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Keywords

contractdefendantsummary judgmentcorporation
contracttortdefendantdamagesstatutesummary judgmentwill

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Sherrodd, Inc. v. Morrison-Knudsen Co., 249 Mont. 282, 815 P.2d 1135

Facts

Sherrodd, Inc. is a family-owned construction corporation that subcontracted with COP Construction to perform earth-moving work for a project involving fifty family housing units for the Army Corps of Engineers. Sherrodd's bid was based on the belief that there were 25,000 cubic yards of excavation to be done, a figure allegedly provided by a representative of the general contractor, Morrison–Knudsen. After starting work, Sherrodd discovered that the actual quantity of excavation was significantly higher. Despite this, Sherrodd signed a written contract with COP that specified a lump sum payment, which led to the dispute over additional compensation for the extra work.

Sherrodd contends that while its officer William Sherrodd was examining the building site in preparation for submitting a bid on this project, a representative of Morrison–Knudsen told him that there were 25,000 cubic yards of excavation to be performed on the job. It claims that its bid of $97,500 on the subcontract was made in reliance on that representation, based on $3.90 per cubic yard for 25,000 cubic yards.

Issue

Whether the entry of summary judgment for defendants was proper given the claims of fraud and the parol evidence rule.

The issue is whether the entry of summary judgment for defendants was proper.

Rule

The parol evidence rule prohibits the admission of oral statements that contradict the terms of a written contract, unless the alleged fraud does not relate directly to the subject of the contract.

The parol evidence rule is codified in Montana statutes. Section 28–2–904, MCA, provides that: The execution of a contract in writing, whether the law requires it to be written or not, supersedes all the oral negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument.

Analysis

The court applied the parol evidence rule, determining that Sherrodd could not introduce evidence of the alleged oral misrepresentations regarding the quantity of excavation work. The written contract explicitly stated that Sherrodd had satisfied itself regarding the quantity of work and that no verbal agreements would modify the contract terms. Thus, the court concluded that the written agreement superseded any prior oral negotiations.

Because the written agreement supersedes all previous oral agreements, the rule prohibits admission of any evidence of the representation by the Morrison–Knudsen representative.

Conclusion

The court affirmed the summary judgment for the defendants, concluding that Sherrodd's claims were barred under the parol evidence rule.

We conclude that the compensation of Sherrodd is governed exclusively by the written contract and that Sherrodd's claims are barred under the parol evidence rule.

Who won?

Defendants (COP Construction and Morrison–Knudsen) prevailed because the court found that the written contract's terms were clear and that the parol evidence rule barred Sherrodd from introducing evidence of alleged oral misrepresentations.

Sherrodd was paid the $97,500 provided for in the contract, less approximately $9,750 for work left uncompleted. It brought this suit to set aside the price provisions in the contract and to recover quantum meruit plus tort damages.

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