Sherrodd, Inc. v. Morrison-Knudsen Co.

Sherrodd, Inc. (Sherrodd) (plaintiff) entered into a contract with COP Construction (COP) (defendant) as a subcontractor on a construction contract. COP was itself a subcontractor, with Morrison-Knudsen Co. (Morrison-Knudsen) (defendant) and Schlekeway Construction, Inc. (Schlekeway) serving as general contractors. Sherrodd submitted a bid to do excavation. Sherrodd claims that, while it was reviewing the building site, a representative of Morrison-Knudsen told Sherrodd that the job required 25,000 cubic yards of excavation. Morrison-Knudsen denies that any of its representatives quoted this figure to Sherrodd. Sherrodd submitted its bid of $97,500 to COP based upon this representation. COP submitted its bid, which included Sherrodd’s bid, to Morrison-Knudsen. Morrison-Knudsen accepted the bids. Before the written contract was signed, Sherrodd began its excavation. Sherrod discovered that more than 50,000 cubic yards of excavation were required. The written contract was then presented to Sherrodd, which stated that Sherrodd agreed to perform “LS” excavation for the consideration of $97,500. The parties concede that “LS” means “lump sum.” The contract additionally provided that it could not be orally modified. Sherrodd claims that it complained to COP about the amount of excavation required, but signed the contract anyway because COP threatened to withhold a progress payment. Sherrodd further claims that both COP and Schlekeway orally promised that Sherrodd would be paid an amount that reflected actual work done, rather than the price quoted in the contract. When Sherrodd completed the excavation, COP paid the $97,500 provided for in the contract, less an amount for work that was not completed. Sherrodd claims that, as a result of the contract, it lost the ability to borrow money, lost bonding, suffered a lack of operating capital leaving it unable to perform other contracts, and could no longer stay in business, as it had done for 30 years. Sherodd filed suit, seeking quantum meruit for the additional excavation it completed above and beyond the 25,000 cubic yards. Morrison-Knudsen filed a motion for summary judgment. The trial court granted the motion, finding that the parol evidence rule prohibited Sherrodd from introducing evidence that conflicted with the express terms of the agreement. Sherrodd appealed to the Supreme Court of Montana.