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Web Constructon Inc. v. Cincinnatti Ins. Co.: US District Court : INSURANCE - Commercial General Liability, business risk, occurrence, your work, property damage, fact questins regarding subcontractor

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Web Construction Inc., a Minnesota
corporation,
Plaintiff,
Civ. No. 06-5061 (RHK/AJB)
MEMORANDUM OPINION
AND ORDER
v.
Cincinnati Insurance Company, an
Ohio corporation,
Defendant.
Jeffrey A. Ehrich, Steven P. Zabel, Robert L. Smith, Leonard, Street and Deinard, P.A.,
Minneapolis, Minnesota, for Plaintiff.
Scott G. Williams, William L. Moran, Murnane Brandt, P.A., St. Paul, Minnesota, for
Defendant.
INTRODUCTION
This case involves an insurance-coverage dispute. Plaintiff Web Construction Inc.
(Web) filed this declaratory-judgment action against Defendant Cincinnati Insurance
Company (Cincinnati), seeking a determination that Cincinnati must pay for damages
allegedly caused by Webs subcontractor, Owatonna Concrete Products, Inc.
(Owatonna). Both Web and Cincinnati filed motions for summary judgment. For the
reasons set forth below, the Court will deny both Motions.
2
BACKGROUND
I. The Construction Project
Web is a general contractor in Mankato, Minnesota. (Josh Williams 1 Aff. 1.) In
February 2004, Web entered into a contract with Itron, Inc. (Itron) for the construction
of an addition to Itrons manufacturing facility in Waseca, Minnesota. (Id. Ex. A.) The
project required, among other things, that Web install a 5 -inch thick, 38,400 square
foot concrete slab floor, for which Itron agreed to pay Web approximately .6 million.
(Id. 6; Ex. A at 2.) In October 2003, Web requested a bid proposal from Owatonna for
materials and certain services in connection with the installation of the concrete floor.
(Id. 6.) On October 24, 2004, Owatonna provided Web with a bid proposal for the
floor. (Id. Ex. B.) Web accepted Owatonnas bid on November 18, 2003. (Id. 7.)
Web and Owatonna did not enter into a written subcontract agreement for the Itron
project. (Scott Williams Aff. Ex. P at 100.)
A. The Concrete Specifications
Itron hired an architect to create a specifications manual for the Itron project,
which was issued on October 14, 2003 (Specifications Manual). (Josh Williams Aff.
8.) Section 2.01A of the Specifications Manual provided a number of requirements for
the composition of the concrete, most notably, that no shale was to be included in the fine
aggregate of the concrete. (Id. Ex. C 2.01A). Section 1.02 also required Web to submit
the proposed concrete-mix design of each class of concrete to a testing laboratory for
review prior to starting its work on the Itron facility. (Id. 1.02.B.3) This section also
1 Josh Williams served as the project manager for Web.
3
required Web to [t]est [the] cement and aggregate to ensure they [met the] specified
requirements. ( Id. 1.02.B.4) In addition, the Specifications Manual provided that the
contractor could request mix design adjustments when characteristics of materials,
project conditions, weather, test results, or other circumstances required such action.
(Id. Ex. C 2.02C.3).
B. Design and Testing of Concrete Mix
Owatonna informed Web that it hired American Engineering and Testing (AET)
to design the formula for the Itron concrete mix. ( Id. 10.) Owatonna provided Web
with AETs design mix for the Itron project in November 2003. (Id. Ex. D.) Web,
however, rejected this design mix because it concluded that the compressive strength
rating was too high and that it included too much cement. (Id. 10.) In March 2004,
Owatonna provided Web with a new design mix formula from another engineering firm,
Huntingdon Engineering and Environmental (Huntingdon). (Id. 11.) This design
mix was ultimately used for the Itron project. (Id.)
Owatonna then hired Waseca Redi-Mix (Waseca) to produce the concrete
according to the concrete-mix design. ( Id. Ex. P at 56, 67.) Waseca loaded it into
specialized ready-mix trucks in order to prevent premature curing and delivered it to the
Itron facility. (Josh Williams Aff. 12.)
C. Installation of Concrete Floor at Itrons Facility
Web began the installation of the concrete floor at the Itron facility on April 1,
2004, and completed it on April 8, 2004. (Scott Williams Aff. Ex. B.) Web had
approximately ten employees at the Itron site involved in the installation of the concrete
4
floor. (Id. Ex. D. at 44.) Web also hired Owatonna to perform some on-site services in
connection with the installation of the concrete. (Josh Williams Aff. 13.) Web was
generally responsible for complying with Part 3 of the Specifications Manual (Execution
Section), which addressed the installation of the concrete. (Id.) Section 3.04B required
that the concrete be deposited either continuously, or in layers, so long as the bottom
layers did not harden first. ( Id.) Because Owatonnas ready-mix trucks could not deposit
the concrete directly to its final resting place, Web asked Owatonna to pump the concrete
to the proper location pursuant to Section 3.04B of the Specifications Manual. ( Id.
14, 15, 16.) In turn, Owatonna retained Concrete Placement, Inc. (CPI) to perform
these services, in which they pumped the concrete through a 4-inch diameter, 400 foot
long hose. ( Id. 17.) Before discharging the concrete from the ready-mix truck into the
pump trucks, Owatonna had to first test the consistency of each batch of concrete to
ensure that it could be properly distributed. (Id.) Owatonna tested the consistency of the
concrete and either added water or a water-reducing agent to make sure it complied with
its specification. (Id.)
After Owatonna poured the concrete into the pump-truck hopper, CPI monitored
the pump-truck equipment to ensure even distribution of the concrete to its final resting
location. (Id. 18.) Web was responsible for determining where the concrete was to be
delivered, setting the forms, laying the mesh, leveling the concrete, troweling the
5
concrete, and finishing the concrete with a cure and sealer.2 (Scott Williams Aff. Ex. D
at 45-46, 55-60, 116-17; Ex. P at 98-98.)
D. The Concrete Floor Defects
Itron noticed cracks and popouts in the surface of the concrete floor a few
months after it was installed. (Josh Williams Aff. 22.) In October 2005, Web had
substantially completed the construction of the Itron addition. ( Id. 23.) Itron took
possession of the entire facility shortly thereafter, but the popouts continued to occur.
(Id.) Itron then made demands that Web pay for the damage. (Id.)
Webs expert witness, Brian Pashina, concluded that the popouts were caused by
shale particles that were present in the fine aggregate of the concrete. (Pashina Aff. Ex.
A. at 3.) Pashina opined that [t]he Popouts would not have occurred if the fine
aggregate used in the concrete had not included shale particles. (Id.) Web also retained
Rachel Detwiler, a Senior Materials Engineer from Braun Intertech Corporation, to
prepare a report regarding the concrete floor at Itrons facility. Detwiler opined that the
majority of surface defects were determined to be popouts caused by alkali-silica
reaction. 3 (Scott Williams Aff. Ex. J.)
Cincinnatis expert witness, Ho ward Noziska, concluded that the popouts at the
Itron facility were caused by the expansive aggregates in the concrete and the finishing,
2 Web spent a substantial amount of time preparing the site and smoothing and curing the
concrete. (Doc. No. 25 at 4 n.2.)
3 She also opined that some additional surface defects were apparently caused by impressions of
the aggregate particles caused by movement of these particles during finishing. (Id.) She
explained that [t]his is why you observed worse effects where a second coat of sealer had been
applied: two coats retain more moisture than one. (Id.)
6
curing, and sealing activities performed by Web. (Scott Williams Aff. Ex. H.) Noziska
also opined that Web failed to have the concrete tested before installation, and then due
to methods employed by [Web] to finish and seal the concrete, various surface problems
occurred.4 (Id.)
II. Itrons Arbitration Award
On July 17, 2006, Itron filed an arbitration demand against Web, seeking damages
for the defects in the concrete floor. (Josh Williams Aff. Ex. J.) In July 2007, an
arbitrator rendered a decision against Web, awarding Itron 8,276.00. 5 (Scott
Williams Aff. Ex. Q; Smith Aff. Ex. C.) The arbitrator held that Itron is entitled to what
it bargained for under its Project construction with Web Construction -- smooth, clean
concrete floor surfaces that did not contain shale. (Smith Aff. Ex. C.) The arbitrator
explained that the concrete furnished for the project by Web contained shale and the
chemical reaction to shale in the concrete mix caused popouts. ( Id.) The arbitration
award provided that [n]othing in the Arbitration Award . . . should be construed as
limiting Web Constructions right to seek recovery from its Project suppliers or
subcontractors regarding the inclusion of shale in the concrete mix. (Id.)
III. The Policy
Web was insured under a Commercial General Liability (CGL) policy (the
Policy) issued by Cincinnati. (Josh Williams Aff. Ex. F.) The Policy provides liability
4 Owatonna retained Daniel Vruno, a Senior Concrete Engineer for AET. (Scott Williams Aff.
Ex. L.) He concluded that [t]he reactive popout condition was aggravated by sealing the
surface. (Id.)
5 This arbitration award to Itron was a net award, which included a credit to Web for its
counterclaim of ,997.00. (Smith Aff. Ex. C.)
7
coverage for those sums that the insured becomes legally obligated to pay as damages
because of . . . property damage to which this insurance applies. ( Id. at 3.) The term
property damage is defined as [p]hysical injury to tangible property, including all
resulting loss of use of that property. ( Id. at 21.)
The insurance applies to property damage only if it is caused by an
occurrence. ( Id. at 3.) Occurrence is defined as an accident, including continuous
or repeated exposure to substantially the same general conditions. ( Id. at 20.)
A. Relevant Exclusions
Damage to Your Work
The your work exclusion provides that the insurance does not apply to
[p]roperty damage to your work arising out of it or any part of it and included in the
products-completed operations hazard. ( Id. at 5.) Your work is defined as (1)
[w]ork or operations performed by you or on your behalf; and (2) [m]aterials, parts, or
equipment furnished in connection wi th such operations. (Id. at 20.) However, there is
an exception to the your work exclusion: [t]his exclusion does not apply if the
damaged work or the work out of which the damage arises was performed on your behalf
by a subcontractor.6 (Id. at 5. (emphases added).)
Damage to Property
The Damage to Property exclusion provides that there is no coverage when there
is property damage to [t]hat particular part of real property on which you or any
contractors or subcontractors working directly or indirectly on your behalf are
6 The Policy does not define subcontractor.
8
performing operations, if the property damage arises out of those operations[.] ( Id.
(emphasis added).)
Damage to Impaired Property or Property Not Physically Injured
Finally, there is no insurance coverage for [p]roperty damage to impaired
property . . . arising out of: (1) [a] defect, deficiency, inadequacy, or dangerous condition
in your work; or (2) [a] delay or failure by you or anyone acting on your behalf to
perform a contract or agreement in accordance with its terms. ( Id.) The Policy defines
impaired property as:
[T]angible property, other than . . . your work, that cannot be used or is
less useful because:
(a) It incorporates your product or your work that is known or thought to
be defective, deficient, inadequate or dangerous; or
(b) You have failed to fulfill the terms of a contract agreement; if such
property can be restored to use by:
(a) The repair, replacement, adjustment or removal of your product
or your work; or
(b) Your fulfilling the terms of a contract or agreement.
(Id. at 16 (emphasis added).)
B. Webs Attempt to Obtain Coverage under the Policy
In July 2005, Web notified Cincinnati of a potential claim for the popouts in the
concrete floor. (Josh Williams Aff. 25.) In response, Cincinnati conducted its own
investigation to determine the cause and whether there was coverage under its Policy.
(Ehrich Aff. Ex. D.)
9
On August 7, 2006, Cincinnati sent Web a denial of coverage and reservation-ofrights
letter. (Josh Williams Aff. Ex. K.) On September 26, 2006, Web formally sought
coverage for the defense of Itrons arbitration demand. (Smith Aff. Ex. A.) On October
23, 2006, Cincinnati reaffirmed its position and denied coverage for Webs claim. (Id.
Ex. B.) On December 6, 2006, Web filed this action against Cincinnati in state court
seeking coverage under the Policy; Cincinnati removed the case to this Court and both
parties now seek summary judgment.
STANDARD OF DECISION
Summary judgment is proper if, drawing all reasonable inferences in favor of the
nonmoving party, there is no genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986). The moving party bears the burden of showing that the
material facts in the case are undisputed. Celotex, 477 U.S. at 322; Mems v. City of St.
Paul, Dept of Fire & Safety Servs., 224 F.3d 735, 738 (8th Cir. 2000). The Court must
view the evidence, and the inferences that may be reasonably drawn from it, in the light
most favorable to the nonmoving party. Graves v. Ark. Dept of Fin. & Admin., 229
F.3d 721, 723 (8th Cir. 2000); Calvit v. Minneapolis Pub. Schs., 122 F.3d 1112, 1116
(8th Cir. 1997). The nonmoving party may not rest on mere allegations or denials, but
must show through the presentation of admissible evidence that specific facts exist
creating a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256
(1986); Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995).
10
ANALYSIS
I. Interpretation of Insurance Policies
State law governs the interpretation of insurance policies. Natl Union Fire Ins.
Co. of Pittsburgh v. Terra Indus., Inc., 346 F.3d 1160, 1164 (8th Cir. 2003). Under
Minnesota law, the interpretation of an insurance policy is a question of law for the
Court.7 Watson v. United Servs. Auto. Assn, 566 N.W.2d 683, 688 (Minn. 1997).
When an insurance policys language is unambiguous, the Court interprets that language
in accordance with its plain and ordinary meaning. Ill. Farmers Ins. Co. v. Glass Serv.
Co., 683 N.W.2d 792, 799 (Minn. 2004). When an insurance policys language is
ambiguous, however, the Court will generally construe that language against the drafter
and in favor of the insured. Nathe Bros., Inc. v. Am. Natl Fire Ins. Co., 615 N.W.2d 341,
344 (Minn. 2000). In addition, the insurer bears the burden to establish the applicability
of an exclusion. SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 311-14 (Minn.
1995). If the insurer demonstrates that an exclusion applies, then the insured must show
that an exception to the exclusion applies because the exception restores coverage, and
the insured has the ultimate burden of proving coverage. Id. at 314.
II. Accidental Property Damage Constitutes An Occurrence
The insuring clause of the Policy provides that Cincinnatis obligation to provide
coverage arises only if there is an occurrence. (Josh Williams Aff. Ex. F at 3.) The
Policy defines occurrence as an accident. ( Id. at 18.) If there is an occurrence the
7 Neither party has argued that another states law governs the Policy. See BBSerCo, Inc. v.
Metrix Co., 324 F.3d 955, 960 n.3 (8th Cir. 2003) (law of forum state applies by default where
parties do not raise choice-of- law issue).
11
Policy requires the insurer to provide coverage for those sums that the insured becomes
legally obligated to pay as damages because of . . . property damage. . . . (Id. at 1.)
Accordingly, the Court must first determine whether there was an occurrence in this
case. If there was, the Court must then determine whether that occurrence resulted in
property damage. If the Court concludes that there was property damage, then the insurer
must provide coverage to the insured unless the losses are excluded by a provision in the
insurance policy.
Web argues that the concrete floor defects here constitute an accident under the
Policy and that such defects also constitute property damage. (Pl.s Mem. at 18-19.) In
response, Cincinnati contends that Webs faulty construction cannot be considered an
occurrence as a matter of law. (Def.s Mem. at 24-29.) In particular, Cincinnati argues
that the business-risk doctrine precludes coverage for Webs defective construction.
(Id.; Def.s Oppn Mem. at 14-22.) At its core, the business-risk doctrine is based on the
premise that an insured should not be able to look to its general liability policy to protect
it against the costs of having to repair or replace its work because it was improperly
performed in the first place. 4 Phillip L. Bruner and Patrick J. OConnor, Jr., Bruner &
OConnor on Construction Law (West 2002). The Minnesota Supreme Court has
explained:
If insurance proceeds could be used to pay for the repairing and/or
replacing of poorly constructed products, a contractor or subcontractor
could receive initial payment for its work and then receive subsequent
payment from the insurance company to repair and replace it. . . . Equally
repugnant on policy grounds is the notion that the presence of insurance
obviates the obligation to perform the job initially in a workmanlike
manner.
12
Knutson Constr. Co. v. St. Paul Fire & Marine Ins. Co., 396 N.W.2d 229, 235 (Minn.
1986); see also Bor-Son Bldg. Corp. v. Employers Commercial Union Ins. Co. of Am.,
323 N.W.2d 58, 63 (Minn. 1982) (applying business-risk doctrine and holding that
insurer had no duty to defend because damages arose out of contractors breach of
contract).
Cincinnati argues that the Minnesota Supreme Courts decisions in Bor-Son and
Knutson defeat insurance coverage for Webs claim.8 However, [u]nder pre-1986 CGL
policies, Minnesotas Business Risk Doctrine applied to damage arising out of work
performed by subcontractors where the general contractor had exclusive control and
responsibility for the work of the subcontractor. OShaughnessy v. Smuckler Corp., 543
N.W.2d 99, 102 (Minn. Ct. App. 1996). Thus, the insurance policies at issue in Bor-Son
and Knutson excluded coverage for property damage arising out of work performed by
the insured or the insureds subcontractor. Id. at 102-03. In 1986, however, the work
performed exclusion was replaced with the your work exclusion. Id. at 103. Unlike
the work performed exclusion, the your work exclusion does not exclude coverage
for work that subcontractors perform on behalf of the insured. Id. at 103-04. Thus, the
scope of the business risk doctrine is much narrower with post-1986 CGL policies:
We cannot conclude that the exception to [the your work exclusion] has
no meaning or effect. The CGL policy already covers damage to the
property of others. The exception to the exclusion, which addresses
8 Cincinnati also asserts that this Court applied the business-risk doctrine to defeat coverage in
Aten v. Scottsdale Insurance Co., Civ. No. 06-293, 2006 WL 2990476, at *4 (D. Minn. Oct. 19,
2006). But, Aten is factually distinguishable from this case and was decided at the motion-todismiss
stage. Aten is currently on appeal to the Eighth Circuit Court of Appeals.
13
property damage to your work must therefore apply to damages to the
insureds own work that arise out of the work of a subcontractor. Thus, we
conclude that the exception at issue was intended to narrow the business
risk doctrine. . . . Under our holding in the current language of the policy,
the business risk doctrine would still apply to work performed by the
general contractor and to other deficiencies in a subcontractors work that
do not constitute property damage. Absent policy language to the
contrary, the business risk doctrine would also preclude a subcontractor
from making a claim against its own insurer to recover the cost of the repair
or replacement of its own defective work. The insurance industry is, of
course, free to alter this result in future cases by seeking to change the
language of its policies.
OShaughnessy, 543 N.W.2d at 102 (the fact that the general contractor receives
coverage will not relieve the subcontractor of ultimate liability for unworkmanlike or
defective work. In such a case, an insurer will have subrogation rights against the
subcontractor who performed the defective work) ; see also Kalchthaler v. Keller Constr.
Co., 591 N.W.2d 169, 174 (Wis. App. Ct. 1999) (For whatever reason, the industry
chose to add the new exception to the business risk exclusion in 1986. We may not
ignore that language when interpreting case law decided before and after the addition.)
Indeed, the Minnesota Supreme Court has held that the determination of whether
coverage exists under a CGL policy must be based upon the express terms of the policy.
Thommes v. Milwaukee Ins. Co., 641 N.W.2d 877, 880 (Minn. 2002). Although the
business-risk doctrine helps illuminate the underlying purpose of CGL insurance, it does
not act as an independent basis to override the express language of the insurance policy.
Id. The Court must still look to the plain language of the Policy to determine whether
coverage applies.
14
Applying these principles, the Court determines that there was an occurrence
because the concrete floor defects constituted an accident. An accident under a CGL
policy is an unexpected, unforeseen, or undesigned happening or consequence. Am.
Family Ins. Co. v. Walser, 628 N.W.2d 605, 611-12 (Minn. 2001) (where there is no
intent to injure, the incident is an accident, eve n if the conduct itself was intentional).
There is no evidence that Web or anyone working on its behalf intentionally caused the
concrete floor defects. Furthermore, the record clearly shows that popouts in the concrete
floor constitute property damage under the Policy because such defects caused
physical injury to the floor.
Because the Court concludes that there was an occurrence that resulted in property
damage, Cincinnati has a duty to provide coverage to Web unless the losses fall within an
exclusion in the Policy.
III. The Your Work Exclusion9
Cincinnati argues that the your work exclusion precludes coverage for Web. As
set forth above, the Policy precludes coverage for property damage to your work
arising out of it or any part of it . . . . (Josh Williams Aff. Ex. F at 5.) However, [t]his
exclusion does not apply if the damaged work or the work out of which the damage arises
was performed on your behalf by a subcontractor. (Id. (emphases added).)
Web argues that the exception to the your work exclusion restores coverage
here. (Pl.s Mem. at 12-17.) In particular, Web argues that Owatonna was a
9 The Court finds that the Damage to Property and Impaired Property exclusions are
inapplicable.
15
subcontractor and therefore the exception applies. In Wanzek Construction, Inc. v.
Employers Insurance of Wausau, 679 N.W.2d 322 (Minn. 2004), the Minnesota Supreme
Court addressed whether a supplier was a subcontractor under the exception making
the exclusion for damage to your work inapplicable. In that case, the general
contractor (Wanzek) was awarded a contract to build a municipal swimming pool. Id. at
324. Specifications prepared by an architect required the general contractor to provide
material, labor, equipment, and services needed to deliver and install precise pool-coping
stones to cover the perimeter overflow. Id. The specifications detailed the required
density, strength, size, pattern, and color of the coping stones. Id. The general contractor
entered into a purchase agreement with Aquatic to manufacture and deliver custom
coping stones for the swimming pool. Id. The general contractor also paid Aquatic to
provide on-site supervision to the general contractors employees for either three days of
installation or until they felt capable of installing the stones without supervision. Id.
When the pool opened for use, patrons were injured because a large number of the
coping stones cracked. Id. The general contractor replaced the defective coping stones
and then submitted a claim under its CGL policy with its insurer. Id. The insurance
company denied coverage contending that the insurance did not cover the cost of
remedying defects in workmanship because the exclusion for damage to your work in
the CGL insurance policy precluded coverage. Id.
The general contractor then filed a declaratory-judgment action against its insurer
to determine coverage. Id. The district court granted summary judgment in favor of the
insurance company, but the court of appeals reversed, holding that Aquatic was a
16
subcontractor and therefore the your work exclusion did not apply. The Minnesota
Supreme affirmed the court of appeals and found that the term subcontractor in the
CGL policy was ambiguous because it was not defined in the policy and there was no
statutory or regulatory definition. Id. at 329. The Minnesota Supreme Court determined
that when a supplier custom fabricates the materials to the owners specifications and
provides on-site services in connection with the installation, the supplier meets the
definition of subcontractor under the exception to the your work[] exclusion. Id.
(emphases added).
The determination of whether the subcontractor exception to the your work
exclusion applies is a question of law for the Court to decide. However, as explained
below, there are genuine issues of material fact with respect to Owatonnas role in the
Itron project.
A. Owatonnas Role in Providing a Concrete Mix to Web
Web claims that Owatonna was responsible for compliance with Section 2.01A of
the Specifications Manual, which contained the composition requirements for the
concrete that was to be used at the Itron facility. (Williams Aff. 8.) In response,
Cincinnati argues that there is no evidence that Web entered into an agreement to that
effect with Owatonna.10 (Def.s Oppn Mem. at 3-4; Scott Williams Aff. Ex. D at 52-53;
98-99, Ex P. at 40-44.) Yet, Web expressly states that it hired Owatonna to perform the
10 Web did enter into several subcontract agreements with entities that provided construction
services at the Itron facility, which appear on the Subcontractor List. (Scott Williams Aff. Ex.
N.) Notably, Web identifies itself as the entity responsible for Concrete work on the
Subcontractor List and there is no reference to Owatonna. (Id.)
17
entire Concrete Material section of the Specifications Manual, including testing the
aggregate for the presence of shale. (Josh Williams Suppl. Aff. 3.) The record,
however, is unclear as to whether Owatonna ever received the Specifications Manual.11
In addition, a factual dispute exists as to whether the concrete mix in this case was
merely a standard mix or was custom fabricated to Itrons specifications. Web asserts
that the concrete mix was custom fabricated because Owatonna had to hire a professional
engineering firm to create the formula pursuant to the requirements of the Specifications
Manual. (Pl.s Mem. at 13.) Notably, Owatonna claims that the concrete mix used for
the Itron project was used on other projects and that there was nothing special about it.
(Scott Williams Ex. P at 92-93, 95-96, 119-21.) Furthermore, Cincinnatis expert
11 Q: Was Owatonna provided the entire specifications manual?
***
A: There again, I dont know how they couldve put together a bid without it.
***
Q: Do you know what documentation Owatonna had at the time it submitted its proposal?
A: No.
(Scott Williams Aff. Ex D at 98-99.)
Q: Did Owatonna have a copy of the specs manual?
A: I dont know if Web had sent it over or not until after the fact or if it was ahead of the
time or before the bid actually went out or not. I do not know.
Q: So Owatonna had a copy of the specifications manual?
A: But, I dont know when we got that.
Q: Youre not aware of when Owatonna received that?
A: Right.
(Id. Ex. P at 41.)
18
testified that this was a standard batch mix. (Id. Ex. H at 4.) This cannot be
reconciled with Webs assertion that the concrete mix was tailored specifically for the
Itron project, and was further customized according to the unique characteristics of the
concrete after transport. (Pl.s Reply Mem. at 10; Josh Williams Aff. 7, 8, 10, 11;
Josh Williams Supp. Aff. 2-5.) Indeed, as noted above, the record is unclear as to
whether Owatonna was aware of the specifications for the concrete mix in particular
that it contain no shale. The bottom line is that genuine issues of material fact exist with
respect to this issue such that the Court cannot decide whether Owatonna is a
subcontractor as a matter of law.
B. Owatonnas Role in Providing On-Site Services for the Itron Project
Web argues that Owatonna provided a number of on-site services for the Itron
project. (Pl.s Mem. at 14-15.) In particular, Web asserts that Owatonna was responsible
for depositing the concrete into a pump-truck hopper, operating the pump-truck
equipment, and physically pumping the concrete to its final location pursuant to Section
3.04B of the Specifications Manual. ( Id. 12, 15-18.) Web also claims that Owatonna
had to continuously mix the concrete in its specialized ready-mix trucks while it was at
the Itron facility to prevent premature curing. (Josh Williams 12.) Furthermore, Web
asserts that Owatonna had to add water or superplasticizer to bring the concrete back to
specification. (Id. 17.)
In response, Cincinnati asserts that Owatonnas role was limited to driving the
concrete ready-mix to the Itron job site and Owatonna had no other connection to the
19
Itron project in terms of labor or materials.12 (Scott Williams Aff. Ex. P at 96-100, 109,
112.) Cincinnati also points out that there is no written agreement between Web and
Owatonna for performing on-site services at the Itron facility. (Def.s Mem. at 38.) The
record is further muddied by the fact that Web was not aware that Owatonna had
delegated the fabrication and distribution services to other companies (Huntingdon,
Waseca, and CPI) until after delivery and installation of the concrete began.13 (Josh
Williams 19.) Thus, genuine issues of material fact exist with respect to Owatonnas
role in providing on-site services for the Itron project.
CONCLUSION
Neither party has satisfied its burden of demonstrating that no genuine issue of
material fact exists. Based on the foregoing, and all the files, records, and proceedings
herein, IT IS ORDERED that Webs Motion for Summary Judgment (Doc. No. 18) and
Cincinnatis Motion for Summary Judgment (Doc. No. 19) are DENIED.
Date: November 29, 2007
s/Richard H. Kyle
RICHARD H. KYLE
United States District Judge
12 Indeed, Owatonna considered itself a supplier and not a subcontractor for Web. (Scott
Williams Aff. Ex. P at 100, 112.) However, Owatonna acknowledged that it had CPI perform
pumping services for the Itron project. (Id. at 62.)
13 Web contends that David Seykora, owner of Owatonna, had an ownership interest in
Huntingdon, Waseca, and CPI, and that each entity was acting as Owatonnas subcontractors for
the Itron project. (Pl.s Mem. at 14 n.2.) However, the record is unclear as to whether Owatonna
owned these companies or whether they were truly separate entities. (See Scott Williams Aff.
Ex. P at 11, 14, 23-25.)
 

 
 
 

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