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

CourtCourt of Appeals of Texas
DecidedAugust 30, 2024
Docket03-23-00358-CV
StatusPublished

This text of 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) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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

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. 2 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

3 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.” 4 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

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Diamond Hydraulics, Inc. v. GAC Equipment, LLC D/B/A Austin Crane Service, Counsel Stack Legal Research, https://law.counselstack.com/opinion/diamond-hydraulics-inc-v-gac-equipment-llc-dba-austin-crane-service-texapp-2024.