Paul Reed Construction & Supply, Inc. v. Arcon, Inc. et al
MEMORANDUM AND ORDER that PRC's Motion for Partial Summary Judgment (Filing No. 85) is granted in part, a. Arcon's quantum meruit and unjust enrichment claims are barred by the Subcontract; b. The remainder of PRC's Motion for Summary Judgment regarding Arcon's breach of contract claim is denied. Western Surety's Motion for Summary Judgment and Request for Oral Argument (Filing No. 80) is denied. PRC's Motion in Limine (Filing No. 88) is granted, and Russell W . Andrews will be precluded from offering expert opinions regarding Arcon's entitlement to damages and the accuracy and/or reasonableness of its Invoices. Arcon's Motion in Limine (Filing No. 91) is granted in part, a. Adam Reed will be precluded from offering opinions as to what the law requires, or conclusions of law; and b. the Motion in Limine is otherwise denied, without prejudice to Arcon raising objections at the time of trial. Ordered by Chief Judge Laurie Smith Camp. (ADB)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
PAUL REED CONSTRUCTION &
SUPPLY, INC., a Nebraska corporation,
CASE NO. 8:12CV48
ARCON, INC., a Colorado corporation,
Defendant and Counter
ARCON, INC., a Colorado corporation,
WESTERN SURETY COMPANY, a South
This matter is before the Court on the Motion for Summary Judgment (Filing No.
80) submitted by Third-Party Defendant Western Surety Company (“Western Surety”);
The Motion for Partial Summary Judgment (Filing No. 85) and Motion in Limine to
Exclude Expert Testimony (Filing No. 88) submitted by Plaintiff and Counter Defendant
Paul Reed Construction & Supply, Inc. (“PRC”); and the Motion in Limine to Preclude
Expert Testimony (Filing No. 91) submitted by Defendant, Counter Claimant, and ThirdParty Plaintiff Arcon, Inc. (“Arcon”).
For the reasons that follow, Western Surety’s
Motion for Summary Judgment will be denied; PRC’s Motion for Partial Summary
Judgment will be granted in part; PRC’s Motion in Limine will be granted; and Arcon’s
Motion in Limine will be granted in part.
FACTUAL AND PROCEDURAL BACKGROUND
The following facts are those stated in the briefs and supported by pinpoint
citations to evidence in the record, those the parties have admitted, and those the
parties have not properly resisted as required NECivR 56.11 and Federal Rule of Civil
The Nebraska Department of Roads (“NDOR”) had a construction project in Keith
County, Nebraska (the “Project”). Before August 1, 2010, NDOR and Upper Plains
Contracting, Inc. (“UPCI”) entered into a contract (the “Prime Contract”), in which UPCI
served as general contractor, furnishing labor and material for the Project, including
removal and replacement of a portion of Nebraska highway.
On August 31, 2010, UPCI entered into a written subcontract (the “Contract”)
with PRC, a Nebraska corporation, for the performance of a certain portion of UPCI’s
scope of work on the Project. Among other things, the Contract required PRC to crush
the asphalt and concrete highway surface.
On or about April 5, 20111, PRC entered into a subcontract (the “Subcontract”)
with Arcon, a Colorado corporation, for the performance of certain aspects of the
Project, including “crushing.” The Subcontract defined the services to be provided by
Arcon through incorporation of Arcon’s bid proposal. The bid proposal provided that:
Arcon is responsible for crushing services only. Tear out, demolition,
removal, stockpiling, placement, compaction, and any other processing or
construction is not included.
(Filing No. 87-2, at ECF 2 and Filing No. 92-1, at ECF 39; See Filing No. 87-2, at
ECF 2-4, ECF 6 and Filing No. 92-1, at ECF 32-33, ECF 38-39.)
The Contract bears the date 3/28/2011 (Filing No. 87-2, ECF at 4 and Filing No. 92-1, ECF at
The Subcontract also contained Article XIV (the “Change Order Provision”):
The Contractor reserves the right, and without notice to the
Subcontractor's sureties to make changes in the material to be furnished
or work to be performed under this Subcontract, or additions thereto or
omissions there from [sic] upon written order to the Subcontractor. Any
additions or reductions to be made to or from the amount of the
Subcontract price resulting from changes in work or materials furnished
shall be agreed upon in writing by the parties hereto, such agreement not
being valid unless signed by an officer of the Contractor. No addition or
reduction in subcontract price shall be binding on the Contractor unless so
agreed upon in writing. Any claim for adjustment in the Subcontract price
must be made in writing within 10 days of the date such changes are
ordered. In case the Owner orders the Contractor to make any changes in
the work [and] such change requires a change to be made in the work of
this Subcontractor, the Subcontract shall be equitably adjusted on account
of such changes subject to any applicable provisions of the Contract
between the Owner and the Contractor. In the event the Subcontractor
desires to claim additional compensation for any reason involving alleged
fault of the Contractor, it shall give notice of such claim within 10 days
following the occurrence which gave rise to such claim. Failure of the
Subcontractor to deliver such notice in a timely manner shall be deemed a
waiver of its right to recover any costs incurred more than 10 days before
the date on which it gives such notice. 2
(Filing No. 87-2, ECF at 7 and Filing No. 92-1, ECF at 36.)
PRC began work on the Project sometime between April 1, 2011 and April 7,
2011, and asked Arcon to have its equipment at the Project site by April 11, 2011.
Arcon incurred standby costs associated with having to pay for its crew and equipment,
waiting for PRC to give approval for Arcon to start crushing.
Arcon did not start
crushing until May 10, 2011. During the first three weeks of crushing, Arcon
encountered problems with the size of the slabs of concrete that PRC prepped and
presented to Arcon for crushing, and problems with a lack of water available for its
Arcon disputes this language on the grounds of “completeness,” but does not dispute the
existence or substance of the Change Order Provision in the Subcontract. The Court supplied the
bracketed conjunction, pertaining to a clause not at issue in this dispute.
crusher. On the first day Arcon began work, it advised Brad Benson (“Benson”), UPCI’s
Project Manager, that Arcon’s contract provided only for “crushing,” not “breaking.”
Arcon used its equipment to break the concrete into smaller sizes before crushing it.
From early May 2011 through late June 2011, Donna Schultejann (“Schultejann”)
of Arcon sent e-mails to Adam Reed (“Reed”), Vice President and Chief Operating
Officer of PRC, notifying him of the problems and delays caused by PRC’s failure to
break the concrete into chunks Arcon could crush, and PRC’s failure to provide water
for Arcon. Schultejann also notified PRC by email that Arcon was “essentially doing the
majority of the demo” to keep the Project moving and that they needed to reach an
agreement for additional compensation regarding use of Arcon’s equipment to break the
material, as well as compensation for its standby time.
PRC acknowledged the
problems and delays and that PRC’s impactor was not breaking the concrete. Arcon
sent PRC several messages seeking opportunities to discuss its compensation.
response, Reed offered to “discuss this more.” At some point Reed asked Arcon to get
a second crusher. On June 3, 2011, Schultejann notified PRC that in order to stay on
schedule, Arcon was asking to work Sundays. Arcon asked PRC to make note of this
request and to ask UPCI and NDOR for authorization.
PRC did not issue any written change orders, and Arcon never received any
written change orders from PRC. Between May and July of 2011, Arcon submitted at
least three invoices to PRC including Invoice 702, Invoice 707, and Invoice 708
(collectively “the Invoices”). On May 24, 2011, Arcon submitted Invoice 702 in the
amount of $17,650.00 seeking additional compensation for work performed pursuant to
On June 27, 2011, Arcon submitted Invoice 707, in the amount of
$30,318.27, seeking additional compensation for work performed pursuant to the
Project. By July 21, 2011, Arcon completed all its work on the Project. On July 31,
2011, Arcon submitted Invoice 708 claiming $209,322.08 for additional compensation
for work performed pursuant to the Project.
When disagreement arose regarding Arcon’s scope of work, UPCI reviewed
Arcon’s Subcontract and told PRC that UPCI could not be an advocate for PRC
because the Subcontract was clear that Arcon’s price was for crushing only.
Western Surety Company, a South Dakota corporation, furnished Payment and
Performance Bonds with UPCI as the principal, NDOR as an obligee, and the Project
subcontractors and suppliers as additional obligees.
Western Surety’s Payment Bond (the “Bond”) stated in part:
“NOW THEREFORE, if said UPPER PLAINS CONTRACTING, INC. as
principal shall in all respects fulfill this said contract according to the terms
and the tenor thereof, and shall faithfully discharge the duties and
obligations therein assumed, then the obligation is to be void and of no
effect; otherwise to be and remain in full force and virtue in law.
It is expressly understood and agreed that this bond is given to secure and
does secure not only the faithful performance by the principal herein
named of said contract for the construction of the work as specified in said
contract and in strict accordance with the terms of said contract and the
plans, specifications and all special provisions made a part thereof; but
that it is given to secure also the payment by the said bounden UPPER
PLAINS CONTRACTING, INC. of all overpayments made to said principal
by the Department of Roads, and of all just claims to all laborers and
mechanics for labor that shall be performed, and for the payment of all
materials, supplies and equipment which is used or rented in performing
the contract, . . . and if such payments be made then this obligation shall
be null and void; otherwise it shall remain in full force and effect.3
Arcon also disputes this language on the grounds of “completeness,” but it does not dispute the
existence or substance of the Bond.
(Arcon’s Third-Party Complaint, Filing No. 3, at ECF 9 (bold-face in original).)
On January 27, 2012, PRC filed its Complaint in the District Court of Scotts Bluff
County Nebraska, and Arcon removed the action to this Court on February 3, 2012,
invoking the Court’s diversity jurisdiction.
PRC has two remaining claims: In its first cause of action PRC seeks declaratory
relief related to the Subcontract, and in its second cause of action it seeks damages for
Arcon’s alleged breach of the Subcontract.
misrepresentation, (3) quantum meruit, and (4) unjust enrichment. Arcon also filed a
Third-Party Complaint against Western Surety seeking a judgment for amounts Arcon
claims it is owed under the Bond for its work on the Project.
Western Surety moved for summary judgment, essentially arguing that the work
for which Arcon is seeking payment was outside the scope of the Subcontract and that
Arcon did not provide proper and timely notice of its claim. PRC moved for partial
summary judgment, essentially seeking dismissal of all Arcon’s claims against PRC.
Both PRC and Arcon have moved, in limine, to preclude certain expert testimony from
each other’s witnesses.
SUMMARY JUDGMENT STANDARD OF REVIEW
“Summary judgment is appropriate when the record, viewed in the light most
favorable to the non-moving party, demonstrates there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law.” Gage v. HSM
Elec. Prot. Servs., Inc., 655 F.3d 821, 825 (8th Cir. 2011) (citing Fed. R. Civ. P. 56(c)).
The court will view “all facts in the light most favorable to the nonmoving party and
mak[e] all reasonable inferences in [that party's] favor.” Schmidt v. Des Moines Pub.
Sch., 655 F.3d 811, 819 (8th Cir 2011). “[W]here the nonmoving party will bear the
burden of proof at trial on a dispositive issue . . . Rule 56(e) permits a proper summary
judgment motion to be opposed by any of the kinds of evidentiary materials listed in
Rule 56(c), except the mere pleadings themselves.” Celotex Corp. v. Catrett, 477 U.S.
317, 324 (1986). The moving party need not negate the nonmoving party’s claims by
showing “the absence of a genuine issue of material fact.” Id. at 325. Instead, “the
burden on the moving party may be discharged by ‘showing’ . . . that there is an
absence of evidence to support the nonmoving party’s case.” Id.
In response to the movant’s showing, the nonmoving party’s burden is to produce
specific facts demonstrating “‘a genuine issue of material fact' such that [its] claim
should proceed to trial.” Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 422 (8th Cir.
2009) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986)). The nonmoving party “‘must do more than simply show that there is some
metaphysical doubt as to the material facts,’ and must come forward with ‘specific facts
showing that there is a genuine issue for trial.’” Torgerson v. City of Rochester, 643
F.3d 1031, 1042 (8th Cir. 2011) (quoting Matsushita, 475 U.S. at 586-87)), cert. denied,
132 S. Ct. 513 (2011). “‘[T]he mere existence of some alleged factual dispute between
the parties’” will not defeat an otherwise properly supported motion for summary
Quinn v. St. Louis County., 653 F.3d 745, 751 (8th Cir. 2011) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)).
In other words, in deciding “a motion for summary judgment, ‘facts must be
viewed in the light most favorable to the nonmoving party only if there is a “genuine”
dispute as to those facts.’” Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (quoting Scott
v. Harris, 550 U.S. 372, 380 (2007)). Otherwise, where the Court finds that “the record
taken as a whole could not lead a rational trier of fact to find for the non-moving party”–
where there is no “genuine issue for trial”–summary judgment is appropriate.
Matsushita, 475 U.S. at 587 (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391
U.S. 253, 289 (1968)).
MOTIONS FOR SUMMARY JUDGMENT
I. PRC’S MOTION FOR PARTIAL SUMMARY JUDGMENT
In its Motion for Partial Summary Judgment, PRC asks the Court to grant
summary judgment in favor of PRC and find that:
(1) Arcon’s Quantum Meruit and Unjust Enrichment Claims are barred by
the existence of the Subcontract that governs Arcon’s claims for changed
and/or extra work.
(2) Arcon’s Breach of Contract Claim is barred by the Subcontract to the
extent the claim seeks compensation for work in Invoices 702, 707, and
708 because Arcon failed to obtain written change orders for such work.
(3) Arcon’s Breach of Contract Claim is barred by the Subcontract to
extent the claim seeks compensation for work in Invoices 702, 707, and
708 for which Arcon failed to provide timely written notice.
A. Arcon’s Quantum Meruit and Unjust Enrichment Claims
PRC contends that Arcon’s quantum meruit and unjust enrichment claims are
barred by the Subcontract because it governs Arcon’s claims for changed and/or extra
work. Arcon claims that all its tear-out work, demolition work, removal work, asphalt
work, and standby time were the result of either a modification of the Arcon Subcontract
or an entirely new implied contract between PRC and Arcon.
Quantum meruit and unjust enrichment are equitable actions based on the theory
of implied contract, and, consequently, are only proper in instances where the parties do
not have an express contract. See Siebler Heating & Air Conditioning v. Jenson, 326
N.W.2d 182, 184 (Neb.1982).4 Under Nebraska law,5 “a plaintiff is permitted to plead
both express contract and quasi-contract in the same petition.” Byrne v. Hauptman,
O'Brien, Wolf & Lathrop, P.C., 608 N.W.2d 208, 213 (Neb. 2000). However, “there
cannot be an express and an implied contract for the same thing existing at the same
time . . . .”6 Wrede v. Exchange Bank of Gibbon, 531 N.W.2d 523, 530 (Neb.1995).
“[A]n implied contract cannot arise where an enforceable contract exists between the
parties as to the same subject matter . . . .” Assoc. Wrecking and Salvage Co. v.
Wiekhorst Bros. Excavating & Equip. Co., 424 N.W.2d 343, 348 (Neb.1988).
Nevertheless, in Wiekhorst the Nebraska Supreme Court held that “an implied
contract on a point not covered by an express contract is not superseded by the
express contract . . . .” 424 N.W.2d at 350. A plaintiff may recover on “a quantum
“It is only when parties do not expressly agree that the law interposes and raises a promise. No
agreement can be implied where there is an express one existing. Thus, an express contract precludes
the existence of a contract implied by law or a quasi-contract.” Siebler Heating & Air Conditioning v.
Jenson, 326 N.W.2d 182, 184 (Neb.1982).
Contracts for construction in Nebraska are governed by Nebraska law. See Neb. Rev. Stat. §
In a supplemental brief to the Court (Filing No. 111), Arcon cites City of Scottsbluff v. Waste
Connection of Nebraska, Inc., 809 N.W.2d 725, 739-40 (Neb. 2011) for the principle that parties may
have express and implied contracts governing the same subject matter and that the scope of such
contracts is a question for the jury. City of Scottsbluff is distinguishable from this case because it
addressed services performed after a 10 year contract for the same services expired. Id. City of
Scottsbluff did not address express and implied contracts governing the same subject at the same time.
meruit theory . . . supplement[ing] an express contract theory, not . . . act[ing] as a
substitute for it.” Id. at 348. In Wiekhorst the court considered an action involving
express oral contracts for equipment rental and work performed under a general
contract on a city sewer project.
The parties disputed the scope of the oral
agreements, but “[w]ith respect to the additional work to be performed, if any, by either
party, there was no agreement.” Id. at 349.
Here, there is an express, valid contract—the Subcontract—governing the same
subject matter that Arcon now asserts as the basis of quantum meruit and unjust
Unlike the agreement in Wiekhorst, the agreement between PRC and Arcon
contains provisions governing additional work.
To allow Arcon to proceed with its
claims for quantum meruit and unjust enrichment would render the express contractual
language null and void. Because the parties have an express contract governing the
same subject matter that forms the basis for Arcon's quantum meruit and unjust
enrichment claims, those claims are precluded by the existence of the Subcontract.
B. Arcon’s Breach of Contract Claim
PRC contends that Arcon’s breach of contract claim is barred by the Subcontract
to the extent the claim seeks compensation for work reflected in the Invoices, because
Arcon failed to obtain written change orders. PRC also contends that Arcon’s breach of
contract claim is barred by the Subcontract because Arcon failed to provide timely
written notice of its claims for additional compensation or adjustments in accordance
with the Subcontract’s Change Order Provision.
Arcon argues: (1) the Change Order Provision does not apply to the additional
work reflected in the invoices because that work was performed under an implied
contract; (2) the Change Order Provision does not apply because PRC breached the
Subcontract by failing to pay amounts due Arcon under Invoice 709; and/or 3) PRC
waived the “writing” and “notice” requirements of the Change Order Provision by its
conduct. As noted above, Arcon’s first argument fails because the parties have an
express contract governing the same subject matter that forms the basis of Arcon’s
“implied contract” claims, therefore, the work Arcon performed pursuant to the Project is
within the scope of the Change Order Provision.
1. PRC’s Alleged Breach of Contract by Failing to Pay Invoice 709
Arcon argues that the Change Order Provision is not applicable because PRC
breached the Subcontract, rendering it and the Change Order Provision void. Arcon
provides no persuasive authority to support this position, and the record does not
contain sufficient evidence for the Court to conclude that PRC breached the
The Subcontract provides that “[u]pon completion of Arcon’s work and
acceptance of crushed concrete spec by owner, [PRC] shall release full payment of the
subcontract, including any retainage withheld.” (Filing No. 92-1, at ECF 38.) Arcon
claims that pursuant to this section of the Subcontract, PRC was required to pay Arcon
the amounts billed in Invoice 709, and for delays and additional costs. Arcon admits,
however, that it owes its suppliers not less than $153,609.99, and pursuant to Articles II
and XXIV of the Subcontract, PRC may withhold monies, such as those Arcon claims
under Invoice 709, until Arcon resolves its outstanding payment obligations to its
As for Arcon’s argument that PRC breached the Subcontract by causing delays,
such delays might well constitute a “fault of the Contractor” under the Subcontract,
giving rise to a right on the part of Arcon to claim additional compensation. It is not
apparent, however, that a delay, even if caused by the fault of the Contractor, is a
breach of the Subcontract. Accordingly, Arcon’s arguments based on PRC’s alleged
breach of the Subcontract fail.
2. Waiver of the Change Order Provision
Under Nebraska law, “[i]t is well-established that the parties to a contract may
avoid [a written change order] provision where their words, acts, or conduct amount to a
waiver, modification, rescission, abrogation, or abandonment of the provision, or the
party claiming the benefit of the provision is estopped to rely on it.” D. K. Meyer Corp. v.
Bevco, Inc., 292 N.W.2d 773, 775 (Neb. 1980) (quoting Griffin v. Geneva Industries,
Inc., 228 N.W.2d 880, 882 (Neb. 1975)). “The interpretation given a contract by the
parties themselves while engaged in the performance of the contract is one of the best
indications of the true intent of the parties and, ordinarily, that construction of the
contract should be enforced.” Richards v. Bycroft, 249 N.W.2d 743, 745 (Neb. 1977).
The Nebraska Supreme Court has stated that a defendant cannot deny that a
plaintiff is entitled to compensation because it failed to obtain prior approval for
additional work where the defendant “ knew about . . . additional work performed . . .
and  its conduct indicated approval and authorization for work to proceed.” D. K.
Meyer, 292 N.W.2d at 775 (quoting Griffin, 228 N.W.2d at 882). Accordingly, a party to
a contract may waive a change order provision even when it does not direct the other
party to perform the extra work.
In D. K. Meyer, a subcontractor entered into an agreement wherein it was
responsible for the erection of a roof support structure for a new building. Id. at 774.
The agreement provided that “no extra work shall be allowed or changes made by the
Sub-Contractor, or paid for by the Contractor unless and until authorized by the
Contractor or his superintendent in writing before the work and/or changes are begun.”
Id. at 775. As a result of error in design that was not the fault of the subcontractor, the
subcontractor performed modifications to the roof support structure that were necessary
for the completion of the project. Id. at 777. The modifications were not contemplated
by the original agreement. Id. at 775. The record did not clearly indicate which party
specifically authorized the modifications; however, it was clear that all parties to the
construction project agreed that modifications were necessary.
Id. at 774.
subcontractor incurred extra expenses because of the modifications, and the contractor
refused to pay because the subcontractor did not first receive a written change order
pursuant to the change order provision in the agreement. Id. at 774-75.
The Nebraska Supreme Court affirmed the lower court’s ruling in favor of the
subcontractor noting that “[t]he record sustain[ed] the conclusion that the parties . . .
ignored the provision of the contract requiring a written change order prior to the
modification of the project.” Id. at 775.
The court noted the following key facts in
support of its conclusion that the contractor’s “actions clearly demonstrated a
modification of the contract and recognized that the subcontractor was due money for
the extra costs incurred as a result of the modifications”:
The job supervisor from [the subcontractor] testified that the work
performed in the modifications was not originally contemplated in the
contract. The project manager from [the contractor] testified that the
modifications caused [the subcontractor] to incur costs not originally
contemplated in the contract for erection of the steel space grid.
Moreover, correspondence between [the contractor] and the architectural
firm which designed the building indicates knowledge and acceptance of
the extra costs incurred by [the subcontractor] and a request by [the
contractor] to the architect that a change order be issued to [the
contractor] for the costs of said modifications. In fact, in its request for a
change order, [the contractor] demanded a 7 percent markup for itself on
the costs of modification, but the request for the change order was denied.
Whether or not the owner chose to modify its contract with [the contractor]
in regard to any written change orders is immaterial on the question of
whether [the contractor's] actions amounted to a modification of its own
contract with [the subcontractor].
The plain meaning of “crushing services” is not clear from the contents of the
Subcontract and is subject to at least two reasonable interpretations. Therefore, as a
matter of law, the meaning of “crushing services” is a question of fact.7 Viewing the
facts in the light most favorable to Arcon, this Court assumes that Arcon performed work
in addition to “crushing services,” including asphalt crushing, concrete breaking,
demolition, tear-out, and standby time for equipment and labor while Arcon was
required to perform non-crushing work and while Arcon awaited PRC’s performance.
Arcon argues that PRC waived the Change Order Provision by its conduct when
it, inter alia,
(a) Ignored and failed to object to Arcon’s e-mails that notified PRC that
Arcon would be seeking compensation for (1) the demo, tear-out and
processing work it had performed and would be performing in the future;
“Whether a contract is ambiguous is a question of law . . . . A document is ambiguous if a word,
phrase, or provision in the document has, or is susceptible of, at least two reasonable but conflicting
interpretations . . . . If a contract is ambiguous, the meaning of the contract is a question of fact . . . .”
Plambeck v. Union Pac. R. Co., 783, 509 N.W.2d 17, 20 (Neb. 1993).
(2) the cost incurred from its crushing crew and equipment being forced to
stand by and wait for Arcon’s excavator to break the concrete down to a
proper size for crushing; and the additional labor and crushing equipment
that PRC demanded to get the Project schedule back on track;
(b) Ignored and failed to object to Arcon’s written e-mail that requested
PRC to reach an agreement for additional compensation regarding the
use of Arcon’s equipment to break the material and the stand-by time of
Arcon’s crushing crew and equipment;
(c) Ignored and failed to object to Arcon’s e-mail that requested PRC to
obtain a change order from NDOR for some of the additional work;
(d) Received Invoice 702 on May 24, 2011 and Invoice 708 on June 27,
2011, for the demo, tear-out work and crushing stand-by time, but waited
until July 19, 2011 (two days before Arcon completed its work on the
Project) to deny the Invoices;
(e) [P]ressured Arcon to continue its crushing and non-crushing work and
threatened to replace Arcon if it did not obtain an additional crusher to
keep the Project moving, with the knowledge that Arcon would be seeking
compensation for said work and equipment once the Project was
(f) [I]nstructed Arcon to get a second crew to keep PRC’s original
schedule, with full knowledge that Arcon would be seeking compensation
for said work once the Project was completed; and
(g) [R]epresented to Arcon that “it agreed” that Arcon was entitled to
compensation for the asphalt work in Invoice 707 and adversely fought
UPCI to compensate Arcon for such work.
(Arcon’s Brief in Opposition to PRC’s Motion for Partial Summary Judgment, Filing No.
102 at 27-28 (emphasis in original) (citations omitted).)
Assuming for purposes of this Motion that asphalt crushing, the removing and
breaking of large slabs of concrete, and standby time for such work, constituted
additional work under the Subcontract, then the record contains sufficient evidence to
support a finding that PRC knew about such additional work and by its actions and
inactions approved it. The record indicates that Arcon incurred costs for such additional
work; PRC knew of the additional costs; and PRC accepted or approved at least some
of the extra costs.
Genuine issues of material fact remain for trial regarding the meaning of
“crushing services,” as that term is used in the Subcontract, and as to PRC’s alleged
waiver of the terms of the Change Order Provision. Accordingly, PRC’s Motion for
Partial Summary Judgment will be denied with respect to Arcon’s breach of contract
claim against PRC based on the theory of waiver.
II. Western Surety’s Motion for Summary Judgment
Western Surety claims the work Arcon performed was (1) not covered by the
Bond because it was not performed pursuant to any contractual obligation, and/or (2)
barred by Arcon’s failure to comply with the notice requirements of Neb. Rev. Stat. § 52118.01.
As stated above, genuine issues of material fact remain regarding whether
Arcon’s work was outside its Subcontract. Viewing the available record in the light most
favorable to Arcon, a reasonable finder of fact could conclude that Arcon performed
extra work and PRC waived the Change Order Provision. Accordingly, the work for
which Arcon seeks payment could be considered work performed pursuant to the
Subcontract, and Arcon should be permitted to make its claims under the Bond.
Neb. Rev. Stat. § 52-118.01, provides in pertinent part:
Any person having a direct contractual relationship with a subcontractor
but no contractual relationship, express or implied, with the contractor
furnishing such bond or bonds shall have a right of action upon the bond
or bonds upon giving written notice to the contractor within four months
from the date on which such person did or performed the last of the labor
or furnished or supplied the last of the material for which such claim is
made, stating with substantial accuracy the amount claimed and the name
of the party to whom the material was furnished or supplied or for whom
the labor was done or performed. Such notice shall be served by mailing
the same by registered or certified mail, postage prepaid, in an envelope
addressed to the contractor at any place he or she maintains an office or
conducts his or her business or his or her residence or in any other
manner in which a notice may be served.
Because Arcon had a direct contractual relationship with PRC, a subcontractor of
UPCI, but no contractual relationship with UPCI, Arcon was required to provide UPCI
with timely notice of Arcon’s claims under the Western Surety bond. Arcon’s work on
the Project was completed on July 21, 2011, so any notice under § 52-118.01 was due
to UPCI on or before November 21, 2011. Arcon argues that its claim was timely under
§ 52-118.01 because (1) on the first day Arcon began work on the Project, it advised
Brad Benson, Project Manager for UPCI, that Arcon’s contract provided for crushing not
breaking; (2) on August 2, 2011, Schultejann sent Benson an e-mail stating that Arcon
“would have to place a claim on the project for the concrete dispute” and she wanted
Benson and UPCI “to be aware of the situation first”; and (3) Arcon sent its claim to
Western Surety on September 27, 2011.
While is does not appear that Arcon stated with substantial accuracy the amount
claimed in its communications with UPCI, or effected written notice to UPCI in
conformity with § 52-118.01, and while such deficiencies may provide Western Surety
with an affirmative defense to Arcon’s claim, Western Surety raised no such affirmative
defense in its Answer (Filing No. 27) and such a defense may not be asserted
otherwise. See Fed. R. Civ. P. 8(c). Accordingly, Western Surety’s Motion for Summary
Judgment will be denied.
RULE 701 AND 702 STANDARDS OF REVIEW
Federal Rule of Evidence Rule 702 allows for the admission of expert opinions.
Rule 702 states:
A witness who is qualified as an expert by knowledge, skill, experience,
training, or education may testify in the form of an opinion or otherwise if:
(a) the expert's scientific, technical, or other specialized knowledge will
help the trier of fact to understand the evidence or to determine a fact in
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts
of the case.
In light of Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), and Kumho
Tire Co. v. Carmichael, 526 U.S. 137 (1999),8 this Court must screen proffered expert
testimony for relevance and reliability. See Bland v. Verizon Wireless, (VAW) L.L.C.,
538 F.3d 893, 896 (8th Cir. 2008). A reliable opinion must be based on scientific
methodology rather than on subjective belief or unsupported speculation. See Turner v.
Iowa Fire Equip. Co., 229 F.3d 1202, 1208 (8th Cir. 2000). In assessing reliability, the
Court should consider factors including whether the proposed expert's theory,
methodology or technique: (1) can be and has been tested; (2) has been subjected to
peer review; (3) has a known or potential rate of error; and (4) is generally accepted by
the relevant community. Bland, 538 F.3d at 896. This list of factors is not exclusive,
The Supreme Court has held that Daubert applies to all expert testimony, not only scientific
expert testimony. Kumho Tire Co., 526 U.S. at 141.
and this Court is allowed “great flexibility” in its analysis.
Jaurequi v. Carter Mfg.
Co.,173 F.3d 1076, 1082 (8th Cir. 1999).
The expert's information or opinion must also “assist” the trier of fact in
understanding or determining a fact in issue. Fed. R. Evid. 702(a). “This condition goes
primarily to relevance.” Daubert, 509 U.S. at 591.
Throughout the Court’s assessment of the admissibility of an expert’s opinion,
Daubert makes clear that the Court “should also be mindful of other applicable rules,”
such as Fed. R. Evid. 403,9 which states:
The court may exclude relevant evidence if its probative value is
substantially outweighed by a danger of one or more of the following:
unfair prejudice, confusing the issues, misleading the jury, undue delay,
wasting time, or needlessly presenting cumulative evidence.
Fed. R. Evid. 701 States:
If a witness is not testifying as an expert, testimony in the form of an
opinion is limited to one that is:
(a) rationally based on the witness's perception;
(b) helpful to clearly understanding the witness's testimony or to
determining a fact in issue; and
(c) not based on scientific, technical, or other specialized knowledge
within the scope of Rule 702.
Daubert, 509 U.S. at 595; see also United States v. Kime, 99 F.3d 870, 884 (8th Cir. 1996)
(quoting Daubert, 509 U.S. at 595):
Daubert makes it clear that when assessing the admissibility of proffered scientific expert
testimony under Rule 702, the trial court must also take into account the interplay of other
relevant rules of evidence, such as Rule 403: “Expert evidence can be both powerful and
quite misleading because of the difficulty in evaluating it. Because of this risk, the judge in
weighing possible prejudice against probative force under Rule 403 of the present rules
exercises more control over experts than over lay witnesses.”
ANALYSIS OF MOTIONS IN LIMINE
I. PRC’s Motion in Limine
PRC moved in limine to preclude expert testimony from Russell W. Andrews
(“Andrews”) to the extent Andrews intends to opine about Arcon’s entitlement to
damages and/or the reasonableness and amount of Arcon’s damages. PRC contends
that Andrews failed to use a reliable methodology when rendering his opinion.
Andrews is the Vice President of Colorado Cleanup Corporation. He has 40
years of education, training, and experience in the demolition and excavation industry
including the demolition, processing, and crushing of concrete. After litigation arose,
Arcon engaged the services of Andrews to provide opinions with respect to Arcon’s
claims. Pursuant to Fed. R. Civ. P. 26, Arcon disclosed Andrews as an expert witness
opining about standard of care in the crushing industry and Arcon’s entitlement to
damages and/or the reasonableness and amount of damages.
Rule 702 requires that an expert articulate the principles and methods used in
reaching the proffered opinions. If the expert fails to do so, then the court is unable to
determine whether the expert has used the correct principles and methods, or whether
the expert has reliably applied such principles and methods in the particular case. In re
Canvas Specialty, Inc., 261 B.R. 12, 21 (Bankr. C.D. Cal. 2001).
By his own admission, Andrews did not engage in any analysis or employ any
reasonableness of Arcon’s alleged damages. During his deposition, when Andrews
was asked about whether he did “anything to necessarily verify that the costs were
incurred,” he responded by saying, “I had looked at her submittals on her extra costs
that she submitted to [PRC]. But did I go through their payroll, accounting, and stuff, no,
I did not.”
Andrew’s also failed to provide any reliable basis for his opinions, therefore his
opinions regarding Arcon’s entitlement to damages and the accuracy or reasonableness
of the Invoices are not capable of review and do not satisfy the criteria required by Rule
702. Accordingly, Andrews will be limited to offering his opinions as an expert regarding
standards of care and business customs in the crushing industry, to the extent those
opinions are relevant. He will not be permitted to testify regarding Arcon’s entitlement to
damages and/or the reasonableness and amount of Arcon’s damages.
II. Arcon’s Motion in Limine
Arcon moved in limine to preclude any expert opinion testimony by Reed on the
grounds that his opinions are (1) not relevant, and (2) either not expert opinions or not
opinions Reed is qualified to give under Rule 702. Arcon’s Motion challenges Reed’s
opinions related to Arcon’s inadequate performance, failure to document its claims, and
failure to act in accordance with industry standards and practices.
Arcon does not
challenge the admissibility of Reed’s testimony under Rule 701.
In support of its motion, Arcon notes that this Court concluded PRC was “happy
with how [Arcon] performed” (Memorandum and Order on Granite Re’s Motion for
Summary Judgment, Filing No. 60, at 6) and therefore PRC should be precluded from
re-litigating the quality of Arcon’s performance under the Subcontract. Arcon further
argues that Reed does not meet the minimum requirements of Daubert and Kumho Tire
to offer expert opinions, because his opinions are based on subjective beliefs or
unsupported speculation and will not assist the trier of fact to determine any fact in
In opposition to Arcon’s motion, PRC contends that it will use Reed as a fact
witness pursuant to Rule 701, and that it disclosed Reed as a potential expert witness
out of an abundance of caution, not knowing whether Arcon might argue that some of
Reed’s opinions fall within the scope of Rule 702. PRC contends that Reed’s opinions
are relevant lay opinions, but to the extent the Court may determine that Reed’s
opinions are governed by Rule 702, Reed is qualified as an expert.
Arcon counters that Rules 701 and 702 are mutually exclusive, and PRC may not
offer Reed’s opinions under both rules.
Reed’s opinions related to the scope, method, and quality of work performed by
Arcon pursuant to the Project may be relevant to issues of fact remaining in dispute.
Notwithstanding language in the Court’s earlier Memorandum and Order, the quality of
Arcon’s performance has not been adjudicated. PRC’s disclosure of Reed’s opinions as
“expert” opinions out of an abundance of caution does not preclude PRC from offering
fact testimony and lay opinions from Reed. Reed may not offer opinions about what the
law requires, nor conclusions of law.
To the extent that opinions about industry
standards and practices are “expert” opinions, PRC will have the opportunity to lay
proper foundation at trial.
PRC’s Motion for Partial Summary Judgment will be granted in part; Western
Surety’s Motion for Summary Judgment will be denied; PRC’s Motion in Limine will be
granted; and Arcon’s Motion in Limine will be granted in part.
IT IS ORDERED:
1. PRC’s Motion for Partial Summary Judgment (Filing No. 85) is granted in part,
a. Arcon’s quantum meruit and unjust enrichment claims are barred by
b. The remainder of PRC’s Motion for Summary Judgment regarding
Arcon’s breach of contract claim is denied;
Western Surety’s Motion for Summary Judgment and Request for Oral
Argument (Filing No. 80) is denied;
3. PRC’s Motion in Limine (Filing No. 88) is granted, and Russell W. Andrews
will be precluded from offering expert opinions regarding Arcon’s entitlement to
damages and the accuracy and/or reasonableness of its Invoices;
4. Arcon’s Motion in Limine (Filing No. 91) is granted in part,
a. Adam Reed will be precluded from offering opinions as to what the law
requires, or conclusions of law; and
b. the Motion in Limine is otherwise denied, without prejudice to Arcon
raising objections at the time of trial.
Dated this 16th day of January, 2014.
BY THE COURT:
s/Laurie Smith Camp
Chief United States District Judge
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