Federal Paper Bd. Co. v. Harbert-Yeargin, Inc.

• Decision Date: 09 July 1999
• Docket Number: No. Civ.A.1:97CV0449AJEC.,Civ.A.1:97CV0449AJEC.
• Citation: 53 F.Supp.2d 1361
• Parties: FEDERAL PAPER BOARD CO., INC., Plaintiff, v. HARBERT-YEARGIN, INC., Defendant.
• Court: U.S. District Court — Northern District of Georgia

53 F.Supp.2d 1361

FEDERAL PAPER BOARD CO., INC., Plaintiff, v. HARBERT-YEARGIN, INC., Defendant.

No. Civ.A.1:97CV0449AJEC.

United States District Court, N.D. Georgia, Atlanta Division.

July 9, 1999.

James McDonald, Christopher D. Balch, Swift, Currie, McGhee & Hiers, Atlanta, GA, for plaintiff.

Trammel Cullen Gilliland, Gray & Gilliland, Atlanta, GA, for defendant.

ORDER

CARNES, District Judge.

This case is presently before the Court on defendant Harbert-Yeargin, Inc.'s Supplemental Brief in Support of its Motion for Summary Judgment [51] and plaintiff's Motion for Partial Summary Judgment [47]. The Court has reviewed the record and the arguments of the parties and, for the reasons set forth below, concludes that defendant Harbert-Yeargin, Inc.'s Supplemental Brief in Support of its Motion for Summary Judgment [51] should be DENIED and plaintiff's Motion for Partial Summary Judgment [47] should be GRANTED.

BACKGROUND

Plaintiff owns and operates a paper mill in Augusta, Georgia. (Def.'s Statement of Material Facts [16] at ¶ 1.) Early in 1994, plaintiff began preparing "for a production line shutdown to perform routine maintenance on its dryer for the Number 2 paper machine." (Compl. [1] at ¶ 5.) At plaintiff's solicitation, contractors submitted bids to perform this work. (Def.'s Statement of Material Facts [1] at ¶ 1.)

On February 23, 1994, defendant submitted a bid to perform the required tasks for $59,750. (Id. at ¶ 3.) On March 28, after engaging in negotiations with Jim Michau, a senior plant engineer and project manager for plaintiff at the Augusta mill, concerning the cost, scope, and contractual provisions of the maintenance work to be performed, defendant lowered its bid to $54,750. (Id. at ¶ 4.)

During the course of these negotiations, Michau delivered to defendant plaintiff's general terms and conditions to its purchase orders. (Id. at ¶ 5.) Michau instructed defendant to put in writing any objections it had to the proposed terms and conditions. (Id. at ¶ 6.) Thereafter, Marv Fischer, defendant's contracts manager, wrote an internal memorandum to Chuck Farris, the director of defendant's pulp and paper group, and Dave Massie, another employee of defendant, detailing a number of conditions that defendant did not wish to accept. (Id. at ¶ 7.) On March 30, Farris conveyed to plaintiff, via a letter to Michau, defendant's concerns regarding eight of the conditions dealt with in Fischer's memorandum. (Fischer Dep. at Exs. 3, 4.)¹

One of the eight conditions defendant objected to was Article 26.2 of the proposed contract. As initially drafted, Article 26.2 would have required defendant to indemnify plaintiff for virtually any form of loss "directly or indirectly" related to activities arising out of the work to be performed under the contract. (Def.'s Mot. for Summ.J. [16] at Ex. 16, Art. 26.2.) Farris's letter proposed that Article 26.2 be changed so that defendant would only have to indemnify plaintiff for claims arising directly from defendant's own negligence. (Def.'s Statement of Material Facts [16] at ¶ 10.)

On April 4, Farris again wrote Michau.² In this letter, defendant reduced its bid price to $48,750, requested that the contract be issued based on the clarifications previously sent to plaintiff, and stated that it would begin to mobilize at plaintiff's mill on April 11 in preparation for the anticipated shutdown of the mill on April 18. (Id. at ¶ 11.) On April 5, defendant's construction manager, Tony Ross, had a conversation with Fred Chase, a representative of plaintiff's procurement department. This conversation led Ross to believe that plaintiff, through Chase, had accepted defendant's proposed revisions to plaintiff's general terms and conditions. (Id. at ¶ 12.) Following this conversation, Ross prepared to incorporate a few minor changes proposed by Chase into the alterations defendant had proposed in Farris's March 30 letter to Michau. (Ross Dep. at 32.)

As soon as Ross finished, and signed the letter that he was preparing, he received a conference call from Farris and Michau.³ (Def.'s Stmt. of Mat. Facts [16].) Michau told Ross that plaintiff would not accept most of defendant's proposed alterations to the contract, including defendant's proposed changes to the indemnification agreement set out in Article 26.2. (Id. at ¶ 16; Michau Dep. at 88-89.) Ross then suggested that Michau propose alternative language and forward his proposal to defendant. Defendant contends that Michau committed to doing this by the sixth or seventh of April. (Id. at ¶ 15.) Plaintiff, through Michau's deposition testimony contradicts defendant's assertion that Michau agreed to submit proposed alternative language to be incorporated into plaintiff's general terms and conditions to its purchase orders. Rather, Michau stated that he informed defendant's representatives that they could either accept the terms and conditions, including the indemnification agreement, as originally proposed, or forego working in plaintiff's mill. (Michau Dep. at 71.) Neither Michau nor any other representative of plaintiff ever forwarded a proposal for alternative language to defendant. (Id. at ¶ 17.)

The only remaining material fact pertaining to the existence of a contract containing an indemnity provision upon which the parties are in agreement is that at some point after the April 5 teleconference, the dates set for defendant to mobilize at the mill and begin work were pushed back a week. Most significantly, the parties disagree on the status of negotiations at the conclusion of the April 5 teleconference, and the meaning that should be attributed to a letter from Fischer to Michau on April 11, in light of that status.

Specifically, on April 11, Fischer sent Michau a letter requesting that Michau incorporate three agreed upon changes into the contract language.⁴ This letter began, "The following is wording agreed to for the contract covering the referenced project. Please include in the contract and forward a copy for our review as agreed in your recent telephone conversation with Chuck Farris and Tony Ross." (Michau Dep. at Ex. 25.) The letter concluded by stating, "We hope this meets with your approval and look forward to hearing from you and receiving your contract." (Id.) Defendant contends that this letter merely memorialized three provisions upon which the parties had reached agreement, and that the remaining issues raised in Farris's March 30 letter were still unresolved. (Def.'s Statement of Material Facts [16] at ¶ 19.) Plaintiff, however, contends that these three issues were all that were left to be resolved, and at this point the parties had reached an agreement.⁵ (Pl.'s Resp. to Def.'s Statement of Material Facts [20] at ¶ 19.)

A number of memoranda internal to defendant were also issued around this time. Though these memoranda are dated after April 11, plaintiff contends that they predate the April 11 letter from Fischer to Michau and that the dates are out of sequence for the events as they actually occurred. (Pl.'s Resp. to Def.'s Statement of Material Facts [20] at ¶ 21, citing Farris Dep. at 111.) These memoranda imply that negotiations with plaintiff were still ongoing and a final agreement had not been reached. (Def.'s Statement of Material Facts [16] at ¶ 21.)

Defendant also took two further actions relevant to the issue of whether a contract existed between the parties to which the parties provide different meanings. First, on April 11, defendant provided plaintiff with certificates of insurance in the amount required by the contract. (Pl.'s Statement of Material Facts [17] at ¶ 7.) Plaintiff contends this action demonstrates the existence of an agreement between the parties, while defendant states that it took this action in anticipation of contracting. (Id.; Def.'s Resp. to Pl.'s Statement of Material Facts [18] at ¶ 7.) Second, on April 18, defendant mobilized workers and equipment at plaintiff's mill and began "preliminary pre-shutdown work." (Id. at ¶ 8.) Defendant claims it did this merely as a show of good faith in recognition of the fact that a shutdown at a paper mill results in the loss of significant revenue.⁶ Thus, defendant sought to demonstrate that it was ready to do the work. (Id.) Plaintiff, however, states that defendant does not allow its employees to begin to mobilize at a job site until a contract has been agreed to, and, therefore, this action demonstrates the existence of a contract. (Pl.'s Statement of Material Facts [17] at ¶¶ 8-9, citing Ross Dep. at 53.)

On April 18, Paul Timothy Powell, defendant's employee, was performing preliminary activities in plaintiff's Augusta mill in preparation for the shutdown scheduled for April 25. (Def.'s Statement of Material Facts [34] ¶ 34.) Prior to beginning work, Powell and other employees of defendant held a "tool box" meeting in which they discussed the jobs to be performed that day and the safety hazards presented, specifically: that the machines they would be working around would be operating, that the machines possessed rotating shafts, and that tools, clothing and bodies could be caught in the machines.⁷ (Id. at ¶¶ 36-38.)

Part of Powell's duties on the eighteenth included erecting scaffolding around portions of plaintiff's number two paper machine. (Id. at ¶ 35.) From his attendance at the tool box meeting, he should have been aware that this machine would be operating and that it possessed an unguarded rotating shaft. (Id. at ¶ 37.) Powell attempted to build a guard to place over the shaft. (Id. at ¶ 43.) After deciding that he could not use the guard he had built, however, he attempted to build a scaffold above the rotating shaft. (Id.) Together with George Cassity, another employee of defendant who plaintiff alleges was acting as Powell's foreman,⁸ Powell erected pole scaffolding next to the number two paper machine. (Id. at 44.) While engaged in this activity, Powell was wearing safety lines, or "lanyards", which...