Lamb Plumbing & Heating Co. v. Kraus-Anderson

• Decision Date: 29 August 1980
• Docket Number: No. 50411.,50411.
• Citation: 296 NW 2d 859
• Parties: LAMB PLUMBING & HEATING CO., Respondent, v. KRAUS-ANDERSON OF MINNEAPOLIS, INC., Appellant.
• Court: Minnesota Supreme Court

296 N.W.2d 859 (1980)

LAMB PLUMBING & HEATING CO., Respondent, v. KRAUS-ANDERSON OF MINNEAPOLIS, INC., Appellant.

No. 50411.

Supreme Court of Minnesota.

August 29, 1980.

Dorsey, Windhorst, Hannaford, Whitney & Halladay and Steven K. Champlin, Minneapolis, for appellant.

Robins, Davis & Lyons, Stanley E. Karon, and Maury S. Landsman, St. Paul, for respondent.

Heard before OTIS, PETERSON, and SCOTT, and considered and decided by the court en banc.

SCOTT, Justice.

Plaintiff Lamb Plumbing & Heating Co. (Lamb) brought this action against Kraus-Anderson of Minneapolis, Inc. (Kraus-Anderson) to recover the value of certain work done on a wastewater treatment construction project. The matter was tried in Hennepin County District Court without a jury. The trial court ordered judgment for plaintiff. Defendant appeals from the trial court's order denying its motion for a new trial or for amended findings. We affirm.

In June, 1974, the Metropolitan Sewer Board began advertising for competitive bids on a public contract to construct a wastewater pretreatment facility at its Pig's Eye site (the facility is designated as Project 71-06). The contract documents were prepared by Toltz, King, Duvall, Anderson and Associates, Inc. These documents include a specifications book, general conditions, plans, drawings, and schedules. The contract was to be awarded to a single prime contractor. Contract bids were due on August 13, 1974.

Defendant Kraus-Anderson decided that it would present a bid as prime contractor for the project, doing 40% of the construction itself and subcontracting the rest. Kraus-Anderson obtained plans and specifications for the project three or four weeks prior to the bid date. At approximately the same time, plaintiff Lamb also obtained the plans and decided to bid for a subcontract for mechanical work, set out in Division 15 of the contract. Lamb submitted bids for the mechanical work to various potential prime contractors, and Kraus-Anderson in turn solicited bids from subcontractors for various portions of the project, including the mechanical work. Several witnesses testified that the submission and acceptance of subcontracting bids for a large project such as this one is a last-minute, hectic affair, as the contractors compete for the best price. Lamb bid for the mechanical work with Kraus-Anderson shortly before Kraus-Anderson's general bid was due, on August 13. Kraus-Anderson accepted Lamb's bid, and was awarded the prime contract for $13,048,989. Within a few months, this dispute arose between Lamb and Kraus-Anderson as to whether certain valves and wall pipes or fittings were to be provided by the mechanical subcontractor or the force main subcontractor. Neither party wished to delay the project because of the dispute, and therefore plaintiff and defendant executed a subcontract for performance of the mechanical work, including the disputed items, and agreed that the dispute would be resolved later. The parties stipulated that the value of the disputed work was $96,401.84.

Project 71-06 was designed to provide additional sewage treatment capacity at the Pig's Eye facility in St. Paul. The sewage was to be partially treated at a South St. Paul plant, and then transferred to Pig's Eye by means of a 48-inch diameter force main pipe. At the Pig's Eye site, the force main pipe was to take the sewage through a concrete wall into a meter vault located underground (used to measure the volume of sewage), out of the vault through a concrete wall, and then through a third wall into a valve pit. The valve pit, also located underground, was to contain two 48-inch gate valves. These gate valves could be used to direct the flow of sewage into a large main facility (constructed as part of the same project) or into an adjacent facility.

The mechanical subcontract for Project 71-06 required plaintiff to do work inside the various structures. The force main subcontractor, J. & T. Contractors, was responsible for the construction of the force main pipe. The dispute in this case between plaintiff and Kraus-Anderson involves the question of whether the mechanical subcontractor (plaintiff) or the force main subcontractor was required by the contract to provide the two 48-inch gate valves located within the valve pit and the five wall pipes or wall fittings needed to carry the force main pipe in and out of the meter vault and the valve pit. Plaintiff contends that these items are included under Division 2 of the contract specifications and not under Division 15, the mechanical division for which it bid. The problem arises because the valves and wall fittings are referred to in both divisions of the contract and drawings, and their locations and functions are such that they could logically be included under either subcontract.

The trial court concluded that Kraus-Anderson, but not plaintiff, was aware of the potential conflict in subcontracts prior to the time that it accepted plaintiff's bid for the mechanical work. The trial court found that Mr. Simpkins, the project manager for Kraus-Anderson, had a conversation with Mr. Frost of J. & T. Contractors (the force main subcontractor) one day before the prime bid was due, during which Frost told Simpkins that he was confused about who should provide the valves and wall fittings. Frost advised Simpkins that he was excluding them from his bid because someone at the engineering office told him that the disputed items were under the mechanical section. The mechanical bidders on Simpkins' list of specification holders were told that they should include the disputed items in their bid, but plaintiff was not on this list. The trial court found that plaintiff was not told about this decision and was not aware of any ambiguity in the contract as to the disputed items. According to plaintiff's interpretation of the contract, the disputed items were to be supplied by the force main subcontractor; therefore, plaintiff did not include these items in its bid calculations. Kraus-Anderson did not mention the disputed items to plaintiff when it accepted plaintiff's bid.

The trial court concluded that the contract was not ambiguous as to which subcontractor should supply the 48-inch gate valves, and that the force main subcontractor was responsible for them. The trial court held that the contract was ambiguous as to who was to provide the five wall fittings. Without resolving the ambiguity, the court found that plaintiff did not believe that there was an ambiguity, that plaintiff's analysis of the contract was reasonable, and that Kraus-Anderson was aware of the potential conflict. The trial court therefore concluded that because Kraus-Anderson failed to clear up a known potential conflict plaintiff should not be held responsible for providing the wall fittings.

1. Defendant Kraus-Anderson challenged several aspects of the trial court's

decision. Defendant contends that the contract provisions are not ambiguous as to either the gate valves or the wall fittings, and that the contract clearly requires the mechanical subcontractor to provide all of them. Defendant argues in the alternative that if the contract is ambiguous, a new trial is required to properly weigh all the factors which should be considered in resolving an ambiguity.

A contract is ambiguous if it is susceptible to more than one interpretation based on its language alone. See, Metro Office Parks Co. v. Control Data Corp., 295 Minn. 348, 205 N.W.2d 121 (1973); Telex Corp. v. Data Products Corp., 271 Minn. 288, 135 N.W.2d 681 (1965). The initial question of whether a contract is ambiguous is a question of law to be decided by the trial court, and therefore this court on appeal is not bound by the trial court's determination. Otten v. Stonewall Insurance Co., 511 F.2d 143, 147 (8th Cir. 1975), appeal after remand, 538 F.2d 210 (1976); Employers Liability Assurance Corp. v. Morse, 261 Minn. 259, 263-64, 111 N.W.2d 620, 624 (1961); Noreen v. Park Construction Co., 255 Minn. 187, 190-91, 96 N.W.2d 33, 36 (1959).

We conclude that the contract in question is ambiguous as to who is to supply both the 48-inch valves and the wall fittings. Although the trial court determined that the contract does not include the 48-inch valves in the mechanical work, there is enough support in the contract documents for the contrary position to create an ambiguity. In support of the position that the valves are to provided under Division 2, the force main division, plaintiff and the trial court note the following: the 48-inch valves are described in much greater detail in Division 2, § 02554, ¶ 6, than in Division 15, § 15120, ¶ 4.¹ Although both paragraphs are directional and mandatory in tone, the greater specificity in Division 2 suggests that the subcontractor for Division 2 is expected to provide the valves. Moreover, the Division 2 description is cross-referenced to Division 15 and the general specifications for all valves contained therein. In addition, viewing the contract as a whole, most of plaintiff's work is "inside work," to be performed within the main facility of Project 71-06. The contract describes mechanical work to be done outside this facility with particularity; the reference to the 48-inch valves in § 15120, ¶ 4, is especially vague when compared to the directions for other mechanical work to be done by plaintiff outside of the main facility. Finally, both the bid proposal in the specifications book and the shop drawing list the 48-inch valves under § 02554.

Defendant, on the other hand, points out that § 15120, ¶ 2, entitled "Scope," includes the furnishing and installation of "all valves and related operating devices." Section 15120, ¶ 4, does in fact describe the 48-inch valves, in addition to many other valves that plaintiff is expected to provide. Plaintiff's mechanical subcontract includes the piping and other equipment within the valve pit, and it seems more logical for plaintiff to provide all of the...