Green Const. Co. v. Williams Form Engineering
| Decision Date | 10 September 1980 |
| Docket Number | No. G75-248 CA1.,G75-248 CA1. |
| Citation | 506 F. Supp. 173 |
| Parties | GREEN CONSTRUCTION COMPANY, Hoak Construction Company and Green Construction Company-Hoak Construction Company, joint venture, Plaintiffs, v. WILLIAMS FORM ENGINEERING CORPORATION and Gibralter Cement Products, Inc., Defendants. WILLIAMS FORM ENGINEERING CORPORATION, Third-Party Plaintiff, v. UNITED STATES of America and United States Army Corps of Engineers, Third-Party Defendants. |
| Court | U.S. District Court — Western District of Michigan |
COPYRIGHT MATERIAL OMITTED
Harold M. Street, Muskegon, Mich., Robert E. Dreher, James L. Sayre, Des Moines, Iowa, for plaintiffs.
Thomas J. McNamara, Grand Rapids, Mich., for Williams Form Engineering Corp.
Wilber M. Brucker, Jr., Detroit, Mich., Sam F. Massie, Jr., Grand Rapids, Mich., for Gibralter Cement Products.
Robert C. Greene, Asst. U. S. Atty., Grand Rapids, Mich., for the Government.
This is a products liability action, founded in diversity, for damages sustained in 1972 when grout manufactured and sold by defendants allegedly deteriorated after use on a government construction project in Alaska. Plaintiffs Green Construction Company, Hoak Construction Company, and a joint venture, Green Construction Company-Hoak Construction Company (hereinafter Green-Hoak), were awarded a contract by the U. S. Army Corps of Engineers for the construction of transmission towers along a line extending from Juneau, Alaska, to the Snettisham Hydro Electric Station, approximately 28 miles southeast of Juneau. This contract was known as the Snettisham Project. In constructing the towers, Green-Hoak used Wil-Kwik-Set grout, a product manufactured by defendant Gibralter Cement Products, Inc. (Gibralter) and sold by Williams Form Engineering Corporation (Williams Form). Wil-K wik-Set allegedly was defective and the Corps of Engineers ordered Green-Hoak to replace the product and make repairs, which the contractors did. Plaintiffs filed suit against Williams Form and Gibralter in 1975 and Williams Form in turn impleaded the United States of America as third-party defendant in 1978, seeking indemnity or contribution under the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346(b), 2671, et seq. The case is now before the court on the Government's motion to dismiss the third-party complaint for lack of subject matter jurisdiction, pursuant to Fed.R. Civ.P. 12(b), or alternatively, for summary judgment.
For the purpose of consideration of motions under Rules 12(b) and 56, well-pleaded facts are taken as true, and the third-party complaint is construed in favor of the party opposing the motion. Davis Elliot Co., Inc. v. Caribbean Utilities Co., Ltd., 513 F.2d 1176, 1182 (6th Cir. 1975); Day v. UAW, 466 F.2d 83 (6th Cir. 1972).
Plaintiffs' complaint maintains that an agent of defendant Williams Form, learning of the requirements and specifications of the Snettisham Project from the Corps of Engineers, recommended use of Wil-Kwik-Set grout and assured them the product met the Government's specifications. They subsequently purchased Wil-Kwik-Set grout and applied it to transmission tower foundation pads and used it to grout anchor rods. The grout, it is alleged, failed to set up firmly, rapidly deteriorated, became soft and wholly unfit, and had to be replaced, together with all anchor rods and rock bolts, at a total cost of $557,519.19. The complaint comprises six counts, five of which state claims against Williams for the failure of Wil-Kwik-Set grout, as follows:
Count I: Breach of an express warranty that Wil-Kwik-Set grout met all requirements for its intended use, would successfully perform when integrated into the Snettisham Project, and would withstand the Alaska weather and climatic conditions.
Count II: Breach of an implied warranty of fitness for a particular purpose, namely, use on the Snettisham Project in conformity with the requirements of the Army Corps of Engineers.
Count III: Breach of implied warranty of merchantability, namely, that Wil-Kwik-Set grout was fit for the ordinary purpose for which grout is sold.
Count IV: Negligence in the following respects:
Count V: Res ipsa loquitur.
Defendant Williams Form maintains, in its third-party complaint and briefs, that the Corps of Engineers had operational duties under the contract with Green-Hoak to review, and approve or reject, the designs and material proposed by the contractors and also to inspect work in progress, and in so performing, the Government assumed a duty towards Williams Form to act with reasonable care. It alleges the Corps of Engineers redesigned the anchor rod specifications, thereby requiring the grout to act as a structural bearing material as well as a sealant, and also redesigned the electrical grounding system on the transmission towers, and that these changes, together with the Corps's failure to perform its operational duties with reasonable care, caused the failure of Wil-Kwik-Set grout on the Snettisham Project.
Williams Form's third-party complaint alleges that negligent acts and/or omissions of the Corps of Engineers were the primary and active causes of the damages suffered by plaintiffs and that its liability, if any, will be only vicarious and passive. Accordingly, it seeks full indemnity from the Government. In the alternative, Williams Form alleges that negligent acts and omissions of the Corps of Engineers make the Government a concurrent tortfeasor with Williams Form. Accordingly, Williams Form seeks contribution from the Corps.
The Government first moves to dismiss the third-party complaint on the ground the district court has no jurisdiction to hear a contract claim in excess of $10,000. It maintains Williams Form's third-party complaint posits breaches of duties arising from the contract between the Corps of Engineers and Green-Hoak which can only be heard in the Court of Claims under the Tucker Act, 28 U.S.C. § 1491. It cites Woodbury v. United States, 313 F.2d 291 (9th Cir. 1963), where the Ninth Circuit Court of Appeals stated, at 296:
"Where, as in this case, an action is essentially for breach of a contractual undertaking, and the liability, if any, depends wholly upon the Government's alleged promise, the action must be under the Tucker Act, and cannot be under the Federal Tort Claims Act."
But the Government's reliance on Woodbury is misplaced. As the appellate court noted, the decision does not bar a suit in district court under the FTCA merely because the relationship between the parties was originally defined by contract. Here, Williams Form argues that the wrongful acts of the Corps of Engineers are not, in Woodbury terms, "essentially for breaches of contractual undertakings," but rather are "essentially" tortious acts. I agree.
It is fundamental hornbook law, of course, that misfeasance, or negligent performance, of a contract can give rise to both a claim for breach of contract and tort liability. W. L. Prosser, Law of Torts (4th Ed. 1972), § 92, at 617-618. See, Woodbury, supra at 295. A party must perform his duties under a contract with reasonable care. If he is negligent, he may be liable in tort just as he would be for the negligent performance of a gratuitous promise on which another party has relied. This principle applies equally to the Government and its performance of a contract. Aleutco Corporation v. United States, 244 F.2d 674 (3rd Cir. 1957); I Jayson, Handling Federal Tort Claims (1980), § 161 at 5-182 — 5-184.
The Government points out correctly that Williams Form was not a party to the contract between Green-Hoak and the Corps of Engineers. This fact, of itself, however, does not absolve the Corps of a duty to defendant. A party to a contract may be under a duty of reasonable care not only to the other signatories to the agreement, but also to third parties whose interests may be expected to be affected. Prosser, § 94, at 627. Here, a jury could readily find that the Corps of Engineers owed an implied duty of care to Williams Form when it assumed responsibility for approval of materials to be used by the contractors and for inspection of the work in process. The Government knew or should have known that Williams, as supplier of Wil-Kwik-Set grout, would be materially affected by the manner in which the product was used, a matter within the control of the Corps of Engineers and Green-Hoak. I believe an independent duty of care in the fulfillment of its contract obligations may be found to run from the Government to Williams Form.
In addition, it should be noted that not all of Williams Form's claims are derivative of the Government's contract with Green-Hoak. Williams also claims that the Government gratuitously undertook to recommend Wil-Kwik-Set grout to plaintiffs, to redesign the anchor rod and electrical grounding systems, and to inspect the work in progress. Having undertaken these tasks,...
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