Story v. City of Bozeman

• Citation: 259 Mont. 207,856 P.2d 202,50 St.Rep. 761
• Decision Date: 24 June 1993
• Docket Number: No. 91-632,91-632
• Parties: Mark STORY d/b/a Mark Story Construction, Plaintiff, Respondent and Cross-Appellant, v. CITY OF BOZEMAN and Neil Mann, Defendants, Appellants and Respondents on Cross-Appeal.
• Court: United States State Supreme Court of Montana

Page 202

856 P.2d 202

259 Mont. 207

Mark STORY d/b/a Mark Story Construction, Plaintiff Respondent and Cross-Appellant, v. CITY OF BOZEMAN and Neil Mann, Defendants, Appellants and Respondents on Cross-Appeal.

No. 91-632.

Supreme Court of Montana.

Submitted March 25, 1993.

Decided June 24, 1993.

J. Robert Planalp and Steve Reida (both argued); Landoe, Brown, Planalp & Braaksma, Bozeman, for appellants.

Gregory O. Morgan (argued), Atty. at Law, Bozeman, for respondent.

GRAY, Justice.

Appellants City of Bozeman and Neil Mann appeal from a final judgment following a jury verdict in the Eighteenth Judicial District, Gallatin County, and from an order denying post-trial motions. Mark Story cross-appeals. We affirm in part and reverse in part.

We phrase the issues as follows:

1) Were the damages awarded against the City for breach of contract and/or breach of the covenant of good faith and fair dealing excessive and speculative or duplicative?

2) Did the District Court err in limiting the City's cross-examination of Story?

3) Does § 2-9-305(5), MCA (1985), bar Story from recovering against Neil Mann individually?

4) Did the District Court properly instruct the jury?

5) Did the special verdict form comply with Rule 49(a), M.R.Civ.P.?

6) Did the District Court err in permitting retrial of the issues of reformation, defamation and constructive fraud?

This case arises from a dispute over a construction contract between Mark Story Construction (Story) and the City of Bozeman (the City). In the early autumn of 1985, the City distributed bid schedules for the construction of the Durston and Valley View water mains. On Schedule I, the Durston water main, the unit measure for type 2 pipe bedding material was listed as "CY" (cubic yard), the customary unit measure for such material. On Schedule II, the Valley View project, a typographical error listed the unit measure for type 2 pipe bedding material as "CF" (cubic feet). Story bid $25.00 per unit on both schedules. On September 30, 1985, the City awarded Story the construction contract. The engineering firm of Thomas, Dean, and Haskins (TD & H) was awarded the engineering subcontract.

On October 9, 1985, Doug Daniels, the project engineer from TD & H, discovered the typographical error and left a telephone message for Story explaining the error. He followed the message with a letter. The City claims that Story returned Daniels' call the next day and assured the City that he meant to bid the Schedule II, type 2 pipe bedding material in cubic yards. Story denies this conversation took place. Story signed and returned the contract with "CF" listed as the unit measure of type 2 pipe bedding material on Schedule II. On November 12, 1985, the City executed the contract without changing the unit measure.

The minutes of a preconstruction meeting held November 21, 1985, do not contain any discussion of the error. Shortly after the meeting, Story began purchasing supplies for the project. When Story received his first pay estimate dated December 20, 1985, the disputed pipe bedding material was listed at $25 per cubic yard. Story crossed this out and wrote in "CF" before returning it to the City. The City recognized that Story had made the change but paid Story under pay estimate # 1. Because work had not started, Story had not used any pipe bedding material; consequently, the City did not pay for pipe bedding material at either "CY" or "CF."

The City then issued a change order to change the contract to read "cubic yards" instead of "cubic feet" for the pipe bedding material in Schedule II. Story refused to sign the change order. Story similarly crossed out "CY" on the second pay estimate dated February 18, 1986.

Story began work on the project on March 3, 1986, but halted after a week due to wet, muddy conditions. Story worked sporadically and submitted three requests to the City for extensions of time on the contract; the City did not rule on the requests immediately. When he returned the third pay estimate dated April 29, 1986, he attached a signed statement setting forth his position regarding the unit measure of the type 2 pipe bedding material on Schedule II.

On May 9, 1986, a TD & H engineer informed city engineer Neil Mann (Mann) that Story had completed 46% of the work, but 86% of the time on his contract had elapsed. Mann wrote to Story's bond company, Balboa Insurance Company (Balboa), and relayed this information. Balboa then wrote to Story, referenced Mann's letter, and encouraged him to finish the project. Story walked off the job on June 9, 1986, with Schedule II nearly finished but Schedule I untouched.

On June 12, 1986, the City granted 23 of the 48 days Story had requested for an extension, and announced its intention to enforce the $450 per day liquidated damages clause of the contract. On June 16, 1986, Balboa canceled Story's bond. After the City submitted a claim on the bond, Balboa paid out $96,070.50 for completion of the project. Story did not accept the final pay estimate due to the ongoing dispute.

Story filed suit on December 12, 1986, for breach of contract, breach of the covenant of good faith and fair dealing, and defamation. In the first trial, the jury awarded Story $360,000 in tort damages for breach of the covenant and $13,236 in contract damages. In Story v. Bozeman (1990), 242 Mont. 436, 791 P.2d 767, (Story I ), we concluded that the special verdict form used was misleading and remanded for a new trial. We also clarified the law regarding the covenant of good faith and fair dealing, concluding that a breach of the covenant is a breach of the contract and that only contract damages are due unless the parties have a special relationship. Story I, 791 P.2d at 775-6.

After remand, Story amended his complaint to add a claim of intentional interference with contractual relations against Mann. Following the second trial, the jury awarded Story $850,000 in damages for breach of contract and/or breach of the covenant of good faith and fair dealing against the City. It also awarded $100,000 in damages against Mann for intentional interference with contractual relations. In its judgment on the verdict, the District Court assessed interest against both Mann and the City pursuant to § 25-9-205, MCA.

The City then moved for judgment notwithstanding the verdict or, alternatively, for a new trial. The City argued, among other things, that Mann was immune from judgment and that substantial evidence did not support the verdicts against Mann and the City. In its order on post-trial motions, the court amended the final judgment to preclude the accrual of interest against the City if the City paid the judgment within two years, pursuant to § 2-9-317, MCA. The District Court denied all other post-trial motions. This appeal follows.

Were the damages awarded against the City for breach of contract and/or breach of the covenant of good faith and fair dealing excessive and speculative or duplicative?

At the eight-day jury trial, Story presented the following figures concerning the damages claimed:

. Loss incurred because of forced sale of eq uipment $111,115

. Future lost profits 1986"1996 $373,266

. Amount due on contract with the City $230,747

. Loss of credit and reputation $500,000

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Story's expert economist, Arlen Smith (Smith) testified regarding the first two elements of damages; Story testified regarding the last two elements. The jury awarded Story $850,000 in damages against the City for breach of the contract and/or breach of the covenant of good faith and fair dealing.

The City makes two primary arguments concerning the proof of damages: that the damages claimed were excessive and speculative and that they were duplicative. Regarding its first contention, the City phrases the issue as whether the jury verdict of $850,000 is excessive and speculative, and argues that no evidence supports the verdict. It concedes, however, that evidence of record exists to support the verdict; therefore, we construe the City's argument to be that the proof of damages on which the jury award was based was speculative and excessive. Story initially responds that the City did not object to the testimony at trial or otherwise adequately preserve either argument for appeal. Accordingly, we focus on this threshold matter.

At trial, Smith testified specifically, and without objection, regarding the amount of damages for lost future profits and loss caused by forced sale of equipment. The District Court also admitted Smith's two economic reports detailing his analysis of Story's damages without objection. Story testified regarding his calculation of the amount due on the contract without objection. The City did not mention the issue of speculative damages in its opening or closing arguments, did not raise the issue in its post-trial motions, and did not refer to "speculative or excessive damages" in any colloquies of record with the court.

It is elementary that unless a party urging error has made timely objection to evidence or testimony at the trial level, it will not be considered by this Court on appeal. Sikorski v. Olin (1977), 174 Mont. 107, 113, 568 P.2d 571, 574. In Sikorski, the plaintiff testified to $10,550 in damages, and the jury awarded $10,000. On appeal, the defendant argued, as the City does here, that the proof of damages was speculative and could not form a basis for the jury's damage award. Sikorski, 568 P.2d at 574. We refused to consider the defendant's argument, stating:

[w]hile the computations offered may have been subject to the objection that they were speculative in nature, we refuse to consider the matter for the first time on appeal.

Sikorski, 568 P.2d at 574. We face the identical situation here. The City wholly failed to object to the amount of damages presented by Smith and Story. It cannot now claim that Story's proof of damages was speculative and excessive.

The City claims it adequately...