Continental Grain Co. v. Fegles Construction Co., Inc., 72-1572.

• Decision Date: 29 June 1973
• Docket Number: No. 72-1572.,72-1572.
• Citation: 480 F.2d 793
• Parties: CONTINENTAL GRAIN COMPANY, Appellee, v. FEGLES CONSTRUCTION COMPANY, INC., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

480 F.2d 793 (1973)

CONTINENTAL GRAIN COMPANY, Appellee, v. FEGLES CONSTRUCTION COMPANY, INC., Appellant.

No. 72-1572.

United States Court of Appeals, Eighth Circuit.

Submitted April 10, 1973.

Decided June 29, 1973.

M. W. Gaughan, Minneapolis, Minn., for appellant.

Mary Jeanne Coyne, Minneapolis, Minn., for appellee.

Before ROSS and STEPHENSON, Circuit Judges, and TALBOT SMITH, Senior District Judge.^*

STEPHENSON, Circuit Judge.

This is a diversity case in which Fegles Construction Company, Inc. (Fegles) appeals from the denial by the trial court of its motion for a directed verdict. The jury, by special verdicts, held that Fegles was negligent in its design and construction of a grain drier for appellee Continental Grain Company (Continental) and assessed Fegles' percentage of the total negligence to be 80%. Judgment in favor of Continental was entered in the sum of $56,060.39. Fegles contends (1) that the guarantee provision of the contract between the parties constitutes a complete defense to the action; (2) that the action is barred by two Minnesota state statutes of limitation on actions and (3) that there was insufficient evidence of negligence to warrant the trial court in submitting the case to the jury. For example, Fegles contends the damages which occurred were the result of settlement of the soil and fill for which it was not responsible under the contract. We are required, of course, to review the evidence in the light most favorable to the prevailing party who is entitled to the benefit of all inferences which could reasonably be drawn from the evidence. A. B. McMahan Company v. Amphenol Corporation, 443 F.2d 1072, 1076 (C.A.8 1971). We find the cause was properly submitted to the jury.

In 1959 Fegles contracted with Continental to design and construct a grain storage facility on Continental's property adjacent to the Minnesota River at Savage, Minnesota. The soil at the proposed site was soft, loose and unable to support the weight of substantial structures, necessitating the use of piling for support of the facilities to be constructed. The structure in question, a grain drier, was to be erected on a concrete slab which overlapped the foundation of adjacent grain silos. The silos' slab was supported by cast-in-place concrete piling. The remainder of the drier's slab, which rested upon 19 feet of fill, was to be supported by timber piling. All of Fegles' work with respect to the grain drier was completed by November 17, 1960.

Shortly after completion Fegles discovered a gap developing between the edge of the drier's foundation and the wall of the silos. By December 16, 1960, the gap had increased to 1½ inches with a 5/8 inch slope in the slab supporting the drier. In short, the edge of the slab supported by the wood piling was sinking. On February 27, 1961, Continental informed Fegles that the gap and slope had increased to 1 5/8" and 1 3/8" respectively; that the grain drier was "out of plumb" and should be "shimmed up" and that the slab's elevations should be periodically checked. On April 12, 1961, Fegles reported that "All movement appears to have ceased at this time. No corrective action contemplated immediately. Continued checking will be carried on." The next week Fegles informed Continental that all corrective work would be completed by the end of April. The grain drier was never shimmed but operated for eight years until January 3, 1969, when it toppled over to the ground. It was then discovered that the drier's slab had a slope of up to 7 1/8". Expert testimony was given to the effect that the drier collapsed because of (1) defective design in that one end of the slab was supported by concrete piling and the other by wood piling and (2) faulty construction of the foundation in that the wood piling had not originally been driven down to bedrock, so that later settling occurred at the end of the slab supported by the wood piling.

We think it clear that sufficient evidence of negligence existed to warrant submitting the case to the jury. The record would support findings that Fegles had a duty to use reasonable care in the design and construction of the drier, that Fegles breached such duty, and that such breach was a direct cause of the drier's collapse and resulting damages.¹

Fegles further contends that the guarantee provision of the contract constitutes a complete defense to the action. In paragraph 19 of the contract, Fegles guaranteed "all materials and workmanship for a period of two years after acceptance of the work by Continental and shall replace any defective materials and/or workmanship that may develop in this period without expense to Continental." The trial court held that the contract did not preclude this action for negligence and instructed the jury to remove such evidence from its consideration. The trial court's interpretation of applicable state law is entitled to great weight. Luke v. American Family Mutual Ins. Co., 476 F.2d 1015, at 1019 n. 6 (8th Cir., filed Nov. 2, 1972).

Continental's acceptance of the work became effective December 15, 1960.² Therefore, if appellant's contention is correct, Continental's remedies against Fegles for faulty design and construction became foreclosed on December 15, 1962.

In Minnesota, parties to a construction contract may limit their liability for negligence by providing exclusive remedies within the agreement. Great Northern Oil Co. v. St. Paul Fire and Marine Ins. Co., 189 N.W.2d 404, 407 (Minn.1971); Independent Consolidated School District No. 24 v. Carlstrom, 277 Minn. 117, 151 N.W.2d 784 (1967) and Independent School District No. 877 v. Loberg Plumbing & Heating Co., 266 Minn. 426, 123 N.W.2d 793 (1963). See, Clements Auto Company v. Service Bureau Corporation, 444 F.2d 169, 188 (C.A.8 1971). The contract, however, must clearly indicate the intent of the parties to make the stipulated remedies exclusive. Independent No. 24, supra, 151 N.W.2d at 786-787 (and cases cited at 787, n. 4). "The question of whether or not the remedy is exclusive turns upon the intention of the parties as revealed by the language of the contract as a whole; the specific provisions relating to the remedy; and all the facts of a particular case." Independent No. 24, supra at 787.

The object or purpose of the contract in question was the construction of a grain storage facility, including several large structures only one of which was the grain drier. The entire project took nearly 16 months to complete. With such a multitude of structures to be erected over a long period of time, the parties provided that Fegles would replace any defective materials or workmanship that might develop within two years following Continental's acceptance of the work. We believe, however, that this provision falls far short of providing either expressly or by clear implication, an exclusive remedy for negligence in design and construction. Paragraph 19 does not limit Fegles' liability for its negligence, but rather entitles Continental to demand corrective action to remedy defects without first showing fault by law attributable to Fegles. Furthermore, paragraph 5 of the contract states that payment by Continental does not operate to relieve Fegles "from its obligation or liability to replace any work if it be afterward discovered to have been improperly done . . . nor as a waiver . . . as to the durability of the...