Mustang Fuel Corp. v. Youngstown Sheet & Tube Co.

• Decision Date: 07 May 1975
• Docket Number: No. 74-1396,74-1396
• Citation: 516 F.2d 33
• Parties: 17 UCC Rep.Serv. 70 MUSTANG FUEL CORPORATION, a corporation, Plaintiff-Appellant, v. YOUNGSTOWN SHEET AND TUBE COMPANY, an Ohio Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 33

516 F.2d 33

17 UCC Rep.Serv. 70

MUSTANG FUEL CORPORATION, a corporation, Plaintiff-Appellant, v. YOUNGSTOWN SHEET AND TUBE COMPANY, an Ohio Corporation Defendant-Appellee.

No. 74-1396.

United States Court of Appeals Tenth Circuit.

Submitted March 25, 1975.

Decided May 7, 1975.

Ed Abel and Ben T. Lampkin, Jr., Oklahoma City, Okl., for appellant.

Calvin W. Hendrickson and Gary W. Gardenhire, Oklahoma City, Okl., for appellee.

Before HILL, SETH and BARRETT, Circuit Judges.

BARRETT, Circuit Judge.

Mustang Fuel Corporation (Mustang) appeals from an order of the Trial Court granting Summary Judgment to Youngstown Sheet and Tube Company (Youngstown), and overruling Mustang's motion for new trial and rehearing. Jurisdiction vests by reason of diversity.

Youngstown is a manufacturer of metal pipe. In 1961 Youngstown sold to Mustang some 37 miles of 123/4 outside diameter, .203 wall, 27.22#/Ft. Youngstown Grace X-46 electric weld black plain end line pipe. It was to be manufactured, pursuant to the purchase order, in accordance with the API (American Petroleum Institute) specifications "5LX". ¹ The pipe was to be used by Mustang for the purpose of transporting natural gas. Following delivery, the pipe was subjected to high pressure tests, coated with applied coal tar enamel (but was not "wrapped"), and was buried in place by an independent contractor employed by Mustang.

After approximately three years of service, several ruptures developed in the pipe. Mustang reduced the pressure in the pipe and requested that Youngstown investigate the failures and make an analysis of the cause. Youngstown's analysis report indicated that it believed that the pipe had not been properly coated and wrapped by Mustang before it was laid and that it was now being subjected to "preferential corrosion" caused by action of the "hot" soil in which it was laid. In order to remedy the situation, and to prevent future failures, Youngstown suggested that Mustang expose the pipe and "rehabilitate" it by giving it a proper coating and wrapping.

Apparently considering Youngstown's recommendations to be impractical (deposition of Edward C. Joullian, III), Mustang decided instead to attempt a remedy through the use of "cathodic" protection. ²

Subsequently, in December of 1967, a rupture and explosion occurred on the property of Ervin W. Lemke near Okarche, Oklahoma, resulting in the death of Mrs. Lemke, and serious injuries to members of her family. Mustang, while denying liability, eventually settled with Lemke in amount of $680,000 in a suit in In the instant action, Mustang seeks recovery on two grounds: first, via indemnity, for the amount paid the Lemkes for the resulting death and personal injuries; and secondly, for the economic loss incurred in replacing the allegedly defective pipe.

which Youngstown was not a participating party. ³

In its memorandum opinion filed December 30, 1971, the Trial Court found that, based upon the pleadings, depositions and stipulations of the parties, there existed no genuine issue as to any material fact. It granted Youngstown's motion for Summary Judgment. In Mustang Fuel Corp. v. Youngstown Sheet and Tube Company, 480 F.2d 607 (10th Cir. 1973), we reversed that order without expressing any opinion on the merits of the action. The reversal was predicated on the failure of the Court to comply with the hearing and notice requirements of Rule 56, Fed.R.Civ.P., 28 U.S.C.A. Upon remand, and after full compliance with the above rule and a review of the entire file, the Trial Court again sustained Youngstown's motion for Summary Judgment. Judgment was entered dismissing the complaint and the cause of action.

On appeal, Mustang challenges the Summary Judgment Order of the Trial Court contending that there exists genuine issues of material fact, and that it has established an actionable cause based upon: (1) breach of express warranty; (2) breach of implied warranties of merchantability and/or fitness for particular use; and (3) strict liability in tort. We shall treat each of these contentions in the order above stated.

We recognize that appellate courts, in assessing motions for summary judgment, must consider factual inferences tending to show triable issues in the light most favorable to the existence of those issues. Dzenits v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 494 F.2d 168 (10th Cir. 1974); James v. Atchison, Topeka and Santa Fe Railway Company, 464 F.2d 173 (10th Cir. 1972). Pleadings and documentary evidence are to be construed liberally in favor of the party opposing such a motion. Harman v. Diversified Medical Investments Corporation, 488 F.2d 111 (10th Cir. 1973); Shawver & Son, Inc. v. Oklahoma Gas & Electric Company, 463 F.2d 204 (10th Cir. 1972); Building Mart, Inc. v. Allison Steel Manufacturing Co., 380 F.2d 196 (10th Cir. 1967). The movant must demonstrate entitlement beyond a reasonable doubt and if an inference can be deduced from the facts whereby the non-movant might recover, summary judgment is inappropriate. Dzenits v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra ; James v. Atchison, Topeka and Santa Fe Railway Company, supra. However, notwithstanding the difficult legal hurdles confronting a party moving for summary judgment, the burden is not an impossible one.

BREACH OF EXPRESS WARRANTY

Mustang contends that Youngstown breached its express warranty to manufacture the pipe to meet API specifications as provided for in the purchase order. ⁴ In support of this contention, Mustang Weaver testified to the effect that, under his interpretation of the published API specifications, and on the basis of Youngstown's own records kept in connection with the manufacturing and testing of the pipe, API standards had been violated. In rebuttal, Youngstown introduced the deposition of James Ubben, assistant director of the API, who testified as an official representative of the API as to that body's interpretation of its own standards. His testimony indicated that Weaver had misinterpreted the applicable API standard. ⁵ Under the interpretation given the standard by Ubben, it would appear from the record that at least in relation to the tests actually performed by Youngstown on the subject pipe are concerned API standards were met.

offered the depositions of two expert witnesses, Frank Weaver, a metallurgist and owner of an independent testing agency, and Professor Robert F. Hochman, a specialist in the field of metallurgy at the School of Chemical Engineering, Georgia Institute of Technology.

In its memorandum opinion, the Trial Court, in light of Ubben's testimony, rejected Weaver's as to the interpretation to be given the applicable API specification. The Court held that it had "no probative value." Mustang asserts that the Court, in effect, weighed the credibility of these two expert witnesses and that in rejecting the testimony of Weaver, the Trial Court exceeded its authority, i. e., by deciding as a matter of law that which should have been a determination of fact, thus precluding summary judgment. We disagree.

We have held that whether a witness is qualified to testify as an " expert" to any matter of opinion is a preliminary determination for the trial judge and his decision is conclusive unless shown to be clearly erroneous or the result of an abuse of judicial discretion. Chapman v. United States,169 F.2d 641 (10th Cir. 1948), cert. denied 335 U.S. 860, 69 S.Ct. 134, 93 L.Ed. 406 (1948); Bratt v. Western Air Lines, 155 F.2d 850 (10th Cir. 1946), cert. denied 329 U.S. 735, 67 S.Ct. 100, 91 L.Ed. 635 (1946). As to whether a witness possesses the "capacity" to testify as an "expert", Wigmore states:

(1) The capacity is in every case a relative one, i. e., relative to the topic about which the person is asked to make his statement. The object is to be sure that the question to the witness will be answered by a person who is fitted to answer it. His fitness, then, is a fitness to answer on that point. He may be fitted to answer about countless other matters, but that does not justify accepting his views in the matter in hand.

2 Wigmore on Evidence § 555, at 634 (3rd Ed. 1940).

Youngstown agreed to manufacture the pipe to API specifications. The Trial Court, in attempting to determine if there existed an issue as to whether this express warranty had been breached, was faced with the problem of what the API standards were. While Weaver, as a metallurgist, may have qualified to render an expert opinion as to what those standards should be ideally (in order to insure the manufacture of quality pipe), this was not the "topic" at issue. There is nothing in this record to indicate that Weaver possessed that special knowledge or "expertise" which would have qualified him to render an expert opinion as to what in fact the API intended its standards to mean.

Under these circumstances, and in view of the fact that the Trial Court had before it the API's own official interpretations of its standards (at least Mustang has not challenged the "authenticity" of this purported "official" interpretation), we hold that the Trial Court did not abuse its discretion in rejecting the "expert opinion" testimony offered by Weaver as being of no probative value. ⁶

Mustang also offered the deposition of Dr. Robert Hochman who testified that according to the "microprobe analysis" and other tests which he ran on the pipe, it was, in fact, defective in at least two respects, i. e., an incomplete closure of the pipe seam and a sulphur concentration in the "heat effective zone" of the pipe which exceeded the maximum level established by the API specifications. Both of these conditions, he testified, could have contributed to the corrosion which, allegedly, resulted in the explosion. The Trial Court again rejected this testimony as having "no probative value" relating to the issue of whether API standards had been met, since the tests performed by Dr. Hochman were not included in...