Woodrock v. McKenzie Cty.

Filed 8/27/20 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2020 ND 182Woodrock, Inc. Plaintiff and Appellant
and
Bakken Aggregates, LLC, Plaintiff
v.
McKenzie County, North Dakota, Defendant and Appellee
No. 20200066
Appeal from the District Court of McKenzie County, Northwest Judicial
District, the Honorable Robin A. Schmidt, Judge.
AFFIRMED.
Opinion of the Court by McEvers, Justice.
Thomas R. Olson, West Saint Paul, MN, for plaintiff and appellant Woodrock,
Inc.
Brian D. Schmidt (argued) and Scott K. Porsborg (on brief), Bismarck, ND, for
defendant and appellee.
Woodrock v. McKenzie Cty.
No. 20200066
McEvers, Justice.
[¶1] Woodrock, Inc. appeals from a summary judgment dismissing its
negligence and other claims against McKenzie County. Woodrock argues the
district court erred in concluding a project to stockpile aggregate materials was
not a public improvement and the bond requirement under N.D.C.C. § 48-01.2-
10 did not apply. We conclude supplying aggregate materials to stockpiles for
general use in maintaining and repairing county roads does not constitute
“construction of a public improvement.” We therefore conclude the district
court did not err in concluding N.D.C.C. § 48-01.2-10 does not apply and the
County was not required to obtain a bond. We affirm.
I
[¶2] In September 2018, Woodrock sued the County for violations of N.D.C.C.
ch. 48-01.2 and negligence. Woodrock alleged the County hired Edwards
Gravel & Trucking, LLC to supply aggregate to aggregate stockpiles, the
County did not obtain a payment bond from Edwards Gravel, Woodrock
furnished materials for use in the project, and Edwards Gravel did not pay
Woodrock for the materials. Woodrock claimed that the County violated
N.D.C.C. § 48-01.2-10 and was negligent by failing to obtain a bond from
Edwards Gravel and that the County is liable to the subcontractors and
material suppliers who worked on the project. Woodrock requested damages in
the amount of $298,629.54.
[¶3] The County moved for summary judgment, arguing N.D.C.C. § 48-01.2-
10 does not apply because the project is not a “public improvement” as defined
by statute, there is no private right of action for failure to obtain a bond under
N.D.C.C. § 48-01.2-10, and the negligence claim fails as a matter of law because
the County did not owe a duty of care to Woodrock. Woodrock also moved for
summary judgment, arguing N.D.C.C. § 48-01.2-10 applies to the aggregate
stockpile project, the legislature intended suppliers would have a private cause
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of action against a governing body who failed to take a bond as required by
statute, and the County is liable for its negligence.
[¶4] The district court granted the County’s motion and entered summary
judgment in its favor. The court concluded there were two issues: 1) whether
the project was a public improvement project as defined in N.D.C.C. ch. 48-
01.2; and 2) if the project was a public improvement project, was the County
legally responsible for failing to obtain a bond. The court held it was
undisputed the project was to supply aggregate to stockpiles of aggregate
materials used for county road maintenance and repair, the contract was
awarded to Edwards Gravel, the County did not obtain a payment bond, the
County paid Edwards Gravel in full, and Edwards Gravel did not pay
Woodrock. The court interpreted the statutory definition of “public
improvement” and concluded the stockpiling aggregate for maintenance of
county roads was not a public improvement as defined in N.D.C.C. ch. 48-01.2,
county road maintenance is specifically excluded from the definition of a public
improvement, and no bond was required under N.D.C.C. § 48-01.2-10.
II
[¶5] Woodrock contends the district court erred in granting summary
judgment in favor of the County. Woodrock argues the aggregate stockpile
project was a “public improvement project” as defined in N.D.C.C. ch. 48-01.2,
N.D.C.C. § 48-01.2-10 applies, and the County violated the statute by failing
to obtain a bond from Edwards Gravel before the work started.
[¶6] Our standard for reviewing a district court’s summary judgment is well
established:
Summary judgment is a procedural device under
N.D.R.Civ.P. 56(c) for promptly resolving a controversy on the
merits without a trial if there are no genuine issues of material
fact or inferences that can reasonably be drawn from undisputed
facts, or if the only issues to be resolved are questions of law. The
party seeking summary judgment must demonstrate there are no
genuine issues of material fact and the case is appropriate for
judgment as a matter of law. In deciding whether the district court
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appropriately granted summary judgment, we view the evidence
in the light most favorable to the opposing party, giving that party
the benefit of all favorable inferences which can reasonably be
drawn from the record. A party opposing a motion for summary
judgment cannot simply rely on the pleadings or on unsupported
conclusory allegations. . . . When reasonable persons can reach
only one conclusion from the evidence, a question of fact may
become a matter of law for the court to decide. A district court’s
decision on summary judgment is a question of law that we review
de novo on the record.
Wachter Dev., Inc. v. Martin, 2019 ND 202, ¶ 8, 931 N.W.2d 698 (quoting
Frontier Fiscal Servs., LLC v. Pinky’s Aggregates, Inc., 2019 ND 147, ¶ 6, 928
N.W.2d 449). The interpretation of a statute is a question of law, which is fully
reviewable on appeal. Hughes v. Olheiser Masonry, Inc., 2019 ND 273, ¶ 8, 935
N.W.2d 530.
[¶7] We seek to ascertain the legislature’s intent when we interpret a statute.
Rocky Mountain Steel Founds., Inc. v. Brockett Co., LLC, 2019 ND 252, ¶ 11,
934 N.W.2d 531. Words are given their plain, ordinary, and commonly
understood meaning, unless they are specifically defined or contrary intention
plainly appears. N.D.C.C. § 1-02-02. A statute is ambiguous if it is subject to
different, but rational meanings. Rocky Mountain Steel, at ¶ 11.
[¶8] Section 48-01.2-10, N.D.C.C., governs bonds from contractors for public
improvements. When this action commenced the statute provided:
Unless otherwise provided under this chapter, a governing body
authorized to enter a contract for the construction of a public
improvement in excess of one hundred fifty thousand dollars shall
take from the contractor a bond before permitting any work to be
done on the contract. The bond must be for an amount equal at
least to the price stated in the contract. The bond must be
conditioned to be void if the contractor and all subcontractors fully
perform all terms, conditions, and provisions of the contract and
pay all bills or claims on account of labor performed and any
supplies, and materials furnished and used in the performance of
the contract, including all demands of subcontractors. . . . The bond
is security for all bills, claims, and demands until fully paid, with
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preference to labor and material supplies as to payment. The bond
must run to the governing body, but any person having a lawful
claim against the contractor or any subcontractor may sue on the
bond.
N.D.C.C. § 48-01.2-10(1) (2017).
[¶9] Undisputed evidence established that the County maintains stockpiles
of aggregate material for the purpose of repairing and maintaining roads and
that the County requested bids for 100,000 tons of Class 13 Modified aggregate
material for the County Road Department for two aggregate stockpiles. The
County prepared standard specifications to inform potential bidders of the
requirements for the project. The stockpile specifications stated, “The Project
consists of furnishing all labor, materials, and equipment to perform the
hauling and stockpiling of 100,000 total tons of Class 13 Modified that will be
divided between two (2) sites.” Edwards Gravel submitted a bid for the project
for $1,435,750. The district court concluded it was undisputed the project was
to supply aggregate for two aggregate material stockpiles to be used on county
road maintenance and repairs.
[¶10] The plain language of N.D.C.C. § 48-01.2-10 requires the governing body
to take a bond before permitting any work to be done on a contract for the
“construction of a public improvement” in excess of $150,000. “Construction” is
defined as “the process of building, altering, repairing, improving, or
demolishing any public structure or building or other improvement to any
public property.” N.D.C.C. § 48-01.2-01(4) (2017). A “public improvement” for
purposes of N.D.C.C. ch. 48-01.2 is:
[A]ny improvement undertaken by a governing body for the good
of the public and which is paid for with any public funds . . . and is
constructed on public land or within an existing or new public
building or any other public infrastructure or facility if the result
of the improvement will be operated and maintained by the
governing body. The term does not include a county road
construction and maintenance, state highway, or public service
commission project governed by title 11, 24, or 38.
N.D.C.C. § 48-01.2-01(21) (2017).
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[¶11] The word “improvement” is not specifically defined in N.D.C.C. ch. 48-
01.2. This Court previously noted the common definition of “improvement” as
it relates to real property is, “a change or addition to land or real property, as
a sewer, fence, etc., to make it more valuable.” See Bellemare v. Gateway
Builders, Inc., 420 N.W.2d 733, 736 (N.D. 1988) (quoting Webster’s New World
Dictionary (2d College Ed. 1980)). See also Improvement, Black’s Law
Dictionary 907 (11th ed. 2019) (defining improvement as “[a]n addition to
property, usu. real estate, whether permanent or not; esp., one that increases
its value or utility or that enhances its appearance.”).
[¶12] We conclude supplying materials to a stockpile for use in future projects
does not constitute “the construction of a public improvement” as defined in
N.D.C.C. ch. 48-01.2. Supplying materials to a stockpile for use in some
unspecified future project does not meet the statutory definition of construction
because it is not a process of building, altering, repairing, improving, or
demolishing a public structure or building or other improvement. It also does
not meet the statutory definition of a public improvement because it does not
constitute an improvement. It is something that has value, but it is not an
addition to property that increases its value or utility or enhances its
appearance. Our decision is consistent with the conclusion other courts have
reached in cases with similar facts. See Rogers v. Nez Perce County, 364 P.2d
1049, 1050 (Idaho 1961) (holding bond was not required when the county hired
a contractor to crush and deliver gravel to be stockpiled for repair and
construction of public roads because the contract was not for the construction,
alteration, or repair of a public work); Knuth v. Fid. & Cas. Co. of N.Y., 83
N.W.2d 126, 130 (Wis. 1957) (holding a contract to furnish sand and gravel was
not a contract for a public improvement because it was not directly related to
any public improvement and merely called for the sale of delivery of a
commodity not earmarked for use on any particular project).
[¶13] The South Dakota Supreme Court reached a similar result in Pete Lien
& Sons, Inc. v. City of Pierre, 1998 S.D. 38, 577 N.W.2d 330 (per curiam). The
City solicited bids for the supply of gravel to a city stockpile used for general
road maintenance purposes, and a subcontractor sued the City after the
contractor failed to pay for the gravel the subcontractor supplied. Id. at ¶¶ 2-
5
3. Section 5-21-1, S.D. Codified Laws, directed the City to require surety from
a contractor furnishing materials for the construction or repair of a public
improvement. Pete Lien, at ¶ 6. The subcontractor argued the City should have
required a surety from the contractor because the contract was to furnish
materials for the repair of a public improvement. Id. The court concluded the
statute specifically defined “public improvement” but did not define
“improvement,” and an improvement is ordinarily defined as a permanent
addition or betterment of real property that enhances its value and involves
the expenditure of labor or money and is designed to make the property more
useful or valuable. Id. at ¶¶ 8-9. The court held a pile of gravel does not fall
within the definition of an improvement, particularly when the material is
furnished for a general stockpile and not for a particular road improvement
project. Id. at ¶ 9. The court held that “a gravel stockpile itself does nothing to
make property more useful or valuable.” Id. We agree, a general stockpile of
materials that are not for use in a particular project does not meet the
definition of an improvement.
[¶14] Moreover, the definition of “public improvement” under N.D.C.C. § 48-
01.2-01(21) unambiguously excludes a county road construction and
maintenance project. Woodrock argues the exception for projects to repair or
maintain county roads does not apply, because the project only involved
constructing a stockpile of the materials and did not involve the construction
or maintenance of a county road. Although the project to acquire the aggregate
materials itself may not have involved actual road maintenance or
construction, it involved stockpiling materials used to repair and maintain the
county roads. The project was completed for the purpose of repairing and
maintaining the county roads.
[¶15] The project was not for the construction of a public improvement as
defined by N.D.C.C. § 48-01.2-01(4) and (21), and therefore the statutory bond
requirement for public improvements under N.D.C.C. § 48-01.2-10 did not
apply. We conclude the district court did not err in granting summary
judgment and dismissing Woodrock’s claims against the County.
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III
[¶16] We affirm the judgment.
[¶17] Lisa Fair McEvers
Daniel J. Crothers
Jerod E. Tufte
Gerald W. VandeWalle
Jon J. Jensen, C.J.
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