Georgetown Steel v. Law Engineering Test

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
GEORGETOWN STEEL CORPORATION,
Plaintiff-Appellee,
v.
LAW ENGINEERING TESTING COMPANY,
Defendant-Appellant,
and
No. 94-2257
UNION CARBIDE CORPORATION,
Defendant-Appellee,
and
PITTSBURGH TESTING LABORATORY,
INC.,
Defendant.
GEORGETOWN STEEL CORPORATION,
Plaintiff-Appellant,
v.
UNION CARBIDE CORPORATION,
Defendant-Appellant,
No. 94-2289
LAW ENGINEERING TESTING COMPANY,
Defendant-Appellee,
and
PITTSBURGH TESTING LABORATORY,
INC.,
Defendant.
Appeals from the United States District Court
for the District of South Carolina, at Charleston.
Falcon B. Hawkins, Chief District Judge.
(CA-85-440-2-1)
Argued: November 1, 1995
Decided: November 13, 1996
Before WIDENER and HALL, Circuit Judges, and
PAYNE, United States District Judge for the
Eastern District of Virginia, sitting by designation.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: Michael S. Seekings, ROBERTSON & SEEKINGS,
Charleston, South Carolina; Robert O'Neal Fleming, Jr., SMITH &
FLEMING, Atlanta, Georgia, for Appellant. Charles Porter,
MCNAIR & SANFORD, P.A., Columbia, South Carolina; Thomas S.
Tisdale, Jr., YOUNG, CLEMENT, RIVERS & TISDALE, L.L.P.,
Charleston, South Carolina, for Appellees. ON BRIEF: James B.
Moore, Jr., Robert P. Widener, MCNAIR & SANFORD, P.A.,
Columbia, South Carolina; Stephen P. Groves, YOUNG, CLEMENT,
RIVERS & TISDALE, L.L.P., Charleston, South Carolina, for Appel-
lees.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
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OPINION
PER CURIAM:
Georgetown Steel Corporation contracted with Union Carbide Cor-
poration for Carbide to build an air separation plant on premises that
Carbide leased from Georgetown Steel. The plant was to provide
Union Carbide with liquid oxygen and nitrogen, which it furnished to
Georgetown Steel and which Georgetown Steel used in its steelmak-
ing process. Georgetown Steel was responsible for the site preparation
and hired Law Engineering Testing Company to perform soil analysis
and to give engineering advice. One of Law Engineering's recom-
mendations was that slag, a by-product of the steelmaking process,
could be used as backfill material. Georgetown Steel, therefore, used
slag for the foundation, and Carbide proceeded to build the plant upon
the slag foundation. After Carbide completed construction, the slag
expanded and caused such problems at the plant that Carbide eventu-
ally had to close the plant in 1985. Carbide began reconstruction of
the plant in 1988 and reopened the plant in 1989.
This suit began in 1985 when Georgetown Steel sued Law Engi-
neering and Pittsburgh Testing Laboratory* for negligence and breach
of express and implied warranties. Georgetown Steel also sought a
declaratory judgment that it was not responsible for any of Carbide's
damages. Carbide filed a counterclaim against Georgetown Steel for
negligence and breach of contract and express warranties, and a cross-
claim against Law Engineering for negligence and breach of express
and implied warranties. Georgetown Steel and Carbide settled prior
to the first trial, and Carbide assigned its claims against Law Engi-
neering to Georgetown Steel.
I.
This case is on appeal before this court for the third time, and this
time the question is damages. On our second remand to the district
court, we instructed the district court to enter judgment for Carbide
against Law Engineering and to calculate damages. Georgetown Steel
_________________________________________________________________
*Pittsburgh Testing Laboratory paid a judgment against it and is not
a party to this appeal.
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Corp. v. Law Eng'g Testing Co., 892 F.2d 1041 (4th Cir. 1993)
(unpublished). Law Engineering now appeals the order of the district
court awarding Carbide (1) the cost of reconstructing the driox sys-
tem, (2) the cost of updating the air separation plant, and (3) the cost
of inflation and consequential damages during a period of delay
before reconstruction of the plant. Carbide, in turn, cross-appeals and
claims that the district court should have awarded it the costs associ-
ated with using atmospheric vaporizers and TM-11 storage tanks in
the rebuilt driox. We affirm.
II.
Law Engineering argues on appeal that the district court should not
have awarded Carbide the cost of reconstructing the driox system.
Law Engineering complains that Carbide took the opportunity to
redesign the driox system by increasing the number of tanks in the
system and by using atmospheric vaporizers as a heat source for the
new system rather than the electric power vaporizers that the original
driox system had. Carbide produced evidence that the driox system
had to be moved in order for Georgetown Steel to excavate the slag
and refill the foundation, and that the installation with atmospheric
vaporizers cost less than it would have had Carbide rebuilt the driox
on a different site with electric power as a heat source. The district
court refused to assess the full cost of the new vaporizers and tanks
against Law Engineering because the new power source was in fact
a redesign. The record shows that although the new driox system con-
tains a design change, the cost of installation was less than it would
have been had the change not been made. Moreover, the court did not
hold Law Engineering responsible for the cost of the change. The dis-
trict court's findings of fact related to the reconstruction of the driox
are not clearly erroneous and we decline to set them aside. Fed. R.
Civ. P. 52(a).
III.
Law Engineering also argues that the district court should not have
awarded Carbide certain costs associated with the reconstruction of
the new plant. In awarding Carbide damages for costs incurred during
the reconstruction, the court used actual costs incurred including
safety modifications and updates. The court did not award damages
4
for spare parts that were not used in the original plant, modifications
that could not be attributed to any party at fault, and design improve-
ments that were not attributable to Law Engineering's actions. The
court credited Carbide's witness who testified that such modifications
and updates would not have been necessary had it not been for the
reconstruction required by Law's negligence and that the plant would
otherwise have operated satisfactorily for the contract period. We
must give due regard to the district court's opportunity to judge the
credibility of the witness. Again, we cannot say that the district
court's findings are clearly erroneous. Fed. R. Civ. P. 52(a).
IV.
Law Engineering also argues that it should not be responsible for
the cost of inflation or consequential damages during the period of
delay between the closing of the plant and the start of reconstruction.
The plant ceased operations in May 1985, Carbide began recon-
struction in April 1988, and the plant reopened in July 1989. The dis-
trict court found that Carbide was responsible for 20 of the 35 months
delay between the closing of the plant and the start of reconstruction
because Carbide was concerned with circumstances that were not the
result of Law Engineering's actions.
The court specifically found that Carbide spent several months
determining whether an alternate site, off Georgetown Steel's prem-
ises, would be suitable for the reconstruction of the plant; four months
unsuccessfully negotiating the acquisition of a different property site
on which to rebuild the plant; another 14 months determining that
rebuilding on an alternate site would not be less expensive; and addi-
tional time determining whether the new plant should be larger than
the original plant. The court also found that the remaining 15 months
delay was attributable to Law Engineering because Carbide reason-
ably spent that time preparing for reconstruction. Once again, based
on our review of the record, we cannot say that the district court's
findings are clearly erroneous. Fed. R. Civ. P. 52(a). Accordingly, we
reject Law Engineering's argument that the district court erroneously
awarded Carbide consequential damages for 15 months of delay.
The end and effect of Law's argument with respect to inflation is
that it claims that the reconstruction costs should be reduced for infla-
5
tion during the period the plant was shut down until the period of
reconstruction commenced.
Just as the district court awarded Carbide consequential damages
for 15 months of delay, it denied a credit for inflation during the 20
month period just mentioned.
Law offered no evidence with respect to inflation and relies on a
witness for Carbide who stated that inflation during this three-year
period would have amounted to "about 10%." Even if we take that
testimony as the fact, the most credit that Law can claim is for a 20
month period during which the district court held that Carbide did not
mitigate its damages. Contrary to the argument of Law, we do not
believe the district court was required to accept the 10% figure we
have mentioned and to apply a 20 mo./35 mo. fraction to the 10% fig-
ure with mathematical precision to obtain credit. The argument that
South Carolina law as to fact finding applies in the district court is not
well taken under Erie Ry. v. Tompkins, 304 U.S. 64 (1938). On facts
indistinguishable for practical purposes, we have held that Virginia
law does not. Utility Control Corp. v. Prince William Const., 558
F.2d 716, 720-721 (4th Cir. 1977). See Fed. R. Evid. 607.
The district court awarded damages under South Carolina law as
"the cost of repair or restoration" and as well "the loss of use."
When we consider that there was no other evidence with respect to
inflation; that the district court awarded the cost of repair or restora-
tion; and that no authority has been presented to us requiring any
adjustment for inflation in these circumstances, we cannot say that the
district court's finding of fact that inflation was"a small, but negligi-
ble percentage" of the restoration costs was clearly erroneous. Fed. R.
Civ. P. 52(a). Along the same line, we note that the district court did
not award pre-judgment interest, only that from the date of its judg-
ment.
V.
Carbide cross-appeals and claims that the district court should have
awarded it an additional $144,344 for the cost of one TM-11 storage
6
tank and 11 atmospheric vaporizers that Carbide took from it's inven-
tory and used in the new driox. The district court did not award these
damages because Carbide did not present evidence of the actual
replacement costs of these items so that the court could determine
with certainty the cost of the individual storage tank and the cost of
the atmospheric vaporizers versus the electric vaporizers to determine
what costs were attributable to Law Engineering. As noted in part II
hereof, we also note that the court would not assess the full cost of
the new tanks and vaporizers to Law Engineering because Carbide
redesigned the power source for the driox system so that the vaporiz-
ers are atmospheric rather than relying on electricity. We cannot say
the district court was clearly erroneous.
The judgment of the district court is accordingly
AFFIRMED.
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