Trinity Products, Inc. v. Burgess Steel, L.L.C.

• Decision Date: 07 May 2007
• Docket Number: No. 06-2365.,No. 06-2252.,06-2252.,06-2365.
• Citation: 486 F.3d 325
• Parties: TRINITY PRODUCTS, INC., Plaintiff-Appellee/Cross Appellant, v. BURGESS STEEL, L.L.C., Defendant-Appellant/Cross Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

486 F.3d 325

TRINITY PRODUCTS, INC., Plaintiff-Appellee/Cross Appellant, v. BURGESS STEEL, L.L.C., Defendant-Appellant/Cross Appellee.

No. 06-2252.

No. 06-2365.

United States Court of Appeals, Eighth Circuit.

Submitted: December 11, 2006.

Filed: May 7, 2007.

James D. Bass, argued, St. Louis, MO (Nicole S. Zellweger, St. Louis, MO, on the brief), for appellant.

Michael E. Wilson, argued, St. Louis, MO (Michelle C. Eller, St. Louis, MO, on the brief), for appellee.

Before LOKEN, Chief Judge, MURPHY and SHEPHERD, Circuit Judges.

LOKEN, Chief Judge.

Burgess Steel, L.L.C. (Burgess), hired Trinity Products, Inc. (Trinity), to fabricate two steel towers. After the first tower was erected, the owner rejected it because the base plate was warped. Burgess directed Trinity to fabricate and deliver a replacement. At the end of the project Trinity sued for the balance of the contract price and for extra work not covered by the contract, primarily the value of the replacement tower. Burgess counterclaimed for breach of contract. The dispute is governed by the Missouri Uniform Commercial Code. The district court granted Trinity summary judgment of $102,958 on its contract claim and dismissed Burgess's counterclaims. After trial, the jury awarded Trinity $60,660 for extra work. The court awarded Trinity $114,649.73 in attorneys' fees but denied prejudgment interest and an additur. Burgess appeals the adverse judgment, and Trinity cross appeals the denial of an additur and prejudgment interest. We reverse the grant of summary judgment, vacate the award of attorneys' fees, affirm the jury verdict, and remand.

I. Background

The general contractor hired Burgess to erect two 75-foot, 125-ton steel towers on top of a two-story building in midtown Manhattan. Burgess hired Trinity to fabricate the towers in St. Louis and deliver them to the New York City job site. The contract price as amended by three change orders was $601,896. Trinity's two-page sale agreement was accepted by Burgess, with significant hand-written modifications, on March 5, 2003.

To fabricate each tower, Trinity welded a seven-foot square base plate, two inches thick, to the foot of the tower column. The towers when erected would be bolted to the building's girder connections through holes in the steel base plates. While welding the base plate to the first tower (referred to by the parties as the north tower), Trinity's welders and welding inspectors present at Trinity's St. Louis workplace on behalf of Burgess¹ noticed that the base plate was warping. Efforts to eliminate the warping during the final welding were unsuccessful. After further discussions with the Burgess inspectors, Trinity shipped the completed north tower to a storage facility in Pennsylvania on April 16 and requested early payment, a variance from the applicable letter of credit that required inspection and approval by Burgess. A Burgess field superintendent inspected the tower in Pennsylvania and reported the warped base plate. As requested by Burgess, Trinity's Vice President and Sales Manager sent Burgess a letter stating, "The warpage will not affect the base plate to girder connection in any way." Burgess then paid for the tower.

Burgess erected the tower when it arrived at the Manhattan job site on May 23. The warped base plate caused gaps between the base plate and the girder of 3/4 to 1-1/16 inches. Burgess promptly advised Trinity, "it appears that base plates have not been fabricated in accordance with . . . fabrication tolerances," and advised the project's engineer of record of the issue. Though Trinity and Burgess proposed procedures to flatten the base plate, on June 5 the engineer of record, acting on behalf of the owner and the general contractor, declared that these procedures were not acceptable and concluded: "We are loosing [sic] valuable time. We should proceed with the replacement of the column."

Burgess removed the north tower and it was shipped back to St. Louis at Trinity's expense. Burgess directed Trinity to fabricate a second north tower as well as the south tower called for by the contract. For these two towers, Trinity developed a more thorough sequence of base plate welding procedures and reduced the size of the "fillet welds" from 5/8 inch to 5/16 inch, which reduced distortion-causing heat during the welding process. The second north tower and the south tower were delivered and successfully erected. Both Trinity and Burgess incurred significant unanticipated expenses in completing their parts of the project.

Trinity commenced this action in Missouri state court, asserting a breach of contract claim for the unpaid balance of the contract price (Count I), and a quantum meruit claim for the fair value of "extra work" requested and accepted by Burgess, primarily the second north tower (Count IV). After removing, Burgess asserted breaches of contract by Trinity — primarily the faulty first north tower — both as damage counterclaims and as defenses to Trinity's claims.

The district court granted summary judgment dismissing the counterclaims on the ground that Burgess did not assert these claims in the time period specified in the contract. For the same reason, the court granted Trinity summary judgment on Count I, awarding $102,958 as the unpaid contract balance. The case then proceeded to trial on Count IV, the extra work claims. The jury returned a verdict in Trinity's favor on four of the five extra work claims, awarding $60,660 in damages. The district court awarded Trinity $114,649.73 in attorneys fees on Count I but denied prejudgment interest on both counts and an additur on Count IV. Burgess appeals the summary judgment rulings, the jury verdict, and the award of attorneys fees. Trinity cross appeals the denial of prejudgment interest and additur. We conclude: (i) summary judgment was improperly granted on Count I and the counterclaims; (ii) the jury verdict on Count IV is not tainted by the erroneous summary judgment ruling or by other errors alleged by Burgess on appeal; (iii) the district court properly denied Trinity an additur on Count IV; and (iv) the denial of prejudgment interest must be affirmed in part, reversed in part, and remanded in part. Accordingly, we vacate portions of the final judgment and the fee award and remand for further proceedings on Count I and the Burgess counterclaims consistent with the jury verdict.

II. The Summary Judgment Ruling

A. The principal focus of the parties' claims and counterclaims in this case was the first north tower that was delivered to the Manhattan job site, erected, and then rejected by the engineer of record as unacceptably defective. The district court granted summary judgment dismissing Burgess's counterclaims and defenses solely on the ground that its notice of these claims was untimely. We review the grant of summary judgment de novo. See Baum v. Helget Gas Products, Inc., 440 F.3d 1019, 1022 (8th Cir.2006) (standard of review). The parties agree that the substantive law of Missouri governs this diversity case.

A provision on the first page of the Trinity/Burgess sales contract stated: "Any claim(s) for damaged or incorrect material must be made in writing within five (5) days of receipt of material to be considered valid." The second page, entitled TERMS AND CONDITIONS OF SALE GOODS, included a different provision:

If the goods which are being sold hereunder are defective, the Seller, at its sole option, will either repair the goods, replace the goods, or will take back the goods and refund to the Purchaser any purchase price that the Purchaser may have paid for the goods. If the Purchaser fails to notify Seller of any defects in the goods upon the arrival of the goods at Purchaser's business location, Purchaser will be deemed to have unequivocally accepted the goods.

In granting summary judgment for Trinity, the district court concluded that the five-day provision applied to Burgess's claims regarding the first north tower because the warped base plate made the tower "incorrect material," not "defective goods," and Burgess "did not make a claim with [Trinity] for the incorrect materials within five days of their receipt." We disagree.

Missouri has enacted the Uniform Commercial Code. The Code provides that, whenever it "requires any action to be taken within a reasonable time, any time which is not manifestly unreasonable may be fixed by agreement." Mo.Rev.Stat. § 400.1-204(1). The Code further provides that a buyer may reject tendered goods "within a reasonable time after their delivery or tender." § 400.2-602(1). The five-day provision "fixed" the reasonable time for rejection of damaged or incorrect goods. That provision would clearly be reasonable in many situations, for example, if the seller had obviously shipped the wrong product, such as a green car instead of a red car, or if the product was obviously damaged in shipment.

But that is not what happened in this case. The parties first noticed a potential defect — the warped base plate — at Trinity's St. Louis shop. The tower was nonetheless shipped and Trinity requested early payment. When a Burgess field inspector again noted the possible defect, Trinity assured Burgess it would not affect the tower's performance "in any way." The tower arrived at the job site on May 23. Burgess elected to accept it. See Mo.Rev.Stat. §§ 400.2-601, 2-606(1)(a). When the tower was erected, serious gaps caused by the warped base plate appeared. Burgess notified Trinity of the apparent contract nonconformity in writing four days later, and the parties attempted to cure the problem. The engineer of record concluded that these efforts were unsuccessful and rejected the tower on behalf of the general contractor and the owner on June 5.

The UCC has remedial provisions that expressly govern this situation. Mo.Rev. Stat. § 400.2-607 provides in relevant part:

(2) Acceptance of goods by the buyer precludes rejection . . . and if made with...