755 F.3d 611 (8th Cir. 2014), 13-1843, Graham Construction Services, Inc. v. Hammer & Steel Inc.
|Docket Nº:||13-1843, 13-1906|
|Citation:||755 F.3d 611|
|Opinion Judge:||BRIGHT, Circuit Judge|
|Party Name:||Graham Construction Services, Inc., Plaintiff - Appellee v. Hammer & Steel Inc., Defendant - Appellant; Graham Construction Services, Inc., Plaintiff - Appellant v. Hammer & Steel Inc., Defendant - Appellee|
|Attorney:||For Graham Construction Services, Inc., Plaintiff - Appellee (13-1843): James F. Bennett, John D. Comerford, Dowd & Bennett, Saint Louis, MO; Matthew T. Collins, Nathan R. Sellers, Kristine Kroenke, Dean Beard Thomson, Fabyanske & Westra, Minneapolis, MN. For Hammer & Steel Inc., Defendant - Appe...|
|Judge Panel:||Before GRUENDER, BRIGHT, and MELLOY, Circuit Judges.|
|Case Date:||June 13, 2014|
|Court:||United States Courts of Appeals, Court of Appeals for the Eighth Circuit|
Submitted January 14, 2014
[Copyrighted Material Omitted]
Appeal from United States District Court for the Eastern District of Missouri - St. Louis.
This dispute arose between the lessor of drilling equipment, Hammer & Steel, Inc. (H& S), and its lessee, Graham Construction Services, Inc. (Graham), over the lease of drilling equipment for the construction of an underground water shaft. As a result of the unsatisfactory performance of the equipment, Graham brought several claims for damages against H& S. H& S filed counterclaims seeking certain damages not paid under the lease, as well as the value of an auger that was lost during the drilling process. The jury awarded Graham $420,194.40 in economic losses on its negligent misrepresentation claim. As to the counterclaims, the jury awarded H& S $197,238 for breach of contract plus an award made by the district court of an additional $52,387 for the value of the lost auger. H& S appeals the jury's award to Graham on the ground that it is barred by the economic loss doctrine. Graham appeals the district court's award of the value of the auger as well as the district court's refusal to submit Graham's defenses to the jury. Having jurisdiction under 28 U.S.C. § 1291, we (1) vacate the jury award of $420,194.40 for negligent misrepresentation in favor of Graham and enter judgment in favor of H& S on that claim and (2) vacate both the jury award of $197,238 in favor of H& S on its breach of contract claim and the district court's award of $52,387 in favor of H& S for loss of the auger and remand for a new trial on damages as to those claims.
Graham is a contractor located in Eagan, Minnesota. In August 2009, Graham obtained information to bid for the construction of a raw water intake structure (" the project" ) for the city of Parshall, North Dakota. The project required the construction of an underground shaft for a water storage unit, which in turn required drilling a 96-foot-deep, 14-foot-wide shaft and lining it with concrete.
If Graham received the bid, it intended to execute the drilling itself. However, because Graham did not have the requisite equipment, Graham's senior project manager, Quint McDermand, contacted Todd Maxa, a salesperson for H& S, about leasing drilling equipment. According to McDermand, Maxa represented that H& S " could provide a drill rig to do the job."
Although Graham did not win the bid, it subcontracted with the winning bidder to perform the project for a reduced price. Graham's subcontract was based on its original estimate of the project cost, which took into account the price that H& S had provided for leasing the equipment.
In September 2009, Graham met with an engineer to design a drill platform at the project site. Maxa attended the meeting to provide information regarding the drill that Graham had selected--the SANY SR 250. Soon thereafter, H& S sent Graham the rental agreement for the SANY SR 250 drill and a 60-inch auger. McDermand later testified that he signed the lease agreement but did not read the fine print because he was confident that H& S was providing appropriate equipment for the project. The agreement included clauses under which Graham " acknowledge[d] that [it] has selected the equipment . . . based entirely and solely on [its] judgment" and agreed that it " is not relying on [H& S] regarding proper use of this equipment or installation or removal techniques."
Graham encountered several obstacles during the drilling process. In January 2010, a component of the drill called the " Kelly bar" broke, resulting in the 60-inch auger falling to the bottom of the shaft. Despite this setback, H& S confirmed that the drill was " more than enough machine" to complete the project. The Kelly bar broke on two more occasions while Graham attempted to recover the auger from the bottom of the shaft. After the third break in July 2010, McDermand sent Maxa an email stating his understanding that the Kelly bar could not withstand the torques and pressures required to drill the shaft. H& S arranged for the removal of the drill from the project site. Graham was forced to abandon the shaft, locate a replacement drill rig, and redrill a new shaft.
In March 2012, Graham filed an amended complaint against H& S alleging various causes of action, including negligent misrepresentation. H& S filed counterclaims asserting (i) breach of contract, (ii) unjust enrichment, (iii) breach of express warranties, and (iv) a claim for delivery or the value of the lost auger. The parties tried the claims to a jury in January 2013. After the close of evidence, H& S moved for judgment as a matter of law (JMOL) under Fed.R.Civ.P. 50(a) on its counterclaim for breach of contract and on various claims brought by Graham, including negligent...
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