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DAK Americas Mississippi, Inc. v. Jedson Engineering, Inc.

United States District Court, S.D. Mississippi, Southern Division

March 28, 2019

DAK AMERICAS MISSISSIPPI, INC. PLAINTIFF
v.
JEDSON ENGINEERING, INC. and ROB'T J. BAGGETT, INC. DEFENDANTS JEDSON ENGINEERING COUNTER-CLAIMANT
v.
DAK AMERICAS MISSISSIPPI, INC. COUNTER-DEFENDANT

         MEMORANDUM OPINION AND ORDER DENYING DEFENDANT COUNTER-CLAIMANT JEDSON ENGINEERING'S MOTION [60] FOR PARTIAL SUMMARY JUDGMENT ON ITS COUNTERCLAIM, AND DENYING AS MOOT PLAINTIFF/COUNTER-DEFENDANT DAK AMERICAS MISSISSIPPI, INC.'S MOTION [166] TO SUBSTITUTE RESPONSE IN OPPOSITION TO JEDSON ENGINEERING'S MOTION [60] FOR PARTIAL SUMMARY JUDGMENT

          HALIL SULEYMAN OZERDEN, UNITED STATES DISTRICT JUDGE

         BEFORE THE COURT are Defendant/Counter-Claimant Jedson Engineering's Motion [60] for Partial Summary Judgment on its Counterclaim against Plaintiff/Counter-Defendant DAK Americas Mississippi, Inc., and Plaintiff/Counter-Defendant DAK Americas Mississippi, Inc.'s Motion [166] to Substitute Response to Jedson Engineering's Motion [60] for Partial Summary Judgment. After due consideration of the record, the parties' Motions, related pleadings, and relevant legal authority, the Court is of the opinion that Jedson Engineering's Motion [60] for Partial Summary Judgment should be denied and DAK Americas Mississippi, Inc.'s Motion [166] to Substitute Response should be denied as moot.

         I. BACKGROUND

         A. Factual background

         This dispute arises out of the design and construction of a concrete storage slab at DAK Americas Mississippi, Inc.'s (“DAK”) PET resin manufacturing facility located in Bay St. Louis, Hancock County, Mississippi. See Compl. [1] at 2. According to DAK, it was in need of creating a suitable area for staging, unloading, and storing stacked shipping containers. This required a slab that was suitable for operating loaders and other heavy equipment necessary to transport, unload, and stack shipping containers. Id. Jedson Engineering (“Jedson”) is an engineering firm located in Cincinnati, Ohio. It was engaged by DAK to design the slab and supervise its construction. Id. Defendant Rob't J. Bagget, Inc. (“RJB”) was selected as the contractor to construct the slab. Id. at 3.

         To facilitate design and construction, DAK issued several purchase orders to Jedson. Jedson has submitted the final October 15, 2014, Purchase Order # 4500426907 issued for the work, which included certain Terms and Conditions relevant here, as follows:

5. Warranty: [Jedson] expressly warrants that the Services will . . . meet [Jedson's] Order, all referenced or attached specifications, tolerances, limitations, drawings, samples and information; be of merchantable quality, free from defects on workmanship and material, be fit for such purposes as expressed in the Order, or are reasonable [sic] inferable from the terms of the Order; and in accordance with standard of care of other professionals performing the same or similar work in that locality. These warranties shall run to [DAK], its successors, assigns, customers and the user of its products . . . .
6. Liability:
A) Should any Services, fail to conform with the warranties of Article 6 [sic] [Jedson's] sole liability and [DAK's] sole remedies shall be as follows: [Jedson] shall rework the Services promptly following [DAK's] notification or, at [DAK's] option, refund the purchase price.
B) To the extent permitted by law, neither party shall be liable to the other for any special, consequential or punitive damages, even if caused by negligence, willful misconduct or breached [sic] of contract. The preceding sentence and the liability/remedies limitations of A) above do not apply to, and each party shall indemnify and defend the order[1] against (i) fines or civil penalties; (ii) loss or damage to the indemnified party's property; and (iii) costs (including legal fees and expenses) and liability arising from claims, suits, causes of action, action, judgments, by third parties (including legal fees and expenses) and liability arising from claims, suits, causes of action, action, judgments by third parties (including either party's employees) based on death, personal injury, loss or damage to property or the environment to the extent (i), (ii) and (iii) are caused by the negligence, willful misconduct or breach of contract of the indemnifying party.

Ex. “3” [60-3] at 4.[2] The term “Services” is defined as “any services and work ordered by [DAK] pursuant to the [Purchase] Order.” Id.

         According to DAK, even though Jedson knew of DAK's intended purposes for the slab and agreed to design and supervise its construction accordingly, Jedson failed to design a sufficient slab and failed to manage and supervise the construction in the manner necessary to fit DAK's intended purposes. See Compl. [1] at 2-4. DAK claims that, within months of completion of construction, it discovered issues with the new concrete slab, including what it characterizes as serious cracking and chipping. Id. at 4-5.

         B. Procedural background

         Invoking the Court's diversity jurisdiction pursuant to 28 U.S.C. § 1332, DAK filed this lawsuit on January 31, 2018, against Defendants Jedson and RJB. DAK alleged negligent design, negligent construction management, and breach of contract claims against Jedson, and negligent construction and breach of contract claims against RJB. See Compl. [1] at 6-10. Jedson filed a Counterclaim [15] against DAK seeking a declaratory judgment determining DAK's rights and Jedson's responsibilities under the limitation-of-liability clause contained in section 6(A) of the Purchase Order [15-1] and limiting DAK's remedies against Jedson accordingly. Jedson also advanced claims for specific performance and bad faith breach of contract. Countercl. [15] at 18-21. RJB filed a Cross-claim [43] against Jedson asserting claims for implied contractual indemnity, common law indemnity, legal/Spearin immunity, negligent design, and negligent supervision, Cross-cl. [43] at 12-16, but RJB later voluntarily dismissed its Cross-claim, Order [203] at 1-2.

         1. Jedson's Motion [60] for Partial Summary Judgment

         Jedson's Motion [60] for Partial Summary Judgment seeks a declaration from the Court that “the Terms and Conditions attached to the final purchase order are valid and enforceable and operate [to] limit DAK's recovery to 1) refund of the purchase price or 2) rework of services.” Jedson's Mot. [60] at 3. Jedson also asks the Court to enter “an Order directing DAK to elect its remedy pursuant to the Terms and Conditions.” Id.

         DAK responds that the limitation-of-liability clause does not unambiguously apply because Jedson damaged DAK's property due to Jedson's own negligence or breach of contract. See Resp. [79] at 3-5. DAK maintains that section 6(B)(ii) of the Terms ...


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