SORNSIN CONSTRUCTION CO v STATE

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No. 13699 I N THE SUPFEMF, COUIiT O THE STATE OF F ~~~ 1978 SORNSIN CONsTRUCTION CaMPANY, a North Dakota corporation, Plaintiff and Respondent, THE S A E OF M3NTANA; and THE DP T T EO NATURAL RESOURCES AND CONS~TION F an adrinistrative agency of the State of Montana, Defendants and Appellants. Appeal f r m : District Court of the F i r s t Judicial District, Honorable Gordon R. Bennett, Judge presiding. Counsel of Record: For Appellants: Hon. Mk Greely, Attorney General, Helena, Pbntana ie Allen B. Chronister argued, Assistant Attorney General, Helena, Wntana Garrity and Keegan, Helena, E.lontana Donald A. Garrity argued, Helena, Pbntana Ted Doney , Helena, Pbntana For Respondent: Scribner and H u s s , Helena, Wntana Walker and Grover, Denver, Colorado Philip E. Riedesel argued, Denver, Colorado S-tted: October 1 9 , 1978 Decided : DEc Filed: DEc, J lQ78 2 !j 1978 M r . J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion o f t h e Court. P l a i n t i f f , S o r n s i n C o n s t r u c t i o n Company, b r o u g h t t h i s t a c t i o n i n t h e ~ i s t r i c C o u r t of t h e F i r s t J u d i c i a l D i s t r i c t t o r e c o v e r damages f o r t h e a l l e g e d b r e a c h of a c o n t r a c t f o r t h e c o n s t r u c t i o n of a n i r r i g a t i o n pump system on t h e YellowFrom a judgment f o r s t o n e R i v e r n e a r S i d n e y , Montana. p l a i n t i f f , d e f e n d a n t S t a t e of Montana a p p e a l s . On J u l y 28, 1970, t h e Montana Water Resources Board (MWRB) (now t h e Department o f N a t u r a l Resources and Conserva- t i o n ) i s s u e d a n i n v i t a t i o n f o r b i d s on a c o n t r a c t f o r t h e c o n s t r u c t i o n of a n i r r i g a t i o n pump system p r o j e c t . The p r o j e c t e n t a i l e d c o n s t r u c t i n g t h r e e r i v e r pump u n i t s t o pump w a t e r from t h e Yellowstone R i v e r and f o u r r e l i f t pump s t a t i o n s t o pump t h e w a t e r from t h e r i v e r u n i t s i n t o v a r i o u s i r r i g a t i o n canals. The p r o j e c t w a s d e s i g n e d by t h e P o r t l a n d , Oregon, d e s i g n u n i t of t h e United S t a t e s Department of Agriculture S o i l Conservation Service. P l a i n t i f f r e c e i v e d a number of p l a n s , s p e c i f i c a t i o n s and d r a w i n g s from t h e MWRB which i t u s e d i n p r e p a r i n g i t s bid. A f t e r t h e c o n t r a c t had been awarded t o p l a i n t i f f and work had begun, it became a p p a r e n t t h a t a number of s p e c i f i c a t i o n s w e r e only approximations. Specifically, the l i s t e d e l e v a t i o n s f o r t h e r i v e r bed, i n t h e neighborhood o f 1880 f e e t , v a r i e d from t h e a c t u a l e l e v a t i o n s a s much as 1 5 feet. These d i s c r e p a n c i e s r e s u l t e d i n i n c r e a s e d c o s t s t o plaintiff. I n a d d i t i o n , a number of o t h e r c l a i m s developed t h r o u g h t h e c o u r s e of performance o f t h e c o n t r a c t which d e f e n d a n t r e f u s e d t o compensate. P l a i n t i f f s u e d , and a j u r y t r i a l commenced on A p r i l 1 2 , 1976, c o n t i n u i n g t h r o u g h May 6 , 1976. The j u r y awarded damages t o p l a i n t i f f i n t h e amount of $335,328 p l u s $6,751.05 i n c o s t s . The o r i g i n a l b i d s u b m i t t e d by p l a i n t i f f and a c c e p t e d by d e f e n d a n t had been $962,108.40. The i s s u e s r a i s e d by a p p e l l a n t on a p p e a l a r e : 1. Did S o r n s i n C o n s t r u c t i o n Company assume t h e r i s k of f a i l u r e of i t s proposed c o f f e r d a m d e s i g n s ? 2. Did S o r n s i n C o n s t r u c t i o n Company assume t h e r i s k t h a t t h e m a t e r i a l t o be e x c a v a t e d a t Pump U n i t 3 m i g h t n o t s t a n d on a v e r t i c a l c u t ? 3. Was t h e g i v i n g of I n s t r u c t i o n No. 22 e r r o r ? 4. Under t h e t e r m s of t h i s c o n t r a c t , w a s t h e c o n t r a c - t o r r e s p o n s i b l e f o r damage p r i o r t o a c c e p t a n c e ? 5. Is a c o n t r a c t o r who b i d s on a n i t e m , knowing t h a t t h e q u a n t i t y l i s t e d f o r t h a t i t e m i s wrong, e n t i t l e d t o r e c o v e r l o s t p r o f i t s on t h e e x c e s s q u a n t i t y ? 6. Did S o r n s i n C o n s t r u c t i o n Company p r o v e t h a t mate- r i a l s u i t a b l e f o r compacted g r a n u l a r e a r t h f i l l w a s n o t a v a i l a b l e a t t h e s i t e of Pump U n i t l-A? 7. May t h e c o n t r a c t o r r e c o v e r f o r e x t r a work n o t c o v e r e d by a change o r d e r ? 8. Did t h e D i s t r i c t C o u r t err by a d m i t t i n g p l a i n t i f f ' s E x h i b i t Nos. 9. 119, 1 3 1 and 1 4 1 i n e v i d e n c e ? Did t h e D i s t r i c t C o u r t err by r e f u s i n g t o a d m i t d e f e n d a n t ' s E x h i b i t No. 555 i n e v i d e n c e ? 10. Is t h e v e r d i c t and judgment s u p p o r t e d by t h e evidence? The p a r t i e s a g r e e o n l y on t h e s t a t e m e n t of I s s u e Nos. 3 , 8 , 9, and 10. As a result, i n t h e d i s c u s s i o n of a l l i s s u e s , t h e i s s u e s w i l l b e p r e s e n t e d i n p a i r s t o emphasize t h e a l t e r n a t i v e p o s i t i o n s of t h e p a r t i e s . Issue 1 P r i o r t o d i s c u s s i o n of I s s u e No. 1, w e s e t f o r t h t h e g e n e r a l p r i n c i p l e a s s t a t e d i n Big Sky L i v e s t o c k , I n c . v. Herzog ( 1 9 7 6 ) , 1 7 1 Mont. 409, 558 P.2d 1107, 1110, 33 St.Rep. 1232, 1236, t h a t t h e r o l e of t h e r e v i e w i n g c o u r t i s t o l i m i t i t s r e v i e w t o whether t h e r e i s s u b s t a n t i a l c r e d i b l e e v i d e n c e t o support the verdict. I n s o d o i n g , it w i l l r e v i e w t h e e v i d e n c e i n t h e l i g h t most f a v o r a b l e t o t h e p r e v a i l i n g party. S e e Davis v. Davis ( 1 9 7 2 ) , 159 Mont. 355, 497 P.2d 315, and S t a t e Highway Commission v . Vaughan ( 1 9 7 0 ) , 155 Mont. 277, 470 P. 2d 967. D-1. Did S o r n s i n C o n s t r u c t i o n Company assume t h e r i s k of f a i l u r e of i t s proposed c o f f e r d a m d e s i g n s ? P-1. Did t h e S t a t e b r e a c h i t s w a r r a n t y of a c c u r a c y and s u f f i c i e n c y of i t s p l a n s and s p e c i f i c a t i o n s ; w e r e t h e r e " d i f f e r i n g site conditions"; i f so, d i d t h e S t a t e breach t h e c o n t r a c t by f a i l i n g t o pay t h e r e f o r ? Defendant a r g u e s t h a t p l a i n t i f f assumed t h e r i s k t h a t i t s o r i g i n a l c o f f e r d a m p l a n s would n o t work. P l a i n t i f f r e s p o n d s by a s s e r t i n g t h a t d e f e n d a n t b r e a c h e d i t s w a r r a n t y r e g a r d i n g p l a n s and s p e c i f i c a t i o n s ; t h e r e were " d i f f e r i n g s i t e c o n d i t i o n s " , and d e f e n d a n t i s e s t o p p e d from s o denying. T h i s i s s u e i n v o l v e s t h e t h r e e r i v e r pump u n i t s . To c o n s t r u c t t h e s e u n i t s , it was n e c e s s a r y t o f i r s t remove t h e w a t e r from t h e a r e a u s i n g c o f f e r d a m s . The r i v e r bed t u r n e d o u t t o be lower t h a n p l a i n t i f f a n t i c i p a t e d r e s u l t i n g i n h a v i n g t o u t i l i z e l a r g e r and more e x p e n s i v e c o f f e r d a m s . The S t a t e a d m i t s t h e p l a n s from which p l a i n t i f f drew i t s estimates were n o t c o n s i s t e n t w i t h r e s p e c t t o t h e e l e v a - t i o n of t h e r i v e r bed. The S t a t e g o e s on t o a r g u e , however, t h a t t h i s d i s c r e p a n c y i n t h e p l a n s s h o u l d have p u t p l a i n t i f f on n o t i c e t o make f u r t h e r i n q u i r y , p u r s u a n t t o C l a u s e 12 of t h e g e n e r a l p r o v i s i o n s of t h e c o n t r a c t : "12. CONDITIONS AFFECTING THE WORK. The C o n t r a c t o r s h a l l b e r e s p o n s i b l e f o r having t a k e n s t e p s r e a s o n a b l y n e c e s s a r y t o a s c e r t a i n t h e n a t u r e and l o c a t i o n o f t h e work, and t h e g e n e r a l and l o c a l c o n d i t i o n s which c a n a f f e c t t h e work o r t h e c o s t t h e r e o f . Any f a i l u r e by t h e C o n t r a c t o r t o do s o w i l l n o t r e l i e v e him from r e s p o n s i b i l i t y f o r s u c c e s s f u l l y p e r f o r m i n g t h e work w i t h o u t a d d i t i o n a l expense t o t h e Cont r a c t i n g L o c a l O r g a n i z a t i o n . The C o n t r a c t i n g L o c a l O r g a n i z a t i o n assumes no r e s p o n s i b i l i t y f o r any u n d e r s t a n d i n g o r r e p r e s e n t a t i o n s conc e r n i n g c o n d i t i o n s made by any of i t s o f f i c e r s o r a g e n t s p r i o r t o t h e e x e c u t i o n of t h i s cont r a c t , u n l e s s such understanding o r representat i o n a r e expressly stated i n the contract." The o t h e r c l a u s e p o i n t e d o u t by t h e S t a t e a l o n g t h i s same l i n e i s C l a u s e 2: SPECIFICATIONS AND DRAWINGS The C o n t r a c t o r s h a l l keep on t h e work a copy o f t h e d r a w i n g s and s p e c i f i c a t i o n s and s h a l l a t a l l t i m e s g i v e t h e C o n t r a c t i n g O f f i c e r a c c e s s t h e r e t o . Anything mentioned i n t h e s p e c i f i c a t i o n s and n o t shown on t h e d r a w i n g s , o r shown on t h e d r a w i n g s and n o t mentioned i n t h e s p e c i f i c a t i o n s , s h a l l b e of l i k e e f f e c t as i f shown o r mentioned i n both. I n c a s e of d i f f e r e n c e between drawing and s p e c i f i c a t i o n s , t h e I n case of d i s s p e c i f i c a t i o n s s h a l l govern. crepancy e i t h e r i n t h e f i g u r e s , i n t h e drawings, o r i n t h e s p e c i f i c a t i o n s , t h e m a t t e r s h a l l be promptly s u b m i t t e d t o t h e C o n t r a c t i n g O f f i c e r , who s h a l l promptly make a d e t e r m i n a t i o n i n w r i t i n g . Any a d j u s t m e n t by t h e C o n t r a c t o r w i t h o u t s u c h a d e t e r m i n a t i o n s h a l l be a t h i s own r i s k and expense. The C o n t r a c t i n g O f f i c e r s h a l l f u r n i s h from t i m e t o t i m e s u c h d e t a i l d r a w i n g s and o t h e r i n f o r m a t i o n as h e may c o n s i d e r necess a r y , u n l e s s otherwise provided." "2. F i n a l l y , t h e S t a t e ' s argument t u r n s t o t h e c o m p e t i t i v e e l e m e n t i n v o l v e d i n t h e b i d d i n g p r o c e s s and t h e a t t e n d a n t a s s u m p t i o n of r i s k where one b a l a n c e s t h e r i s k i n v o l v e d i n p r e d i c t i n g what something w i l l a c t u a l l y c o s t a g a i n s t t h e r i s k of l o s i n g t h e c o n t r a c t i f one minimizes t h e r i s k i n t h e f i r s t p a r t too greatly. The State, citing Haggart Construction Company v. State Highway Commission (1967), 149 Mont. 422, 427 P.2d 686, asserts that the crucial question of the contractor's right to recover for misrepresentations in the plans is one of "justified reliance." Plaintiff argues that there were portions of the plans which expressly misstated certain elevations on which the cofferdams were to sit. Furthermore, construction experts at trial seemed to agree that plaintiff's reliance on the plans without the further investigations suggested by the State was reasonable. Plaintiff feels Clause 4 of the contract is most applicable to this issue: "4. DIFFERING SITE CONDITIONS (a) The Contractor shall promptly, and before such conditions are disturbed, notify the Contracting Officer in writing of: (1) subsurface or latent physical conditions at the site differing materially from those indicated in this contract, or (2) unknown physical conditions at the site, of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in this contract. The Contracting Officer shall promptly investigate the conditions, and if he finds that such conditions do materially so differ and cause an increase or decrease in the Contractor's cost of, or the time required for, performance of any part of the work under this contract, whether or not changed as a result of such conditions, an equitable adjustment shall be made and the contract modified in writing accordingly." Plaintiff gave proper notice, and the Contracting Officer for the State responded by letter on December 30, 1970. Among other things, he stated: "After investigation, it is agreed that, while some change in the river bed level and configuration could be normally expected, the existing depth as compared to that indicated on the drawings is materially different so as to constitute a differing site condition under the terms of Clause 4 of General Provisions . . ." The State withdrew this determination six months later, and no price adjustment was made. The law is established that a contractor can rely on the plans and specifications and need not, as alleged by the State here, verify them. It has long been recognized that the owner, here the State, warrants and is responsible for the accuracy of the descriptions in the plans and specifications of the contract that are issued. See Haggart Construc- tion Company v. State Highway Commission, supra; Halvorson v. United States (Ct-C1. 1972), 461 F.2d 1337. Section 4(a) of the Differing Site Conditions clause of this contract hereinbefore cited, formerly known as the Changed Conditions clause in government contracts, is the most applicable to this situation. In Farnsworth & Chambers v. United States (Ct.Cl. 1965), 346 F.2d 577, 580-81, the court said: "The contractual requirement that plaintiff make its own investigation of the site does not obliterate the Changed Conditions clause nor did this requirement obligate bidders to discover, at their peril, subsurface conditions hidden by the river's water and thus unavailable to any reasonable pre-award inspection." The exculpatory clauses in the contract relied upon by the State do not, as a matter of law, waive, eliminate, or modify the contractor's right to rely on the representations made in the plans or specifications nor its right to rely on the Differing Site Conditions clause. Haggart Construction Company v. State Highway Commission, supra; Morrison-Knudsen v. United States (Ct.Cl. 1965), 345 F. 2d 535; Fehlhaber Corp. v. United States (Ct.Cl. 1957), 151 F.Supp. 817; and Farnsworth v. United States, supra. In Haggart Construction, 149 Mont. at 687, 688, case cited above, this Court recognized that the owner cannot be allowed to rely on the exculpatory provisions, citing Sandkay Const. Co. v. State (1965), 145 Mont. 180, 399 P.2d 1002, and said: "Or to state it with a more particularity, where plans and estimates or specifications are used as the basis for bids, [it] is a contractor who has been led to believe that the conditions indicated in such plans exist, [and is] able to rely on them and recover for expenses necessary by conditions being other than as represented in such plans." The reason for the Differing Site Conditions clause of a contract is to eliminate the contractor's risk of an unanticipated subsurface condition and still allow the government to avoid the unnecessary expense of the contractor including a contingency amount in his bid for possible unanticipated subsurface conditions. See Foster Construc- tion Company v. United States (Ct.Cl. 1970), 435 F.2d 873, The State in its citation of authority relied upon the cases of Austin Company v. United States (Ct.Cl. 1963), 314 F.2d 518, and Beacon Construction of Massachusetts v. United States (Ct.Cl. 1963), 314 F.2d 501. Neither of these cases are factually similar to the situation in this case on the point of the assumed risk by the contractor. In Austin the contractor, not the owner (the state as here), prepared the plans and specifications and promised to perform under those specifications--those are not the facts in this case. In Beacon the evidence indicated that the contractor was aware of the ambiguities prior to bidding-that is not the case here. The State argues that Sornsin could not "justifiably rely" on the plans because it alleges that the plans do not show elevations in the areas where the cofferdams were to be placed and the plans had significant discrepancies. As previously set forth, the evidence simply does not support those allegations. There was justifiable reliance on the r i v e r bed e l e v a t i o n s a s shown on t h e p r o p e r s h e e t s of t h e plans submitted. Issue 2 id S o r n s i n C o n s t r u c t i o n Company assume t h e r i s k D-2. t h a t t h e m a t e r i a l t o b e e x c a v a t e d a t Pump U n i t 3 m i g h t n o t s t a n d on a v e r t i c a l c u t ? P-2. Did t h e S t a t e b r e a c h i t s w a r r a n t y of a c c u r a c y and s u f f i c i e n c y of i t s p l a n s and s p e c i f i c a t i o n s ; were t h e r e " d i f f e r i n g s i t e conditions"; i f s o , d i d t h e S t a t e breach t h e c o n t r a c t by f a i l i n g t o pay t h e r e f o r ? T h i s i s s u e i n v o l v e s t h e n e c e s s a r y e x c a v a t i o n a t Pump Unit 3. The d e s i g n f o r t h i s u n i t c a l l e d f o r e x c a v a t i o n of a t r e n c h from t h e r i v e r i n t o t h e bank t o p e r m i t i n s t a l l a t i o n of t h e p i p e and pumping a p p a r a t u s o f t h e u n i t . The p l a n s f o r Pump U n i t 3 i n d i c a t e d a n e x c a v a t i o n pay l i n e ( a n "excav a t i o n pay l i n e " e s t a b l i s h e s t h e a r e a of e x c a v a t i o n f o r which t h e c o n t r a c t o r w i l l b e p a i d ) on a 1.1 s l o p e f o r t h e f i r s t twenty f e e t of t h e e x c a v a t i o n and a v e r t i c a l pay l i n e f o r t h e r e m a i n i n g twenty-two f e e t of t h e e x c a v a t i o n . Rock was n o t e n c o u n t e r e d u n t i l some f o u r t e e n o r f i f t e e n f e e t below t h e l e v e l where t h e drawings i n d i c a t e d t h e v e r t i c a l pay l i n e w a s t o b e g i n . P l a i n t i f f s o u g h t damages f o r t h e c o s t s of i t s e x c a v a t i o n beyond t h e v e r t i c a l pay l i n e on t h e t h e o r y t h a t drawing s u c h a pay l i n e c o n s t i t u t e d a w a r r a n t y t h a t t h e e a r t h i n t h a t area w a s r o c k c a p a b l e of b e i n g excav a t e d on a 90° a n g l e . P l a i n t i f f ' s argument w i t h r e s p e c t t o t h i s i s s u e p a r a l l e l s t h e argument r e g a r d i n g t h e c o f f e r d a m s i n I s s u e 1. The a d d i t i o n a l e l e m e n t i n t h i s s i t u a t i o n seems t o b e C l a u s e 1 7 of t h e g e n e r a l c o n d i t i o n s of t h e c o n t r a c t . Defendant r e l i e s h e a v i l y on t h i s c l a u s e : "17. RECORDS OF TEST PITS AND BORINGS The C o n t r a c t i n g L o c a l O r g a n i z a t i o n d o e s n o t r e p r e s e n t t h a t t h e a v a i l a b l e r e c o r d s show c o m p l e t e l y t h e e x i s t i n g c o n d i t i o n s and d o e s n o t g u a r a n t e e any i n t e r p r e t a t i o n o f t h e s e r e c o r d s . The C o n t r a c t o r assumes a l l r e s p o n s i b i l i t y f o r d e d u c t i o n s and c o n c l u s i o n s a s t o t h e n a t u r e of r o c k and o t h e r materials t o be e x c a v a t e d , t h e d i f f i c u l t i e s of making and m a i n t a i n i n g t h e r e q u i r e d e x c a v a t i o n s and o f d o i n g o t h e r work a f f e c t e d by t h e geology of t h e s i t e of t h e work, and f o r t h e f i n a l p r e p a r a t i o n of t h e f o u n d a t i o n s f o r t h e s p i l l w a y , d i k e s , and o t h e r s t r u c t u r e s . " P l a i n t i f f argues t h a t t h i s clause i s not r e f e r r i n g t o i n t e r p r e t a t i o n s made by t h e o w n e r ' s d e s i g n e r s , b u t m e r e l y contractor interpretations. Moreover, p l a i n t i f f a r g u e s t h a t t h e D i f f e r i n g S i t e Conditions c l a u s e supersedes t h i s clause. I n s u p p o r t of t h i s a s s e r t i o n , p l a i n t i f f c i t e s F o s t e r Cons t r u c t i o n C.A., e t a l . v . United S t a t e s ( C t . C l . 1970) , 435 "Even u n m i s t a k a b l e c o n t r a c t l a n g u a g e i n which t h e Government s e e k s t o d i s c l a i m r e s p o n s i b i l i t y f o r d r i l l hole d a t a does not l e s s e n t h e r i g h t of r e l i a n c e . The d e c i s i o n s r e j e c t , a s i n conf l i c t w i t h t h e changed c o n d i t i o n s c l a u s e , a ' s t a n d a r d mandatory c l a u s e o f broad a p p l i c a t i o n , ' t h e v a r i e t y o f s u c h d i s c l a i m e r s of r e s p o n s i b i l i t y --that the logs a r e not guaranteed, not repres e n t a t i o n s , t h a t t h e b i d d e r i s urged t o draw h i s own c o n c l u s i o n s . " (Citations omitted.) The S t a t e d o e s n o t a d d r e s s t h i s a u t h o r i t y nor any of t h e o t h e r arguments made by p l a i n t i f f i n i t s r e p l y b r i e f . W e hold t h a t t h e S t a t e f a i l e d t o overturn t h e finding with respect t o t h i s issue. Issue 3 W e next d i r e c t our a t t e n t i o n t o Issue No. 3 wherein t h e S t a t e a l l e g e s e r r o r by t h e g i v i n g of I n s t r u c t i o n No. 2 2 which r e a d s : "One of t h e p l a i n t i f f ' s c l a i m s i s f o r damages f o r t h e i n c r e a s e d c o s t s of p l a c i n g r i p r a p a t Pump U n i t No. 1, a l l e g e d t o have been i n c u r r e d b e c a u s e of t h e o w n e r ' s a l l e g e d d e l a y i n c o n s e n t i n g t o t h e removal of the old pump house at that location. In your consideration of this claim, you should take into account the provisions of paragraph 7(a)2 of the Specifications for Structure Removal reading in part as follows: " ' 7 (a) 2 Except for the existing transformer base at Pump Unit No. 1, the existing pumping plants shall be left intact and kept in operation until the replacement pumping plants are installed and operable. The time for removal and salvaging or disposal of existing facilities shall be as directed by the Contracting Officer. The concrete transformer base can be removal [sic] at any time after the transformers are relocated. Relocating the transformers is not a part of this contract.' "You are instructed that provisions such as this one, prohibiting a contractor from performing certain work without the owner's consent, do not permit the owner to withhold consent unreasonably, or to delay giving consent for an unreasonable period of time. Therefore, if you find that such consent was unreasonably withheld or delayed by the owner in this case, you may consider whether the withholding or delay in giving such consent caused damage to the contractor, and if so, the amount of the damages sustained thereby." Defendant argues that the court altered the clear meaning of this provision of the contract by suggesting, through this instruction, that the existing pumping plants could be removed if such removal would be "reasonable", in which event the owner had a duty to promptly consent. Plaintiff emphasizes the sentence in the contract stating the time for removal shall be "as directed by the Contracting Officer". The consent was finally given before the replacement pump was operable lending credence to plaintiff's assertion that the Contracting Officer's understanding of this contractual provision was the same as plaintiff's. Again, defendant did not respond to plaintiff's arguments. We find no error. Issue 4 This issue is directed to the responsibility of either plaintiff or the State for damage to the project prior to acceptance : D-4. Under the terms of this contract, was the con- tractor responsible for damage prior to acceptance? P-4. Did the State breach its warranty of adequacy of design for the riprap work, and did the risk of loss pass to the State once this work had been accepted as fulfilling the State's specifications? In the winter of 1971-1972, a massive ice breakup: on the Yellowstone River dislodged some 150 cubic yards of the rock riprap which had been installed at Pump Unit 1. (Rip- rap is a foundation or sustaining wall of stones thrown together without order, as in deep water or on an embankment slope to prevent erosion.) Plaintiff alleged in its amended complaint that the damage resulted because of the State's defective design but apparently offered no proof of that allegation. Instead plaintiff relied on the fact that this work was completed to the State's specifications and paid for prior to the damage. The State relies on two provisions of the contract. The first is Clause 11: "11. PERMITS AND RESPONSIBILITIES The Contractor shall, without additional expense to the Contracting Local Organization, be responsible for obtaining any necessary license and permits, and for complying with any applicable Federal, State, and municipal laws, codes, and regulations, in connection with the prosecution of the work. He shall be similarly responsible for all damages to persons or property that occur as a result of his fault or negligence. He shall take proper safety and health precautions to proHe also tect the property of others. - shall - -be responsible for all materials delivered and work - acceptance of and - the performed until for any completed h theretofore phasisaddedl) The other provision of the contract cited by the State is Clause 7, part (d): "7. PAYMENTS TO CONTRACTOR " ( d ) A l l m a t e r i a l and work covered by p r o g r e s s payments made s h a l l thereupon become t h e s o l e p r o p e r t y of t h e C o n t r a c t i n g Local O r g a n i z a t i o n , b u t t h i s p r o v i s i o n s h a l l n o t be c o n s t r u e d a s r e l i e v i n g t h e C o n t r a c t o r from t h e s o l e r e s p o n s i b i l i t y f o r a l l m a t e r i a l and work upon which payments have been made o r t h e r e s t o r a t i o n of any damaged work, o r a s waiving t h e r i g h t of t h e C o n t r a c t i n g Local O r g a n i z a t i o n t o r e q u i r e t h e f u l f i l l m e n t of a l l of t h e terms of t h e c o n t r a c t . " P l a i n t i f f ' s argument i s t h a t t h e S t a t e warranted t h e adequacy of i t s p l a n s and s p e c i f i c a t i o n s . The f a c t t h a t t h e r i p r a p was damaged by t h e f o r c e i t was designed t o s u s t a i n i s t h e e x t e n t of t h e proof o f f e r e d by p l a i n t i f f t h a t t h e d e s i g n was d e f e c t i v e . P l a i n t i f f f u r t h e r argues t h a t t h e r i p r a p was a "completed u n i t " which had been a c c e p t e d . 1 Clause 1 of t h e g e n e r a l p r o v i s i o n s of t h e c o n t r a c t provided t h a t t h e c o n t r a c t o r " s h a l l a l s o be r e s p o n s i b l e f o r a l l m a t e r i a l s d e l i v e r e d and t h e work performed u n t i l t h e completion and a c c e p t a n c e of t h e e n t i r e c o n s t r u c t i o n work, e x c e p t f o r any completed u n i t which t h e r e t o f o r e may have been accepted." N u n i t of t h e p r o j e c t , i n c l u d i n g t h e o r i p r a p a t Pump U n i t 1, was accepted b e f o r e November 2 , 1 9 7 2 . Clause 7 of t h e g e n e r a l p r o v i s i o n s of t h e c o n t r a c t c a r e f o r t h i s i s s u e and t h e s e p r o v i s i o n s f a i r l y p l a c e t h e r i s k of damage p r i o r t o a c c e p t a n c e of t h e work upon t h e c o n t r a c t o r . DeArmis v. United S t a t e s ( C t . C l . 1 9 4 7 ) , 70 F.Supp. 605, i s a c a s e where a storm damaged t h e c o n t r a c t o r ' s p a r t i a l l y completed j e t t y a t t h e mouth of t h e M i s s i s s i p p i River. The c o n t r a c t o r f i l e d a c l a i m f o r a d d i t i o n a l compensation f o r t h i s work i n r e p a i r i n g t h e damage. stating: The Court of Claims denied r e c o v e r y "The question then, is, who must bear the loss from a destruction of a part of the work which the plaintiff had contracted to do, while that work was in an unfinished stage . The specifications as to final examination and acceptance certainly contemplated that the work should stand in place in a useful condition when the contract was completed. We think, therefore, that its being damaged by forces of nature and without anyone's fault before it was completed and accepted as complete, was the plaintiff's misfortune and loss." 70 F.Supp. at 606. .. See also John McShain, Inc. v. United States (Ct.Cl. 1967), 375 F.2d 829; Amino Brothers Co. v. United States (Ct.Cl. 1967), 372 F. 2d 485; Carman v. United States (Ct.Cl. 19581, We find that the work being damaged by forces of nature and without anyone's fault before it was completed and even though accepted as complete, was the plaintiff's misfortune and it must suffer the loss. This is in accord with the general rule, applicable to both private and public building contracts, that one who contracts to erect a structure must bear the loss occasioned by an accidental destruction or damage before completion. See 13 Am.Jur.2d Building and Construction Contracts 964, and 64 Arn.Jur.2d Public Works and Contracts S115. Issue 5 D-5. Is a contractor who bids on an item, knowing that the quantity listed for that item is wrong, entitled to recover lost profits on the excess quantity? P-5. Whether the Contracting Officer paid plaintiff an equitable price adjustment for the quantity of miscellaneous metal? Clause 28 appears to be the controlling clause in this issue. It provides for a variation of 25 percent which the plaintiff's estimator was aware of at the time of the bid and a quantity that he set forth was only an estimate subject to quantity variations. It would appear he logically did not believe this difference of his estimate and that of the State's was of any significance. We note that perhaps the real point at issue here is whether or not the Contracting Officer paid plaintiff an equitable price adjustment. The Contracting Officer agreed that was the only issue in his letter dated November 22, 1971, in which he responded to Sornsin's rejection of the 63 cents per pound for the steel. Part of that letter provided: "As provided in the terms of the contract, would you please furnish us a detailed breakdown describing your costs information in support of your suggested price unit of $1.10 a pound. We will need this information in order to make a decision on the unit price." At trial plaintiff presented testimony that the actual cost was set forth in the final cost report and submitted data in support thereof. The Supreme Court in United States v. Callahan Walker Construction Co. (1942), 317 U.S. 56, 61, 63 S.Ct. 113, 115, 87 L Ed 2d 49, 53, stated that "[aln 'equitable adjustment' of the respondent's additional payment for extra work involved merely the ascertainment of the cost of digging, moving, and placing earth, and the addition to that cost of a reasonable and customary allowance for profit." In Bruce Construction v. United States (Ct.Cl. 1963), 324 F.2d 516, the court held that a proper measure is the "reasonable cost" and declared that to be "there is a presumption that the actual costs paid are reasonable." That presumption must be overcome by whichever party alleges its unreasonableness. Here, plain- tiff proved that the claim was reasonably incurred and that they were prima facie reasonable costs. Thus, the State, having failed in its burden of proving these costs unreasonable, must fail at this issue. Issue 6 D-6. Did Sornsin Construction Company prove that material suitable for compacted granular earth fill was not available at the site of Pump Unit 1-A? P-6. Was evidence introduced at trial from which the jury could find that there was not sufficient granular earth fill material at the site? Both a letter of Sornsin dated December 24, 1970, and testimony given at the time of trial indicated that the material at the site was not suitable for compaction. In the December 24 letter the Contracting Officer of the State was advised that "there appears to be a question that the available dry granular material is too fine for compacted granular fill. We also noted considerable amount of coal while drilling the test hole a week from the last Wednesday. This coal appeared with the coarser gravel underneath the gravel bed." In his testimony at trial Sornsin confirmed the unsuitable conditions when he testified: "Well, the site, the topsoil, the top section of the soil above the river level was just like a blow sand. There was a noncompactable material and then, when we got down deeper we got into the coarse gravel and that gravel had a lot of lignite coal--you know what lignite coal is--particles throughout it. During a conversation out on the job site on December 16th, Mr. Fisher told me that the material could not be used for granular backfill at this site, as so stated on the plan." With this testimony and the reference to the letter of December 24, 1970, there was sufficient evidence that the jury could weigh as to the sufficiency of the granular earth fill material and make a decision. We find no error. Issue 7 D-7. May the contractor recover for extra work not covered by a change order? P-7. Did t h e S t a t e b r e a c h i t s w a r r a n t y of a c c u r a c y and s u f f i c i e n c y of i t s p l a n s and s p e c i f i c a t i o n s ; were t h e r e " d i f f e r i n g s i t e conditions"; i f so, d i d t h e S t a t e breach t h e c o n t r a c t by f a i l i n g t o pay t h e r e f o r ? W e n o t e f i r s t t h a t i t i s amazing t h a t t h i s p o i n t i s r a i s e d by t h e S t a t e , f o r h e r e t h e e v i d e n c e i n d i c a t e s t h a t t h e S t a t e unreasonably delayed preparing modified p l a n s f o r w e l l over a year. The C o n t r a c t i n g O f f i c e r a d m i t t e d i n h i s t e s t i m o n y t h a t it " w o u l d n ' t be u n r e a s o n a b l e " f o r p l a i n t i f f t o keep t r y i n g t o make t h e e f f e c t i v e p l a n work u n t i l it was g i v e n a w r i t t e n change o r d e r . With t h i s background, it i s s l i g h t l y amazing t h a t t h e S t a t e raises t h e p o i n t a t a l l . We n o t e f u r t h e r t h a t t h e S t a t e , i n c i t i n g Diamond v . U n i t e d S t a t e s ( 1 9 4 3 ) , 98 C t . C l . Ct.Cl. 428, and Pope v . United S t a t e s , 76 64, 97, r e l i e s on o l d c a s e s which do n o t i n v o l v e c o n t r a c t s which have e i t h e r t h e " c o n s t r u c t i v e change" o r " d i f f e r i n g s i t e c o n d i t i o n s " c l a u s e s i n them. The o n l y o t h e r c a s e c i t e d by t h e S t a t e i n s u p p o r t of t h i s i s s u e i s L.I. Waldrnan Co. v. S t a t e ( 1 9 6 0 ) , 202 N.Y.S.2d 764, and t h i s c a s e d o e s n o t even i n v o l v e t h e i s s u e h e r e which was a d e f e c t i v e design situation. Here d e f e n d a n t S t a t e a d m i t s t h e e v i d e n c e i n d i c a t e s t h a t i t s o r i g i n a l and r e v i s e d d e s i g n s p e c i f i c a t i o n s were d e f e c t i v e , s i m i l a r t o t h e c a s e s s e t f o r t h i n United S t a t e s v. S p e a r i n ( 1 9 1 8 ) , 248 U.S. 1 3 2 , 1 3 6 , 39 S.Ct. 5 9 , 63 L.ed. 166, wherein t h e Court declared: ". . . i f a c o n t r a c t o r i s bound t o b u i l d acc o r d i n g t o t h e p l a n s and s p e c i f i c a t i o n s p r e p a r e d by . t h e owner, t h e c o n t r a c t o r w i l l n o t b e r e s p o n s i b l e f o r t h e consequences of d e f e c t s i n the plans o r specifications T h i s respons i b i l i t y of t h e owner i s n o t overcome by t h e usual clauses requiring builders t o v i s i t the s i t e , t o check t h e p l a n s , and t o i n f o r m themselves of t h e r e q u i r e m e n t s of t h e work (Citations omitted. ) . .. . . ." We find sufficient evidence under any one of several theories to support the findings of the jury for plaintiff on this issue. Issue 8 Did the ~istrictCourt err by admitting plaintiff's Exhibit Nos. 119, 131, and 141 in evidence? Principally the State argues that the exhibits were improperly admitted over the State's continuing objections, citing section 93-401-12, R.C.M. 1947, which provides: "There can be no evidence of the contents of a writing, other than the writing itself, except in the following cases: "5. When the original consists of numerous accounts or other documents, which cannot be examined in court without great loss of time, and the evidence sought from them is only the general result of the whole." The State continues to argue that Rule 1006, Mont.R.Evid., has superseded this section since the date of trial. However, since that rule does not purport to change existing law, an examination of Rule 1006 would provide some insight into section 93-401-12 (5) . Rule 1006 provides: "The contents of voluminous writings, recordings, or photographs which cannot conveniently be examined in court may be presented in the form of a chart, summary, or calculation. The originals, or duplicates, shall be made available for examination or copying, or both, by other parties at a reasonable time and place. The court may order that they be produced in court." Considering the above the State argues that it has always been recognized that summaries may be based on documents which are themselves competent as evidence and which are made accessible to the opposing party so that the correctness of the summary may be tested on cross-examination. ~ c ~ o l l u m 0 ' ~ e i l(19541, 128 Mont. 584, 281 P.2d 493; v. State v. Keneally (1963), 142 Mont. 256, 384 P.2d 770; 29 Am.Jur.2d Evidence S458. The three exhibits objected to, Nos. 119, 131, and 141, are preliminary and final cost reports setting forth the job costs of the project, including detailed unit costs of material, labor, and equipment attributable to each bid item or work item for the project. Exhibit 131 was the 22nd edition of a book published by the Associated Equipment Distributors listing types of construction equipment and their respective average rental rates. This book is recog- nized by the construction industry as one of the standard works for equipment rental rates and is also accepted as a guide by federal and state agencies in showing the cost of various types of equipment. The evidence indicated that plaintiff maintained the records of all of the actual equipment ownership costs on the company-wide, annual construction basis. Such records and supporting documentation were made available prior to and during trial for inspection and examination by defendant. Specific equipment, type of work performed, and the period of time each worked on the project were included. Further, it was indicated that it was not the company's policy to prepare individual records of the equipment ownership cost for each specific item of equipment because it was not economically feasible or practical to make such record. To determine the equipment ownership costs for each project, the company developed a certain procedure and criteria, based on its experience and knowledge, for properly allocating total equipment membership costs uniformly among each of its jobs. This procedure was used on the ~idneyjob, and Mr. lander, the cost accountant for plaintiff, determined that the proper equipment membership costs for each item of equipment was equal to 8 0 percent of the A.E.D. rate listed in Exhibit 131. The above method, as testified to by Mr. Olander, was not represented nor used as the actual equipment ownership cost rates, but rather as a method to aid in analyzing the relative and comparative values of the various items of equipment. For instance, the A.E.D. book did not list trucks, and Mr. Olander calculated the fair rental rate based on his construction knowledge and experience and applied an 8 0 percent factor to this rate to be consistent with the company's procedure and criteria. In determining the factor as 8 0 percent A.E.D. rate, Mr. Olander testified that he then applied this factor to the hours worked by each item of equipment on the Sidney project to obtain the proper allocations of equipment ownership costs to the project. This procedure and this criteria have been used by plaintiff as a regular practice for many years prior to, during, and after the Sidney project and has proven satisfactory in the company's operation. As previously noted, the State argues that the cost reports are summaries reflecting total equipment hours on all plaintiff's projects, but the records of such total equipment hours were no longer available. However, the records show that these cost reports are summaries of the total equipment hours "on the Sidney project only", not on all projects, as argued by the State. The Sidney equipment time reports were available to the State. The jury accepted the testimony of Mr. Olander and gave credibility to the policy of the company and the procedures it used in allo- cating the equipment ownership costs. Therefore, we find defendant's argument and citations not applicable and the exhibits properly admitted. Issue 9 Did the District Court err by refusing to admit defendant's exhibit 555 in evidence? In support of its position plaintiff cites Shechter v. Brewer (Mo. 1961), 344 S.W.2d 784, 789, where the court was faced with a very similar situation. There the court of appeals ruled that no error had been committed by the court in not allowing such an exhibit to be put in, noting: "Whether the claim was contradictory would depend upon (1) an interpretation of the Federal tax laws and regulations, and (2) the understanding placed upon those laws and regulations by Nathan Shecter . . it is apparent that if the trial court had permitted the jury to be informed of the claim, an entire new controversy then arose . . .. "The law has wisely invested the trial court the discretion to deal with these situations. 'If evidence pertaining to collateral matters brings into the case a new controversial matter which would result in confusion of the issues, constitute unfair surprise or cause prejudice wholly disproportionate to the value and usefulness of the offered evidence, it should be excluded.' Conley v. Kaney, Mo.Sup., 250 S.W.2d 350, 353; Jones v. Terminal Railroad Association of St. Louis, Mo.Sup., 242 S.W.2d 473; McComb v. Vaughan, 358 Mo. 915, 218 S.W.2d 548; Wigmore, Evidence, p. 458." Here, defendant State had the opportunity to review Sornsin's daily time sheets and payroll records for the project, and to cross-examine the plaintiff and its witnesses regarding these documents. We find it was unneces- sary and would have been improper to have admitted Exhibit 555 which would have brought controversial matters into the case and could have resulted in the confusion of issues and caused prejudice to the case. I s s u e 10 T h i s i s s u e i s d i r e c t e d t o whether t h e v e r d i c t and t h e judgment a r e s u p p o r t e d by t h e e v i d e n c e . A s set f o r t h i n t h e d i s c u s s i o n of t h e above n i n e i s s u e s c o n s i d e r e d by t h i s C o u r t , w e s u s t a i n t h e f i n d i n g s of t h e j u r y and t h e judgment on a l l i s s u e s w i t h t h e e x c e p t i o n of t h e f o u r t h i s s u e which r e l a t e s t o t h e r i p r a p , a n i t e m amounting t o $21,295. The judgment of t h e t r i a l c o u r t i s a f f i r m e d w i t h t h e o n e e x c e p t i o n , and t h e m a t t e r i s remanded t o t h e t r i a l c o u r t f o r c o r r e c t i o n and compliance w i t h t h i s o p i n i o n . plaintiff. W Concur: e u Costs t o

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