Advance Conveying Technologies v. Lemartec Corporation
931 F.3d 715
8th Cir.2019Background
- Lemartec was general contractor for a chlor-alkali plant; it solicited bids for the conveyor subcontract via a bid package that required submission of design/shop drawings and prohibited fabrication until drawings were stamped “APPROVED” or “APPROVED AS NOTED,” and referenced compliance with the AISC code.
- ACT submitted a revised bid and entered a December 18, 2013 purchase order with Lemartec; the purchase order attached a “Scope of Work Clarification” and ACT’s bid proposal, but did not attach the full bid package.
- ACT submitted general arrangement drawings Jan 27–28, 2014; Lemartec stamped them “Reviewed by G.C.” and “Final Review pending AE of Record,” but neither Lemartec nor the architect/engineer gave formal approval.
- Boundary-condition changes and delayed owner decisions through mid-2014 affected design; in September 2014 Lemartec ordered immediate fabrication and delivery despite ACT’s protests that designs were not approved, prompting claims of delays, rework, and cross-claims.
- At bench trial the district court found ACT did the contracted work, that Lemartec’s inadequate supervision and insistence on fast-track fabrication caused delays and rework, and entered judgment for ACT for unpaid amounts. The court referenced the bid package language and credited expert testimony that the AISC code was an industry usage requiring owner/GC approval and allocating rework risk under fast-track.
Issues
| Issue | Plaintiff's Argument (ACT) | Defendant's Argument (Lemartec) | Held |
|---|---|---|---|
| Whether the bid package was incorporated into the purchase order | Purchase-order terms refer to contract documents/scope and thus incorporate the bid package provisions (including approval-before-fabrication requirement) | Purchase order lacks a clear, specific reference; the bid package was not attached and therefore not incorporated | Purchase order did not incorporate the bid package by reference |
| Whether the AISC code applied as a usage of trade to explain/supplement the contract | AISC is industry standard; it is a usage of trade that explains “applicable code requirements” and requires owner/GC approval; under AISC fast-track risk shifts to owner | AISC did not apply because it was only in the bid package, which was not part of the contract | Court held, based on credited expert testimony, that the AISC code was a usage of trade that supplemented the purchase order and applied |
| Whether Lemartec’s conduct (ordering fabrication before approval) breached the purchase order | Lemartec’s insistence on fabrication before approval implemented fast-track delivery, caused delays/rework, and breached contract obligations | Lemartec contends it had effectively approved drawings in Jan 2014 and did not implement fast-track — it only urged timely delivery | Court found ACT acted reasonably in withholding fabrication pending approval; Lemartec’s conduct caused delays and liability; judgment for ACT affirmed |
Key Cases Cited
- Longfellow v. Sayler, 737 N.W.2d 148 (Iowa 2007) (incorporation-by-reference requires a clear, specific contractual reference)
- Hofmeyer v. Iowa Dist. Ct., 640 N.W.2d 225 (Iowa 2001) (doctrine of incorporation explained)
- In re Estate of Kokjohn, 531 N.W.2d 99 (Iowa 1995) (need for specificity to incorporate extrinsic documents)
- Acciona Windpower N. Am., LLC v. City of West Branch, 847 F.3d 963 (8th Cir. 2017) (standard of review for contract-incorporation questions)
- C-Thru Container Corp. v. Midland Mfg. Co., 533 N.W.2d 542 (Iowa 1995) (usage of trade may supplement contract terms)
- Lesch v. United States, 612 F.3d 975 (8th Cir. 2010) (bench-trial findings must be explained sufficiently for appellate review)
- Leonard v. Dorsey & Whitney LLP, 553 F.3d 609 (8th Cir. 2009) (bench-trial reasoning standard)