Travelers Property Cas. v. Saint-Gobain Technical

• Decision Date: 31 January 2007
• Docket Number: Civil No. 04-4386 ADM/AJB.
• Citation: 474 F.Supp.2d 1075
• Parties: The TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA and Hellmuth Obata & Kassabaum, Inc., Plaintiffs, v. SAINT-GOBAIN TECHNICAL FABRICS CANADA LIMITED, formerly known as Bay Mills, Defendant.
• Court: U.S. District Court — District of Minnesota

Page 1075

474 F.Supp.2d 1075

The TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA and Hellmuth Obata & Kassabaum, Inc., Plaintiffs, v. SAINT-GOBAIN TECHNICAL FABRICS CANADA LIMITED, formerly known as Bay Mills, Defendant.

Civil No. 04-4386 ADM/AJB.

United States District Court, D. Minnesota.

January 31, 2007.

John Cardinal Parks, Esq., McElroy, Deutsch, Mulvaney, & Carpenter, LLP, Denver, CO, and Michael R. Peterson, Esq., Bruce P. Candlin & Associates, St. Paul, MN, argued on behalf of Plaintiffs.

David M. Dahlmeier, Esq. and Amy M. Coniaris, E sq., Foley & Mansfield, P.L.L.P., Minneapolis, MN, argued on behalf of Defendant.

MEMORANDUM OPINION AND ORDER

MONTGOMERY, District Judge.

I. INTRODUCTION

On October 31, 2006, oral argument before the undersigned United States District Judge was heard on Defendant Saint-Gobain Technical Fabrics Canada Limited's ("Saint-Gobain") Motion for Summary Judgment [Docket No. 20] and Plaintiffs The Travelers Property Casualty Company of America ("Travelers") and Hellmuth Obata & Kassabaum, Inc.'s ("HOK") (collectively, "Plaintiffs") Motion for Partial Summary Judgment [Docket No. 25]. In their Complaint [Docket No. 1], Plaintiffs assert claims that Saint-Gobain is liable for damage to the exterior of the Pepsi Center Arena ("Pepsi Center") in Denver, Colorado. Additionally, Saint-Gobain has filed a Motion to Strike [Docket No. 68], and Plaintiffs have filed an Objection to Magistrate Judge's Order on Motion for Leave to File Amended Complaint [Docket No. 64] and an Objection to Magistrate Judge's Order on Motion for Extension of Deadline [Docket No. 88]. For the reasons set forth herein, Saint-Gobain's Motion for Summary Judgment is granted in part and denied in part, Saint-Gobain's Motion to Strike is denied as moot, Plaintiffs' Motion for Partial Summary Judgment is denied, and both of Plaintiffs' Objections, construed as appeals, are denied.

II. BACKGROUND

A. Construction of the Pepsi Center's Exterior Walls

The Pepsi Center, located in Denver, Colorado, is a multi-purpose arena for professional and amateur sporting events, concerts, conventions, and other public and private functions. Compl. ¶ 5. The Pepsi Center is owned by Kroenke Arena Company, LLC ("Kroenke"), a Colorado company. Id.; 09/15/06 Parks Decl. [Docket No. 28] Ex. 1 at 1. On November 20, 1997, Kroenke and HOK entered into a contract for HOK to provide design-related services for the construction of the Pepsi Center. 09/15/06 Parks Decl. Ex. 1 at 1. On November 27, 1997, Kroenke and M.A. Mortenson Company ("Mortenson"), a Minnesota corporation, entered into a contract for Mortenson to act as the general contractor for the construction of the Pepsi Center. Compl. ¶ 7; 09/15/06 Parks Decl. Ex. 1 a 1-2. On February 12, 1998, Mortenson entered into a subcontract agreement with Denver Drywall Company ("Denver Drywall"), a Colorado corporation, for Denver Drywall to be the prime subcontractor for the construction of the Pepsi Center's exterior walls. 09/15/06 Parks Decl. Ex. 1 at 1-2. On August 3, 1998, Denver Drywall entered into a subcontract agreement with Big Horn Plastering, Inc. and Big Horn Plastering of Colorado, Inc. (collectively, "Big Horn"), both Colorado corporations, for Big Horn to apply the exterior insulation and finish system ("EIFS") to the Pepsi Center's exterior walls. Id.

The Pepsi Center EIFS is a multi-layered, multi-component exterior cladding consisting of, inter alia, a base coat applied to the face of the expanded polystyrene ("EPS") insulation board, a glass fiber reinforcing mesh embedded into the base coat, and a textured decorative finish coat consisting of synthetic polymers, pigments, and filler materials. Id. at 2. The base coat, mesh, and finish coat are collectively referred to as "lamina." Id.

The components used in the Pepsi Center EIFS were provided by TEC Specialty Products, Inc. ("TEC"), a Minnesota corporation now known as Specialty Construction Brands, Inc. Id. at 1-2. In particular, TEC's proprietary "Ful-O-Mite" EIFS was selected. Munce Dep. (Coniaris Aff. [Docket No. 45] Ex. A; 09/15/06 Dahlmeier Aff. [Docket No. 23] Ex. C) at 26. By a Purchase Order dated September 28, 1998, TEC, ordered reinforcing mesh from Saint-Gobain, then known as Bay Mills, an Ontario, Canada, corporation. TEC Purchase Order (09/15/06 Parks Decl. Ex. 3 Attach. 1) at 1. The back of the Purchase Order contained TEC's general terms and conditions of purchase. Id. at 2. On October 21, 1998, Saint-Gobain shipped mesh in response to TEC's Purchase Order. Jones Dep. (09/15/06 Dahlmeier Aff. Ex. F; 09/15/06 Parks Decl. Ex. 8; 10/13/06 Parks Decl. [Docket No. 48] Ex. C) at 113. Later that same day, Saint-Gobain prepared and sent an invoice that included Saint-Gobain's general terms and conditions of sale. Id.; Jones Aff. [Docket No. 44] Ex. A.¹

The mesh that Saint-Gobain sent to TEC had Saint-Gobain's "271 finish," which is a plasticized polyvinyl chloride ("PVC") coating. Jones Dep. at 86; 10/13/06 Parks Decl. Ex. J. Saint-Gobain's 271 finish contained dioctyl phthalate ("DOP"). Newton Dep. (10/13/06 Parks Decl. Ex. D) at 55-56. Hereinafter, the mesh with the 271 finish will be referred to as the "271 mesh." During all relevant times, Saint-Gobain also sold mesh that did not contain a DOP plasticizer. Jones Dep. at 45-46. TEC was unaware that Saint-Gobain's 271 mesh contained a DOP plasticizer. Munce Dep. at 26.

B. Colorado Litigation and Settlement

After its construction, portions of the Pepsi Center's lamina delaminated (debonded) from the EPS board, necessitating repairs. 09/15/06 Parks Decl. Ex. 1 at 2-3. After filing and dismissing a federal court action in Colorado, Kroenke sued HOK and TEC in a Colorado state court (the "Colorado litigation"). Id. at 2. TEC filed a third-party complaint against Big Horn and Saint-Gobain. 09/15/06 Parks Decl. Ex. 2 at 8-13. The Colorado court dismissed Saint-Gobain from the Colorado litigation based on a forum selection clause in TEC's purchase order that specified Minnesota. 09/15/06 Parks Decl. Ex. 5.

Additionally, Mortenson filed a complaint in Colorado state court against HOK, Denver Drywall, Big Horn, and TEC. Mortenson subsequently dismissed the action, without prejudice, after the parties executed a tolling agreement. 09/15/06 Parks Decl. Ex. 1 at 3. Kroenke also filed a demand for arbitration against Mortenson with the American Arbitration Association. Id.

Subsequently, Kroenke, HOK, TEC, Mortenson, Denver Drywall, Big Horn, and Travelers, as the liability insurer for Mortenson, Denver Drywall, and Big Horn, entered into a Settlement Agreement and Release. Under the Settlement Agreement, Kroenke released its claims in exchange for $1.8 million from the other settling parties, allocated as follows: (1) Travelers, as the insurer of Mortenson, Denver Drywall, and Big Horn, contributed $1.2 million; (2) TEC contributed $400,000; and (3) HOK contributed $200,000. Id. at 4, Ex. A. Additionally, TEC assigned its claims against Saint-Gobain to Mortenson, Denver Drywall, Big Horn, HOK, and Travelers. Id. at 7.

C. Plaintiffs' Claims Against Saint-Gobain

On September 3, 2004, Travelers, as the subrogee of Mortenson, Denver Drywall, and Big Horn, and HOK, on behalf of themselves and as the assignees of TEC's claims, filed suit in Minnesota against Saint-Gobain, alleging that the mesh Saint-Gobain provided was defective and caused the delamination of the Pepsi Center's EIFS. Plaintiffs allege that the DOP and other elements of Saint-Gobain's 271 plasticizer migrated and degraded the bond between the EPS board and the base coat. Plaintiffs assert the following claims for relief: (1) common law indemnification; (2) contribution under Colorado statute; (3) contribution under Minnesota statute; (4) breach of contract/warranty; (5) negligence; (6) breach of implied warranty of merchantability under common law and/or Colorado statute; (7) breach of implied warranty of merchantability under common law and/or Minnesota statute; (8) breach of implied warranty of fitness for a particular purpose under common law and/or Colorado statute; (9) breach of implied warranty of fitness for a particular purpose under Minnesota statute; and (10) contractual indemnity.

III. DISCUSSION

A. Summary Judgment Standard

Federal Rule of Civil Procedure 56(c) provides that summary judgment shall issue "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On a motion for summary judgment, the Court views the evidence in the light most favorable to the nonmoving party. Ludwig v. Anderson, 54 F.3d 465, 470 (8th Cir.1995). The nonmoving party may not "rest on mere allegations or denials, but must demonstrate on the record the existence of specific facts which create a genuine issue for trial." Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir.1995).

B. Plaintiffs' Motion for Partial Summary Judgment

In their Motion for Partial Summary Judgment, Plaintiffs request the Court to find, as a matter of law that: (1) the indemnification clause in Section 14 and the express warranties in Section 4 of TEC's Purchase Order are part of the contract² between TEC and Saint-Gobain; (2) both Section 14 and Section 4 allow Plaintiffs to recover the $1.8 million paid to settle the Colorado litigation; and (3) Plaintiffs do not need to prove that Saint-Gobain was negligent or that Saint-Gobain's mesh was defectively designed or manufactured to trigger the indemnification clause in TEC's...