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Hayward Baker, Inc v. Shirttail Gulch Road District

September 10, 2012


The opinion of the court was delivered by: Jeffrey L. VIKEN United States District Judge


Pending before the court are motions for summary judgment filed by Hayward Baker, Inc. ("HBI"), Shannon & Wilson, Inc. ("Shannon & Wilson"), and American Technical Services, Inc. (ATS).


After receiving above-average precipitation, Shirttail Gulch Road District, Inc., ("Shirttail Gulch") experienced a slope failure along Shirttail Gulch Road. (Docket 32, ¶¶ 3, 5-7). Shirttail Gulch retained ATS to evaluate the area. Id. at ¶¶ 8-9, 16. Upon ATS's recommendation, Shirttail Gulch hired Rogers Construction to perform an emergency slope repair. Id. at ¶¶ 23, 26. This work consisted of the installation of rock trench drains. (Docket 33-6). The work performed by Rogers Construction was completed on July 1, 2008. (Docket 32, ¶ 27).

On July 2, 2008, a second slide occurred at the site. Id. at ¶ 28. Again, ATS was called to evaluate the area. Id. at ¶¶ 31-32. ATS recommended Shirttail Gulch either develop a new route for ingress and egress from the development or stabilize the slope through the installation of a post tension anchor block system. Id. at ¶ 37; Docket 33-6. ATS contacted HBI for estimates regarding the cost of installation of an anchor block system. (Docket 33-6). Based upon the recommendation of ATS, Shirttail Gulch sought bids from contractors for the road shaping and embankment work, while HBI was to install the anchor system. (Docket 32, ¶¶ 50-51, 53).

At this same time, in July of 2008, President George Bush issued a disaster declaration for South Dakota due to the above-average precipitation received in June of 2008. Id. at ¶ 116. Shirttail Gulch then became eligible to receive assistance from the Federal Emergency Management Agency ("FEMA"). Id. at ¶¶ 116-17. Shirttail Gulch was able to apply for FEMA assistance for the road and slope repair in August of 2008. Id. at ¶ 52. FEMA, however, requested Shirttail Gulch accept competitive bids for the work involving the anchor block system. Id. at ¶ 54. HBI submitted a proposal to construct a tie-back anchor block system which was accepted by Shirttail Gulch. Id. at ¶¶ 54-58. HBI hired Shannon & Wilson, Inc. ("Shannon & Wilson") to design the tie-back anchor block system consisting of twelve anchor blocks. (Docket 21).

HBI commenced construction of the tie-back anchor block system on September 22, 2008. (Docket 32, ¶ 69). A change order was submitted on October 9, 2008, due to a greater quantity of soil needing to be removed than had been considered during the bidding process. Id. at ¶ 71. HBI completed construction of the tie-back anchor block system on October 17, 2008. Id. at ¶ 77. Though HBI had completed construction of the tie-back anchor block system, other work was still ongoing at the site including the installation of a rock buttress system. Id. at ¶¶ 78, 80, 92.

In November of 2008, after receiving between four and five feet of snow, a secondary slope failure occurred. Id. at ¶ 84. At the time of the snowfall, the slide remediation project had not been completed. Id. at ¶ 94.

In March of 2009, another slide occurred at the site. Id. at ¶ 100. ATS concluded the failure of the tie-back anchor block system was due to "incompletion of the lower stabilization system and excessive precipitation[.]" Id. at ¶ 109 (emphasis in original). ATS recommended a re-design of the system. See id. Proposals were then submitted to construct a soldier beam and lagging wall system. Id. at ¶¶ 110-12. Shirttail Gulch hired CTL/Thompson to perform the geotechnical work and Coggins and Sons, Inc., ("Coggins") to perform the construction. Id. at ¶ 112.

In December of 2010, HBI requested payment from Shirttail Gulch in the amount of $197,880. Id. at ¶ 98. Shirttail Gulch has not remitted payment. Id. at ¶ 99. This action was subsequently commenced by HBI by the filing of a complaint on March 5, 2010. (Docket 1).

In response to the complaint, Shirttail Gulch filed a counterclaim against HBI alleging the tie-back anchor block system failed in November of 2008. (Docket 21). Shirttail Gulch asserts HBI was negligent in failing to request further geological testing and in its construction of the tie-back anchor block system. (Docket 6). Shirttail Gulch further claims Shannon & Wilson was negligent in failing to request further geotechnical exploration and testing and in its design of the tie-back anchor block system. (Docket 21). Shirttail Gulch also asserts a negligence claim against ATS for failing to conduct a thorough investigation of the site. (Docket 7). Currently pending before the court is a motion for summary judgment by HBI. (Docket 31). Shannon & Wilson also move for summary judgment, as does ATS. (Dockets 41 and 50).


Under Fed. R. Civ. P. 56(a), a movant is entitled to summary judgment if 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). Once the moving party has met its burden, the nonmoving party may not rest on the allegations or denials in the pleadings, but rather must produce affirmative evidence setting forth specific facts showing a genuine issue of material fact exists. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). Only disputes over facts that might affect the outcome of the case under the governing substantive law will properly preclude summary judgment. Id. at 248. Accordingly, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. at 247-48 (emphasis in original).

If a dispute about a material fact is genuine, that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party, then summary judgment is not appropriate. Id. However, the moving party is entitled to judgment as a matter of law if the nonmoving party fails to "make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In such a case, "there can be 'no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. In determining whether summary judgment should issue, the facts and inferences from those facts must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986). The key inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52.


A. HBI's Motion for Summary Judgment

1. Economic Loss Rule

HBI contends Shirttail Gulch is barred from recovering the damages it seeks under the economic loss rule. (Docket 34). Under the Uniform Commercial Code ("UCC"), "[t]he general rule is that economic losses are not recoverable under tort theories[.]" City of Lennox v. Mitek Industries, Inc., 519 N.W.2d 330, 333 (S.D. 1994). To determine if Shirttail Gulch's requested recovery is limited, the court must first determine whether the contract between HBI and Shirttail Gulch was a transaction contemplated by the UCC. In this matter, the court applies the law of South Dakota, the forum state. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). South Dakota has adopted the UCC. See SDCL ch. 57A-2.

Article 2 of the UCC governs "transactions in goods." SDCL § 57A-2-102. Section 57A-2-105 of South Dakota Codified Law defines "goods" as all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Chapter 57A-8) and things in action. "Goods" also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the sections on goods to be severed from realty (§ 57A-2-107).

SDCL § 57A-2-105. "When goods and services are sold together[,] . . . a special inquiry must be made." Lennox, 519 N.W.2d at 332 (citing Jandreau v. Sheesley, 324 N.W.2d 266 (S.D. 1982)). "The test for inclusion or exclusion is not whether they are mixed, but, granting that they are mixed, whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of service with goods incidentally involved (e.g., contract with artist for painting) or is a transaction of sale, with labor incidentally involved (e.g., installation of a water heater in a bathroom). . . ." Jandreau, 324 N.W.2d at 268.

HBI contends the contract was for the installation of a tie-back anchor block system for a fixed sum which therefore constitutes a contract for sale. (Docket 34). Shirttail Gulch contends that it is a contract for design and construction services. (Docket 68).

The contract between HBI and Shirttail Gulch contains the following provisions:


HBI has had discussion with Dave Bressler of American Technical Services, Inc. regarding the stabilization of the slope failure adjacent to Shirt Tail Gulch Road. In order to increase the slope stability of this area, HBI is proposing to construct ...

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