Water v. HDR Eng'g, Inc.

• Decision Date: 23 September 2013
• Docket Number: No. 12–14600.,12–14600.
• Citation: 731 F.3d 1171
• Parties: TAMPA BAY WATER, a regional water supply authority, Plaintiff–Appellant, v. HDR ENGINEERING, INC., a Nebraska corporation, Defendant–Cross Defendant–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

731 F.3d 1171

TAMPA BAY WATER, a regional water supply authority, Plaintiff–Appellant,

v.HDR ENGINEERING, INC., a Nebraska corporation, Defendant–Cross Defendant–Appellee.

No. 12–14600.

United States Court of Appeals, Eleventh Circuit.

Sept. 23, 2013.

Richard A. Harrison, Law Office of Richard A. Harrison, PA, Tampa, FL, Cynthia S. Tunnicliff, Pennington, PA, Tallahassee, FL, for Plaintiff–Appellant.

Arthur J. England, Jr., Arthur J. England, Jr., P.A., Coral Gables, FL, James K. Hickman, Timothy D. Woodward, Forizs & Dogali, PA, Tampa, FL, David C. Kent, Wayne B. Mason, Kurt W. Meaders, Cori Steinmann, Sherman Vance Wittie, Sedgwick, LLP, Dallas, TX, Barry Richard, Greenberg Traurig, LLP, Tallahassee, FL, for Defendant–Appellee.

Appeal from the United States District Court for the Middle District of Florida. D.C. Docket No. 8:08–cv–02446–JDW–TBM.

Before BARKETT and MARCUS, Circuit Judges, and HUCK,^* District Judge.

MARCUS, Circuit Judge:

Appellant Tampa Bay Water (“TBW”) challenges three pretrial rulings that preceded its defeat at trial in this diversity case. The subject matter of the lawsuit was a reservoir, owned by TBW, which developed large cracks in its earthen embankments shortly after construction. TBW sued several defendants, including HDR Engineering (“HDR”) and Barnard Construction Company (“Barnard”), alleging that HDR defectively designed the reservoir and that Barnard defectively constructed it. The amount in controversy was very large; TBW's initial settlement demands exceeded $200 million, and it ultimately sought more than $100 million in damages at trial. Prior to trial, TBW settled with Barnard and entered into a series of factual stipulations that essentially absolved Barnard of liability. On the basis of those stipulations, the district court granted Barnard summary judgment, leaving only TBW and HDR to go to trial. TBW argued that HDR's defective design caused the reservoir damage. HDR presented an alternative theory to the jury, alleging that Barnard's construction techniques caused the damage. The jury found in HDR's favor, leading to this appeal.

The primary issue on appeal concerns the district court's decision to allow HDR to present evidence that Barnard caused the reservoir damage. According to TBW, both Florida's comparative negligence statute and estoppel principles should have barred the introduction of this evidence, since Barnard had been absolved of liability to TBW by the district court's grant of summary judgment in Barnard's favor. After thorough review, we conclude that the district court properly denied TBW's motion to exclude HDR's evidence. TBW advanced one theory of causation against Barnard, which it expressly disavowed as part of its settlement agreement with Barnard. When the district court granted summary judgment to Barnard, therefore, the court addressed and rejected only that theory. The district court had no occasion to adjudicate the merits of HDR's alternative theory of causation. Thus, the grant of summary judgment did not estop HDR from presenting that theory and the surrounding facts to the jury.

TBW also claims that the district court improperly admitted HDR's expert's testimony despite the fact that his methodology was unreliable and never peer-reviewed, and that the district court wrongly denied TBW leave to amend its complaint for a second time after the close of discovery. The district court did not abuse its discretionin either respect and, therefore, we affirm its judgment.

I.

A.

Tampa Bay Water is a regional water supply authority that provides drinking water for the Tampa Bay area. In November 1998, TBW and HDR entered into a contract for the design of a large reservoir project. TBW also contracted with Barnard to build the reservoir based on HDR's design. Because water in an earthen reservoir may seep away, HDR's design included the use of plastic sheeting called a “geomembrane” within the embankment. A protective layer of two to three feet of soil was placed over the geomembrane. On top of that layer, the inner slope of the reservoir consisted of “soil cement,” a mixture of soil and cement designed to prevent erosion of the reservoir's inner walls.

The reservoir began operating in June 2005. By late 2006, two areas of the reservoir's embankment—one in the northeast quadrant, one in the southwest—exhibited large cracks in the soil cement. TBW contacted HDR and asked it to investigate the cracks. According to TBW, HDR used its investigation to figure out a way to escape its own liability and to produce evidence of other parties' fault. Eventually, TBW fired HDR and tasked its system engineer, Black & Veatch, with completing the investigation.

In December 2008, TBW sued HDR and Barnard in the United States District Court for the Middle District of Florida. The complaint alleged that HDR's design was defective because of the failure to account for excess pore pressure. The complaint also alleged that Barnard had negligently constructed the reservoir with improperly blended soil, and that HDR had negligently performed its field inspection and quality-control duties during construction. In November 2009, TBW filed an amended complaint.

The parties advanced several different theories regarding the cause of the cracking. One of TBW's theories was that the cracking was caused by excess pore pressure (“the excess pore pressure theory”), which meant that the layer of soil between the soil cement and the geomembrane was trapping excess water. The excess water exerted pressure on the soil cement and pushed it up, leading to the cracks. This theory put the blame squarely on HDR, since a different design could have avoided this problem. Initially, TBW also asserted that Barnard had used improperly blended soil in the intermediate layer. The soil then created “lenses, pockets, streaks, and layers,” which permitted the excess pore pressure to develop (“the lenses and pockets theory”).

HDR's theory was that the cracking was not caused by the soil cement being pushed up but rather by the cement collapsing. According to HDR, the protective soil layer on top of the geomembrane was too thick, too loose, and too dry in the two areas where the soil cement cracked. When the soil became saturated with water, it became denser and lost volume, causing the soil cement to collapse and crack (“the collapse upon wetting theory”). This theory placed the blame on Barnard. Notably, TBW never asserted the collapse upon wetting theory as an alternative theory of causation against Barnard.

B.

Three of the district court's pretrial rulings are at issue in this appeal. In December 2010, after discovery closed, TBW filed a timely motion requesting leave to amend its complaint for a second time. Among other things, TBW wished to add claims for professional negligence and breach of an implied covenant of good faith and fair dealing based on HDR's post-cracking investigation. The district court granted the motion in part, allowing TBW to bolster its allegations in Count One (concerning HDR's defective design), but denied leave to amend to add the two new claims pertaining to HDR's post-cracking investigation. The district court found that TBW knew of the factual basis for both of those claims well before December 2010 and had unduly delayed bringing the motion.

The second contested ruling concerned HDR's expert, Dr. Bromwell. TBW moved to exclude Bromwell because his testimony relied on using results from a test called “ASTM D 4767” to determine whether the reservoir's protective soil layer was susceptible to collapse upon wetting. According to TBW, ASTM D 4767 was not a reliable or widely accepted method for measuring collapse potential. The district court denied TBW's motion and permitted Bromwell to testify for two reasons. First, HDR had produced several peer-reviewed articles that suggested that triaxial tests like ASTM D 4767 could be used to determine the collapse potential of a soil sample. Second, Bromwell had explained in his deposition how he had derived his assessment of the collapse potential from the ASTM D 4767 data.

The final contested ruling requires some more background. In March 2011, TBW and Barnard entered into a high-low settlement agreement, which obligated Barnard to pay a minimum of $750,000 and capped its maximum exposure at $5,000,000. The agreement also contained an extensive set of stipulated facts that essentially absolved Barnard of liability. The agreement did not dispose of TBW's claims against Barnard, however, and in fact required Barnard to stand trial and call certain witnesses and prevented Barnard from calling others. The ultimate thrust of the agreement was that Barnard would remain a nominal defendant at trial but would (like TBW) blame HDR for the damage.

HDR moved to void the settlement agreement as collusive or, in the alternative, suggested that the district court enter summary judgment in Barnard's favor so that Barnard could not participate at trial. The district court ordered TBW to show cause why summary judgment should not be entered in favor of Barnard.¹ TBW argued that, although the stipulations disavowed Barnard's responsibility under the excess pore pressure theory, TBW could still pursue Barnard under its lenses and pockets theory.

The district court granted Barnard summary judgment and found it not liable to TBW. To start with, the court noted that TBW had abandoned any claim against Barnard not based upon the lenses and pockets theory. However, TBW and Barnard expressly stipulated that the lenses and pockets in the soil were not the cause of the damage. Moreover, they further stipulated that HDR, not Barnard, was responsible for the existence of the lenses and pockets. The district court concluded, therefore, that TBW's sole theory of Barnard's liability was “foreclosed by its own admissions.” Since the district court granted summary judgment to Barnard, it did not decide on the validity of the settlement...