82 Hawai'i 32, State by Bronster v. U.S. Steel Corp.
| Decision Date | 24 June 1996 |
| Docket Number | No. 17695,17695 |
| Court | Hawaii Supreme Court |
| Parties | 82 Hawai'i 32, 32 UCC Rep.Serv.2d 118 STATE of Hawai'i, By Margery S. BRONSTER, Attorney General, 1 Plaintiff-Appellant/Cross-Appellee, v. UNITED STATES STEEL CORPORATION, Defendant-Appellee/Cross-Appellant, and Erkel Greenfield and Associates, Inc.; Charles Luckman; Samuel M. Burnett; The Luckman Partnership, Inc.; formerly known as Charles Luckman And Associates; Dillingham Corporation, dba Hawaiian Dredging And Construction Company, Inc.; Inryco, Inc.; formerly known as Inland Ryerson Company, Inc.; Hawai'i Welding Co., Ltd.; Diversified Earth Sciences, Inc.; Mountain States Steel Company, Inc., aka Emessessco, Inc., Mitsui & Co. (U.S.A.), Inc.; Bethlehem Steel Corporation; Kaiser Steel Corporation; Nippon Steel (U.S.A.), Inc.; Nippon Steel Corporation; Riedel International, Inc., fka Williamette Western Corporation; Severud, Perrone, Sturm, Conlin And Bandel, aka Severud, Perrone, Szegezdy & Strum; The Ogden Corporation; Mitsui & Co., Ltd.; Rudy Veland; Michael T. Suzuki; Michael T. Suzuki & Associates, Inc.; Argonaut Insurance Company; Charles Shumsky; John Does 4-100; Mary Roes 1-100; Doe Partnerships 2-100; and Doe Corporations 9-100; Defendants. HAWAI'I WELDING CO., LTD., Third-Party Plaintiff, v. GENERAL INSURANCE COMPANY OF AMERICA, Third-Party Defendant. |
Robert A. Marks, Former Attorney General, and Girard D. Lau and Peter L. Yee, Deputy Attorneys General, and David J. Dezzani and Wayne A. Muraoka of Goodsill, Anderson, Quinn & Stifel, Special Deputy Attorneys General, on the briefs, Honolulu, for Plaintiff-Appellant/Cross-Appellee State of Hawai'i.
Richard R. Clifton and Milton M. Yasunaga of Cades, Schutte, Fleming & Wright, Honolulu, and Tony Berman of Berman Paley Goldstein & Kannry, New York City, pro hac vice, and John M. Rochefort and David S. MacCuish of McClintock, Weston, Benshoof, Roschfort Rubalcava & MacCuish, Los Angeles, Cal., pro hac vice, on the briefs, for Defendant-Appellee/Cross-Appellant United States Steel Corporation.
Before MOON, C.J., and LEVINSON, NAKAYAMA and RAMIL, JJ., and MILKS, Circuit Judge, in place of KLEIN, J., recused.
In this case, dealing with the rusting steel structure of O'ahu's Aloha Stadium, plaintiff-appellant/cross-appellee State of Hawai'i (state) appeals from the judgment, after a jury trial, entered in favor of defendant-appellee/cross-appellant United States Steel Corporation (USX, USS, or U.S. Steel). On appeal, the state argues that: (1) the circuit court erred in granting USX's motion to dismiss its negligent misrepresentation claim on the basis that the claim was barred by the "economic loss" rule; (2) the trial court's jury instructions regarding the state's unfair and deceptive trade practices claim were erroneous; and (3) USX's alleged failure to turn over requested documents during discovery warrant the grant of a new trial. In addition, USX cross appeals from the trial court's denial of its motion for attorneys' fees.
For the following reasons, we hold that: (1) the "economic loss" rule does not bar the state's negligent misrepresentation claim; (2) the trial court's jury instructions regarding the state's claim for unfair or deceptive acts or practices in the conduct of any trade or commerce erroneously stated the law; and (3) the state waived any claim of discovery abuse by not raising the issue at trial. We therefore vacate the circuit court's grant of USX's motion to dismiss, vacate the judgment in favor of USX as to the state's claim for unfair or deceptive acts or practices in the conduct of any trade or commerce, and remand this case for further proceedings. In view of our remand, we need not reach USX's cross appeal. The judgment of the trial court is affirmed in all other respects.
In 1966, the City and County of Honolulu (the City) decided to build a multi-purpose sports stadium in Halawa. The City budgeted the stadium project at $25,000,000.00 and was particularly desirous of a design that would be able to accommodate both football and baseball. The City solicited design proposals from various architectural firms, and the firm that was eventually awarded the bid, Charles Luckman Associates (CLA), 2 proposed building a stadium with movable stands that could be positioned in both football and baseball configurations. However, because a movable stand design required a structure constructed of a material lighter and more flexible than concrete, a central feature of CLA's proposed design was that the stadium be constructed of steel.
Through USX's advertising and the personal experience of Rudy Veland, CLA's chief designer for the stadium project, CLA became aware of a product generically referred in the steel industry as "weathering steel," a type of steel designed to be used in an unpainted condition in appropriate circumstances. Ideally, when exposed to the normal wetting and drying cycles of the atmosphere, weathering steel would form a patina of rust that allegedly would protect the steel from further corrosion. USX marketed its brand of weathering steel, which was known as "Cor-Ten," as being four times as resistant to corrosion as ordinary carbon steel.
CLA investigated the propriety of using weathering steel for the stadium project and received letters from steel companies, including USX, expressing favorable opinions regarding the propriety of using weathering steel in the stadium project. In a letter to Veland, dated October 1, 1968, Frank E. Felix, USX's construction industry representative, wrote:
In response to your request to our Mr. G. Tupac earlier this month, we are pleased to have the opportunity to comment on the suitability of the use of exposed structural Cor-Ten steel on the new Municipal Stadium in Honolulu.
It is our understanding that the projects [sic] building site is located about one thousand (1000) feet from Pearl Harbor, with prevailing winds blowing from inland and that the harbor has very little wave action. Your information to us also indicated that the minimum temperature of the area is about 68? >>> F and the average rainfall is approximately forty (40) inches per year.
Our experience and research indicates that unpainted Cor-Ten will perform satisfactorily when exposed in the environment described above and, specifically, airborne salt will not pose a problem since the harbor has little wave action and prevailing winds are from inland.
We therefore recommend that it would be most appropriate for you to continue to consider this excellent application for bare USS Cor-Ten steel.
Based on our past relationship with you, we know you have a full understanding and appreciation of the design characteristics and requirements of this product; however, we would like to confirm our offer to provide you and your client full benefit of our past experience and extensive research in the exposed application of Cor-Ten as your design of Honolulu Municipal Stadium progresses through it's [sic] final stage as well as through the fabrication and construction phases of the project.
Thank you for your inquiry and if we can be of any further assistance in regards to this subject or any other matter, please don't hesitate to call on us.
Subsequently, in an internal USX memorandum to F.T. Comee, USX's construction marketing regional manager, Felix wrote:
During the last several weeks, G. Tupac and the writer have been involved in efforts to direct Charles Luckman Associates towards an all steel structure on the above captioned project [the stadium] and, in particular, an exposed Cor-Ten steel design. Our activities, together with Luckman's intense desire to do a Cor-Ten job, has resulted in a preliminary Cor-Ten specification for the stadium requiring approx 5500 tons of Cor-Ten structural shapes, plate and decking.
Earlier this month, we had requested the ARL [applied research lab] give their comments relative to the suitability of exposed Cor-Ten in the Honolulu area based on climatical data provided to us by the architect. Our comments to Luckman, based on Mr. D.J. Carney's letters of September 19, 1968 is attached.
On October 1, I met with Mr. Rudy Veland, Ass't Director of Design for Luckman, who expressed that it would be most beneficial to his firm and important to our mutual interest if we would provide him with a letter signed by an executive of USS for purpose of the prestige that it would lend and that, in addition to having the same content of my letter. Veland requested it also include an offer to have one of our qualified representatives personally visit the building site to confirm its suitability for exposed Cor-Ten and that we also offer to give a presentation of Cor-Ten to Mr. Tsutomu Izumi, Building Supervisor for the City and County of Honolulu. Veland specifically requested that this presentation be the same one that we gave to his client (Dillingham Corporation) on the Wilshire West Plaza project here in Los Angeles a few months ago.
Veland went on to explain that he could than [sic] forward this letter to Mr. Izumi and thereby have facility to recommend and arrange a USS meeting with his client.
It is my recommendation that we seriously consider honoring Luckman's request, and in light of Mr. Paddock's personal relationship with Luckman, that his signature on the subject letter would be most appropriate, assuming, of course, that he feels this effort on our part is warranted.
USX's favorable opinions regarding the use of Cor-Ten in the stadium project were thereafter echoed in another letter to Veland dated October 11, 1968, from D.J. Carney, USX's vice-president in charge of applied research, which provided:
Recently, Frank Felix of our Los Angeles Construction Marketing Office asked us to comment on the suitability of using un-painted USS COR-TEN steel for the proposed Municipal Stadium in Honolulu, Hawaii. It is our understanding the stadium site is about 1,000...
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