The Neenan Company, LLLP v. Gerhold Concrete Company, Inc.

Filing 40

MEMORANDUM AND ORDER - THEREFORE, IT IS ORDERED THAT: Defendant's motion for summary judgment, Filing No. 22 , is denied at this time but is subject to reassertion at trial, if appropriate. Plaintiff's motion to strike the defendants reply brief, Filing No. 30 , is denied. Defendant's second motion to file supplemental record, Filing No. 38 , is granted. Ordered by Senior Judge Joseph F. Bataillon. (TCL)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA

THE NEENAN COMPANY, LLLP, a
Colorado Limited Liability Limited
Partnership;
8:18CV90

Plaintiff,

MEMORANDUM AND ORDER

vs.
GERHOLD CONCRETE COMPANY, INC.,
a Nebraska Domestic Corporation;
Defendant.

This matter is before the Court on the defendant’s motion for summary judgment,
Filing No. 22; plaintiff’s motion to strike the reply brief, Filing No. 301; and defendant’s
second motion for leave to supplement the summary judgment record, Filing No. 38.2
Plaintiff filed this action on February 26, 2018. The case involves an alleged breach of
contract, indemnity issues, and breach of express and implied warranties. Filing No. 9,
Amended Complaint, Ex. 1. Plaintiff also requests declaratory relief.
BACKGROUND
This case centers around the construction of the Cambridge Memorial Hospital in
Cambridge, Nebraska (“Project”).

Plaintiff Neenan Company (“Neenan”) was the

designer and general contractor on the Project. Defendant Gerhold Concrete Company

Plaintiff moves to strike defendant’s reply brief on the basis that defendant filed the brief four days late.
Defendant disagrees and states it timely filed the brief. At most, the brief was only four days late. The
Court finds no undue prejudice from the delay, if any. The Court will deny the motion.
2 Defendant moves to file a supplemental summary judgment record. Defendant wants to supplement the
record with the motion to dismiss in case Cambridge Memorial Hospital Inc. v. The Neenan Company,
LLLP, 19cv3062, Filing No. 10, filed by Neenan. See Filing No. 38, Ex. I, in 18cv90. Likewise, defendant
asks this court to allow it to include the brief in support of motion to dismiss filed in the Cambridge case by
Neenan at Filing No. 12 in that case. See Filing No. 18cv90, Ex. J. The Court has reviewed both documents
and will grant the motion.
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(“Gerhold”) was the subcontractor for the Project. Gerhold, as supplier, contracted to
purchase goods in the form of concrete to be used in pouring slab on grade flooring for
the Project. Neenan issued a purchase order to Gerhold on September 10, 2009 for
furnishing concrete for the Project. Gerhold delivered concrete to the Cambridge Hospital
site beginning on or about October 27, 2009 and continuing through March 1, 2010.
Neenan alleges nearly 10 years later that the concrete was defective, which prohibits the
flooring from properly adhering. Each delivery ticket included terms and conditions for
delivery, including the following:
“Except as otherwise provided by written agreement subsequently executed by
both Buyer and Seller, these Terms and Conditions, and the terms in Seller’s
invoices, shall supersede the terms and conditions of Buyer’s order (including,
without limitation, any statement that Buyer’s terms or conditions are to take
precedence over any contrary provisions)….Acceptance or delivery of the
Products hereunder shall constitute acceptance of these terms and conditions.”
Except for the warranty that the goods are made in a workmanlike manner,
SELLER MAKES NO WARRANTY EITHER EXPRESS OR IMPLIED, AND ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WHICH EXCEEDS THE FOREGOING WARRANTY IS
HEREBY DISCLAIMED BY SELLER AND EXCLUDED FROM THIS
AGREEMENT.”
Filing No. 24-3, Ex. B, generally (emphasis in original). Plaintiff contends it notified
defendant on February 26, 2016, that the floor was bubbling. Defendant argues that
previous emails show complaints regarding the flooring were raised as early as May of
2012. Filing No. 25-4 Ex. G. Cambridge Hospital asserted, in its related lawsuit3, that
Neenan is “barred under theories of promissory estoppel from raising any affirmative
defense on the statute of limitations” due to promises made by Neenan to Cambridge
Hospital through March 2016. Filing No. 25-2, Ex. E, para. 17-18.

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The related case of Cambridge Memorial Hospital v. The Neenan Company, LLP, 4:19cv3062 has
settled. See Filing Nos. 36 and 37.

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On May 2, 2016 Cambridge Hospital filed a suit against Neenan in the District
Court of Furnas County, Nebraska alleging breach of contract and warranties. Neenan
then sued Gerhold later in this case.
STANDARD OF REVIEW
Summary judgment is appropriate when, viewing the facts and inferences in the
light most favorable to the nonmoving party, the “materials in the record, including
depositions, documents, electronically stored information, affidavits or declarations,
stipulations (including those made for purposes of the motion only), admissions,
interrogatory answers, or other materials . . . show[] that the materials cited do not
establish the absence or presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.” Fed. R. Civ. P. 56(c). The plain
language of Rule 56(c) mandates the entry of summary judgment, after adequate time for
discovery and upon motion, against a party who fails to make a showing sufficient to
establish the existence of an element essential to that party’s case, and on which that
party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986).
“The movant ‘bears the initial responsibility of informing the district court of the
basis for its motion and must identify ‘those portions of [the record] . . . which it believes
demonstrate the absence of a genuine issue of material fact.’” Torgerson v. City of
Rochester, 643 F.3d 1031, 1042, (8th Cir. 2011) (en banc) (quoting Celotex, 477 U.S. at
323). If the movant does so, “the nonmovant must respond by submitting evidentiary
materials that set out ‘specific facts showing that there is a genuine issue for trial.’” Id.
(quoting Celotex, 477 U.S. at 324).

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“A genuine dispute of material facts exists when “factual issues . . . may reasonably
be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250
(1986). If “reasonable minds could differ as to the import of the evidence,” summary
judgment should not be granted. Id. at 251. In the summary judgment context, the Court
views the facts and draws all reasonable inferences in favor of the nonmoving party.
Oglesby v. Lesan, 929 F.3d 526, 532 (8th Cir. 2019). “Credibility determinations, the
weighing of the evidence, and the drawing of legitimate inferences from the facts are jury
functions, not those of a judge.” Torgerson, 643 F.3d at 1042; see Anderson, 477 U.S.
at 255.
DISCUSSION
Gerhold contends that the claims for declaratory judgment and breach of contract
are precluded by the statute of limitations for actions based in written contract. See Neb.
Rev. Stat. § 25-205 (2018). Gerhold also asserts that Neenan’s claims for breach of
warranty are precluded by the statute of limitations for actions based on breach of written
warranty. See Neb. Rev. Stat. § 25-223 (2018). Third, Gerhold states that Neenan’s
claim for indemnity is based on breach of contract, rather than negligence, and should be
dismissed for failing to state a claim on which relief can be granted. Gerhold contends
that the contract was drafted, executed and fully performed through documents and
deliveries from September 10, 2009 to March 1, 2010.
a. Statute of limitations – breach of contract
First, argues Gerhold, the breach of contract and declaratory judgment actions are
governed by a five-year statute of limitations on actions arising from breach of a written
contract (occurrence rule). See Neb. Rev. Stat. § 25-205 (2018). “[A] cause of action

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accrues at the time of the breach or failure to do the thing agreed to, irrespective of any
knowledge on the part of the plaintiff or of any actual injury occasioned to him or her.”
Cavanaugh v. City of Omaha, 254 Neb. 897, 901, 580 N.W.2d 541, 544 (Neb. 1998). The
Cambridge Hospital, states Gerhold, contacted plaintiff no later than May 2012, and
Gerhold argues that under any scenario, the statute of limitations expired in May 2017,
well before this suit was filed. Plaintiff knew, argues Gerhold, at least by May 2012 of the
defects in the concrete and flooring. Thus, Gerhold argues, a breach occurred eight years
prior to this lawsuit at the time of delivery.
Neenan argues that the Uniform Commercial Code (U.C.C.) applies in this case.
The statute of limitations for a breach of contract action must be commenced within four
(4) years after the cause of action has accrued. Neb. U.C.C. § 2-725(1).4 A cause of
action accrues when the breach occurs, regardless of the aggrieved party’s lack of
knowledge of the breach. Neb. U.C.C. § 2-725(2). Under these sections and under
Nebraska law, argues Neenan, breach can occur on a date other than delivery of the
goods at issue. Neenan contends that the action accrued when the alkali-silica reactivity

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The general statute of limitations applicable to actions on written contracts is Neb. Rev. Stat. § 25–205
(Reissue 1989), which provides in pertinent part: “[A]n action upon ... any agreement, contract or promise
in writing ... can only be brought within five years.”
However, there is a special statute of limitations for an action based on a contract for the sale of goods
governed by the Uniform Commercial Code:
(1) An action for breach of any contract for sale must be commenced within four years after the cause of
action has accrued. By the original agreement the parties may reduce the period of limitation to not less
than one year but may not extend it.
(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge
of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty
explicitly extends to future performance of the goods and discovery of the breach must await the time of
such performance the cause of action accrues when the breach is or should have been discovered.
Neb. U.C.C. § 2–725 (Reissue 1980). The “comment” for U.C.C. § 2–725 states, “This article takes sales
contracts out of the general laws limiting the time for commencing contractual actions and selects a four
year period as the most appropriate to modern business practice.”
Murphy v. Spelts-Schultz Lumber Co. of Grand Island, 240 Neb. 275, 282–83, 481 N.W.2d 422, 428 (1992)
(emphasis added).

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(ASR) in the Gerhold concrete began to cause pop-outs in the slab at Cambridge Hospital.
Under that scenario, Neenan argues that the cause of action accrued no earlier than
November 4, 2015, the date of the first occurrence notification to Gerhold. The same
date of the blistering/bubbling/pop-out issues with the flooring.
Gerhold responds that even under the U.C.C. § 2-725, contracts for sale, the
statute of limitations is four years after the cause of action has accrued. It is actually more
restrictive, argues Gerhold, than the Nebraska statutory limitations period. Neenan’s
cause of action, filed on February 26, 2018, is about eight years after the alleged breach.
Neenan was notified as early as May 2012, argues Gerhold, of the flooring issues at
Cambridge Hospital.
b. Statute of limitations - warranty
Second, Gerhold contends the warranty5 actions are likewise time-barred. An
action brought to recover damages based on an alleged breach of warranty on
improvements to real property must be brought within four years of the alleged act or
omission giving rise to the claim. See Neb. Rev. Stat. § 25-223 (2018). Unlike the
occurrence rule, this statute is based on the discovery rule. The statute of limitations is
four years, but to the extent the breach is not discovered or could not be discovered within

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The warranty in question states:
WARRANTIES. [Gerhold] warrants to Neenan that it has fully reviewed the provisions, specifications,
drawings, samples or other descriptions contained in the [Purchase] Order or Neenan’s request. [Gerhold]
warrants to Neenan that the materials or services shall be free from defects and faulty workmanship, shall
be of the quality specified, shall be fit and appropriate for the purpose intended, and shall conform to the
provisions, specifications, performance standards, drawings, samples or other descriptions contained
herein or in Neenan’s request. [Gerhold] further warrants that the materials will be complete in all respects
necessary to make the materials fully functional if installed in accordance with industry standards. All
warranties implied by law or usage of trade are incorporated into this [Purchase] Order and shall apply to
services and materials ordered. The materials are ordered by Neenan in reliance on each and all of the
warranties and guarantees specified herein and implied by law or usage of trade. Neenan’s remedies
pursuant to this paragraph are in addition to, and not a limitation on, all other remedies allowed by law.
Filing No. 24-2.

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the first three years, the action must be started within two years of the discovery or when
it should have been discovered. When viewing the light in the most favorable way for the
plaintiff, Gerhold contends that Neenan had notice of a warranty claim no later than
February 25, 2016, which would mean the lawsuit had to be brought by February 25,
2018. The lawsuit was filed on February 26, 2018.
Neenan disagrees with the defendant. Neenan argues that under the U.C.C., a
breach of warranty occurs when delivery is made, except where a warranty explicitly
extends to future of performance of the goods and discovery of the breach has to await
the time of such performance when the breach should have been discovered. Neb.
U.C.C. § 2-725(2). Neenan also contends that the warranty states in part that “[Gerhold]
further warrants that the materials will be complete in all respects necessary to make the
materials fully functional if installed in accordance with industry standards.” Filing No. 242. See Econ. Hous. Co. v. Cont’l Forest Prod., Inc., 757 F.2d 200 (8th Cir. 1985) (where
court applied Nebraska law in buyer’s action against seller of plywood siding for breach
of warranty and found genuine issue of material fact existed as to whether warranty
explicitly extended to future performance of the goods, and whether limitations period had
run, precluding summary judgment); Allan v. Massey-Ferguson, Inc., 221 Neb. 528, 378
N.W.2d 664 (1985) (whether discovery exception tolled four-year statute of limitations for
breach of warranty claim were issues of material fact, precluding summary judgment).
Neenan argues it did not receive any correspondence from Cambridge Hospital until
November 4, 2015. Thus, it argues, there is a genuine issue of fact as to whether Neenan
knew or should have known.

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Neenan further argues that Gerhold’s reliance on Neb. Rev. Stat. § 25-223 is
misplaced as it applies only to homebuilders. See Thomas v. Countryside of Hastings,
Inc., 2 Neb. App. 590, 593, 512 N.W.2d 660, 664, rev’d, 246 Neb. 907, 524 N.W.2d 311
(1994); Georgetowne Ltd. P’ship v. Geotechnical Servs., Inc., 230 Neb. 22, 430 N.W.2d
34 (1988).
For the same reasons discussed above, Gerhold argues the breach of warranty
claims are time-barred. Where a supplier of building materials does not explicitly warrant
any future performance of those materials, the statute of limitations bars any claims
asserted four years after delivery of materials. Murphy v. Spelts-Schultz Lumber Co. of
Grand Island, 240 Neb. 275, 287, 481 N.W.2d 422, 430 (1992). When applying § 2-275,
both breach of express and implied warranties are time barred states Gerhold. The
warranties, argue Gerhold, do not specify a warranty for future performance for a period
of time.
c. Statute of limitations - indemnity
Third, with regard to the indemnity claim, Gerhold argues that this claim is based
on breach of contract, not negligence, and fails to state a claim for which relief can be
granted. Gerhold argues that this is an attempt to make an end-run around the statute of
limitations issue by defining this as a negligence issue. See Lesiak v. Central Valley Ag
Co-op., Inc., 283 Neb. 103, 121-22, 808 N.W.2d 67, 82 (2012). “Nebraska has long held
that a claim for indemnity accrues at the time the indemnity claimant suffers loss or
damage.” Dutton-Lainson Co. v. Continental Ins. Co., 271 Neb. 810, 825, 716 N.W.2d
87, 100 (2006) (citing City of Wood River v. Geer-Melkus Constr. Co., 233 Neb. 179, 444
N.W.2d 305 (1989)).

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Neenan disagrees and argues that the Nebraska Supreme Court has held that the
statutes of limitation set forth Neb. U.C.C. § 2-725 are inapplicable to claims in which a
party seeks indemnification on a contract of sale. See City of Wood River v. Geer-Melkus
Const. Co., 233 Neb. 179, 189, 444 N.W.2d 305, 311 (1989); Hillcrest Country Club v.
N.D. Judds Co., 236 Neb. 233, 247, 461 N.W.2d 55, 64 (1990).
The following clause is at issue in this regard:
INDEMNITY. Seller will indemnify, hold harmless, and defend Neenan and
project owner against any and all losses, damages, liabilities and claims of
any kind whatsoever, including actual attorney's fees and experts' or
consultants' fees, which arise directly or indirectly from the negligent
performance or nonperformance of this order including, but not limited
to, losses of any materials ordered hereunder and injured to property and
to persons, including death. This indemnity applies regardless of any active
and/or passive negligent act or omission of Neenan, the project owner, or
their agents or employees. Seller, however, shall not be obligated under
this Order to indemnify, defend or hold harmless Neenan or the project
owner for the portion of negligence or willful misconduct of Neenan or the
project owner or their agents or employees. The indemnity set forth in this
paragraph shall not be limited by the insurance requirements set forth in
Paragraph 15 and shall survive termination or performance of this Order.
See Filing No. 9, Amended Complaint, ¶ 37 (emphasis added). Gerhold agrees the
contribution clause requires a negligent act or omission but argues that Neenan only
alleges violation of the contract with Gerhold. Gerhold states this is crucial as a recent
Nebraska Supreme Court would not permit a party to change its breach of contract action
to a contribution claim to extend the statute of limitations. Keith v. Data Enterprises, Inc.,
27 Neb. App. 23, 34, 925 N.W.2d 723, 732 (2019) (“Keith cannot save any separate
causes of action for contract and tort against DCR by trying to retitle them as indemnity
claims; the district court properly concluded that these claims were barred by the statute

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of limitations”). Thus, argues Gerhold, this claim is likewise barred by the five-year statute
of limitations.
Neenan disagrees with the analysis as presented by Gerhold. Neenan argues that
the claims in this case are governed by the Nebraska Uniform Commercial Code, and
there are material facts to be decided regarding the contract action and, hence, the
indemnity clause.
CONCLUSION
With regard to each of these claims, the Court finds that there are, at this time,
material facts in dispute. For example, it is not clear from the record when plaintiff knew
or should have known of the breach. The parties clearly dispute this issue. It is clear to
the Court this contract reasonably requires future performance. Specifically, the contract
warrants the materials meet industry standards. The pivotal issue is when the plaintiff
knew or should have known of the alleged breach. The defendant submitted no expert
testimony substantiating its assertion that early complaints about concrete by the owner
put the plaintiff on notice of an alleged breach of contract for faulty materials rather than
installation workmanship.

The plaintiff contends the concrete did not meet industry

standards and was not fit for purpose. The plaintiff alleges discovery within the four-year
statute of limitations proscribed by the UCC. As a result, the Court will deny the summary
judgment motion.
The issue of common law contribution and indemnity does not appear to be before
the court at this time. The Court however notes that a claim for either does not arise until
the claimant suffers a loss.

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The Court’s ruling herein does not preclude the defendant from raising the statute
of limitations issue at trial.
THEREFORE, IT IS ORDERED THAT:
1. Defendant’s motion for summary judgment, Filing No. 22, is denied at this time
but is subject to reassertion at trial, if appropriate.
2.

Plaintiff’s motion to strike the defendant’s reply brief, Filing No. 30, is denied.

3.

Defendant’s second motion to file supplemental record, Filing No. 38, is

granted.

Dated this 9th day of March, 2020.

BY THE COURT:
s/ Joseph F. Bataillon
Senior United States District Judge

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