This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
IN COURT OF APPEALS
Starry Construction Co., Inc.,
Hubbard County District Court
File No. C898341
Kyle E. Hart, Julie A. Doherty, Fabyanske, Westra & Hart, P.A., 920 Second Avenue South, Suite 1100, Minneapolis, MN 55402 (for appellant)
Gerald W. Von Korff, Rinke-Noonan, 700 Wells Fargo Center, P.O. Box 1497, St. Cloud, MN 56302; and
Gregory D. Larson, Hubbard County Attorney, P.O. Box 486, Park Rapids, MN 56470 (for respondent)
Considered and decided by Crippen, Presiding Judge, Anderson, Judge, and Huspeni, Judge.
In this construction-contract case, appellant challenges the summary judgment entered in favor of the respondent, arguing that issues of material fact exist as to claims for breach of contract and breach of warranty. Because we see no issues of material fact as to any claim, we affirm.
In 1991, respondent Hubbard County accepted appellant Starry Construction’s bid for a project to regrade and repave a section of Highway 4. The contract between Starry and the county incorporated the Minnesota Department of Transportation’s Standard Specifications for Construction (standard specifications) and also established labor rates for work predicted by the engineer and compensation rates for work beyond the engineer’s predictions. Guidelines for perfecting a claim for additional payment on work not contemplated by the contract required the contractor to submit a written demand for additional payment.
After approximately two years’ performance under the contract, Starry requested payment for work not contemplated by the contract. Starry stated that it was forced to incur extra costs because (1) the county required that bituminous materials be hauled away instead of used in the embankment and (2) the soil along the project was initially unsuitable for regrading and repaving. Additionally, Starry asserted that the county did not disclose its “boring logs,” which would have shown the soil conditions before the commencement of the work. Consequently, the soil conditions created unexpected additional work for which Starry claims it must be compensated.
Despite efforts by the parties to resolve disputed issues, agreement was not reached. Starry brought suit under theories of breach of contract and breach of warranty, and included those claims outlined above, as well as a claim that extra-contractual drying and compaction of the roadbed was required by the county engineer. Also included were claims that the county failed to act in good faith when it refused to permit Starry to work on July 5 (a holiday), when Starry was required to plow snow, and when the county refused to permit Starry to place gravel on the road.
The county responded that (1) Starry was told, before the project-letting date, that they could not use the bituminous pavement within the new embankment; (2) the prohibition was also discussed in the pre-construction conferences; (3) special provision S-18.2 of the contract makes the contractor responsible for removal of the bituminous waste; and (4) special provision S-18.4 of the contract requires that a disposal plan be written and approved before the disposal begins. The county also asserted that, although borings might have been taken, they were not taken for the purposes of the contract work and any information concerning county borings is always available to all bidders who wish to examine them. The district court granted summary judgment to the county on all claims. This appeal followed.
D E C I S I O N
Standard of Review
On appeal from summary judgment, we ask whether any genuine issues of material fact exist and whether the district court erred in applying the law. Cummings v. Koehnen, 568 N.W.2d 418, 420 (Minn. 1997). This court views evidence in the light most favorable to the non-moving party. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).
The county argues that the standard of review for summary-judgment proceedings has changed over the past few decades, stating that in earlier times “district courts allowed numerous cases to go to trial, which could never survive summary judgment under current standards.” While the county may overstate the case somewhat in claiming that summary judgment is no longer a blunt instrument, there is merit in its argument that Starry may not resist summary judgment by merely relying on the nonspecific conclusory nature of affidavits offered in defense of the county’s motion. The party opposing summary judgment may no longer rest merely on averments; the essential standard remains the same, however. Compare DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997) (stating that “the party resisting summary judgment must do more than rest on mere averments”), with Donnay v. Boulware, 275 Minn. 37, 45, 144 N.W.2d 711, 716 (1966) (holding that summary judgment is a “blunt instrument” and that it is not necessary to inquire into facts that might clarify the application of the law).
The proper inquiry of an appellate court remains: are there any genuine issues of material fact in this case? See Vacura v. Haar’s Equip., Inc., 364 N.W.2d 387, 391 (Minn. 1985).
Our discussion of the several issues presented here will be aided by noting initially that in regard to most of those issues the parties came to their respective positions by assuming that work was proceeding under the terms of the contract (Hubbard County’s argument) or that work clearly was outside the contract and would be so compensated (Starry’s argument). Both parties appear to agree that the work on Highway 4 has been successfully completed, that certain payments have been made to Starry, and that those payments are accurate if the contract rate applies.
The parties disagree substantially on the scope of contractual provisions, whether notice was required or given, and what form of notice was needed under the contract. We address each argument in turn.
1. The drying and compacting of the road.
Starry argues that drying and compacting of the road outside the driving-surface area was not work contemplated in the contract. Starry does not explain these conclusory allegations, other than merely stating that the work was not industry standard. The standard specifications’ definitions state that “roadbed” is defined as “the graded portion of a highway within the top and side slopes prepared as a foundation for the pavement structure and shoulders.” (Emphasis added.) Thus, the provisions of the contract defined the roadbed as including the shoulder areas. The engineer required that compaction be performed over the entire width of the roadbed. The contract gives the engineer discretion to require the work to be done; the contract also provides that “subgrade preparation will be considered to be incidental work and no direct compensation will be made therefor.” The district court properly determined that this compacting and drying work came within the provisions of the contract.
Even if we were to assume for the sake of further analysis that the scope of the drying and compacting work as required by the county exceeded contract provisions, Starry was required to follow the notice provisions outlined in the standard specifications. Specification 1517 requires that a contractor provide written notice of a claim for additional compensation on work the contractor considers not covered in the contract, or the contractor waives the claim. Starry asserts that the owner’s actual knowledge that a contractor is performing extra work constitutes waiver of the written-notice requirement. See New Ulm Bldg. Ctr., Inc. v. Studtmann, 302 Minn. 14, 16, 225 N.W.2d 4, 5 (1974) (holding that owner’s actual knowledge that extra work is being done creates a waiver of written-notice requirement). While this proposition, under certain circumstances, may be true, it is a proposition that, we believe, should be limited to cases in which the owner knows that the contractor considers this work to be outside of the contract; knowledge of the owner only that the work is being performed is insufficient. Seeing only the performance of the work, the owner would be justified in believing that the contractor considered the work to come within the provisions of the contract. Here, Starry has failed to demonstrate that the county knew that the work being performed was, in fact, considered by Starry to be extra work.
Starry also argues that supplemental agreements that the parties negotiated but did not finalize establish the county’s knowledge that Starry considered the extra drying and compacting to be work outside the contract. We disagree. Letters written by Starry and the county show that there was an ongoing dispute about the nature of this work. The county did not waive its notice requirement by attempting to resolve a dispute with a proposed supplemental agreement offered at the end of a contract. See Tagtow v. Carlton Bloomington Dinner Theatre, Inc., 379 N.W.2d 557, 562 (Minn. App. 1985) (holding that an offer to settle disputes on value of contract extras was properly excluded).
A common-sense interpretation of the contract would indicate that if the contractor considers work to be outside of the contract, written notice must be given to the owner, not that the work is being done (the owner can observe that to be the case), but that, in fact, the contractor considers the work to be outside the contract. Accordingly, even assuming here that the extra drying and compacting work was work outside the contract, no issue of material fact exists as to whether Starry has a claim for this work.
The redrying and recompacting of the road surface.
Starry also argues that the extra redrying and recompacting of the road surface, despite the fact that density requirements under the contract were met, was not work contemplated in the contract. Again, we disagree. The standard specifications of the contract provide that
the Engineer [will] have sufficient executive authority to administer the Contract with discretion, within its general scope, so as to rule out apparent discrepancies, fulfill intentions, and allow for exigencies * * * on the basis of engineering judgment.
Here, the district court determined that the engineer required the work because
rains had saturated the subgrade and more drying and compaction was needed. * * *
* * * *
While the Engineer found that the roadbed passed the density tests he observed the road was soft and spongy.
The extra drying and compacting was needed to make the road drivable. Therefore, because the contract gave the engineer authority, and because the work was done to fulfill the provisions of the contract, this work falls within the scope of the contract. Starry has not established a genuine issue of material fact on this issue.
2. Removal of bituminous material.
Starry next argues that the removal of bituminous material from the site was work outside the scope of the contract. Starry contends that special provision S-18.4, which outlines procedures for disposal of excess bituminous material, implies that some of the bituminous material may be used on-site. We conclude that there is no material fact question regarding this issue.
When reviewing the contract, specific and exact terms are given greater weight than general language. See Restatement (Second) of Contracts § 203 (1981); see also Anderson v. Crestliner, Inc., 564 N.W.2d 218, 220 (Minn. App. 1997) (holding that, when interpreting a contract, language used is to be given its plain and ordinary meaning). Starry, in effect, relies on this theory to argue that because special provision S-18.4 addresses the disposal of excess material, it must be implied that there is some material that is not excess; that the contract contemplates the use of some of the material.
The district court, however, cited two special provisions in determining that the removal of bituminous material was contemplated and required by the contract. Special provision S‑18.2 states that “[t]he Contractor will be responsible for the removal of the existing bituminous pavement.” Special provision S-30.1 states that, in some instances, the use of bituminous material is not allowed:
Crushed concrete or salvaged bituminous mixtures shall not be placed in the embankment or used as aggregates for surface and base courses or as granular materials * * * .
Further, in two pre-construction conferences, agents of Starry were notified that the county would require the removal of bituminous material. Starry does not dispute this notification. When one party to a contract knows or has reason to know of the different meaning attached by the other, that party is bound by the other party’s meaning. Lamb Plumbing & Heating Co. v. Kraus-Anderson of Minneapolis, Inc., 296 N.W.2d 859, 864 (Minn. 1980). Because Starry had notice that the county interpreted the contract to require the removal of bituminous waste and did not object, and because the county’s interpretation is consistent with the specific contract language, Starry is bound by the county’s interpretation and there is no issue of material fact.
3. Implied warranty of accuracy of plans.
Starry argues that the county’s estimate of the amount and nature of soil to be removed for the road project was misleading, that the soil was wetter than expected, that the amount required to be hauled was greater than expected, and that the county failed to disclose soil borings prior to Starry’s bid. In support of its position, Starry cites United States v. Spearin, 248 U.S. 132, 39 S. Ct. 59 (1918). In Spearin, the Supreme Court held that the
responsibility of the owner is not overcome by the usual clauses requiring builders to visit the site, to check the plans, and to inform themselves of the requirements.
248 U.S. at 136, 39 S. Ct. at 61 (citations omitted). Additionally, Starry cites Helene Curtis Indus. v. United States, 312 F.2d 774 (Ct. Cl. 1963), for the proposition that the county has an affirmative duty to disclose information that differs from what it provided to contractors for bidding. We find scant support for Starry’s argument in that case, where the court noted:
Where [the contracting party] has made no misrepresentations, has no duty to disclose information, and does not improperly interfere with performance, the fixed-price contractor of course bears the burden of unanticipated increases in cost. * * * [B]ut that does not excuse the defendant from liability if it breaches an independent duty to reveal data or if the end-product specification embodies a material misrepresentation misleading the contractor.
Id. at 777-78 (emphasis added).
Starry has failed to establish any misrepresentation by the county. While Starry argues that the county knew of the wet soils and failed to inform Starry, it presented no evidence of what the soil borings disclosed or whether that information differed from the information the county provided to all bidders on the contract. In fact, Starry’s letters to the county about the borings only refer to the county’s “nondisclosure.” To the extent that Starry relies on the statement of a county worker during excavation that the county was aware that the contractor would encounter unsuitable soil, that reliance is misplaced. That statement was of a conclusory nature, contained in the affidavit of a Starry executive. There is no evidence, expert or otherwise, in the record regarding the county’s knowledge or information on this question. Further, the contract itself clearly anticipated the presence of unsuitable soils. There is no evidence that the county misled Starry; the borings were simply not referred to in the project’s plans.
Additionally, as noted by the district court, Starry was informed that soil borings are available to contractors. The standard specifications, which were incorporated into the contract, state:
When the Department has taken test borings on the Project, they may or may not be indicated in the Plans. These borings were made by ordinary and conventional methods and with care deemed adequate for the Department’s design purposes. The logs of the borings * * * may not reveal all information which might be useful or of interest to the Contractor. * * * Since subsurface conditions * * * cannot be relied upon to be consistent * * * no warrant is made that conditions * * * will necessarily be the same as shown on the logs.
Starry does not dispute that this section was incorporated into the contract. Furthermore, Starry makes no argument that this section was insufficient to provide notice. It asserts only that boilerplate language does not bar action. This bare assertion does not create a prima facie case requiring reversal of summary judgment.
Finally, Starry argues that the condition of the soil here brings its claim within the rationale of Zontelli & Sons, Inc. v. City of Nashwauk, 373 N.W.2d 744 (Minn. 1985), and McCree & Co. v. State, 253 Minn. 295, 91 N.W.2d 713 (1958). We find reliance on these cases to be misplaced. In McCree, the compaction required by the contract was impossible to achieve because of the condition of the soil. 253 Minn. at 316, 91 N.W.2d at 727. Here, there was no impossibility; the contractual requirements were met. In Zontelli, the actual quantity and quality of the concrete, rebar, and mesh materials, which required different equipment and longer time to break apart, were vastly different from what was shown in the specifications. 373 N.W.2d at 749. Even though a trial court verdict in favor of the contractor was affirmed in Zontelli, that court observed that in an ordinary project, the contractual provision providing for extra compensation would carry out the intent of the parties. Id. at 753. Starry cannot bring the facts of this case within the rationale of either McCree or Zontelli.
4. Implied promise of good faith.
Every contract includes an implied promise of good faith, requiring that no party unjustifiably hinder the other party’s performance. Midwest Sports Mktg., Inc. v. Hillerich & Bradsby of Can., Ltd., 552 N.W.2d 254, 268 (Minn. App. 1996), review denied (Minn. Sept. 20, 1996). Starry asserts that this implied promise was broken by the county when it (a) refused to allow Starry to work on July 5, 1993; (b) required Starry to unnecessarily plow snow; and (c) refused to allow gravel to be placed on the road. We fail to see a material fact issue in regard to any of these claims.
A. Refusing to allow work on July 5, 1993.
Independence Day was celebrated on a Sunday in 1993. County workers were not required to work the following day. See Minn. Stat. § 645.44, subd. 5 (1992) (describing official state holidays). Although Starry may be accurate in contending that this day off hindered its work progress, we believe that we would err as a matter of law if we considered it bad faith on the part of the county to refuse to make employees work on their statutory holidays. While we recognize that Starry did offer to pay the overtime wages of the county employees involved, the county had the discretion to decline the offer.
B. Requiring Starry to unnecessarily plow snow.
Starry was required to plow snow because “the job hadn’t officially yet been suspended.” Because the job was not suspended, snow plowing was required in the event that work did continue later. Plowing was a reasonable business precaution for the county to have Starry perform because the work was not yet officially suspended. Although later events may have shown the plowing to be unnecessary, the reasonableness of the decision at the time it was made cannot be challenged. The county should not be required, under the guise of hindering contract performance, to compensate Starry for the cost of plowing snow.
C. Refusing to allow gravel to be placed on the road.
Starry argues that “the engineer stopped the work because the roadbed was frozen. * * * There is a rule against placing frozen gravel.” Although Starry asserts that the gravel was not yet frozen, it is reasonable to assume that the gravel would freeze after being applied. The county was acting in accordance with the rules when it prohibited placement of the gravel on the road. There is no evidence to establish that the county acted unjustifiably to hinder Starry’s contract performance.
In conclusion, the record fails to establish a material fact issue on whether there was work outside the scope of the contract. Also, there is no issue of material fact on whether the county failed to act in good faith. Therefore, we do not address Starry’s argument that the county’s actions constituted a cardinal change in the contract.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 The district court did not specifically address the good-faith claims in its memorandum. It did, however, indicate that “[Starry] makes claims for other work done which was either incidental work under the contract and, therefore, not compensated directly or makes claims for work which should have had a prior written request.” The county does not argue that the good-faith claims are not properly before us for review; we shall consider the district court’s language sufficient to enable us to address these claims on their merits.