Pack and Company v. Meadow Lake Co ( 1992 )

No. 91-232
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
PACK AND COMPANY, INC.,
Plaintiff, Respondent and
Cross-Appellant,
-vs-
MEADOW LAKE COUNTY WATER & SEWER DISTRICT;
MEADOW LAKE DEVELOPMENT CORPORATION; MEADOW
LAKE ESTATES REAL ESTATE, INC.; PETER E. TRACY,
Defendants and Appellants.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Michael H. Keedy, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Ward E. Taleff; Alexander, Baucus & Linnell, Great
Falls, Montana
For Respondent:
Dana L. Christensen; Murphy, Robinson, Heckathorn &
Phillips, Kalispell, Montana
Submitted on Briefs: May 28, 1992
JUN -2 1992 Decided: June 2, 1992
I
Clerk
Justice R. C. McDonough delivered the Opinion of the Court.
Meadow Lake County Water and Sewer District, Meadow Lake
Development Corporation, Meadow Lake Estates Real Estate, Inc., and
Peter E. Tracy, appeal from a judgment of the Eleventh Judicial
District Court, Flathead County, in favor of Pack and Company, Inc.
We affirm in part and reverse in part. We frame the following
issues for appeal:
1. Whether the District Court erred in its damage award to
Pack and Co., Inc., and in awarding Pack and Co., Inc. prejudgment
interest; and
2. Whether the District Court erred in finding Peter Tracy
individually liable.
The dispute before us arose out of a contract between Meadow
Lake County Water & Sewer District (Meadow Lake) and Pack and Co.,
Inc. (Pack) entered into on October 1, 1985. The contract provided
that Pack construct water and sewer improvements for a golf course
near Columbia Falls, Montana. Under the contract Pack was to
install the necessary lines and connect those lines to the Columbia
Falls facilities. The contract also involved some road paving.
The written agreement required completion of the project in 90
days. The plans and specifications were in accordance with the
project engineer, Carver Engineering. The specifications provided
for liquidated damages of $300 per day for each day beyond the
deadline until the contract work was substantially completed.
Evidence presented at trial revealed that the golf season begins in
March and that it was important for the work to be completed before
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the season got underway.
On February 13, 1986, the parties executed a written change
order. This order reflected a reduction of the contract price due
to a decrease in the work required. It also extended the
completion date to May 1, 1986. The project was substantially
completed on July 7, 1986.
Pack brought suit against Meadow Lake and Peter Tracy for
amounts due on accounts in connection with the project. Meadow
Lake counterclaimed and the District Court after a non-jury trial
found in favor of Meadow Lake, granting them liquidated damages.
The liquidated damages were to be deducted from the total amount
Pack claimed due. The District Court then rendered net judgment in
favor of Pack. Meadow Lake moved the District Court to correct
mathematical errors. The motions were not ruled upon. Meadow Lake
appeals.
Our standard of review in reviewing findings of fact in a non-
jury matter is clearly erroneous. Interstate Production Credit
Association v. DeSaye (1991), __ Mont. -, 820 P.2d 1285.
I
Whether the District Court erred in its damage award to Pack
and Co., Inc., and in awarding Pack and Co., Inc. prejudgment
interest.
The District Court found that Meadow Lake was entitled to
liquidated damages totaling $15,900.00 from May 16, 1986 to July 7,
1986. It further found that Meadow Lake waived its right to
receive liquidated damages from the date of contract completion on
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May 1, 1986 to May 16, 1986 when they requested extra trenching and
paving work. The District Court further found that Meadow Lake was
entitled to an offset of $2,244.44 to reimburse it for damage Pack
had done to an electrical line. It also found Meadow Lake was
entitled to an offset of $1,668.40 for unused sewer pipe. All of
which totals $19,812.84.
The District Court found that Meadow Lake owed Pack money
remaining on the contract with ten percent interest to the date of
trial as compiled by the court, which came to $44,709.76. It
appears the District Court found, based on 5 31-1-106, MCA (1990),
that work done over and beyond the contract was an open account
subject to the applied ten percent interest. Meadow Lake retained
$26,896.59 over the course of the contract payment. The District
Court found that Pack was also entitled to $7,103.75 remaining on
the contract.
Meadow Lake argues that the District Court made mathematical
errors in its damage award. The total amount of the judgment was
$44,709.76, plus the $7,103.75 remaining on the contract, for a
total of $51,813.51, in favor of Pack. The total amount included
prejudgment interest.
Meadow Lake contends that the District Court added back into
the award "retainage" which was already included in Pack's figures
of amount due. They argue this amounts to prejudgment interest and
double recovery. Under the contract, Meadow Lake was entitled to
retain a certain percentage of the amount from each billing.
According to Meadow Lake, the retainage of $26,896.59, was
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improperly added back.
The amount due on the contract alone, as evidenced by Pack's
demand letter, and as computed using Pack's explanatory invoice is
$26,896.59. After deducting the items of the finance and extra
work charges, this is the same amount due as Meadow Lake agrees is
the retainage. This ultimate amount due on the contract,
$26,896.59, is also supported by the findings of the District
Court. Therefore there is to be subtracted from the $26,896.59 the
amount of $15,900.00 in liquidated damages awarded to Meadow Lake,
the offsets of $2,244.44 for the damage done by Pack to the
electrical line and the $1,668.40 for the credit for the unused
pipe. This leaves a balance of $7,083.75 owing by Meadow Lake on
the contract.
Pack's explanatory invoice indicates four invoices remain
unpaid. Invoice #23120 indicates the amount due for flaging work,
which is $377.45. Invoice #23195 indicates the amount due for
equipment rental, which is $100.00. The amount due on the extra
work, as reflected on invoice #23841, and Pack's explanation of
account is $3,610.98. The amount due on the lift station work,
invoice #23840, is $5,156.48. The total for the four outstanding
invoices is $9,244.91. Ten percent interest on this amount is
allowed. It appears from the record that the amount of the
invoices was not contested, but which entity was liable was
contested. The District Court found that Meadow Lake was liable,
and that the remaining unpaid amounts are then subject to interest
charges. We agree. Therefore, ten percent interest from the date
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of the invoices to the date of judgment is allowed.
As we stated in Safeco Insurance Co. v. Lovely Agency (1985),
215 Mont. 420, 697 P.2d 1354, for prejudgment interest there must
be an underlying monetary obligation, the amount of recovery must
be certain or capable of being made certain by calculation and the
right of recovery must rest on a certain day. Here, all three
criteria are met. We agree with the District Court that
prejudgment interest is allowable on the outstanding invoices. We
conclude the District Court made a mathematical error in its award
in favor of Pack. The District Court was clearly erroneous. We
therefore reverse and remand to the District Court for the correct
calculations.
I11
Whether the District Court erred in finding Peter Tracy
individually liable.
The District Court concluded that the named defendants owed
Pack a total of $51,813.51. However, Pack, in its complaint
demanded judgment against Peter Tracy in the sum of $974.02, which
did not involve Meadow Lake. Pack renewed its demand in its
amended complaint. Further, the pretrial order states that Pack is
seeking $974.02 plus interest from Peter Tracy.
Pack did not amend its complaint to reflect it was seeking to
recover individually against Peter Tracy on the amounts owed to it
by Meadow Lake. Therefore, we conclude the District Court erred in
finding Peter Tracy individually liable for amounts other than
reflected in the complaint, the amended complaint, and the pretrial
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order. We therefore reverse the District Court on this issue.
Affirmed in part, reversed in part, and remanded for
computation of the judgment in accordance with this opinion.
Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
1988 Internal Operating Rules, this decision shall not be cited as
precedent and shall be published by its filing as a public document
with the Clerk of this Court and by a report of its result to the
West Publishing Company.
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