Hawthorne v. Kober Const. Co., Inc.
| Citation | 196 Mont. 519,640 P.2d 467 |
| Decision Date | 11 February 1982 |
| Docket Number | No. 81-159,81-159 |
| Parties | Glenn HAWTHORNE, d/b/a Hawthorne Steel et al., Plaintiff and Appellant, v. KOBER CONSTRUCTION COMPANY, INC., et al., Defendant and Respondent. |
| Court | Montana Supreme Court |
Jardine, Stephenson, Blewett & Weaver, Great Falls, Jack Lewis argued, Great Falls, for plaintiff and appellant.
Crowley, Haughey, Hanson, Toole & Dietrich, Cynthia Ford argued, Anderson, Brown, Gerbase, Cebull & Jones, P. C., Billings, for defendant and respondent.
This action was instituted by Glenn Hawthorne, d/b/a Hawthorne Steel (Hawthorne), against the prime contractor Kober Construction Co., Inc. (Kober) and against Pittsburgh-Des Moines Steel Company (PDM), a steel supplier. The trial court entered partial summary judgment against Hawthorne and in favor of PDM. Hawthorne appeals following certification by the trial court that the order was an appealable one.
Kober contracted to build the Metra building in Billings, Montana, and on January 2, 1974, entered into a contract with PDM by which PDM agreed to furnish steel for the construction of the building. On January 11, 1974, Kober entered into a subcontract with Hawthorne by which Hawthorne agreed to erect the steel.
On March 25, 1974, Hawthorne and his son, Jack, met with officials of PDM in Des Moines, Iowa, to discuss arrangements for the delivery of steel. A delivery date for the steel was not specifically discussed at this meeting, but a delivery date of May 1, 1974, had been discussed between the parties on prior occasions. Hawthorne, by affidavit, stated that he mobilized his employees to commence erection of structural steel in June, 1974.
On March 4, 1974, PDM had received a directive from the United States Government to ship steel to the government on or before April 17, 1974. The contract existing between PDM and the United States for the delivery of steel pre-existed the contract between Kober and Hawthorne. Hawthorne was not told of the contract's existence.
PDM did not deliver steel in May or June of 1974, and on August 9, 1974, PDM acknowledged by letter to Kober Construction that it was having schedule problems in meeting its commitments to customers because of the directive it had received from the United States Government on March 4, 1974. Apparently Kober did not transmit this information to Hawthorne. It was not until the latter part of October, 1974, that Hawthorne received any shipments and then, according to Hawthorne, it did not receive the steel shipments in the sequence promised by PDM.
On June 2, 1975, Hawthorne attended a meeting in Billings, at which PDM's representative was in attendance. At this time, Hawthorne was shown the directive from the United States Government issued to PDM. Hawthorne's affidavit, which for purposes of summary judgment, would have to be taken as true, provided:
"At no time during our meeting with Mr. Davis in March, 1974, did he make any mention of the directive letter from the U.S. Department of Commerce; at no time was I or anyone in my business advised of the directive letter from the U.S. Department of Commerce until the meeting I attended with Mr. Davis in Billings, Montana, on or about June 2, 1975."
By way of complaint filed in the District Court, Hawthorne alleged that the delay in delivery of steel caused him to be unable to finish his work until about January of 1976. He alleged that as a consequence of the delay sustained, he suffered financial losses.
PDM did not dispute that it failed to deliver steel. PDM alleged that it had no contractual relationship with Hawthorne and because of the lack of privity, Hawthorne could not maintain an action against PDM. The trial court agreed and partial summary judgment in favor of PDM resulted.
The following issues are presented on appeal:
(1) Can Hawthorne maintain an action against PDM based upon negligence?
(2) If privity of contract is required, did Hawthorne have privity with PDM on the basis of their interaction?
(3) Can Hawthorne prevail on the basis of implied or quasi-contract?
(4) Is the action barred by the statute of limitations?
We hold that privity of contract is not required to maintain an action grounded in negligence. Therefore, we need not discuss a contention that privity existed or that this action can be maintained on the basis of implied or quasi-contract. We further find that the action is not barred by the statute of limitations.
The principle issue to be determined is whether Hawthorne can maintain an action for negligence in the performance of duties growing out of contract, where no privity of contract existed. We have examined the authorities and find a division to exist.
The California Supreme Court resolved a similar question in determining whether a contractor who undertook construction work pursuant to a contract with an owner of premises, could be held liable in tort for business losses suffered by a lessee where the lessee alleged the contractor negligently failed to complete the project with due diligence. In J'Aire Corporation v. Gregory (1979), 157 Cal.Rptr. 407, 598 P.2d 60, the California Supreme Court said:
"... Where a special relationship exists between the parties, a plaintiff may recover for loss of expected economic...
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...resulting from contractor's negligence during performance of contract with restaurant's landlord); Hawthorne v. Kober Construction Co., 196 Mont. 519, 523–24, 640 P.2d 467 (1982) (steel supplier, who had contract with general contractor, owed duty of care to subcontractor who suffered econo......
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...and the alleged tortfeasor was also emphasized in another case frequently cited for the minority view. In Hawthorne v. Kober Construction Co., 196 Mont. 519, 640 P.2d 467 (1982), the plaintiff had suffered economic losses due to a delay in the shipment of steel. The court acknowledged that ......
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