Lexington Insurance Company et al v. Newbern Fabricating, Inc. et al

Filing 285

OPINION AND ORDER by Judge Claire V Eagan ; granting in part and denying in part 100 Motion for Summary Judgment; denying 110 Motion to Strike Document(s) (Re: 54 Amended Complaint ) (RGG, Chambers)

UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA

LEXINGTON INSURANCE COMPANY;
GAVILON FERTILIZER, LLC; CERTAIN
UNDERWRITERS AT LLOYD’S OF
LONDON; and GAVILON GRAIN, LLC,
Plaintiffs,
v.
NEWBERN FABRICATING, INC., and
BAUCOM CONCRETE CONSTRUCTION,
INC.,
Defendants,
and
NEWBERN FABRICATING, INC.,
Third-Party Plaintiff,
v.
DOVELAND ENGINEERING CO.,
Third-Party Defendant
and
BAUCOM CONCRETE CONSTRUCTION,
INC.,
Third-Party Plaintiff,
v.
COMMERCIAL METALS COMPANY,
Third-Party Defendant.

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Case No. 14-CV-0610-CVE-TLW

OPINION AND ORDER
Now before the Court is Defendant Newbern Fabricating Inc.’s Motion for Summary
Judgment and Brief in Support (Dkt. # 100) and Newbern Fabricating Inc’s Motion to Strike
Affidavit of Brian Carleton (Dkt. # 110).1 Newbern asserts that it is entitled to summary judgment
on plaintiffs’ claims, arguing that plaintiffs’ breach of contract claim is time barred, that plaintiffs’
tort claim is not recoverable, and that the subrogated insurer plaintiffs cannot recover against
Newbern in the absence of a cognizable claim. Dkt. # 100, at 8. Plaintiffs Gavilon Grain, LLC and
Gavilon Fertilizer, LLC respond that none of the claims is barred and that the subrogated insurers
have a right to recovery. Dkt. # 107. Plaintiffs Lexington Insurance Company and Lloyd’s of
London join in that response. Dkt. # 108. Defendant Newbern also seeks to strike the affidavit of
Brian Carleton, Vice President of Operations for Gavilon Grain, submitted as an exhibit to the
response to Newbern’s motion (Dkt. # 107-1), arguing that plaintiffs use this affidavit to create a
sham factual dispute and asserting that its contents are inconsistent with previous pleadings and
discovery responses. Dkt. # 110, at 2. Plaintiffs respond that the affidavit should not be stricken,
because it is consistent with the allegations in previous pleadings and discovery responses and does
no more than provide clarification. Dkt. # 119.

1

The Court notes that several other motions are pending, including Third-Party Defendant
Doveland Engineering Co.’s Motion for Summary Judgment and Brief in Support (Dkt. #
167), Third-Party Defendant Commercial Metals Company’s Motion for Summary Judgment
and Brief in Support (Dkt. # 183), and Defendant Baucom Concrete Construction, Inc.’s
Motion for Partial Summary Judgment (Dkt. # 198). This opinion and order addresses only
Newbern’s motion for summary judgment and motion to strike.
2

I.
This action arises from the collapse of a wall of a storage facility at the Tulsa Port of
Catoosa on March 7, 2013. Plaintiff Gavilon Grain owned the building, which Gavilon Fertilizer
used to store fertilizer.2 Dkt. # 100, at 11; Dkt. # 107, at 4. In 2004, Gavilon Grain contracted with
defendant Newbern, a construction company that builds river terminals and equipment, to build a
concrete storage building. Dkt. # 100, at 10; Dkt. # 107, at 3. Construction on the concrete portion
of the structure was substantially completed by August 12, 2005. Dkt. # 100, at 10; Dkt. # 107, at
3. The remainder of the building and associated equipment was substantially complete by late 2005
or early 2006. Dkt. # 100, at 10; Dkt. # 107, at 3. The building was operational in early 2006. Dkt.
# 100, at 10; Dkt. # 107, at 3.
On March 7, 2013, a concrete wall of the building collapsed, resulting in damage to the wall
itself and the master control center (MCC Room), an adjacent room that housed controls, motors,
and electronics that controlled the building’s conveyer system. Dkt. # 100, at 12; Dkt. # 107, at 4.
Plaintiffs Lexington and Lloyd’s of London paid a number of claims related to the losses sustained
from the wall collapse. Dkt. # 100, at 12; Dkt. # 107, at 5. Plaintiffs Gavilon Grain and Gavilon
Fertilizer both suffered losses from the wall collapse, including damage to the building and
associated equipment and loss of profit and use of facilities. Plaintiffs thereafter filed this action
against defendants Newbern and Baucom Concrete Construction, Inc., asserting that the damages

2

In 2011, Gavilon Grain merged with DeBruce Grain, the party that contracted for and
oversaw the construction of the storage facility. Dkt. # 100, at 11; Dkt. # 107, at 4. For
clarity’s sake, the Court refers to both entities as Gavilon Grain. Also in 2011, Gavilon
Fertilizer merged with DeBruce Fertilizer. Dkt. # 100, at 11; Dkt. # 107, at 4. The Court
refers to Gavlion Fertilizer as representative of both entities. When referencing Gavilon
Grain and Gavilon Fertilizer together, the Court uses the Gavilon plaintiffs.
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were caused by inadequate design and installation of the concrete columns. Dkt. # 54. Plaintiffs
assert breach of contract and negligence claims against Newbern, seeking damages not recovered
from the insurer plaintiffs. Id. The insurer plaintiffs seek recovery of insurance payments made to
and on behalf of the Gavilon plaintiffs. Id. Newbern now moves for summary judgment.
II.
Summary judgment pursuant to Fed. R. Civ. P. 56 is appropriate where there is no genuine
dispute as to any material fact and the moving party is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 250 (1986); Kendall v. Watkins, 998 F.2d 848, 850 (10th Cir. 1993). 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, 477 U.S. at 317. “Summary judgment procedure is properly regarded not as a disfavored
procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are
designed ‘to secure the just, speedy, and inexpensive determination of every action.’” Id. at 327
(quoting FED. R. CIV. P. 1).
“When the moving party has carried its burden under Rule 56(c), its opponent must do more
than simply show that there is some metaphysical doubt as to the material facts. Where the record
taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no
‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87
(1986) (citations omitted). “The mere existence of a scintilla of evidence in support of the plaintiff’s
position will be insufficient; there must be evidence on which the [trier of fact] could reasonably

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find for the plaintiff.” Anderson, 477 U.S. at 252. In essence, the inquiry for the Court is “whether
the evidence presents a sufficient disagreement to require submission to a jury or whether it is so
one-sided that the party must prevail as a matter of law.” Id. at 251-52. In its review, the Court
construes the record in the light most favorable to the party opposing summary judgment. Garratt
v. Walker, 164 F.3d 1249, 1251 (10th Cir. 1998).
III.
A.
The Court first considers Newbern’s motion to strike (Dkt. # 110). Newbern asserts that the
affidavit of Brian Carleton, the Vice President of Operations for Gavilon Grain, submitted as an
exhibit to the response to Newbern’s motion for summary judgment (Dkt. # 107-1) should be
stricken because it is an “attempt to create a sham fact question” and “is inconsistent with Gavilon
Plaintiffs’ prior discovery responses.” Dkt. # 110, at 2. Plaintiffs respond that the Carleton affidavit
is consistent with prior statements about the property damaged by the wall collapse and, at most,
provides clarification on the issue of ownership. Dkt. # 119, at 11.
The Carleton affidavit states that when the wall of the fertilizer storage building collapsed,
it also destroyed an adjacent building, the MCC room. Dkt. # 107-1, at 3. Carleton attests that the
MCC Room was a separate building from the fertilizer storage building that suffered the wall
collapse. Id. Carleton attests that MCC Room itself was owned by Gavilon Grain, but that the
controls, starters, and other electrical equipment inside the building is personal property that was
owned by Gavilon Fertilizer, which operated the facility. Id. Newbern asserts that this affidavit is
the first assertion by any plaintiff that Gavilon Fertilizer owned any property damaged by the wall
collapse, and that it should be stricken as a sham affidavit. Dkt. # 110, at 7.

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Newbern identifies the second amended complaint3 and prior discovery responses including
answers to interrogatories and requests for production as support for its position that Carleton’s
affidavit attempts to create a sham question of fact. Id. at 3-5. The second amended complaint
identifies Gavilon Fertilizer as the party that operated the storage facility and Gavilon Grain as the
lessee of the property. Dkt. # 54. The second amended complaint also details property damage
suffered due to the wall collapse, but does not specifically allocate ownership of the damaged
property. See id.
With respect to discovery responses, both Gavilon Grain and Gavilon Fertilizer answered
interrogatories regarding property damage each party sustained. Gavilon Grain detailed its property
damage as follows: “Wall of west storage bay, together with adjacent fixtures and MCC Control
Room were destroyed or compromised.” Dkt. # 110, at 8. Gavilon Fertilizer, in response to the
same question about the property damage it suffered, responded “amount of property damage
unknown at this time.” Dkt. # 119-1, at 3. Gavilon Grain and Gavilon Fertilizer were also served
with requests for production. Gavilon Fertilizer provided Newbern documents related to any
replacement or repairs Gavilon Fertilizer expected would be required based on property damage
sustained in the wall collapse, as well as documents related to any damages that Gavilon Fertilizer
sustained. Dkt. # 119-2, at 2,4. In response to its requests for production, Gavilon Grain answered
each request with the following:

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To the extent that Newbern asserts that the Court should consider the original petition and
amended complaint, the Court declines to do so because the second amended complaint
superseded all previous complaints and rendered them a legal nullity. See Davis v. TXO
Prod. Corp., 929 F.2d 1515, 1517 (10th Cir. 1991) (explaining that it is a well-established
rule that an amended complaint supersedes the original complaint and renders it of no legal
effect).
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The facility which is the subject of this action was operated by Gavilon Fertilizer,
LLC rather than Gavilon Grain, LLC and all extra expense, loss of use and lost
profits were therefore incurred by Gavilon Fertilizer, LLC rather than Gavilon Grain,
LLC. Gavilon Grain, LLC’s interest in these proceedings arises as lessee of the
premises and relates to the cost of repairing and/or replacing the defective
construction resulting in the wall collapse.
Dkt. # 110, at 25.
Newbern asserts that the second amended complaint and discovery responses demonstrate
that the Carleton affidavit is a sham and should be stricken. But Newbern never deposed any
Gavilon Grain or Gavilon Fertilizer representative with respect to the issue of property ownership.
Although Newbern noticed 30(b)(6) depositions for both Gavilon Grain and Gavilon Fertilizer that
included topics relating to ownership of property damaged by the wall collapse, Newbern concedes
that no examination regarding property ownership ever occurred. Newbern served Gavilon Grain
with a 30(b)(6) notice that included a topic related to the “[o]wnwership and use of the subject
fertilizer building, and associated equipment, accessories, controls, and attachments.” Dkt. # 110,
at 33. Gavilon Grain designated Bill Arroyo to testify as to this topic; however, Gavilon Grain
withdrew him as a designated representative for this topic moments before the deposition began. Id.
at 35. Newbern served Gavilon Fertilizer with a 30(b)(6) notice, which included a topic related to
“[a]ny property owned by Gavilon Fertilizer, LLC that was damaged by the wall collapse, and all
documentation relating to ownership of such property.” Id. at 41. Gavilon Fertilizer did not provide
any representative designated to testify as to this topic. Brian Carleton provided testimony on behalf
of both Gavilon Grain and Gavilon Fertilizer, but was not designated to testify to these topics for
either plaintiff. The Court has reviewed the docket sheet and notes that Newbern never filed a
motion to compel testimony from a designated representative from either Gavilon Grain or Gavilon
Fertilizer related to the topics of ownership included in the 30(b)(6) notices. Instead, Newbern filed
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its motion for summary judgment, asserting that it is undisputed that Gavilon Fertilizer owned no
property that was damaged in the wall collapse.
Newbern argues that Carleton’s affidavit should be stricken pursuant to the sham affidavit
rule. “‘[A]n affidavit may not be disregarded [solely] because it conflicts with the affiant’s prior
sworn statements. In assessing a conflict under these circumstances, however, courts will disregard
a contrary affidavit whey they conclude that it constitutes an attempt to create a sham fact issue.’”
Law Co., Inc. v. Mohawk Const. and Supply Co., Inc., 577 F.3d 1164. 1169 (10th Cir. 2009)
(alterations in original) (quoting Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir. 1986)).
To determine whether a contradicting affidavit seeks to create a sham fact issue, we
have looked to three factors: whether “(1) the affiant was cross-examined during his
earlier testimony, (2) the affiant had access to pertinent evidence at the time of his
earlier testimony was based on newly discovered evidence; and (3) the earlier
testimony reflects confusion which the affidavit attempts to explain.”
Ralson v. Smith & Newphew Richards, Inc., 275 F.3d 965, 973 (2001) (quoting Rios v. Bigler, 67
F.3d 1543, 1551 (10th Cir. 1995)).
Based on the foregoing, the Court concludes that the Carleton affidavit is not a sham
affidavit and should not be stricken. The Court finds the third factor of the sham-affidavit analysis
dispositive. The Carleton affidavit provides clarification on the issue of ownership; it is not
inconsistent with prior discovery responses. And Newbern seized upon the opportunity to file a
motion for summary judgment without seeking clarification on the property ownership issue.
Newbern could have filed a motion to compel testimony regarding the ownership of controls and
equipment housed in the MCC room, but instead chose to file its motion for summary judgment
without such testimony.

And, as plaintiffs rightfully note, they are entitled to designate

representatives to testify about particular topics. Gavilon Grain’s designation of Bill Arroyo to

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testify about ownership issues and Gavilon Grain’s subsequent withdrawal of this designation,
moments before the deposition began, is permissible; the Court will not use it as evidence in support
of Newbern’s argument. Newbern’s recourse in this situation was to file a motion to compel
designation of a 30(b)(6) representative of each company to give testimony regarding the ownership
of materials in the MCC Room; that Newbern did not avail itself of this remedy should not be held
against plaintiffs. Newbern’s motion to strike should thus be denied.
B.
Turning to the merits of Newbern’s arguments, Newbern asserts that it is entitled to summary
judgment because: (i) the breach of contract claim is barred by a five-year statute of limitations; (ii)
the Gavilon plaintiffs cannot recover for their tort claim as a matter of law because their claim is
barred by either a “contractual” economic loss rule or a “stranger” economic loss rule; and (iii)
subrogated insurers cannot recover as a matter of law because the Gavilon plaintiffs’ claims fail as
a matter of law. Dkt. # 100, at 13-14.
i.
The Court first considers Newbern’s argument that it is entitled to summary judgment on
plaintiffs’ contract claim, asserting that such claim is time-barred. Dkt. # 100, at 13. Newbern
asserts that plaintiffs’ contract claim is governed by a five year statute of limitations, which began
to run in 2005 when the storage building was substantially completed. Id. at 15. Plaintiffs assert
that the contract between the parties included a prospective covenant that the facility would be fit

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and suitable for its intended use, and argues that the limitations period did not begin to run until the
March 7, 2013 wall collapse.4 Dkt. # 107, at 8.
Under Oklahoma law, “[a]n action upon any contract, agreement, or promise in writing” is
subject to a five-year statute of limitations. OKLA. STAT. tit. 12, § 95(a)(1). And “[t]he cause of
action for breach of a contract for construction arises at the contract’s completion.” Kirby v. Jean’s
Plumbing Heat & Air, 222 P.3d 21, 27 (Okla. 2009). Oklahoma courts have declined to apply the
discovery rule, whereby a statute of limitations begins to run only upon discovery of a defect, to
actions based upon breach of construction contracts. Id.; Samuel Roberts Noble Foundation, Inc.
v. Vick, 840 P.2d 619, 622-23 (Okla. 1992) (declining to extend the discovery rule for claims of
breach of construction contracts); see also Jaworsky v. Frolich, 850 P.2d 1052, 1054 (Okla. 1992)
(explaining that the court “expressly rejected the rule that a cause of action for breach of contract
does not accrue until discovery of the defect” with respect to a construction contract). Newbern
argues that, because construction on the fertilizer storage building was substantially complete in late
2005 and plaintiffs did not file this action until 2014, the statute of limitations bars plaintiffs’ claim.
Although a five-year statute of limitations for a breach of contract claim ordinarily applies, plaintiffs
assert that the breach of contract claim alleges breaches of both express and implied contractual
obligations, the latter of which would not begin to accrue until discovery of the defect. Dkt. # 107,
at 8.

4

In support of its argument, plaintiffs cites Sampson Const. Co. v. Farmers Co-op Elevator
Co., 382 F.2d 645 (10th Cir. 1967) (applying Oklahoma law), arguing that it involves a
factually similar scenario and urging the Court to reach the same result. However, as the
plaintiffs note, this case was decided by the Tenth Circuit in 1967, decades before the more
recent Oklahoma Supreme Court guidance in Kirby, Noble, and Jaworksy. The Court agrees
with plaintiffs that these more recent cases more accurately reflect the current landscape of
Oklahoma law.
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Under Oklahoma law, “[a] contract includes not only the promises set forth in express words,
but, in addition, all such circumstances under which it was made.” Miler v. Ind. Sch. Dist. No. 56,
609 P.2d 756, 758 (Okla. 1980). The implied warranty for a particular purpose is a creature of
statute, established by Oklahoma’s adoption of the Uniform Commercial Code (U.C.C.) provision
in Okla. Stat. tit. 12A, § 2-315. The U.C.C. applies only to a sale of goods. See, e.g., Redwine v.
Baptist Gen. Conv. of Okla., 681 P.2d 1121, 1124 (Okla. App. 1982). Neither party has addressed
whether materials installed as part of a construction contract constitutes a sale for purposes of the
U.C.C. However, assuming the installation of materials as part of a construction contract constitutes
a sale for purposes of the U.C.C., plaintiffs’ claim is governed by the five-year statute of limitations
period set out in OKLA. STAT. tit. 12A, § 2-725, which “accrues when the breach occurs, regardless
of the aggrieved party’s lack of knowledge of the breach.” Thus, the limitations period for a claim
under section 2-315 would have started to run at the completion of construction, and plaintiffs’ claim
would be untimely.
Construction on the storage building was substantially complete by late 2005 or early 2006.
Any contract claim based on this construction job was subject to a five-year statute of limitations
under OKLA. STAT. tit. 12, § 95(a)(1), or OKLA. STAT. tit. 12A, § 2-725. The discovery rule does
not operate to toll any statute of limitations. Therefore, plaintiffs’ contract claim, filed in 2014, is
untimely. The Court thus concludes that summary judgment is appropriate as to plaintiffs’ contract
claim.5

5

The Court notes that Newbern also asserts that Gavilon Fertilizer cannot recover on the
breach of contract claim because it was not a party to the contract. Dkt. # 111, at 6. Gavilon
Fertilizer, in its response to Newbern’s motion for summary judgment, did not address this
argument. However, because the contract claim is time-barred, the Court need not reach the
issue.
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ii.
Newbern next asserts that Gavilon Grain cannot recover for its negligence claim because it
is barred by what Newbern terms the “contractual” economic loss rule, and characterizes as a rule
that a plaintiff may not recover in tort for damages to a property constructed pursuant to a contract
or to associated property integral to the function of the property. Dkt. # 100, at 27. Plaintiffs
respond that the “contractual” economic loss rule applies to products liability cases only and should
not be extended to claims of negligent construction. Dkt. # 107, at 11-12.
In Waggoner v. Town & Country Mobile Homes, Inc., 808 P.2d 649 (Okla. 1990), the
Oklahoma Supreme Court first recognized the “contractual” economic loss rule, under which “no
action lies in manufacturer’s products liability for purely economic injury to the product itself.”
Dutsch v. Sea Ray Boats, Inc., 845 P.2d 187, 193 (Okla. 1992) (reaffirming Waggoner economic
loss rule). Explaining the reasoning behind this rule, the Oklahoma Supreme Court has stated that
“the purpose of adopting the theory of manufacturer’s products liability in tort cases was not to do
away with contractual liability under the Uniform Commercial Code. When purely economic
damages occur and there is no damage to person or other property, U.C.C. remedies are sufficient
to protect the plaintiff.” Id.
Newbern urges the Court to extend the “contractual” economic loss rule to claims of
negligent construction. But at least one other court considering whether Oklahoma courts would
extend the “contractual” economic loss rule to claims outside of products liability cases has
concluded that it was inappropriate to apply the rule beyond products liability. See Compusorce
Okla. v. BNY Mellon, N.A., No. CIV-08-469-KEW, 2009 WL 2366112, at *2 (E.D. Okla. July 31,
2009) (“No authority has been cited from a court in Oklahoma specifically adopting the economic

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loss rule outside of the products liability arena. . . . . [T]his Court is not prepared to conclude
Oklahoma would adopt the economic loss rule in the context of this case.”).
Like that court, this Court is unprepared to conclude that Oklahoma courts would adopt the
“contractual” economic loss rule in areas of the law beyond products liability. Oklahoma courts
have given no indication, nor has Newbern identified any authority suggesting, that Oklahoma courts
would extend the reach of this economic loss doctrine to negligent construction claims.6 Oklahoma
courts have clearly discussed the “contractual” economic loss rule in the context of products liability
only. See, e.g., Dutsch, 845 P.2d at 193 (“The purpose of Waggoner–to preserve the remedies of
the U.C.C.–is upheld by limiting a plaintiff seeking only recovery for the product itself to U.C.C.
remedies.”). The absence of any language in these opinions indicating that Oklahoma courts would
consider applying the rule to different contexts convinces this Court that applying the rule in this
instance would be inappropriate. As such, the Court declines to apply the “contractual” economic
loss rule to bar plaintiffs’ claim. Newbern’s motion for summary judgment on this basis should be
denied.
iii.
Newbern also asserts that it is entitled to summary judgment on Gavilon Fertilizer’s
negligence claim, arguing that Gavilon Fertilizer’s tort claim is barred by both the “contractual”
economic loss rule and what it terms the “stranger” economic loss rule. Dkt. # 100, at 17, 27.
Plaintiffs respond that there is a genuine dispute of material fact regarding whether Gavilon

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Newbern identifies case law from other jurisdictions in support of its argument that this
Court should extend the “contractual” economic loss rule to negligent construction claims.
Dkt. # 100, at 28. However, these cases do not provide any basis for this Court to conclude
that Oklahoma courts would extend this rule to negligent construction claims and the Court
remains unpersuaded.
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Fertilizer owned any property damaged in the wall collapse and asserts that Newbern’s argument
regarding “stranger” economic loss relies on a theory that has not been, and is unlikely to be,
accepted by Oklahoma courts. Dkt. # 107, at 11. As to the “contractual” economic loss rule,
plaintiffs argue that, for the same reasons it should not bar Gavilon Grain’s claim, it should not be
applied to bar Gavilon Fertilizer’s claim. Dkt. # 107, at 12.
First, to the extent that Newbern asserts that Gavilon Fertilizer cannot recover for its
negligence claim based on the “contractual” economic loss theory, for the same reasons the Court
concludes that the “contractual” economic loss rule does not apply to bar Gavilon Grain’s claim, it
concludes the same as to Gavilon Fertilizer. Second, Newbern urges the Court to apply what it
terms the “stranger” economic loss rule to bar Gavilon Fertilizer’s negligence claim against
Newbern. Under this rule, a plaintiff may not recover for a purely economic loss in the absence of
some special relationship between the plaintiff and the tortfeasor. Dkt. # 100, at 18 (citing Aikens
v. Debow, 541 S.E.2d 576, 583 (W.Va. 2000)).
Oklahoma courts have not adopted this rule, but Newbern asserts that the Court should apply
the rule in the context of this case. Dkt. # 100, at 17. However, the Court need not reach the issue
at this stage in the ligation. As discussed above in relation to the motion to strike, the parties dispute
whether Gavilon Fertilizer owned any property that was damaged by the wall collapse, i.e. whether
Gavilon Fertilizer suffered a purely economic loss. The Court denied Newbern’s motion to strike,
thus allowing the Carleton affidavit as evidence of Gavilon Fertilizer’s ownership of controls and
equipment located in the MCC Room. Based on this affidavit, the Court concludes that there is a
genuine dispute of material fact regarding ownership of damaged property, including controls and
equipment located in the MCC room. Because the Court concludes that there is a disputed material

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fact concerning whether Gavilon Fertilizer suffered economic losses only, the Court need not resolve
at this point whether Oklahoma courts would adopt the “stranger” economic loss rule. The Court
will address this issue in the event of a finding of fact from a jury that plaintiff Gavilon Fertilizer
suffered economic losses only and did not own any property damaged or destroyed by the wall
collapse. Newbern’s motion for summary judgment on this basis should be denied.
iv.
Newbern finally asserts that the insurers’ claims depend upon the validity of the claims
asserted by the Gavilon plaintiffs, and in the absence of a cognizable claim by the Gavilon plaintiffs,
the insurers may not recover. Dkt. # 100, at 13-14. Under Oklahoma law, “[a] subrogee steps into
the shoes of the plaintiff ‘subject to all legal and equitable defense which the [tortfeasor] may have
against the [plaintiff.]’” Empl. Mut. Cas. Co. v. Mosby, 943 P.2d 593, 595 (Okla. 1997) (second
and third alteration in original) (quoting Moore v. White, 603 P.2d 1119, 1121 (Okla. 1979)). Thus,
“a subrogee acquires no rights greater than those of the party whose claim it has paid.” Id. Because
the Court concludes that Newbern is not entitled to summary judgment on the negligence claim, the
Court cannot conclude that, as a matter of law, the insurers have no claim for relief against Newbern.
IV.
In sum, the Court concludes that Newbern’s motion to strike should be denied because the
plaintiffs have not presented a sham affidavit. Instead, plaintiffs offer evidence clarifying an issue
of ownership. The Court also concludes that plaintiffs’ breach of contract claim is time barred
because it was brought outside of the five-year statute of limitations, which began running upon
completion of construction, either in late 2005 or early 2006. Next, the Court concludes that the
plaintiffs’ negligence claim is not barred as a matter of law because the Court declines to adopt the

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“contractual” economic loss rule outside the products liability area and because a disputed material
fact renders a decision regarding the application of the “stranger” economic loss rule premature.
Finally, the Court concludes that, because the Gavilon plaintiffs still have claims for recovery,
Newbern has not shown that the insurer plaintiffs cannot recover as a matter of law. Newbern is
thus entitled to summary judgment on plaintiffs’ contract claim, but summary judgment on
plaintiffs’ negligence claim should be denied.
IT IS THEREFORE ORDERED that Defendant Newbern Fabricating Inc.’s Motion for
Summary Judgment and Brief in Support (Dkt. # 100) and the insurers’ joinder (Dkt. # 108) is
granted in part and denied in part as follows: summary judgment is granted as to plaintiffs’
contract claim and denied as to plaintiffs’ negligence claim. Newbern Fabricating Inc’s Motion to
Strike Affidavit of Brian Carleton (Dkt. # 110) is denied.
DATED this 28th day of July, 2016.

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