John T. Jones Const. Co. v. Hoot General Const.

• Decision Date: 06 March 2008
• Docket Number: No. 4:05-cv-00525-RAW.,4:05-cv-00525-RAW.
• Citation: 543 F.Supp.2d 982
• Parties: JOHN T. JONES CONSTRUCTION CO., Plaintiff/Counterclaim Defendant, v. HOOT GENERAL CONSTRUCTION, Defendant, Des Moines Metropolitan Wastewater Reclamation Authority; and Black & Veatch Corp., Defendants/Cotinterclaimants. Hoot General Construction Company, Inc., Third-Party Plaintiff, v. Black & Veatch Corporation, Third-Party Defendant. Des Moines Metropolitan Wastewater Reclamation Authority, Cross-Claimant, v. Black & Veatch Corporation, Cross-Claim Defendant. Black & Veatch Corporation, Cross-Claimant, v. Hoot General Construction Company, Inc., Cross-Claim Defendant.
• Court: U.S. District Court — Southern District of Iowa

543 F.Supp.2d 982

JOHN T. JONES CONSTRUCTION CO., Plaintiff/Counterclaim Defendant, v. HOOT GENERAL CONSTRUCTION, Defendant,

Des Moines Metropolitan Wastewater Reclamation Authority; and Black & Veatch Corp., Defendants/Cotinterclaimants.

Hoot General Construction Company, Inc., Third-Party Plaintiff, v. Black & Veatch Corporation, Third-Party Defendant.

Des Moines Metropolitan Wastewater Reclamation Authority, Cross-Claimant, v. Black & Veatch Corporation, Cross-Claim Defendant.

Black & Veatch Corporation, Cross-Claimant, v. Hoot General Construction Company, Inc., Cross-Claim Defendant.

No. 4:05-cv-00525-RAW.

United States District Court, S.D. Iowa, Central Division.

March 6, 2008.

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Jeffrey Dean Stone, Stephen D. Marso, Whitfield & Eddy, PLC, West Des Moines, IA, for Plaintiff/Counterclaim Defendant.

Kevin H. Collins, Kevin J. Caster, Shuttleworth & Ingersoll, Cedar Rapids, IA, for Defendants and Third-Party Plaintiff/Cross-Claim Defendant.

James E. Brick, Brick Gentry Bowers Swartz Stoltze & Levis PC, West Des Moines, IA, for Third-Party Plaintiff, and Cross-Claim Defendant.

Debra Rectenbaugh Pettit, William J. Koehn, Davis Brown Koehn Shors & Roberts, Des Moines, IA, for Defendants/Counter-claimants and Third-Party Defendant/Cross-Claim Defendant.

Mark Godwin, Des Moines City Attorney, Susan A. Low, City of Des Moines Legal Dept., Des Moines, IA, for Defendants/Counter-claimants and Cross-Claimant.

FINDINGS OF FACT, CONCLUSIONS OF LAW, RULING ON MOTIONS FOR JUDGMENT AS A MATTER OF LAW AND ORDER FOR JUDGMENT

ROSS A. WALTERS, United States Magistrate Judge.

Plaintiff John T. Jones Construction Co. ("Jones") was the general contractor for a public improvement project at defendant Des Moines Metropolitan Wastewater Reclamation Authority's ("WRA") Wastewater Reclamation Facility ("WRF"). The project was the "WRF Combined Hauled Waste/Solids Processing Improvements"("the project" or the "WRA project"). (Ex. 48 at 4). The project included a lining system to protect the concrete in "blended sludge wetwells, a new waste-todigester" wetwell and septage tanks which were to be rehabilitated to serve as "special waste receiving tanks." This lawsuit is about which of two competing lining systems should have been installed. It involves claims, counterclaims and crossclaims between Jones, WRA, Black & Veatch ("B&V"), an international construction and engineering firm hired by the City of Des Moines¹ to provide engineering services for the design, bidding and construction of the project, and Hoot General Construction Co. ("Hoot"), the initial concrete lining subcontractor hired by Jones.

The claims of the parties and history of proceedings were discussed at length in an August 8, 2007 ruling on the parties' motions and cross-motions for summary judgment ("the August 8 ruling"). The August 8 ruling left the following claims to be tried: Jones' claims of breach of contract (Count VI), common law indemnity (Count VII) and promissory estoppel (Count XII) against Hoot; Jones' claims of breach of contract (Count I) and breach of the duty of good faith and fair dealing (Count II) against WRA; Jones' claims of intentional interference with contract (Count VIII), negligent misrepresentation (Count X) and professional negligence (Count XI) against B&V Hoot's claims of intentional interference with contract (Count I) and professional negligence (Count III) against B&V WRA's counterclaim against Jones for breach of contract and breach of the duty of good faith and fair dealing; WRA's cross-claim against B&V for indemnity (Counts I through VI); and B&V's counterclaim against Jones for contribution on Hoot's claims against B&V and cross-claim against Hoot for contribution on Jones' claims against B&V.

The Court has diversity jurisdiction. 28 U.S.C. § 1332(a). The case came on for bench trial before the undersigned on August 20 through 24, 2007 pursuant to 28 U.S.C. § 636(c). Posttrial written arguments and motions for judgment as a matter of law have been filed and the case is now fully submitted.

The Court has carefully considered the record evidence, the post-trial written arguments and motions for judgment as a matter of law, and now finds and concludes as follows on the issues presented.

I. FACTUAL BACKGROUND AND FINDINGS

A. Concrete Corrosion, The Competing Lining Systems, and Testing

To better understand the issues and background facts in this case it is appropriate to start by discussing why concrete exposed to wastewater needs to be protected and moving from there to a comparison of the two lining systems at issue and the testing to which they have been subjected. John A. Redner retired in 2004 as head of the "Sewerage" Department for the County Sanitation Districts of Los Angeles County. He has extensive experience in protecting wastewater collection systems from the corrosive effect of wastewater, and is a recognized leading expert on the subject. Jones called Mr. Redner to give expert testimony. According to Mr. Redner, as wastewater stays in a collection system, it becomes septic and gives off hydrogen sulfide gas., Bacteria break down the hydrogen sulfide gas and consume the hydrogen sulfide. A byproduct of this process is sulfuric acid. Most wastewater collection systems, including WRA's, are constructed of concrete. Sulfuric acid corrodes concrete. How to protect concrete wastewater collection systems from corrosion has been a subject of study for decades. The issue became acute when in about 1987 the federal Environmental Protection Agency adopted new regulations which required industries to remove heavy metals from wastewater. The removal of heavy metals had the unfortunate effect of improving the wastewater environment for the growth of bacteria, the net effect of which was a significant increase in the production of sulfuric acid and accompanying marked acceleration in the corrosion rate of concrete wastewater structures.

Coatings of various kinds provide a measure of protection, but used alone tend to degrade and fail over time which had, in fact, been WRA's experience with coal tar epoxy coatings. The most consistently successful protective methods involve attachment of an impervious polyvinyl chloride (PVC) liner to the concrete surface. PVC liners for new concrete structures have been available for years.² It has been within about the past twenty years that lining systems have evolved to protect rehabilitated existing concrete collection structures. As relevant in this case, the rehabilitation and protection of an existing structure involves first repair of the corroded concrete surface (for example by sand- or waterblasting, with the application of shot crete if more severely damaged) followed by the application of a bonding material or "mastic" to the repaired concrete surface to which is affixed a PVC liner. In 2002 two companies offered PVC/mastic lining systems for rehabilitated concrete wastewater structures — Ameron International Corp. ("Ameron"), and Linabond, Inc. ("Linabond"). (Ex. 195 at 4).³ As events would develop, the competing lining systems proposed for use on the WRA project were Ameron's "Arrow-Lock" system and Linabond's "Semi-Rigid Co-Lining" system.

Arrow-Lock uses an epoxy mastic and PVC sheets with ribbed, arrow-shaped anchors on the inside face. The PVC sheets are mechanically locked in place by rolling the anchors into the mastic before it cures. Weld strips are fused at the seams of the PVC sheets using hot air. Linabond's colining system uses a structural polymer mastic with, in this case, a semi-rigid PVC lining which is chemically bonded⁴ to the structural polymer. Polyurethane seam material is used to seal the joints. The first installation of both of these systems occurred in the mid-1990's. While both were designed to rehabilitate corroded concrete structures, both could be used on new construction.⁵

The record is replete with references to two kinds of tests for coatings and liners generally accepted as standards in the wastewater treatment community. The first is the "pickle jar" test, developed and conducted by the City of Los Angeles. Since the 1940's and '50's the City has been involved in testing materials for use in wastewater treatment systems. The manufacturer of the product being tested, usually a coating, supplies test "coupons" which are immersed in solutions of chemicals typically found in wastewater for a period of up to 112 days. The coupons are checked every twenty-eight days for changes in their properties. Some coatings, however, passed the pickle jar test but failed in use. Los Angeles sanitation officials under Mr. Redner's leadership developed an auxiliary test to gauge the performance of protective coating and lining systems to sulfuric acid exposure over a period of one year. Some ninety-plus products or systems had, as of 2002, been subjected to what has come to be known as the Redner test. The results of the tests were summarized in an August 2002 report authored by Mr. Redner and other engineers associated with the sanitation districts of Los Angeles County (the "Redner report"). (Ex. 195 at 310-44). Both Ameron's Arrow-Lock PVC liner and Linabond's PVC liner with its structural polymer system passed the Redner test. (Id. at 321, 322, 332).⁶ Both had the best possible score for acid resistance and "concrete bond," though Linabond did not score as well on "application." While the Arrow-Lock liner passed the Redner test, the mastic used in the Arrow-Lock system has not been tested. The Linabond structural polymer mastic has passed the pickle jar test.

B. The Course of Events

On December 3, 2001, the City of Des Moines entered into an Agreement for Professional Services (the "professional services agreement") with B&V to review the WRF and design the project.⁷ (Ex. 197). The scope of B&V's professional services was initially limited to engineering...