CLAIRE V. EAGAN, District Judge.
Now before the Court is Defendant Newbern Fabricating Inc.'s Motion for Summary Judgment and Brief in Support (Dkt. # 100) and Newbern Fabricating Inc's Motion to Strike Affidavit of Brian Carleton (Dkt. # 110).
This action arises from the collapse of a wall of a storage facility at the Tulsa Port of Catoosa on March 7, 2013. Plaintiff Gavilon Grain owned the building, which Gavilon Fertilizer used to store fertilizer.
On March 7, 2013, a concrete wall of the building collapsed, resulting in damage to the wall itself and the master control center (MCC Room), an adjacent room that housed controls, motors, and electronics that controlled the building's conveyer system. Dkt. # 100, at 12; Dkt. # 107, at 4. Plaintiffs Lexington and Lloyd's of London paid a number of claims related to the losses sustained from the wall collapse. Dkt. # 100, at 12; Dkt. # 107, at 5. Plaintiffs Gavilon Grain and Gavilon Fertilizer both suffered losses from the wall collapse, including damage to the building and associated equipment and loss of profit and use of facilities. Plaintiffs thereafter filed this action against defendants Newbern and Baucom Concrete Construction, Inc., asserting that the damages were caused by inadequate design and installation of the concrete columns. Dkt. # 54. Plaintiffs assert breach of contract and negligence claims against Newbern, seeking damages not recovered from the insurer plaintiffs.
Summary judgment pursuant to Fed. R. Civ. P. 56 is appropriate where there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.
"When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'"
The Court first considers Newbern's motion to strike (Dkt. # 110). Newbern asserts that the affidavit of Brian Carleton, the Vice President of Operations for Gavilon Grain, submitted as an exhibit to the response to Newbern's motion for summary judgment (Dkt. # 107-1) should be stricken because it is an "attempt to create a sham fact question" and "is inconsistent with Gavilon Plaintiffs' prior discovery responses." Dkt. # 110, at 2. Plaintiffs respond that the Carleton affidavit is consistent with prior statements about the property damaged by the wall collapse and, at most, provides clarification on the issue of ownership. Dkt. # 119, at 11.
The Carleton affidavit states that when the wall of the fertilizer storage building collapsed, it also destroyed an adjacent building, the MCC room. Dkt. # 107-1, at 3. Carleton attests that the MCC Room was a separate building from the fertilizer storage building that suffered the wall collapse.
Newbern identifies the second amended complaint
With respect to discovery responses, both Gavilon Grain and Gavilon Fertilizer answered interrogatories regarding property damage each party sustained. Gavilon Grain detailed its property damage as follows: "Wall of west storage bay, together with adjacent fixtures and MCC Control Room were destroyed or compromised." Dkt. # 110, at 8. Gavilon Fertilizer, in response to the same question about the property damage it suffered, responded "amount of property damage unknown at this time." Dkt. # 119-1, at 3. Gavilon Grain and Gavilon Fertilizer were also served with requests for production. Gavilon Fertilizer provided Newbern documents related to any replacement or repairs Gavilon Fertilizer expected would be required based on property damage sustained in the wall collapse, as well as documents related to any damages that Gavilon Fertilizer sustained. Dkt. # 119-2, at 2,4. In response to its requests for production, Gavilon Grain answered each request with the following:
Dkt. # 110, at 25.
Newbern asserts that the second amended complaint and discovery responses demonstrate that the Carleton affidavit is a sham and should be stricken. But Newbern never deposed any Gavilon Grain or Gavilon Fertilizer representative with respect to the issue of property ownership. Although Newbern noticed 30(b)(6) depositions for both Gavilon Grain and Gavilon Fertilizer that included topics relating to ownership of property damaged by the wall collapse, Newbern concedes that no examination regarding property ownership ever occurred. Newbern served Gavilon Grain with a 30(b)(6) notice that included a topic related to the "[o]wnwership and use of the subject fertilizer building, and associated equipment, accessories, controls, and attachments." Dkt. # 110, at 33. Gavilon Grain designated Bill Arroyo to testify as to this topic; however, Gavilon Grain withdrew him as a designated representative for this topic moments before the deposition began.
Newbern argues that Carleton's affidavit should be stricken pursuant to the sham affidavit rule. "`[A]n affidavit may not be disregarded [solely] because it conflicts with the affiant's prior sworn statements. In assessing a conflict under these circumstances, however, courts will disregard a contrary affidavit whey they conclude that it constitutes an attempt to create a sham fact issue.'"
Based on the foregoing, the Court concludes that the Carleton affidavit is not a sham affidavit and should not be stricken. The Court finds the third factor of the sham-affidavit analysis dispositive. The Carleton affidavit provides clarification on the issue of ownership; it is not inconsistent with prior discovery responses. And Newbern seized upon the opportunity to file a motion for summary judgment without seeking clarification on the property ownership issue. Newbern could have filed a motion to compel testimony regarding the ownership of controls and equipment housed in the MCC room, but instead chose to file its motion for summary judgment without such testimony. And, as plaintiffs rightfully note, they are entitled to designate representatives to testify about particular topics. Gavilon Grain's designation of Bill Arroyo to testify about ownership issues and Gavilon Grain's subsequent withdrawal of this designation, moments before the deposition began, is permissible; the Court will not use it as evidence in support of Newbern's argument. Newbern's recourse in this situation was to file a motion to compel designation of a 30(b)(6) representative of each company to give testimony regarding the ownership of materials in the MCC Room; that Newbern did not avail itself of this remedy should not be held against plaintiffs. Newbern's motion to strike should thus be denied.
Turning to the merits of Newbern's arguments, Newbern asserts that it is entitled to summary judgment because: (i) the breach of contract claim is barred by a five-year statute of limitations; (ii) the Gavilon plaintiffs cannot recover for their tort claim as a matter of law because their claim is barred by either a "contractual" economic loss rule or a "stranger" economic loss rule; and (iii) subrogated insurers cannot recover as a matter of law because the Gavilon plaintiffs' claims fail as a matter of law. Dkt. # 100, at 13-14.
The Court first considers Newbern's argument that it is entitled to summary judgment on plaintiffs' contract claim, asserting that such claim is time-barred. Dkt. # 100, at 13. Newbern asserts that plaintiffs' contract claim is governed by a five year statute of limitations, which began to run in 2005 when the storage building was substantially completed.
Under Oklahoma law, "[a]n action upon any contract, agreement, or promise in writing" is subject to a five-year statute of limitations. OKLA. STAT. tit. 12, § 95(a)(1). And "[t]he cause of action for breach of a contract for construction arises at the contract's completion."
Under Oklahoma law, "[a] contract includes not only the promises set forth in express words, but, in addition, all such circumstances under which it was made."
Construction on the storage building was substantially complete by late 2005 or early 2006. Any contract claim based on this construction job was subject to a five-year statute of limitations under OKLA. STAT. tit. 12, § 95(a)(1), or OKLA. STAT. tit. 12A, § 2-725. The discovery rule does not operate to toll any statute of limitations. Therefore, plaintiffs' contract claim, filed in 2014, is untimely. The Court thus concludes that summary judgment is appropriate as to plaintiffs' contract claim.
Newbern next asserts that Gavilon Grain cannot recover for its negligence claim because it is barred by what Newbern terms the "contractual" economic loss rule, and characterizes as a rule that a plaintiff may not recover in tort for damages to a property constructed pursuant to a contract or to associated property integral to the function of the property. Dkt. # 100, at 27. Plaintiffs respond that the "contractual" economic loss rule applies to products liability cases only and should not be extended to claims of negligent construction. Dkt. # 107, at 11-12.
In
Newbern urges the Court to extend the "contractual" economic loss rule to claims of negligent construction. But at least one other court considering whether Oklahoma courts would extend the "contractual" economic loss rule to claims outside of products liability cases has concluded that it was inappropriate to apply the rule beyond products liability.
Like that court, this Court is unprepared to conclude that Oklahoma courts would adopt the "contractual" economic loss rule in areas of the law beyond products liability. Oklahoma courts have given no indication, nor has Newbern identified any authority suggesting, that Oklahoma courts would extend the reach of this economic loss doctrine to negligent construction claims.
Newbern also asserts that it is entitled to summary judgment on Gavilon Fertilizer's negligence claim, arguing that Gavilon Fertilizer's tort claim is barred by both the "contractual" economic loss rule and what it terms the "stranger" economic loss rule. Dkt. # 100, at 17, 27. Plaintiffs respond that there is a genuine dispute of material fact regarding whether Gavilon Fertilizer owned any property damaged in the wall collapse and asserts that Newbern's argument regarding "stranger" economic loss relies on a theory that has not been, and is unlikely to be, accepted by Oklahoma courts. Dkt. # 107, at 11. As to the "contractual" economic loss rule, plaintiffs argue that, for the same reasons it should not bar Gavilon Grain's claim, it should not be applied to bar Gavilon Fertilizer's claim. Dkt. # 107, at 12.
First, to the extent that Newbern asserts that Gavilon Fertilizer cannot recover for its negligence claim based on the "contractual" economic loss theory, for the same reasons the Court concludes that the "contractual" economic loss rule does not apply to bar Gavilon Grain's claim, it concludes the same as to Gavilon Fertilizer. Second, Newbern urges the Court to apply what it terms the "stranger" economic loss rule to bar Gavilon Fertilizer's negligence claim against Newbern. Under this rule, a plaintiff may not recover for a purely economic loss in the absence of some special relationship between the plaintiff and the tortfeasor. Dkt. # 100, at 18 (citing
Oklahoma courts have not adopted this rule, but Newbern asserts that the Court should apply the rule in the context of this case. Dkt. # 100, at 17. However, the Court need not reach the issue at this stage in the ligation. As discussed above in relation to the motion to strike, the parties dispute whether Gavilon Fertilizer owned any property that was damaged by the wall collapse, i.e. whether Gavilon Fertilizer suffered a purely economic loss. The Court denied Newbern's motion to strike, thus allowing the Carleton affidavit as evidence of Gavilon Fertilizer's ownership of controls and equipment located in the MCC Room. Based on this affidavit, the Court concludes that there is a genuine dispute of material fact regarding ownership of damaged property, including controls and equipment located in the MCC room. Because the Court concludes that there is a disputed material fact concerning whether Gavilon Fertilizer suffered economic losses only, the Court need not resolve at this point whether Oklahoma courts would adopt the "stranger" economic loss rule. The Court will address this issue in the event of a finding of fact from a jury that plaintiff Gavilon Fertilizer suffered economic losses only and did not own any property damaged or destroyed by the wall collapse. Newbern's motion for summary judgment on this basis should be denied.
Newbern finally asserts that the insurers' claims depend upon the validity of the claims asserted by the Gavilon plaintiffs, and in the absence of a cognizable claim by the Gavilon plaintiffs, the insurers may not recover. Dkt. # 100, at 13-14. Under Oklahoma law, "[a] subrogee steps into the shoes of the plaintiff `subject to all legal and equitable defense which the [tortfeasor] may have against the [plaintiff.]'"
In sum, the Court concludes that Newbern's motion to strike should be denied because the plaintiffs have not presented a sham affidavit. Instead, plaintiffs offer evidence clarifying an issue of ownership. The Court also concludes that plaintiffs' breach of contract claim is time barred because it was brought outside of the five-year statute of limitations, which began running upon completion of construction, either in late 2005 or early 2006. Next, the Court concludes that the plaintiffs' negligence claim is not barred as a matter of law because the Court declines to adopt the "contractual" economic loss rule outside the products liability area and because a disputed material fact renders a decision regarding the application of the "stranger" economic loss rule premature. Finally, the Court concludes that, because the Gavilon plaintiffs still have claims for recovery, Newbern has not shown that the insurer plaintiffs cannot recover as a matter of law. Newbern is thus entitled to summary judgment on plaintiffs' contract claim, but summary judgment on plaintiffs' negligence claim should be denied.