OLANDER CONTRACTING v. Gail Wachter Investments

• Citation: 643 N.W.2d 29,2002 ND 65
• Decision Date: 16 April 2002
• Docket Number: No. 20010086.,20010086.
• Parties: OLANDER CONTRACTING CO., Plaintiff, Appellee and Cross-Appellant, v. GAIL WACHTER INVESTMENTS, Defendant, Appellee and Cross-Appellant, Dakota Sand and Gravel, Inc., Defendant, and The City of Bismarck, North Dakota, Defendant, Appellant and Cross-Appellee.
• Court: United States State Supreme Court of North Dakota

643 N.W.2d 29
2002 ND 65

OLANDER CONTRACTING CO., Plaintiff, Appellee and Cross-Appellant,
v.
GAIL WACHTER INVESTMENTS, Defendant, Appellee and Cross-Appellant,
Dakota Sand and Gravel, Inc., Defendant, and
The City of Bismarck, North Dakota, Defendant, Appellant and Cross-Appellee

No. 20010086.

Supreme Court of North Dakota.

April 16, 2002.

Rehearing Denied May 14, 2002.

643 N.W.2d 31

Marvin T. Fabyanske (argued), Fabyanske, Westra & Hart, Minneapolis, and David J. Hogue (appeared), Pringle & Herigstad, P.C., Minot, for plaintiff, appellee, and cross-appellant

Clark J. Bormann (argued) and Paul H. Myerchin (on brief), Bormann Law Office, Bismarck, for defendant, appellee, and cross-appellant.

Randall J. Bakke (argued) and Michael J. Hagburg (on brief), Smith Bakke Hovland & Oppegard, Bismarck, for defendant, appellant, and cross-appellee.

SANDSTROM, Justice.

[¶ 1] The City of Bismarck ("Bismarck") appealed a judgment and orders entered in an action brought by Olander

643 N.W.2d 32

Contracting Co. ("Olander") against Bismarck, Gail Wachter d/b/a Gail Wachter Investments ("Wachter"), and Dakota Sand and Gravel, Inc.¹ Wachter and Olander cross-appealed. We affirm

[¶ 2] In 1997, Olander, Wachter, and Bismarck entered into a water and sewer construction contract including, among other things, connecting a ten-inch sewer line from Wachter's housing development to Bismarck's existing 36-inch concrete sewer main and installing a manhole at the connection, to be paid for by Wachter. Olander installed the manhole, but it collapsed within a few days. Olander installed a second manhole, with a larger base supported by pilings, but it failed a few days after it was installed. Olander then placed a rock bedding under the sewer main, replaced 78 feet of the existing concrete pipe with PVC pipe, and installed a manhole a third time on a larger base.

[¶ 3] Olander sued Wachter and Bismarck for damages of $456,536.25 for extra work it claims it was required to perform to complete its contract. Wachter answered, counterclaimed against Olander, and cross-claimed against Bismarck. Bismarck answered, counterclaimed against Olander, cross-claimed against Wachter, and demanded a jury trial on all issues.

[¶ 4] The jury returned a special verdict finding Olander performed "extra work/unforeseen work ... for which it is entitled to be compensated in excess of the contract price" in the amount of $220,849.67, to be paid by Bismarck; Wachter was not required to pay Olander any of the $6,600 it had withheld for delay in completing the project; neither Olander nor Wachter breached its contract with Bismarck; and Olander should be paid interest on its damages. The trial court denied Bismarck's post-trial motion for judgment as a matter of law or a new trial. Judgment was entered in favor of Olander against Bismarck for $275,462, which included $220,850 on the jury verdict, prejudgment interest of $44,544 from November 11, 1997, and costs of $10,068. The judgment dismissed Olander's claims against Wachter, Bismarck's claims against Wachter, and Wachter's claims against Bismarck. Bismarck appealed, and Olander and Wachter cross-appealed.

[¶ 5] On appeal, Bismarck contends Olander's claims against it should be dismissed because Bismarck owed Olander no duty under the contract and Olander failed to satisfy its burden of proof, and contends it should be granted a new trial because the court erred in dismissing Bismarck's negligence claims, the court erred in conducting the trial, and the verdict was inconsistent with the evidence.

[¶ 6] On cross-appeal, Olander contends the trial court erred in dismissing its argument that under United States v. Spearin, 248 U.S. 132, 54 Ct.Cl. 187, 39 S.Ct. 59, 63 L.Ed. 166 (1918), the contract included implied warranties of fitness and suitability of the plans and specifications furnished by Bismarck, and the court erred in interpreting and applying this State's prompt payment statute in N.D.C.C. ch. 13-01.1.

[¶ 7] On cross-appeal, Wachter contends there was no reversible error below. Alternatively, Wachter contends that (1) the trial court erred in dismissing Wachter's cross-claim against Bismarck, (2) Olander had a duty to insure and indemnify Wachter, and (3) Wachter had no duty to pay for extra work.

643 N.W.2d 33

[¶ 8] The trial court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. The appeals were timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01

I

A

[¶ 9] Bismarck contends it should have been granted summary judgment. Summary judgment is a procedural device for speedy disposition of a controversy without a trial if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving disputed facts would not change the result, and either party is entitled to judgment as a matter of law. Jaskoviak v. Gruver, 2002 ND 1, ¶ 11, 638 N.W.2d 1. On appeal, we review the evidence in the light most favorable to the party opposing a motion for summary judgment, giving that party the benefit of all favorable inferences that reasonably can be drawn from the evidence. Id. If a case goes to trial after a motion for summary judgment is denied, the question of whether the trial court erred in denying summary judgment is moot; the appropriate question on appeal is whether the trial court erred in denying the movant's subsequent motion for judgment as a matter of law. Berg v. Dakota Boys Ranch Ass'n, 2001 ND 122, ¶¶ 10-11, 629 N.W.2d 563.

1

[¶ 10] Bismarck contends it should have been granted summary judgment of dismissal, arguing (a) the trial court erred in refusing to interpret the contract and in "pass[ing] the task of interpreting the contract to the jury"; (b) Bismarck had no duty to pay for Olander's work, because the contract placed responsibility for payment for all work on Wachter, and Wachter paid for extra work before the manhole failures; (c) the contract required Olander "to complete the work on time and in accordance with project specifications" and "[n]o language in the contract allowed extra payments to Olander for mere completion of the contract work"; and (d) the contract made Olander responsible for job delays and costs associated with job delays.

[¶ 11] We recently addressed the construction of written agreements:

If the intent of the parties can be ascertained from the agreement alone, interpretation of the contract is a question of law. Thus, an unambiguous contract is particularly amenable to summary judgment. However, if the terms of the contract are ambiguous, extrinsic evidence regarding the parties' intent may be considered, and the terms of the contract and parties' intent become questions of fact. When two good arguments can be made for either of two contrary positions as to the meaning of a term in a document, an ambiguity exists.

Garofalo v. Saint Joseph's Hosp., 2000 ND 149, ¶ 7, 615 N.W.2d 160 (citations omitted). "Whether or not a contract is ambiguous is a question of law." Des Lacs Valley Land Corp. v. Herzig, 2001 ND 17, ¶ 9, 621 N.W.2d 860. "A determination of ambiguity is but the starting point in the search for the parties' ambiguously expressed intentions, which are questions of fact to be determined with the aid of extrinsic evidence." Bohn v. Johnson, 371 N.W.2d 781, 788 (N.D.1985).

[¶ 12] Section (6) of the contract provides, in part:

The DEVELOPER [Wachter] will be responsible to pay the CONTRACTOR [Olander] for all of the contract work in accord with the plans, specifications, and

643 N.W.2d 34

proposal prepared by the DEVELOPER's Representative made a part of this contract.

Section (9) of the contract provides, in part:

The CONTRACTOR shall guarantee all work against faulty materials and workmanship for a period of one year from the date of final payment.

Section (13) of the contract provides:

The Board of City Commissioners reserves the right to make any necessary changes in the alignment, grade, or design of the proposed work deemed by them advisable.

Section 108 of the General Provisions incorporated in the contract provides:

LOCAL CONDITIONS. Bidders shall satisfy themselves as to the nature of the material to be handled and the local conditions affecting the work and if conditions are found to be different than anticipated by the Contractor subsequent to the signing of the contract, it shall not in any way relieve the Contractor from his obligation or any risks from the fulfillment of all the work and terms of his contract.

Section 109 of the General Provisions required Olander to use such "methods and appliances ... as will enable him to secure a satisfactory quality of work ... within the time specified." Section 110 of the General Provisions says Olander "will not be entitled to any compensation for causes resulting in delays or hindrances to the work." Section 120 of the General Provisions provides:

CONTRACTOR'S RESPONSIBILITIES. Unless otherwise specified, the Contractor shall furnish all labor, materials and equipment necessary for the completion of the Schedule of Work in accordance with the plans and specifications. The Contractor shall do all necessary hauling and perform all labor, incidental thereto, for which no express provisions have been made. The Contractor shall assume all risks or damages to persons or property prior to the final acceptance of the work. The Contractor shall so conduct his operation as not to interfere with the work of other contractors in the vicinity. The Contractor shall maintain at all times an efficiently sized crew headed by a comp[]etent construction foreman and the necessary skilled labor to efficiently complete the work.

Section 126 of the General Provisions provides, in part:

EXTRA WORK The Contractor shall perform unfor[e]seen work, for which there is no price included in the contract, whenever it is deemed necessary or desirable in order

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