Linneman Const., Inc. v. Montana-Dakota Utilities Co., Inc.

• Decision Date: 08 November 1974
• Docket Number: MONTANA-DAKOTA,No. 73-1923,73-1923
• Citation: 504 F.2d 1365
• Parties: LINNEMAN CONSTRUCTION, INC., formerly F. H. Linneman, Inc., a Colorado corporation, and Ira James Gentle, Trustee, Appellant, v.UTILITIES CO., INC., a Delaware corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1365

504 F.2d 1365

LINNEMAN CONSTRUCTION, INC., formerly F. H. Linneman, Inc. a Colorado corporation, and Ira James Gentle Trustee, Appellant, v. MONTANA-DAKOTA UTILITIES CO., INC., a Delaware corporation, Appellee.

No. 73-1923.

United States Court of Appeals, Eighth Circuit.

Submitted Sept. 12, 1974.

Decided Nov. 8, 1974.

Holmes Baldridge, Denver, Colo., for plaintiff-appellant.

William P. Pearce, Bismarck, N.D., for defendant-appellee.

Before GIBSON, Chief Judge, BRIGHT, Circuit Judge, and SMITH, Senior District Judge. ^*

GIBSON, Chief Judge.

Linneman Construction, Inc., ¹ brought this diversity action against Montana-Dakota Utilities Co., Inc., for monies allegedly due under a written contract for extra work' involved in the construction of gas distribution and service lines in six North Dakota towns. Linneman's complaint sought recovery for three claims: (1) failure to pay contract unit price for installation of mains and service line footage that were power tamped and for some 'boring' and 'rock removal'; (2) location of gas mains behind the curb rather than in streets and alleys; and (3) installation of additional service lines. The jury returned a verdict against Linneman on claims (1) and (3). The District Court, ² however, foreclosed plaintiff from introducing all its evidence regarding the second claim, the laying of mains behind the curb, and directed a verdict on that claim for defendant. This order of the District Court, as well as the subsequent taxation of costs against Linneman, is asserted as error on this appeal. No appeal was taken on claims (1) and (3).

Linneman is a Colorado corporation engaged in the construction of gas, water, telephone and electric lines. Montana-Dakota is a Delaware corporation and a regulated public utility engaged in supplying gas and electric service in North Dakota, South Dakota, Montana, and Wyoming, and gas service only in Minnesota. As part of Montana-Dakota's 'Progress 70' plan to extend its gas service in North Dakota to an additional 12 towns, defendant issued invitations to bidders in February, 1970, inviting bids for the construction of gas distribution lines and service lines in the 12 towns. Bidders were allowed to bid on all 12 towns, or on the six steel towns or six plastic towns only. ³

Provided to the bidders was a list of estimated total pipe footages to be laid and an estimate of the number of service lines to be installed, a copy of the proposed contract and specifications, and maps of each town showing where the distribution mains were to be located within each town. The specifications and the maps were expressly made a part of the contract to the extent not inconsistent with the contract provisions. Linneman's bid for the six steel towns was accepted by Montana-Dakota and the contract was signed March 16, 1970.

Linneman began construction of the gas distribution systems May 5, 1970, in Jamestown, North Dakota. During the course of construction of the project, completed in November, 1970, in excess of 766,000 feet of gas mains were laid in the six towns. All of the footage laid was paid for at the unit price specified in the contract for the laying of mains. The present dispute arises from a demand for payment by Linneman of an additional $460,000 above the contract price for the laying of gas distribution mains outside the paved portion of the streets. The above amount is based upon Linneman's computation of the cost of laying some 160,145 feet of mains behind the curb, plus 15 percent for profit and overhead as called for by the 'extras' clause of the contract. ⁴

In the alternative Linneman asserts a right to quantum meruit or implied contract recovery. We reject at the outset the quantum meruit theory advanced by Linneman as without any foundation in the record. It is clear that the laying of distribution mains behind the curbs is governed by the contract between the parties, either the specific unit price provision or the 'extras' clause.

We turn to the consideration of plaintiff's claim for additional compensation under the 'extras' clause, predicated upon an alleged change in the terms and conditions of the contract respecting location of the lines. Linneman attempted to show that at the beginning of construction all the lines were being located in the paved portion of the streets where it was much faster and cheaper for Linneman to lay the mains. However, Linneman contends that after Montana-Dakota received a bid for repaving the streets in an amount much greater than it had estimated, it began moving as much of the construction as possible out of the paved portion of the street and behind the curbs in order to save itself substantial repaving costs. This saved Montana-Dakota the contract prices for cutting and removing the old pavement in addition to the cost of repaving, while increasing threefold the cost to Linneman of laying the mains behind the curbs. To further buttress its contentions that the location of mains behind the curbs was not contemplated by the contract, Linneman contends the maps attached to the contract show that the mains were to be located within the paved portion of the streets.

The District Court during trial foreclosed Linneman from offering all of its evidence in support of its claim, and directed verdict for the defendant as a matter of law. While we would have preferred the allowance of all of plaintiff's evidence on this claim, the trial court, as well as we, considered the offer of proof, and we find no error in the circumstances of this case. Construction of the contract is a matter for the court under North Dakota lwa. Anderson v. First National Bank, 6 N.D. 497, 72 N.W. 916, 920 (1897), aff'd, 172 U.S. 573, 19 S.Ct. 284, 43 L.Ed. 558 (1899). Construction of the contract reveals that plaintiff has no cause of action for the extra compensation claimed. This conclusion is necessitated upon either of two grounds.

First, even if we could accept plaintiff's theory that the laying of mains behind the curb was an extra under the contract, the clear and unambiguous terms of the 'extras' clause were not complied with. The 'extras' clause provides for a written order for any extra work performed and in addition requires claims to be submitted within 30 days of completion of the extra work. It is undisputed that no written orders were prepared, nor was any claim made until some 10 months after completion of the job. Non-compliance with this 'extras' clause bars recovery for alleged extra work performed under the contract. Goodwin, Inc. v. City of Lafayette, 418 F.2d 698, 701 (5th Cir. 1969); Alden v. Central Power Electric Cooperative, 168 F.Supp. 19, 21 (D.N.D.1958). Although waiver of the contractual requirements is possible, United States v. Henke Construction Co., 157 F.2d 13, 20-21 (8th Cir. 1946); Alden v. Central Power Electric Cooperative, supra, 168 F.Supp. at 21-22, a definite agreement to pay is required to establish a waiver. United States v. Henke Construction Co., supra, 157 F.2d at 21. Here there is no evidence even indicating a definite agreement to pay. The conduct of Linneman during the performance of the contract will not support a conclusion of waiver. No demand for extra compensation was made during the performance of the contract, nor until 10 months after the completion of the job. ⁵ This is a strong indication that the laying of mains behind the curbs, while more costly, was not regarded by Linneman as an extra under the contract. See Old Colony Trust Co. v. City of Omaha, 230 U.S. 100, 118, 33 S.Ct. 967, 972, 57 L.Ed. 1410 (1913), wherein the Court stated:

Generally speaking, the practical interpretation of a contract by the parties to it for any considerable period of time before it comes to be the subject of controversy is deemed of great, if not controlling, influence.

Accord, Craig v. Thompson, 177 F.2d 457, 460 (8th Cir. 1949); Elkan v. Sebastian Bridge District, 291 F. 532, 550 (8th Cir. 1923), cert. denied, 268 U.S. 690, 45 S.Ct. 510, 69 L.Ed. 1159 (1925).

There is an additional ground upon which the trial court's action in directing a verdict must be sustained. The trial court was bound to apply the law of North Dakota in this diversity action. The North Dakota Supreme Court has recently held regarding claims for extras that:

'Extra work,' as used in connection with building contracts, means work which arises outside of and independent of the original contract; that is, something not required in the performance of the original contract, not contemplated by the parties, and not controlled by the terms of such contract.

Trinity Builders, Inc. v. Schaff, 199 N.W.2d 914, 918 (N.D.1972).

To find that Linneman was entitled to recover for its claim for extra work, the trial court would have had to determine that the claim was for 'labor and materials not contemplated by or embraced in the terms of the original contract.' Trinity Builders, Inc. v. Schaff, supra at 918. The trial court was convinced after reading the contract, as are we, that the claim is based upon work required by any covered within the contract and thus the claim for extras must fail.

The contract was a unit price contract. The pertinent unit price provision provides for a single unit price based upon the diameter of the main:

For unloading and hauling millcoated steel pipe, fittings, wrappers and other materials, clearing right-of-way, ditching, coating, laying, construction, welding, connecting, cleaning, testing, repairing, backfilling, roll packing, and grading * * *.

The contract provision which underlies this disputed claim provides:

Distribution mains in general shall be approximately 5-10 feet from the property line in the street and 5 feet from the property line in the alley. Where more specific information is required it will be furnished by the Company.

The specifications provide:

2. Location of Lines

The lines shall follow the locations as shown on maps furnished by the...