270 F. Supp. 3d 1088
D.S.D.2017Background
- BHSU contracted with GSE to install an artificial turf system over an 8-inch, 8% by volume cement‑stabilized deck at Lyle Hare Field; GSE’s proposal and contract contemplated cement stabilization as the base.
- GSE directed soil testing; FMG performed limited tests and reported results, but did not perform a mix design or extensive geotechnical analysis for cement stabilization. FMG had no prior cement‑stabilization experience.
- GSE subcontracted Midstate to broadcast and mix cement into the soil (Midstate performed the broadcast/mix but did not perform mix‑design, coring, or geotechnical testing). GSE instructed Midstate to use the 8"/8% specification.
- Soft spots/divots developed after installation. GSE attempted multiple repairs and entered an Amendment in May 2014 to regrade and repair the field in exchange for final payments; BHSU paid after a grading consultant (not a geotechnical engineer) approved the regrade.
- Experts retained by BHSU (Rettner and Smith) concluded the cement stabilization failed due to unsuitable/plastic/organic soils and insufficient cement mix; they recommended removal and replacement with granular base. Court found recurring divots, extensive repairs over years, and continued field limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract (Count I) | BHSU: GSE failed to provide the contract‑specified cement‑stabilized deck, a field meeting specs, and a functioning drainage system; damages to be determined. | GSE: Denies breach; contends Amendment and subsequent work satisfied obligations; warranty governs repairs. | Court: Grant summary judgment for BHSU — GSE breached the contract. |
| Accord and satisfaction / Amendment effect | BHSU: Amendment was to cure GSE’s prior nonperformance, not to accept something different; no accord. | GSE: Amendment was an accord extinguishing prior obligations once satisfied (grading approval, payments). | Court: No accord; Amendment required performance to original specs and did not extinguish prior claim. |
| Express warranty / warranty as exclusive remedy | BHSU: Warranty never became effective because BHSU never accepted a finished field; warranty does not bar other claims. | GSE: Warranty (upon acceptance/first use) was BHSU’s exclusive remedy; BHSU failed to follow warranty claims. | Court: Warranty never took effect; GSE cannot rely on it as exclusive remedy. |
| Implied covenant of good faith (Count II) | BHSU: GSE’s failures and failure to disclose testing concerns prevented BHSU from receiving contract benefits. | GSE: South Dakota doesn’t recognize independent tort; seeks summary judgment. | Court: Claim allowed as contract‑based (not independent tort); factual issues remain — summary judgment denied to GSE. |
| Implied warranty of fitness for a particular purpose (Count III) | BHSU: GSE held itself out as expert; implied warranty that work would be fit for intended purpose; warranty disclaimer inapplicable because express warranty never triggered. | GSE: Contract is a services/ construction contract (not UCC goods); express warranty disclaimer precludes implied warranty. | Court: Denied GSE summary judgment; implied warranty claim may proceed. |
| Rescission (Count IV) | BHSU: Defective base defeats contract’s objective; seeks rescission due to substantial failure. | GSE: BHSU derived benefit (used field for seasons); adequate remedy at law; rescission inequitable. | Court: Grant summary judgment for GSE — rescission denied with prejudice. |
| Third‑party claims against Midstate (indemnity/contribution) | GSE: Midstate negligently failed to advise unsuitability; agent noticed problems and should have warned GSE. | Midstate: Duties limited to subcontract terms; no independent duty beyond contract; excluded mix design/testing. | Court: Midstate owed no independent legal duty; grant summary judgment for Midstate (third‑party claims dismissed). |
| Third‑party claims against FMG (professional negligence/contribution) | GSE: FMG should have warned that additional testing/mix design was needed; FMG’s proposal expressly tied tests to cement‑stabilization decision. | FMG: Performed limited testing as contracted; methodology/results are unchallenged; no duty beyond tests. | Court: Genuine factual dispute whether FMG owed broader professional advice; FMG’s motion denied. |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard and genuine issue inquiry)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden allocation)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (view facts in light most favorable to nonmoving party)
- Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 559 U.S. 393 (choice‑of‑law: federal courts apply state substantive law in diversity)
- Mid‑Western Elec., Inc. v. DeWild Grant Reckert & Assocs. Co., 500 N.W.2d 250 (S.D. 1993) (professional negligence duty assessed by foreseeability beyond privity)
- Fisher Sand & Gravel Co. v. State, 558 N.W.2d 864 (S.D. 1997) (duties arising from contract normally govern; tort duty must be independent of contract)
- Waggoner v. Midwestern Dev., Inc., 154 N.W.2d 803 (S.D. 1967) (implied warranty of workmanship/fitness in construction contracts)