Great Plains Christian Radio v. Central Tower

• Decision Date: 08 November 2005
• Docket Number: No. 04-2559 JWL.,04-2559 JWL.
• Citation: 399 F.Supp.2d 1185
• Parties: GREAT PLAINS CHRISTIAN RADIO, INC. Plaintiff, v. CENTRAL TOWER, INC. and Ray Ryan Defendants.
• Court: U.S. District Court — District of Kansas

399 F.Supp.2d 1185

GREAT PLAINS CHRISTIAN RADIO, INC. Plaintiff, v. CENTRAL TOWER, INC. and Ray Ryan Defendants.

No. 04-2559 JWL.

United States District Court, D. Kansas.

November 8, 2005.

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Frederick H. Riesmeyer, II, Vincent F. O'Flaherty, Spradley & Riesmeyer, PC, Kansas City, MO, William P. Denning, Sanders Conkright & Warren LLP, Overland Park, KS, for Plaintiff.

Angela L. Freel, James D. Johnson, Rudolph, Fine, Porter & Johnson, LLP, Evansville, IN, Norman E. Beal, Rebecca S. Yocum, Stinson Morrison Hecker LLP, Kansas City, MO, for Defendants.

MEMORANDUM AND ORDER

LUNGSTRUM, District Judge.

This case concerns a dispute over an allegedly defective radio tower (the Tower) designed and sold in 1992 by Central Tower, Inc. (Central Tower) and its president, Ray Ryan (Mr. Ryan), to Great Plains Christian Radio, Inc. (GPCR). Against Central Tower, GPCR has claimed fraud, breach of implied warranty of fitness for a particular purpose, breach of contract, strict liability, and negligence. Against Mr. Ryan, GPCR has claimed fraud. This matter comes before the court on Central Tower and Mr. Ryan's motion for summary judgment (doc. # 41). For the reasons explained below, the motion is granted in part and denied in part.¹

STATEMENT OF MATERIAL FACTS

In August 1991, GPCR obtained its construction permit for a Christian radio station from the FCC. In April 1992, GPCR signed a contract with Central Tower, an Indiana corporation, for the fabrication and installation of a 995' guyed tower. Mr. Ryan, founder and head of Central Tower, engaged in price negotiations with GPCR.

Contrary to the assurances provided by Central Tower's salesperson, Central Tower hired a subcontractor to install the tower. At that point, GPCR decided that they would not contract with Central Tower for future tower maintenance. GPCR also was disappointed by the delays of the project and the lack of communication with Central Tower during the Tower's installation. According to GPCR, Central Tower led GPCR to believe that the Tower would be designed by specialty engineers who would ensure all parts of the tower were custom welded.

In September 1992, the tower was completed and the radio station went on the air. At 855', the tower is reduced to a 2' face from the primary 5' face. The tower then has a 2' face from 855' to the top of the tower at 955'. This top area is referred to as the "transition section."

In 1993, a dispute arose regarding the installation of a transmission cable of the Tower. Temporary repairs were made, and then Central Tower installed a replacement section to remedy the problem. The two parties disagreed about who was responsible for the expense of the repair.

Mr. Hughes, head of GPCR, has testified that following this dispute GPCR "developed a distrust of Central Tower." He also sent a memorandum to GPCR's legal counsel in 1993, which outlined many areas of concern. He wrote in part:

The entire problem was caused by willful neglect in doing the job right the first time. Was Central Tower knowledgeable that the job was not done correctly and was just hoping we would not find out? What did they know and when did they know it? Since they have not operated in good faith over this matter is there reason to doubt if the correct strength steel was used for the tower legs? Should we also be asking for funds for an engineering study to see what other problems may exist?

In 1997, GPCR hired Stephen Larson (Mr. Larson) as chief engineer. He acted to repair equipment and hire people to maintain the Tower. Mr. Larson hired Rhodes Tower Service (RTS) to inspect the Tower and determined what needed to be done to place another antenna on the Tower. RTS detected cracks in the transition section's welds.² When the cracks first were detected, RTS fabricated and welded braces for the transition section and welded the cracks. The remedy, however, was temporary. Shortly thereafter, the welds cracked again. Mr. Larson contacted Mr. Ryan several times to discuss these problems.

In 2000, GPCR retained Paul J. Ford and Company to fix the problems with the Tower's transition section. GPCR also contacted Central Tower for assistance in solving the problem. In response to GPCR's request, Mr. Ryan sent a letter in April 2000 outlining Central Tower's position. His letter stated in part:

[We] do not feel that these problems are a result of a faulty design. Your tower was designed by a structural engineer in 1992, meeting ANSI222-E standards, the latest standards for that time period. Furthermore, the tower was designed based upon your specifications, utilizing the most cost effective measures, as budget was an issue.

. . . . .

.... It is our opinion that the bracing is inadequate, and the cracked weld that you are seeing is a direct result from the lack of tower maintenance. Plumb and tension on the tower should be performed on a yearly basis in order for the tower to perform efficiently. In addition to the lack of maintenance, it was noted that the tower had to withstand severe wind and ice damage. The combination of an out of plumb tower and severe ice loading can create a deflection in the structure. This transition section would see more of an eccentric load under the above conditions before the rest of the structure; thus showing signs of failure prior to the remaining parts of the tower.

. . . . .

Central Tower is not opposed to helping with the cost associated with repairing the tower. It is our offer to supply you with the necessary materials needed, and make recommendations of contractors to do the site work.³

After reading Mr. Ryan's letter, Mr. Hughes thought that Central Tower was shifting the blame. Mr. Larson does not recall receiving the letter from Mr. Ryan but does recall Mr. Ryan offering during a telephone conversation to supply GPCR with a bracing system. Despite initially denying responsibility, two months later Mr. Ryan and Central Tower agreed to do warranty work on the Tower. GPCR later accepted Central Tower's offer to design and fabricate a bracing system for the transaction section at no cost to GPCR. There was no further contact between the parties until this suit.

In April or May 2004, Vincent O'Flaherty, an attorney, contacted GPCR regarding a problem Central Tower had with a collapsed tower in Kentucky. Around June 2004, GPCR retained Lawrence Penner, an engineer, to inspect the Tower. Based in part on this examination, GPCR alleges that the Tower was not constructed as it was designed and represented to GPCR. It alleges that the Tower is defective because the absence of designed welds leaves the Tower over-stressed in a number of critical areas.

On November 15, 2004, GPCR filed suit against Central Tower and Mr. Ryan. It subsequently amended its complaint on April 8, 2005. GPCR contends that Mr. Ryan knew before 1992 that Central Tower had an issue with welds cracking prematurely and failed to disclose Central Tower's history of welding problems. Rather than addressing or correcting the problems, it alleges that Mr. Ryan concealed these defects and continued to manufacture and sell defective towers. It claims that Mr. Ryan did so even after two of his towers collapsed in 1993 and 2000 because of the same welding defects as alleged here. To substantiate its claim, it offers evidence that two of Mr. Ryan's former employees specifically told him that Central Tower's welds were faulty. GPCR alleges that Mr. Ryan acted to conceal these defects so that he could sell Central Tower for a substantial profit in 2001.

On January 5, 2001, Central Tower sold its assets. On October 22, 2001, Central Tower filed its Articles of Dissolution and proceeded to liquidate and dissolve. On October 30, 2001, Central Tower, through its legal counsel, published its intent to dissolve in accordance with Indiana law, which GPCR has not disputed.

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Spaulding v. United Transp. Union, 279 F.3d 901, 904 (10th Cir.2002). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Wright ex rel. Trust Co. of Kansas v. Abbott Laboratories, Inc., 259 F.3d 1226, 1231-32 (10th Cir.2001) (citing Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Adler, 144 F.3d at 670 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

The moving party initially must show the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Spaulding, 279 F.3d at 904 (citing Celotex Corp. v. Catrett, 477 U.S 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). In attempting to meet this standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Adams v. American Guarantee & Liability Ins. Co., 233 F.3d 1242, 1246 (10th Cir.2000) (citing Adler, 144 F.3d at 671).

Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Spaulding, 279 F.3d at 904 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)); Anderson, 477 U.S. at 256, 106 S.Ct. 2505; Celotex, 477 U.S. at 324, 106...