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South Dakota Board of Regents v. Global Synthetics Environmental, LLC

United States District Court, D. South Dakota, Western Division

September 15, 2017

SOUTH DAKOTA BOARD OF REGENTS on behalf of BLACK HILLS STATE UNIVERSITY, Plaintiff and Counterclaim Defendant,
v.
GLOBAL SYNTHETICS ENVIRONMENTAL, LLC, D/B/A GEO-SURFACES, Defendant, Counterclaim Plaintiff and Third-Party Plaintiff,
v.
MIDSTATE RECLAMATION S.D., INC.,

          ORDER

          JEFFREY L. VIKEN, CHIEF JUDGE.

         INTRODUCTION

         Plaintiff South Dakota Board of Regents, on behalf of Black Hills State University (“BHSU”), filed a motion for partial summary judgment, a statement of undisputed material facts with supporting exhibits and a supporting brief against defendant Global Synthetics Environmental, LLC, (“GSE”). (Dockets 40-41 & 43-44). GSE filed a brief in resistance to BHSU's motion, together with a response to plaintiff's statement of undisputed facts with supporting exhibits. (Dockets 45-46 & 48). Plaintiff filed a reply brief in support of its motion. (Docket 49). For the reasons stated below, BHSU's motion for partial summary judgment is granted.

         GSE filed a cross motion for summary judgment against BHSU together with a statement of undisputed material facts with supporting exhibits and a supporting brief. (Docket 54-57). BHSU filed a brief in resistance to GSE's motion together with a response to defendant's statement of undisputed facts with supporting exhibits. (Dockets 78-84). GSE filed a reply brief in support of its motion. (Docket 85). For the reasons stated below, GSE's motion for summary judgment is granted in part and denied in part.

         Third-Party Defendant Midstate Reclamation SD, Inc., (“Midstate”) filed a motion for summary judgment against GSE together with a statement of undisputed material facts and a supporting brief. (Dockets 58-60). GSE filed a brief in resistance to Midstate's motion together with a response to the statement of undisputed material facts with supporting exhibits. (Dockets 70-72). Midstate filed a reply brief in support of its motion. (Docket 76). For the reasons stated below, Midstate's motion for summary judgment is granted.

         Third-Party Defendant FMG, Inc., (“FMG”) filed a motion for summary judgment against GSE together with a statement of undisputed material facts and a supporting brief. (Dockets 63-65 & 67). GSE filed a brief in resistance to FMG's motion together with a response to the statement of undisputed material facts with supporting exhibits. (Dockets 73-75). FMG did not file a reply brief in support of its motion. For the reasons stated below, FMG's motion for summary judgment is denied.

         PROCEDURAL BACKGROUND

         BHSU filed a complaint against GSE in state court. (Docket 1-1 at pp. 5-11). GSE timely removed plaintiff's complaint from state court. (Docket 1). GSE filed an answer and counterclaim. (Docket 6). BHSU filed a reply to the counterclaim. (Docket 7).

         GSE filed unopposed motions for leave to file third-party complaints against Midstate and FMG. (Dockets 17 & 22). The court granted the motions. (Dockets 20 & 26). GSE filed third-party complaints against Midstate and FMG. (Dockets 24 & 27). Midstate and FMG filed their answers to the third-party complaints. (Dockets 29 & 35). The court entered a scheduling order setting deadlines for the completion of all discovery and filing substantive motions. (Docket 39). The parties' motions for summary judgment were all timely filed.

         STANDARD OF REVIEW

         Under Fed.R.Civ.P. 56(a), a movant is entitled to summary judgment if the movant can “show 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 meets 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 that 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 p. 248. “[T]he 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 failed 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. at p. 323.

         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 pp. 251-52.

         UNDISPUTED MATERIAL FACTS

         The following recitation consists of the material facts developed from the complaint (Docket 1-1 at pp. 5-11), the third-party complaints (Dockets 24 & 27), the parties' answers (Dockets 6, 29 & 35), the parties' statements of undisputed material facts (Dockets 44, 55, 59 & 65), the parties' responses to opposing parties' statements of undisputed material facts (Dockets 46, 72, 74 & 79) and other evidence where indicated. Where a statement of fact is admitted by the opposing party, the court will only reference the initiating document. These facts are “viewed in the light most favorable to the [party] opposing the motion.” Matsushita Elec. Indus. Co., 475 U.S. at 587. The facts material to the parties' motions for summary judgment are as follows.

         Plaintiff South Dakota Board of Regents is a South Dakota governmental entity with the power to sue and be sued on behalf of those educational institutions under its control, including Black Hills State University. (Docket 1-1 at p. 5 ¶ 1). BHSU is a state university located in Spearfish, South Dakota. Id. ¶ 2. Global Synthetics Environmental, LLC, is a Louisiana corporation with its principal place of business in Baton Rouge, Louisiana. Id. ¶ 3. Midstate Reclamation, Inc., is a Minnesota corporation with its principal place of business in Lakeville, Minnesota. (Docket 24 ¶ 4). FMG, Inc., is a South Dakota corporation consisting of a multi-discipline engineering consulting firm in Rapid City, South Dakota. (Docket 27 ¶ 5).

         On May 30, 2013, BHSU and GSE entered into a contract (“Contract”) in which GSE would provide the labor, materials and equipment to install an artificial sports field consisting of a GeoGreen infilled replicated grass field on a GeoFlo drainage and shock attenuation blanket over a cement stabilized deck which was to perform as a vertical-to-horizontal draining synthetic turf system at BHSU's Lyle Hare Field (the “Project”). (Docket 1-1 at p. 6 ¶ 4; see also Dockets 24 ¶ 7; 27 ¶ 8 & 44 ¶ 4). The pertinent documents include the Contract, GSE's Proposal of May 13, 2013, the Design and Build Installation Guide Specifications, GSE's Warranty, and GSE's Maintenance Requirement Manual (the “Contract documents”).[2] (Docket 44 ¶ 5).

         The artificial turf system contracted for is a vertical-to-horizontal draining system comprised of the following layers, from top to bottom:

a. Rubber infill;
b. Sand infill;
c. Artificial grass or turf;
d. Backing layer;
e. Drainage and shock attenuation blanket; and
f. Base course consisting of a “cement stabilized deck.”

(Docket 44 ¶ 9).

         Cement soil stabilization (“cement stabilization”) is a commonly used method of improving the overall strength and stability of soils for use as a base, similar to granular material or aggregate bases. Id. ¶ 10. The process of stabilizing soil involves mixing a certain amount of cement with an amenable soil type which causes a chemical reaction to create a hard, impervious product. Id. ¶ 11. Cement stabilization is not appropriate for all soil types. Id. ¶ 12. A “mix design” is typically utilized before starting construction to determine whether cement stabilization is appropriate and, if so, the type and amount of ingredients required to achieve a desired result. Id. ¶ 13; see also Docket 59 ¶ 14. The mix design procedure recommends the soil to be stabilized be tested for pH, organic content and plasticity. (Docket 44 ¶ 14; see also Docket 59 ¶ 15). GSE determined it could achieve a proper cement stabilized deck with eight percent cement if the plasticity index of the soil material is acceptable or as determined by a geotechnical engineer. (Docket 44 ¶ 16).

         GSE required BHSU to hire an engineering firm to conduct soil tests GSE wanted performed in order to determine if a cement stabilized deck could be utilized in the field. Id. ¶ 17. FMG was hired by BHSU for the Project. Id. ¶ 18. On May 10, 2013, GSE instructed FMG as to the tests GSE wanted performed to determine if cement stabilization was appropriate on the Project. (Docket 44 ¶ 18; see also Docket 59 ¶ 11) (“Charles Dawson of GSE told FMG what to test for.”).[3] FMG had no prior experience in cement soil stabilization. (Docket 65 ¶ 7). FMG was not asked to do a cement mix design or a soil stabilization test.[4] Id. ¶ 6. FMG sent a proposal to BHSU itemizing the tests requested by GSE and the total cost. Id. ¶ 2; see also Docket 75-1.

         On May 17, 2013, GSE received FMG's report of the test results. (Docket 44 ¶ 19). FMG's testing was correctly conducted, the results were accurate and fell within the reasonable values which should be expected for the soil at the Lyle Hare Field. (Docket 65 ¶ 4). Based on FMG's report, it was not possible to determine whether the soil was suitable for cement stabilization. (Docket 59 ¶ 37).

         GSE knew cement stabilization would not work in soil containing organic material. (Docket 43-5 at p. 49:2-12). GSE did not test the soil for organics. Id. at p. 95:17-19. GSE was responsible for the mix design. Id. at p. 125:17-19. Although a mix design is customarily performed on projects like the Lyle Hare Field Project, no mix design was utilized by GSE for the Project. (Docket 44 ¶ 15; see also Docket 59 ¶ 16). GSE concluded the soil was acceptable for cement stabilization. (Docket 44 ¶ 17; see also Docket 59 ¶ 4). The cement stabilization process was intended to make the soil a suitable subgrade to support the artificial turf surface on the field. (Docket 44 ¶ 10). After receiving FMG's report, GSE represented to BHSU that the soil at Lyle Hare Field could be properly stabilized using the concentration of cement contained in GSE's May 13, 2013, proposal and the Contract of May 30, 2013.[5] (Docket 44 ¶ 22).

         On June 3, 2013, GSE received Midstate's bid to perform the cement stabilization work. (Docket 24 ¶ 14). On June 11, 2013, Mr. Dawson provided Midstate's owner with a 2005 FMG report which included a proctor test performed on the soil at Lyle Hare Field in that year.[6] (Docket 24 ¶ 15).

         On June 17, 2013, GSE entered into a subcontract with Midstate.[7] Id. ¶ 8. Under the subcontract, Midstate was hired to perform cement stabilization for the Project. Id. ¶¶ 9 and 26. Midstate suggested to GSE that a pre-project mix design be conducted. (Docket 59 ¶ 19). GSE instructed Midstate “to put cement 8 inches deep at 8% volume” on the field but did not indicate how GSE came to that conclusion.[8] Id. ¶ 20. GSE provided Midstate with no testing information regarding the soil organic content. Id. ¶ 34. Ultimately, whether to use cement stabilization was GSE's decision. (Dockets 59 ¶ 9 and 72 ¶ 9).

         On June 19, 2013, Midstate's employees began the cement stabilization process.[9] (Docket 24 ¶ 18). Superintendent Doug Kahnke of Midstate's cement stabilization division immediately noticed the soil may not be appropriate for cement stabilization. Id. ¶ 19. He suspected the soil may contain too much organic material or may not have sufficient other components to make the soil suitable as a subgrade for the artificial turf surface.[10] Id. Mr. Kahnke never expressed his concerns to anyone. (Docket 72 ¶ 9).

         Once the Project began it involved removing the natural grass, attempting[11] cement stabilization, grading, installation of shock pad, drainage pad, turf, markings, logo, and rubber in-fill. (Docket 44 ¶ 23). Grading and compaction, which constituted the balance of the cement stabilization process, were not activities performed by Midstate. (Docket 59 ¶¶ 29-30; see also Docket 44 ¶ 25). Midstate completed its portion of the cement stabilization work in one day. (Docket 44 ¶ 24).

         On June 19, 2013, at the request of BHSU and GSE, FMG visited the site to take moisture content and density tests on the subgrade soils during the cement stabilization process. (Docket 75-2 at p. 1). The average moisture content readings were used by GSE “to calculate the percentage of cement . . . required to treat . . . the subgrade soils.” Id. After compaction of the treated subgrade soil, FMG did density testing. Id. Light watering and additional compaction was done and a second density test taken. FMG was told the contractor was “targeting a completed cement treated subgrade wet density of 104.0 pounds per cubic foot.” Id. Both of FMG's density tests “exceeded 104.0 pounds per cubic foot.” Id. FMG's oral results were provided to BHSU and GSE with a cover letter dated June 25, 2013. (Docket 75-2).

         Grading the soil after it has been stabilized can destroy the integrity of the cement stabilization process. (Docket 59 ¶ 38). GSE recognized the material should not be moved around once the cement stabilization process begins. Id. ¶ 40. The entire grading, or layback, process should be completed within two hours. Id. ¶ 39. Final grading and compaction on the Project took longer than two hours and went well into June 20.[12] Id. ¶ 41.

         GSE's grading subcontractor encountered problems and failed to grade the field to the specifications required by the Contract. (Docket 44 ¶ 25). In addition to the grading problems, many soft areas (“divots”) started appearing under the turf soon after construction. Id. ¶ 27.

         BHSU was entitled to receive an athletic field which was fully functional and ready by the beginning of the 2013 football season. (Docket 55 ¶ 4). On September 19, 2013, BHSU's Athletic Director noticed some areas on the field which were soft and needed to be addresses as soon as possible. (Docket 57-3 at pp. 89:16-90:3). GSE agreed the field did not meet Contract specifications and returned in September 2013 to regrade part of the field. (Docket 44 ¶ 26). GSE acknowledged it became clear there were issues with the subgrade soil because of the divots which were developing. (Docket 55 ¶ 6).

         On at least three occasions in the fall of 2013, GSE attempted to repair divots.[13] (Docket 44 ¶ 28). Some of the repairs did not function consistent with the expectations for the turf surfacing, with many of the seams not bonding and additional divots forming around the repaired areas.[14] Id. ¶ 29. Because of the recurring problems with the field, BHSU withheld the final Contract payment. Id. ¶ 30.

         In November 2013, GSE was concerned about the long-term stability of the field and consulted with Midstate. Id. ¶ 36. Midstate recommended additional testing be performed to determine if the soil stabilization system was working as intended. Id. GSE never notified BHSU of GSE's concern over the cement stabilization system or the additional testing recommended by Midstate.[15] Id. ¶ 37. BHSU's football team played its 2013 home season on the field. (Docket 57-4 at p. 72:19-21).

         In the spring of 2014, BHSU reported to GSE that there were continuing problems with the field. (Docket 44 ¶ 31). GSE offered to repair the field in return for the final Contract payment. Id. ¶ 32. On May 12, 2014, BHSU and GSE entered into an Amendment to the Contract Agreement (“Amendment”).[16] Id. ¶ 6. The Amendment required GSE to:

[C]ommence work on the Field as necessary to conform with the specifications of the . . . Contract Agreement, which shall be accomplished by [GSE] furnishing the necessary materials, labor and equipment to proceed as follows:
a. Remove “infill” from the surface of the field;
b. Remove synthetic turf and shock pads;
c. Re-grade the base of the field with dual plane laser equipment;
d. Remove soft or noncompacting material and replace with compactible stone;
e. Make a final grade to tolerance as per specifications; and
f. Reinstall shock pad, turf, and infill.

(Docket 43-2 ¶ 3). GSE was responsible for determining the means and methods to be utilized under the Amendment, subject to the completion of the work according to the Contract specifications. Id. ¶ 7; see also Docket 44 ¶ 34. In exchange for the work to be performed, BHSU agreed to pay GSE the final amount due under the Contract on a progressive payment schedule. (Docket 43-2 ¶ 8).

         The fifth payment was due “upon completion of grading/compaction.” (Docket 43-2 ¶ 8(F). Prior to making the payment, BHSU hired Interstate Engineering to verify the grading of the field by GSE. (Docket 57-4 at pp. 58:20-59:1). Interstate Engineering was asked to determine whether the field “had been graded to elevation and slope by [GSE] to meet certain contract specifications.” (Docket 83 ¶ 2). William Moths is a licensed land surveyor employed by Interstate Engineering. Id. ¶ 1. On May 22, 2014, Mr. Moths' e-mail to BHSU stated:

Please find the attached drawing representing the Lyle Hare Stadium Football Field surface after regrade and prior to placement of shock pad and turf. . . . Grades were blended from the side lines to the drainage channels at the edge of the track and from the end zones to the edge of the rubberized surface at each end. I feel the [GSE] crew has provided a sub-surface that meets or exceeds the specifications for the project and think that you will have a field to be proud of.[17]

(Docket 48-4). Following receipt of Mr. Moths' e-mail, BHSU made the fifth progress payment to GSE on May 28, 2014.[18] (Docket 55 ¶ 29).

         Under the Amendment the final payment was to “be paid upon BHSU receiving confirmation from its consultant(s) that the field conforms to the project specifications as set forth in the Contract Agreement.” (Docket 43-2 ¶ 8(G). There is no evidence in the record that BHSU conferred with any other consultants before making the final payment under the Amendment. BHSU made the final payment to GSE under the Amendment on May 30, 2014. (Docket 55 ¶ 34). BHSU made all of the payments to GSE required by the Contract and the Amendment. (Docket 44 ¶ 53).

         On June 10, 2014, GSE “re-sent” to BHSU the warranty contained in the Contract. (Docket 55 ¶ 43). The warranty contains a “date of completion or first use” of July 25, 2013.[19] (Docket 57-12 at p. 3).

         The BHSU football team began fall practice on the field on August 14, 2014. (Docket 57-13; see also Dockets 55 ¶ 44 & 79 ¶ 44). During that practice BHSU “discovered two sink holes (soft spots) similar to the ones . . . experienced in the past.” (Docket 57-13). After describing the locations of the divots to GSE, BHSU's Athletic Director asked Mr. Dawson to “please send someone as soon as possible to fill and repair these two areas.” Id. About August 25, 2014, GSE sent a couple of men to work on the field. (Docket 43-5 at p. 155:6-14). GSE made three trips that fall to repair areas which were failing to meet tolerances. (Docket 43-5 at p. 179:1-5). In addition, the parties agreed Tom Verhelst of Spearfish, South Dakota, would do minor repairs to the field. (Docket 80-4 at p. 1). Having Mr. Verhelst repair divots saved GSE the expense of having one of its own employees travel to South Dakota as problems surfaced. Id.

         Because GSE's attempted repairs of the field were not working, BHSU hired David L. Rettner, a geo-technical engineer with vast experience in cement stabilization, to assess the field and make repair recommendations.[20] (Docket 44 ¶ 39). Mr. Rettner conducted a site visit on August 31, 2015, and a geotechnical investigation[21] of the field on September 18, 2015. (Docket 43-3 at pp. 5 & 10). Mr. Rettner issued a written report dated March 2, 2016. (Docket 43-3). Another of BHSU's expert witnesses, W. Todd Smith, a professional engineer experienced in design and installation of artificial turf fields, conducted a site inspection on July 28-29, 2015, and issued a report dated March 9, 2016.[22] (Docket 44 ¶ 48).

         During his site inspection, Mr. Rettner made a number of observations about the condition of the field. Those observations included the following:

1. [S]everal dozen soft areas in the turf. These areas were soft enough that they would deform under the load applied by foot traffic.
2. [S]everal areas of the turf . . . were now over ½ inch below the adjacent surface which was a concern as a tripping hazard . . . .
3. There were several areas on the field where . . . the seam tape had failed and the turf ...

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