Prunty Construction, Inc. v. City of Canistota

2004 SD 78, 682 N.W.2d 749, 2004 S.D. LEXIS 85
CourtSouth Dakota Supreme Court
DecidedJune 9, 2004
DocketNone
StatusPublished
Cited by15 cases

This text of 2004 SD 78 (Prunty Construction, Inc. v. City of Canistota) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prunty Construction, Inc. v. City of Canistota, 2004 SD 78, 682 N.W.2d 749, 2004 S.D. LEXIS 85 (S.D. 2004).

Opinion

MEIERHENRY, Justice.

[¶ 1.] The City of Canistota contracted with Prunty Construction, Inc. for a water and sewer project. The City claims that the contract was paid in full. Prunty claims it is owed an additional sum of $59,428 for work performed under the contract. The trial court granted summary judgment in favor of the City. Prunty and the City appeal.

FACTS AND PROCEDURE

[¶ 2.] The City hired Sayre Associates, Inc. (Sayre) to design and prepare construction and bidding documents for the construction of two projects: (1) a water main and (2) a sanitary sewer and surfacing improvement. Sayre assigned Monty Miller (Engineer), a professional engineer, to represent the City on this project. Prunty submitted its bid and was awarded the contract. The City paid Prunty partial payments in the amount of $925,587.77 which was the amount Prunty submitted on the original bid form. After the project was completed, the City refused to pay a final change order in the amount of $54,930 plus an additional $4,498 for items inadvertently omitted from the final change order. 1 Prunty filed suit against *752 the City alleging breach of contract. Both Prunty and the City moved for summary judgment. The trial court granted summary judgment to the City. Prunty moved for reconsideration. The City requested sanctions against Prunty pursuant to SDCL 15 — 6—56(g) in its Resistance to Plaintiffs Motion for Reconsideration. The trial court denied Prunty’s motion. It also denied the City’s request to impose sanctions against Prunty. Both Prunty and the City appeal. The Association of General Contractors of South Dakota (AGC) appears as amicus curiae. 2

ISSUES

[¶ 3.] Prunty raises the following issue on appeal:

Whether the trial court erred in granting summary judgment to the City.

[¶ 4.] The City raises the following issue on appeal:

Whether the trial court abused its discretion by not imposing sanctions against Prunty.

STANDARD OF REVIEW

[¶ 5.] Summary judgment grant or denial requires this Court to determine whether genuine issues of material fact exist and whether legal issues were correctly decided. First Dakota Nat. Bank v. Performance Eng’g and Mfg., Inc., 2004 SD 26, ¶ 4, 676 N.W.2d 395, 398. We view the evidence most favorably to the non-moving party, resolving reasonable doubt against the moving party. Id. The grant or denial of sanctions is reviewed for abuse of discretion.

ANALYSIS

[¶ 6.] The parties disagree as to the terms of the contract. The City claims that the contract is a “lump sum” contract. Prunty claims that the contract is a “unit bid” contract. They also disagree about the final change order and whether the contract requires prior approval of the changes. Both parties argue that the terms of the contract are not ambiguous. In analyzing this case, we will first set forth the trial court’s ruling and the positions of Prunty and the City.

Trial Court

[¶ 7.] The trial court, while discussing differences between unit bid contracts and lump sum contracts, did not expressly decide this question. Rather, the trial court determined that “the contract between Prunty and Canistota required notice of unanticipated conditions and a halt to the work until the change order was approved.” Because the trial court concluded that Prunty did not comply with these requirements, it held that the City was “not bound to pay for these additional expenses.”

City’s Claim — ■Lump Sum Contract

[¶ 8.] The City argues that the contract is a lump sum contract, and that Prunty was required to submit change orders for additional units and have prior authorization in order to be paid for any additional work beyond the contract amount. “Under a lump-sum agreement, the contractor agrees to complete the work for a set price, regardless of the actual costs incurred in completing the construction.” United States v. Johnson, 937 F.2d 392, n. 2 (8thCir.l991). The City relies on the contract provision that specified a total sum of $925,587.77. The provision states:

*753 The CONTRACTOR agrees to perform all of the WORK described in the CONTRACT DOCUMENTS and comply with the terms therein for the sum of $925,587.77 or as shown in the BID schedule.

The City claims that Prunty is only entitled to the lump sum amount specified, in the contract. The only way Prunty would be entitled to amounts in excess of the contract amount is if Prunty had submitted and the City had approved a change order prior to the work being done. The City further argues that municipalities cannot be held liable for sums greater than the approved original bid because subsequent increases were not approved at a duly-authorized meeting as required by SDCL 9-1-5, 5-18-11 & 5-18-19.

Pnmty’s Claim — Unit Bid Contract

[¶ 9.] Prunty argues that its contract with the City is a unit bid contract and as such, requires the City to pay for the actual units supplied.

A unit-bid contract is one wherein the contractor submits a price per unit for each of the various categories involved. This type of contract is used where the final quantities of work cannot be determined with accuracy until final completion.

Johnson, Drake & Piper, Inc. v. United States, 483 F.2d 682, 684 (8thCir.l973). Prunty admits that change orders had to be submitted but asserts that a “final change order” is contemplated by the contract. Prunty also argues that not all changes required halting the work until a change order was approved. Prunty argues that only certain changes required prior approval. Specifically, changes that required prior approval were of two types: (1) changes due to subsurface or latent physical conditions at .the site differing materially from those indicated in the contract, and (2) changes due to unknown physical conditions at the site, of an unusual nature , and differing materially from those ordinarily encountered and generally recognized as inherent in this type of work. Prunty claims that the final change order did not include changes requiring prior approval. Whether the site conditions differed materially or were of an unusual nature would be questions of fact for which summary judgment would be inappropriate. Sundt Corp. v. South Dakota Dept. of Transp., 1997 SD 91, ¶¶ 22-24, 566 N.W.2d 476, 481-82.

DECISION

[¶ 10.] Contract interpretation is a question of law reviewed de novo. Fenske Media Corp. v. Banta Corp.,

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Bluebook (online)
2004 SD 78, 682 N.W.2d 749, 2004 S.D. LEXIS 85, Counsel Stack Legal Research, https://law.counselstack.com/opinion/prunty-construction-inc-v-city-of-canistota-sd-2004.