University of Notre Dame Du Lac v. English Boiler and Tube Inc

Filing 42

ORDER denying 30 Motion for Summary Judgment. Signed by Judge Rudy Lozano on 8/29/2014. (kds)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
UNIVERSITY OF NOTRE DAME
DU LAC,
Plaintiff,
vs.
ENGLISH BOILER & TUBE,
INC.,
Defendant.

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NO. 3:12-CV-418

OPINION AND ORDER
This matter is before the Court on English Boiler & Tube,
Inc.’s Motion for Summary Judgment, filed on October 17, 2013. For
the reasons set forth below, this motion is DENIED.

BACKGROUND
The University of Notre Dame Du Lac (“Notre Dame”) initially
brought a breach of contract action against English Boiler & Tube,
Inc. (“English Boiler”) in the Circuit Court of St. Joseph’s
County,

Indiana,

arising

out

of

a

contract

construction project on Notre Dame’s campus.
removed here.

related

to

a

The case was then

English Boiler has filed the instant motion for

summary judgment, asserting there is no genuine dispute of material
fact and that it is entitled to judgment as a matter of law.

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DISCUSSION
Summary judgment standard
Summary judgment must be granted when “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).

A genuine

dispute of material fact exists when “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
every

dispute

between

the

parties

makes

summary

Not

judgment

inappropriate; “[o]nly disputes over facts that might affect the
outcome of the suit under the governing law will properly preclude
the entry of summary judgment.”

Id.

In determining whether

summary judgment is appropriate, the deciding court must construe
all facts in the light most favorable to the non-moving party and
draw all reasonable inferences in that party’s favor. Ogden v.
Atterholt, 606 F.3d 355, 358 (7th Cir. 2010).

“However, our favor

toward the nonmoving party does not extend to drawing inferences
that are supported by only speculation or conjecture.”

Fitzgerald

v. Santoro, 707 F.3d 725, 730 (7th Cir. 2013) (citing Harper v.
C.R. Eng., Inc., 687 F.3d 297, 306 (7th Cir. 2012)).
A party opposing a properly supported summary judgment motion
may not rely on allegations or denials in her own pleading, but
rather must “marshal and present the court with the evidence she
contends will prove her case.” Goodman v. Nat’l Sec. Agency, Inc.,

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621 F.3d 651, 654 (7th Cir. 2010).

If the non-moving party fails

to establish the existence of an essential element on which he or
she bears the burden of proof at trial, summary judgment is proper.
Massey v. Johnson, 457 F.3d 711, 716 (7th Cir. 2006).

While a non-

moving party’s failure to respond to summary judgment does not
automatically result in judgment for the movant, a court may deem
the facts in the moving party’s statement of uncontested facts as
admitted to the extent the facts are supported by evidence in the
record.

Keeton v. Morningstar, Inc., 667 F.3d 877, 884 (7th Cir.

2012).

Facts
On or around February 7, 2005, Notre Dame and English Boiler
entered into an agreement entitled Lump Sum General Bid Contract
Between The University of Notre Dame and English Boiler and Tube,
Inc. for Packaged Steam Boiler No. 6 Project (“the Contract”). The
Contract related to a construction project on Notre Dame’s campus,
referred to as “Package Steam Boiler No. 6,” under which English
Boiler agreed to manufacture a boiler complete with the necessary
auxiliary
“Project”).

equipment

(“Boiler

No.

6”)

for

Notre

Dame

(the

English Boiler purchased the Economizer from English

Boiler’s subcontractor, Applied Heat Recovery (“Applied Heat”).
(Def’s Ex. C, Dep. of John R. English, p. 30).

The Economizer is

“a heat recovery device designed to transfer heat from the products

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of combustion to boiler feedwater.” AM. BOILER MFR.’S HANDBOOK
UTIL.

AND

BOILER TERMS

AND

OF

POWER,

PHRASES, 110 (PennWell Books 6th ed. 1992).

Boiler No. 6 was completed on or about July 12, 2007. (Def’s
Ex. D, Notre Dame’s Answers to English Boiler’s Second Set of
Interrogs.).

Startup of Boiler No. 6 commenced on or about July

12, 2007 and was completed on or about July 30, 2007. (Ex. D, No.
2.). Boiler No. 6 “was [first] fired for regular production of
steam” on July 30, 2007.” (Ex. D, No. 3; Def’s Ex. E, Dep. of Mark
L. Hummel 59, 63).

Notre Dame made the final payment for English

Boiler’s work pursuant to the Contract on or about March 5, 2008.
(Ex. E, 64).
Subparagraph 2(f) of the Contract states, in pertinent part,
“the Work will be free from materials and workmanship defects and
in

conformance

with

the

Contract

Documents.”

(Def’s

Ex.

Further, subparagraph (g) states, in pertinent part, that:
The Contractor warrants to the Owner that the goods
provided by the Contractor at the time of shipment will
be free from material defects in material and workmanship
and, that the goods will conform in all material respects
to the Owner’s specifications. This warranty shall be
ineffective and shall not extend to goods subjected to
misuse, neglect, accident or improper installation or
maintenance, goods which have been altered or repaired by
anyone other than the Contractor or its authorized
representative. The warranty for boiler pressure parts
shall be five (5) years from the date of final completion
or five (5) years plus six (6) months after “first fire”,
whichever period ends first. The warranty contained
herein is made only to and for the exclusive benefit of
the Owner, and does not extend to any subsequent
purchaser or user of the goods or of any product at which
the goods may be a component part. THE ABOVE WARRANTY
COMPRISES THE CONTRACTOR’S SOLE AND ENTIRE WARRANTY
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B).

OBLIGATION.
(Ex. A, ¶ 2(g)(emphasis added)).
On March 25 and April 26, 2010, Notre Dame alleged that
members of its Utilities Department discovered three leaks in the
tubes of Boiler No. 6. (Def’s Ex. G, Notre Dame’s Answers to
English Boiler’s First Interrogs., No. 2; Ex. E, p. 67–70).
Economizer’s tubes are pressure parts. (Ex. C, p. 71).
Mechanical

Contracting,

Inc.

(“Centerline”),

at

The

Centerline

Notre

Dame’s

request, made repairs to the leaks on approximately March 28 and
April

29,

2010.

(Ex.

G,

No.

16l;

Ex.

E.,

p.

73–82).

Since

approximately April 26, 2010, Notre Dame has discovered no other
leaks in the Economizer. (Ex. G, No. 15; Ex. E, p. 93–94).

Since

April 29, 2010, the Economizer has functioned as required by Notre
Dame without any leaks or issues other than normal maintenance
issues. (Ex. E, p. 93–94; Def’s Ex. I, Dep. of John M. Koltick,
Jr., P.E., pp. 59–60).
While repairing the Economizer, Notre Dame claims to have
found other issues with it, including evidence of the casing being
removed

and

patched

back

and

numerous

cobbled

attempts

to

reassemble the Economizer casing to the structural framework with
shims, lapped metal sheeting, and brackets. (Ex. G, No. 1). Notre
Dame further claims that its employees saved sections of the
Economizer’s failed tube to analyze the welds. (Ex. G, No. 1).
Upon further analysis, Notre Dame alleges that it discovered the

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welds did not achieve complete penetration. (Ex. G, No. 1).
There are approximately 420 weld points in the Economizer.
(Ex. E, pp. 124, 126; Ex. G, No. 1).

Notre Dame engaged an outside

firm, Calumet Testing Services, Inc., to x-ray sixteen randomly
selected weld points on the Economizer. (Ex. G, No. 1). A document
entitled Radiographic Examination Report, dated April 28, 2010,
revealed that eleven of the sixteen welds failed the radiographic
analysis. (Ex. J; Ex. E, p. 133; Ex. G, No. 1).

Metallurgical

analysis of the tube sections removed from the Economizer confirmed
“non-optimal weld joint construction related to lack of fusion.”
(Koltick Rep., Ex. 1, p. 14).

Even those welds that “passed” the

radiographic testing may be defective.
15).

(Koltick Rep., Ex. 1, p.

English Boiler admits some welds failed.

(Ex. 4).

Notre Dame contacted English Boiler after Notre Dame had
already made repairs to the tubes and removed sections of them for
analysis and after Notre Dame first contacted English Boiler’s
subcontractor, Applied Heat. (Ex. E, p. 74–75; Def’s Exhibit K;
Def’s Exhibit L).
The Contract Documents required that all equipment furnished
by English Boiler adhere to the then-latest edition of the ASME
Boiler and Pressure Vessel Code (“ASME Code”).

(Ex. 4, at #5-7).

The ASME Code Section I requires welded joints in pressure vessels
to be full penetration butt welds.

(Ex. 1 at p. 10).

To ensure a

full penetration butt weld has occurred, an x-ray examination can

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be performed.

(Def’s Ex. O, Dep. Sollish, p. 137).

Nevertheless,

ASME Code Section I did not require random radiographic x-rays of
the welds on the Economizer.

(Ex. I, pp. 35-36).

The Contract did

not require English Boiler to perform random radiographic x-rays on
the Economizer’s welds. (Ex. I, pp. 36-37; Ex. E, pp. 33-34).
David Sollish has been designated as an expert in this case by
English Boiler to evaluate whether the Economizer complied with
ASME Code Section 1.

(Def’s Exhibit P).

Sollish stated, “[T]his

component, in order to be code compliant, had to pass a visual test
and a hydrostatic test, which it did.”

(Ex. O, pp. 172-174).

Therefore, Sollish concluded that the Economizer complied with ASME
Code Section 1.

While Sollish agreed that only a radiographic x-

ray can ensure a full penetration weld, that x-ray test is not
required to be performed under ASME Code Section 1.

(Ex. O, pp.

172-174).
English Boiler has provided a “Form P-3 Manufacturers Data
Report,” which indicates that the Economizer was fabricated by an
authorized ASME boiler construction facility.
Thomas

Martin,

an

authorized

inspector,

(Ex. P, p. 5).

certified

that

the

Economizer was constructed in accordance with Section 1 of the ASME
Code.

(Ex. P, pp. 5-6).
Notre Dame’s designated expert, John Koltick, also provided an

expert report and testimony in this case.

Koltick stated that,

“based on the Calumet testing . . . they have shown that the

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economizer, at least the joints that were tested, do not comply”
with ASME Code Section 1.
discloses

that,

“[t]he

(Ex. 2, p. 59).
long

term

Koltick’s expert report

effect

of

the

Economizer’s

defective welds will be an increased risk for future leaks,
materials fatigue, and ultimately, a shorter useful life than if it
had been fabricated without the defects and in compliance with
Section I of the 2004 ASME B&PVC.”

(Ex. 1, p. 19).

Notre Dame claims that its damages range from $255,000$735,000 for the purchase and installation of a new economizer,
labor associated with the installation of the new economizer, and
the costs associated with renting a backup boiler while Boiler No.
6 is offline during the installation of the new economizer. (Ex. G,
No. 8; Ex. M; Ex. N).
Notre Dame has brought its breach of contract claim against
English Boiler, asserting English Boiler breached the Contract by
supplying a non-compliant economizer; one that contained welds
which did not meet ASME Code Section 1 standards.

English Boiler

has filed the instant motion for summary judgment asserting Notre
Dame has failed to prove that English Boiler breached the Contract.
English Boiler goes on to argue, that even if Notre Dame could
prove that English Boiler breached the contract, Notre Dame is
barred from asserting such a claim for three reasons.

First,

English Boiler argues Notre Dame’s engagement of a third party Centerline- to repair the tube leaks in Boiler No. 6's Economizer

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rendered the Contract’s warranty ineffective and bars Notre Dame’s
breach of contract claim.

Second, English Boiler argues that the

Contract’s exclusive warranty expired in January 2013, such that
even if leaks or other defects were present in the Economizer
thereafter, English Boiler would not be obligated to repair or
replace it.

And third, English Boiler asserts that Notre Dame has

suffered no actual damages and, instead, is seeking to recover for
possible future damages.

There is a Genuine Dispute as to Whether
English Boiler Materially Breached the Contract
It is undisputed that Indiana law governs the Contract.

In

Indiana, “[t]he essential elements of a breach of contract action
are the existence of a contract, the defendant’s breach thereof,
and damages.

Fowler v. Campbell, 612 N.E.2d 596, 600 (Ind. Ct.

App. 1993)(citation omitted).

Here, the parties agree there was a

contract, but disagree whether English Boiler breached the Contract
and whether the breach, if any, caused actual damages to Notre
Dame.
There is a genuine dispute as to whether English Boiler
breached the Contract by delivering an Economizer that included
welds which were not full penetration butt welds.

The Contract

required English Boiler to provide products that complied with the
ASME Code.

Notre Dame’s expert, Mr. Koltick opines that the

Economizer provided by English Boiler had some welds that were not
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full penetration butt welds, as required by the ASME Code.
he

concluded

that

English

Boiler’s

“fabrication

was

Thus,
not

in

compliance with Section I of the 2004 ASME B&PVC.” (Koltick Report
at 19).

English Boiler’s expert, David Sollish, reached an

opposite conclusion, noting that the welds in the Economizer passed
all necessary ASME Code testing, and thus complied with the ASME
standards.

English Boiler also points to the fact that Thomas

Martin, an authorized inspector, certified that the Economizer was
constructed

in

accordance

with

Section

1

of

the

ASME

Code.

However, at this stage, all this conflicting evidence establishes
is a genuine dispute as to whether the welds in the Economizer met
ASME standards, as required.

Because of this, there is a genuine

issue as to whether English Boiler breached the Contract.
And, the dispute as to whether the welds met ASME standards is
material, which makes summary judgment inappropriate.

See Air

Prods & Chemicals, Inc. v. Eaton Metal Prods. Co., No. 02-CV-1277
2003 WL 22133839 *6 (E.D. Pa. Aug. 22, 2003)(holding that evidence
that fabrication procedures violated the ASME Code make summary
judgment on the breach of contract issue inappropriate); see also
Frazier v. Mellowitz, 804 N.E.2d (Ind. Ct. App. 2004)(“[Whether a
party has committed a material breach is a question of fact.”).
Indeed, whether a party’s breach is material is a question of fact
contingent on a number of factors:
(a) the extent to which the injured party will obtain the
substantial benefit which he could have reasonably
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anticipated;
(b) the extent to which the injured party may be
adequately compensated in damages for lack of complete
performance;
(c) the extent to which the party failing to perform has
already partly performed or made preparations for
performance;
(d) the greater or less hardship on the party failing to
perform in terminating the contract;
(e) the willful, negligent or innocent behavior of the
party failing to perform; and
(f) the greater or less uncertainty that the party
failing to perform will perform for the remainder of the
contract.
Tomahawk Village Apts. v. Farren, 571 N.E.2d 1286, 1293 (Ind. Ct.
App. 1991)(quotation omitted).

Whether such a breach is material

is “generally a question of fact to be decided by the trier of
fact.” Collins v. McKinley, 871 N.E.2d 363, 375 (Ind. Ct. App.
2007).

Thus, it will be the jury’s role - not this Court’s - to

determine if the alleged breach in this case is material.

Because there is a genuine dispute whether English
Boiler materially breached the contract at the time
the Economizer was delivered, summary judgment regarding
Notre Dame’s alleged subsequent breach is inappropriate.
English Boiler asserts that Notre Dame’s breach of contract
action is barred because of Notre Dame did not give English Boiler
prompt notice of the leaks and also because Notre Dame hired
Centerline to complete repairs to the leaks on March 28 and April
29, 2010.
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Paragraph 19 of the Contract set forth the obligations of the
Owner, here Notre Dame:
In the event the Owner becomes aware of any fault or
defect of the Project, non-conformance with the Contract
Documents, or of any errors, omissions or inconsistencies
in the Drawings or Specifications, and in the further
event that the Contractor does not have notice of the
same, prompt notice thereof shall be given by the Owner
to the Contractor.
English Boiler argues that Notre Dame failed to comply with
Paragraph 19 of the Contract by not giving English Boiler timely
notice of the leaks so that English Boiler may have had an
opportunity to address them.
English Boiler also maintains that Notre Dame rendered the
warranty contained in paragraph 2(g) of the Contract void by having
Centerline

perform

repairs

on

the

Economizer.

However,

as

previously discussed, there is a genuine dispute to whether English
Boiler

materially

breached

conforming Economizer.

the

Contract

by

providing

a

non-

If a jury finds that English Boiler

materially breached the Contract, that breach occurred at the time
of delivery, which predated either of Notre Dame’s complained of
actions.
In

Indiana,

“where

a

party

is

in

material

breach

of

a

contract, he may not . . . seek to enforce the contract against the
other party if that party later breaches the contract.”

Wilson v.

Lincoln Federal Sav. Bank, 790 N.E.2d 1042, 1048 (Ind. Ct. App.
2003)(citation omitted).

Thus, if a jury does find that English

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Boiler materially breached the contact by delivering a non-ASME
compliant Economizer to Notre Dame, any subsequent breach by Notre
Dame would not negate Notre Dame’s breach of contract claim.
Because the answers to these disputed factual questions can only be
answered by a jury, summary judgment is inappropriate.

Notre Dame’s Breach of Contract Claim is not Untimely
English

Boiler

next

asserts

that

Notre

Dame’s

claim

is

untimely because the Contract’s warranty has expired. According to
English Boiler, “at the very latest, the warranty on pressure parts
would have expired on January 30, 2013.”

English Boiler argues

that, because the Economizer has functioned normally since April
29, 2010, Notre Dame cannot seek any damages that occurred or may
occur after January 30, 2013.
The warranty in question is found in Paragraph 2(g) of the
Contract, which states, “[t]he warranty for boiler pressure parts
shall be five (5) years from the date of final completion or five
(5) years plus six (6) months after ‘first fire’, whichever period
ends first.”

Notre Dame experienced leaks in the Economizer in

March and April 2010.

Notre Dame then went on to have testing

performed on the Economizer in April and May 2010.
Notre

Dame

notified

English

Boiler

of

its

In June 2010,

concern

with

the

Economizer and Notre Dame ultimately brought this lawsuit in July
2012. Notre Dame discovered the alleged materially defective welds

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in the Economizer and notified English Boiler about them before
January 30, 2013.
Thus, Notre Dame was timely in bringing the instant claim
based on those materially defective welds found prior to January
30, 2013.

Ind. Code § 26-1-2-725(2)(defining when a cause of

action accrues and noting that “[a] breach of warranty occurs when
tender of delivery is made”).
What English Boiler really disputes is the extent of damages
Notre Dame can recover. English Boiler argues that the warranty in
Paragraph 2(g) should preclude Notre Dame from recovering for any
damage outside of the five year period.

In support of that

proposition, English Boiler relies on Red Rose Transit Authority v.
Am. Bus Industries, No. 11-1146, 2013 WL 180201 (Jan. 16, 2013 E.D.
Pa.).

In Red Rose, the plaintiff received a shipment of buses

pursuant to a contract in May of 2003.

Then, in June of 2009, a

fire started in one of the bus’s battery compartments.

The

plaintiff brought suit against the manufacturer alleging, among
other things, breach of warranty. However, the court dismissed the
breach of warranty claim, finding that express warranties had
expired before the plaintiff noticed any defect and before the fire
had taken place.
The logic in Red Rose is not applicable here.

While the

plaintiff in Red Rose did not assert a breach of warranty claim
until after the contractual and statutory warranty periods had

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expired, Notre Dame did bring its breach of warranty claim within
the contractual warranty period.
support

that

position

that

There is nothing in Red Rose to

just

because

Notre

Dame

did

not

appreciate or sustain the full extent of its damages as of January
31, 2013, any subsequent damage claim would be time barred.

Notre Dame’s Alleged Damages are not Speculative
English Boiler takes issue with Notre Dame’s allegation that
“the defects in the Boiler 6 economizer creates a risk of future
failures that could result in future damage, loss or injuries.”
(Cmpt ¶ 14).

English Boiler argues Notre Dame cannot seek damages

based on unknown damages that Notre Dame may possibly suffer in the
future.
The parties agree that the appropriate measure of damages is,
“the amount that would put plaintiff in the same position it would
have been in had the contract been fulfilled.

Plaintiff may only

recover the loss actually suffered and should not be placed in a
better position than if defendant had not breached the contract.”
Ind. Model Civil Jury Instr. 3313.

However, the parties disagree

as to how to arrive at this measurement.
While it is true that no additional leaks have resulted in the
Economizer since April 2010, that does not necessarily mean that
Notre Dame has not have suffered any recoverable damages.

Notre

Dame’s expert, Koltick, noted that the non-conforming welds in the

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Economizer means that it suffers “an increased risk for future
leaks, materials fatigue, and ultimately, a shorter useful life
than if it had been fabricated without the defects.”
p. 19).

(Kotick Rep.

In fact, Notre Dame retained another expert, Todd Jacobs,

who gathered cost information regarding the amount it would take to
be in the position to have an economizer with conforming ASME
welds.

Todd Jacobs estimated that amount at $255,000.

English Boiler argues that to allow Notre Dame to use the
Economizer for six and one-half years and now seek damages for an
entirely new Economizer would be unfair.

While that may be true,

English Boiler can certainly contest the extent of Notre Dame’s
alleged actual damages.
sufficient

evidence

Regardless, Notre Dame has presented

that

it

has,

sufficient to proceed to trial.

in

Fowler,

fact,

suffered

damages

612 N.E.2d at 603; Prime

Mortgage USA, Inc. v. Nichols, 885 N.E.2d 628, 659 (Ind. Ct. App.
2008)(noting that “estimates are permitted” in computing damages).
Thus, while Notre Dame’s damages may not be exact, they are not
speculative

either.

As

a

result,

summary

judgment

inappropriate.

CONCLUSION
For the reasons set forth above, this motion is DENIED.

DATED:

August 29, 2014

/s/RUDY LOZANO, Judge
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is

United States District Court

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