Layne-Minnesota P. R., Inc. v. Singer Co.
| Decision Date | 19 April 1978 |
| Docket Number | Nos. 77-1731,77-1786,LAYNE-MINNESOTA,s. 77-1731 |
| Citation | 574 F.2d 429 |
| Parties | p. r., INC., Appellee, v. The SINGER COMPANY and Layne-Atlantic Company, Appellants, v.COMPANY and United Pacific Insurance Company, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Elmer B. Trousdale, St. Paul, Minn., for appellant, David C. Donnelly, St. Paul, Minn., on briefs; Oppenheimer, Wolff, Foster, Shepard & Donnelly, St. Paul, Minn., filed appendix.
B. Warren Hart, St. Paul, Minn., for appellee; A. Patrick Leighton, St. Paul, Minn., on brief.
Before HEANEY and STEPHENSON, Circuit Judges, and BECKER, Senior District Judge. *
In 1971, Layne-Atlantic Company, a wholly owned subsidiary of The Singer Company, entered into a construction contract with Layne-Minnesota Company. 1 Layne-Minnesota agreed to drill caisson holes for two bridge sites, Overlook and LaPalmas, in connection with a Puerto Rican highway construction project. Layne-Atlantic had previously contracted with Ballenger-Potashnick, the general contractor for the project, to drill the holes. The drilling was considerably more difficult than anticipated and took longer to complete than estimated. The cost exceeded the original estimate by $354,549.73. The task took twenty-four months to complete rather than the eight months originally estimated. Layne-Minnesota brought suit against Layne-Atlantic and Singer in the United States District Court for the District of Minnesota to recover its costs, overhead and profits.
Shortly after this action was filed, Layne-Atlantic and Singer brought an action in the United States District Court for the District of Puerto Rico against Ballenger-Potashnick and the Puerto Rican Highway Authority for damages resulting from extra work on the drilling project. Layne-Atlantic and Singer then moved the Minnesota District Court to transfer this action to Puerto Rico pursuant to 28 U.S.C. § 1404(a). The motion was denied. Motions were also made to dismiss the action for failure to join indispensable parties, Fed.R.Civ.P. 19(b), and for failure to obtain personal jurisdiction over Layne-Atlantic. These motions were denied. After a nonjury trial, the trial court awarded Layne-Minnesota damages of $352,795.20, plus interest of six percent per annum from October 12, 1973. It allowed Layne-Atlantic's counterclaims in the amounts of $23,872 and $47,521.75 which were treated as offsets to Layne-Minnesota's damages. The net amount of the recovery was $281,401.45.
Layne-Atlantic argues initially that several factual findings are clearly erroneous. In particular, it argues that the trial court erred in finding that the "sound rock," referred to in the drilling specifications, did not include the "hard rock" encountered at the drilling site; that the specifications stated the rock could be drilled by using rotary tricone bits; and that the negotiations established an open-ended rather than a results contract.
We will accept the factual findings of a trial court unless they are clearly erroneous. See, e. g., Swanson & Youngdale, Inc. v. Seagrave Corp.,561 F.2d 171 (8th Cir. 1977); Fed.R.Civ.P. 52(a). A finding of fact is clearly erroneous if, upon review of the entire record, the reviewing court forms "the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948); Ridgway v. United Hospitals-Miller Division, 563 F.2d 923, 927 (8th Cir. 1977). We have carefully reviewed the entire record and conclude that the findings of the trial court were not clearly erroneous.
The evidence shows that in early June, 1971, Robert Peters, a vice-president of Layne-Atlantic and a vice-president and regional manager for Singer, contacted Donald Vry, the president of Layne-Minnesota. Peters asked Vry if Layne-Minnesota would be interested in the Puerto Rican drilling project. He represented that the drilling could be accomplished by utilizing auger-type drilling equipment. Vry discussed the proposition with Warren Lindeke, a vice-president of Layne-Minnesota, and the two expressed an interest in the project. Vry and Lindeke later met with Peters and Dick Bendetto, who was with the Water Resources Division of Singer. Peters and Bendetto again represented that an auger-type drilling arrangement was required.
Later in June, Lindeke traveled to Puerto Rico to obtain soil samples from the project area. He met with Peters, Bendetto and another representative from Singer. Soil samples were not available from the project area as the area was inaccessible. However, samples were inspected from a proximate area. Peters represented to Lindeke that the samples would be the most difficult material drilled. The samples indicated that the rock could be drilled with auger-type drilling equipment. 2
During the ensuing negotiations, Peters stated that he wanted a contract price based on the number of feet drilled rather than a rate for equipment rental or a cost-plus contract. Negotiations continued during the summer; and on August 17, 1971, Peters sent a proposed subcontract to Vry. Attached to the subcontract were technical specifications for the drilling at the two bridge sites. The specification for the LaPalmas site provided that "the holes shall be drilled using rotary tricone bits capable of drilling sound rock." Rotary tricone bits are an auger-type drilling device.
Vry agreed to the subcontract on August 30, 1971, with certain modifications. It is clear, from Vry's transmittal letter to Peters, that Layne-Minnesota was depending on the representations of Layne-Atlantic for information about the drill site:
It was assumed and understood through conversation that the bulk of drilling would be in overburden and weathered rock. Our operation was geared to drilling in this type material with provisions made to cut solid or unweathered rock if that situation presented itself on occasion. Since boring information has not been available at the drill site locations, there still exists a question about the amount of rock drilling involved, and we must keep this item open.
These representations were reflected in the contract price which was a "shotgun figure" per lineal foot of hole:
In the absence of any detailed plans, specifications and soil borings, some assumptions were necessarily made, and our estimating was done with this information as a basis.
The letter also states that Layne-Minnesota refused to accept responsibility for conditions not outlined in the drilling specifications and that "(s)hould field conditions vary greatly from those anticipated, it may be necessary to modify the contract accordingly." Peters agreed to these changes. The estimated cost of the drilling contract was $264,900.
During this same period, Peters also negotiated with Ballenger-Potashnick. On August 2, 1971, Layne-Atlantic entered into a contract with Ballenger-Potashnick to drill the holes for $781,836. 3
Men and equipment from Layne-Minnesota were transported to Puerto Rico and work on the project began in October, 1971. Layne-Minnesota attempted to utilize the auger-type, rotary tricone bits called for in the specifications but they were virtually useless. A few months after the drilling started, the bits were almost completely destroyed. Several alternative drilling methods and devices were used after the rotary tricone bits failed. A percussion-type drilling rig was finally used, but Layne-Minnesota never could drill rock at a practical production rate. The drilling conditions caused considerable damage to the equipment and frequent breakdowns. The equipment required continuous maintenance which was not needed on a normal project.
Lindeke stated that the rock actually encountered at the drilling site was much harder than the hardest sample of rock Layne-Atlantic represented as typical. He further stated that he had never experienced such difficult drilling or such hard rock. Layne-Minnesota's field superintendent in Puerto Rico and Peters also testified that they had never seen such difficult drilling.
The evidence shows that Layne-Minnesota depended on Layne-Atlantic and the drilling specifications for information about the condition of the drilling site and the equipment needed. Layne-Minnesota protected itself by open-ending the contract if drilling and site conditions were not as assumed. The evidence establishes that the "hard rock" at the drilling site was unlike any contemplated by the parties. 4
Layne-Atlantic also argues that the trial court erred when it refused to transfer this action to Puerto Rico and to dismiss the case for failure to join an indispensable party. Both contentions assume that the issues in this action are identical to those issues in the Puerto Rican action. This assumption is incorrect.
Layne-Minnesota did not have any contractual relationship with Ballenger-Potashnick or the Puerto Rican Highway Authority, although Layne-Minnesota's contract with Layne-Atlantic encompassed the same drilling project as Layne-Atlantic's contract with Ballenger-Potashnick. Moreover, the terms of the two contracts are substantially different with respect to obligations. Layne-Minnesota's contract provides that the contract price would be adjusted if final conditions differed from those originally specified. Layne-Atlantic's contract, however, contains no such limitation. Instead, Layne-Atlantic expressly assumed full responsibility for all conditions of work known and unknown.
More importantly, there is no evidence that Ballenger-Potashnick made any representations to Layne-Minnesota similar to those made by Layne-Atlantic. Layne-Atlantic throughout the negotiations represented that the rock could be drilled using auger-type drilling equipment. The rock samples Layne-Atlantic gave to Layne-Minnesota for testing supported this representation.
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