Rhode Island Turnpike and Bridge Authority v. Bethlehem Steel Corp., 76-201-A

• Citation: 119 R.I. 141,379 A.2d 344
• Decision Date: 11 August 1977
• Docket Number: No. 76-201-A,76-201-A
• Court: United States State Supreme Court of Rhode Island
• Parties: RHODE ISLAND TURNPIKE AND BRIDGE AUTHORITY v. BETHLEHEM STEEL CORPORATION et al. v. Walter S. DOUGLAS et al., d. b. a. Parsons, Brinckerhoff, Quade & Douglas. ppeal.

Page 344

379 A.2d 344

119 R.I. 141

RHODE ISLAND TURNPIKE AND BRIDGE AUTHORITY v. BETHLEHEM STEEL CORPORATION et al. v. Walter S. DOUGLAS et al., d. b. a. Parsons, Brinckerhoff, Quade & Douglas.

No. 76-201-Appeal.

Supreme Court of Rhode Island.

Aug. 11, 1977.

[119 R.I. 169] Hogan & Hogan, Edward T. Hogan, Providence, Sheffield & Harvey, Brian G. Bardorf, Newport, for Rhode Island Turnpike and Bridge Authority.

Edwards & Angell, John V. Kean, George W. Shuster, Providence; Hynes & Diamond, Leslie A. Hynes, New York City, for Bethlehem Steel Corp. and Ins. Co. of North America; Howard A. Feldman, Bethlehem, Pa., of counsel.

Keenan, Rice, Dolan, Reardon & Kiernan, John F. Dolan, Providence, for Parsons, Brinckerhoff, Quade & Douglas.

OPINION

KELLEHER, Justice.

Anyone who has been to Newport in the last several years knows that the once slow but scenic ferry which crossed from Jamestown to Newport has long since given way to the marvels of modern engineering. A graceful suspension bridge now spans the east passage of Narragansett Bay and links Jamestown to Newport. Unfortunately, even before the structure was completed, its paint began to flake and it was ultimately determined that within a short period of time virtually the entire bridge would have to be repainted. The one point on which all of the litigants and their respective experts agreed was that the Newport Bridge had suffered the most catastrophic paint failure known to any of them no small claim to fame.

On December 17, 1970, the Rhode Island Turnpike and Bridge Authority (the Authority) filed suit against Bethlehem Steel Corporation (Bethlehem or the company), ¹ alleging that on April 25, 1966, Bethlehem had entered into a contract with the Authority (the contract) and that Bethlehem had breached the contract. Under the contract Bethlehem agreed to fabricate and erect the bridge's superstructure. Among other things, Bethlehem was also bound to furnish all steel for the project and was responsible for the surface preparation and application of paint to all ferrous metals and galvanized surfaces in accordance with the contract specifications. The Authority's basic contention was that Bethlehem had "failed adequately to prepare the surfaces required to be painted * * * failed properly to prepare and apply the paint in accordance with (the) specifications * * * (and) failed to do necessary remedial work." Originally, the Authority claimed damages of $2 million, but following completion of certain remedial work by a third party (Cannon), the Authority amended its complaint and sought damages of $6 million.

Bethlehem denied all liability and additionally filed a counterclaim. Count I alleged that the Authority still owed Bethlehem $811,661.27 plus interest for work performed under the contract. ² The second count charged that the Authority had contracted with an engineering firm, Parsons, Brinckerhoff, Quade & Douglas (Parsons or the Engineer), for engineering advice and services including the "preparation and design of an adequate and suitable paint system" for the bridge (Section 7 Specifications or paint system); that Parsons had prepared the paint specifications; and that the paint system was "developed and prepared in a negligent manner." Damages of.$2.5 million, plus interest and costs, allegedly due from the Authority and Parsons were claimed. The third count alleged that due to the late delivery of certain tower and anchorage piers as well as to certain acceleration programs undertaken as a result of the delay, Bethlehem was prevented from performing its work in the manner and within the time planned. Therefore, the company claimed it had suffered a.$4.5 million loss.

The trial justice, finding for the Authority and rejecting Counts II and III of the counterclaim, ultimately awarded the Authority $4,571,329.39. Bethlehem has appealed, claiming errors relating to a discovery ruling, the trial justice's findings and conclusions in favor of the Authority and against the company, and the award of damages. We shall first address the discovery question; then we will turn to the Authority's complaint and Count II of the counterclaim (The Paint Controversy). Count III (The Delay Controversy) will be discussed separately as will the damages question.

I. The Discovery Question

Bethlehem alleges that the trial justice erred in refusing to allow the corporation to inspect certain diaries written by Parsons' Chief Field Engineer during 1971, 1972, and 1973, when he was largely responsible for overseeing remedial work, cleaning and repainting the steel, being performed by Cannon. Bethlehem had initially requested the diaries when the Chief Field Engineer was deposed and renewed the request at trial. Upon reading them, the trial justice ruled that under Super.R.Civ.P. 26(b)(2) they were not discoverable because they were "a writing prepared by the agent of a party in anticipation of litigation and in preparation for trial."

On appeal Bethlehem claims that this ruling is wrong because the volumes are discoverable in whole or in part as business records, and any portions of them covered by the work-product rule should simply have been excised. However, to qualify as a business record the writing must be kept in the ordinary course of business. See Webbier v. Thoroughbred Racing Protect. Bureau, Inc., 105 R.I. 605, 254 A.2d 285 (1969); Douglas Furniture Corp. v. Ehrlich, 91 R.I. 7, 160 A.2d 362 (1960); Ostroff v. Stephen Girard, Inc., 79 R.I. 158, 85 A.2d 174 (1951). These diaries were a part of the Chief Field Engineer's personal records; he maintained diaries on all sorts of subjects including nonwork-related readings and writings, family, physical exercise, and work responsibilities. These records were not part of Parsons' records; nor were they maintained at Parsons' direction. Accordingly, they were not discoverable as business records. We, therefore, find no fault with the trial justice's ruling.

II. The Paint Controversy

A. Misconceived issues of law and fact

At trial the Authority contended that the failure of the paint to adhere to the steel was caused by contaminants on the steel prior to painting. The alleged contaminant was "mill scale" or a residuum thereof. Mill scale is similar to rust in that both are caused by oxidation of the steel, but unlike rust in that it is bluish-black in color. However, whereas rust occurs at normal everyday temperatures, mill scale occurs in the manufacturing process as the steel cools, when temperatures are greater than 1000o F. Mill scale is not, therefore, an unusual condition. The prime component of mill scale is the oxide FeO, but FeO is not always evident because it is an extremely unstable compound, which rapidly deteriorates. If chemical analysis reveals FeO, mill scale is present, but the absence of FeO does not preclude the presence of mill scale.

Paint systems most commonly used on bridges contain a linseed oil and red-lead base which is capable of penetrating mill scale, thereby helping the paint to adhere to the steel. Such systems generally have a high pigment volume concentration (PVC) which also helps the paint adhere to the surface. The Newport system was epoxy rather than linseed oil based and had a low PVC. Witnesses at trial agreed that an epoxy system had never been used on a bridge before; however, there was testimony that such systems had been used on ships and other marine structures and were in fact used on bridges subsequent to the painting of the Newport structure.

It was recognized that the epoxy system was not able to penetrate mill scale. Therefore, the steel used in the project would have to be free of mill scale, although the residual stain could remain. This required cleaning of the steel to standard specifications (SSPC) 6 level, ³ and this requirement was part of the Specifications under which Bethlehem was to perform. Essentially, the Authority claimed that the SSPC 6 level had not been met, whereas Bethlehem argued that no competent engineer would have ordered a new and untested paint system for this bridge.

Bethlehem's first argument, that the trial justice misconceived issues of law and fact, is two-pronged: (1) the trial justice's ultimate finding as to the presence of mill scale or a residuum thereof was based on a purely conjectural preliminary finding, and (2) the trial court overlooked the distinctions between the claim and counterclaim and the burden of proof allocable to each of the parties.

In arguing that the findings as to mill scale were speculative, the company points to evidence adduced militating against its presence. Additionally, Bethlehem directs our attention to language in the trial court's decision which noted that the oxide FeO "might well disappear in the open air after a period of time." This further breakdown of the oxide would presumably account for its absence from the bridge's superstructure. Bethlehem strenuously maintains that FeO does not disappear into thin air as rapidly as the trial court suggests, but that even assuming the absence of FeO could logically be explained, a finding of "might well disappear" is insufficient to sustain the Authority's burden of proof. Had the trial justice based his conclusions solely on the instability of FeO, Bethlehem might have cause for complaint, but that simply is not the case. The question of whether the steel had been properly prepared was exhaustively litigated.

Numerous witnesses testified for and against the theory that mill scale or another contaminant was responsible for the paint failure. Quite simply, the question had to be resolved by weighing conflicting testimony. The trial justice did precisely this, and there was ample evidence on which he could base a finding concerning the presence of the mill scale. There was testimony that the paint system used on the Newport Bridge required an extremely careful job of surface preparation for the paint to adhere properly and that Bethlehem...