Georgetown Steel Corp. v. Union Carbide Corp.

• Decision Date: 05 June 1989
• Docket Number: Nos. 88-2884,88-2979,s. 88-2884
• Citation: 892 F.2d 1041
• Parties: NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. GEORGETOWN STEEL CORPORATION, Plaintiff-Appellant, v. UNION CARBIDE CORPORATION, Defendant-Appellant, Law Engineering Testing Company; Pittsburgh Testing Laboratory, Inc., Defendants-Appellees. GEORGETOWN STEEL CORPORATION, Plaintiff-Appellant, v. UNION CARBIDE CORPORATION, Defendant-Appellant, Law Engineering Testing Company; Pittsburgh Testing Laboratory, Inc., Defendants-Appellees. . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1041

892 F.2d 1041

NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.

GEORGETOWN STEEL CORPORATION, Plaintiff-Appellant, v. UNION CARBIDE CORPORATION, Defendant-Appellant,

Law Engineering Testing Company; Pittsburgh Testing

Laboratory, Inc., Defendants-Appellees.

GEORGETOWN STEEL CORPORATION, Plaintiff-Appellant, v. UNION CARBIDE CORPORATION, Defendant-Appellant,

Law Engineering Testing Company; Pittsburgh Testing

Laboratory, Inc., Defendants-Appellees.

Nos. 88-2884, 88-2979.

United States Court of Appeals, Fourth Circuit.

Argued: June 5, 1989.

Decided: Dec. 15, 1989.

Rehearing and Rehearing In Banc Denied Jan. 29, 1990.

Charles Porter (E. Russell Jeter, Jr., James B. Moore, Jr., McNair Law Firm, P.A., on brief); Thomas S. Tisdale, Jr. (Stephen P. Groves, Young, Clement, Rivers & Tisdale, on brief), for appellants.

Robert Bruce Wedge (Stokes, Shapiro, Fussell & Wedge, on brief); Robert O'Neal Fleming, Jr. (Smith & Fleming, on brief), for appellees.

Before WIDENER and K.K. HALL, Circuit Judges, and GEORGE ROSS ANDERSON, Jr., United States District Judge for the District of South Carolina, sitting by designation.

PER CURIAM:

This diversity case arises out of Georgetown Steel Corporation's ("GSC") use of steel slag as backfill under a railroad track scale, a truck scale, a refractory warehouse, and an oxygen separation plant, all of which are located on GSC's steel mill site in Georgetown, South Carolina. Shortly after swelling slag destroyed the oxygen separation plant which was owned and operated by Union Carbide Corporation ("Carbide"), GSC filed suit against Pittsburgh Testing Laboratory, Inc. ("PTL") and Law Engineering Testing Company ("Law") alleging negligence and breach of express and implied warranties on the part of PTL and Law in connection with their opinions regarding the suitability of slag as fill material. GSC also filed suit against Carbide for declaratory judgment to determine the respective rights and responsibilities of GSC and Carbide. Carbide cross-claimed against Law and PTL and counterclaimed against GSC. The court allowed GSC to recover for the damage to the track scale as a result of PTL's negligence but denied GSC's remaining claims against both PTL and Law. The court denied all of Carbide's claims. GSC and Carbide appeal. For the reasons set forth below, we affirm in part and reverse in part and remand.

I.

A rather complex set of facts gave rise to this lawsuit. In 1979, Stephen Rishel, a civil engineer, was hired by GSC. His job required him to perform the civil engineering necessary for all of GSC's construction projects. His duties included some engineering design, the writing of specifications, preparation of drawings and the supervision of construction contractors. Prior to going to work at GSC, Rishel worked as a construction engineer for a highway contractor in the Pittsburgh area. He had some experience with steel slag, having encountered it on at least two construction jobs and having seen it used behind retaining walls, as a base to support pavement, as backfill underneath drain pipe, and behind bridge abutments. In addition, he knew something of the expansive properties of certain slag having heard from a carpenter foreman on one of his construction jobs that a swimming pool under which steel slag had been placed was destroyed when the slag swelled.

Shortly after starting work at GSC, Rishel considered using GSC's steel slag as backfill as a cost saving measure. ¹ Because of his knowledge that certain slag does swell, Rishel obtained approval from his supervisor, Bill Dobinski, to have the slag tested for its expansive properties. When he decided to have the slag tested, Rishel was not aware of any expansive characteristic of the particular slag produced by GSC nor was he aware that GSC frequently had its slag chemically analyzed and had been doing so since 1977. ² Rishel contacted PTL and requested that certain tests be run on the slag to determine its expansiveness. An employee of PTL, Greg Kuske, conducted several tests on a slag sample including a swell test, under the direction of Dr. Harry Wu, who was totally unfamiliar with slag and its expansive nature. After the ninety-six hours of testing required by the American Society of Testing Materials, the percentage of swell was found to be .09%. Although Rishel had not asked PTL to determine whether the slag would be appropriate for use as backfill under any particular structures, on March 27, 1979, PTL issued a report with the following conclusion:

Based on our tests results, the subject material is a well-graded, course-grained, greenish gray mill slag. The material has a very little effect on swell due to change in its moisture content. This material may be suitable for using as an engineered fill, provided that the material should be compacted to a minimum of 95% maximum density as obtained by Modified Proctor ASTM D-1557.

On the basis of this report, Rishel made the decision to use the slag for fill. His receipt of this report was the last contact Rishel or anyone else at GSC had with PTL until after problems with the slag backfill under the oxygen separation plant surfaced in 1982.

After he received the PTL report, Rishel used slag as backfill around the walls of a railroad track scale. A track scale contains the weighing mechanism for railroad cars, and is a concrete structure the size of a railroad car, sitting in the ground. Piles were placed under the scales, but slag was used to backfill around the walls of the structure. Shortly after its construction, problems developed with the track scale when the walls deflected inward and bound the weighing deck. Rishel testified that he did not suspect expanding slag as the problem at this point. The scale was repaired by its builder, Colt Industries, by placing jacks in the walls for structural support. Heavy truck traffic was also eliminated from the scales at the builder's suggestion. In September 1984, GSC had the slag replaced with gravel at a cost of $3,233.

In early 1980 slag was used as backfill to support the walls of a truck scale which was being installed on GSC's site. A truck scale resembles a track scale but weighs trucks instead of railroad cars. When problems developed with the pavement around the scale, it was moved to another location on the GSC site and a material other than slag was used as backfill because it was more convenient.

In the fall of 1980 slag was used as backfill under an extension built on to an existing refractory warehouse. Approximately a year later, GSC became aware of cracks in the floor of the refractory warehouse extension and attempted to repair the cracks by filling them with grout. The cracks reopened within a year. Rishel testified it was at this point, in the fall of 1982, that he first suspected that there might be a problem with the slag fill.

Three years earlier, in the fall of 1979, Rishel had learned that GSC and Carbide were negotiating for the construction of an oxygen separation plant on the GSC plant site. The plant's purpose was to provide GSC with oxygen and nitrogen in gaseous form at a price less than that at which GSC previously purchased the gases. Under an agreement entered into by Carbide and GSC on January 23, 1981, GSC agreed to provide a site for Carbide to build the plant, have an analysis of the soil conducted, and perform the necessary preparation of the site for construction. Preparation of the site involved two key elements. First, because the site was in close proximity to a river, proper support for the plant had to be determined. Second, because of the plant's structure and the sensitive nature of its equipment, Carbide would be able to tolerate only minimal differential settlement of the underlying support.

GSC contacted Law about providing professional engineering advice and testing services to assist in preparation of the site. On February 8, 1980, Law submitted a proposal to conduct a geotechnical exploration of the plant site, specifically, to provide "a general subsurface exploration to determine one or two reasonable solutions to major foundation and earthwork design and construction problems." On February 12, 1980, GSC and Law entered into a contract which provided that Law would furnish all labor, equipment, supervision, materials, tools, engineering, insurance, etc., "necessary to perform a subsurface investigation within the proposed construction area for Georgetown's New Oxygen plant," and would "analize [sic] the conditions encountered to determine any solutions to major foundation and earthwork design problems and submit a written report with these findings to Georgetown."

Pursuant to this contract, and after conducting an exploration of the plant location and performing various soil tests, Law issued a report on March 24, 1980. Stated in the report the purpose of the exploration was "to develop information about the site [for the oxygen separation plant] and subsurface conditions that could be used for assessing foundation alternatives for the new facilities." Law's investigation revealed that the area had been built up to its current elevations using a fill consisting of slag from the furnace operations at GSC. The fill contained soil, metal, concrete, and both organic and inorganic debris. Law made three alternative recommendations for site preparation: (1) dynamic compaction of the existing slag and sand fill to eliminate voids; (2) excavation of the soil/slag mixture and replacement with properly compacted sand; and (3) placement of the plant on properly driven piles. GSC had originally requested that Law evaluate the possible use of piles. The third alternative was offered in response to GSC's request even though Law noted that shallow foundations...