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Paul Reed Construction & Supply, Inc. v. Arcon, Inc.

United States District Court, Eighth Circuit

January 16, 2014

PAUL REED CONSTRUCTION & SUPPLY, INC., a Nebraska corporation, Plaintiff and Counter Defendant,
v.
ARCON, INC., a Colorado corporation, Defendant and Counter Claimant. ARCON, INC., a Colorado corporation, Third-Party Plaintiff,
v.
WESTERN SURETY COMPANY, a South Dakota corporation, Third-Party Defendant.

MEMORANDUM AND ORDER

LAURIE SMITH CAMP, Chief District Judge.

This matter is before the Court on the Motion for Summary Judgment (Filing No. 80) submitted by Third-Party Defendant Western Surety Company ("Western Surety"); The Motion for Partial Summary Judgment (Filing No. 85) and Motion in Limine to Exclude Expert Testimony (Filing No. 88) submitted by Plaintiff and Counter Defendant Paul Reed Construction & Supply, Inc. ("PRC"); and the Motion in Limine to Preclude Expert Testimony (Filing No. 91) submitted by Defendant, Counter Claimant, and Third-Party Plaintiff Arcon, Inc. ("Arcon"). For the reasons that follow, Western Surety's Motion for Summary Judgment will be denied; PRC's Motion for Partial Summary Judgment will be granted in part; PRC's Motion in Limine will be granted; and Arcon's Motion in Limine will be granted in part.

FACTUAL AND PROCEDURAL BACKGROUND

The following facts are those stated in the briefs and supported by pinpoint citations to evidence in the record, those the parties have admitted, and those the parties have not properly resisted as required NECivR 56.11 and Federal Rule of Civil Procedure 56.

The Nebraska Department of Roads ("NDOR") had a construction project in Keith County, Nebraska (the "Project"). Before August 1, 2010, NDOR and Upper Plains Contracting, Inc. ("UPCI") entered into a contract (the "Prime Contract"), in which UPCI served as general contractor, furnishing labor and material for the Project, including removal and replacement of a portion of Nebraska highway.

On August 31, 2010, UPCI entered into a written subcontract (the "Contract") with PRC, a Nebraska corporation, for the performance of a certain portion of UPCI's scope of work on the Project. Among other things, the Contract required PRC to crush the asphalt and concrete highway surface.

On or about April 5, 2011[1], PRC entered into a subcontract (the "Subcontract") with Arcon, a Colorado corporation, for the performance of certain aspects of the Project, including "crushing." The Subcontract defined the services to be provided by Arcon through incorporation of Arcon's bid proposal. The bid proposal provided that:

Arcon is responsible for crushing services only. Tear out, demolition, removal, stockpiling, placement, compaction, and any other processing or construction is not included.

(Filing No. 87-2, at ECF 2 and Filing No. 92-1, at ECF 39; See Filing No. 87-2, at ECF 2-4, ECF 6 and Filing No. 92-1, at ECF 32-33, ECF 38-39.)

The Subcontract also contained Article XIV (the "Change Order Provision"):

The Contractor reserves the right, and without notice to the Subcontractor's sureties to make changes in the material to be furnished or work to be performed under this Subcontract, or additions thereto or omissions there from [sic] upon written order to the Subcontractor. Any additions or reductions to be made to or from the amount of the Subcontract price resulting from changes in work or materials furnished shall be agreed upon in writing by the parties hereto, such agreement not being valid unless signed by an officer of the Contractor. No addition or reduction in subcontract price shall be binding on the Contractor unless so agreed upon in writing. Any claim for adjustment in the Subcontract price must be made in writing within 10 days of the date such changes are ordered. In case the Owner orders the Contractor to make any changes in the work [and] such change requires a change to be made in the work of this Subcontractor, the Subcontract shall be equitably adjusted on account of such changes subject to any applicable provisions of the Contract between the Owner and the Contractor. In the event the Subcontractor desires to claim additional compensation for any reason involving alleged fault of the Contractor, it shall give notice of such claim within 10 days following the occurrence which gave rise to such claim. Failure of the Subcontractor to deliver such notice in a timely manner shall be deemed a waiver of its right to recover any costs incurred more than 10 days before the date on which it gives such notice.[2]

(Filing No. 87-2, ECF at 7 and Filing No. 92-1, ECF at 36.)

PRC began work on the Project sometime between April 1, 2011 and April 7, 2011, and asked Arcon to have its equipment at the Project site by April 11, 2011. Arcon incurred standby costs associated with having to pay for its crew and equipment, waiting for PRC to give approval for Arcon to start crushing. Arcon did not start crushing until May 10, 2011. During the first three weeks of crushing, Arcon encountered problems with the size of the slabs of concrete that PRC prepped and presented to Arcon for crushing, and problems with a lack of water available for its crusher. On the first day Arcon began work, it advised Brad Benson ("Benson"), UPCI's Project Manager, that Arcon's contract provided only for "crushing, " not "breaking." Arcon used its equipment to break the concrete into smaller sizes before crushing it.

From early May 2011 through late June 2011, Donna Schultejann ("Schultejann") of Arcon sent e-mails to Adam Reed ("Reed"), Vice President and Chief Operating Officer of PRC, notifying him of the problems and delays caused by PRC's failure to break the concrete into chunks Arcon could crush, and PRC's failure to provide water for Arcon. Schultejann also notified PRC by email that Arcon was "essentially doing the majority of the demo" to keep the Project moving and that they needed to reach an agreement for additional compensation regarding use of Arcon's equipment to break the material, as well as compensation for its standby time. PRC acknowledged the problems and delays and that PRC's impactor was not breaking the concrete. Arcon sent PRC several messages seeking opportunities to discuss its compensation. In response, Reed offered to "discuss this more." At some point Reed asked Arcon to get a second crusher. On June 3, 2011, Schultejann notified PRC that in order to stay on schedule, Arcon was asking to work Sundays. Arcon asked PRC to make note of this request and to ask UPCI and NDOR for authorization.

PRC did not issue any written change orders, and Arcon never received any written change orders from PRC. Between May and July of 2011, Arcon submitted at least three invoices to PRC including Invoice 702, Invoice 707, and Invoice 708 (collectively "the Invoices"). On May 24, 2011, Arcon submitted Invoice 702 in the amount of $17, 650.00 seeking additional compensation for work performed pursuant to the Project. On June 27, 2011, Arcon submitted Invoice 707, in the amount of $30, 318.27, seeking additional compensation for work performed pursuant to the Project. By July 21, 2011, Arcon completed all its work on the Project. On July 31, 2011, Arcon submitted Invoice 708 claiming $209, 322.08 for additional compensation for work performed pursuant to the Project.

When disagreement arose regarding Arcon's scope of work, UPCI reviewed Arcon's Subcontract and told PRC that UPCI could not be an advocate for PRC because the Subcontract was clear that Arcon's price was for crushing only.

Western Surety Company, a South Dakota corporation, furnished Payment and Performance Bonds with UPCI as the principal, NDOR as an obligee, and the Project subcontractors and suppliers as additional obligees.

Western Surety's Payment Bond (the "Bond") stated in part:

"NOW THEREFORE, if said UPPER PLAINS CONTRACTING, INC. as principal shall in all respects fulfill this said contract according to the terms and the tenor thereof, and shall faithfully discharge the duties and obligations therein assumed, then the obligation is to be void and of no effect; otherwise to be and remain in full force and virtue in law.
It is expressly understood and agreed that this bond is given to secure and does secure not only the faithful performance by the principal herein named of said contract for the construction of the work as specified in said contract and in strict accordance with the terms of said contract and the plans, specifications and all special provisions made a part thereof; but that it is given to secure also the payment by the said bounden UPPER PLAINS CONTRACTING, INC. of all overpayments made to said principal by the Department of Roads, and of all just claims to all laborers and mechanics for labor that shall be performed, and for the payment of all materials, supplies and equipment which is used or rented in performing the contract, ... and if such payments be made then this obligation shall be null and void; otherwise it shall remain in full force and effect.[3]

(Arcon's Third-Party Complaint, Filing No. 3, at ECF 9 (bold-face in original).)

On January 27, 2012, PRC filed its Complaint in the District Court of Scotts Bluff County Nebraska, and Arcon removed the action to this Court on February 3, 2012, invoking the Court's diversity jurisdiction.

PRC has two remaining claims: In its first cause of action PRC seeks declaratory relief related to the Subcontract, and in its second cause of action it seeks damages for Arcon's alleged breach of the Subcontract.

Arcon counterclaimed against PRC for (1) breach of contract, (2) misrepresentation, (3) quantum meruit, and (4) unjust enrichment. Arcon also filed a Third-Party Complaint against Western Surety seeking a judgment for amounts Arcon claims it is owed under the Bond for its work on the Project.

Western Surety moved for summary judgment, essentially arguing that the work for which Arcon is seeking payment was outside the scope of the Subcontract and that Arcon did not provide proper and timely notice of its claim. PRC moved for partial summary judgment, essentially seeking dismissal of all Arcon's claims against PRC. Both PRC and Arcon have moved, in limine, to preclude certain expert testimony from each other's witnesses.

SUMMARY JUDGMENT STANDARD OF REVIEW

"Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, demonstrates there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Gage v. HSM Elec. Prot. Servs., Inc., 655 F.3d 821, 825 (8th Cir. 2011) (citing Fed.R.Civ.P. 56(c)). The court will view "all facts in the light most favorable to the nonmoving party and mak[e] all reasonable inferences in [that party's] favor." Schmidt v. Des Moines Pub. Sch., 655 F.3d 811, 819 (8th Cir 2011). "[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue... Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves." Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The moving party need not negate the nonmoving party's claims by showing "the absence of a genuine issue of material fact." Id. at 325. Instead, "the burden on the moving party may be discharged by showing'... that there is an absence of evidence to support the nonmoving party's case." Id.

In response to the movant's showing, the nonmoving party's burden is to produce specific facts demonstrating "a genuine issue of material fact' such that [its] claim should proceed to trial." Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 422 (8th Cir. 2009) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts, ' and must come forward with specific facts showing that there is a genuine issue for trial.'" Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (quoting Matsushita, 475 U.S. at 586-87)), cert. denied, 132 S.Ct. 513 (2011). "[T]he mere existence of some alleged factual dispute between the parties'" will not defeat an otherwise properly supported motion for summary judgment. Quinn v. St. Louis County., 653 F.3d 745, 751 (8th Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)).

In other words, in deciding "a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a "genuine" dispute as to those facts.'" Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (quoting Scott v. Harris, 550 U.S. 372, 380 (2007)). Otherwise, where the Court finds that "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party"where there is no "genuine issue for trial"-summary judgment is appropriate. Matsushita, 475 U.S. at 587 (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).

MOTIONS FOR SUMMARY JUDGMENT

I. PRC'S MOTION FOR PARTIAL SUMMARY JUDGMENT

In its Motion for Partial Summary Judgment, PRC asks the Court to grant summary judgment in favor of PRC and find that:

(1) Arcon's Quantum Meruit and Unjust Enrichment Claims are barred by the existence of the Subcontract that governs Arcon's claims for changed and/or extra work.
(2) Arcon's Breach of Contract Claim is barred by the Subcontract to the extent the claim seeks compensation for work in Invoices 702, 707, and 708 because Arcon failed to ...

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