Salt Lake City Corp. v. Sw. Pipeline & Trenchless Corp.
| Decision Date | 21 September 2021 |
| Docket Number | Case No. 2:17-cv-01095-JNP-CMR |
| Citation | 561 F.Supp.3d 1160 |
| Parties | SALT LAKE CITY CORPORATION, Plaintiff; v. SOUTHWEST PIPELINE AND TRENCHLESS CORP.; Safeco Insurance Company of America, Inc. ; and Does 1–10, Defendants. |
| Court | U.S. District Court — District of Utah |
E. Russell Vetter, Catherine L. Brabson, John Edward Delaney, Salt Lake City Attorneys Office, Brian D. Bolinder, Craig C. Coburn, Jack W. Reed, Lincoln Harris, Richards Brandt Miller Nelson, Samantha E. Wilcox, Goebel Anderson PC, Salt Lake City, UT, for Plaintiff.
Kamie F. Brown, Matthew M. Cannon, Ray Quinney & Nebeker, Salt Lake City, UT, for Defendants Sekisui SPR Americas, Sekisui Rib Loc Australia Pty.
Brian J. Babcock, Robert F. Babcock, Babcock Scott & Babcock, S. Spencer Brown, Stanford P. Fitts, Strong & Hanni, Salt Lake City, UT, for Defendant Southwest Pipeline and Trenchless Corp.
Brian J. Babcock, Robert F. Babcock, Babcock Scott & Babcock, Salt Lake City, UT, for Defendant Safeco Insurance Company of America.
Gary T. Wight, Shawn McGarry, Kipp & Christian, Salt Lake City, UT, Jeremy R. Speckhals, Gordon Rees Scully Mansukhani LLP, Denver, CO, for Defendant Hydratech Engineered Products.
Salt Lake City Corporation hired Southwest Pipeline and Trenchless Corporation (Southwest) to rehabilitate a sewer line. Southwest used components supplied by Sekisui Rib Loc Australia Pty Ltd. (Sekisui Australia) and Sekisui SPR Americas, LLC (Sekisui Americas) to complete the project. Salt Lake City sued Southwest, alleging that the rehabilitated sewer line was leaking. Southwest filed a crossclaim for breach of contract against Sekisui Australia and Sekisui Americas (collectively, Sekisui).
Before the court are Sekisui's motion for summary judgment on Southwest's breach of contract crossclaim, ECF No. 180, and Southwest's motion to strike an affidavit proffered by Sekisui, ECF No. 186. The court GRANTS Sekisui's motion for summary judgment. The court finds Southwest's motion to strike to be MOOT because the affidavit does not affect the outcome of the motion for summary judgment.
Southwest repairs and rehabilitates underground pipes. Sekisui sells equipment and material used to install a liner within existing underground pipes. This "trenchless" method of pipe rehabilitation avoids the need to dig up and replace the pipe. Southwest entered into a contract (Contract) with Sekisui to purchase goods and acquire licenses necessary to use Sekisui's pipe rehabilitation system. The contract consisted of two main documents: the Customer Specific Terms and Conditions (Customer Specific Terms or CSTC) and the General Terms and Conditions for Sale and Delivery (General Terms or GTCSD).1
The preamble to the Customer Specific Terms stated that the "Buyer [Southwest] wishes to purchase products and to receive know how from the Seller [Sekisui] and the Seller agrees to provide to the Buyer products and to license know how and technology to the Buyer." The Contract required Southwest to purchase at least one complete set of equipment used to install the rehabilitation system (installation equipment). CSTC § 5.2. The Contract also contained numerous provisions establishing the terms and conditions for future purchases of "thermo-plastic profile strip"—the material used to line the interior of underground pipes (liner material). See GTCSD § 1.
The Contract granted Southwest a free, non-exclusive license to use Sekisui's "technology" to rehabilitate underground pipes. CSTC § 4; GTCSD § 3. Southwest also had a "preferred status" within its assigned territory of California, Oregon, Nevada, and Washington, meaning that Sekisui could issue only one other license to use its rehabilitation system within this territory. CSTC § 7.1. Southwest could use the licensed technology outside of its assigned territory only if it obtained written authorization from Sekisui. CSTC § 7.3; GTCSD § 4.4.
The Contract required Southwest to meet minimum purchase objectives each calendar year. CSTC § 8.1. If Southwest failed to purchase the minimum dollar amount of installation equipment and liner material within a particular year, it would lose its preferred status within its assigned territory and the purchase objective amount would be reduced by 50%. CSTC § 8.2. If Southwest failed to meet this reduced purchase objective in any subsequent year, Sekisui had the option to terminate the contract. CSTC § 8.3.
The Contract required Southwest's employees to complete a two-week training program in order to become proficient in using the Sekisui technology. CSTC § 9; GTCSD § 3.7. Sekisui was required to provide the two-week initial training program free of charge at Southwest's place of business. CSTC § 9.1. Southwest could also purchase additional training or onsite project support services from Sekisui. CSTC § 9.2.
After Southwest and Sekisui entered into the Contract, Southwest submitted a bid to rehabilitate a sewer line in Salt Lake City using Sekisui's liner system. Southwest won the bid. On December 31, 2009, Southwest submitted a purchase order to Sekisui for liner material to be used in the Salt Lake City project. The material cost was $180,137.48. The purchase order also added Salt Lake City sales tax in the amount of $12,339.42, for a total of $192,476.90. On January 21, 2010, Southwest submitted a second purchase order for $321,239.84 in liner materials for the Salt Lake City project. The Salt Lake City sales tax on this amount was $22,004.93, for a total of $343,244.77. The combined total of the two purchase orders was $535,721.67.2
In late 2012, Southwest finished the sewer line rehabilitation project. On December 17, 2012, Salt Lake City notified Southwest that it had discovered "a significant defect and leak in the liner." Over the next two and a half years, Southwest and the city formulated a number of plans to fix the leak and Southwest made one unsuccessful attempt to repair the sewer line. On June 22, 2015, Southwest declined to make any further plans to repair the sewer line.
On May 10, 2017, Salt Lake City sued Sekisui. On November 8, 2017, the city amended its complaint to add claims against Southwest. Meanwhile, Southwest sued Sekisui on October 2, 2017. That lawsuit was consolidated with crossclaims that Southwest had asserted in this lawsuit.
The court previously dismissed all of Southwest's crossclaims except for its claim that Sekisui breached two provisions of the Contract: (1) section 9.2 of the Customer Specific Terms, which permitted Southwest to request additional installation training from Sekisui and (2) section 13.1 of the General Terms, which warranted that the liner material would be free from defects. Sekisui now moves for summary judgment on Southwest's breach of contract crossclaim, arguing that it is barred by the four-year statute of limitations for a contract for the sale of goods. In support of its motion, Sekisui submitted an affidavit prepared by its COO, Shintaro Shibata. Southwest moved to strike the Shibata affidavit, asserting that it did not contain admissible evidence and should be excluded because Sekisui did not designate Shibata as a witness in this case.
Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). The movant bears the initial burden of demonstrating the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has met this burden, the burden then shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citation omitted).
Summary judgment on a statute of limitations affirmative defense is proper if there are no genuine disputes of material fact that would preclude the resolution of the statute of limitations issue. See City of Wichita, Kan. v. U.S. Gypsum Co. , 72 F.3d 1491, 1498 (10th Cir. 1996).
Southwest received notice of the defects in the liner it installed in the sewer line on December 17, 2012. The court has previously ruled that there is no dispute that the statute of limitations began to run on Southwest's breach of contract claims against suppliers of parts for the sewer rehabilitation project soon after it was notified of the leaks because it had a duty to investigate any claims arising from the defects. ECF No. 173, pp. 6–7; ECF No. 136, p. 25. Southwest does not dispute that its breach of contract claim accrued in December 2012.
But the parties disagree as to whether the court may determine which statute of limitations applies to Southwest's breach of contract claim at the summary judgement stage of the litigation. Sekisui argues that the undisputed facts show that the four-year statute of limitations for breach of a contract for the sale of goods should govern. See UTAH CODE § 70A-2-725(1). Southwest asserts that disputes of fact prevent the court from determining whether the Contract was for the sale of goods governed by the four-year limitations period found in the Utah Uniform Commercial Code (UCC), or whether the six-year statute of limitations for a written contract should be applied to its breach of contract claim. See id. § 78B-2-309(1)(b).
The UCC establishes a four-year statute of limitations for "[a]n action for breach of any contract for sale." Id. § 70A-2-725(1). ...
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