United States of America, for the use and benefit of Ash Equipment Co., Inc. et al v. Morris, Inc. et al

Filing 262

ORDER denying 149 Motion to Exclude. Signed by US Magistrate Judge Veronica L. Duffy on 8/8/2017. (CG)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION

UNITED STATES OF AMERICA, FOR
THE USE AND BENEFIT OF ASH
EQUIPMENT CO., INC. D/B/A
AMERICAN HYDRO; AND ASH
EQUIPMENT CO., INC., A MARYLAND
CORPORATION;

Plaintiffs,

4:14-CV-04131-VLD

ORDER DENYING MOTION TO
EXCLUDE BY DEFENDANT RED
WILK CONSTRUCTION, INC.
DOCKET NO. 149

vs.

MORRIS, INC., A SOUTH DAKOTA
CORPORATION; UNITED FIRE AND
CASUALTY COMPANY, AN IOWA
CORPORATION; AND RED WILK
CONSTRUCTION, INC., A SOUTH
DAKOTA CORPORATION;

Defendants.

This matter is pending before the court on a complaint by plaintiffs Ash
Equipment Co, Inc. d/b/a American Hydro and Ash Equipment Co., Inc.
(hereinafter "Hydro"), arising out of a construction project on the Fort Randall
Dam spillway at Pickstown, South Dakota. See Docket No. 1. Hydro was a
second tier subcontractor which had a contract for hydrodemolition on the

project with first-tier subcontractor Red Wilk Construction, Inc. (hereinafter
"Red Wilk"). Red Wilk in turn had a subcontract with Morris, Inc., the general
contractor on the project. Morris had the prime contract with the United
States Army Corps of Engineers (hereinafter "the Corps") for the entire project.
Much of the project included demolition and removal of damaged concrete and
its replacement with fresh concrete. This matter is before this magistrate judge
on the consent of the parties pursuant to 28 U.S.C. § 636(c).
For further factual development, the court hereby incorporates by
reference this court's order granting in part and denying in part partial
summary judgment motions by all three parties, which order is filed this same
day. Suffice it to say, there are a multitude of factual, technical, and highly
detailed issues which will be presented to the jury for decision in this case.
The case revolves around the process of demolishing defective concrete through
the use of hydrodemolition processes.
The subject of this order is a motion filed by Red Wilk seeking to exclude
any reference to or reliance on the International Concrete Repair Institute,
Inc.'s (ICRI) guide references or guidelines. See Docket No. 149. Two of the
ICRI standards are incorporated into the Corps' plans and specifications.
Three of Hydro's experts (Winkler, Edelman and Duntemann) have rendered
opinions which make reference to ICRI standards. No motions pursuant to
Daubert1 or any other legal bases have been made by Red Wilk or Morris to
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). The
Daubert decision dealt with admissibility of expert opinion under FED. R.
EVID. 702.
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exclude the expert testimony of these three expert witnesses hired by Hydro.
Red Wilk argues that because Hydro's claims sound in contract, not in
negligence, the ICRI standards are irrelevant. Red Wilk also argues that the
standards may not be reliable.
Hydro resists the motion. It argues the ICRI standards are relevant to an
understanding of the contract between Hydro and Red Wilk and that the
standards are reliable. Furthermore, Hydro characterizes Red Wilk's motion as
an improper "back-door" Daubert motion.
In City of Bridgewater v. Morris, Inc., 1999 S.D. 64, 594 N.W.2d 712,
714, the city of Bridgewater hired an engineering firm to prepare plans and
specifications for a construction project to replace portions of the city's water
distribution system. The city hired Morris to construct the system. Id. Upon
completion of the system, the city discovered that the water lines in many
areas of the system had been buried less than six feet below ground level. Id.
It sued both the engineering firm and Morris for breach of contract, which was
tried to a jury. Id. The jury found in favor of the city against both
defendants. Id.
On appeal, Morris argued the contract itself did not specify that the
water lines were to be buried six feet deep and that the parties could only have
modified the contract in writing. Id. at 715. Among other evidence, the city
was allowed to present evidence at trial that the prevailing industry standard
was to bury water lines six feet deep. Id. The trial court had instructed the
jury that they could consider customs of the trade or industry standards to be
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part of the construction contract unless excluded by the terms of the contract.
Id. at n.1. If the jury found the contract terms were inconsistent with industry
standards, the court instructed the jury to follow the contract terms. Id. The
South Dakota Supreme Court held the trial court did not err in its admission of
evidence nor in its jury instructions. Id. at 715.
The Bridgewater case is directly on point here. Admission of evidence is
a procedural issue which, in federal court is governed by the Federal Rules of
Evidence. Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). But here the issue is
really substantive, not procedural: are industry standards considered part of a
construction contract? The Bridgewater decision answers this question in the
affirmative, to the extent the industry standards do not conflict with a contract
provision. City of Bridgewater, 594 N.W.2d at 715, 715 n.1. Red Wilk never
sets forth any contract provision it believes conflicts with the ICRI standards.
Under Bridgewater, the ICRI standards are admissible and may be considered
by the jury at trial to the extent they do not conflict with any contract
provision.
Accordingly, it is hereby
ORDERED that Red Wilk's Motion to Exclude [Docket No. 149] is denied.
DATED August 8, 2017.
BY THE COURT:
VERONICA L. DUFFY
United States Magistrate Judge

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