Ross Island Sand & Gravel CO. v. Lehigh Southwest Cement Company

Filing 89

OPINION & ORDER: Lehigh's Motion for Summary Judgment 46 is Granted as to Ross Island's Price Protection Claims, and otherwise Denied. Lehigh's Motion for Extension of Time to Amend Pleadings 60 is Granted. Ross Island&# 039;s Motion for Partial Summary Judgment 50 is Denied. Lehigh's Motion to Exclude Expert Opinion Evidence from William Weyrauch 48 and Motion to Strike Evidence Offered by Ross Island 78 are Denied. Signed on 10/27/16 by Magistrate Judge Paul Papak. (gm)

THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION
ROSS ISLAND SAl'ID & GRAVEL CO.,
No. 3:15-cv-01369-PK
Plaintiff:

OPINION AND ORDER

v.
LEHIGH SOUTHWEST CEMENT CO.,
Defendant.

PAP AK, Magistrate Judge:
Plaintiff Ross Island Sand & Gravel Co. (Ross Island) manufactures and sells concrete.
For forty years, Ross Island purchased cement, a key ingredient in concrete, from defendant
Lehigh Southwest Cement Co. (Lehigh).
In this action, Ross Island alleges that in fall 2014, Lehigh sold defective cement that
caused Ross Island's concrete to fail at two construction sites. Ross Island claims that Lehigh is
liable for damages caused by the allegedly defective cement.
After the alleged failure of Lehigh's cement, Ross Island began purchasing all of its
cement from a different cement supplier that charged higher prices than Lehigh. Ross Island now
claims that Lehigh is obligated to pay Ross Island for the price difference, based on the paiiies'
2012 "price protection agreement," in which Lehigh agreed to charge Ross Island discounted
prices for cement used in three specific construction projects. I refer to these claims as cost-to-

Page 1 - OPINION AND ORDER

cover or price protection claims. Ross Island brings claims for breach of contract, breach of
express warranty, breach of implied warranty, breach of the covenant of good faith and fair
dealing, promissory estoppel, declaratory relief, and attorney's fees.
Lehigh now moves for summary judgment on all of Ross Island's claims. Lehigh also
moves to exclude opinion evidence from Ross Island's expert William Weyrauch; to strike the
proposed testimony of certain Ross Island witnesses; and to amend its answer to include an
affirmative defense.
Ross Island moves for partial summary judgment on Lehigh's affirmative defense based
on the pmiies' Janumy 2015 settlement agreement (the 2015 Settlement Agreement).
For the reasons that follow, I grant Lehigh's motion for summmy judgment as to Ross
Island's price protection claims, and deny the motion as to the defective cement claims. I deny
Lehigh's motion to exclude Weyrauch's expe1i opinion, and its motion to strike proposed
,testimony. I grant Lehigh's motion to amend its answer. I deny Ross Island's motion for pmiial
summary judgment.

I. LEHIGH IS ENTITLED TO SUMMARY JUDGMENT ON ROSS ISLAND'S COSTTO-COVER CLAIMS
In its cost-to-cover claims, Ross Island seeks to recover the difference between Lehigh's
proposed cement prices for 2015 and 2016 under the parties' 2012 price protection agreement
(the Price Protection Agreement), and the higher prices Ross Island now pays for cement from its
current supplier, Ash Grove Cement Co. I conclude that Ross Island has failed to overcome the
Statute of Frauds' requirement ofa writing to show that the parties agreed to expand the 2012
Price Protection Agreement beyond the three construction projects specified in the original
agreement.
Page 2 - OPINION AND ORDER

A. Background

1. The 2012 Price Protection Agreement
Before entering into the 2012 Price Protection Agreement at issue, the parties reached
similar agreements in 2006 and in 2010. A1mstrong Deel. Exs. 36Under each agreement, Lehigh
granted Ross Island discounted prices per ton of cement that Ross Island purchased for specified
large constrnction projects. For example, in the paiiies' 2010 price protection agreement, Lehigh
agreed to charge Ross Island $87 per ton of cement in 2011, discounted from Lehigh's base price
of $94 per ton. Armstrong Deel. Ex. 37, ECF No. 73-36. The 2010 agreement listed the
construction projects to which it applied, and included a discount schedule for subsequent years
through 2014. Both the 2006 and the 2010 price protection agreements were oral agreements,
which were documented at a later time. Armstrong Deel. Ex. 13, at 136-38. 1
The parties orally agreed to the Price Protection Agreement at issue here on April 17,
2012, when Bill Boughton, Lehigh's vice president of sales, met with Chuck Steinwandel, Ross
Island's president and CEO, in a P01iland restaurant. The next day, Steinwandel handwrote the
te1ms of the Price Protection Agreement on a spreadsheet that listed the three construction
projects that would be eligible for the discounted cement prices, with estimates for the amount of
cement required per year. The three construction projects were the Willamette River Transit
Bridge, Portland Milwaukie Light Rail, and the Sellwood Bridge.
Steinwandel's summary of the 2012 Price Protection Agreement stated:
Presented and agreed between myself and Bill Boughton on the evening of April
17, 2012. Regular pricing on cement for 2012, starting April 1, 2012, is 91.50

1

Page numbers for deposition transcripts refer to the page numbers for the original
transcript, not the page numbers for the exhibit that contains selected pages of the transcript.
Page 3 - OPINION AND ORDER

[per] ton. Standard pricing, 96.50 ton. [Ross Island] will pay down debt' by
$300,000 by Dec. 31, 2012. [Initialed by Steinwandel and dated April 18, 2012]
Armstrong Deel. Ex. 21. Steinwandel testified that his handwritten summaty is essentially a
"complete recitation of the [Price Protection Agreement]." Armstrong Deel. Ex. 13, at 154.
To receive price rebates under the 2012 Price Protection Agreement, Ross Island sent
Lehigh monthly spreadsheets showing the amount of cement Ross Island had purchased from
Lehigh during the previous month for the three specified construction projects. See Armstrong
Deel. Ex. 11, at 148-49. Because of Ross Island's outstanding debts, Lehigh applied the rebate
credits to Ross Island's old debt. Armstrong Deel. Ex. 2, at 114 (Boughton Depo.).
The key issue for the cost-to-cover claims is whether Lehigh agreed to modify the 2012
Price Protection Agreement to include construction projects that were not covered by the initial
Agreement. Steinwandel testified that during the April 17, 2012 meeting, he asked Boughton to
consider adding other construction projects to the Price Protection Agreement, and Boughton
responded, "If you have other projects, come to me, and then we'll discuss whether I'm going to
protect those projects." Armstrong Deel. Ex. 13, at 161. Steinwandel testified that he had "a
general memory" of discussing with Boughton an expansion of the Price Protection Agreement
to include other construction projects, but he had no "specific recall of a particular conversation
on a particular date or time." Anderson Deel. Ex. 8, at 69, ECF No. 47. Steinwandel considered
the inclusion of additional projects to be an expansion of the 2012 Price Protection Agreement.
Armstrong Deel. Ex. 14, at 43.
During 2013, Ross Island sent Lehigh monthly spreadsheets showing the amount of

2

As of April 2013, Ross Island owed Lehigh about $1.7 million. Anderson Deel., Ex. 10,

at 1.
Page 4 - OPINION AND ORDER

cement purchased from Lehigh during the previous month for the three specified projects.
Through 2013, Ross Island apparently limited its monthly spreadsheets to cement used in the
three construction projects specified by the Agreement.
Ross Island asserts that sometime in late 2013, Steinwandel and Boughton agreed to
expand the Price Protection Agreement. PL Opp'n 8, ECF No. 71. Steinwandel testified that
Lehigh, through Boughton, agreed to discount cement used in construction projects by four
contractors: Skanska USA Building Inc., Perlo Construction, Cascade Bridge LLC, and Pacific
Foundation. See Armstrong Deel. Ex. 14, at 40-41, ECF No. 73-13. But Ross Island has not
presented any writing showing an agreement to modify the Price Protection Agreement.
Boughton testified that he never agreed to expand the 2012 Price Protection Agreement beyond
the original three projects. He testified that "the only thing that was protected, in my eyes and
my understanding, were those three jobs." Anderson Deel. Ex. 5, at 122.
In an attempt to show that the parties did agree to expand the Agreement, Ross Island
cites the monthly spreadsheets it sent Lehigh to receive discounted cement prices. In early 2014,
Ross Island changed the format of the monthly spreadsheets to show the tons of cement used by
the four contractors, without showing on which construction projects the cement was used. A
Ross Island employee, Ken Gambill, testified he decided to change the format of the
spreadsheets, noting that by the end of2013, "We were running out of projects. We had done the
first group [named in the initial agreement]." Anderson Deel. Ex. 6, at 261. Relying on the
newly formatted spreadsheets, in 2014, Lehigh granted discounts to Ross Island for cement used
by the four contractors, regardless of whether the cement was used on the three construction
projects specified in the original Price Protection Agreement.

Page 5 - OPINION AND ORDER

Lehigh now argues that its employees assumed that Ross Island would seek discounts
only for the three original projects named in the 2012 Price Protection Agreement. Boughton
testified that "everything that was submitted [by Ross Island as eligible for the discount], I would
have assumed was appropriate and right for those three jobs. So, if ... a couple of jobs that got
on that list that got by, it could have been overlooked by [a Lehigh employee]; unfortunate, but
that could have been the case." Anderson Deel., Ex. 5, at 122. Referring to Ross Island's 2014
spreadsheets, Boughton stated, "If they weren't related to those three jobs, they should not be
requested for special pricing." Anderson Deel. Ex. 5, at 121.
In May 2014, Lehigh employee Tony McCauley asked Ross Island employee Ken

Gambill about the new format for the cement usage spreadsheets. Referring to the April 2014
spreadsheet as an example, McCauley asked Gambill why Ross Island listed cement use by
contractor rather than by project, as it had jn the 2013 spreadsheets. Although McCauley did not
receive a complete answer from Gambill, he did not pursue the issue futiher. Armstrong Deel.
Ex. 11, at 151, 152.
After the concrete at a construction project failed, Ross Island stopped purchasing cement
from Lehigh on November 21, 2014. Ross Island began purchasing cement from Ash Grove at
higher prices than Lehigh's prices would have been under the Price Protection Agreement.
In June 2015, Ross Island filed this action against Lehigh in Multnomah County Circuit
Court. In July 2015, Lehigh removed the action to this cou1i.

2. The Parties' 2015 Settlement Agreement
In 2012 and 2013, Ross Island fell behind on its payments due to Lehigh. In April 2013,

Ross Island agreed to repay Lehigh about $1. 7 million, in quarterly payments of $50,000 until

Page 6 - OPINION AND ORDER

fully paid. Anderson Deel., Ex. 10, at I. In July 2013, Ross Island again fell behind on its
payments to Lehigh, accruing a new balance of about $731,000, in addition to the amount already
owing. Ross Island agreed to make payments of $7,000 three times per month.
In Janumy 2015, Lehigh filed a complaint in Multnomah County Circuit Court against
Ross Island and other defendants, seeking amounts due under its agreements with Ross Island.
About ten days later, Ross Island and Lehigh reached a settlement agreement (the 2015
Settlement Agreement). Ross Island agreed that it owed Lehigh $1.3 million, including
attorney's fees and costs up to January 22, 2015. Ross Island paid Lehigh $100,000 and agreed
to pay Lehigh $750,000 by February 27, 2015, and the remainder due, about $450,000, by
January 22, 2016.
The 2015 Settlement Agreement included the following release:
5. RELEASES
Subject to the complete and timely performance of all obligations set f011h
in this Agreement, the Parties, on behalf of themselves and their subsidiaries,
parent companies, affiliates, owners, members, shareholders, agents, officers,
attorneys, directors, employees, contractors, and representatives hereby release
and discharge each other from all claims, counterclaims, cross-claims, causes of
action, liens, damages, charges, penalties, and obligations whether known or
unknown, or which the Pm1ies have ever had or now have, arising at any time up
to the Effective Date of this Agreement (the "Released Claims"). Except as
expressly set foi1h herein, the Pm1ies shall each pay their own attorney fees
incurred in connection with the Litigation and this Agreement.
El:plicitly excluded from the Released Claims are any and all: (I) claims
arising from or in any way related to the enforcement of this Agreement; (ii)
claims made by Ross Island against Lehigh arising out of the quality of the
Product[3]; and (iii) claims that are not otherwise released in this Agreement.
Notwithstanding anything to the contra1y herein, Lehigh's obligations, if any,
under any wananty or wananty exclusion or limitation applicable to any of the
Product shall remain unchanged.

3

The word "Product" refers to Lehigh's cement.

Page 7 - OPINION AND ORDER

Anderson Deel., Ex. 10, at 5 (emphasis added).

B. Legal Standards for Summary Judgment Motions
The comt must grant summmy judgment when there are no genuine issues of material
fact and the moving patty is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). If the
moving party shows that there are no genuine issues of material fact, the nonmoving patty must
go beyond the pleadings and designate facts showing an issue for trial. Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986). A factual dispute is genuine "if the evidence is such that a
reasonable jmy could return a verdict for the nonmoving pmty." Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). The substantive law governing a claim or defense determines which
facts are material. See }vforeland v. Las Vegas lvfetro. Police Dep't, 159 F.3d 365, 369 (9th Cir.
1998). In ruling on a motion for summaty judgment, the comt must draw all reasonable
inferences in favor of the nonmoving pmty and may not make credibility detenninations or weigh
evidence. See Anderson, 477 U.S. at 255.
C. Ross Island's Claims Under the 2012 Price Protection Agreement

1. Ross Island Has Not Shown That the Parties Agreed to Expand the 2012
Price Protection Agreement
A valid contract "requires a clear and unequivocal acceptance of a ce1tain and definite
offer." Estey & Assocs., Inc. v. lvfcCul/och Corp., 663 F. Supp. 167, 173 (D. Or. 1986). A
discussion will not create a contract "unless it is carried on to such an extent that the minds of the
patties meet upon all the essential te1ms." Steel Prod. Co. of Oregon, Inc. v. Fi\1D Corp., 282
Or. 513, 519, 579 P.2d 855, 858 (1978) (citations and quotation marks omitted). The pmty
asse1ting the existence of an agreement bears the burden of proof. See J. L. Price Brokerage Co.
v. Baker Groce1y Co., 94 Or. 538, 548, 186 P. 23, 25 (1919).
Page 8 - OPINION AND ORDER

Here, Lehigh contends that Ross Island's cost-to-cover claims fail because the alleged
expansion of the Price Protection Agreement is not documented by a writing. Under the Statute
of Frauds, "a contract for the sale of goods for the price of $500 or more is not enforceable by
way of action or defense unless there is some writing sufficient to indicate that a contract for sale
has been made between the parties and signed by the party against whom enforcement is sought
or by the authorized agent or broker of the party." Or. Rev. Stat.§ 72.2010(1). The Statute of
Frauds' writing requirement also applies to alleged oral modifications of an agreement. Or. Rev.
Stat.§ 72.2010(3) ("The requirements of ORS 72.2010, relating to the statute of frauds must be
satisfied if the contract as modified is within its provisions."). The Unifo1m Commercial Code
(UCC)'s official commentary on the UCC's equivalent to Or. Rev. Stat.§ 72.2010(3) is
instructive here:
The Statute of Frauds provisions of this Article are expressly applied to
modifications by subsection (3). Under those provisions the "delivery and
acceptance" test is limited to the goods which have been accepted, that is, to the
past. "Modification" for the future cannot therefore be conjured up by oral
testimony ifthe price involved is $500.00 or more since such modification must
be shown at least by an authenticated memo. And since a memo is limited in its
effect to the quantity of goods set foiih in it there is safeguard against oral
evidence.
Official Comment 3, UCC 2-209 (noting that subsection (3) is "intended to protect against false
allegations of oral modifications").
Ross Island has not provided any writing showing that the parties agreed to modify the
2012 Price Protection Agreement to include additional construction projects. Steinwandel
testified that Boughton told him, in effect, "If you have other projects, come to me, and then
we'll discuss whether I'm going to protect those projects." Armstrong Deel. Ex. 13, at 161.
Steinwandel' s deposition testimony on this issue is at best vague and provisional, while
Page 9 - OPINION AND ORDER

Boughton denies that Lehigh agreed to modify the Agreement to include additional construction
projects.
Ross Island argues that it has presented documents showing the pmiies agreed to modify
the Price Protection Agreement to include additional projects. "If a writing is used to supply
rather than to explain a term in another writing, then there must be additional evidence that the
parties intended the two writings to be read together." }vfclnnis v. Lind, I 08 P .3d 578, 585, 198
Or. App. 139, 149 (2005). Here, none of the evidence cited by Ross Island shows that the pmiies
agreed to modify the Price Protection Agreement.
As evidence of the alleged modification, Ross Island cites a July 2012 email it sent to
Lehigh, attached to a spreadsheet report on cement usages, which states, "This rep01i will change
as we add other work to the locations that are part of the agreement between Ross Island and
Lehigh." Armstrong Deel. Ex. 46. The email acknowledges that additional work will occur on
the three large construction projects subject to the Price Protection Agreement, but the email does
not show that the parties agreed to include additional construction projects.
Ross Island also cites the testimony of Tony McCauley, a Lehigh employee, that the Price
Protection Agreement included locations where work had not yet begun. I note that McCauley
had no role in negotiating the 2012 Price Protection Agreement. See Armstrong Deel. Ex. 14, at
25 (Steinwandel testified that he negotiated "singly and solely" with Boughton). In any event,
McCauley's statement is consistent with the terms of the 2012 Price Protection Agreement,
which contemplated that the three large construction projects would be pouring concrete at
multiple locations.
In a fi.niher attempt to show a writing that documents the alleged expansion of the Price

Page 10 - OPINION AND ORDER

Protection Agreement, Ross Island cites the monthly spreadsheets it sent to Lehigh during 2014,
which sought price rebates for cement used on projects that were not included in the original
Price Protection Agreement. Ross Island contends that Lehigh's willingness to allow credit for
additional construction projects shows that the parties had a course of dealing that modified the
original terms of the 2012 Price Protection Agreement. I disagree. The monthly spreadsheets
refer only to past usage, so they are limited in effect "to the quantity of goods set forth" in them.
In other words, the monthly spreadsheets, which covered cement used during the prior month,
cannot show an agreement to continue granting discounts for other projects in the foture.
Lehigh's willingness, mistaken or not, to grant discounts based on Ross Island's 2014
spreadsheets does not show an intent to extend the discounts to foture purchases of cement.
Ross Island also argues that the 2012 Price Protection Agreement was a requirements
contract, and that the Statute of Frauds does not require that requirements contracts include a
written provision on the quantity of goods to be sold. Instead, a requirements contract may
satisfy the Statute of Frauds if the pmiies agree that the quantity of goods sold will be the amount
required by the buyer. See Or. Rev. Stat.§ 72.3060(1).
Here, while I agree with Ross Island that the 2012 Price Protection Agreement is a
requirement contract, I conclude that it is a requirements contract only as to the three projects
named in the Agreement. The estimated cement usage figures included in the Price Protection
Agreement are based on the three specified construction projects. To add multiple unknown
construction projects as eligible for discounts would be a material modification of the Agreement
that must be evidenced by a writing to be enforceable. See In re Empire Pac. Indus., Inc., 71
B.R. 500, 504 n.3 (Bankr. D. Or.1987) ("The addition of a quantity te1m other than that

Page 11 - OPINION AL'ID ORDER

previously agreed to would materially alter the terms of the contract.").
Ross Island also relies on the UCC merchant rule, which provides:
Between merchants, if within a reasonable time a writing in confinnation of the
contract and sufficient against the sender is received and the party receiving it has
reason to know its contents, it satisfies the requirements of subsection (1) of this
section against such party unless written notice of objection to its contents is
given with 10 days after it is received.
Or. Rev. Stat.§ 72.2010(2). I agree with Lehigh that the merchant rule does not aid Ross Island
here, because, as noted, the spreadsheets submitted by Ross Island in 2014 do not show an
agreement to expand the Price Protection Agreement to include additional projects. Lehigh's
apparently cavalier attitude in allowing price rebates beyond the three construction projects,
without more, does not show an intent to expand the Price Protection Agreement.
In an attempt to avoid the requirements of the Statute of Frauds, Ross Island argues that
Lehigh is liable under a promissory estoppel theory. "In Oregon promiss01y estoppel is not a
cause of action in itself, but is a subset of and a the01y of recove1y in breach of contract actions."

Kraft v. Arden, No. 07-487-PK, 2008 WL 4866182, at *10 (D. Or. Nov. 7, 2008) (citations and
quotation marks omitted). "Under promissory estoppel, the party seeking enforcement of a
promise must demonstrate: '1) a promise, 2) which the promisor, as a reasonable person, could
foresee would induce conduct of the kind which occuned, 3) actual reliance on the promise, 4)
resulting in a substantial change in position.' A party may seek relief under promissory estoppel
when no valid contract exists. Thus, promissory estoppel can defeat the Statute of Frauds." Id.
(citations omitted).
Here, Ross Island alleges that it relied on Boughton's alleged statement to Steinwandel
that he would consider future requests to expand the discount agreement to other projects.

Page 12 - OPINION AND ORDER

Steinwandel could not recall specifically when Boughton orally agreed to expand the Price
Protection Agreement. Boughton' s alleged statements are no more than an illusory promise,
which cannot justify Ross Island's alleged reliance. See Kraft, at *36.
Nor has Ross Island shown evidence of detrimental reliance. Ross Island has not
presented documents suppo1iing its assertions that it submitted lower bids to contractors based on
Lehigh's discounted price for cement.
Ross Island argues that the court should strike evidence submitted by Lehigh in suppo1i of
its Statute of Frauds affirmative defense because Lehigh's Rule 30(b)(6) witness, Boughton, did
not mention the deposition testimony of Steinwandel as evidence supp01iing the defense. I see
no prejudice to Ross Island when its CEO's deposition testimony is used as evidence against it.
As an additional affirmative defense, Lehigh contends that Ross Island failed to mitigate
damages. Lehigh notes that when Ross Island stopped purchasing cement that Lehigh
manufactured in Redding, California, Ross Island did not seek to substitute cement that Lehigh
manufactured in British Columbia, which Ross Island considered high quality and used for many
years until 20 I 0. Instead, Ross Island chose to pay a higher price for cement from Ash Grove.
Because I conclude that Lehigh is entitled to summary judgment on the cost-to-cover claims, I
need not address this defense.

2. The 2015 Settlement Agreement Bars Ross Island's Price Claims
Alternatively, Lehigh contends that it is entitled to summmy judgment on Ross Island's
price protection claims because of the 2015 Settlement Agreement, which releases all claims
except, as relevant here, "claims made by Ross Island against Lehigh arising out of the quality of
the Product [i.e., cement]." Lehigh argues that Ross Island's price protection claims are based on

Page 13 - OPINION AND ORDER

the quantity of Lehigh's cement, not its quality.
Because I conclude that the Statute of Frauds bars the price protection claims, I need not
address the effect of the 2015 Settlement Agreement.

II. DISPUTED ISSUES OF MATERIAL FACT PRECLUDE SUMMARY JUDGMENT
ON ROSS ISLAND'S DEFECTIVE CEMENT CLAIMS
The cement sold by Lehigh to Ross Island is referred to as Cl50-12, Type I/II under
standards set by the American Society for Testing and Materials (ASTM). Anderson Deel., Ex.

1, at 11, ECF No. 47. For about 30 years, Lehigh sold Ross Island Type I/II cement that was
manufactured in Vancouver, British Columbia, which the pmiies refer to as Delta cement.4
Armstrong Deel. Ex. 13, at 105 (Steinwandel Depo.).
Starting in about 2008, Lehigh asked Ross Island to switch from the Delta cement to
cement Lehigh manufactured at a plant in Redding, California. Steinwandel testified that he
initially refused to switch to Redding cement because Delta cement had performed so reliably for
many years. After Ross Island and Lehigh separately compared Redding cement to Delta cement.
Steinwandel decided that Redding cement would be satisfacto1y. Anderson Deel. Ex. 6, at 108
(Ken Gamill Depo). By July 2010, Ross Island switched to Redding cement and stopped using
Delta cement. Aimstrong Deel. Ex. 19.
Wayne Flues, Ross Island's quality control manager, testified that from 2010 until fall
2014, Ross Island had no problems with the Redding cement. Flues stated that "we trusted [the
Redding cement] and used it exclusively for the Tilikum Bridge project ... because of our trust
in that cement, and in our ability to produce strengths that we needed, like we needed to happen."

4

Former Ross Island president and CEO Chuck Steinwandel refened to Delta cement as
"Tilbury cement." Aimstrong Deel. Ex. 13, at 76-77 (Steinwandel Depo.).
Page 14 - OPINION AND ORDER

Armstrong Deel. Ex. 4, at 122.

A. Concrete Failures at Two Projects
Ross Island alleges that Lehigh's cement caused its concrete to fail at two construction
projects. 5 The first concrete failure occurred on October 11, 2014, at the I-5 Corporate Park .
project in Wilsonville, Oregon. The concrete was used for a "tilt wall panel," placed on October
11, 2014. Anderson Deel., Ex. 1at47. Tilt wall panels are poured onto a casting slab and then
tilted into place. The project owner rejected the panels because of surface imperfections when
the panels were lifted into place. Perlo Construction, the contractor, removed and replaced the
panels.
The second concrete problem was at a foundation poured at the Athey Creek project in
West Linn, Oregon. On November 20, 2014, Ross Island concrete was poured for a basement
floor slab. Ross Island alleges that Lehigh cement caused the concrete slab to set too slowly.
Before the slab could set, it rained, ruining the slab's surface and requiring removal and a new
pour.
Ross Island's expe1i, William Weyrauch, used the process of elimination to conclude that
Lehigh's cement had the problems with Ross Island's concrete at the I-5 and Athey Creek
projects. Weyrauch reasoned that he could eliminate all other possible extemal and internal
reasons for the concrete problems, other than the cement. Although Weyrauch acknowledged
that Lehigh's regular test records indicated that Lehigh's cement met the standards for Type I/II

5

In its Second An1ended Complaint, Ross Island alleged that Lehigh's cement caused two
other concrete failures, at the Burnside Bridgehead Project and the Sumise Corridor Project. 2d
Amd. Comp!. ~~ 33-38, ECF No. 22. In the Third Amended Complaint, which is now the
operative complaint, Ross Island has dropped its allegations about these two projects.
Page 15 - OPINION AND ORDER

cement, Weyrauch concluded compliance with the basic standards was not sufficient to show that
the Lehigh cement had perfonned adequatdy.
I conclude that disputed issues of material fact exist whether Lehigh provided defective
cement. At the Athey Creek project, Wayne Flues, Ross Island's quality control manager,
observed that concrete containing Lehigh cement did not set properly, but concrete using the
same mix, except with Ash Grove cement, did set properly. Flues testified that he was surprised
by this result because "[i]f anything, it's the coldest part of the slab. It should be the part that's
not. It shouldn't be setting up, because it doesn't have the protection and the heat of the rest of
that slab. This should be the least set-up part of the whole thing." Annstrong Deel. Ex. 5, at
143.6
Lehigh argues that Ross Island's breach of wananty claims are baned by the wmTanty
disclaimer included on Lehigh's invoices. The disclaimer provides that the cement "shall
conform to the present standard specifications (for the respective types) of the American Society
for Testing and Materials, and no other wananty, representation or condition of any kind, express
or implied (including no wananty of merchantability or of fitness for a particular purpose) shall
apply thereto." Anderson Deel. Ex. 5, at 24. Under the UCC, a contract for the sale of goods
includes an implied wananty that the goods shall be merchantable "if the seller is a merchant
with respect to goods of that kind." Or. Rev. Stat. § 72.3140. "The purpose of such a wananty is
to protect the buyer of goods from bearing the burden of loss when the goods, although not
violating an express wmTanty, do not meet the buyer's particular purpose." Controltek, Inc. v.

6

Lehigh moves to strike this and other po1iions ofFlues's deposition testimony. I will
discuss Lehigh's motion to strike below.
Page 16 - OPINION AND ORDER

Kwikee Enterprises, Inc., 284 Or. 123, 128, 585 P.2d 670, 673 (1978). I conclude that there are

disputed issues of material fact on whether there was at least an implied warranty of fitness for
purpose that goes beyond simply meeting the standards for Type VII cement.
III. Lehigh's Motion to Exclude Expert Opinion Evidence
Lehigh moves to exclude the expe1i opinion evidence of Ross Island's expe1i William
Weyrauch. I deny the motion.
A. Legal Standards for Evaluating Expert Testimony
Federal Rule of Evidence 702 provides:
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the foim 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 issue;

(b)

the testimony is based on sufficient facts or data;

(c)

the testimony is the product of reliable principles and methods; and

(d)

the expe1i has reliably applied the principles and methods to the
facts of the case.

Expe1i opinion is admissible if the expert is qualified and the expe1i' s testimony is
reliable and relevant. See Daubert v. lvlerrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 589
(1993). The district court acts as a '"gatekeeper,' excluding 'junk science' that does not meet the
standards ofreliability required under Rule 702." Domingo ex rel. Domingo v. T.K, 289 F.3d
600, 605 (9th Cir. 2002). The inquhy into reliability is flexible and depends on the facts of the
pmiicular case. See Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 463 (9th Cir. 2014)
(en bane).

Page 17 - OPINION AND ORDER

Admissibility of expert testimony is a matter for preliminaiy determination by the court
under Federal Rule of Evidence 104(a), and the pmiy offering the evidence must prove
admissibility by a preponderance of the evidence. See Daubert, 509 U.S. at 592-93. The
admissibility of expeii testimony is "'a subject peculiarly within the sound discretion of the trial
judge, who alone must decide the qualifications of the expert on a given subject and the extent to
which his opinions may be required."' United States v. Chang, 207 F.3d 1169, 1172 (9th Cir.
Cal. 2000) (quoting Fineberg v. United States, 393 F.2d 417, 421 (9th Cir. 1968)).
The trialjudge may consider a number of factors to detennine the reliability of an
expert's testimony, including: "1) whether a theory or technique can be tested; 2) whether it has
been subjected to peer review and publication; 3) the known or potential error rate of the theory
or technique; and 4) whether the theory or technique enjoys general acceptance within the
relevant scientific community." United States v. Hankey, 203 F.3d 1160, 1167 (9th Cir. 2000).

B. Wcyrauch's Background and Expert Opinion
Weyrauch is a geotechnical and materials engineer who has more than 3 8 years of
experience with concrete and other constrnction materials. Weyrauch has been a member, and a
past president, of the American Concrete Institute since 1980. He is a member of technical
committees at the Oregon Concrete and Aggregate Producers Association that oversees Oregon
Depmiment of Transportation (ODOT) certification programs for "testing fresh concrete,
preparing samples and developing and adjusting concrete mix designs on ODOT projects." Pl.
Opp'n 3, ECF No. 67.
Weyrauch's report concludes that the concrete failures at the Athey Creek and I-5 projects
were caused by "excessively slow set times." Id. Weyrauch states that four factors could have

Page 18 - OPINION AND ORDER

caused the slow set times: "improper concrete mix, weather conditions, admixtures, and
cement." Id He stated that he could eliminate concrete mix, weather, and admixtures as
potential causes of the slow set times. Although Weyrauch could not test the Lehigh cement that
was actually used by Ross Island at the two sites, he concluded that based on the process of
elimination, Lehigh's cement caused the concrete failures.

C. Discussion
Lehigh contends that Weyrauch's expert opinion should be excluded because he did not
examine each potential cause of the concrete failures. Lehigh also argues that Weyra{1ch's
testimony should be excluded because "he provides an insufficient explanation for why he did
not bother to examine the ve1y substance at issue in this case: data pertaining to the cement at
issue." Def. Reply 4, ECF No. 80.
Ross Island contends that Weyrauch's process of elimination method is recognized as a
proper basis for expert opinion. See Clausen v. }vf!VNew Carissa, 339 F.3d 1049, 1061 (9th Cir.
2003). Ross Island argues that Weyrauch's extensive experience qualifies him to testify as an
expert.
Lehigh's objections go to the weight, not the admissibility, ofWeyrauch's expert
opinions. Lehigh may, for example, cross-examine Weyrauch on his failure to test the cement at
issue. I conclude that Weyrauch's expert opinion testimony as to the I-5 and Athey Creek
concrete failures is admissible.
Lehigh also argues that Weyrauch' s testimony as to other projects where concrete
allegedly failed may should not be admitted. Weyrauch states that he did not evaluate the other
alleged concrete failures in depth. I reserve ruling on this issue.

Page 19 - OPINION AL'ID ORDER

IV. Lehigh's J\ilotion to Strike Evidence
Lehigh moves to strike portions of the testimony ofRoss Island witnesses Wayne Flues,
Ken Gambill, and Morgan Johnson, although Lehigh's briefing focuses solely on the testimony
of Flues, Ross Island's quality control manager. Lehigh contends that Flues is offering expert
testimony, violating Federal Rule of Evidence 701(c)'s prohibition against a lay witness
testifying to an opinion that is based on "scientific, technical, or other specialized knowledge
within the scope of Rule 702." Fed. R. Evid. 70l(c). Lay witnesses' opinions must be
"'predicated upon concrete facts within their own observation and

recollection~that

is facts

perceived from their own senses, as distinguished from their opinions or conclusions drawn from
such facts."' United States v. Durham, 464 F.3d 976, 982 (9th Cir. 2006) (quoting United States
v. Skeet, 665 F.2d 983, 985 (9th Cir. 1982) (further citation and quotation marks omitted)).

I deny Lehigh's motion to strike. Flues's testimony is generally based on his own
observations of the performance of Ross Island concrete at construction sites, and on his personal
knowledge of concrete. See, e.g. Hammann v. 800 Ideas Inc., No. 2:08-cv-0886-LDG-GWF,
2014 WL 1089664, at *2 (D. Nev. Mar. 18, 2014) ("the law does not prohibit lay witnesses from
testifying based on particularized knowledge gained from their own experience"). Lehigh's
objections based on hearsay or other grounds may be addressed at trial.
V. Lehigh's Motion to Amend Answer
Lehigh moves to amend its answer to include an affirmative defense based on Ross
Island's apparent promise in the 2012 Price Protection Agreement to pay down $300,000 of Ross
Island's outstanding debt to Lehigh. Ross Island apparently never fulfilled that promise.
Although Lehigh could have raised this affirmative defense sooner, the proposed

Page 20 - OPINION Al"\!D ORDER

amendment should not prejudice Ross Island. I grant Lehigh's motion to amend the answer,
although in light of my rulings on Ross Island's cost-to-cover claims, the amendment may be
moot.

VI. Ross Island's Motion for Partial Summary Judgment
Ross Island moves for partial summary judgment on Lehigh's atfamative defense based
on the 2015 Settlement Agreement, which released all claims other than claims based on the
quality of Lehigh's cement.
I deny Ross Island's motion for pa1iial summary judgment. The atfomative defense may
apply to Ross Island's claims related to the Price Protection Agreement. I also conclude that it
would be premature to address entitlement to attorney's fees under the 2015 Settlement
Agreement.

CONCLUSION
Lehigh's Motion for Summary Judgment, ECF No. 46, is GRANTED as to Ross Island's
Price Protection Claims, and otherwise DENIED. Lehigh's Motion for Extension of Time to
Amend Pleadings, ECF No. 60, is GRANTED. Ross Island's Motion for Partial Summary
Judgment, ECF No. 50, is DENIED. Lehigh's Motion to Exclude Expert Opinion Evidence from
William Weyrauch, ECF No. 48, and Motion to Strike Evidence Offered by Ross Island, ECF
No. 78, are DENIED.
Dated this ,'-t)i \1ay

j Or~ber,20~~

·. //d IU

('\-

.

Cj\ c-/2

Hono;able Paul Papak
United States Magistrate Judge

Page 21 - OPINION AND ORDER