                                                                                       No.       88-531

                                                   I N THE SUPREME COURT OF THE STATE O F MONTANA

                                                                                             1989




TRI-COUNTY ATLAS,                                             INC.,

                                                       P l a i n t i f f and R e s p o n d e n t ,
                              -vs-
JAMES BRUMMER, d / b / a BRUMMER E N T E R P R I S E S ,

                                                       D e f e n d a n t and A p p e l l a n t .




APPEAL FROM:                                           D i s t r i c t C o u r t of t h e F i r s t J u d i c i a l D i s t r i c t ,
                                                       I n and f o r t h e C o u n t y o f L e w i s & C l a r k ,
                                                       The H o n o r a b l e Henry L o b l e , J u d g e presiding.

COUNSEL O F RECORD:

                             For Appellant:

                                                       C h a r l e s E. P e t a j a , H e l e n a , M o n t a n a
                                                       T h o m a s H. C l a r y ; C l a r y & C l a r y , G r e a t F a l l s ,           Montana

                             For Respondent:

                                                       P. K e i t h K e l l e r ; K e l l e r , R e y n o l d s , D r a k e ,        Sternhagen
                                                       & Johnson, H e l e n a , M o n t a n a




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Mr. Justice John Conway Harrison delivered the Opinion of the
Court.

      This appeal arises from an action to foreclose a
mechanics' lien filed by Tri-County Atlas, Inc. for work and
materials supplied to a construction project owned by James
Brummer. The District Court for the First Judicial District,
Lewis and Clark County, entered judgment in favor of
Tri-County. We affirm and remand for correction of costs.
      James Brummer is a general contractor who conceived and
developed the construction of a professional office building
located   in Helena, Montana.         Brummer, through his
corporation, Brummer     Enterprises,   Inc.,  designed   and
constructed the building, and utilized subcontractors for
electrical, plumbing, heating, air conditioning and other
aspects of the construction. Tri-County was hired by Brummer
to install the heating, ventilation, and air conditioning
(HVAC) system, and the domestic plumbing in the building.
The parties had no written contract but merely discussed
their agreements orally.
      Tri-County began work on the building in early February
of 1987, and continued installation of both the HVAC system
and the domestic plumbing until August, when it walked off
the job because of nonpayment.      In September, Tri-County
filed its lien and brought this action to foreclose. Brummer
counterclaimed   for    alleged   defects   in   Tri-County's
workmanship.
      The District Court entered judgment for Tri-County, and
awarded damages, attorney's fees and costs. Brummer raises
the following issues for our review:
      1. Was the District Court's award of damages to
Tri-County supported by substantial evidence?
      2. Was it error for the District Court to award
attorney's fees and costs?
       The standard of review is clear. We must affirm the
trial court if its findings are supported by substantial
evidence and are not clearly erroneous.          We will not
substitute our judgment for that of the District Court.
Hammerquist v. Employment Sec. Div. of Montana Dept. of Labor
and Industry (Mont. 1988), 749 P.2d 535, 536, 45 St.Rep. 261,
262; Meridian Minerals Co. v. Nicor Minerals, Inc. (Mont.
1987), 742 P.2d 456, 461, 44 St.Rep. 1516, 1523.
       At trial, Tri-County alleged it was hired on a
not-to-exceed basis, plus specific amounts to be paid for
additional constant air volume (CAV) and variable air volume
 (VAV) units. Brummer claimed Tri-County had given a flat bid
of $112,000 for the entire HVAC system.      The evidence was
clear, however, that no final plans were submitted to
Tri-County on which it could make a firm flat bid because the
plans were evolving as the project developed. Additionally,
there was evidence that other subcontractors were hired by
Brummer on similar time-and-materials, or price-not-to-exceed
bases.
       Although Brummer's counterclaim alleged the work
performed by Tri-County was not done in a workmanlike manner,
no evidence was produced at trial that Tri-County's
workmanship was deficient. Tri-County admitted some work was
not completed, because it pulled off the job.      Tri-County
also admitted there were some product defects which would
have been covered by the manufacturer's warranty, had Rrurnrner
not failed to pay.       However, there was no evidence the
workmanship was poor. Tri-County's witnesses and even one of
Brummer's witnesses testified that Tri-County's workmanship
was very good.
       The evidence was extensive and complicated. During the
four day trial, the District Court heard testimony from
eleven witnesses, examined all of the exhibits and determined
that Tri-County was entitled to judgment. In its Opinion,
Memorandum of Decision, and Order, the District Court made
the following conclusions:
                 The evidence of each party was
           diametrically opposed to the evidence of
           the opposing party. The matter resolved
           itself into a question of which party
           presented the most credible evidence. If
           the version of the Plaintiff is accepted,
           the version of the Defendant must be
           rejected, and vice versa. As the trial
           progressed, it became very clear to the
           Court that Plaintiff presented the most
           credible    witnesses    and    evidence.
           Defendant, on the other hand, lacked
           credibility to a pronounced degree. His
           version of the events is wholly rejected
           by the Court.
      We find no abuse of discretion.      The findings were
supported by substantial evidence in the record.          The
judgment of the District Court is affirmed.
      Brumrner's final issue alleges the District Court erred
in its award of attorney's fees and costs to Tri-County. The
first basis of the alleged error, which Tri-County admits,
involves the inclusion of expert witness fees and deposition
costs within the award of attorney's fees and costs. Section
26-2-505, MCA. We remand this matter to the District Court
to deduct these costs from the award.
      The second basis of alleged error involved settlement
negotiations between the parties. Brummer apparently offered
to pay Tri-County the amount of its lien as settlement of
Tri-County's claims.     Tri-County refused because it had
already invested substantial amounts of money in attorney's
fees in its attempt to recover. The District Court refused
to hear the evidence because it involved settlement
negotiations.
      Brummer cites Schillinger v. Brewer (1985), 215 Mont.
333, 697 P.2d 919, to support his claim that because
Tri-County refused to accept his settlement offer, it is not
entitled     to   attorney's   fees.       However,   the   facts   of
Schillinger differ from those of this case, and do not
support Brumrner's theory. In Schillinger, the District Court.
awarded the defendant attorney's fees when judgment was
entered for an amount less than that offered in settlement by
the defendant.     We reversed the award of attorney's fees
because the defendant was only entitled to costs, not
attorney's fees. If Schillinger has any application to this
case, it supports Tri-County's claim for attorney's fees.
Donnes v. Orlando (1986), 221 Mont. 356, 720 P.2d 233.
Tri-County prevailed in its action and was therefore entitled
to recover attorney's fees and costs.
      Affirmed and remanded for reduction of costs awarded to
Tri-County in accordance with this opinion.




We concur:                             U
