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dismissing some of the plaintiff’s tort claims because those claims did not "allege anything different" than was alleged in the breach of contract claim, and stating that "[h]ow [the defendant] went about breaching that [contractual] duty, whether by negligence, inadvertence, misunderstanding, concealment, or misrepresentation is not legally supportive of a separate legal duty sounding in tort," but allowing a claim for fraud in the inducement to proceed, because that claim included allegations that the defendant "committed a tort before the contract was ever entered into" by allegedly misrepresenting "facts before the" contract was awarded
Summary of this case from KTM Health Care Inc. v. SG Nursing Home LLCOpinion
Case No. 2:01CV330.
July 10, 2003.
MEMORANDUM OPINION AND ORDER
Before he Court is defendant Granite Construction Company's motion for judgment on the pleadings. Also before the Court is defendant Union Pacific Railroad Company's motion to amend its cross-claim against Granite Construction Company. The Court heard oral argument on both motions on June 2, 2003. Having considered the parties' briefs and the relevant law, the Court issues the following memorandum opinion and order.
I. BACKGROUND
This lawsuit arises out of a repair project performed by Granite Construction Company ("Granite") on a sinking causeway that traverses the Great Salt Lake. The causeway is owned and operated by Union Pacific Railroad ("UP"). In order to prevent further sinkage of the causeway UP hired the engineering firm of Milbor-Pita to create a design that would abate the dissipating railway. Milbor-Pita proposed that a berm be constructed on each side of the causeway to counteract displacement of soils underneath the causeway. According to Milbor-Pita's design this was to be accomplished with the use of an "onshore earthwork contractor who can move large amounts of rock material and a marine contractor." Milbor-Pita also suggested that both berms should be constructed concurrently, however, if a choice had to be made, the north side should le constructed first because of high winds and greater erosion on that side of the causeway.
UP followed its engineer's advice and drafted a "Bid Form" describing the project and listing the equipment and materials needed to complete the project per the specifications of Milbor-Pita's design. Included within the list of equipment needed were "operated workboats w/bottom profiled, 2 each." Also included with UP's "Bid Form" were the design specifications of Milbor-Pita. In conformity with Milbor-Pita's suggestion to UP, one particular instruction to all bidding parties staled: "Recommend that north side be constructed first, if there is a choice. However, work should progress on both sides at once."
UP then solicited bids from various general contractors. The winning bid would be awarded the General Contract for the repair project. Granite submitted a bid to perform the repair project via fix on September 7, 2000. Included within its bid was the cost for the land based activities as well as a separate cost for "marine work." The daily rate for marine work included "the cost of two work boats with bottom profilers to monitor the lake bed while construction of the berms was in progress." Granite sub-contracted with plaintiff in this case, Associated Diving and Marine Contractors, L.C., ("Associated") to perform the marine services. Granite's bid also assured UP that it had "obtained the needed equipment for this project and can move the machines starting as soon as directed to proceed."
Also included in Granite's bid were Granite's "Proposed Methods for the Construction of Offshore Berms." That document stated in pertinent part: "Marine equipment required to construct the North berm will be mobilized first and construction of the North berm will have priority over the South berm. Equipment for the South berm will be mobilized once the North side has been supplied." The bid, which was incorporated into the General Contract, was signed by Granite's Vice President, R.C. Allbritton and Granite's estimator, Gary Pinkham.
Granite was subsequently informed by UP that it was the lowest bidder and was awarded the General Contract. The General Contract incorporated UP's Bid Form and Granite's Bid Notes.
Granite commenced work on the project on September 18, 2000. Associated began performing the marine portion of the contract by mobilizing a large barge on the north side of the causeway on September 25, 2000. UP claims that the second "southern" barge was not deployed until November 21, 2000. This alleged delay in mobilizing the second barge is the basis for all of UP's claim; against Granite. UP alleges that because of Granite's failure to timely provide a second barge on the south side of the causeway the entire project was delayed, additional costs were incurred and the quality of the finished job was diminished. UP claims that by failing to provide the second barge as required by the General Contract, Granite committed a material breach of the contract and also several torts.
UP's first cause of action in its amended cross-claim is for breach of contract. It alleges that "Granite's unilateral modification of the General Contract and repair design without written consent of Union Pacific constituted a breach of the General Contract." (Amended Cross-cl. at ¶ 73). UP also alleges in its breach of contract claim that "Granite's failure to immediately mobilize marine equipment (barge) to construct the south side berm once the equipment was mobilized to construct the north berm constituted a breach of the General Contract." (Amended Cross-cl. at ¶ 26).
Similarly to their first claim for relief, UP's seventh cause of action also alleges that Granite breached it's contract with UP by violating the covenant of good faith and fair dealing included in that contract. UP alleges that "Granite did not act in good faith or fair dealing with Union Pacific is required under the General Contract, the implied covenant of good faith and fair dealing, or the general standards of conduct in the construction industry." (Amended Cross-cl. at ¶ 132. Paragraph 133 of their cross-claim against Granite states:
Granite's actions in unilaterally modifying the scope and method of work to be performed, in failing to inform Union Pacific that it contracted with Associated to provide only one barge, in failing to inform Union Pacific that it intended to complete the project using only one barge, and in misrepresenting to Union Pacific numerous times that a second barge would be obtained are not consistent with the common purpose and justifiable expectations of Union Pacific under the General Contract, the covenant of good faith and fair dealing, or the standards of conduct for contractors in the construction industry.
(Amended Cross-cl. at ¶ 133). UP concludes that "Granite's intentionally fraudulent, misleading, and bad faith actions prevented Union Pacific from receiving the benefits that should have been afforded to Union Pacific under the General Contract." (Amended Cross-cl. at ¶ 134).
UP's second cause of action is for fraud. In that claim, UP alleges that "[t]hroughout the duration of the Causeway Project, Granite continued to misrepresent to Union Pacific that Granite had arranged for and that the second barge was coming for the purpose of inducing Union Pacific to pay the daily rate of $24,150 for two barges and for the purpose of inducing Union Pacific not to employ another General Contractor, hire another subcontractor, or obtain a second barge or its own." (Amended Cross-cl. at ¶ 89). UP also claims that "Union Pacific reasonably and n reasonable ignorance of the falsity of Granite's misrepresentations, relied upon Granite's misrepresentations, [and] awarded Granite the General Contract. . . ." (Amended Cross-cl. at ¶ 9)).
In its third claim for relief, UP alleges that Granite committed the tort of negligent misrepresentation. Specifically, UP alleges, that after they inquired about the second barge, "Granite misrepresented to Union Pacific that a second barge was coming." (Amended Cross-cl. at ¶ 100). This hey did despite the fact that "Granite was in a superior position to Union Pacific to have, and did have, knowledge of the fact that it had not contracted for a second barge nor was a second barge to be deployed." (Amended Cross-cl. at ¶ 120).
In its fourth claim, UP argues that Granite committed fraudulent concealment by "prevent[ing] Union Pacific from discovering that Granite had modified the scope and method of work to be performed on the Causeway Project by not revealing that it had contracted with Associated for only one barge." (Amended Cross-cl. at 11 108).
Finally, in the last claim challenged by Granite in its motion, UP alleges in its fifth claim that Granite committed the tort of fraudulent nondisclosure. UP alleges that "[d]uring negotiations of the General Contract, bidding, and after commencing work on the Causeway Project, Granite had a duty to disclose to Union Pacific the fact that it had unilaterally altered the scope or that a misunderstanding had arisen concerning the method of work to be performed, that it had not contracted with Associated for two barges, and that there was no other barge being deployed to the Causeway Project." (Amended Cross-cl. at ¶ 113). UP alleges that these facts, "should have been disclosed to Union Pacific on or before September 20, 2000 and that "Granite intentionally failed to disclose these material facts to Union Pacific despite its contractual duty to do so." (Amended Cross-cl. at ¶ 120).
II. PROCEDURAL HISTORY
This case came before this Court after Associated filed suit against Granite and UP on May 8, 2001. Associated alleges that Granite breached the sub-contract entered into by Associated and Granite. On June 8, 2001 UP filed a cross-claim under the General Contract seeking indemnification from Granite for Associated's claim. Granite in turn asserted claims against UP for breach of the General Contract, seeking to recover amounts owed Granite by UP as well as indemnification should Granite be found liable to Associated.
More than one year after filing its cross-claim, UP moved the Court for leave to amend its cross-claim to assert claims against Granite based on breach of contract, fraud, and negligence. UP's amended cross-claim alleges that Granite breached the General Contract by supplying one barge rather than two barges during a portion of the project.
III. MOTION FOR JUDGMENT ON THE PLEADINGS
"After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." FED. R. CIV. PRO. 12(c). "A motion for judgment on the pleadings under Rule 12(c) is treated as a motion to dismiss under Rule 12(b)(6). Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1160 (10th Cir. 2000). Under Rule 12(b)(6), a defendant may move the Court for dismissal of any cause of action that fails to state a claim upon which relief may be granted. In ruling on Granite's motion to dismiss, the Court assumes the truth c fall well-pleaded facts in UP's complaint and views them in the light most favorable to UP. See Zinermon v. Burch, 494 U.S. 113, 118 (1990); Roman v. Cessna Aircraft Co., 55 F.3d 542,543 (10th Cir. 1995). The Court also views all reasonable inferences in favor of UP, and the pleadings are liberally construed. See id. In reviewing the sufficiency of a complaint, the issue is not whether UP will prevail, but whether UP is entitled to offer evidence to support their claims. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).
Granite moves for judgment on the pleadings asking this Court to dismiss UP's tort claims. Granite argues that these claims are barred by the economic loss rule, that UP has failed to plead its fraud c aims with particularity and that the claims fail to state a claim upon which relief may be granted. Specifically, Granite challenges UP's claims of fraud (second cause of action), negligent misrepresentation (third cause of action), fraudulent concealment (fourth cause of action and fraudulent nondisclosure (fifth cause of action).
A. Economic Loss Doctrine
In Utah, the economic loss doctrine bars all tort claims that are not based on a duty independent of any contractual obligations between the parties. Town of Alma v. Azco Constr. Inc., 10 P.3d 1256 (Colo. 2000), Harmansen v. Tasulis. 2002 UT 52, 48 P.3d 235, Grynberg v. Questar Pipeline Co., 469 Utah Adv. Rep. 13, 20 (Utah 2003). The rule exists to further the policy that "when a conflict arises between parties to a contract regarding the subject matter of that contract, `the contractual relationship controls, and parties are not permitted to assert actions in tort in an attempt to circumvent the bargain they agreed upon.'" Id. at 18 ( quoting Snyder v. Lovercheck, 992 P.2d 1079, 1087 (Wyo. 1999)).
The Grynberg case is instructive and controlling. The Grynbergs had entered into multiple contract; with defendant Questar Pipeline Company. The agreements specified that Questar would have the right to purchase, gather and transport natural gas owned by the Grynbergs in return for monetary consideration. In their suit the Grynbergs alleged that Questar breached the contract by improperly measuring the gross heating content of natural gas bought from the Grynbergs. In addition to alleging breach of contract "by incorrectly measuring and analyzing the gross heating content of the gas," the Grynbergs also alleged "negligent or intentional misrepresentation of the incorrect BTU adjustments . . . fraud in the mismeasurement and misanalysis of the BTU adjustments" and "negligence in the mismeasurement of BTU adjustments." Defendants argued that plaintiffs' tort claims were barred by the economic loss doctrine. The Third District Court of Utah agreed.
On appeal, the Utah Supreme Court upheld the lower court's interpretation and application of the economic loss doctrine. The Court noted that the Grynbergs had provided no authority recognizing an independent tort duty when the parties had signed a contract prescribing those "identical duties." Id. at 20. Accordingly, the Utah Supreme Court dismissed the Grynbergs' tort c aims as prohibited under the economic loss doctrine.
For analytical purposes, the facts and circumstances of this case are virtually identical to those described by the Utah Supreme Court in Grynberg. In Grynberg, plaintiff's tort claims were alleged with reference to the same obligations described in the contract claims, namely the obligation to accurately determine the amount of royalties to be paid to the plaintiffs. This case is no different. UP's tort claims allege a violation of the same obligation alleged in its contract claims, namely the obligation to provide two barges. Therefore, consistent with the Utah Supreme Court's interpretation of Utah law, this Court finds that UP's tort claims, with one exception, are barred by the economic loss doctrine.
UP alleges in this case that Granite breached the contract between the two parties by "unilateral[ly] modif[ying] . . . the General Contract and repair design without written consent of Union Pacific." According to Granite, this act was the direct cause of "Granite's failure to immediately mobilize marine equipment (barge) to construct the south side berm once the equipment was mobilized to construct the north berm," as well as "breach of the General Contract."
Similarly. Granite's tort claims all allege, with little if any variation, that Granite intentionally and unilaterally changed the agreement between the two parties when it decided that it would provide only one barge instead of two and that Granite failed to provide two barges in a timely manner. For example, UP's claim for fraud alleges that "Granite continued to misrepresent to Union Pacific that Granite had arranged for and that the second barge was coming. . . ."; UP's claim for negligent misrepresentation argues that "Granite misrepresented to Union Pacific that a second barge was coming" despite the fact that "it had not contracted for a second barge nor was a second barge to be deployed"; the claim for fraudulent concealment alleges that Granite "prevented Union Pacific from discovering that Granite had modified the scope and method of work to be performed on the Causeway Project by not revealing that it had contracted with Associated for only one barge"; and finally, in its claim for fraudulent nondisclosure UP alleges that Granite failed to "disclose to Union Pacific the fact that it had unilaterally altered the scope . . . that it had not contracted with Associated for two barges, and that there was no other barge being deployed to the Causeway Project." despite "its contractual duty to do so."
Juxtaposing UP's contract claims with its tort claims, it is clear that each of these claims allege breaches if the same duties. Each of the tort claims challenged by Granite allege a breach of a duty that is encompassed by the subject matter of the General Contract. Therefore, even when viewing UP's pleadings in the most liberal manner possible, it is clear that the duties alleged by UP in its tort claims are not independent of the parties' contract but are part and parcel of the defined rights, obligations and potential liabilities mutually agreed to by the parties. These allegations fall squarely within the four corners of the contract. And, once parties have required something to be performed pursuant to a contract, then an action for nonperformance of that obligation will only be recognized in contract and not tort. This is the reason for and the essence of the economic loss doctrine. The parties contractual relationship, therefore, governs in this case.
Because the doctrine originated in products liability cases, the analysis initially focused on the character of the harm; if no damage occurred to persons or property other than the product itself the doctrine applied. See e.g., Cont'l Ins. v. Page Eng'g Co., 783 P.2d 641, 647 (Wyo. 1989). That analysis, however, did not lend itself well to other types of cases. Nevertheless, courts have adapted the doctrine by instead focusing on the fact that the "successful separation of contract and tort law requires Identification of the underlying duties governing the parties' relationship." Grynberg at 18. Thus, the "modern focus is not on the harm that occurs but instead is on the source of the duty that was breached." Id.
Of course, prior to memorializing their relationship in a contract the parties are bound by tort law. However, once a legally binding contract is agreed upon, the law recognizes that the parties to that agreement have forsaken the remedies provided in tort law and agreed rather to have their legal relationship governed by the obligations, duties, and remedies set out in the contract. This doctrine recognizes a right and a duty on the parties to a contract to produce an agreement that protects them from potential breaches by setting out the desired consequences and attendant liabilities in the contract itself. See Isler v. Texas Oil Gas Corp., 749 F.2d 22, 23 (10th Cir. 1984) (explaining that essential to the "vitality of contract is the capacity voluntarily to define the consequences of the breach of a duty before assuming the duty").
Because the responsibility is placed upon the parties to create an agreement that is suitable to their individual circumstances, there are very few barriers limiting the types of provisions that two equally situated parties may agree upon. For example, the law of contracts allows parties to outline their own forms of relief for a breach by including provisions for attorney's fees, liquidated damages and indemnification provisions. And in this case, the parties have clearly outlined the consequences for the claims made by UP.
If the parties in this case were unequal bargaining partners the outcome could be different. See Grynberg, at 20. It has long been recognized that intervention by the courts into contracts between extremely unequal bargaining parties is permissible. A court will only intervene in those limited types of cases because an agreement entered into with even some degree of coercion or duress poses a "threat to the integrity of the Bargaining process itself." See Isler, 749 F.2d at 23. Nothing in the record, however, leads the Court to find that such an intrusion is warranted in a case like this one; both parties are sophisticated businesses with past experience negotiating construction contracts.
The contract, as interpreted by UP, required Granite to provide two barges to efficiently and correctly repair the sinking causeway. While Granite did ultimately provide two barges to the project, UP claims that the second barge appeared on the scene too late. Therefore, they argue Granite breached the contract. None of UP's claims allege anything different than that core fact. All of UP's alleged damages flow from that alleged failure to provide the second barge. How Granite went about breaching that duty, whether by negligence, inadvertence, misunderstanding, concealment, or misrepresentation is not legally supportive of a separate legal duty sounding in tort. See Isler, at 24; Grynberg, at 19. How Granite accomplished the breach may be relevant to show that a breach occurred but because the harm (failing to produce the second barge) is fully covered by the contract, it does not give rise to an independent action in tort. While some claims have added additional nuances and explanations to attempt to explain why Granite did not provide the second barge when they allegedly knew they were obligated to do so, none of UP's claims stray from this principal allegation against Granite.
Of utmost importance to this discussion is the undisputed fact that the obligation to provide the second barge was required by the General Contract. Therefore, the circumstances surrounding why Granite failed to provide the second barge are virtually irrelevant. What does matter is that all of UP's claims allege that Granite failed to comply with a contractual term; the fact that the tort claims attempt to explain the circumstances behind that failure to comply does not remove them from the realm of the contractual obligations of the parties. Instead, the duty to comply allegedly breached in the contract claims is the same duty allegedly breached in the tort claims. Therefore, this Court holds that UP's claims do not allege the breach of any independent duty existing outside of the contract, with one exception. That exception is UP's claim for fraud in the inducement.
Similarly to the tort claims alleged by UP, the tort claims alleged by the Grynbergs merely explained how the defendant breached the contract. For example, the Grynbergs' breach of contract claim alleged that Questar improperly measured the gross heating content of the natural gas. The Grynbergs' tort claims contained only slight variations from that claim; they merely attempted to explain how Questar had improperly measured the gas. For example, they alleged that Questar fraudulently, intentionally, and/or negligently mismeasured the heating content of the natural gas. Grynberg. at 15. Then in defense of their claims, the Grynbergs argued that the economic loss doctrine did not apply to intentional torts or torts based upon independent duties. While the Utah Supreme Court agreed with the latter argument, they explicitly dismissed the former. "All contract duties, and all breaches of those duties — no mater how intentional — must be enforced pursuant to contract law." Grynberg, at 18. Therefore, it is clear that, in Utah, the economic loss doctrine bars all torts — intentional or otherwise — that are not based upon a duty independent of the parties bargained-for contract.
At the hearing, counsel for UP argued that a separate duty in this case exists because, for example, Granite had a duty not to lie about the circumstances surrounding the second barge. However, this argument misses the point of the economic loss doctrine. Even assuming that Granite lied or concealed or failed to disclose a material fact about the second barge, UP's source of relief for each of these actions lies within a claim for breach of contract. None of the alleged tort claims caused any harm to UP that cannot be remedied by that claim. Because UP alleges that Granite lied about a duty that was bargained for and set out in the contract, it is the law of contract and not tort that governs that claim. An opposite conclusion "would be to nullify a substantial part of what the parties bargained for." Isler, at 23.
1. Fraud in the Inducement
In addition to setting forth general allegations of fraud in its second cause of action, UP also alleges fraud in the inducement. UP's first amended complaint states that "Union Pacific reasonably and in reasonable ignorance of the falsity of Granite's misrepresentations, relied upon Granite's misrepresentations [and] awarded Granite the General Contract. . . ." (Amended Cross-cl. at ¶ 90).
A claim for fraud in the inducement cannot be barred by the economic loss doctrine. This is true because, as described above, the doctrine only applies to bar tort claims that fall within the "bargained-for duties and liabilities" of a contract. Grynberg, at 18. The Tenth Circuit has reaffirmed this conclusion. Although interpreting Colorado law, the Tenth Circuit's reasoning in United International Holdings v. Wharf Limited, 210 F.3d 1207 (10th Cir. 2002), is helpful. The court stated:
Where a negligence claim is based only on breach of a contractual duty, the law of contract rightly does not punish the breaching party, but limits the breaching party's liability to damages that naturally flow from the breach. It is an altogether different situation where it appears two parties have in good faith entered into a contract but, in actuality, one party has deliberately made material false representations of past or present fact, has intentionally failed to disclose a material past or present fact, or has negligently given false information with knowledge that the other party would act in reliance on that information in a business transaction with a third party. The breaching party in this latter situation also is a tortfeasor and may not utilize the law of contract to shield liability in tort for the party's deliberate or negligent misrepresentations.
Although a negligent misrepresentation may also be a means of inducing a party to sign a contract, in this ease UP's third cause of action — that of negligent misrepresentation — does not allege any conduct that occurred prior to Granite being awarded the General Contract. Therefore, UP's claim for negligent misrepresentation is also barred by the economic loss doctrine.
In this case, UP alleges that Granite committed a tort before the contract was ever entered into. Specifically, UP alleges that Granite misrepresented facts before the General Contract had been awarded to Granite. UP then relied upon that representation in awarding the General Contract to Granite. Therefore, UP's claim of fraud in the inducement is not barred by the economic loss doctrine.
B. Federal Rule of Civil Procedure 9(b)
Because UP's claim of fraud in the inducement is not barred by the economic loss doctrine, the Court must determine if that claim meets the requirements set out in Federal Rule of Civil Procedure 9(b). That rule requires a party to state the "circumstances constituting fraud or mistake with particularity." FED. R. Civ. PRO. 9(b). Specifically, UP must set forth the "time, place and contents of the false representation, the identity of the party making the false statement and the consequences thereof." Lawrence Nat'l Bank v. Edmonds, 924 F.2d 176, 180 (10th Cir. 1991). "The purpose of Rule 9(b) is `to afford defendant fair notice of plaintiff's claims and the factual ground up on which [they] are based. . . ." Schwartz v. Celestial Seasonings. Inc., 124 F.3d 1246, 1252 (10th Cir. 1997) (quoting Farlow v. Peat, Marwick, Mitchell Co., 956 F.2d 982, 987 (10th Cir. 1992)).
In this case, the representations upon which UP's claim for fraud in the inducement is based are Granite's statements that it would follow Milbor-Pita's design specifications and supply two barge; to work on both sides of the causeway. UP alleges that Granite made these representations "in its bid, during the course of negotiating the General Contract, and as expressly stated in the General Contract. . . ." (Amended Cross-cl. at ¶ 82).
There can be no dispute that UP relied on Granite's representation — both in its bid and in its contract — when it awarded Granite the General Contract. And, Granite may, with substantial certainty, ascertain the time, place, contents, identity and consequences of the alleged misrepresentations made in Granite's bid and in the General Contract. Conversely, however, Granite has clearly not been "afforded fair notice of" the misrepresentations that UP alleges were made "during the course of negotiating the General Contract." Specifically, UP has failed to indicate the time of the misrepresentations, where the misrepresentations were made and the identity of the person making such representations. UP's claim for fraud in the inducement, therefore, fails to provide the specificity required by Federal Rule of Civil Procedure 9(b).
Although a complaint that fails to meet the Rule 9(b) specificity requirements is properly dismissed in some instances, the Court finds that UP's claim of fraud in the inducement should be dismissed with leave to amend. For reasons discussed below, the Court finds that UP may file its second amended cross-claim against Granite to amend its claim of fraud in the inducement.
IV. MOTION TO AMEND CROSS-CLAIM
Also before the Court is UP's motion for leave to file its second amended cross-claim. A motion for leave to amend should be "freely granted when justice so requires." FED. R. Civ. PRO. 15. "The policy in favor of allowing amendments is extremely liberal." 3 James W. Moore, Moore's Federal Practice § 15.14[1] (3d ed. 2000). A motion to amend, however, is not to be mechanically granted; instead such a motion should be denied if the court finds that granting leave to amend (1) will cause undue delay, (2) will cause undue prejudice to the opposing party, (3) is done with bad faith or dilatory motive or (4) would be futile. Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993).
UP moves to amend its cross-claim to include "recently discovered instances of Granite's misrepresentations." (UP's Mot. Second Am. Cross-cl. at 3). According to UP, these additional facts were not discovered until "well after it filed its existing Cross-Claim." Id.
UP filed it cross-claim for breach of contract against Granite on August 15, 2002. The second amended complaint simply asks to add additional instances of Granite's alleged misrepresentations concerning the number of barges to be used at the work site. Trial in this matter is not scheduled until October 20, 2003. Discovery has not been completed and expert reports have yet to be submitted. Therefore, this amendment will not delay Granite or any other party from complying with the scheduling deadlines, nor will it prevent Granite from adequately preparing for trial. The first two factors therefore, are not met. Nor is there any allegation, and the Court does not find, that UP has made its motion to amend for any improper purpose.
The final requirement, however, — that the amendment not be futile — is not fully met. As discussed above, this Court finds that all of UP's tort claims are barred by the economic loss doctrine with the exception of its claim of fraud in the inducement. While a portion of UP's second amended cross-claim includes allegations supporting a claim of fraud in the inducement, a large part of the second amended cross-claim also contains facts relating to its additional tort claims. However, because these claims are barred, such an amendment would be futile. Therefore, the Court finds that UP's motion for leave to file its second amended cross-claim is GRANTED in part and DENIED in part. The Court will allow UP to amend its first amended cross-claim only o provide additional allegations supporting its claim of fraud in the inducement. Of course, UP must provide the specificity required by Federal Rule of Civil Procedure 9(b) for any claim alleging fraud.
UP's amended cross-claim includes new "evidence that a statement Granite made during contract negotiations . . . was false and was made to induce UP to enter into a contract with Granite for the project." (UP's Mot. Second Am. Cross-cl. at 2).
In summary, Granite's motion for judgment on the pleadings on Union Pacific Railroad Company's tort claims is GRANTED in part and DENIED in part. Union Pacific Railroad Company's motion for leave to amend its first amended complaint is GRANTED in part and DENIED in part. IT IS SO ORDERED.