Oldcastle Precast, Inc. v. Concrete Accessories of Georgia, Inc
Filing
115
MEMORANDUM DECISION AND ORDER - it is hereby ORDERED: 1. Crossclaim Defendant Liberty Mutual Insurance Companys Motion for Summary Judgment (Dkt. 63 ) is GRANTED. A separate judgment, pursuant to Federal Rule of Civil Procedure 54, will accompany th is Memorandum Decision and Opinion. 2. Oldcastle Precast, Inc.s Motion for Partial Summary Judgment (Dkt. 72 ) is GRANTED to the extent it argues that Areva may not maintain a claim on the Performance Bond. 3. Oldcastle Precast, Inc.s Motion for Par tial Summary Judgment (Dkt. 72 ) isDENIED to the extent it seeks to preclude Areva from seeking delaydamages. 4. CONACs Motion for Partial Summary Judgment (Dkt. 71 ) is DENIED.5. CONACs Motion in Limine to exclude all or part of the testimony of A reva Federal Services LLCs expert, Henry Spieker, Dkt. 64 , is DENIED. 6. CONACs Motion in Limine to exclude all or part of the testimony of Oldcastles expert, Dr. Ronald Mayville, Dkt. 67 , is DENIED. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
Case No. 4:17-cv-00164-BLW
OLDCASTLE PRECAST, INC.,
Plaintiff,
v.
CONCRETE ACCESSORIES OF
GEORGIA, INC., AREVA FEDERAL
SERVICES LLC, and LIBERTY MUTUAL
INSURANCE COMPANY,
Defendants.
AREVA FEDERAL SERVICES LLC,
Counterclaimant/Crossclaimant,
v.
OLDCASTLE PRECAST, INC.,
CONCRETE ACCESSORIES OF
GEORGIA, INC.,
Counterdefendants,
&
LIBERTY MUTUAL INSURANCE
COMPANY,
Crossclaim defendant.
00
MEMORANDUM DECISION AND ORDER - 1
MEMORANDUM DECISION AND
ORDER
INTRODUCTION
The Court has three ripe summary judgment motions before it: Crossclaim
Defendant Liberty Mutual Insurance Company’s Motion for Summary Judgment, Dkt.
63; Concrete Accessories of Georgia, Inc.’s (hereinafter, “CONAC”) Motion for Partial
Summary Judgment, Dkt. 71; and, Oldcastle Precast, Inc.’s Motion for Partial Summary
Judgment, Dkt. 72.
In addition, the Court has two ripe motions in limine: CONAC’s Motion in Limine
to exclude all or part of the testimony of Areva Federal Services LLC’s expert, Henry
Spieker, Dkt. 64; and CONAC’s Motion in Limine to exclude all or part of the testimony
of Oldcastle’s expert, Ronald Mayville, Dkt. 67.
BACKGROUND
This case arises out of an accident that occurred during the construction of the
Remote Handled Low-Level Waste Disposal Facility at the Idaho National Laboratory.
The legal relationships between the various parties to this litigation are as follows:
1. Areva, working on behalf of the project owner, Battelle Energy Alliance,
performed the role of general contractor for the construction of the Remote
Handled Low-Level Waste Disposal Facility.
2. Areva entered into a Subcontract Agreement with Oldcastle (hereinafter, the
“Oldcastle Subcontract”), by which Oldcastle agreed to fabricate and deliver
MEMORANDUM DECISION AND ORDER - 2
precast concrete vaults for the project. See Dkt. 72-3, Dkt. 72-4, Dkt. 72-5,
Dkt. 72-6, Dkt. 72-7.
3. As part of its agreement with Oldcastle, Areva required Oldcastle to furnish a
Subcontract Performance Bond. See Dkt. 72-9. To fulfill this obligation,
Oldcastle obtained the Performance Bond from Liberty Mutual and furnished it
to Areva. Id.
4. In addition to securing the Performance Bond, Oldcastle entered into an
agreement with CONAC for the purchase of metal anchors (hereinafter, the
“CONAC Agreement”).1
FINDINGS OF FACT
1. Areva Enters into the Oldcastle Subcontract
On September 14, 2015, Oldcastle and Areva entered into the Oldcastle
Subcontract. Dkt. 31 at ¶ 6. In exchange for payment, Oldcastle agreed to, among other
things, fabricate and deliver precast concrete vaults to a site at the Idaho National
Laboratory. Id. The vaults were intended for use at the Remote-Handled Low-Level
Waste Disposal Facility located near Scoville, Idaho. Id.
2. Oldcastle Obtains a Performance Bond from Liberty Mutual
1
Pursuant to the Court’s analysis below, the exact terms of the CONAC Agreement cannot be
determined on the basis of the record presently before the Court. Nevertheless, the Parties do not contest
that consideration was exchanged. The Court therefore concludes that an agreement between the Parties
existed, though its exact terms are not known.
MEMORANDUM DECISION AND ORDER - 3
Shortly after Oldcastle entered into the Oldcastle Subcontract with Areva,
Oldcastle secured a Performance Bond from Liberty Mutual on September 29, 2015. See
Dkt. 72-9. The following portions of the Performance Bond are relevant to the dispute:
NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION is such that, if
the Principal shall promptly and faithfully perform said Subcontract, then this
obligation shall be null and void; otherwise it shall remain in full force and effect.
PROVIDED AND SUBJECT TO THE CONDITIONS PRECEDENT:
1.0
Whenever the Principal shall be, and be declared by the Obligee to be in
default under the Subcontract, the Obligee having performed the Obligee’s
obligations thereunder, the Surety may promptly remedy the default, or
shall promptly:
1.1. Arrange for the Principal, with consent of the Obligee, to perform
and complete the Subcontract; or
1.2. Undertake to perform and complete the Subcontract itself, through
its agents or through independent contractors; or
1.3. Obtain a bid or bids from alternative contractors to complete the
Subcontract in accordance with its terms and conditions, and upon
determination by Surety of the lowest bidder, or if the Obligee
elects, upon determination by the Obligee and Surety jointly of the
lowest responsible bidder, arrange for a subcontract between such
bidder and the Obligee …; or
1.4. Waive its right to perform and complete, arrange for completion, or
obtain a new subcontractor and with reasonable promptness under
the circumstances:
a.
After investigation, determine the amount for which it
may be liable to the Obligee and, as soon as
practicable after the amount is determined, tender
payment therefore to the Obligee; or
b.
Deny liability in whole or in part and notify the
Obligee citing reasons therefore…
5.0
Any claims must be presented in writing to Liberty Mutual Insurance
Company, to the attention of The Surety Law Department at the above
address.
Id. at 2-3.
3. Oldcastle Enters into the CONAC Agreement
MEMORANDUM DECISION AND ORDER - 4
a. Basic Parameters of the CONAC Agreement
In addition to securing the Performance Bond from Liberty Mutual, Oldcastle
entered into the CONAC Agreement. In exchange for payment, CONAC agreed to
supply certain metal anchors to be used as part of the assembly of the precast concrete
vaults that Oldcastle was assembling for Areva. See Dkt. 21. For demonstrative
purposes only, photos of the metal anchor supplied by CONAC and the final precast
concrete vault follow as Figure 1 and Figure 2, respectively.
Fig. 1: Dkt. 70 at 7.
MEMORANDUM DECISION AND ORDER - 5
Fig. 2: Dkt. 70 at 7.
b. The Contested Terms of the CONAC Agreement
The exact contents of the CONAC Agreement are disputed. According to
CONAC, the Agreement between CONAC and Oldcastle incorporated CONAC’s “Terms
and Conditions of Sale” which, again according to CONAC, are conspicuously posted on
CONAC’s website (Dkt. 74-1 at 2) and in CONAC’s purchase catalog (Dkt. 74-1 at 1).
The relevant portion of CONAC’s “Terms and Conditions of Sale” reads as follows:
It is the responsibility of the user to check supplied products prior to
use. Any product believed to be defective should be returned to
CONAC for inspection. CONAC will refund the purchase price or
replace, at its election, any product which it finds to be defective,
provided the product has been used properly. Such refund or
replacement shall be the exclusive remedy available, and CONAC
hereby disclaims any and all express or implied warranties, and
excludes any liability for consequential damages, in accordance with
Article 2-719 of the Uniform Commercial Code.
Id.
MEMORANDUM DECISION AND ORDER - 6
The Parties do not dispute that Michael Blackham, an engineer employed by
Oldcastle who placed the order for the CONAC anchors, (1) had a copy of CONAC’s
catalog when he made the order and (2) accessed CONAC’s website before ordering
them. Dkt. 86 at 2. Oldcastle, however, argues that the “Terms and Conditions of Sale”
“were [n]ever provided to Oldcastle” and were not conspicuously located on CONAC’s
website or in CONAC’s magazine. Id. at 3. Mr. Blackham gave the following testimony
during his deposition on this issue:
Q.
A.
Q.
A.
Q.
A.
Q.
A.
Q.
A.
(BY MR. STUBBS [Counsel for CONAC]) Mr. Blackham, I’ve handed
you what has been marked Deposition Exhibit 5 [Dkt. 74-1]. I’ll represent
to you that these are terms and conditions of sale that are published by
CONAC. They are OCP 00001 and 2. One is from the website for
CONAC. Another is a document they published in their catalog. Have you
seen these before?
No.
You have accessed the CONAC website before; correct?
Yes.
And were you aware that the CONAC terms and conditions of sale were
present on the website?
No, I’ve never seen these.
And in terms of the CONAC catalog, do you have a CONAC catalog?
Yes.
Have you ever looked at the terms and conditions of sale that are in there?
No.
Dkt. 74.
4. Areva Seeks Increase in Compensation from Battelle
After construction on the Remote Handled Low-Level Waste Disposal Facility
was underway, Areva sought an increase in contract compensation from Battelle. To this
end, on August 9, 2016, Areva filed Baseline Change Request (“BCR”) 193 (Dkt. 89-3 at
MEMORANDUM DECISION AND ORDER - 7
8) seeking an increase of roughly $3.25 million in contract compensation as a result of
“[c]hanges requested by … [Battelle].” Id. BCR-193 did not include a request to alter
the construction schedule. Id. (“There has been a schedule impact [from the project
changes for which Areva was seeking additional compensation], but it has been mitigated
largely be [sic] adding resources. We are not seeking [sic] change in schedule or costs for
schedule delays at this time.”).
5. The Construction Accident
On August 11, 2016, two days after Areva submitted BCR 193, the accident at the
center of this case occurred. As Oldcastle personnel raised one of the concrete vaults into
the air for purposes of placing on a flatbed truck, CONAC’s metal fastener failed. Due
to the shift in weight, the other two anchors failed as well, and the concrete cask then fell
approximately three feet to the ground.
6. The Stop-Work Order and Amendment 29
One day after the accident, Battelle issued a Stop Work order “on all concrete
vault component hoisting and rigging at the INL site.” Dkt. 72-15 at 51. The letter
accompanying the Stop Work order required Areva to provide Battelle with a “detailed
… [report] including root cause of the failure, the extent of conditions of parts fabricated
by Oldcastle under the referenced subcontract, and any corrective action(s) required to
mitigate recurrence.” Id. Through a series of subsequent letters over the next four
months, Battelle slowly rescinded parts of the Stop Work order. Id. at 55-59.
MEMORANDUM DECISION AND ORDER - 8
During the same period, Battelle also continued to consider Areva’s request for an
increase in contract compensation in BCR-193. Areva’s request for fees was approved,
though in an amount that was less than Areva sought, in Amendment 29. Dkt. 89-4 at 5.
And, even though BCR-193 specifically stated that it Areva was not seeking an extension
of the completion date, Amendment 29 extended the projects completion date to
September 28, 2017. Id. According to the sworn statement of Joe Stringer, who, at the
time of the accident, was the Vice-President of Operations for Areva and was in charge of
the Remote Handled Low-Level Waste Disposal Facility project, the extension of the
project completion date came after Areva submitted a revised project schedule in light of
the lifting accident. Dkt. 89-4 at 1. Per Mr. Stringer’s Declaration, no causal link existed
between the delays for which Areva was seeking extra fees in BCR-193 and the revised
project schedule that was proposed by Areva after the accident. Dkt. 89-3 at 2-5.
EXPERT REPORTS
1. Expert Report of Henry Spieker
In support of its claims against CONAC, Areva retained and disclosed an Expert
report from Henry J. Spieker. See Dkt. 66. Mr. Spieker was retained in order to quantify
the damages incurred by Areva as a result of, among other things, the lifting lug failure.
Id. at 4. To quantify the delay damages incurred by Areva, Mr. Spieker first calculated
the project completion rate. Id. An example of the Mr. Spieker’s project completion rate
calculation follows:
MEMORANDUM DECISION AND ORDER - 9
Payment application 23, which includes work completed through July 24, 2016,
shows that AFS was 75% complete prior to the Lifting Lug Failure, leaving 25%
($8,660,352) of the Project to complete in 4.5 months. Leading up to the time of
the lug failure, AFS completed an average of $2,430,774 per month between
March and July 2016. Had AFS been able to continue the completion of the
project at this pace, but for the lug and pull out failures, AFS would have
completed the Project on time. This can be seen by dividing the remaining value
of the project by the remaining contract time, as follows: $8,660,352 / 4.5 months
= $1,924,522 per month. Therefore, at the time the Lifting Lug Failure occurred,
AFS was on pace to complete the project in accordance with the revised
substantial completion date, December 15, 2016.
Dkt. 66 at 7-8 (footnote omitted).
Based on this method of calculating the project completion rate, Mr. Spieker
estimates that the project suffered from a delay of 286 days – one day less than the
number of days that Amendment 29 added to the project completion date. Dkt. 66 at 8;
Dkt. 89-4 at 5. Mr. Spieker breaks this total period of delay down into four specific
categories:
a. “Lifting Lug Failure – Lifting Re-Design” – Mr. Spieker estimates that the
lifting lug failure and accompanying Stop Work order resulted in 103
calendar days of delay. Dkt. 66 at 10.
b. “Winter Suspension” – Mr. Spieker estimates that winter conditions
resulted in 96 calendar days of delay. Id.
c. Anchor Pull Out2 – Mr. Spieker estimates that the anchor pull-out and
accompanying Stop Work order resulted in 33 calendar days of delay. Id.
d. “Inefficiency and Additional Time Needed for New Lift Design” – Finally
Mr. Spieker concludes that “AFS Project staff state that the new designs for
the lifting components resulted in increased time for each lift and required
2
The Court notes for purposes of clarity that this accident is separate and distinct from the
August 11, 2016 anchor failure described above in the Findings of Fact section.
MEMORANDUM DECISION AND ORDER - 10
additional manpower. This along with work performed during winter
weather caused an additional 54 calendar day delay to the Project.” Id.
2. Expert Report of Dr. Ronald Mayville
In support of its claims against CONAC, Oldcastle retained and disclosed an
expert report from Dr. Ronald Mayville. Dr. Mayville’s report concludes that “[t]he
conditions of normal lifting on the cylinder [i.e., the concrete cask] on an anchor that was
brittle and contained a preexisting crack were sufficient to cause fracture of the anchor.”
Dkt. 70 at 14. In other words, Dr. Mayville concludes that the anchor supplied by
CONAC, rather than the lifting procedure employed by Oldcastle’s personnel, was the
likely cause of the anchor failure and the resulting accident. Id.
In arriving at this conclusion, Dr. Mayville incorporates a number of assumptions.
First, Dr. Mayville incorporates linear elastic fracture mechanics into this report. Id. at
12-13. In doing so, however, Dr. Mayville included the following language:
The stresses we calculate for the anchor at the crack location are relatively high
and may approach or exceed the failed anchor’s yield strength. To our knowledge,
the yield strength of the failed anchor was not measured. Nevertheless, it must be
less than the tensile strength, which is approximately 100 ksi. Linear elastic
fracture mechanics is not technically applicable when the stresses are of yield
strength magnitude. Nevertheless, linear elastic fracture mechanics provides a
good means of evaluating fracture conditions given the uncertainties in the other
parameters needed for the evaluation.
Id. at 13. In addition to relying, in part, on linear elastic fracture mechanics in coming to
his conclusion, Dr. Mayville also cites to and incorporates the work of I.S. Raju and J.C.
MEMORANDUM DECISION AND ORDER - 11
Newman in his analysis. Id. at 5, 11-12. Specifically, Dr. Mayville used Raju’s and
Newman’s stress intensity factor solutions. Id.
LEGAL STANDARD
1. Summary Judgment Standard
Summary judgment is appropriate where a party can show that, as to any claim or
defense, “there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). One of the principal purposes of the
summary judgment rule “is to isolate and dispose of factually unsupported claims or
defenses.” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is not “a disfavored
procedural shortcut,” but is instead the “principal tool[ ] by which factually insufficient
claims or defenses [can] be isolated and prevented from going to trial with the attendant
unwarranted consumption of public and private resources.” Id. at 327.
“[T]he mere existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment....” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis omitted). Rather, there must
be no genuine dispute as to a material fact for a party to be entitled to summary judgment.
Material facts are those “that might affect the outcome of the suit.” Id. at 248. “Disputes
over irrelevant or unnecessary facts will not preclude a grant of summary judgment.”
T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987).
MEMORANDUM DECISION AND ORDER - 12
The moving party is entitled to summary judgment if that party shows that a
material fact cannot be disputed and they are therefore entitled to judgment as a matter of
law. To show that the material facts are not in dispute, a party may cite to particular parts
of materials in the record or show that the adverse party is unable to produce admissible
evidence to support the fact. Fed. R. Civ. P. 56(c)(1)(A) & (B). The Court must consider
“the cited materials,” but it may also consider “other materials in the record.” Fed. R.
Civ. P. 56(c)(3). The Court is “not required to comb [through] the record to find some
reason to deny a motion for summary judgment.” Carmen v. San Francisco Unified Sch.
Dist., 237 F.3d 1026, 1029 (9th Cir. 2001) (internal quotation marks omitted). Instead,
the “party opposing summary judgment must direct [the Court’s] attention to specific,
triable facts.” So. Ca. Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003).
If the moving party meets its initial responsibility, then the burden shifts to the
opposing party to establish that a genuine dispute as to any material fact actually does
exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The
existence of a scintilla of evidence in support of the non-moving party’s position is
insufficient. British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir. 1978).
Rather, “there must be evidence on which [a] jury could reasonably find for the [nonmoving party].” Anderson, 477 U.S. at 252.
If a party “fails to properly support an assertion of fact or fails to properly address
another party’s assertion of fact,” the Court may consider that fact to be undisputed. Fed.
MEMORANDUM DECISION AND ORDER - 13
R. Civ. P. 56(e)(2). The Court may grant summary judgment for the moving party “if the
motion and supporting materials—including the facts considered undisputed—show that
the movant is entitled to it.” Fed. R. Civ. P. 56(e)(3).
The Court does not determine the credibility of affiants or weigh the evidence set
forth by the non-moving party. Although all reasonable inferences which can be drawn
from the evidence must be drawn in a light most favorable to the non-moving party, T.W.
Elec. Serv., Inc., 809 F.2d at 630-31, the Court is not required to adopt unreasonable
inferences from circumstantial evidence, McLaughlin v. Liu, 849 F.2d 1205, 1208 (9th
Cir. 1988).
2. Daubert Standard
Whether and to what extent an expert may testify at trial is addressed under the
well-known standard first enunciated in Daubert and its progeny, but now set forth in
Rule 702 of the Federal Rules of Evidence. Rule 702 establishes several requirements for
permitting expert opinion. First, the evidence offered by the expert must assist the trier
of fact either to understand the evidence or to determine a fact in issue. Primiano v.
Cook, 598 F.3d 558, 563 (9th Cir. 2010); Fed. R. Evid. 702. “The requirement that the
opinion testimony assist the trier of fact goes primarily to relevance.” Id. at 564 (internal
quotations and citations omitted).
Additionally, the witness must be sufficiently qualified to render the opinion. Id.
at 563. If specialized knowledge will assist the trier of fact to understand the evidence or
MEMORANDUM DECISION AND ORDER - 14
determine a fact in issue, a witness qualified by knowledge, skill, experience, training or
education may offer expert testimony where: (1) the opinion is based upon sufficient
facts or data, (2) the opinion is the product of reliable principles and methods; and (3) the
witness has applied those principles and methods reliably to the facts of the case. Fed. R.
Evid. 702; Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 592-93 (1993);
Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999).
The inquiry is a flexible one. Primiano, 598 F.3d at 564. Ultimately, a trial court
must “assure that the expert testimony both rests on a reliable foundation and is relevant
to the task at hand.” Id. (internal quotation and citation omitted). In determining whether
expert testimony is reliable and relevant, the Court must determine “whether the
reasoning or methodology underlying the testimony is scientifically valid and ... whether
that reasoning or methodology properly can be applied to the facts in issue.” Boyd v. City
and County of San Francisco, 576 F.3d 938, 945 (9th Cir. 2009) (internal citation
omitted). Finally, a review of the case law after Daubert reveals that exclusion of expert
testimony is the exception rather than the rule. Fed. R. Evid. 702, Adv. Comm. Notes
(2000).
MEMORANDUM DECISION AND ORDER - 15
ANALYSIS
1. Liberty Mutual and Oldcastle Are Both Entitled to Summary Judgment on
Areva’s Claim on the Performance Bond
Because Areva failed to fulfill at least three conditions precedent required by the
unambiguous terms of the Performance Bond, it cannot maintain a claim on the
Performance Bond.
a.
Legal Standards for Interpreting the Performance Bond
Because Areva’s claim on the Performance Bond is grounded in contract law, this
Court applies Idaho state law in interpreting the contents of the Performance Bond. See
Wells Cargo, Inc. v. Transport Ins. Co., No. 4-08-cv-00491-BLW, 2012 WL 3112009 at
*3 (D. Idaho July 30, 2012). The Idaho Supreme Court has made clear that the question
of whether an insurance policy3 is ambiguous is a question of law for the court to
determine. Farm Bureau Mutual Insurance Co. of Idaho v. Schrock, 252 P.3d 98, 102
(Idaho 2011) (citing Cherry v. Coregis Insurance Co., 204 P.3d 522, 524 (Idaho 2009)).
A court must ask whether a policy is reasonably subject to conflicting
interpretations in order to determine whether it is ambiguous. Id. If the language of the
policy is clear and unambiguous, then it will be given its ordinary and plain meaning. Id.
Where the contract is ambiguous however, “[t]o determine the meaning of an ambiguous
contract, the trier of fact must determine what a reasonable person would have
3
Liberty Mutual’s brief, through citation of Clark, appears to concede that the Performance Bond
at issue in this litigation is a species within the genus of insurance contracts.
MEMORANDUM DECISION AND ORDER - 16
understood the language to mean and the words used must be construed given their
ordinary meaning.” Clark v. Prudential Property and Casualty Ins. Co., 66 P.3d 242,
233 (Idaho 2003).
b.
The Parties’ Arguments
Turning to the facts of this case, the key terms of the Performance Bond are as
follows:
NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION is such that, if
the Principal shall promptly and faithfully perform said Subcontract, then this
obligation shall be null and void; otherwise it shall remain in full force and effect.
PROVIDED AND SUBJECT TO THE CONDITIONS PRECEDENT:
1.0
Whenever the Principal shall be, and be declared by the Obligee to be in
default under the Subcontract, the Obligee having performed the Obligee’s
obligations thereunder, the Surety may promptly remedy the default, or
shall promptly:
1.1. Arrange for the Principal, with consent of the Obligee, to perform
and complete the Subcontract; or
1.2. Undertake to perform and complete the Subcontract itself, through
its agents or through independent contractors; or
1.3. Obtain a bid or bids from alternative contractors to complete the
Subcontract in accordance with its terms and conditions, and upon
determination by Surety of the lowest bidder, or if the Obligee
elects, upon determination by the Obligee and Surety jointly of the
lowest responsible bidder, arrange for a subcontract between such
bidder and the Obligee …; or
1.4. Waive its right to perform and complete, arrange for completion, or
obtain a new subcontractor and with reasonable promptness under
the circumstances:
a.
After investigation, determine the amount for which it
may be liable to the Obligee and, as soon as
practicable after the amount is determined, tender
payment therefore to the Obligee; or
b.
Deny liability in whole or in part and notify the
Obligee citing reasons therefore…
MEMORANDUM DECISION AND ORDER - 17
5.0
Any claims must be presented in writing to Liberty Mutual Insurance
Company, to the attention of The Surety Law Department at the above
address.
Dkt. 72-9 at 2-3.
The Parties take three different positions with respect to what meaning should be
ascribed to the foregoing language. Liberty Mutual, for its part, argues that prior to filing
suit the unambiguous terms of the Performance Bond required Areva to (1) declare that
Oldcastle was in default, (2) notify Liberty Mutual of Oldcastle’s default, and (3) present
its claim on the Performance Bond in writing to Liberty Mutual’s Surety Law
Department. Dkt. 63-2 at 5. Oldcastle, for its part, argues that the unambiguous terms of
the Performance Bond, combined with the “Flow Down” provisions that Oldcastle and
Areva agreed to in a separate document, required Areva to terminate Oldcastle prior to
making a claim on the Performance Bond. Dkt. 72-1 at 11.
Finally, Areva points the Court away from the “CONDITIONS PRECEDENT”
language altogether and towards the more general “CONDITIONS OF THIS
OBLIGATION” section (hereinafter, the “OBLIGATION Section”). According to
Areva, the OBLIGATION Section creates a duty that (1) can be enforced by a breach of
contract suit and (2) is not limited by the “CONDITIONS PRECEDENT” language
which immediately follows it in the Performance Bond.
c. The Unambiguous Terms of the Contract Preclude Areva from
Maintaining a Claim on the Performance Bond
MEMORANDUM DECISION AND ORDER - 18
The Court begins by noting that the plain terms of the Performance Bond require
Areva to (1) “declare[],” (2) Oldcastle to be in “default,” (3) by “present[ing] [any
claims] in writing to Liberty Mutual Insurance Company, to the attention of The Surety
Law Department.” Dkt. 72-9 at 2-3. In the context of the Performance Bond, the term
“declare” in its transitive form unambiguously requires Areva “to make a formal
statement … acknowledging” Oldcastle’s default. Declare, OXFORD ENGLISH
DICTIONARY ONLINE, Oxford University Press, December 2018. “Default,” in its noun
form, is the “omission or failure to perform a legal or contractual duty.” Default,
BLACK’S LAW DICTIONARY (10th ed. 2014). Altogether, the plain terms of the
Performance Bond unambiguously require, as conditions precedent to Liberty Mutual’s
performance, that Areva make known or state clearly in a writing to the Liberty Mutual
Surety Law Department that Oldcastle omitted or failed to perform its contractual duty.
See Weisel v. Beaver Springs Owners Ass’n Inc., 272 P.3d 491, 500 (Idaho 2012)
(“Whether a provision in a contract amounts to a condition precedent is generally
dependent on what the parties intended, as adduced from the contract itself.” (citation
omitted)). Because Areva has not satisfied any of the conditions precedent in the
Performance Bond, it may not maintain a claim on the Performance Bond.
Areva’s argument that the OBLIGATION Section creates a duty that (1) can be
enforced by a breach of contract suit and (2) is not limited by the “CONDITIONS
PRECEDENT” language which immediately follows it in the Performance Bond is
MEMORANDUM DECISION AND ORDER - 19
unconvincing. First, as noted above, Areva’s interpretation does not accord with the
plain terms of the Performance Bond. Second, even if the Court found that Performance
Bond was ambiguous, it would still resolve the dispute in Oldcastle’s and Liberty
Mutual’s favor. It is a hornbook canon of interpretation that a general provision in a
contract or statute “does not govern unless there is no more specific rule.” Cf. Green v.
Bock Laundry Mach. Co., 490 U.S. 504, 524 (1989); see also Native Vill. of Venetie
I.R.A. Council v. State of Alaska, 944 F.2d 548, 553 (9th Cir. 1991) (“A specific
congressional directive would trump the general rule.”). Here, the more general
OBLIGATION Section upon which Areva relies give way to the more specific
“CONDITIONS PRECEDENT” language.
Third, the primary case upon which Areva relies, L & A Contracting Co. v.
Southern Concrete Servs., Inc., 17 F.3d 106 (5th Cir. 1994), refutes rather than supports
Areva’s argument that it may maintain a breach of contract suit without declaring
Oldcastle to be in default. Areva repeatedly quotes the following language from that case
throughout its briefs:
Although the terms “breach” and “default” are sometimes used
interchangeably, their meanings are distinct in construction suretyship
law. Not every breach of a construction contract constitutes a default
sufficient to require the surety to step in and remedy it. To constitute a legal
default, there must be a (1) material breach or series of material breaches
(2) of such magnitude that the obligee is justified in terminating the
contract. Usually the principal is unable to complete the project, leaving
termination of the contract the obligee’s only option. The definition of
“default” implicit in L & A’s dictionary analogy impermissibly blurs the
distinct concepts of “breach” and “default”.
MEMORANDUM DECISION AND ORDER - 20
L & A Contracting, 17 F.3d at 110 (footnotes omitted). But, Areva’s citation to the case
ignores the sentence preceding the quoted language, which reads “L & A’s proffered
definition misapprehends the legal nature of the ‘default’ that is required before the
obligee’s claim against the surety matures.” Id. (emphasis added). As in this case, L & A
Contracting makes clear that performance bonds, like other contracts, must be interpreted
in a way that honors conditions precedent included in the contract. L & A Contracting
lends no support to the position that Areva may enforce the Performance Bond through a
breach of contract suit prior to giving Liberty Mutual notice of Oldcastle’s default and an
opportunity to cure.
Fourth, Areva’s argument, that the “CONDITIONS PRECEDENT” language in
the Performance Bond should not be applied in this case because it would render the
OBLIGATION Section superfluous, is obviously incorrect. The OBLIGATION Section
in the Performance Bond sets out broad duties owed between Areva and Oldcastle.
Those rights, however, are subject to, and limited by, the “CONDITIONS
PRECEDENT” terms. The Court’s interpretation of the contract does not render the
more general OBLIGATION Section superfluous; it simply recognizes that at the time of
contracting the Parties chose to limit the broad duties described in the OBLIGATION
Section by imposing conditions that needed to be met prior to Areva making a claim on
the Performance Bond.
MEMORANDUM DECISION AND ORDER - 21
In light of the foregoing, Crossclaim Defendant Liberty Mutual Insurance
Company’s Motion for Summary Judgment (Dkt. 63) is hereby GRANTED.4 Oldcastle
Precast, Inc.’s Motion for Partial Summary Judgment (Dkt. 72) is also hereby
GRANTED-IN-PART to the extent it argues that Areva may not maintain a claim on the
Performance Bond.5
2. Issues of Material Fact Remain with Respect to Whether Areva Is Entitled to
Delay Damages from Oldcastle
Although Oldcastle is entitled to summary judgment on Areva’s claim on the
Performance Bond, Oldcastle is not entitled to summary judgment on Areva’s claim for
delay damages.
a. The Timeline of Events
Oldcastle and Areva put forth different interpretations of the events leading up to
and after the lifting lug accident. The Court will briefly summarize the timeline of
events:
i.
On August 9, 2016, Areva submitted BCR-193 to Battelle. BCR193 requested an increase in the contract price to be paid to
Areva to account for “[c]hanges requested by the customer.”
Dkt. 89-3 at 8. Areva noted in BCR-193 that “[t]here has been a
4
Liberty Mutual also argues that Areva cannot seek delay damages under the Performance Bond.
Because Areva cannot maintain a claim on the Performance Bond at all, the Court will not reach the
question of whether the Performance Bond allows for delay damages.
5
Although Oldcastle is entitled to summary judgment, the Court notes that it is skeptical of
Oldcastle’s argument that Areva was required to terminate Oldcastle prior to maintaining a claim on the
Performance Bond. That requirement does not appear in the Performance Bond itself, and Liberty Mutual
argues, to the contrary, that one of its rights in a default scenario was to continue to have Oldcastle
perform the work while paying for any damages incurred by Areva due to the default. Dkt. 63-2 at 5-6.
MEMORANDUM DECISION AND ORDER - 22
schedule impact [from the project changes for which Areva was
seeking additional compensation], but it has been mitigated
largely be [sic] adding resources.” Id. BCR-193 did not include
a request to alter the construction schedule. Id.
ii.
On August 11, 2016, the lifting lug accident occurred. Dkt. 7212.
iii.
On August 12, 2016, Battelle issued a Stop Work order “on all
concrete vault component hoisting and rigging at the INL site.”
Dkt. 72-15 at 51.
iv.
After the accident and accompanying Stop Work order, Areva
submitted a revised construction schedule to Battelle. Dkt. 89-4.
The run date on the revised schedule was December 13, 2016.
Dkt. 89-4 at 5.
v.
On December 19, 2016, Areva and Battelle executed
Amendment 29 which (1) increased Areva’s compensation to
complete the project pursuant to BCR-193 and (2) revised the
project completion date to September 17, 2017. Id.
vi.
The project was “substantially complete[d] by the end of
September 2017.” Dkt. 72-1 at 6.
b. Issues of Material Fact Remain Regarding Whether the Accident
Caused a Delay in the Completion of the Project
From this series of events, Oldcastle argues that the project was already
significantly delayed prior to the submission of BCR-193 due to Areva’s miscalculation
of the resources required to finish the project. Dkt. 72-1 at 4. Oldcastle then asks the
Court to conclude that, fortuitously, the project completion date was revised to September
17, 2017, which, in essence, created a buffer period so that the lifting-lug accident did not
end up delaying the project. Id. at 6-8.
MEMORANDUM DECISION AND ORDER - 23
Areva argues for a different interpretation of the timeline of events. According to
Areva, BCR-193 did not include a request for a project extension. Dkt. 89 at 4. To the
contrary, Areva asserts that no extension was needed because Areva had made up for the
unexpected difficulties encountered during the period preceding the submission of BCR193 by dedicating additional resources to the project. Id. It was only after the lifting lug
accident and Battelle’s issuance of the Stop Work order that Areva submitted a request
for an extension of the project deadline. According to Areva, no inference can be drawn
from the fact that Amendment 29 both (1) increased Areva’s compensation to account for
delays in construction prior to BCR-193’s submission and (2) extended the project
deadline. Dkt. 89-1 at ¶ 5 (“Purely as a result of timing, Amendment No. 29 reflected
both the contract price adjustment requested in BCR-193 and the separate schedule
adjustment necessitated by the lifting-lug failure.”).
At a minimum, the Parties’ conflicting interpretations of the timeline of events
both prior to and after the accident shows that summary judgment is inappropriate.
While the Court need go no further, it will note that Oldcastle’s position strains credulity.
It is unlikely that a major accident on a job site resulting in a Stop Work order would not
delay the project’s completion date. In any event, that factual question must be left for
the jury. Oldcastle Precast, Inc.’s Motion for Partial Summary Judgment (Dkt. 72) is
DENIED to the extent it seeks to preclude Areva from seeking delay damages.
MEMORANDUM DECISION AND ORDER - 24
3. Issues of Material Fact Remain with Respect to Whether CONAC’s “Terms
and Conditions of Sale” Are an Enforceable Part of CONAC’s Agreement
with Oldcastle
The Court now turns to CONAC’s Motion for Partial Summary Judgment. Dkt.
71. In its motion, CONAC argues that its “Terms and Conditions of Sale” entitled it to
summary judgment on Oldcastle’s claims. Though the Parties briefing largely skips
straight to the question of whether CONAC’s “Terms and Conditions of Sale” were
compliant with the requirements for warranty disclaimers set out by the Idaho UCC, the
Court is required to first answer another question: were the “Terms and Conditions of
Sale” part of the agreement between CONAC and Oldcastle in the first instance? Under
Idaho’s UCC provisions, “[p]arties to a contract must have a mutual understanding or
meeting of the minds regarding essential contract terms in order for the contract to be
binding.” Figueroa v. Kit-San Co., 123 Idaho 149, 156 (Ct. App. 1992); see also Idaho
Code 28-2-204. “In order to have an enforceable contract, the UCC does not require a
document itemizing all the specific terms of the agreement.” Paloukos v. Intermountain
Chevrolet Co., 99 Idaho 740, 743 (1978). But, summary judgment is inappropriate where
there are issues of material fact with respect to open terms in the agreement reached by
the parties. Id.
Given that neither party directly briefed this issue, the answer to the question
posed by the Court is unclear. The Parties agree that Oldcastle entered into a purchase
agreement with CONAC for the metal anchor at issue in this case on October 3, 2015.
MEMORANDUM DECISION AND ORDER - 25
Dkt. 71-1 at ¶ 2; Dkt. 21 at ¶ 8. According to CONAC, Michael Blackham, an engineer
employed by Oldcastle who purchased the metal fastener that failed, had access to a
CONAC catalog that had the “Terms and Conditions of Sale” included in it. Dkt. 71-1 at
¶ 2. Additionally, the “Terms and Conditions of Sale” were apparently included on
CONAC’s website (Dkt. 74-1 at 2), which Mr. Blackham accessed prior to ordering the
metal anchor (Dkt. 71-1 at ¶ 2). CONAC has not provided (1) a copy of the purchase
agreement between it and Oldcastle or (2) briefed how Mr. Blackham went about
negotiating the contract and purchase of the metal anchors. Instead, CONAC flatly assets
that “[a]s part of … [the purchase] agreement, Oldcastle agreed to CONAC’s ‘Terms and
Conditions of Sale’ included in its catalog and on its website.” Dkt. 71-1 at ¶ 2.
For its part, Oldcastle “disputes that the ‘Terms and Conditions of Sale’ were part
of its purchase agreement with CONAC.” Dkt. 86-1 at ¶ 1. In support of this assertion,
Oldcastle relies on the following deposition testimony from Michael Blackham:
Q.
A.
Q.
A.
Q.
A.
Q.
A.
Q.
Mr. Blackham, I’ve handed you what has been marked Deposition Exhibit
5. [Dkt. 74-1]. I’ll represent to you that these are terms and conditions of
sale that are published by CONAC. They are OCP 00001 and 2. One is
from the website for CONAC. Another is a document they published in
their catalog. Have you seen these before?
No.
You have accessed the CONAC website before; correct?
Yes.
And were you aware that the CONAC terms and conditions of sale were
present on the website?
No, I’ve never seen these.
And in terms of the CONAC catalog, do you have a CONAC catalog?
Yes.
Have you ever looked at the terms and conditions of sale that are in there?
MEMORANDUM DECISION AND ORDER - 26
A.
No.
Dkt. 74.
On this record, the Court cannot determine if the “Terms and Conditions of Sale”
were part of the CONAC Agreement. Critical information including the actual purchase
agreement and the process Mr. Blackham went through in placing the order is missing
from the record. Assuming Mr. Blackham ordered the parts online, there is no record of
any discussion of whether the “Terms and Conditions of Sale” were browsewrap or
clickwrap. See Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1179 (9th Cir. 2014)
(holding with respect to browsewrap agreements that “where a website makes its terms of
use available via a conspicuous hyperlink on every page of the website but otherwise
provides no notice to users nor prompts them to take any affirmative action to
demonstrate assent, even close proximity of the hyperlink to relevant buttons users must
click on—without more—is insufficient to give rise to constructive notice”). As such,
the issue of whether the “Terms and Conditions of Sale” are part of the CONAC
Agreement is “a question of fact for the trier of fact to resolve.” Inland Title Co. v.
Comstock, 779 P.2d 15, 16 (Idaho 1989).6 Accordingly, CONAC’s Motion for Partial
Summary Judgment (Dkt. 71) is DENIED.
6
With respect to the arguments put forth by Oldcastle and CONAC regarding the
conspicuousness of the “Terms and Conditions of Sale” and whether the remedy provision in the “Terms
and Conditions of Sale” is unconscionable or fails its essential purpose, the Court will make a
determination on those issues closer to trial.
MEMORANDUM DECISION AND ORDER - 27
4. Both Expert Reports that CONAC Seeks to Exclude Are Admissible
The Court begins by noting that the exclusion of expert testimony is the exception
rather than the rule. Fed. R. Evid. 702, Adv. Comm. Notes (2000). Furthermore, “the
factual basis of an expert opinion goes to the credibility of the testimony, not the
admissibility, and it is up to the opposing party to examine the factual basis for the
opinion in cross-examination.” Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d
998, 1017 (9th Cir. 2004) (citation and quotation marks omitted). Where there are
questions about the factual basis of an expert’s opinion, “[v]igorous cross-examination,
presentation of contrary evidence, and careful instruction on the burden of proof are the
traditional and appropriate means of attacking shaky but admissible evidence.” United
States v. Wells, 879 F.3d 900, 933 (9th Cir. 2018) (citation and quotations omitted).
a. Mr. Spieker’s Expert Report Is Admissible
Mr. Spieker filed a report which primarily deals with calculating the delay
damages allegedly suffered by Areva. CONAC makes three arguments regarding why
Mr. Spieker’s report should be excluded. First, CONAC argues that Mr. Spieker failed to
account for other sources of delay and, as a result, has overestimated to delay that
CONAC is responsible for. Dkt. 64-1 at 6-7. Second, CONAC contends that Mr.
Spieker’s method of calculating the delay is unreliable. Id. at 7-10. Third, CONAC
argues that Mr. Spieker’s calculation of the 54-day delay for “Inefficiencies and
MEMORANDUM DECISION AND ORDER - 28
Additional Time Needed for New Lift Design” is purely algorithmic and lacks any basis
in the facts. Id. at 10-12.
With respect to the first argument, CONAC itself concedes (Dkt. 64-1 at 7), and
the Court agrees, that Mr. Spieker’s alleged failure to account for additional sources of
delay is an inappropriate basis to exclude Mr. Spieker’s report. CONAC will have ample
time during its cross examination of Mr. Spieker and in its affirmative case to point out
factual deficiencies in his report. See Wells, 879 F.3d at 933 (holding that factual
deficiencies in expert reports are issues to be raised a trial).
As for CONAC’s second and third arguments, both of which are rooted in the
reliability of Mr. Spieker’s methods, the Court finds that Mr. Spieker’s report satisfies
Daubert’s and Rule 702’s reliability inquiry. Although Mr. Spieker could not
specifically name another expert who used his exact method of calculating the project
rate, Mr. Spieker did testify that the use of “project controls in the industry, in terms of
measuring progress and using that to validate schedules, … [is] a pretty common tool,
both in terms of measuring progress as well as estimating project durations.” Dkt. 92-3 at
51:12-17.
As a practical matter, Mr. Spieker’s calculation is logical. By adducing the total
project cost, and then dividing that number by the average monthly project outlay, Mr.
Spieker was able to come up with a rough estimate of when the project should have been
completed but for the lifting lug accident. CONAC may very well be correct that Mr.
MEMORANDUM DECISION AND ORDER - 29
Spieker’s method, which is only an approximation, gave an inaccurate result because he
failed to account for real world conditions that effect the underlying variable in his
formula. But, absolute accuracy is not required by Daubert or Rule 702. If it were, very
few experts would be allowed to testify at trial. Mr. Spieker’s method is sufficiently
reliable for the evidence to go before the jury.7 See, e.g., Weitz Co. v. MH Washington,
631 F.3d 510, 528 (8th Cir. 2011) (affirming the admission of expert testimony regarding
potential project delays even where the testimony had “apparent weaknesses” due, in
part, to the expert’s failure to rigorously delineate between critical path and non-critical
path activities). CONAC’s Motion in Limine to exclude all or part of the testimony of
Areva Federal Services LLC’s expert, Henry Spieker, Dkt. 64, is DENIED.
b. Dr. Mayville’s Expert Report Is Admissible
Dr. Ronald Mayville was retained by Oldcastle to evaluate the cause of anchor
failure. He concluded that the anchor supplied by CONAC, rather than the lifting
procedure employed by Oldcastle’s personnel, was the likely cause of the anchor failure
and the resulting accident. Dkt. 70 at 14. Like its motion regarding Mr. Spieker’s report,
CONAC lodges a number of objections to Dr. Mayville’s report. Specifically, CONAC
argues that Dr. Mayville’s report and methods are unreliable because he improperly
7
For similar reasons, the Court is unpersuaded by CONAC’s argument that Mr. Spieker’s
testimony should be excluded under Federal Rule of Evidence 403. CONAC may re-raise this objection
at trial if it so desires.
(Continued)
MEMORANDUM DECISION AND ORDER - 30
relied on “linear elastic fracture mechanics. Dkt. 67-1 at 6. CONAC asserts that Dr.
Mayville applied “linear elastic fracture mechanics” despite conceding in his report that
such reliance was not appropriate. Id. at 6-7.8
The Court is unpersuaded that Dr. Mayville’s use of “linear elastic fracture
mechanics” makes his report unreliable. Dr. Mayville’s report concedes that “linear
elastic fracture mechanics” is not technically applicable to the present case, but then
concludes that the combination of the limited inferences that can be drawn from applying
“linear elastic fracture mechanics” and all of the other evidence in the case reliably
supports the conclusion that the brittleness of the anchor was to blame for the accident.
Dkt. 87-1 at 7. CONAC reads out the fact that Dr. Mayville relied on other evidence in
arriving at his conclusion and asks the Court to find that Dr. Mayville relied exclusively
on “linear elastic fracture mechanics.” This argument is contradicted by Dr. Mayville’s
report, however. In short, Dr. Mayville concluded that a simplified analysis
incorporating “linear elastic fracture mechanics” was sufficient to adequately support his
conclusion in combination with all of the other evidence he had reviewed. Ultimately, a
jury will determine whether Dr. Mayville’s decision to rely on a simpler, and admittedly
8
CONAC contests, in the Procedural History section of its brief, Dr. Mayville’s reliance on
Raju’s and Newman’s stress intensity factor solutions. Dkt. 67-1 at ¶ 7. That argument does not appear
in the Argument section of CONAC’s motion however. Furthermore, similar to CONAC’s argument that
“linear elastic fracture mechanics” are not an appropriate for Dr. Mayville to consider, the Court is
unconvinced that Dr. Mayville’s incorporation of Raju and Newman’s stress intensity factor solutions
into his analysis impacts the reliability of his study.
MEMORANDUM DECISION AND ORDER - 31
less accurate, measure was the correct choice. CONAC’s Motion in Limine to exclude all
or part of the testimony of Oldcastle’s expert, Dr. Ronald Mayville, Dkt. 67, is hereby
DENIED.
ORDER
Accordingly, it is hereby ORDERED:
1. Crossclaim Defendant Liberty Mutual Insurance Company’s Motion for
Summary Judgment (Dkt. 63) is GRANTED. A separate judgment,
pursuant to Federal Rule of Civil Procedure 54, will accompany this
Memorandum Decision and Opinion.
2. Oldcastle Precast, Inc.’s Motion for Partial Summary Judgment (Dkt. 72) is
GRANTED to the extent it argues that Areva may not maintain a claim on
the Performance Bond.
3. Oldcastle Precast, Inc.’s Motion for Partial Summary Judgment (Dkt. 72) is
DENIED to the extent it seeks to preclude Areva from seeking delay
damages.
4. CONAC’s Motion for Partial Summary Judgment (Dkt. 71) is DENIED.
5. CONAC’s Motion in Limine to exclude all or part of the testimony of
Areva Federal Services LLC’s expert, Henry Spieker, Dkt. 64, is DENIED.
6. CONAC’s Motion in Limine to exclude all or part of the testimony of
Oldcastle’s expert, Dr. Ronald Mayville, Dkt. 67, is DENIED.
MEMORANDUM DECISION AND ORDER - 32
DATED: January 31, 2019
_________________________
B. Lynn Winmill
U.S. District Court Judge
MEMORANDUM DECISION AND ORDER - 33
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