Sinclair Wyoming Refining v. A & B Builders
989 F.3d 747
10th Cir.2021Background
- On September 27, 2013 a control valve (FV-241) fractured at Sinclair Wyoming Refinery, releasing hydrogen and causing a fire/explosion; fracture was caused by high temperature hydrogen attack (HTHA).
- FV-241 was remanufactured and supplied in 2006 as a carbon-steel valve with welded-on flanges by IVS/ACE based on Sinclair’s process spreadsheet and ACE’s FirstVue-based sizing; Fluor’s process design and the P&IDs, however, called for stainless-steel metallurgy for hydrogen service.
- Sinclair sued Howe-Baker/A&B/Matrix (CB&I Defendants), ACE, and IVS/Emerson/Fisher asserting contract, negligence, strict products liability, and failure-to-warn claims (two causal theories: Metallurgy Theory and OEM-specifications Theory).
- EPC Contract between Sinclair and Howe-Baker contained Article 1 (warranties, 12‑month warranty period, exclusive‑remedies and limitation-of-liability clause in Article 1.7) and Article 28 (cross‑indemnity provisions). ACE’s contract documents were ACE’s proposal, Sinclair’s purchase order, and ACE’s FV‑241 quote.
- The district court dismissed or granted summary judgment on all Sinclair claims and granted summary judgment for CB&I on their indemnity counterclaim; Sinclair appealed and the Tenth Circuit affirmed in all respects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Howe‑Baker breached the EPC Contract | Sinclair alleged multiple contractual breaches outside Article 1 and argued Article 1.7 shouldn’t bar its suit | Howe‑Baker argued Article 1 creates the exclusive warranty remedy and bars contract suits for quality issues | Article 1.7 is unambiguous; it limits remedies to the warranty process and bars Sinclair’s breach claim against Howe‑Baker; Howe‑Baker need not plead a limitations defense |
| Whether negligence claims against CB&I survive the economic‑loss rule | Sinclair said independent tort duties (implied warranties or API 941 industry standard) exempt its negligence claims | CB&I argued economic‑loss rule applies; implied warranties were contractually disclaimed by Article 1.7 | Sinclair failed to identify an independent tort duty; economic‑loss rule and Article 1.7 bar negligence claims |
| Whether CB&I may pursue an indemnity counterclaim despite not repleading it and whether the EPC requires indemnity | Sinclair argued CB&I waived counterclaim by not repleading; alternatively Sinclair said indemnity doesn’t cover Sinclair’s own claims | CB&I argued failure to replead caused no prejudice and the EPC’s Article 28 requires Sinclair to indemnify | Court exercised discretion to allow the counterclaim (no prejudice) and held Articles 28.3/28.3.4 require Sinclair to indemnify CB&I for litigation costs |
| Whether magistrate judge properly struck Eggleston’s Rule 30(e) retractions and whether appeal is reviewable | Sinclair sought to retract deposition (Brinell test testimony) and later defended retractions | ACE/IVS said retractions were sham changes and should be struck; they also argued appeal was forfeited | Burns/Franks sham‑testimony factors supported exclusion; exclusion not abuse of discretion. Appealability preserved (waiver excused due to stay / firm‑waiver rule applied) |
| Whether ACE breached the ACE Contract by supplying a carbon‑steel valve (Metallurgy Theory) | Sinclair contended ACE promised to guarantee valve performance via FirstVue and to give “best recommendations” about replacements | ACE argued the ACE Contract documents are unambiguous and do not impose a duty to verify metallurgy or HTHA resistance | No contract provision required ACE to assess metallurgy for HTHA; summary judgment for ACE |
| Whether FV‑241 was a defective product (negligence/strict liability) under Wyoming law | Sinclair said carbon steel made FV‑241 defective and unreasonably dangerous | ACE/IVS argued FV‑241 was simply the wrong product for hydrogen service (nondefective for normal use); product‑defect element lacking | Under Wyoming law a product that is merely the wrong product is not a products‑liability defect; Sinclair failed to show defect — summary judgment for defendants |
| Failure‑to‑warn re: metallurgy (Metallurgy Theory) | Sinclair argued ACE/IVS should have warned FV‑241 was carbon steel and vulnerable to HTHA | Defendants argued Sinclair knew FV‑241 was carbon steel before 2013 (spec sheets, markings, Eggleston admission) | No duty to warn when plaintiff already knew; summary judgment for defendants |
| Failure‑to‑warn re: FirstVue limitations | Sinclair claimed FirstVue could not verify metallurgy and defendants failed to warn users like Sinclair | Defendants argued Sinclair lacked standing as a non‑user/non‑consumer and district court applied strict‑liability standing rules | Sinclair failed to present this theory below (forfeited); district court’s resolution stands; summary judgment for defendants |
Key Cases Cited
- Acosta v. Jani‑King of Okla., Inc., 905 F.3d 1156 (10th Cir. 2018) (Rule 12(b)(6) standard and pleading plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (apply forum state substantive law in diversity cases)
- Rissler & McMurray Co. v. Sheridan Area Water Supply Joint Powers Bd., 929 P.2d 1228 (Wyo. 1996) (economic‑loss rule bars tort recovery for purely economic loss)
- Excel Constr., Inc. v. HKM Eng’g, Inc., 228 P.3d 40 (Wyo. 2010) (independent‑duty doctrine and when tort claims survive economic‑loss rule)
- McLaughlin v. Michelin Tire Corp., 778 P.2d 59 (Wyo. 1989) (distinguishing a defective product from a wrong product; implied warranty claim appropriate for wrong‑product disputes)
- Sutherland v. Meridian Granite Co., 273 P.3d 1092 (Wyo. 2012) (contract interpretation; when extrinsic evidence is barred)
- Burns v. Bd. of Cnty. Comm’rs of Jackson Cnty., 330 F.3d 1275 (10th Cir. 2003) (sham‑affidavit test and factors for excluding contradictory testimony)
- Franks v. Nimmo, 796 F.2d 1230 (10th Cir. 1986) (prior articulation of factors for sham‑evidence analysis)
- Niehaus v. Kansas Bar Ass’n, 793 F.2d 1159 (10th Cir. 1986) (firm‑waiver rule for failure to object to magistrate judge orders)
- Merrill Scott & Assocs. v. SEC, 600 F.3d 1262 (10th Cir. 2010) (addressed standards for review of magistrate orders; discussed in circuit‑conflict analysis)
- Arbaugh v. Y & H Corp., 546 U.S. 500 (2006) (distinguishing jurisdictional from nonjurisdictional limits)