Graham Construction Services, Inc v. Hammer & Steel, Inc

Filing 159

MEMORANDUM AND ORDER: HEREBY ORDERED that Defendant Hammer & Steel, Inc.'s Motion for Partial Summary Judgment (ECF No. 127 ) is GRANTED, in accordance with the foregoing. FURTHER ORDERED that Counts II through VI of Graham's Second Amende d Complaint are DISMISSED with prejudice. FURTHER ORDERED that judgment is entered in favor of H&S on the portion of Count IV of its Amended Counterclaim dealing with the Hartfuss 60" auger. Signed by District Judge Jean C. Hamilton on 11/07/12. (CLK)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

GRAHAM CONSTRUCTION SERVICES,
INC.,
Plaintiff(s),
vs.
HAMMER & STEEL, INC.,
Defendant(s).

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Case No. 4:11CV1316 JCH

MEMORANDUM AND ORDER
This matter is before the Court on Defendant Hammer & Steel, Inc.’s Motion for Partial
Summary Judgment, filed July 23, 2012. (ECF No. 127). The motion is fully briefed and ready for
disposition.
BACKGROUND
Plaintiff Graham Construction Services, Inc. (“Graham”) is a Minnesota corporation, with its
principal place of business located in Minnesota. (Second Amended Complaint (“Compl.”), ¶ 1).
Defendant Hammer & Steel, Inc. (“H&S”) is a Missouri corporation, with its principal place of
business located in Missouri. (Id., ¶ 2). Graham first instituted this action in the Northwestern
Division of the District Court of North Dakota. (Id., ¶ 5). The District Court of North Dakota
transferred the case to this Court pursuant to 28 U.S.C. § 1404(a) on July 27, 2011. (Id.).
On or about October 1, 2009, Graham, as subcontractor, entered into an agreement with
Industrial Contract Services, Inc., as general contractor, to provide construction services for the
Parshall Raw Water Intake Structure project (the “Project”) in Parshall, North Dakota. (Compl., ¶
6). One of the Graham’s responsibilities under the contract was to construct a caisson, or shaft for
a foundation. (Id., ¶ 7). Graham consulted with H&S, regarding H&S’s ability to supply and lease

drilling equipment for the construction of the caisson. (Id., ¶ 9).1 H&S had leased equipment to
Graham in the past, pursuant to equipment rental agreements. (Id., ¶ 8; Answer, ¶ 8).
According to Graham, H&S, through its agent Todd Maxa2 (“Maxa”), made representations
that it could provide appropriate drilling equipment for the timely construction of the caisson.
(Compl., ¶ 10).3 On or about September 17, 2009, H&S provided Graham with a proposal for the
sale of a 168” Max Cut Over Reaming Tool (“Over Reaming Tool”). (Id., ¶ 16). Graham maintains
H&S further represented that Graham should lease a Sany Model SR 250 Hydraulic Drilling Rig
(“Sany Drill Rig”) from H&S, to drive the Over Reaming Tool for the construction of the caisson.
(Id.). Graham claims that H&S represented to Graham that the Over Reaming Tool would
accomplish the required drilling for the caisson, and that the only drilling rig that could reach the
depths required for the Project was the Sany Drill Rig. (Id.). Graham purchased the Over Reaming
Tool in December, 2009, and signed an equipment rental agreement (“Rental Agreement”) for both
the Sany Drill Rig and a 60" Hartfuss heavy duty auger on or about December 3, 2009. (Id., ¶ 19;
Answer, ¶ 19).
On or about December 12, 2009, Graham began drilling the pilot shaft with the 60" auger

1

While Graham maintains that as part of the consultation, it supplied H&S with a great
deal of information regarding the Project, H&S admits only that Graham provided a copy of soil
boring logs. (H&S’s Second Amended Answer (“Answer”), ¶ 9).
2

Maxa is H&S’s Upper Midwest Territory Manager, a position he has held for over
eighteen years. (H&S’s Statement of Uncontroverted Material Facts (“H&S’s Facts”), ¶ 4).
3

The parties agree that prior to the start of construction of the caisson for the Project,
Maxa attended a meeting in Bloomington, Minnesota, at the offices of Engineering Partners
International, LLC, Graham’s consulting engineer on the caisson design. (Compl., ¶ 15; Answer,
¶ 15). H&S denies Graham’s assertion that during the meeting Maxa advised Graham on the type
and size of drilling equipment required to complete construction of the caisson, assisted in
finalizing the design for the excavation pit and drill platform, and provided recommendations to
ensure the design of the sheetpile shoring system would accommodate the size of the drill and
drilling tools to be supplied by H&S. (Id.).
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head leased from H&S. (Compl., ¶ 21). According to Graham, during the drilling a component of
the Sany Drill Rig snapped, leaving the auger head embedded approximately 115 feet below the
surface of the caisson excavation pit.4 (Id.). Graham attempted numerous times to retrieve the
embedded auger head but was not successful. (Id., ¶ 22). Graham maintains it was forced to relocate
the site of the caisson excavation pit and drilling platform, thereby incurring significant expenses and
delays. (Id). According to Graham, H&S eventually informed Graham that the Sany Drill Rig could
not complete the required drilling for the construction of the caisson, and that it therefore would be
removing the Sany Drill Rig from the Project. (Id., ¶ 23).5
In its eight-count Second Amended Complaint, filed March 22, 2012, Graham alleges Breach
of Contract (Count I); Breach of Express Warranties (Count II); Breach of Implied Warranties
(Count III); Fraudulent Inducement: Actual Fraud (Count IV); Constructive Fraud (Count V);
Negligent Misrepresentation (Count VI); Reformation (Count VII)6; and Quantum Meruit/Unjust
Enrichment (Count VIII). (ECF No. 72). H&S filed an Amended Counterclaim on March 29, 2012,
asserting claims for Breach of Contract (Count I); Unjust Enrichment (Count II); Breach of Express
Warranties (Count III); and Order of Delivery or Value of Augers (Count IV). (ECF No. 73).7
4

While Graham blames the failure on faulty equipment supplied by H&S, H&S conversely
maintains Graham abused and misused its equipment, thereby causing damage. (Compl., ¶ 21;
Answer, ¶ 21).
5

H&S counters that it removed the Sany Drill Rig from the Project pursuant to the Rental
Agreement, because of Graham’s misuse and abuse of the drill rig, and because of Graham’s
failure to continue to make monthly payments under the terms of the Rental Agreement.
(Answer, ¶ 23).
6

In its response to the instant motion, Graham stipulates to dismissal of its claim for
reformation. (See Plaintiff’s Memorandum of Law in Opposition to Defendant’s Motion for
Partial Summary Judgment (“Graham’s Opp.”), P. 2).
7

In its Amended Counterclaim, H&S maintains Graham has failed to make required
payments under the Rental Agreement, and has failed to return both the 60" Hartfuss heavy duty
auger and a 36" heavy duty auger rented from H&S. (Amended Counterclaim, ¶¶ 8, 12). H&S
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As stated above, H&S filed the instant Motion for Partial Summary Judgment on July 23,
2012, seeking dismissal of Counts II through V of the Second Amended Complaint. (ECF No. 127).
H&S further seeks summary judgment on its affirmative claim for the value of the 60-inch auger.
(Id.).
SUMMARY JUDGMENT STANDARD
The Court may grant a motion for summary judgment if, “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The substantive
law determines which facts are critical and which are irrelevant. Only disputes over facts that might
affect the outcome will properly preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). Summary judgment is not proper if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party. Id.
A moving party always bears the burden of informing the Court of the basis of its motion.
Celotex, 477 U.S. at 323. Once the moving party discharges this burden, the nonmoving party must
set forth specific facts demonstrating that there is a dispute as to a genuine issue of material fact, not
the “mere existence of some alleged factual dispute.” Fed. R. Civ. P. 56(e); Anderson, 477 U.S. at
247. The nonmoving party may not rest upon mere allegations or denials of its pleadings. Anderson,
477 U.S. at 256.
In passing on a motion for summary judgment, the Court must view the facts in the light most
favorable to the nonmoving party, and all justifiable inferences are to be drawn in its favor. Anderson,

maintains Graham buried both augers when it abandoned and filled in the caisson shaft for safety
reasons. (H&S Facts, ¶ 24).
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477 U.S. at 255. The Court’s function is not to weigh the evidence, but to determine whether there
is a genuine issue for trial. Id. at 249.
DISCUSSION
I.

Can Parol Evidence Be Introduced To Alter The Terms Of The Rental Agreement?
In its Motion for Partial Summary Judgment, H&S requests a declaration that the December

3, 2009, Rental Agreement for the Sany Drill Rig and Hartfuss 60" auger is valid and enforceable as
written. (H&S’s Memorandum in Support of Motion for Partial Summary Judgment (“H&S’s Memo
in Support”), P. 3). “Under Missouri law, a party who signs a document after having an opportunity
to review its contents is, absent fraud or duress, bound by its terms.” Monsanto Co. v. Swann, 308
F.Supp.2d 937, 943 (E.D. Mo. 2003) (citations omitted). Further, a signatory to a document is
bound by its terms, irrespective of whether he or she actually read the document. Midwest Printing,
Inc. v. AM Intern., Inc., 108 F.3d 168, 170 (8th Cir. 1997); U.S. for Use of Bussen Quarries, Inc.
v. Thomas, 938 F.2d 831, 833 (8th Cir. 1991). In the instant case, it is undisputed that Quint
McDermand8 (“McDermand”) had the opportunity to read the additional terms and conditions of the
Rental Agreement. That he apparently chose not to do so does not provide a basis for Graham to
avoid the contract’s provisions.
The Court still must consider, however, whether H&S’s alleged prior oral statements may be
introduced to contradict the unambiguous written terms of the Rental Agreement. “The parol
evidence rule prohibits evidence of prior or contemporaneous agreements that vary or contradict the
terms of an unambiguous and complete contract absent fraud, common mistake, accident, or
erroneous omission.” Lion Petroleum of Missouri, Inc. v. Millennium Super Stop, LLC, 2008 WL

8

Quint McDermand was Graham’s Senior Project Manager for the Project, with over 23
years of experience in the construction industry. (H&S’s Facts, ¶ 6).
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3010789, at *5 (E.D. Mo. Aug. 1, 2008) (citing Celtic Corp. v. Tinnea, 254 S.W.3d 137, 142
(Mo.Ct.App. 2008) (per curiam)). “Parol evidence may not be used to create ambiguity in an
otherwise unambiguous contract.” Id. (citation omitted). “Thus, fraud can be proved by parol
evidence, but ‘in the absence of fraud...a valid written contract merges all prior and contemporaneous
negotiations on the subject.’” Id. (quoting Comp & Soft, Inc. v. AT&T Corp., 252 S.W.3d 189, 19697 (Mo.Ct.App. 2008)).
Here, the parties executed a Rental Agreement that included the following integration clause:
“This is the entire agreement between the parties, except as otherwise expressly stated on page 1
hereof. There are no other oral or written promises, terms, conditions, representations of quality of
fitness for any purpose, or warranties express or implied, concerning the equipment, other than those
contained herein in writing.” (Rental Agreement, attached as Exh. A to H&S’s Answer, ¶ 19).
Graham has not identified an ambiguity in the Rental Agreement that would allow the Court to look
to parol evidence to vary this term. Bank of Kirksville v. Small, 742 S.W.2d 127, 133 (Mo. 1987)
(parol evidence is admissible to determine the intent of the parties where an ambiguity exists within
the contract). Instead, Graham argues that this Court may look beyond the terms of the Rental
Agreement because it was the victim of fraudulent and/or negligent oral promises by H&S, that
improperly induced Graham to execute the Rental Agreement. The Court thus turns to consideration
of whether the evidence before it supports a claim for fraudulent or negligent inducement to execute
the Rental Agreement, sufficient to constitute an exception to the parol evidence rule. Id. (parol
evidence rule does not forbid the use of evidence to show that the agreement was entered into as a
result of fraud).
A.

Count IV: Fraudulent Inducement: Actual Fraud

In Count IV of its Second Amended Complaint, Graham asserts that because it is not an

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expert on drilling equipment, it sought and relied on H&S’s recommendations for appropriate drilling
equipment for the Project. (Compl., ¶ 56). Graham maintains that during August, and September,
2009, both in emails and at the meeting in Bloomington, Maxa represented that Graham should lease
the Sany Drill Rig to drive the Over Reaming Tool, and that “this and the other drilling equipment
Graham proceeded to purchase and lease from H&S was the appropriate drilling equipment that could
timely complete the construction of the caisson for the Project work.” (Id., ¶ 57). Graham continues
to allege that Maxa and other H&S employees knew or reasonably should have known these
assertions were false, but nevertheless intended that Graham would rely on the representations and
lease the drilling equipment, which it did to its detriment. (Id., ¶¶ 59-65). As relief, Graham seeks
either rescission of its contract with H&S, or monetary damages. (Id., ¶ 66).
Under Missouri law9, in order to succeed on its claim for fraudulent inducement Graham must
prove the following elements: “(1) that [H&S] made certain material representations to [Graham];
(2) such representations were false when made; (3) that [H&S] knew the representations were false;
(4) that the representations were made with the purpose of deceiving [Graham]; (5) that [Graham]
was, in fact, deceived; (6) [Graham] reasonably relied on the representations in signing the [rental
and/or purchase agreements]; and (7) [Graham] suffered damage as a proximate result of the
fraudulent misrepresentations.” Bracht v. Grushewsky, 448 F.Supp.2d 1103, 1110 (E.D. Mo. 2006)

9

The parties apparently agree that Missouri law governs their contract disputes, pursuant
to a valid choice-of-law provision in the Rental Agreement. In deciding to apply the choice of law
provision to Graham’s tort claims as well, the Court adopts the reasoning set forth in Pissed
Away N6VC, LLC v. Stricker, 2012 WL 393418, at *2 (W.D. Mo. Feb. 6, 2012). See also
Major v. McCallister, 302 S.W.3d 227, 231-232 (Mo. App. 2009) (internal quotation marks and
citation omitted) (noting it would enforce a contract clause, “be it arbitration, forum selection, or
some other provision,” for tort claims “arising directly out of a dispute regarding the terms of the
parties’ contractual relation, or where the statements giving rise to a tort claim are integrally
linked to the contractual relation between the parties.”); Republic Credit Corp. v. Rance, 172
F.Supp.2d 1178, 1183 (S.D. Iowa 2001).
-7-

(citing Trotter’s Corp. v. Ringleader Restaurants, Inc., 929 S.W.2d 935, 939 (1996)).10 “As with any
cause of action, ‘[a] failure to establish any one of the essential elements of fraud is fatal to
recovery.’” Argus Health Systems, Inc. v. Benecard Services, Inc., 2011 WL 5570064, at *2 n. 4
(W.D. Mo. Nov. 16, 2011) (quoting Emerick v. Mutual Benefit Life Insurance Co., 756 S.W.2d 513,
519 (Mo. 1988) (en banc)).
Upon consideration the Court finds that, even assuming H&S employees made the
representations at issue, summary judgment is nevertheless appropriate because Graham cannot
establish it reasonably relied upon H&S’s alleged oral guarantee that the drilling equipment at issue
was “the appropriate drilling equipment that could timely complete the construction of the caisson
for the Project work.” “A party cannot allege reliance on promises made in the course of
negotiations, whether written or oral, true or false, if the party subsequently enters into a written
agreement silent on the matter.” Lion Petroleum, 2008 WL 3010789, at *6 (citing Toghiyany v.
AmeriGas Propane, Inc., 309 F.3d 1088, 1092 (8th Cir. 2002) (upholding summary judgment for
defendant where plaintiff alleged that it entered into a contract in reliance on the promise that a fiveyear commitment would govern the relationship, because no such provision was found in the
subsequent written document)). If assurances that the equipment at issue would timely and properly
complete construction of the caisson were material to Graham’s decision to enter into the Rental
Agreement, one would have expected Graham, a highly sophisticated construction contractor11, to

10

“Fraud in the inducement is a subset of fraudulent misrepresentation, applicable where a
fraudulent misrepresentation leads another to enter into a transaction with a false impression of
the risks, duties, or obligations involved.” Lion Petroleum, 2008 WL 3010789, at *5 (citations
omitted).
11

Graham does not dispute H&S’s assertion that it is a wholly owned subsidiary of the
Graham Group, which in 2010 was the fifth largest construction company in Canada, with
revenue of $1.8 billion. (See H&S’s Facts, ¶ 2).
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have made sure that these terms were included in the written agreement.” Id. Instead, Graham
signed a Rental Agreement containing the following provisions, seemingly at odds with its claim of
reliance:
14.

WARRANTIES. Lessee (i.e., Graham) acknowledges that Lessee has
selected the equipment leased hereunder based entirely and solely on Lessee’s
judgment and Lessee understands and agrees that any IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.

19.

BINDING EFFECT/ENTIRE AGREEMENT....This is the entire
agreement between the parties, except as otherwise expressly stated on page
1 hereof. There are no other oral or written promises, terms, conditions,
representations of quality of fitness for any purpose, or warranties express or
implied, concerning the equipment, other than those contained herein in
writing, if any.

(Rental Agreement, ¶¶ 14, 19). Under these circumstances, the Court finds Graham fails to
demonstrate justifiable reliance on H&S’s alleged misrepresentations, and so its claim for
fraud/fraudulent inducement must fail. Lion Petroleum, 2008 WL 3010789, at *6. See also Cook
v. Little Caesar Enterprises, Inc., 210 F.3d 653, 658 (6th Cir. 2000) (cited with approval in
Toghiyany, 309 F.3d at 1093) (“Reliance upon oral representations or prior documents, even if false,
is unreasonable if the party enters into a subsequent agreement.”); Argus, 2011 WL 5570064, at *5-6.
B.

Count V: Constructive Fraud

In Count V of its Second Amended Complaint, Graham asserts H&S committed “constructive
fraud/fraudulent inducement.” (Compl., ¶ 68). The claim in Count V is based on the same alleged
misrepresentation as in Count IV, i.e., “that H&S examined the geotechnical information for the
Project and assured and represented to Graham through Maxa that the drilling equipment, including
the Sany Drill Rig, was the appropriate drilling equipment that could timely complete the construction
of the caisson for the Project work.” (Id., ¶ 68(a)).
“The elements required to properly plead a claim of fraudulent representation based on
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constructive fraud are identical to those required for pleading a case of fraudulent representation
based on actual fraud except it is not necessary for a plaintiff to plead and prove that the defendant
had knowledge of the falsity of the representation but only that the defendant was ignorant of its
truth.” Northwest Hamilton Lake Development Co. L.L.C. v. American Federal, Inc., 2006 WL
381499, at *7 (E.D. Mo. Feb. 16, 2006) (citations omitted). Since Graham has failed to show any
dispute of material fact regarding the element of reasonable reliance, “whether or not [H&S] was
ignorant of the truth of the alleged misrepresentations is irrelevant.” Id. Graham thus fails to set
forth facts sufficient as a matter of law to support a claim of constructive fraud, and so Count V must
be dismissed. Id.
C.

Negligent Misrepresentation

In Count VI of its Amended Complaint, Graham asserts H&S is liable for negligent
misrepresentation, as it “assured and represented to Graham that the drilling equipment, including the
Sany Drill Rig, was the appropriate drilling equipment that could timely complete the construction
of the caisson for the Project work.” (Compl., ¶ 72). Under Missouri law, “[t]he elements of
negligent misrepresentation are: (1) speaker supplied information in the course of his business or
because of some other pecuniary interest; (2) due to speaker’s failure to exercise reasonable care or
competence in obtaining or communicating this information, the information was false; (3) speaker
intentionally provided the information for the guidance of a limited group of persons in a particular
business transaction; (4) listener justifiably relied on the information; and (5) that as a result of
listener’s reliance on the statement, he/she suffered a pecuniary loss.” Harris v. Smith, 250 S.W.3d
804, 808 (Mo. App. 2008) (internal quotations and citation omitted).

As with fraudulent

misrepresentation, a party’s failure to prove any one of the elements of negligent misrepresentation
is fatal to a claim dependent on that theory. Id. at 809.

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Once again, Graham has not set forth facts sufficient as a matter of law to support a claim of
negligent misrepresentation, as it has failed to show any dispute of material fact regarding the element
of justifiable reliance. Count VI must therefore be dismissed.
D.

Conclusion

In light of the foregoing, parol evidence may not be introduced to alter the terms of the Rental
Agreement, and so it stands as a fully integrated and unambiguous document.12 H&S’s request that
the December 3, 2009, Rental Agreement for the Sany Drill Rig and Hartfuss 60" auger be declared
valid and enforceable as written will therefore be granted.
II.

Contract Claims
A.

Damages Limitation

In its Motion for Partial Summary Judgment, H&S asserts Graham’s damages are limited to
payments made under the rental agreement. (H&S’s Memo in Support, PP. 16-21). H&S bases this
contention on the following provisions in the Rental Agreement:
6.

Non-Working Time.....No “back charges” for job delay or other damages
shall apply against Lessor.

16.

Limitation of Remedies. Lessor’s entire liability and Lessee’s exclusive
remedy is set forth in this Section.
In all situations involving performance or nonperformance of the
equipment leased hereunder, the Lessee’s remedy is (1) the adjustment or
repair of the equipment or replacement of it by Lessor, at Lessor’s option, or
(2) if Lessor, after repeated efforts, is unable to restore the equipment to good
working order or to replace it, all as warranted, the Lessee shall be entitled to
recover actual damages to the limits set forth in this section.

12

In its response, Graham further asserts the Missouri Uniform Commercial Code
(“UCC”) allows parol evidence of “consistent additional terms.” (Graham’s Opp., P. 9, citing
Mo.Rev.Stat. § 400.2-202). As noted above, however, the Court does not find the alleged
assurances at issue constitute consistent additional terms; rather, they directly contradict the
express terms of the Rental Agreement, and thus are barred.
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Lessor’s liability for damages to the Lessee for any cause whatsoever,
except as otherwise stated in this section, and regardless of the form of action,
whether in contract or tort including negligence shall be the total lease or
rental charges for the specific piece of equipment that caused the damages or
that are the subject matter of, or are directly related to, the cause of action.
Such charges shall be those in effect for the specific piece of equipment when
the cause of action arose....
In no event will Lessor be liable for any damages caused by Lessee’s
failure to perform Lessee’s responsibilities or for any lost profits, lost savings,
incidents, damages or other consequential damages, even if Lessor has been
advised of the possibility of such damages, or for any claim by Lessee based
on any third party claim.
(Rental Agreement, ¶ 16).
“Disclaimers of consequential and incidental damages in commercial contracts are generally
enforceable under Missouri law.” Trinity Products, Inc. v. Burgess Steel, L.L.C., 486 F.3d 325, 332
(8th Cir. 2007) (citation omitted). The Missouri UCC bars damage disclaimers, however, “where
‘circumstances cause an exclusive or limited remedy to fail of its essential purpose,’ or where the
exclusion of consequential damages ‘is unconscionable.’” Id. (quoting Mo.Rev.Stat. § 400.2-719(2),
(3)). See also Mo.Rev.Stat. § 400.2A-503 (noting a lease agreement may limit or alter the measure
of damages recoverable under the Missouri UCC, and such limitations are valid unless “circumstances
cause an exclusive or limited remedy to fail of its essential purpose, or provision for an exclusive
remedy is unconscionable.”).13
Upon consideration, the Court does not find the damages limitation provision in the Rental
Agreement, entered into as it was between two sophisticated business entities, to be unconscionable.
Nor does the Court find the provision failed of its essential purpose under the circumstances, as it

13

Graham argues neither exception in its response to H&S’s motion, instead asserting
only that H&S would not be able to avail itself of the contractual limitation of liability if Graham
prevailed at trial on its [now dismissed] claims of fraudulent inducement. (Graham’s Opp., PP.
25-27).
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provided first for repair or replacement of the equipment, and then for actual damages. See Foam
Supplies, Inc. v. Dow Chemical Co., 2008 WL 3159598, at *3, 6 (E.D. Mo. Aug. 4, 2008) (declining
to find that a limitation of liability provision providing for replacement or repayment of the purchase
price paid for the products at issue failed of its essential purpose under Michigan law, as “[if] this
limitation on liability clause fails of its essential purpose, [the Court has] difficulty imagining a
situation where a clause restricting consequential damages for a breach of contract could ever be
found to be valid.”). The Court thus will grant H&S’s Motion for Partial Summary Judgment, to the
extent it seeks to limit Graham’s remedies to those provided for in the Rental Agreement.14
B.

Warranty Claims

H&S next seeks summary judgment on Graham’s claims of breach of express and implied
warranties. (H&S’s Memo in Support, PP. 21-24). The Court will consider the claims in turn.
1.

Express Warranties

In Count II of its Complaint, Graham asserts as follows:
34.

The Rental Agreement contained express warranties for the drilling
equipment, including the Sany Drill Rig, that provided that the equipment was
appropriate for the Project.

35.

H&S also expressly warranted to Graham that the drilling equipment,
including the Sany Drill Rig, would work for the purposes for which it was
intended on the Project.

(Compl., ¶¶ 34, 35). Graham maintains H&S breached its express warranties, by supplying drilling
equipment that could not complete the required work associated with the construction of the caisson
for the Project. (Id., ¶ 38).
Upon review, the Court agrees with H&S that the Rental Agreement does not expressly

14

The parties are free at trial to present evidence as to the appropriate measure of
damages allowable under the Rental Agreement.
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warrant the drilling equipment “was appropriate for the Project.”15 H&S’s Motion for Summary
Judgment on Count II of Graham’s Complaint will therefore be granted.
2.

Implied Warranties

With respect to implied warranties, the Rental Agreement provides as follows: “Lessee
acknowledges that Lessee has selected the equipment leased hereunder based entirely and solely on
Lessee’s judgment and Lessee understands and agrees that any IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY
EXCLUDED.” (Rental Agreement ¶ 14 (emphasis in original)). The Court finds this language
complies with the requirements of Mo.Rev.Stat. § 400.2A-214(2); in other words, it was in writing,
it was conspicuous, and it mentions merchantability. H&S thus effectively disclaimed all implied
warranties in the Rental Agreement, and so Count III of Graham’s Complaint must be dismissed.
III.

H&S’s Counterclaim
As noted above, in Count IV of its Amended Counterclaim H&S seeks an order requiring

delivery of the two heavy duty augers it leased to Graham, or in the alternative, compensation for
their fair market value. (Amended Counterclaim, ¶¶ 27-30). In its Motion for Partial Summary
Judgment, H&S asserts it is entitled to judgment as a matter of law on its claim for reimbursement
for the 60" auger. (H&S’s Memo in Support, P. 30). Specifically, H&S notes that pursuant to
paragraph nine of the Rental Agreement, Graham is responsible for all risk of loss or damage to the
rented equipment, and must immediately pay H&S for any such loss or damage. (Id.). H&S asserts

15

In its response, Graham asserts Maxa created the express warranty when he assured
McDermand that the drilling system it was selling and leasing would be able to complete the
Parshall project. (Graham’s Opp., PP. 28-29). The Court rejects this argument for two reasons:
First, because as noted above any evidence of H&S’s alleged oral guarantees is barred by the
parol evidence rule, and second, because the Rental Agreement specifically states that there are no
other warranties, express or implied, concerning the equipment, other than those contained therein
in writing. (Rental Agreement, ¶ 19).
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Graham has not returned the Hartfuss 60" auger, and has indicated it will not attempt to recover the
auger. (Id.). H&S thus maintains it is entitled to judgment in its favor against Graham for
$52,387.00, the value of the 60" Hartfuss auger.16 (Id.).
Upon consideration, the Court agrees Graham fails to present a disputed issue of material fact,
sufficient to defeat H&S’s Motion for Summary Judgment on this portion of its Amended
Counterclaim. In other words, the Court agrees with H&S that under the Rental Agreement
provision at issue, Graham assumed the risk of loss for the 60" auger no matter the cause. This
portion of H&S’s Motion for Partial Summary Judgment must therefore be granted.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant Hammer & Steel, Inc.’s Motion for Partial
Summary Judgment (ECF No. 127) is GRANTED, in accordance with the foregoing.
IT IS FURTHER ORDERED that Counts II through VI of Graham’s Second Amended
Complaint are DISMISSED with prejudice.
IT IS FURTHER ORDERED that judgment is entered in favor of H&S on the portion of
Count IV of its Amended Counterclaim dealing with the Hartfuss 60" auger.

Dated this

7th

day of November, 2012.

/s/Jean C. Hamilton
UNITED STATES DISTRICT JUDGE

16

Graham does not dispute the value of the auger in its response.
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