Minn. Stat. sec. 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
City of Shakopee,
Orr-Schelen-Mayeron & Associates, Inc.,
Filed March 10, 1998
File No. 964318
George C. Hoff, Kimberly B. Kozar, Hoff, Barry & Kuderer, P.A., Suite 260, 7901 Flying Cloud Drive, Eden Prairie, MN 55344-7914 (for appellant)
William R. Joyce, Andrew B. Koszewski, Faegre & Benson, LLP, 2200 Norwest Center, 90 South Seventh Street, Minneapolis, MN 55402-3901 (for respondent)
Considered and decided by Amundson, Presiding Judge, Short, Judge, and Harten, Judge.
The City of Shakopee appeals from an adverse judgment following a jury trial of a contractor's action to recover additional compensation for work performed incident to a contract to construct streets and install utilities. We affirm.
The contract incorporated several additional documents, including (among others) the plans and specifications for the project, the standard specifications of the City and of the Minnesota Department of Transportation (Mn/Dot), and the City Engineers Association of Minnesota (C.E.A.M.) Standard Utility Specifications.
The parties anticipated that Ryan would install the utilities by digging trenches, laying pipes, and then refilling the trenches with the excavated material. In constructing the streets, the parties expected Ryan to excavate the surface terrain down to a level area, or subgrade, which would form the foundation for the street. Ryan would then build embankments along the streets using the material excavated above the subgrade.
Two sources governed Ryan's compensation for excavation of any rock uncovered in digging the utility trenches. Item 11 of the special provisions of the contract read:
ROCK EXCAVATION: Where rock i[s] encountered in the utility trenches, it shall be measured from the top of the rock to twelve inches below the outside of the pipe and for a width of twelve inches on either side of the outside of the pipe. Payment shall be at the unit price bid and shall include disposal by the Contractor outside of the construction area.
Also, sheet 7 of the plans displayed a diagram accompanied by an instruction regarding payment for rock excavation. The instruction read:
The payment for rock excavation shall be by the cubic yard for an area of the outside pipe dia[meter] plus 12" on each side and bottom of pipe, times the depth.
Ryan dug the utility trenches to a depth of up to 20 feet. Ryan sloped the sides of the trenches outward so that the sides would not collapse on workers. Occupational Safety and Health Administration (OSHA) regulations require employers to protect workers by sloping sides or using lateral support systems when digging trenches more than five feet deep. 29 C.F.R. § 1926.652(a) (1996).
Following installation of utility pipes in the trenches, Ryan discovered that there was insufficient usable backfilling material. C.E.A.M. specifications prohibited the use of rocks larger than eight inches for trench backfill.
In excavating the area above the street subgrade, Ryan uncovered substantial quantities of black dirt, which could not be used to build the street embankments. In some areas, the black dirt extended beneath the intended subgrade, such that Ryan needed additional material to fill those areas.
Ryan sought a change order from the City to establish a compensation rate for obtaining additional material for building the embankments, leveling the subgrade in areas from which black dirt was removed, and backfilling the trenches. The City of Shakopee Standard Specifications provides in relevant part:
If unforeseen conditions require a change in the dimensions of a structure, location of underground pipes, or major variations of a similar nature from the original Plans, necessitating exceeding the reasonable limits defined below, or being of the nature of a substantial departure from the original plans, such work shall be covered by a change order. The change order is to set forth in complete detail the nature of the change and reasons therefore. The compensation to be paid the Contractor and whether it is an addition or a reduction with respect to the original contract costs is also to be covered in detail.
Standard Specifications for Public Works Construction, City of Shakopee, Minnesota, 1989, § 5.00. The City denied Ryan's request for a change order.
To obtain the materials needed to finish the project, Ryan crushed large rocks from the trench and hauled materials from a nearby abandoned stockpile. The City did not pay Ryan for the work involved in obtaining the additional materials or for excavating rock from the utility trenches to slope the sides.
Ryan commenced the instant action against the City seeking compensation for the unanticipated work. The City filed a pretrial motion in limine to exclude evidence of costs incurred by Ryan in doing that work, which the district court denied. The parties tried the case to a jury on counts of breach of contract and breach of implied warranty of the plans and specifications. The jury returned a verdict for Ryan on both counts and awarded Ryan $279,051.89 in total damages. The district court denied the City's motion for JNOV or a new trial; the City appealed from the judgment and the denial of its motion.
Ryan initially contends that the City's appeal from the judgment is defective because the notice of appeal refers to the date of the order for judgment, rather than the date judgment was entered. The City filed a certified copy of the judgment with its notice of appeal. The certified copy contained both the date judgment was ordered and the date the judgment actually was entered. Thus, the erroneous date on the notice was an obvious clerical error. It is unlikely that Ryan would have been misled by the date of the order for judgment because a certified copy of the judgment itself was included. We conclude that the City's notice of appeal was adequate to effect its appeal from the judgment.
2. Trench Excavation Compensation. The City contends that the contract unambiguously limits payment for the rock that Ryan excavated from the utility trenches to that rock excavated within straight vertical trench walls, and not for any additional rock excavated in sloping the walls.
Whether a contract is ambiguous presents a question of law, which we review de novo. Untiedt v. Grand Labs., Inc., 552 N.W.2d 571, 574 (Minn. App. 1996), review denied (Minn. Oct. 15, 1996). The construction and effect of a contract are questions of law for the court, but where there is ambiguity and construction depends upon extrinsic evidence, a question of fact arises for the jury. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979). A contract is ambiguous if its language is reasonably susceptible of multiple interpretations. Current Tech. Concepts, Inc. v. Irie Enters., Inc., 530 N.W.2d 539, 543 (Minn. 1995).
Item 11 of the special provisions of the contract measures the width of the compensable portion of the trench by reference to twelve inches from either side of the pipe. The diagram in the plans also describes width of the compensable portion to be that within twelve inches of the pipe. The pipe is located at the bottom of the trench. Neither Item 11 nor the diagram states that compensable trench width varies at the top of the trench. Thus, there is reasonable basis for the City's interpretation that the compensable width does not vary from the bottom to the top of the trench.
On the other hand, Ryan contends that given the special provisions' silence as to the width of the trench at the top, it is also reasonable to identify and relate trench width as provided in the City and Mn/Dot specifications, which require compliance with all applicable safety rules, including the OSHA regulations on trench safety. Under this interpretation, the width of the compensable rock excavation area would be twelve inches to either side of the pipe at the bottom of the trench, but, in addition, whatever width the OSHA slope-rate produced at the top of the trench. Ryan's interpretation is also reasonable. Because there are conflicting reasonable interpretations of the excavation compensation provision, that provision is ambiguous.
Where contractual language is ambiguous, extrinsic evidence may be used to aid construction. If the extrinsic evidence is conclusive and undisputed, the court declares the meaning of a contract, but if the extrinsic evidence is inconclusive or disputed, the dispute must be resolved by the factfinder at trial. National Farmers Union Property and Cas. Co. v. Anderson, 372 N.W.2d 71, 75 (Minn. App. 1985).
The City contends that even if the language is ambiguous, extrinsic evidence conclusively established that the contract only provided compensation for rock removed from the trench in straight vertical lines extending upward from twelve inches on either side of the pipe. But part of the extrinsic evidence was testimony of Ryan's vice-president indicating that although Ryan expected to be paid in conformance with the twelve inch provision in the twelve inch area immediately surrounding the pipe, Ryan also anticipated that it would be compensated for sloping the trench walls. We conclude that because the extrinsic evidence was disputed, the district court did not err in submitting the excavation compensation issue to the jury.
3. Sloping Requirement. The City contends that even if the compensation provision was ambiguous, Ryan failed to present sufficient evidence that sloping the trench walls was necessary to comply with contractual safety provisions. On review of sufficiency of evidence, we view the evidence in the light most favorable to the verdict. Reedon of Faribault, Inc. v. Fidelity & Guar. Ins. Underwriters, Inc., 418 N.W.2d 488, 491 (Minn. 1988). We will overturn a jury verdict only if no reasonable mind could find as the jury did. Id.
The City relies on OSHA regulations that require either sloping or the use of lateral support, and on a City report indicating that some of the excavated rock was dolomite, which is a stable rock.
Ryan initially alleges that the OSHA regulations were not part of the record on appeal. We disagree. OSHA regulations are part of the law of a United States jurisdiction, such that courts must take judicial notice of them. See Minn. Stat. § 599.04 (1996) (Minnesota courts shall take judicial notice of the common law and statutes of every other jurisdiction of the United States). The OSHA regulations may be considered on appeal.
Ryan's vice-president testified that sloping the sides was necessary for safety. This testimony was corroborated by that of Ryan's expert, Arnold Kraft, a certified construction safety instructor. Kraft further testified that ensuring worker safety also required sloping the trench walls in the areas where the lateral support of a trench box was used. Finally, Kraft testified that the rock excavated was limestone, and that it was "extremely weak rock."
We conclude that viewing the evidence in the light most favorable to the verdict, there was evidence enabling the jury to find that sloping the trench walls was necessary and that Ryan was entitled to the damage award for doing the sloping.
4. Embankment and Backfill Compensation. The City contends that the district court erred in allowing Ryan to submit evidence of actual costs incurred in building embankments and backfilling trenches. The City contends that the contractual unit-price terms govern the amount of compensation to which Ryan was entitled for that work. Ryan alleges that because the conditions encountered during excavation represented a substantial departure from the conditions contemplated by the original plans for both embankment construction and backfilling trenches, Ryan was entitled to a change order. The City's refusal to grant a change order raises an issue as to breach of contract by the City.
Where the evidence conflicts, the question of whether a contract was breached is a fact question for the jury. Ylijarvi v. Brockphaler. 213 Minn. 385, 392, 7 N.W.2d 314, 319 (1942). When reviewing the trial court's decision that the evidence presents a fact question for the jury, we must view the evidence in a light most favorable to the nonmoving party and determine independently whether an issue of fact exists for trial. Baber v. Dill, 531 N.W.2d 493, 495 (Minn. 1995).
Ryan's vice-president testified that the unsuitability to use as fill the rocks excavated from the trenches and the black dirt unearthed above the street subgrade presented conditions substantially different from those contemplated in the plans and specifications. Ryan testified that work performed in hauling material from another contractor's abandoned stockpile and hauling rocks from the construction site to a crusher and back was extra work required by the unanticipated conditions.
Ryan alleged that this evidence also supported its claim of breach of implied warranty of the plans and specifications. If a contractor is required to construct a project according to the plans and specifications provided by the project owner, the owner impliedly warrants the sufficiency of the plans and specifications. McCree & Co. v. State, 253 Minn. 295, 311, 91 N.W.2d 713, 724 (1958). If the contractor is required to perform extra work due to the owner's breach of this implied warranty, the contractor is entitled to damages. Zontelli & Sons, Inc. v. City of Nashwauk, 373 N.W.2d 744, 751-52 (Minn. 1985), McCree, 253 Minn. at 311, 91 N.W.2d at 724.
Ryan claimed that as a result of the conditions arising during excavation, the anticipated amounts of material described in the plans and specifications were insufficient, and thus the city breached the implied warranty of plans and specifications. Ryan's claim is supported by record evidence both as to the shortfall of acceptable material for embankments and backfill and as to the extra work the shortfall caused for Ryan.
Viewing the evidence in the light most favorable to the verdict, we conclude that the district court did not err in submitting to the jury Ryan's claims for breach of contract and breach of implied warranty of plans and specifications.