PCL Construction Services, Inc. v. B&H Contractors of South Dakota, Inc.
4:11-cv-04035
D.S.D.May 2, 2013Background
- PCL Construction subcontracted B&H to install a piping system at 3M's Brookings, SD facility using GF product manufactured by George Fischer and supplied by Central States.
- B&H received over-the-phone installation training from George Fischer personnel before installing the GF product; PCL observed the installation and air-tested the system, which passed with 100% joint integrity.
- Leaks began during and after installation, with at least a dozen leaks occurring over time; B&H repaired some leaks, and insurance covered most damages from early leaks.
- A first leak appeared in October 2007; a second in September 2008; a third in March 2010; a fourth in January 2011; PCL later contracted Redlinger Bros. to replace the system; additional demolition-related leak occurred.
- PCL incurred $171,445.50 in costs; it blamed B&H for improper installation, while B&H asserted third-party liability claims against George Fischer and Central States for defective GF product.
- The court granted summary judgment for third-party defendants on B&H's claims, finding the economic loss doctrine barred tort claims and that B&H failed to prove proper notice for a breach of the implied warranty of merchantability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether economic loss doctrine bars tort claims | B&H asserts exceptions to the doctrine apply. | Central States/George Fischer contend doctrine precludes tort claims for product defects. | Economic loss doctrine applies; tort claims barred. |
| Whether B&H can pursue negligence and product liability despite the component-part damage | Damages are for other property due to defective product. | Damages are repair costs to the whole product; economic losses under UCC. | Damages are consequential repair costs; barred under the doctrine. |
| Whether B&H timely notice of breach is required for implied warranty of merchantability | Notice was provided; failure is not fatal. | Notice is required and not shown; pleaded or shown timeliness lacking. | Notice requirement not met; claim barred. |
| Whether Central States is liable for breach of contract, express warranties, and implied warranties of fitness for a particular purpose | There are breach theories against Central States. | Waived due to lack of opposition and lack of contract/warranties evidence. | Waived or lacking evidence; summary judgment for Central States on these claims. |
Key Cases Cited
- Mitek Indus., Inc. v. City of Lennox, 519 N.W.2d 333 (S.D. 1994) (economic loss doctrine; damages to whole product are not 'other property')
- Jorgensen Farms, Inc. v. Country Pride Corp., 824 N.W.2d 410 (S.D. 2012) (exceptions to economic loss doctrine; notice and personal injury considerations)
- Corsica Coop. Ass’n v. Behlen Mfg. Co., 967 F. Supp. 382 (D.S.D. 1997) (damages to building contents not recoverable as 'other property' under tort claims)
- Brookings Mun. Util., Inc. v. Amoco Chem. Co., 103 F. Supp. 2d 1169 (D.S.D. 2000) (economic loss doctrine applies to torts; cites SD law integration)
- Hepper v. Triple U Enter., Inc., 388 N.W.2d 525 (S.D. 1986) (notice standards for breach of warranty claims under SD law)