Opinion
No. A05-2058.
Filed August 1, 2006.
Appeal from the District Court, Faribault County, File No. 22-C2-02-000618.
Scott V. Kelly, Aaron J. Glade, Farrish Johnson Law Office, for appellant.
Holly J. Newman, Patrick C. Summers, Mackall, Crounse Moore, for respondent Delta-T Corporation.
Jerome B. Abrams, Kevin R. Lewis, Abrams Smith, P.A., 220 for respondent Commonwealth Electric of Minnesota, Inc.
Gary J. Gordon, Michelle K. Dove, Rider Bennett, for respondent DeWar Electric, Inc.
Michael D. Hutchens, Kristine A. Kubes, Erica Gutmann Strohl, Minneapolis, Mn for respondent Paulson Clark Engineering, Inc.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
In this multiparty litigation arising from three electrical failures in a newly constructed expansion of an ethanol plant, the electrical-equipment installer asserts contribution-and-indemnity claims against an electrical company and its subcontractor, who performed engineering and design services. The district court dismissed these claims on motions for summary judgment, concluding that the design professionals were absolved from common liability because the installer deviated from design directions. Because genuine issues of material fact remain on whether the installer impermissibly deviated from the design, whether the system as designed was safe and suitable, and whether any alleged design deviation caused the electrical failure, we reverse and remand.
FACTS
Corn Plus Cooperative expanded the production capacity of its Winnebago ethanol plant in 2001. The expansion, which increased its annual production from twenty-million gallons to forty-million gallons, required the design and installation of a new electrical system. Acting as its own general contractor, Corn Plus hired Delta-T Corporation as the construction-and-procurement advisor for the project. Delta-T prepared electrical-engineering design specifications to solicit bids for an electrical-engineering contractor. Commonwealth Electric of Minnesota, Inc. submitted a bid, which Corn Plus accepted. Commonwealth, in turn, subcontracted with Paulson Clark Engineering to provide the services. The bid solicitation required the contractor to provide full electrical design specifications for electrical equipment and specifications for electrical installation to be used to obtain installation bids. Paulsen Clark produced a sixty-page document of electrical-engineering and design specifications that set forth the requirements for the electrical-power installation.
In its request for bids, Corn Plus specified that it wanted the new electrical system to match the existing system. To meet this request, Paulson Clark's design provided for a busway to transport electricity from an exterior transformer to the plant. A busway is a prefabricated conduit that contains heavy conductors for the transmission of large currents of electrical energy. Corn Plus was responsible for purchasing the busway equipment and selected a Spectra Busway from General Electric (GE).
Following a bidding process, Corn Plus selected E I Specialists, Inc. as the electrical-installation contractor. After installation was complete, the electrical system failed three times. These failures caused Corn Plus to shut down the plant and replace parts of the electrical system.
As a consequence of the electrical failures, Corn Plus refused to pay E I the remaining balance on the electrical-installation contract. E I sued Corn Plus to recover the money, and Corn Plus counterclaimed for damages resulting from the electrical failures. In an amended complaint, E I asserted claims for contribution and indemnity against Delta-T, Commonwealth, Paulson Clark, and DeWar Electric, Inc., the company hired to repair the busway. Commonwealth asserted a cross-claim against the other defendants, and Corn Plus's insurance company, The Hartford Steam Boiler Inspection and Insurance Company, intervened to protect its subrogation rights.
Commonwealth, Delta-T, and Paulson Clark moved for summary judgment. The district court held a motion hearing and granted summary judgment dismissing E I's contribution-and-indemnity claims. Following the entry of summary judgment, the litigants resolved the remaining claims, and the district court entered final judgment. In a memorandum, the district court stated its basis for granting summary judgment: E I's installation did not comply with the installation manual for the busway, the installation manual was a component of the design, and the installer's failure to comply with the design absolved the electrical-system designer from liability. E I challenges the district court's order that granted summary judgment for Commonwealth and Paulson Clark.
DECISION
On appeal from a grant of summary judgment, we consider whether any genuine issues of material fact exist and whether the district court erred in its application of the law. Offerdahl v. Univ. of Minn. Hosps. Clinic, 426 N.W.2d 425, 427 (Minn. 1988). We view the evidence in the light most favorable to the nonmoving party and resolve any doubt as to the existence of an issue of material fact against the moving party. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Nonetheless, the nonmoving party must rely on more than mere allegations and must establish a genuine issue on the elements of its claim. DLH, Inc. v. Russ, 566 N.W.2d 60, 69-71 (Minn. 1997).
In its memorandum stating its basis for summary judgment, the district court described the three failures in the electrical busway. The first failure, in March 2002, occurred near the elbow joint of the west part of the busway where it changes from a horizontal to a vertical installation. Massive phase-to-phase and phase-to-ground fault damage was visible. The second failure, in April 2002, occurred in the last part of the busway and produced similar visible damage. The third failure, in May 2002, occurred in the interior of the building, near the switchgear connections. The evidence is generally undisputed that the first two failures resulted from moisture buildup and that the third was a product of a failure of the joint bolts. The evidence, including the expert testimony, however, is sharply disputed on whether the moisture buildup and failure of the joint bolts resulted from improper installation or was caused, in substantial part, by an improper design that located the busway in a hazardous area of airborne corn dust, in violation of the National Electric Code.
The district court based its summary judgment dismissing the indemnity-and-contribution claims on a narrow ground. It concluded that the evidence was undisputed that E I did not follow the specific instructions in the installation manual for the busway, and that, because the installation manual is a design direction, Commonwealth and Paulson Clark, as the design professionals, are absolved from any common liability for the damages caused by the electrical failures. In making this determination, the district court expressly relied on Hoehn v. Minnesota Mining Manufacturing. Co., 248 Minn. 162, 79 N.W.2d 19 (1956).
In Hoehn, the supreme court held that evidence produced at trial sustained a jury's verdict that an architect had designed the equipment safe for its intended use and was not liable for injuries when the builder, without the architect's consent or knowledge, departed from the architect's specifications by installing other equipment, which was not designed by the architect and which was not safe for the prevailing conditions. Id. at 170, 79 N.W.2d at 24. Hoehn is thus properly cited for the holding that, when a design professional provides plans or specifications that are safe and suitable for their intended use but the work is not constructed or performed according to the plans, the design professional is not liable for the resulting injury.
In applying Hoehn to the circumstances of this case, the district court did not address the question of whether a genuine issue of material fact existed on the safety and suitability of the original plans and also did not address the question of whether E I's failure to comply with design specifications proximately caused the electrical failures. E I contends that material issues of fact remain on each of these prongs. We therefore turn to the record to determine whether the summary judgment rests on undisputed facts and a correct application of law.
At the outset, we note a significant distinction between the facts in Hoehn and the facts in this case. In Hoehn the jury determined that the builder's substitution of specified equipment absolved the architect from liability because the substituted equipment was not safe for the prevailing conditions and the failure of the substituted equipment proximately caused the damages. E I's claim is that Commonwealth and Paulson Clark negligently specified a busway installation that was unsafe in the designated location and that the improper specification of this equipment was a cause of the resulting damages. We must therefore determine whether Commonwealth and Paulson Clark have established as a matter of law that the busway was a safe and suitable design or alternatively that they did not have the responsibility or the latitude to designate a safe and suitable design.
The record indicates that the exterior of the plant where the busway was installed is near a hammer mill, which produces a large quantity of corn dust. Numerous experts and witnesses testified in their depositions that corn dust covered the busway. According to the National Electric Code (NEC), the accumulation of combustible dust, like corn dust, "on, in, or in the vicinity of the electrical equipment may be sufficient to interfere with the safe dissipation of heat from electrical equipment or may be ignitable by abnormal operation or failure of electrical equipment." A location where combustible dust accumulates is classified, for purposes of NEC compliance, as a Class II, Division 2 hazardous location. The NEC further specifies that "busways shall not be installed . . . [i]n any hazardous (classified) location, unless specifically approved for such use." At least two expert witnesses provided an opinion that the exterior of the plant meets the qualifications for classification as a Class II, Division 2 location.
Commonwealth and Paulson Clark argue, as a matter of law, that the area of the busway installation is not a hazardous location. But the NEC and the testimony of E I's experts establish that an area with a high volume of airborne and accumulated corn dust is a hazardous area, and the photographs and testimony of witnesses uniformly confirm the presence of a large amount of airborne and accumulated corn dust in the area of the busway. This evidence is sufficient to create a genuine issue of material fact on whether the specified use of a busway in the electrical design was safe and suitable. Under Hoehn, the safety and suitability of the original design is a necessary component of finding no liability when a design deviation results in damages. Thus, the dispute over whether the design professionals specified a busway in an area of high-volume dust affects the designer's potential liability and raises a genuine issue of material fact. See O'Malley v. Ulland Bros., 549 N.W.2d 889, 892 (Minn. 1996) (stating that fact is material when it affects outcome of case).
Paulson Clark maintains that the evidence that the selected equipment was unsafe and unsuitable cannot create a genuine issue of material fact because the experts who provided those opinions did not visit the plant. But this argument addresses the weight or credibility of the expert opinion, not its competency. The weight to be given to an expert's opinion is properly resolved by the fact-finder, not by summary judgment. See In re Estate of Torgersen, 711 N.W.2d 545, 554 (Minn.App. 2006) ("Credibility determinations . . ., especially when experts are involved, are within the discretion of the factfinder."), review denied (Minn. June 20, 2006). Viewing the evidence in the light most favorable to E I, a genuine issue of material fact exists on whether the designated use of a busway was safe and suitable for an area with a high volume of airborne and accumulated corn dust.
Commonwealth and Paulson Clark alternatively assert that no genuine issue of material fact exists because the scope of their obligation to Corn Plus did not give them the latitude or the responsibility to provide a design for, or to designate, different equipment. They acknowledge that their design documents provide for a busway design and that E I installed a Spectra Busway ordered by Corn Plus and purchased from GE. But they contend that the decision to employ a busway instead of another method of transporting electricity to the plant was safe under the circumstances as described and that they did not exercise discretion in providing the design or designating this equipment. They base this contention on Delta-T's design specification indicating that "[w]here possible, all equipment shall be specified to closely match the existing and all installations should be consistent with the current site practices." We conclude that this argument overstates Delta-T's specification, which indicates that equipment should match existing equipment only when possible and also states that the design should comply with the NEC.
Given the conflicting evidence on the classification of the area surrounding the busway and Commonwealth's and Paulson Clark's obligation to abide by the NEC, a triable issue exists on whether the decision to use a busway was a safe and suitable design. Because Commonwealth and Paulson Clark have failed to establish that their design requiring installation of a busway was safe and suitable, or that they had no obligation to provide a safe and suitable design, they cannot rely on Hoehn to cut off their potential liability.
The genuine issue of material fact on the safety and suitability of the busway defeats the district court's reliance on Hoehn as a basis for summary judgment. But the record also establishes that the second Hoehn prerequisite, that the installer failed to follow the design specifications, raises a similarly disputed issue of material fact. E I stated that, in installing the busway, it did not remove the weep-hole plugs and shield plugs from the busway. According to Commonwealth and Paulson Clark, the design and installation instructions require removal of these plugs, and the failure to do so caused moisture to become trapped in the busway, which eventually resulted in equipment failure. This issue turns on whether the busway's function is rated as a NEMA 3R or an IP 65/66. This rating is a similarly disputed issue of material fact.
The Spectra Busway can be rated either NEMA 3R or IP 65/66. Although the busway equipment is the same for either rating, the testing and installation procedures for the busway differ based on its rating. GE's installation instructions and an expert from GE specified that NEMA 3R-rated busways require the installer to remove "downward-facing weep-hole plugs and shield plugs so that condensation and accumulated moisture can drain out." For IP-rated busways, however, both the expert testimony and the installation instructions indicate that the installer should not remove the weep-hole plugs during installation.
Although Paulson Clark provided design documents that discuss compliance with NEMA ratings for other equipment in the electrical system, the documents do not specify whether the busway itself should be rated as a NEMA or an IP busway. The evidence in the record on this issue indicates that the busway was rated as IP. GE's bill of material lists the components of the Spectra Busway and includes a notation of "IP 65/66" next to one of the components of the busway. The expert from GE testified that this form shows the product that was sold to Corn Plus. Viewing the evidence in the light most favorable to E I, Commonwealth and Paulson Clark have not established that GE sold Corn Plus a NEMA 3R-rated busway for installation.
The testimony of the expert from GE, the installation instructions, and the labels on the equipment all demonstrate that an installer should not remove plugs from an IP-rated system. And the design documents provided to E I did not specify that the plugs should be removed. Furthermore, the design documents indicated that the new busway should match the existing system, which did not have weep-hole plugs removed. The evidence is also undisputed that part of the busway did not have weep-holes from which plugs could be removed. Therefore, the record does not conclusively establish that E I failed to follow a design specification or installation directions by not removing the weep-hole plugs in the installation of the busway.
The remaining two issues relate to the use of a rigid mount as opposed to a spring mount and the possible contamination of the busway during installation. The evidence demonstrates that the installation instructions require a spring mount for both interior and exterior busways and that E I did not use a spring mount. But the evidence is undisputed that the use of a spring mount did not contribute to the failures, and the failure to use a spring mount thus does not appear to be material. More significantly, the failure to use a spring mount does not appear to be a deviation from the design specifications. The design documents do not specify the type of mount to be used and instead indicate that the busway should match the existing system, which used a rigid mount, not a spring mount. The evidence therefore does not support an argument that E I may have deviated from the design specifications even if it departed from the installation instructions.
The final issue relates to possible contamination during the installation process. The design documents do not address contamination. The installation instructions, however, indicate that the installer should ensure that no contamination is present during the installation process and that the installer should clean the busway components. Although the residue that was present after the busway failed suggests that contamination may have been present during installation, E I's supervising installer testified that the busway was not contaminated during installation. Specifically, the installer testified that he examined the components and verified that they were clean and that he kept the components covered at night to keep them clean. He also stated that he properly tightened all bolts to the requisite torque to avoid contamination. Because the design documents did not include specifications on the issue of contamination and because the evidence, when viewed in the light most favorable to E I, includes testimony that it avoided contamination of the busway during installation and otherwise complied with the installation specifications, the issue is a disputed issue of material fact. A fact-finder has the ability to assess whether contamination was present during installation and, if so, what part it played or did not play in the electrical problems.
In sum, genuine issues of material fact remain on whether the moisture buildup and failure of the joint bolts resulted from improper installation or from the high volume of airborne and accumulated corn dust in the area of the busway. Hoehn does not provide a basis for absolving Commonwealth and Paulson Clark from responsibility on summary judgment because these issues are interrelated with whether a busway was a safe and suitable design for the expansion of the Corn Plus facility. A genuine issue of material fact also exists on allegations that E I failed to follow the design specifications in installing the busway. Finally, disputed material fact issues remain on whether any of the alleged deviations was the proximate cause of the busway failure.