United States District Court, D. Nebraska
MEMORANDUM AND ORDER
R. ZWART UNITED STATES MAGISTRATE JUDGE
and Counterclaim Defendant, Sodexo America, LLC (Sodexo)
moves the court for partial summary judgment in its favor and
to exclude testimony on Daubert and related grounds.
(Filing No. 53; Filing No. 76). Sodexo's summary judgment
1) Regional West's claimed damages on the pharmacy
project are barred by a waiver of consequential damages
clause in the parties' agreement; and
2) Regional West's claims for damages resulting from an
alleged failure to load data are based on pure speculation
and conjecture and are thus barred as a matter of law.
(Filing No. 53, at CM/ECF p. 1). Sodexo's motion in
limine seeks to exclude testimony of Roy Gifford (Gifford),
or any other witness proffered by Defendant and Counterclaim
Plaintiff, Regional West Health Services (Regional West)
“regarding or relating to the standard of care
applicable to construction project manager(s).” (Filing
No. 76, at CM/ECF p. 1).
reasons stated below, Sodexo's motion for partial summary
judgment (Filing No. 53) will be denied in its entirety;
Sodexo's motion to exclude testimony on Daubert
and related grounds (Filing No. 76) will be granted
to exclude any Regional West witness from testifying to the
standard of care applicable to construction project managers
following facts are undisputed or considered undisputed for
the purposes of this motion.
November 6, 2015, Sodexo and Regional West entered a
five-year Management Agreement (Agreement) for Sodexo to
provide facilities and housekeeping services at Regional
West. (Filing No. 1 ¶ 7); (Filing No. 33 ¶ 3). The
agreement commenced on January 11, 2016 and was scheduled to
end on January 10, 2021. (Filing No. 1 ¶ 8); (Filing No.
33 ¶ 3). The Agreement was amended December 2, 2015, and
again on January 26, 2016 (January 2016 Amendment). (Filing
No. 1 ¶ 9); (Filing No. 33 ¶ 3).
to the January 2016 Amendment, Sodexo was contractually
obligated to provide a project manager for plant operations
and maintenance services. (Filing No. 55-7, at CM/ECF p. 1).
Sodexo provided Brian Sullivan as a project manager. (Filing
No. 55-8, at CM/ECF p. 3).
March 29, 2016, the Agreement was amended a third time (March
2016 Amendment), changing the financial terms of the
agreement from a “Management Fee” to a
“Contract Price” financial arrangement effective
April 2, 2016. Exhibits B (Housekeeping Services) and C
(Plant Operations and Maintenance and Groundskeeping
Services) of the Agreement were replaced in their entirety by
Exhibits B and C to the March 2016 Amendment. (Filing No. 1
¶ 10); (Filing No. 33 ¶ 3).
3.2 of the Agreement governs termination for cause and
provides, in relevant part:
3.2 Termination for Cause: A. If either Party
breaches a material provision hereof (“Cause”),
the non-breaching Party shall give the other Party written
notice of such Cause. If the Cause is remedied within ten
(10) days in the case of failure to make payment when due, or
thirty (30) days in the case of any other Cause, the notice
shall be null and void. If such Cause is not remedied within
the specified period, the Party giving notice shall have the
right to terminate this Agreement upon expiration of such
remedy period. The rights of termination referred to in this
Agreement are not intended to be exclusive and are in
addition to any other rights or remedies available to either
Party at law or in equity.
(Filing No. 1 ¶ 15); (Filing No. 33 ¶ 3); (Filing
No. 55-5, at CM/ECF p. 2).
3.3 of the Agreement governs termination without cause and
provides, in relevant part:
3.3 Termination without Cause: Either Party may
terminate this Agreement, in whole or in part, at any time,
without Cause, upon no less than sixty (60) days' prior
written notice to the other Party. In the event Client
terminates this Agreement without providing the full sixty
(60) days' written notice required under this Section
3.3, Sodexo shall be entitled to liquidated damages in an
amount equal to the average monthly billing for the prior
three-month period, pro-rated to reflect the number of days
for which the sixty (60) days' notice was not provided.
(Filing No. 1 ¶ 16); (Filing No. 33 ¶ 3); (Filing
No. 55-5, at CM/ECF p. 3).
September 8, 2017, Regional West sent a letter to Sodexo,
purporting to exercise its right to terminate the contract.
The letter provided alternative bases for termination citing
to Section 3.3 to terminate the Agreement without cause,
effective 60 days from the date of receipt, and to Section
3.2 for termination of the Agreement with cause, effective 30
days from the date of receipt. (Filing No. 1 ¶ 17);
(Filing No. 33 ¶ 4); (Filing No. 55-11).
West notified Sodexo on July 24, 2017 by letter that
“it is clear Regional West Health Services has suffered
monetary damages as a result of the inadequate performances
of Sodexo under the facilities and EVS contracts. At this
time, we have decided we will pay the invoices through the
end of June 2017.” (Filing No. 83-13, at CM/ECF pp.
3-4). On October 2, 2017, Sodexo sent Regional West a letter
stating Regional West was in arrears in the amount of $465,
257.00 and was thereby in breach of the Agreement. (Filing
No. 55-17). Regional West thereafter refused to pay certain
outstanding invoices issued by Sodexo, claiming it does not
owe any additional funds to Sodexo.
initiated this action on December 22, 2017, asserting claims
against Regional West for breach of contract, breach of the
implied covenant of good faith and fair dealing, and account
stated. (Filing No. 1).
February 22, 2018, Regional West filed its Answer to the
Complaint, along with a Counterclaim, against Sodexo for
breach of contract. (Filing No. 12). On October 29, 2018,
Regional West filed an Amended Answer and Counterclaim
asserting, among other things, “Sodexo failed to
fulfill the project manager services” and as a result,
“Regional West had to hire additional labor,
consultants, and contractors to secure the performance of
what should have been Sodexo's obligations and further
suffered damages as result of having to start over on
projects mishandled by Sodexo.” (Filing No. 33 ¶
35-36). Regional West claims Sodexo breached the January 26
Amendment in several respects, including by
“provid[ing] an unqualified project manager with no
healthcare experience, . . . [and] launch[ing] various
construction projects without obtaining permits from the
relevant building authorities, and without preparing
appropriate scope and budget documents.” (Filing No.
55-14, at CM/ECF p. 2).
motion for partial summary judgment raises arguments for
judgment as matter of law regarding Regional West's claim
to recover damages arising from failure to timely and
properly manage the construction of the hospital's
pharmacy project, and its Maximo System.
The Pharmacy Project
described by Regional West,
The purpose of the pharmacy project was to get the space in
compliance with hospital regulations. The pharmacy needed
updated ductwork to allow for the regulation of temperature,
air pressurization and ventilation. The ability to control
the temperature and pressurization in a pharmacy is vital to
ensuring the drugs contained therein are properly maintained.
(Filing No. 55-15, at CM/ECF p. 14).
Sodexo's first failure on this project came in the form
of the Project Manager commencing construction without
obtaining a construction permit from the relevant building
authority. This led to immediate citations, and the project
ultimately being shut down. After this delay, Sodexo
eventually obtained the required permits and began
construction on the project.
(Filing No. 55-14, at CM/ECF p. 10).
immediately after completion, Regional West began
experiencing issues with the pharmacy. Employees complained
of temperature fluctuations and pressurization issues.
Assistant Facilities Director, Brett Frasier, attempted to
manually correct the problem by adjusting various settings in
the ductwork software. A competent project manager would have
recognized these issues were outside his scope of his
experience and immediately sought out the advice of qualified
engineers to diagnose the problem.
No. 55-15, at CM/ECF p. 15).
around April 2017, Regional West hired Roy Gifford (Gifford).
Gifford was initially hired by Regional West in 2015 to serve
as its interim facilities director. He worked in that
position until November 2015, (Filing No. 83-4, at CM/ECF pp.
3-4), and from November 2015 to April 2017, he remained
available to Regional West on an on-call basis. (Filing No.
83-4, at CM/ECF p. 4). Regional West designated Gifford as
their corporate representative pursuant to Fed.R.Civ.P.
30(b)(6). (Filing No. 55-9, at CM/ECF p. 3).
and Regional West disagree on what caused the failure of the
pharmacy project. Sodexo argues any failures in the project
were due to the third-party failures of mechanical engineers
(Olsson Associates) and contractors, (Beckenhauer
Construction). (Filing No. 84, at CM/ECF p. 9). In contrast,
Regional West contends the failures were a product of
Sodexo's failure to provide project management services
in violation of the Agreement.
testified that due to Sodexo's failure to provide
competent project management, the pharmacy project had to be
basically redone, resulting in costs incurred by Regional
West, including, but not limited to costs associated with the
removal and reinstallation of drywall along with additional
electrical work. (Filing No. 55-9, at CM/ECF p. 12). Gifford