A-G-E Corp. v. State, No. 23978.

CourtSupreme Court of South Dakota
Writing for the CourtGilbertson
Citation2006 SD 66,719 N.W.2d 780
PartiesA-G-E CORPORATION, a South Dakota Corporation, Plaintiff and Appellant, v. The STATE of South Dakota, by and through the State Department Of Transportation, a state agency, Defendant and Appellee.
Decision Date19 July 2006
Docket NumberNo. 23978.
719 N.W.2d 780
2006 SD 66
A-G-E CORPORATION, a South Dakota Corporation, Plaintiff and Appellant,
v.
The STATE of South Dakota, by and through the State Department Of Transportation, a state agency, Defendant and Appellee.
No. 23978.
Supreme Court of South Dakota.
Considered On Briefs May 23, 2006.
Decided July 19, 2006.
Rehearing Denied August 16, 2006.

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COPYRIGHT MATERIAL OMITTED

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Ronald G. Schmidt of Schmidt, Schroyer, Moreno Lee & Bachand PC, Rapid

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City, South Dakota, Attorneys for plaintiff and appellant.

Lawrence E. Long, Attorney General, William J. Nevin, Assistant Attorney General, Pierre, South Dakota, Attorneys for defendant and appellee.

GILBERTSON, Chief Justice.


[¶ 1.] A-G-E Corporation (A-G-E) entered into a road construction contract with the South Dakota State Department of Transportation (DOT) on a portion of U.S. Highway 83. DOT inspectors randomly spot inspected A-G-E's work after each layer of the road work was completed, and gave verbal approval for each subsequent level to be applied. While the final layer was being applied, the state engineer determined that the elevation and slope of the roadway was off between the randomly inspected locations and required A-G-E to tear off the layers and re-grade to contract specifications. A-G-E brought suit against DOT claiming waiver or estoppel precluded DOT from requiring A-G-E to perform additional work to correct the elevation and slope, as DOT's employees had verbally approved the application of subsequent layers after randomly spot inspecting the work. A-G-E also claimed the work was "extra work," or in the alternative "alterations," under the terms of the contract for which A-G-E should have received additional compensation. On competing motions for summary judgment, the circuit court held for DOT. We affirm.

FACTS AND PROCEDURE

[¶ 2.] On May 6, 2003, A-G-E submitted a sealed bid to DOT for grading, structures and part asphalt course for 11.065 miles of U.S. Highway 83 in Stanley County, South Dakota. A-G-E was awarded the contract as the low bidder. The contract was subject to the Standard Specifications for Roads and Bridges, 1998 Edition (hereinafter SSRB), published by DOT, except for section 5.8, which was modified by a "Special Contract Provision for Contractor's Staking."1

[¶ 3.] Per the provisions of the contract, A-G-E conducted the surveying and setting of blue-top grading stakes (blue-tops)2 at 100 foot intervals, using DOT's specifications for the required slope and grade. The grading portion of the project required A-G-E to 1) prepare the sub-grade (dirt), 2) lay the sub-base (salvage material) to support the base course, 3) place the base course on the sub-base, and 4) place oil on top of the base course.

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Each layer was staked with blue-tops in order to achieve the correct slope, grade and depth of material per the provisions of the contract. The last layer required was an asphalt surface course, which was subcontracted by A-G-E with DOT approval.

[¶ 4.] The quantity of material necessary for each layer of the project was calculated based on the length, width, slope and desired grade elevation of the roadbed. A spreadsheet was used to determine the spread rate and was then included in the construction plans. DOT checkers reviewed the scale ticket of each A-G-E truck that brought material to the site, referred to the spread rate for the specific portion of the roadbed involved, and then directed the truck driver to dump the material over the prescribed length.

[¶ 5.] A-G-E was then responsible for equalizing the material in a windrow and then uniformly blading the material out to the required grade elevation and slope. The process was repeated for each truckload of material and for each layer of the project. A-G-E maintained its own checkers and inspectors on site during the project. However, the record does not indicate their function or what actions they took during the project.

[¶ 6.] After each layer was constructed, the state inspector assigned to the project checked the grade elevation and slope at randomly selected blue-tops. At each randomly selected blue-top that was inspected, the layers were found to be within the contract specifications. After each layer was inspected, the inspector verbally communicated to A-G-E an "okay" to proceed with the next layer. Once the first three layers were constructed, A-G-E placed the oil on top of the base course and DOT issued written consent for the subcontractor to begin applying the final layer of asphalt surface.

[¶ 7.] The contract required the asphalt surfacing to be one to one and one-half inches in depth. Shortly after the asphalt layer was started, it was discovered that a substantially irregular depth of asphalt was being laid down by the paving subcontractor with up to five inches of asphalt being laid in some spots in order to achieve the proper grade and slope. It was subsequently discovered that the grade and slope between the 100-foot blue-tops along approximately the first two miles of roadway did not comply with the contract specifications.

[¶ 8.] A-G-E was then directed by the DOT engineer to rework the material between the 100-foot blue-tops along the two miles of roadway in order to bring the grade and slope in those areas into compliance with the contract specifications. A-G-E determined the manner in which to conduct the re-grading based on its experience, equipment and staffing. A-G-E hauled some excess gravel off site, stockpiled it and then brought the same gravel back onto the site to fill in low spots, and then re-graded the materials.

[¶ 9.] The quantity of materials used was neither increased nor decreased by DOT during the re-grading process. Nor did DOT alter the grade or alignment of the road from that shown in the original plans. At its own expense, DOT placed additional blue-tops every fifty feet longitudinally and every twelve feet across the width of the roadway to guide A-G-E's corrective work.

[¶ 10.] A-G-E filed suit in circuit court claiming $45,517.50 in damages. A-G-E alleged in its complaint that the expenses were incurred as a result of DOT's direction to remove excess gravel from high spots and fill low spots. A-G-E alleged that DOT waived its rights under the contract to a final inspection by virtue of conducting the random blue-top inspections

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of each layer and giving a verbal "okay" to proceed with the next layer. A-G-E also alleged that the work required to regrade the first four layers of the two-mile segment in question was "extra work," or alternatively "alterations," within the meaning of the DOT contract.

[¶ 11.] After DOT filed its answer, the depositions of Rick Gordon, engineering supervisor for DOT; Mark Peppel, the DOT project engineer who was supervised by Gordon; Rodney Larson, DOT senior transportation technician on the project, and Gary Johnson, president of A-G-E, were taken. A-G-E then moved for summary judgment, and DOT filed a cross-motion for summary judgment. On December 20, 2005, oral arguments were presented to the circuit court. The circuit court entered an order granting DOT's motion and judgment of dismissal on January 4, 2006.

[¶ 12.] On appeal, A-G-E raises two issues for this Court's review:

1. Whether the circuit court erred when it denied A-G-E's motion and granted DOT's motion for summary judgment.

2. Whether disputed material facts exist that require a reversal of the circuit court's order granting DOT's motion for summary judgment and a remand for trial on the matter.

We will address the issues in reverse order, as issue two is a threshold issue that determines whether the matter was appropriate for disposition via a motion for summary judgment.

STANDARD OF REVIEW

[¶ 13.] Summary judgment is properly granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." SDCL 15-6-56(c). We will affirm the trial court's grant or denial of a motion for summary judgment when no genuine issues of material fact exist, and the legal questions have been correctly decided. Titus v. Chapman, 2004 SD 106, ¶ 13, 687 N.W.2d 918, 923 (citing Holzer v. Dakota Speedway, 2000 SD 65, ¶ 8, 610 N.W.2d 787, 791 (citing Bego v. Gordon, 407 N.W.2d 801, 804 (S.D.1987))). We review the circuit court's conclusions of law under the de novo standard. Id. (citing Sherburn v. Patterson Farms, Inc., 1999 SD 47, ¶ 4, 593 N.W.2d 414, 419 (citing City of Colton v. Schwebach, 1997 SD 4, 8, 557 N.W2d 769, 771)). However, we view all evidence and favorable inferences from that evidence in a light most favorable to the nonmoving party. Id. (citing Morgan v. Baldwin, 450 N.W2d 783, 785 (S.D. 1990)). We will affirm the circuit court on summary judgment if it is correct for any reason. Westfield Ins. Co., Inc. v. Rowe, 2001 SD 87, ¶ 4, 631 N.W.2d 175, 176 (citing Estate of Juhnke v. Marquardt, 2001 SD 26, ¶ 5, 623 N.W.2d 731, 732).

[¶ 14.] In order to prevail on a motion for summary judgment, the nonmoving party "must present specific facts showing that a genuine, material issue for trial exists." Stoebner v. South Dakota Farm Bureau Mut. Ins. Co., 1999 SD 106, ¶ 6, 598 N.W.2d 557, 558 (quoting Weiss v. Van Norman, 1997 SD 40, ¶ 9, 562 N.W.2d 113, 115) (citations omitted). "A disputed fact is not `material' unless it would affect the outcome of the suit under the governing substantive law in that a `reasonable jury could return a verdict for the nonmoving party.'" South Dakota State Cement Plant Comm'n. v. Wausau Underwriters Ins. Co., 2000 SD 116, ¶ 9, 616 N.W.2d 397, 401 (quoting Weiss, 1997 SD 40, ¶ 11, n. 2, 562 N.W.2d at 116 n. 2 (quoting Parsons v. Dacy, 502 N.W.2d 108, 110 (S.D.1993)

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(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505,...

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24 practice notes
  • Wilcox v. VERMEULEN, No. 25144.
    • United States
    • Supreme Court of South Dakota
    • 31 March 2010
    ...that would make it inequitable to allow the guilty party to claim what would otherwise be his legal rights. A-G-E Corp., v. State, 2006 SD 66, ¶ 32, 719 N.W.2d 780, 789 (quoting Western Cas. and Sur. Co. v. Am. Natl. Fire Ins. Co., 318 N.W.2d 126, 128 (S.D.1982) (quoting Somers v. Somers, 2......
  • Discover Bank v. Stanley, No. 24822.
    • United States
    • Supreme Court of South Dakota
    • 12 November 2008
    ...be no material facts at issue, and there must "be no genuine issue on the inferences to be drawn from those facts." A-G-E Corp. v. State, 2006 SD 66, ¶ 17, 719 N.W.2d 780, 786 (citations [¶ 17.] The construction of a written contract is a question of law. Campion v. Parkview Apartments, 199......
  • American Fam. Mut. Ins. v. Auto-Owners Ins., No. 24723.
    • United States
    • Supreme Court of South Dakota
    • 5 November 2008
    ...appeal, this Court can read a contract itself without any presumption in favor of the trial court's determination.'" A-G-E Corp. v. State, 2006 SD 66, ¶ 15, 719 N.W.2d 780, 786 (citations omitted). "Thus, the interpretation of a contract is a question of law, which is reviewed de novo." Id.......
  • Sazama v. State ex rel. Muilenberg, No. 23959.
    • United States
    • Supreme Court of South Dakota
    • 21 February 2007
    ...2001 SD 93, ¶ 8, 631 N.W.2d 206, 209). "We review the circuit court's conclusions of law under the de novo standard." A-G-E Corp. v. State, 2006 SD 66, ¶ 13, 719 N.W.2d 780, 785 (citations omitted). We review the circuit court's findings of fact under the clearly erroneous standard. Keller ......
  • Request a trial to view additional results
24 cases
  • Wilcox v. VERMEULEN, No. 25144.
    • United States
    • Supreme Court of South Dakota
    • 31 March 2010
    ...that would make it inequitable to allow the guilty party to claim what would otherwise be his legal rights. A-G-E Corp., v. State, 2006 SD 66, ¶ 32, 719 N.W.2d 780, 789 (quoting Western Cas. and Sur. Co. v. Am. Natl. Fire Ins. Co., 318 N.W.2d 126, 128 (S.D.1982) (quoting Somers v. Somers, 2......
  • Discover Bank v. Stanley, No. 24822.
    • United States
    • Supreme Court of South Dakota
    • 12 November 2008
    ...be no material facts at issue, and there must "be no genuine issue on the inferences to be drawn from those facts." A-G-E Corp. v. State, 2006 SD 66, ¶ 17, 719 N.W.2d 780, 786 (citations [¶ 17.] The construction of a written contract is a question of law. Campion v. Parkview Apartments, 199......
  • American Fam. Mut. Ins. v. Auto-Owners Ins., No. 24723.
    • United States
    • Supreme Court of South Dakota
    • 5 November 2008
    ...appeal, this Court can read a contract itself without any presumption in favor of the trial court's determination.'" A-G-E Corp. v. State, 2006 SD 66, ¶ 15, 719 N.W.2d 780, 786 (citations omitted). "Thus, the interpretation of a contract is a question of law, which is reviewed de novo." Id.......
  • Sazama v. State ex rel. Muilenberg, No. 23959.
    • United States
    • Supreme Court of South Dakota
    • 21 February 2007
    ...2001 SD 93, ¶ 8, 631 N.W.2d 206, 209). "We review the circuit court's conclusions of law under the de novo standard." A-G-E Corp. v. State, 2006 SD 66, ¶ 13, 719 N.W.2d 780, 785 (citations omitted). We review the circuit court's findings of fact under the clearly erroneous standard. Keller ......
  • Request a trial to view additional results

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