Five Star Automatic Fire Prot., LLC v. Nuclear Waste P'ship, LLC, Civ. No. 14-622 JCH/GBW

CourtUnited States District Courts. 10th Circuit. District of New Mexico
Docket NumberCiv. No. 14-622 JCH/GBW
Decision Date13 May 2016


Civ. No. 14-622 JCH/GBW


May 13, 2016


This matter is before the Court on Defendants' Motion for Summary Judgment Based on the Unlawful Acts Doctrine. [Doc. 74] Plaintiff Five Star Automatic Fire Protection, LLC ("Five Star"), filed a Response [Doc. 86], and Defendants Nuclear Waste Partnership, LLC ("NWP") and Jerry Golden filed a Reply [89]. Without the Court's permission, Five Star then filed Plaintiff's Objections to Defendants' Additional Summary Judgment Evidence [Doc. 91] regarding Defendants' additional summary judgment evidence attached to the Reply [Doc. 91], Defendants filed a response [Doc. 92], and Five Star filed a reply [Doc. 93].1

Having reviewed the Motion, briefs, evidence, and relevant law, the Court concludes that Defendants' Motion should be denied and Plaintiff's Objections should be overruled and denied as moot.

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I. Facts Alleged in the Second Amended Complaint ("SAC")

NWP operates the Waste Isolation Pilot Plant ("WIPP"), a facility of the United States Department of Energy, which stores hazardous waste. A fire protection system is absolutely necessary to the safe operation of the site.

Under a subcontract with Constructors, Inc., Five Star was to modify the fire protection system at the WIPP site. The plant could not operate without a continuously operational fire protection system, and Five Star needed to turn off the system while working on it; therefore, Five Star's "window of opportunity" in which to perform the work was critical. Defendants were not formal signatories to the subcontract agreement, and that agreement was silent as to the commencement date; however, Defendants conducted most of the negotiations with Five Star and they had agreed to a commencement date of January 18, 2013. NWP conditioned its acceptance on this date of commencement.

Five Star is a Texas company with its principal place of business in El Paso County. Defendants knew that Luis Palacios, president and sole member of Five Star, would be preoccupied with his daughter's surgery for at least a week, from January 17 on.

On January 17, 2013, a Five Star crew traveled from El Paso to Carlsbad, intending to begin work the next day. But Jerry Golden, an employee of NWP, had given four days off (January 18 to January 21) to the employees responsible for inspecting Five Star's materials, even though Golden knew that this action would prevent the Five Star crew from beginning their work on January 18.

When the Five Star crew arrived at the site on January 18, the security guard at the gate told them that the site was closed and would not let them in. A Constructors, Inc. representative

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told them that NWP's materials inspectors were on holiday and it was impossible for Five Star to do the work. The Five Star crew had no choice but to return home.

Over the next thirteen days, there were emails discussing what had happened. NWP and Golden made pretextual and false excuses about Five Star's welding procedures, which they supposedly considered unsafe. Eventually, on February 1, 2013, Constructors, Inc. and Five Star renegotiated the prior subcontract agreement for $12,600 additional compensation and a new commencement date of February 4, 2013.

On February 4, 2013, a Five Star crew returned to the WIPP site to begin work. But they were again denied entrance to the site.

II. Facts Alleged in Defendants' Motion for Summary Judgment

The following is a summary of some of the main factual allegations in Defendants' summary judgment motion.2

Defendants allege that NFPA standards required three documents to be in place prior to any welding of the fire sprinkler system: a Welding Procedure Specification, a Procedure Qualification Record, and a Welder Performance Qualification. Undisputed Material Fact ("UMF") # 3.

Defendants allege that Five Star fabricated the welding procedure documents by making alterations to old forms and used Lonnie Roesel's name on the Procedure Qualification Record ("PQR") without talking to Roesel about the document. UMF # 10-12.

Defendants allege that Roesel did not conduct the tests the Procedure Qualification Record indicated he had performed, and did not supervise any testing performed by Santiago Ramirez of Five Star, the welder identified on that Record. UMF # 16-17.

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Five Star's Welding Procedure Specification was not qualified by Five Star as required by NFPA 13. UMF #23. The documents Five Star submitted to Constructors and NWP are fraudulent because they do not reflect testing of the welding procedure or the welder, as required by NFPA 13 and American Society of Mechanical Engineers standards. UMF # 24.


Summary judgment under Rule 56 is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is material if it could have an effect on the outcome of the suit. Smothers v. Solvay Chems., Inc., 740 F.3d 530, 538 (10th Cir. 2014). A dispute over a material fact is genuine if the evidence presented could allow a rational jury to find in favor of the non-moving party. EEOC v. Horizon/CMS Healthcare Corp., 220 F.3d 1184, 1190 (10th Cir. 2000). The court views the facts in the light most favorable to the non-moving party and draws all reasonable inferences in favor of that party. Shero v. City of Grove, 510 F.3d 1196, 1200 (10th Cir. 2007). The court cannot weigh the evidence and determine the truth of the matter, but instead determines whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 243 (1986).

A party seeking summary judgment bears the initial burden of showing that there is no genuine dispute as to a material fact. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998). When that party does not have the burden of persuasion at trial, it can satisfy its burden at the summary judgment stage by identifying a lack of evidence on an essential element of the claim. Id. at 671. If the movant satisfies its burden, the burden shifts to the non-movant. Id.

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The party opposing summary judgment cannot rest on the pleadings, but must go beyond the pleadings and "designate specific facts so as to make a showing sufficient to establish the existence of an element essential to that party's case in order to survive summary judgment." Sealock v. Colorado, 218 F.3d 1205, 1209 (10th Cir. 2000). The nonmovant must "set forth specific facts" from which a rational trier of fact could find in the non-movant's favor, identifying those facts in the affidavits, deposition transcripts, or incorporated exhibits. Adler, 144 F.3d at 671 (internal quotation marks omitted). The party cannot rest on ignorance of the facts, on speculation, or on unsubstantiated conclusory allegations. Harvey Barnett, Inc. v. Shidler, 338 F.3d 1125, 1136 (10th Cir. 2003); Conaway v. Smith, 853 F.2d 789, 794 (10th Cir. 1988). "A fact is 'disputed' in a summary-judgment proceeding only if there is contrary evidence or other sufficient reason to disbelieve it; a simple denial, much less an assertion of ignorance, does not suffice." Grynberg v. Total S.A., 538 F.3d 1336, 1345 (10th Cir. 2008).

For the claim of tortious interference with an existing contract, Five Star must show that:

(1) the defendant had knowledge of the contract,
(2) the plaintiff was unable to fulfill the contract's obligations,
(3) the defendant played an active and substantial part in causing the plaintiff to lose the benefits of the contract,
(4) the plaintiff suffered damages resulting from the breach, and
(5) the defendant induced the breach without justification or privilege to do so.

Lenscrafters, Inc. v. Kehoe, 2012-NMSC-020, ¶ 40, 282 P.3d 758, 767. The claim may be based on an allegation that the defendant improperly interfered with the plaintiff's contractual relations either through improper means or improper motive. Diversey Corp. v. Chem-Source Corp., 1998-NMCA-112, ¶ 20, 965 P.2d 332, 339.

The elements of a cause of action for prima facie tort under New Mexico law are:

1. An intentional, lawful act by defendant;
2. An intent to injure the plaintiff;

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3. Injury to plaintiff, and
4. The absence of justification or insufficient justification for the defendant's acts.

Schmitz v. Smentowski, 1990-NMSC-002, ¶ 37, 785 P.2d 726, 734; see Hagebak v. Stone, 2003-NMCA-007, ¶ 24, 61 P.3d 201, 208.


Defendants argue that Five Star falsified documents in an effort "to feign compliance" with applicable standards, that Five Star could not have done the work without complying with those standards, and that, under the Unlawful Acts Doctrine, Five Star's fraud and violation of standards preclude Five Star from prevailing on its claims "because applicable law does not permit recovery based on wrongful, immoral, or illegal conduct." [Doc. 74, p. 2]

Five Star disputes the allegations of falsifying documents and argues that it complied with NFPA standards. Five Star also argues that Defendants' authority for the Unlawful Acts Doctrine is inapplicable, because it is limited to cases involving violations of licensing laws.

I. Genuine Dispute on Material Fact

Defendants allege that Five Star: falsified documents submitted to Constructors and NWP; violated NFPA standards; and made multiple misrepresentations to Constructors and NWP. Five Star disputes these allegations.

Defendants allege that Five Star fabricated the welding procedure documents by making alterations to old forms and used Lonnie Roesel's name on the Procedure Qualification Record ("PQR") without talking to Roesel about the document. UMF # 10-12. Palacios testified that he took the old Welding Procedures Specification and changed the old date to January 2013. [Doc. 74-2, p. 8 @ 178-79]...

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