. (1984), [213 Mont. 112,] 690 P.2d 970, 978, 41 St.Rep. 1990, 2000.

Whether one is to be considered a managing agent for the State depends on several factors, including the individual’s right of general control, authority, and judgment within his department; whether the interests of the individual are identified to be those of the State; and whether any person of higher authority possesses knowledge about the matters at issue. See Terry v. Modern Woodmen of America (W.D.Mo.1972), 57 F.R.D. 141; and Carroll v. Wisconsin Power & Light Co. (Wisc. 1956) 273 Wis. 490, 79 N.W.2d 1.

In this case, the depositions offered were those of the chief of Materials Bureau, head of Location Road Design Section, chief of the Preconstruction Bureau, and assistant supervisor of Geology Section. We find the deposition testimony shows that these jobs, with the possible exception of the latter one, entail sufficient supervisory responsibility to place these individuals within the status of managing agents for the State. One might question the managerial status of assistant supervisor of Geology Section, but we need only focus on the deposition of the chief of Materials Bureau.

We find the deposition testimony of the chief of Materials Bureau to be useful evidence on the issue of justifiable reliance. The witness’s statements acknowledge that the State is aware contractors [494]*494rely on State estimates in preparing their bids. We find it was error to exclude this testimony.

The final issue is whether the exculpatory language of the contract relieves the State from liability for damages caused by the borrow underrun.

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McGregor v. Mommer
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Clark Bros. Contractors v. State
710 P.2d 41 (Montana Supreme Court, 1985)

Cite This Page — Counsel Stack

Bluebook (online)
710 P.2d 41, 218 Mont. 490, 1985 Mont. LEXIS 951, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clark-bros-contractors-v-state-mont-1985.