Minn. Pipe & Equipment Co. v. Ameron Int'l Corp., Civil No. 11–2158 (JRT/FLN).

938 F.Supp.2d 862

MINNESOTA PIPE AND EQUIPMENT CO., Plaintiff,

v.AMERON INTERNATIONAL CORPORATION, Defendant/Third–Party Plaintiff,

v.Snyder & Associates, Inc., Third–Party Defendant.

Civil No. 11–2158 (JRT/FLN).

United States District Court, D. Minnesota.

April 3, 2013.

Robert B. Bauer, Dougherty, Molenda, Solfest, Hills & Bauer P.A., Apple Valley, MN, for Plaintiff.

Bernard E. Nodzon, Jr. and David A. Snieg, Faegre Baker Daniels LLP, Minneapolis, MN, for Defendant and Third–Party Plaintiff.

John A. Markert, Coleman Hull & Van Vliet, PLLP, Minneapolis, MN, for Third–Party Defendant.

MEMORANDUM OPINION AND ORDER ON DEFENDANT'S AND THIRD–PARTY DEFENDANT'S MOTIONS FOR SUMMARY JUDGMENT

JOHN R. TUNHEIM, District Judge.

Plaintiff Minnesota Pipe & Equipment, Co. (“MN Pipe”) brought this negligent misrepresentation action against defendant Ameron International Corporation (“Ameron”). Ameron, in turn, filed a third-party complaint against Snyder & Associates, Inc. (“Snyder”) for professional negligence, negligent misrepresentation, tortious interference with contract, and indemnity and contribution.

In the course of bidding on a public works project, Ameron advised MN Pipe that pipe manufactured by Ameron was approved for use in the project. MN Pipe advised its customer S.M. Hentges & Sons, Inc. (“Hentges”) to bid on the project using Ameron pipe as its basis for a price quote. Hentges' bid was chosen and Hentges was awarded the project, but Ameron pipe was subsequently rejected as not suitable for use on the project. As a result, Hentges was forced to use a more expensive type of pipe to complete the project.

Pursuant to an oral agreement between Hentges and MN Pipe, Hentges demanded payment from MN Pipe to cover the difference in cost between Ameron pipe and the more expensive pipe. MN Pipe complied, paying Hentges $247,135.00. MN Pipe now seeks reimbursement from Ameron for that payment, arguing that Ameron negligently misrepresented that its pipe was approved for use in the project. Ameron maintains that it advised MN Pipe that Ameron pipe was approved for use in the project because Snyder assured Ameron that Ameron pipe was approved. Snyder denies that it gave such approval to Ameron, but argues that even if it had, Ameron cannot recover on its claims.

Ameron has now moved for summary judgment against MN Pipe and Snyder has moved for summary judgment against Ameron.

BACKGROUND

I. THE PARTIES

MN Pipe is a waterworks supply distributor incorporated in Minnesota. (Am. Compl. ¶¶ 1–2, Aug. 1, 2011, Docket No. 2.) Ameron is a water and wastewater supply manufacturer incorporated in California. (Third–Party Compl. (“TPC”) ¶¶ 1–2, Sept. 13, 2011, Docket No. 6.) Snyder is an engineering firm incorporated in Iowa that provides comprehensive engineering and planning services to public agencies and private developers. ( Id. ¶¶ 3–4.) Hentges, which is not a party to the present action, is a construction contractor specializing in public-works projects in the Midwest. (Am. Compl.¶ 16); (TPC ¶ 16.) Hentges was also one of MN Pipe's customers. ( Id. ¶ 15.)

This case involves a public works project in Polk County, Iowa called the Rock Creek Trunk Sewer Project, Segments 4 and 5 (“the project”). (TPC ¶ 11.) Polk County retained Snyder as the engineer for the project. ( Id.) As the engineer, Snyder coordinated the project, reviewed plans and specifications, and facilitated the bidding process for the project. (Second Aff. of Bernard (B.J.) E. Nodzon, Ex. 1 (Dep. of Christoffer Pedersen (“Pedersen Dep. A”) 17:15–19, 18:7–20), Sept. 21, 2012, Docket No. 31.) Snyder also drafted the specifications for the project. (Pedersen Dep. A 30:7–11.) Snyder had sole discretion to determine whether a product or process met the specifications for the project. (Aff. of John A. Markert, Ex. D (Iowa Urban Standard Specifications for Public Improvements Manual (“SUDAS Manual”) Section 1.02(A)), Aug. 31, 2012, Docket No. 25.)

II. THE PROJECT SPECIFICATIONS

The written project specifications mandated that the pipe materials to be used on the project were of the brand “HOBAS Pipe USA, Inc. or equal ...” (Markert Aff., Ex. A.) The specifications made no reference to Ameron pipe. (Markert Aff., Ex. B (Dep. of Jay Warren (“Warren Dep.”) 48:16–18).) As such, in order for Ameron pipe to be used on the project, Snyder needed to approve its use. (Warren Dep. 48:19–22.)

III. THE SUDAS

The SUDAS are the governing guidelines and specifications for standard construction materials and procedures in Iowa. (Warren Dep. 41:25–42:5.) Section 1.02 of the SUDAS is entitled “Alternate Processes, Equipment, or Materials.” (SUDAS Manual.) It provides, in relevant part:

A. General. In order to establish a basis of quality for the work, performance, or economy of operation, certain processes, types of machinery and equipment, or kind of material may be referenced in the contract documents by designating a manufacturer by and referring to its brand ... Such reference is not intended to foreclose other processes, equipment or materials that will in the sole discretion of the Engineer meet, or exceed, the designated standards ...

B. Consideration.

1. The Jurisdiction may consider alternate processes, equipment, or materials for those specified in the contract documents; however, it is only an indication that the Jurisdiction will not foreclose consideration of the bidder's/contractor's request, and is not an approval. Following are the steps for consideration of alternate processes, equipment, or materials:

a. If a bidder/contractor desires to use alternate processes, equipment, or materials, the bidder/contractor shall contact the Engineer to confirm the Jurisdiction would consider alternate processes, equipment, or materials for those as specified in the contract documents.

...

d. If the bidder/contractor desires to use alternate processes, equipment, or materials for those as specified in the contract documents, the bidder/contractor shall secure the written approval of the Engineer before entering an order therefore.

e. Proposed alternative processes, equipment, or materials that will in the sole discretion of the Engineer meet, or exceed, the designated standards will be given written approval to be used on the project as an “Approve Equal” or “Equivalent” to the specified item.

(SUDAS Manual Section 1.02(A)-(B)) (emphasis added).

Section 1.12 of the SUDAS Specifications provides, in relevant part:

No oral agreement or conversation made or had with any officer, agent, or employee of the Jurisdiction, and no informal written communication from any officer, agent or employee of the Jurisdiction, occurring either before or after the execution of the contract, shall affect or modify any of the terms or obligations contained in any of the contract documents. Such oral contact and such informal writings shall be considered as unofficial information and in no way binding upon the Jurisdiction.

(SUDAS Manual Section 1.12) (emphasis added).

The following applicable terms are defined by the SUDAS:

CONTRACTING AUTHORITY. The body, entity, board, commission, officer, or governmental entity having authority to award a contract.

CONTRACT DOCUMENTS. The contract documents consist of the following: The notice to bidders and notice of public hearing; the instructions to bidders; special provisions; standard specifications; general supplemental specifications; supplemental specifications; plans; addenda; proposal; contract; performance, payment, and maintenance bond; insurance certificate(s); Notice to Proceed; and change orders. These documents form the agreement whereby the Contractor will furnish all labor, equipment, tools, and materials, and perform all work necessary to satisfactorily accomplish the proposed improvement. The contract documents are complemental and what is called for by one shall be as binding as if called for by all.¹

ENGINEER. For publicly owned projects, the Engineer is a Professional Engineer licensed in the State of Iowa and is the authorized representative of the Contracting Authority. For privately contracted projects, with improvements that are to become publicly owned, the Engineer is the Professional Engineer licensed in the State of Iowa and is the authorized representative of the Jurisdiction ultimately accepting ownership of the improvement ... The Engineer may act directly or through duly authorized representatives.

JURISDICTION. A governmental entity ... acting through its governing body, or through the authorized representatives of such governing body when so authorized.

(Supp. Aff. of John A. Markert, Ex. L (Iowa Urban Standard Specifications for Public Improvements Manual–Definitions (“SUDAS Definitions”) Section 1.03), Oct. 31, 2012, Docket No. 33 (emphasis added).)

IV. THE DISPUTE

On March 23, 2011, Ameron representative Jay Warren spoke by telephone with Snyder's project engineer Chris Pedersen. (Warren Dep. 57:7–8). Snyder and Ameron do not agree as to what was said during that teleconference. Warren maintains that Pedersen initially advised him that Snyder did not consider Ameron pipe “equal to” HOBAS pipe, but then had a change of heart and informed him that the pipe would be accepted as equal to HOBAS. (Warren Dep. 57:18–59:15.) Warren also alleges that Pedersen assured him that a written addendum evidencing the approval was not needed. ( Id.) Warren maintains that Pedersen stated he needed to increase competition among bidders, and implored Ameron to submit a quote to a customer so that Ameron pipe could be used in a contractor's bid. ( Id.) Finally, Warren claims that he complied with Snyder's request and advised MN Pipe representative Mike Stordahl that Ameron Pipe would be approved for the project. ( Id.)

Snyder denies that Pedersen ever gave Warren approval. Pedersen testified that he told Warren that Ameron could submit a bid for its product, but that Ameron's pipe would have to be evaluated after the bid to ensure it complied...