MASTEC NORTH AM. v. EL PASO FLD. SER

rom a utilitarian standpoint bearing in mind the particular business activity sought to be served," and "will avoid when possible and proper a construction which is unreasonable, inequitable, and oppressive." Frost Nat'l Bank, 165 S.W.3d at 312 (quoting Reilly v. Rangers Mgmt, Inc., 121 S.W.2d 527, 530 (Tex. 1987)).

If, after the pertinent rules of construction are applied, the contract can be given a definite or certain legal meaning, it is unambiguous, and we construe it as a matter of law. Id; Transcon. Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658, 665 (Tex.App.-Houston [1st Dist.] 2000, pet. denied) (holding that "[i]f the contract is unambiguous, the court must enforce the contract as written"). However, if the meaning of the contract remains uncertain or is susceptible to more than one reasonable interpretation, it is ambiguous. Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995); Coker v. Coker, 650 S.W.2d 391, 393-94 (Tex. 1983).

Whether a contract is ambiguous is a question of law to be determined "by looking at the contract as a whole in light of the circumstances present when the contract was entered." Coker, 650 S.W.2d at 394. Only when a contract is first determined to be ambiguous may the courts consider the parties' interpretation and admit extraneous evidence to determine the true meaning of the instrument. Nat'l Union Fire Ins. Co., 907 S.W.2d at 520. An ambiguity does not arise simply because the parties advance conflicting interpretations of the contract. Forban v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994). A court may conclude that a contract is ambiguous even in the absence of such a pleading by either party. Sage St. Assocs. v. Northdale Constr. Co., 863 S.W.2d 438, 445 (Tex. 1993).

C. The Applicable Contract Provisions

MasTec directs us to Specifications LP-5 and LP-17 of the Contract, which it contends specifically address foreign crossings and provide that El Paso "will have exercised due diligence in locating" the crossings, as follows:

2. COMPANY FOREIGN LINE AND UTILITY CROSSINGS

[ El Paso] will have exercised due diligence in locating foreign pipelines and utility line crossings. However, the contractor shall confirm the location of all such crossings and notify the owner prior to any ditching activity in the vicinity of the crossings. . . .

. . . .

2. FOREIGN LINE AND UTILITY CROSSINGS [ El Paso] will have exercised due diligence in locating foreign pipelines and/or utility line crossings. However, the Contractor shall confirm the location of all such crossings and notify the owner prior to any HDD activity in the vicinity of the crossings. Contractor shall be responsible for all damages to foreign pipelines and/or utility line crossings during HDD operations. Contractor shall repair damaged foreign pipelines and/or utility line crossings to original or better condition and meet Company approval. In all cases, foreign pipelines, utility line crossings and/or structures take precedence over Company tolerances.

Specifications LP-5, -17 (emphasis added).

The plain language of Specifications LP-5 and LP-17 reflects that El Paso made affirmative assurances that it had exercised "due diligence" in locating foreign crossings. The provision further expresses that the parties intended that MasTec " confirm the location of all such crossings" prior to actually ditching in the vicinity of those crossings and that MasTec notify each foreign crossing owner prior to digging in the vicinity of their crossing. (Emphasis added.)

We do not find any place within the four corners of the Contract that the term "due diligence" is defined. When a contract term is not defined, it will be given its plain, ordinary, and generally accepted meaning, DeWitt County Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96, 101 (Tex. 1999), unless the instrument shows that the parties used it in a technical or different sense. NationsBank, 939 S.W.2d at 121. The Texas Supreme Court has held, "The term `diligence' is relative and incapable of exact definition. Its meaning must be determined by the circumstances of each case. Reasonable diligence has been defined as such diligence that an ordinarily prudent and diligent person would exercise under similar circumstances. . . . It is usually a question of fact." Strickland v. Lake, 163 Tex. 445, 448, 357 S.W.2d 383, 384 (Tex. 1962); see Wheeler v. Methodist Hosp., 95 S.W.3d 628, 637 (Tex.App.-Houston [1st Dist.] 2002, no pet.) (stating that whether party has exercised "due diligence" is question of fact).

Here, El Paso's assurances that due diligence will have been exercised in locating foreign crossings is reasonably construed as meaning that the steps that an ordinarily prudent and diligent person would exercise under similar circumstances will have been performed. What those steps entail and whether they were performed in this case is a question of fact. See Strickland, 163 Tex. at 448, 357 S.W.2d at 384; Wheeler, 95 S.W.3d at 637; see also Oxoco Exploration Prod. Inc. v. Arrowhead Drilling Corp., No. A14-86-181-CV, 1986 WL 11603, at *2 (Tex.App.-Houston [14th Dist.] Oct. 16, 1986, no pet.) (mem. op.) (holding that whether due diligence was exercised in drilling contract was fact issue for jury to resolve under circumstances presented).

Here, the jury found that El Paso failed to "exercise[] due diligence in locating foreign pipelines and/or utility line crossings." El Paso moved for JNOV on the grounds that "[t]he fact that MasTec encountered more underground pipeline crossings than were shown on the drawings was a risk it willingly and openly assumed" under the Contract. El Paso directs us to Articles 2.1, 7.1(e), 8.1(a)(7), and to Exhibit B-1.

Article 2.1 states, in relevant part, as follows:

[MasTec] agrees, at its cost, that it shall (except as otherwise provided for in the Contract or Drawings) furnish all necessary materials, supplies, labor, tools, equipment superintendence, apparatus and machinery, including without limitation, transportation and all other items necessary to perform the Work for the construction and completion. . . .

The plain language of this provision reflects that MasTec promised to furnish, at its cost, the items necessary to perform the work, "except as otherwise." Hence, MasTec's obligation to perform the work for a lump sum is subject to exceptions.

Articles 7.1(e) and 8.1(a)(7) are similar. Article 7.1(e) provides that

[MasTec represents] [t]hat its duly authorized representative has visited the site of the Work, is familiar with the local and special conditions under which the Work is to be performed and has correlated the on site observations with the requirements of the Contract and has fully acquainted itself with the site, including without limitation, the general topography, accessibility, soil structure, subsurface conditions, obstructions and all other conditions pertaining to the Work and has made all investigations essential to a full understanding of the difficulties which may be encountered in performing the Work, and that anything in this Contract or in any representations, statements or information made or furnished by [El Paso] or any of its representatives notwithstanding, [MasTec] assumes full and complete responsibility for any such conditions pertaining to the Work, the site of the Work or its surroundings and all risks in connection therewith. . . .

Article 8.1(a)(7) provides that

[MasTec] represents that it has had an opportunity to examine, and has carefully examined, all of the Contract documents and has fully acquainted itself with the Scope of Work, design, availability of materials, existing facilities, the general topography, soil structure, substructure conditions, obstructions, and all other conditions pertaining to the Work, the site of the Work and its surroundings; that it has made all investigations essential to a full understanding of the difficulties which may be encountered in performing the Work; and that anything in any of the Contract documents or in any representations, statements or information made or furnished by [El Paso] or its representatives notwithstanding, [Mastec] will regardless of any such conditions pertaining to the Work, the site of the Work or its surroundings, complete the Work for the compensation stated in this Contract, and pursuant to the extent of [MasTec's] liability under this Contract, assume full and complete responsibility for any such conditions pertaining to the Work, the site of the Work or its surroundings, and all risks in connection therewith. In addition thereto, [MasTec] represents that it is fully qualified to do the work in accordance with the terms of this Contract within the time specified.

Articles 7.1(e) and 8.1(a)(7) each provide that MasTec represented that it was "familiar with" or had "fully acquainted itself with" the work and the site. The meaning of the language "is familiar with" and "has fully acquainted itself with," as used in the Contract, is not immediately clear. The plain, ordinary, and generally accepted meaning of the terms "familiar" and "acquainted," however, reflects an intent that a representative of MasTec develop at least some personal knowledge of the work and of the site. See Parks, 1 S.W.3d at 101 (stating that terms not defined in contract are given plain, ordinary, and generally accepted meaning). With regard to underground foreign crossings, nothing in this language suggests that the parties intended that MasTec, at the time of contracting, have actually ascertained on its own the number and location of underground foreign crossings along El Paso's 68-mile pipeline corridor.

By contrast, other language in article 8.1(a)(7) specifies that MasTec was to have "carefully examined" all of the Contract documents. The clear intent expressed by this language is that the parties intended to place strong emphasis on that which was contained in "all of the Contract documents." The Contract documents include alignment sheets created by a professional engineering firm, purporting to reflect the number and location of underground foreign crossings, along with express written assurances by El Paso that due diligence was exercised in developing the Specifications it gave to MasTec regarding the number and location of underground foreign crossings.

Both articles 7.1(e) and 8.1(a)(7) provide that MasTec was to have conducted "all investigations essential to a full understanding" of the work. The intent reasonably deduced from this language, when read in light of El Paso's assurances at LP-5 and LP-17 regarding foreign crossings and the professional drawings, is that MasTec was to conduct any remaining investigations that it deemed necessary with regard to formulating its overall understanding of the work. It is not reasonable to conclude that the parties intended that an "essential" investigation include a highly impractical, complete re-investigation of the Specifications El Paso had already provided regarding 68 miles of its own existing underground pipeline and corridor. See Frost Nat'l Bank, 165 S.W.3d at 312 (stating that "[w]e construe contracts from a utilitarian standpoint, bearing in mind the particular business activity," and avoid unreasonable constructions); see also Hollerbach v. United States, 233 U.S. 165, 172, 34 S.Ct. 553, 556, 58 L.Ed. 898 (1914) (stating that owner's specifications regarding character of underground material was matter upon which owner might be presumed to speak with knowledge and authority, and concluding that contractor was not required to undertake investigation to prove falsity of owner's specifications). Moreover, it is reasonable to conclude that El Paso's assurances would effectively thwart an in-depth re-investigation by MasTec.

This conclusion is supported by other language in Article 7.1(e), which states that MasTec was simply to have "correlated" its "on site observations" with the Contract. (Emphasis added.) The clear intent expressed by this language is that MasTec was to observe the site — that is, to view it by sight — and to compare what it saw with what was provided in the Contract.

Although articles 7.1(e) and 8.1(a)(7) include the terms "substructure conditions" and "obstructions," these provisions do not expressly include underground foreign crossings. By contrast, LP-5 and LP-17, discussed above, contain specific assurances concerning "foreign crossings."

Turning to Exhibit B-1, "Contractor's Proposal," paragraph 1 provides that MasTec agreed to

[f]urnish all labor, equipment and materials as described in the Specifications for all Work necessary to perform the following applicable Work as shown on the Drawings, including but not limited to: loading, hauling, unloading, storing, clearing, excavating, including rock if encountered, cutting and beveling of pipe; installing pipe or valves, where required; removing pipe or valves, where required; welding (including tie-in and transition welds, if required); coating, repairing coating, furnishing and installing padding when applicable; installing concrete supports; blow-offs, bypasses, bolting, bracing hydrostatic testing of completed assemblies, painting of newly installed piping assemblies and cleanup.

The plain language of this paragraph reflects that MasTec's promise to furnish all labor, equipment and materials, specifically with regard to tie-ins, applies to that which is "described in the Specifications" and "shown on the Drawings."

Exhibit B-1 at paragraph 15 provides that

[a]ny Work required to complete installation of the new pipeline but not shown as a pay item is no less included in the scope of work for installation of the new 8-inch Butane Shuttle pipeline and is included in [MasTec's] lump sum proposal. Just because an item of Work is not specifically identified, does not mean such Work is not included in [MasTec's] scope of Work. Any item of Work [MasTec] knows is required for completion of the installation but not specifically identified is to be included in [MasTec's] Lump Sum Proposal.

This paragraph reflects that any item not shown as a pay item "is included in the lump sum proposal," but it is qualified by "[a]ny item of Work [ MasTec] knows is required for completion. . . ."(Emphasis added.)

So far, articles 2.1, 7.1(e), 8.1(a)(7) and Exhibit B-1, read together and in light of the entire Contract, evidence an intent that MasTec's responsibilities under the Contract with regard to unidentified foreign crossings were to be subject to El Paso's Specifications, Drawings, and assurances under the Contract.

However, articles 7.1(e) and 8.1(a)(7) also provide that, "notwithstanding" any information in the Contract or statements made by El Paso, MasTec "assumes full and complete responsibility" for the site conditions and the associated "risks," and will "complete the work for the lump sum stated in the Contract." This language suggests an attempt by El Paso to disavow its assurances of due diligence at LP-5 and LP-17 and its qualifying language in articles 2.1, 7.1(e), 8.1(a)(7) and Exhibit B-1. No single provision is given such controlling effect. See Webster, 128 S.W.3d at 229.

In addition, construing the "notwithstanding" language to require MasTec to disbelieve El Paso's Specifications regarding the number and location of underground crossings, to ignore El Paso's assurances under the Contract that it exercised due diligence in developing its Specifications, and to independently determine, at the time of contracting, El Paso's degree of error along 68 miles of El Paso's own existing underground pipe-line is, we think, an unreasonable construction. Again, we construe contracts "from a utilitarian standpoint bearing in mind the particular business activity sought to be served," and "will avoid when possible and proper a construction which is unreasonable, inequitable, and oppressive." Frost Nat'l Bank, 165 S.W.3d at 312.

El Paso contends that the caselaw supports construing the "notwithstanding" language in light of the pre-bid-investigation and lump sum provisions of the Contract as placing the risk of differing or unexpected site conditions on MasTec as a matter of law. To the contrary, MasTec contends that the caselaw supports that it is not, by the inclusion of such language, precluded from recovery as a matter of law.

D. The Risk of Differing or Unexpected Site Conditions

MasTec directs us to Shintech Inc. v. Group Constructors, Inc., 688 S.W.2d 144, (Tex.App.-Houston [14th Dist.] 1985, no writ), and IT Corporation v. Moteo Site Trust Fund, 903 F.Supp. 1106 (S.D.Tex. 1994).

In Shintech, the court allowed a contractor to recover for damages in spite of a site inspection clause and the contractor's assumption of risk under the contract. Shintech Inc., 688 S.W.2d at 151. There, owner Shintech engaged a contractor, Group, to finish an industrial plant expansion. Id. at 147. Group submitted a lump sum bid to "furnish all labor, construction services, and supplies necessary," which was accepted. Id.

During the project, Shintech allegedly interfered with the efficiency of Group's work. Group sued Shintech, asserting, inter alia, that Group incurred expenses based on Shintech's " excessive design errors, changes, and extra work orders." Id. at 147-48 (emphasis added). The trial court rendered judgment in favor of Group. Id. at 148.

On appeal, the court recognized that a contractor is entitled to recover from an owner for losses due to delay and hindrance of its work if it proves (1) that its work was delayed or hindered, (2) that it suffered damages, and (3) that the owner was responsible for the act or omission that caused the delay or hindrance. Id. Shintech complained that, in the contract, Group had assumed the risk of delays and hindrances as follows: "Having fully acquainted itself with the work, the site of the work, its surroundings and all risk in connection therewith, the contractor assumes full and complete responsibility for completing the work for the compensation and within the time provided. . . ." Id. at 151 (emphasis omitted). The court rejected Shintech's theory, stating that it found no evidence that Group had knowledge of defective specifications prior to beginning its work. Id. In addition, the court found that the Shintech contract also provided, "Upsets of [the construction schedule] caused by acts of the client [Shintech] or those over which he controls causing undue expense on the contractor [Groupl shall be for the owner's [Shintech's] account." Id. at 148 (emphasis omitted).

Here, like the contractor in Shintech, MasTec agreed to supply all services, labor, and materials necessary under a lump sum contract; MasTec agreed to inspect the site and to assume responsibility for timely completing the work for the agreed compensation; MasTec later discovered excessive errors in the specifications provided by El Paso; and MasTec did not have knowledge of the defective specifications prior to beginning its work. Also, the Contract herein provides at Article 4.6, "COMPENSATION FOR DELAYS IN PERFORMANCE OF WORK," section b, "For delays in the performance of the Work attributable to [El Paso], it is agreed that the compensation and/or amounts due [MasTec] in full and complete settlement of such delays shall be as follows: [various lump sum settlement or reimbursement options]." Hence, there is some evidence in the Contract of intent to allocate to El Paso those expenses that cause MasTec delay and that are attributable to El Paso.

MasTec also directs us to IT Corporation, a case from the southern district of Texas. 903 F.Supp. at 1106. There, the Environmental Protection Agency required Monsanto to perform remedial action at Monsanto's hazardous waste site. Id. at 1111. Monsanto sent to contractors a request for proposal and scope of work ("bid documents") that included technical data concerning the chemical waste at the site, as prepared by Monsanto's consultants. Id. A letter accompanying the bid documents stated that the waste characteristics were "for information only and will not establish the basis for qualifying bids, quantities, methods, compositions, etc. We feel that sufficient information is available to allow a responsible, experienced contractor to provide a lump sum bid for the service required. . . . " Id. at 1117. The bid documents specified that on-site incineration was to be the primary remedial method employed. Id. at 1111.

Although the letter accompanying the bid documents stated that the waste characteristics given were for information only, the proposed bid format stated that the information shown in the specifications "shall be used" in determining the lump sum price; that the "data is based upon test results by an independent consultant and is considered reliable"; that the contractor should include a "suitable contingency based upon the contractor's experience"; and that "no cost adjustments will be allowed for surface debris quantities different from those noted." Id. at 1117-18.

Contractor ITC visited the site, obtained waste samples, performed limited testing, and submitted its lump-sum bid with a signed statement that it was familiar with the site. Id. at 1111. ITC was awarded the contract. Id.

The contract defined the scope of work as follows:

The "Work" to be performed by Contractor under this Agreement shall consist of furnishing all personnel, supervision, services, field labor, materials, tools, equipment, supplies and all things required for the necessary design, engineering, construction of facilities and all associated services to properly complete the Remedial Action in strict accordance with the Project Scope of Work. . . . Contractor shall provide all labor, material, equipment and supervision required to complete the remediation. . . .

Id. at 1119. The Scope of Work section in the bid documents and the contract included extensive tables and maps describing the geologic and hydrologie characteristics of the site. Id.

During the work, ITC discovered that the waste characteristics were not as Monsanto had specified in the bid documents. Id. at 1111-12. ITC notified Monsanto that ITC could not reasonably have discovered the errors until ITC had performed extensive work at the site and that these differences had a drastic impact on efficiency of incineration and costs. Id. at 1112. ITC claimed that it could not do the work for the price it bid because the work was not as represented by Monsanto. Id. Monsanto refused to consider ITC's claims until ITC completed a "trial burn." Id. ITC continued to work under the contract while the parties negotiated. The parties were unable to find compromise, and ITC suspended its work. Id.

ITC sued Monsanto for, inter alia, breach of contract, alleging that ITC had been forced to discontinue work because Monsanto had misrepresented the site conditions. The jury returned a verdict in favor of ITC. Id.

On appeal, Monsanto contended that any misrepresentation in the bid documents was not a breach of the contract. Id. at 1115. The court disagreed, holding that Monsanto had made assertions concerning the characteristics of the waste that were materially false and that ITC, although it had not investigated the accuracies of the characteristics described in the bid documents, was not estopped from asserting a breach of contract claim. Id. at 1115-16.

In addition, Monsanto argued that the contract placed the risk of the site conditions on ITC, that ITC had assumed the risk by verifying with its bid that it was familiar with the site conditions, and that ITC was estopped by its investigation from complaining about any misrepresentations in the RFP. Id. at 1116. Monsanto further argued that, as a matter of law, the contract placed the risk of differing or unexpected site conditions on the contractor, required the contractor to investigate the site prior to bidding, and that the contractor directed his own work under the contract. Id.

ITC did not dispute that it was required to perform the contract for a lump sum. Id. at 1117. ITC asserted, however, that the contract did not require it to bear the risk that the bid documents misrepresented the nature and amount of the work to be performed. Id.

The court considered whether, in a lump sum contract in which the contractor has had a right to inspect the site before bidding, the risk that the owner's specifications are inaccurate or inadequate to perform the job falls on the contractor as a matter of law. Id. at 1120. The court concluded that it does not. Id. at 1126-27.

In IT Corp., as does El Paso in the case before us, the appellee-owner relied on Lonergan v. San Antonio Loan Trust Co., 101 Tex. 63, 104 S.W. 1061 (1907), and Emerald Forest Utility District v. Simonsen Construction Co., 679 S.W.2d 51 (Tex. App.-Houston [14th Dist.] 1984, writ ref'd n.r.e.), to support its contention that the risk falls on the contractor. IT Corp., 903 F.Supp. at 1120.

In Lonergan v. San Antonio Loan Trust Co., the Supreme Court of Texas held that a contractor was not excused from performance under a contract to build a house even though the plans and specifications that were prepared by the owner's architect proved to be defective. 101 Tex. 63, 104 S.W. 1061, 1065 (1907). After the nearly completed house collapsed, the contractor abandoned the job, and the owner sued for breach of contract. Id. at 1062. The contractor answered that the house collapsed because the plans and specifications were defective. Id. The court held that the contractor was not excused from his contractual obligations to build the house because the owner was not in a better position than the contractor to discover the inadequacies in the plans and there was no express or implied contractual language that would justify a conclusion that the parties intended that the owner be liable. Id. at 1066.

In Emerald Forest Utility District v. Simonsen Construction Company, the contractor agreed to construct an underground sewer system according to plans furnished by the owner. 679 S.W.2d 51, 52 (Tex.App.-Houston [14th Dist.] 1984, writ ref'd n.r.e.). The instructions to bidders had provided for independent investigation of the work site and stated that the submission of a bid was to be "conclusive evidence" that the contractor was "fully acquainted and satisfied" with the quality and quantity of work. Id. at 53. During construction, the contractor encountered "very wet sand conditions." Id. at 52. There was testimony that an alternate "wet sand construction method" should have been applied. Id. After the contractor completed the work, the sewer lines failed. Id. The owner sued the contractor. Id. A jury concluded that the lines failed because the design provided by the owner was insufficient. Id. The court examined the contract and held that the owner had not expressly or implicitly promised that the plans provided were sufficient for the work. Id. at 53.

The IT Corp. court, holding in favor of ITC, concluded that the case before it did not present a situation similar to those involved in Lonergan or Emerald Forest because the contractor did not have the same opportunity or ability as the owner to gather information about the site and to judge the sufficiency of that information before submitting its bid. 903 F.Supp. at 1120-21, 1123.

Here, as in IT Corp., El Paso's bidding instructions provided that "[t]he Contractor's bid shall be based on the Contract documents as issued, without modification," that "significant exceptions to the provisions of the Proposed Contract documents may cause rejection of the bid," and that "[t]he Scope of Work is believed to be complete." See id. at 1111, 1117-18, 1125. As with the contractor in IT Corp., MasTec visited the site, submitted a lump-sum proposal, and represented that it was "familiar" with the site. See id. at 1111. Also as the contractor encountered in IT Corp., it was during performance of the work that MasTec discovered the errors in El Paso's specifications and such errors could not reasonably have been discovered until extensive work was performed. See id. at 1111-12. Also similarly, MasTec sued El Paso for breach of contract, and the jury returned a verdict in favor of MasTec. See id. at 1112-13. Further, similar to the owner in IT Corp., El Paso argues that the contract placed the risk of differing or unexpected site conditions on MasTec, as the contractor, that the contract required MasTec to investigate the site prior to bidding, and that MasTec assumed the risks by representing that it was "familiar" with the site conditions. See id. at 1115-16.

As in IT Corp., however, MasTec was not in as good a position as El Paso, as the owner of the Project, to gather critical information concerning underground foreign crossings in El Paso's own pipeline corridor and to judge the sufficiency of the alignment sheets that El Paso provided as a basis for MasTec's bid. El Paso owned the existing pipeline and the easements along the right-of-way, as well as a second pipeline in the same corridor. In addition, El Paso had access to its "one call" catalog, the contact information for area land-owners, and the alignment sheets on its other pipeline. Further, the parallel pipe-line owned by Valero, which was purchase from El Paso, had alignment sheets showing most of the plastic lines.

Further, as was the court in IT Corp., we are bound by the holding of the United States Supreme Court in Hollerbach v. United States, 233 U.S. 165, 34 S.Ct. 553, 58 L.Ed. 898 (1914), which was decided on similar facts and is cited by MasTec.

In Hollerbach, the United States Supreme Court held that the contractor before it was not precluded from recovering his additional expenses when he discovered, during construction, deficiencies in owner-provided specifications in a contract that also required a pre-bid, independent investigation of the jobsite by the contractor. Id. at 172, 34 S.Ct. at 556. There, the contractor, Hollerbach, contracted with the government to remove and rebuild a river dam. Id. at 167, 34 S.Ct. at 554. The contract specifications provided, inter alia, that "[t]he dam is now backed for about 50 feet with broken stone, sawdust, and sediment to a height of within 2 or 3 feet of the crest, and it is expected that a cofferdam can be constructed with this stone. . . ." Id. at 168, 34 S.Ct. at 554. In addition, "[t]he excavation behind the dam will be required to go to the bottom. . . ." Id. The contract also provided, "It is expected that each bidder will visit the site of this work, . . . and ascertain the nature of the work, the general character of the river as to floods and low water, and obtain the information necessary to enable him to make an intelligent proposal." Id. The contract further provided,

It is understood and agreed that the quantities given are approximate only, and that no claim shall be made against the United States on account of any excess or deficiency, absolute or relative, in the same. Bidders . . . are expected to examine the maps and drawings in this office, which are open to their inspection, to visit the locality of the work, and to make their own estimates of the facilities and difficulties attending the execution of the proposed contract, including local conditions, uncertainty of weather, and all other contingencies.

Id., at 167, 34 S.Ct. at 554.

During construction, Hollerbach discovered that the dam was not backed with broken stone, sawdust, and sediment, as stated in the specifications. Id. at 168, 34 S.Ct. at 554. Rather, the backing was composed of "soft, slushy sediment" on top and a "cribwork" of "sound logs filled with stone" underneath. Id. The trial court refused recovery of the additional expenses Hollerbach incurred to complete the project. Id. at 169, 34 S.Ct. at 554.

The Supreme Court reversed, concluding that the specifications assured the contractor of the character of the material — a matter upon which the owner "might be presumed to speak with knowledge and authority." Id. at 172, 34 S.Ct. at 556. The Court further explained,

We think this positive statement of the specifications must be taken as true and binding. . . . We think it would be going quite too far to interpret the general language of the other paragraphs as requiring independent investigation of facts which the specifications furnished by the [owner] as a basis of the contract left in no doubt. If the [owner] wished to leave the matter open to the independent investigation of the claimants, it might easily have omitted the specification as to the character of the [site]. . . . In its positive assertion of the nature of this much of the work it made a representation upon which the claimants had a right to rely without an investigation to prove its falsity.

Id.

Here, like the owners in IT Corp. and Hollerbach, El Paso made affirmative assurances in its Specifications directly bearing on the nature and amount of work to be performed. El Paso wrote into its Contract that due diligence was exercised in locating the foreign crossings on El Paso's alignment sheets — a matter upon which El Paso might be presumed to speak with knowledge and authority. See Hollerbach, 233 U.S. at 172, 34 S.Ct. at 556. ("In its positive assertion of the nature of this much of the work it made a representation upon which the claimants had a right to rely without an investigation to prove its falsity."). As in Hollerbach, if El Paso had wished to leave open the matter of foreign crossings to the independent investigation of MasTec, El Paso could have simply left the due diligence provision out of the Contract. See id. at 172, 34 S.Ct. at 556.

In sum, the caselaw demonstrates that a contractor is not precluded, as a matter of law, from recovering against an owner, under a breach of contract theory, for defective specifications, notwithstanding lump-sum and pre-bid investigation provisions in the contract, if the owner was in a better position to know whether its specifications were sufficient for its intended scope of work and the contract evidences that the owner made positive assurances concerning the reliability of those specifications. See id. at 172, 34 S.Ct. at 556; IT Corp., 903 F.Supp. at 1120-27. Even when the contract places the risk of differing or unexpected site conditions on the contractor, the contractor is not, as a matter of law, required to bear the risk "that the bid documents misrepresent the nature and amount of the work to be performed." See IT Corp., 903 F.Supp. at 1125.

MasTec also directs us to City of Bay town v. Bayshore Constructors, Inc., 615 S.W.2d 792 (Tex.Civ.App.-Houston [1st Dist.] 1980, writ ref'd n.r.e.). In Baytown, the court concluded that the failure of an owner to provide correct or adequate plans and specifications as are necessary to carry out the work required by a contract constitutes a breach of the contract. Id. at 793; but see Interstate Contraciing Corp. v. City of Dallas, 407 F.3d 708, 720-21 (5th Cir. 2005) (concluding that Supreme Court of Texas would require contractual language indicating an intent to shift the burden or risk to owner to find an owner breached contract by providing defective plans and also questioning reasoning in Bayshore, which relies on cases in which contracts indicated such intent).

Hence, here, MasTec's "own contractual representations and commitments" do not "conclusively preclude any recovery" on the jury's finding that El Paso failed to exercise its promised due diligence under the Contract in locating its underground foreign pipelines. We conclude that the jury's findings in Questions One and Three are not immaterial. Cf. Tichacek, 997 S.W.2d at 172 (stating that trial court may disregard jury answer and enter judgment notwithstanding the verdict if jury finding is immaterial). We hold that the trial court erred by granting a JNOV in favor of El Paso.

Accordingly, we sustain MasTec's sole issue.

CONCLUSION

We hold that the trial court erred by granting judgment notwithstanding the verdict on MasTec's breach of contract claim. We reverse the trial court's judgment as to this claim and remand for entry of judgment consistent with the jury's verdict and for the assessment of attorney's fees in favor of MasTec.

Justice JENNINGS, dissenting.