Falls Sand and Gravel Co. v. Western Concrete, Inc.

• Decision Date: 06 June 1967
• Docket Number: Civ. No. 2433.
• Citation: 270 F. Supp. 495
• Parties: FALLS SAND AND GRAVEL CO., a corporation, Plaintiff, v. WESTERN CONCRETE, INC., a corporation, and George A. Fuller Company, a corporation, and Del E. Webb Corporation, a corporation, a Joint Venture, commonly known as Fuller-Webb, Defendants.
• Court: U.S. District Court — District of Montana

270 F. Supp. 495

FALLS SAND AND GRAVEL CO., a corporation, Plaintiff, v. WESTERN CONCRETE, INC., a corporation, and George A. Fuller Company, a corporation, and Del E. Webb Corporation, a corporation, a Joint Venture, commonly known as Fuller-Webb, Defendants.

Civ. No. 2433.

United States District Court D. Montana, Great Falls Division.

June 6, 1967.

COPYRIGHT MATERIAL OMITTED

Jardine, Stephenson, Blewett & Weaver, Great Falls, Mont., for plaintiff.

Alexander, Kuenning & Hall and Church, Harris, Johnson & Williams, Great Falls, Mont., for defendants.

ORDER AND MEMORANDUM OPINION

JAMESON, Chief Judge.

Plaintiff seeks damages from the joint venture of George A. Fuller Company and Del E. Webb Corporation (Fuller-Webb), which contracted with the United States to construct missile facilities, and Western Concrete, Inc., which furnished concrete for the project pursuant to an agreement with Fuller-Webb. Plaintiff supplied Western Concrete with sand, aggregate and other materials.

This action was commenced in state court on September 9, 1963, and removed to this court by reason of diversity of citizenship. Plaintiff filed its amended complaint on September 2, 1966. On September 7, 1966, defendants filed their joint motion for summary judgment pursuant to Rule 56, F.R.Civ.P., requesting that plaintiff's amended complaint be dismissed, or in the alternative, that each of the four counts be dismissed against the applicable defendant.¹ The last brief was filed May 5, 1967.

The first count of the amended complaint alleges that Fuller-Webb entered into its contract with the United States on February 28, 1961, that Western contracted with Fuller-Webb to furnish the concrete on April 14, 1961, and that Falls contracted with Western to supply sand and aggregate on or about May 1, 1961. Prior to entering into its contract with Western, Falls negotiated with Fuller-Webb and Western with regard to the aggregates to be supplied for the project, and in this connection, on March 29, 1961, Fuller-Webb furnished Falls with a production schedule and amounts of various types of concrete to be used in the project.

According to the amended complaint, from these amounts and schedule, the volume of aggregates needed could be ascertained and the times when aggregates would have to be available could be determined. Relying upon these amounts and production schedule, plaintiff computed its production costs for sand and aggregates, and determined the unit prices at which it would sell its products to Western. Falls thereafter contracted to sell Western "all of the aggregates Western may need in furnishing all of the concrete" and agreed that "the `aggregates' to be furnished hereunder by Falls shall be available to Western on a twenty-four hour a day, seven days a week basis."

It is further alleged that Fuller-Webb, in furnishing the production schedule and amounts negligently represented to plaintiff that they were accurate, which subsequently proved to be untrue, and that Fuller-Webb and Western failed to follow the projected schedule and amounts. The deviation from the schedule and from any uniform demand resulted in plaintiff's spasmodic operations and attendant increased costs, all of which damaged plaintiff in the amount of $102,785.59.

The second count repleads the preliminary allegations of the first count and alleges that on March 29, 1961, in addition to the production schedule and amounts, Fuller-Webb furnished plaintiff with a "mix design" which showed the percentage of sand needed in the total aggregate. Relying upon the schedule and mix design, Falls computed its unit price for concrete sand at $1.20 per ton. Fuller-Webb negligently represented that the mix design was accurate, but in fact did not follow it both as to the total amount of concrete sand demanded and as to the percentage of concrete sand per cubic yard of concrete. The resulting demand for excess sand damaged plaintiff in the amount of $63,644.91.

Count three alleges that the agreement between Falls and Western provides that, "In the event that at any time it becomes necessary to heat the aggregates, a price adjustment will be negotiated between the parties to reflect the reasonable cost of such heating." Negotiations were conducted with Fuller-Webb and Western under this clause, and the defendants represented to Falls that the aggregates would have to be heated or dried so that their moisture content would not exceed two percent. Relying upon this figure, plaintiff computed its charges for heating or drying and negotiated a price adjustment with Western at a certain price per ton. However, Fuller-Webb and Western thereafter required that the aggregates be heated or dried so that the moisture content would be no more than one-half of one percent. Since Western would not accept aggregates with greater moisture content than .5%, Falls incurred extra expense in further drying them to its damage of $37,122.15.

Count four substantially realleges the first count with regard to the production schedule, amounts, and plaintiff's reliance thereon, but specifically alleges that the quantity of Intrusion Prepakt required by defendants did not correspond to the amount calculated using the schedule and amounts furnished by Fuller-Webb. As a result, plaintiff was required to produce in excess of its projected demand which damaged plaintiff in the amount of $7,838.92.

Following the prayer of the amended complaint it is stated that, "If Plaintiff recovers under the First Count, its claim under the Second Count would be reduced by 27.8¢ per ton and its claim in the Third Count would be reduced by 10¢ per ton. The Fourth Count is an alternative to the First Count."

As noted supra (note 1), the court also has under consideration an action instituted by plaintiff against Fuller-Webb and its sureties under the Miller Act. Counsel have stipulated that the court may consider in this case statements submitted by plaintiff to Western between June 15, 1961, and August 30, 1962, covering materials supplied by plaintiff during that period. None of these statements make any reference to the claims asserted in this action.²

Defendants have moved for summary judgment on the grounds of (1) election of remedies, (2) waiver of the misrepresentation by affirmance of the contract, and (3) the statute of limitations.

Summary judgment of course is proper only where there is no genuine issue of fact or where viewing the evidence and the inferences which may be drawn therefrom in the light most favorable to the adverse party, the movant is clearly entitled to prevail as a matter of law. All doubts as to the existence of a genuine issue as to any material fact must be resolved against the moving party. An issue of fact may arise from countering inferences which are permissible from evidence accepted as true. The court may not weigh evidence or resolve issues in determining a motion for summary judgment.³

On the other hand, Rule 56(e), F.R.Civ. P., as amended in 1963, provides that in opposition to a motion for summary judgment an adverse party "may not rest upon the mere allegations or denials of his pleading" but must by affidavit or otherwise "set forth specific facts showing that there is a genuine issue for trial."⁴

With these guiding principles in mind, we turn to a consideration of defendants' motion. The first, second and fourth counts of plaintiff's amended complaint are interrelated and relate primarily to the actions of Fuller-Webb which allegedly resulted in damages to plaintiff and are based upon the theory of negligent misrepresentation. The third count relates to the winter operations where a price adjustment was negotiated pursuant to plaintiff's agreement with Western, and for which plaintiff seeks to recover the "reasonable value" of the materials supplied.⁵ Accordingly, counts one, two and four will be considered together, and count three will be considered separately.

NEGLIGENT MISREPRESENTATION (Counts 1, 2 & 4).

The issue here is whether Falls, which contracted directly with Western, has a claim for relief against Fuller-Webb, which had previously contracted with Western to supply the concrete. Negligent misrepresentation has been defined as "a false statement made by one who has no reasonable grounds for believing it to be true, although he does not know that it is untrue, or even believes it to be true." Black's Law Dictionary; Mid-Central Fish Co. v. United States, W.D.Mo.1953, 112 F.Supp. 792, 799. The general rule, as stated in 65 C.J.S. Negligence § 20, p. 642 ff. is that:

"A false statement negligently made may be the basis of a recovery of damages for injury or loss sustained in consequence of reliance thereon. * * * In order that such liability may exist, it is necessary that the relationship of the parties, arising out of contract or otherwise, be such that one has the right to rely on the other for information, that the one giving the information should owe to the other a duty to give it with care, that the person giving the information should have, or be chargeable with, knowledge that the information is desired for a serious purpose, that the person to whom such information is given intends to rely and act on it, that, if the information given is erroneous, the person to whom it is given will be likely to be injured in person or in property as a result of acting thereon, and that the complaining party is injured by the erroneous information." (footnotes omitted).

This action has specific applicability to business transactions.⁶

(1) Election of Remedies

Defendants contend that plaintiff has elected its remedy by bringing action on the contract under the Miller Act. It is clear that in Montana, and generally, a party may not pursue both an action for recission and damages for deceit or misrepresentation. Fraser v. Clark, 1960, 137 Mont. 362, 376, 352 P.2d 681 and cases there cited. On the other hand, it is universally held that an action on the...