ALLIED ERECTING AND DISMANTLING CO., INC. v. UNITED STATES STEEL CORPORATION
Filing
172
ORDER denying Defendant United States Steel Corporation's Motion in Limine to Exclude Parol Evidence. 156 Signed by Magistrate Judge Patricia L. Dodge on 10/19/2020. (ahm)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
ALLIED ERECTING AND
DISMANTLING CO., Inc.,
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Plaintiff,
v.
UNITED STATES STEEL
CORPORATION,
Defendant.
Civil Action No. 16-1379
MEMORANDUM ORDER
Pending before the Court is Defendant United States Steel Corporation’s (“U.S. Steel”)
Motion in Limine to Exclude Parol Evidence. (ECF No. 156.) For the reasons discussed below,
U.S. Steel’s motion will be denied.
I.
RELEVANT PROCEDURAL BACKGROUND
In this lawsuit, Plaintiff Allied Erecting and Dismantling Co., Inc. (“Allied”) alleges,
among other things, that U.S. Steel breached the parties’ 2010 Dismantling Services Agreement
(“2010 DSA”) by failing to honor Allied’s “last look” rights on various projects. As the Court
explained in its Memorandum Opinion that addressed U.S. Steel’s Daubert motion, the 2010 DSA
provides in relevant part that:
Allied had to provide U.S. Steel with a “project cost estimate” setting forth its costs
to perform any dismantling work. The parties would then negotiate to come to
mutually agreeable terms. If an agreement was reached, Allied would perform work
on a “negotiated” basis (“Negotiated Projects”). Allied performed all Negotiated
Projects on a “target gross margin basis,” under an agreed formula and profit
margins. If the parties were unable to negotiate the terms however, U.S. Steel could
competitively bid the work and invite Allied to participate in the bidding. After the
work was competitively bid, Allied had “last look” rights that allowed it to match
the terms of the “most acceptable bid” and perform the work.
(ECF No. 150 at 2 (citations omitted).)
In seeking partial summary judgment at an earlier stage in this proceeding, U.S. Steel
questioned the methodology employed by Allied’s damages expert with respect to Allied’s initial
project cost estimates. Based upon those estimates, U.S. Steel argued that Allied could not have
profitably performed some of the “last look” projects and, therefore, could not have sustained any
damages. Allied countered that its initial project cost estimates were typically higher than its
subsequent “last look” contract price. According to Allied, this was because those estimates were
calculated as a worst-case scenario using an agreed formula, mark-ups, and profit margins which
did not apply to competitively bid work.
In rejecting U.S. Steel’s motion for partial summary judgment, the Court explained that
“while U.S. Steel may certainly question the methodology and damage calculations of Allied’s
expert in a Daubert motion or at trial, it has not shown that Allied’s damage calculations fail as a
matter of law.” (ECF No. 121 at 28.)
U.S. Steel later filed a Daubert motion seeking to exclude the testimony and opinions of
Allied’s expert witness. Allied’s initial project cost estimates were again at issue. While
acknowledging that Allied’s expert had testified that those estimates were calculated on a worstcase basis, U.S. Steel argued that the expert’s testimony was unreliable because he used those
estimates when it inured to Allied’s benefit to do so. In denying U.S. Steel’s Daubert motion, the
Court noted that whether the initial project cost estimates were calculated as a worst-case approach
is a disputed fact. (ECF No. 150 at 8.) Therefore, the Court ruled that Allied’s expert may rely on
that factual assumption and that U.S. may challenge this reliance at trial. (Id. at 8–9.)
In its pending motion in limine, U.S. Steel seeks to preclude Allied from offering any
evidence with respect to whether those estimates were worst-case because it represents
inadmissible parol evidence.
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II.
DISCUSSION
As indicated in a footnote, U. S. Steel moves to exclude parol evidence related to all of the
contracts at issue in this case but focuses on the 2010 DSA because it claims that Allied has
repeatedly attempted to alter its terms. Allied denies having done so or that it intends to introduce
any such evidence at trial.
As an initial matter, this case will be tried as a bench trial. As such, issues as to the
admissibility or exclusion of evidence are most appropriately raised in context and resolved during
the trial, particularly with respect to a motion to exclude unspecified parole evidence. The right of
the parties to raise any such objection at trial are expressly reserved. However, the specific parol
evidence issue raised in U.S. Steel’s motion will be addressed here.
In the absence of fraud, accident or mistake, earlier oral representations, understandings or
agreements are superseded by the subsequent written contract, and parol evidence is inadmissible
to vary, modify or supersede the written contract. Yocca v. Pittsburgh Steelers Sports, Inc., 854
A.2d 425, 436 (Pa. 2004).1 Moreover, as U.S. Steel notes, the inclusion of an integration clause in
a contract is indicative of the parties’ intent that the writing is intended to be their entire agreement.
Id. The 2010 DSA includes an integration clause. (2010 DSA § 4(F).) If the parties have integrated
their agreement into a single writing, “all prior negotiations and agreements in regard to the same
subject matter, whether oral or written, are excluded from consideration.” Martin v. Monumental
Life Ins. Co., 240 F.3d 223, 233 (3d Cir. 2001). Thus, once it is determined that a single integrated
agreement exists, “the parol evidence rule applies and evidence of any previous oral or written
negotiations or agreements involving the same subject matter as the contract is almost always
1
Pennsylvania substantive law applies in this diversity action. See, e.g., Chamberlain v.
Giampapa, 210 F.3d 154, 158 (3d Cir. 2000) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78
(1938)).
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inadmissible to explain or vary the terms of the contract.” Yocca, 854 A.2d at 436. “[T]he parol
evidence rule bars only prior or contemporaneous oral agreements, not subsequent ones.” Nicolella
v. Palmer, 248 A.2d 20, 23 (Pa. 1968).
U.S. Steel argues that the parol evidence rule bars Allied from offering evidence that U.S.
Steel directed Allied to calculate the initial project cost estimates as a worst-case approach because
by doing so, Allied seeks to alter the terms of the 2010 DSA. According to U.S. Steel, Allied
claims that its initial project cost estimates are unreliable because they were artificially inflated by
Allied at U.S. Steel’s direction. In addition, Allied also asserts that these estimates are applicable
only to the Negotiated Projects and were calculated as a worst-case basis because the 2010 DSA
does not allow change orders for the Negotiated Projects. These two contentions, U.S. Steel argues,
are directly refuted by the following language of the 2010 DSA:
[Allied’s] Final Total Project Cost on any [Negotiated] Project shall not be in excess
of the Estimated Project Cost shown on the Final Project Cost Estimate, unless there
has been a formal written change order issued by [U.S. Steel] due to (a) a change
in the scope of the project; or (b) [U.S. Steel’s] acceptance of a change in or to the
work methods, the schedules, work scopes and/or dismantling plans submitted by
[Allied].
2010 DSA § 3(H)(iii).
In opposing U.S. Steel’s motion, Allied asserts that it is not attempting to alter the terms of
the 2010 DSA. Further, it does not contend that the project cost estimates are unreliable; rather, its
position is that they are not relevant in the way that U.S. Steel suggests. According to Allied, it is
U.S. Steel, not Allied, that is attempting to use this evidence to suggest that Allied could not have
made a profit on the Count I “last look” projects, and therefore, could not have sustained any
damages on these projects. If U.S. Steel offers such testimony, Allied may present evidence that
the estimates were intentionally conservative at the recommendation of U.S. Steel in order to avoid
using change orders.
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With respect to the specific objection raised by U.S. Steel, it does not explain how Allied’s
first contention—that the initial project cost estimates are applicable only to the Negotiated
Projects—is an extra-contractual position. Indeed, as a plain reading of the 2010 DSA makes clear,
and this Court has explained in its Daubert opinion, the initial project cost estimates are applicable
only to the Negotiated Projects. (ECF No. ECF No. 150 at 2 (citing the 2010 DSA §§ 3(B), 3(C),
3(H)).)
As to Allied’s second contention, U.S. Steel mischaracterizes Allied’s position. As Allied
notes, it does not claim that change orders were not allowed for the Negotiated Projects under the
2010 DSA, which would indeed be an extra-contractual stance. Rather, Allied claims that it was
to avoid this process that Allied, allegedly under U.S. Steel’s directive, utilized more conservative
figures in developing the initial project cost estimates. (ECF No. 141 at 4.) The Court has already
ruled that this is a disputed fact that must be resolved at trial. (ECF No. ECF No. 150 at 8–9.)
Throughout this litigation U.S. Steel has argued that because the initial project cost
estimates suggest that Allied could not have profitably performed the Count I projects, it could not
have violated Allied’s “last look” rights under the 2010 DSA. Should U.S. Steel present this
position at trial, Allied asserts, it may counter with evidence and testimony reflecting that those
estimates were intentionally conservative, allegedly at U.S. Steel’s recommendation, in order for
U.S. Steel to avoid issuing change orders. This is not an extra-contractual position. On the contrary,
this evidence is consistent with the plain language of the 2010 DSA.
Based on the parties’ current positions regarding the use of this evidence, the Court will
deny U.S. Steel’s motion in limine. However, the parties may assert objections at trial if they
contend that this evidence is being offered for an impermissible purpose, and the Court reserves
ruling on any such objections.
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Therefore, this 19th day of October, 2020, it is ORDERED that United States Steel
Corporation’s Motion in Limine to Exclude Parol Evidence (ECF No. 156) is DENIED.
BY THE COURT:
/s/ Patricia L. Dodge
Patricia L. Dodge
United States Magistrate Judge
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