Diamond Hydraulics, Inc. v. GAC Equipment, LLC D/B/A Austin Crane Service

Court of Appeals of Texas·Decided August 30, 2024·No. 03-23-00358-CV·Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-23-00358-CV

Diamond Hydraulics, Inc., Appellant v.

GAC Equipment, LLC d/b/a Austin Crane Service, Appellee

FROM THE 425TH JUDICIAL DISTRICT COURT OF WILLIAMSON COUNTY NO. 19-1077-C425, THE HONORABLE BETSY F. LAMBETH, JUDGE PRESIDING

MEMORANDUM OPINION

This is a dispute over Diamond Hydraulics’ (Diamond) repair of a hydraulic crane owned by GAC Equipment, LLC d/b/a Austin Crane Service (Austin). Dissatisfied with the repair, Austin sued Diamond for breach of contract and breach of express and implied warranties. A jury found for Austin and awarded damages. We affirm.

BACKGROUND

Austin provides crane rental services. In June 2018, the hydraulic cylinder on one of its cranes started leaking hydraulic fluid during a job. Bryan Simpson, Austin’s general manager, contacted Diamond to repair the cylinder. Instead of repairing and resealing the cylinder, Diamond recommended rebuilding the barrel. 1 Diamond sent a work order to Austin offering to rebuild it for $26,988.76. The work order did not specify the type or strength of 1 A hydraulic cylinder has three main parts: a rod, a barrel, and spherical bearings.

material to be used or include an express warranty. Simpson accepted the offer and paid Diamond $26,988.76. Diamond rebuilt the cylinder using a106 B/C carbon grade steel.

Austin had the rebuilt cylinder reinstalled on the crane and sent it back into service. The following year, the cylinder bent while the crane was lifting an airport bridge. 2

Simpson emailed Diamond the following day that Austin would not release the cylinder and wanted “to know how [Diamond] would like to proceed” with purchasing a replacement cylinder from the original equipment manufacturer (OEM). William Gibson (a co-owner of Diamond) responded that Diamond needed to perform a failure analysis on the bent cylinder before purchasing a new one.

During that same exchange of emails, Gibson represented that Diamond had rebuilt the cylinder with “the same material” as the OEM. Austin hired metallurgist Tony Studer

2 We take this image, which the district court admitted as one of Austin’s exhibits, from Austin’s brief.

to determine if the rebuilt cylinder was made of the same material used by the OEM. Studer reported that Diamond used a106 B/C carbon grade steel in the rebuild, which is significantly weaker.

Austin sued Diamond for breach of contract and breach of express and implied warranties. Specifically, Austin alleged that Diamond breached the repair contract by failing to repair the cylinder “with materials that were of sufficient quality or strength to utilize the cylinder for its intended purpose.” And by doing so, Diamond allegedly breached an express warranty that “all repaired components are brought back up to OEM standards” and an implied warranty that it would perform the repairs in a good and workmanlike manner.

Diamond retained KnightHawk Engineering to determine why the cylinder failed.

Dr. Kevin Macfarlan and other personnel from KnightHawk, including Dr. Michael Hoerner, conducted tests on the cylinder and prepared a report. Dr. Macfarlan concluded in his report that the cylinder bent because the “spherical plain bearing at the top of the hydraulic rod” seized. The bearing seizure was the result of damage caused by repeated overloading of the crane and poor maintenance. Diamond’s use of a “A106 Grade B/C did not contribute in any way to the failure of the hydraulic cylinder.” Diamond designated Dr. Macfarlan as its testifying expert on the cause of the bend. Austin took Dr. Macfarlan’s deposition in October 2021.

Studer prepared a “rebuttal letter” criticizing Dr. Macfarlan’s report. According to Studer, the cylinder bent because the weak steel used in the rebuild could not withstand the stress of lifting the 55,000-pound bridge. He relied in part on pi tape measurements of the barrel showing that it had swelled and calculations of the “hoop stress” on the cylinder at the time of

the bend. 3 The stress on the cylinder wall exceeded the yield strength of the carbon steel and caused the barrel to swell, resulting in the bend.

The case was set for a jury trial on October 3, 2022. On August 22, 2022, KnightHawk informed Diamond’s counsel that Dr. Macfarlan had accepted a position in Ohio with another company and was no longer available to testify. Diamond’s counsel contacted Austin’s counsel to discuss substituting Dr. Hoerner for Dr. Macfarlan as a testifying expert, but Austin’s counsel opposed the request.

On September 2, 2022—952 days after the deadline to designate experts expired and 31 days before the trial date—Diamond served Austin with a supplemental disclosure designating Dr. Hoerner as a testifying expert in place of Dr. Macfarlan and a motion for leave. Diamond argued that there was good cause to permit the substitution and that permitting Dr. Hoerner’s testimony would not unfairly surprise or prejudice Austin. See Tex. R. Civ. P. 193.6(a) (providing for automatic exclusion of evidence that was not timely disclosed unless court finds good cause or that opposing party would not suffer unfair surprise or prejudice). Diamond argued that Dr. Macfarlan’s withdrawal was good cause and that permitting Dr. Hoerner to testify would not cause unfair surprise or prejudice because Austin knew Dr. Hoerner was involved in testing the cylinder. Further, Dr. Hoerner had reviewed the same evidence as Dr. Macfarlan and reached the same opinion. Diamond attached an affidavit from Dr. Macfarlan confirming that he is “not available to testify as an expert witness” in this case,

3 Studer explained that a “pi tape” is a “calibrated piece of tape, it’s a piece of metal that has marking on it, you wrap it around the diameter” of the object. Dr. Macfarlan explained in his deposition that “hoop stress” refers to the stress on a vessel when it is under pressure, “like the barrel in this case when it’s pumped full of hydraulic fluid.”

which was “set for a jury trial starting October 3, 2022.” The district court denied Diamond’s motion and its request for a continuance. 4 The parties tried the case to a jury in October 2022. The district court preadmitted several exhibits, including Studer’s report, a redacted version of Dr. Macfarlan’s report, and photographs of the crane, including several of the disassembled bearings. The redacted report included extensive photographs and measurements of the cylinder and its components. Austin presented the testimony of Simpson; Studer; Dr. Jim Wiethorn; Eric Fidler, the corporate representative of Grove, the crane manufacturer; Gibson; and the crane operator.

Simpson testified that the lifting capacity of the crane on the day of the accident was 75,000 pounds. Fidler testified by deposition that the cylinder was manufactured by a German supplier using a material that he could not name but which possesses a minimum yield strength of 90,000 pounds per square inch (“PSI”). He explained that Grove does not consider a106 B/C carbon grade steel an acceptable alternative material because it is “significantly weaker.”

Austin called Studer to testify on the cause of the cylinder failure. Diamond objected that Studer was unqualified and his opinion lacked support. Studer testified that he holds a master’s degree in engineering and works as a metallurgist. He described metallurgy as the “science and engineering of metallic elements and mixtures of those elements.” His work involves assisting engineering clients with “selecting a suitable material for a specific application.” This might involve determining the correct material for use in a new machine or identifying an alternative material for a known use. Part of this work involves determining why

4 Diamond sought mandamus relief from the district court’s denial of its motion for leave, but this Court denied relief. In re Diamond Hydraulics, Inc., No. 03-22-00604-CV, 2022 WL 6255698, at *1 (Tex. App.—Austin Sept. 30, 2022, orig. proceeding) (mem. op.).

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Diamond Hydraulics, Inc. v. GAC Equipment, LLC D/B/A Austin Crane Service, (Tex. Ct. App. 2024).

Diamond Hydraulics, Inc. v. GAC Equipment, LLC D/B/A Austin Crane Service (Diamond Hydraulics, Inc. v. GAC Equipment, LLC D/B/A Austin Crane Service) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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