Sanders Company Plumbing and Heating Inc. v. City of Independence, WD

• Decision Date: 18 June 1985
• Docket Number: No. WD,WD
• Citation: 694 S.W.2d 841
• Parties: SANDERS COMPANY PLUMBING AND HEATING, INC., Appellant, v. CITY OF INDEPENDENCE, Missouri, Respondent. 34714.
• Court: Missouri Court of Appeals

Page 841

694 S.W.2d 841

SANDERS COMPANY PLUMBING AND HEATING, INC., Appellant, v. CITY OF INDEPENDENCE, Missouri, Respondent.

No. WD 34714.

Missouri Court of Appeals Western District.

June 18, 1985.

Motion for Rehearing and/or Transfer

to Supreme Court Overruled and

Denied July 30, 1985.

Application to Transfer Denied

Sept. 10, 1985.

Richard W. Miller (argued), Kevin E. Glynn and Stephen J. Dennis, Kansas City, for appellant.

Joe F. Willerth (argued), George E. Kapke, Independence, for respondent.

Before LOWENSTEIN, P.J., and SOMERVILLE and NUGENT, JJ.

NUGENT, Judge.

The jury found in plaintiff's favor on two counts for misrepresentation based upon a contract to build a sewer and a change order adopted regarding that construction. The trial court granted the defendant municipality a judgment notwithstanding the verdict on both counts. We reverse, reinstate the verdict on Count II, and remand for new trial with directions on Count III.

Plaintiff, Sanders Company Plumbing and Heating, contends that the court erred in upsetting the jury's verdict in its favor and entering judgment for the defendant, City of Independence. In reviewing the court's action, we only consider the evidence and inferences supporting the verdict, disregarding defendant's evidence except as it may support the verdict. Bayne v. Jenkins, 593 S.W.2d 519, 521 (Mo.1980) (en banc). The following statement of facts conforms to that standard of review.

Sanders was the successful bidder on a sanitary sewer and pump station project let by the City to be built in east Independence along the Little Blue River. Engineers hired by the City prepared the plans and specifications upon which the contractors based their bids. The bidders had only thirty days to bid the project from the time they were given the city's plans. The City Engineer at the time of the project, Donald Yelton, testified that one reason the City provided the plans and specifications was to receive lower bids since the bidders would be saved the expense of drafting their own plans. Sanders relied upon the information supplied by the City and did not conduct its own tests or investigation.

The crux of Sanders' second count is that the documents provided by the City contained positive misrepresentations that the subsurface condition to be encountered in excavating the sewer pipe trench were stable, without the free-flowing ground water that the contractor actually encountered in its excavation. Sanders' evidence was that the City's plans, specifications and contract contained three positive misrepresentations of material fact.

First, attached to the documents as an appendix were the results of "auger borings" drilled in 1974 that showed the subsurface situation to be sandy and moist. The contract provides that the test hole information is not part of the contract, that the City intended no express or implied guaranty as to the accuracy of the data nor of the interpretation of it and that the bidder must draw its own conclusions as to subsurface conditions. Mr. Yelton testified that, in spite of the disclaimer, as a municipal engineer he would expect a bidder to rely upon the boring results. Geotechnical engineer Donald Duncan testified that the custom and practice in the industry is for contractors to rely upon such boring results despite a disclaimer. Mr. Duncan also testified that it would be difficult for a bidder to do its own borings on a month's notice.

The contract itself contained a drawing which is the second source of alleged misrepresentations. The drawing numbered Figure 1-2A and entitled "Embedments for Conduits" showed the amount of excavation required and the amount and type of bedding needed for laying the pipe. The contract states that "[e]xcept where otherwise required, pipe trenches shall be excavated below the underside of the pipe, as shown on Figure 1-2A, to provide for the installation of granular embedment pipe foundation material." Finally, the contract lists the drawing in the table of contents as a specification for the contractor to follow. Mr. Yelton testified that Figure 1-2A represented the subsurface conditions as stable without the presence of free-flowing ground water.

The last relevant source of misrepresentation was that the contract had no provision for plaintiff to furnish additional bedding material. Donald Yelton testified that the absence of such a provision indicates stable subsurface conditions not requiring extra foundation materials.

The contract also provides that the contractor must obtain a change order for payment of any extra expenditures.

Sanders began work on the project in February of 1977. Initial excavation revealed unstable subsurface conditions caused by free-flowing ground water. Mr. Duncan and Mr. Yelton testified that conditions were different from those represented in the City's documents. The City's representative on the job was alerted, and the process to get a change order was begun. For reasons not revealed by the record, however, it was never obtained. Sanders had to add extra bedding, pump out the water and, consequently, its progress slowed. Sanders claims that as a result it incurred over $500,000 in additional expense.

Once the project was almost complete, an inspection pursuant to the contract revealed "exfiltration and infiltration" in a twenty-one inch clay pipe. Mr. Duncan testified that the pipe cracked because the jointing material caused excessive stress in the pipe. Sanders had installed the pipe in accordance with and to the standard required by the City's specifications.

Mr. Sanders, owner of Sanders Plumbing, testified that he was told that Sanders would be paid monthly for replacing the pipe. The city council adopted a change order that provided in pertinent part as follows:

Liability for the cause of the replacements and repairs called for by this change order has not been determined at this time and in the interest of expediting the time when the sewer may be put in service such additional work shall proceed now with a reservation of rights as hereinafter stated between the parties.

....

The parties agree that the City reserves all rights in connection with its obligation to pay for such additional work and that Sanders Co. Plumbing and Heating, Inc. reserves all its rights to be paid for this additional work.

By reason of this Change Order No. 4, the contract price shall be increased by not more than $175,914.00.

All other provisions of the contract remain unchanged.

Either because of Sanders' guarantee or because of the City's belief that Sanders material or work was defective, the City never paid Sanders. The cracked pipe was discovered within the guaranty period.

Sanders filed suit in four counts, but only two counts are before us on appeal. In Count II, Sanders alleged that the City's plans, specifications and contract misrepresented the project's subsurface conditions and that it relied upon those misrepresentations and incurred additional expenses of over $500,000. The jury found in the contractor's favor on that count and awarded it $225,000. In Count III Sanders alleged that the City misrepresented that it would pay Sanders monthly for replacing the cracked twenty-one inch pipe. Again the jury found in plaintiff's favor, awarding it $175,914. The court granted defendant's motion for a judgment notwithstanding the verdicts on both counts.

As we have previously stated, in reviewing the court's grant of a judgment notwithstanding the verdict we only consider the evidence and reasonable inferences supporting the verdict, disregarding the City's evidence except where it supports the verdict. Bayne v. Jenkins, supra, 593 S.W.2d at 521. The trial court cannot take the case away from the jury unless the evidence is so strongly against the plaintiff that no room remains for reasonable minds to differ on the issue; where reasonable minds can differ on a question before the jury, the court may not disturb the verdict. Kuehle v. Patrick, 646 S.W.2d 845, 847 (Mo.App.1982).

I.

Plaintiff's first point is that the court erred in upsetting the jury's verdict on Count II. Sanders argues that the court erred in finding that the contract disclaimer pertaining to the test hole results nullified any positive misrepresentations made by the results. Sanders believes that the court was mistaken in relying on Air Cooling & Energy, Inc. v. Midwestern Construction Co., 602 S.W.2d 926 (Mo.App.1980). We agree.

In Air Cooling, a contractor agreed with Jackson County to construct a public beach area. The city prepared the plans and specifications that included auger boring results. The contract disclaimed any representation that the results were accurate and informed the contractor to make its own tests and draw its own conclusions. The contractor hired the appellant sub-contractor to excavate trenches for the project. The sub-contractor encountered subsurface conditions different from those shown by the test holes. The sub-contractor sued the contractor and Jackson County on a warranty and misrepresentation theory. The case was tried to the court upon the pleadings and a stipulation of facts. On appeal, this court held at 929 that nothing in the evidence showed that the boring results were held out to be accurate and could be relied upon and found against the sub-contractor.

In contrast, the evidence supporting the verdict in the case at hand was that the custom and practice in the industry is for boring results to be relied upon by contractors despite disclaimers, that this reliance was invited by the city, and that one month is not sufficient time for a bidder to do its own tests. Moreover, the only representations appellant relied upon in Air Cooling were the disclaimed test hole results. Here two other representations are present: Figure 1-2A and the absence of a provision for extra work. The accuracy of Figure 1-2A was not disclaimed by the contract.

The holding in Air Cooling is limited by...