Salt Lake City Corporation v. Sekisui SPR Americas

CourtDistrict Court, D. Utah
DecidedAugust 4, 2022
Docket2:17-cv-01095
StatusUnknown

This text of Salt Lake City Corporation v. Sekisui SPR Americas (Salt Lake City Corporation v. Sekisui SPR Americas) is published on Counsel Stack Legal Research, covering District Court, D. Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Salt Lake City Corporation v. Sekisui SPR Americas, (D. Utah 2022).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH

SALT LAKE CITY CORPORATION,

Plaintiff, MEMORANDUM DECISION AND ORDER DENYING MOTION FOR v. SUMMARY JUDGMENT AND FINDING MOTION TO STRIKE TO BE MOOT SOUTHWEST PIPELINE AND TRENCHLESS CORP. and SAFECO Case No. 2:17-cv-01095-JNP-CMR INSURANCE COMPANY OF AMERICA, INC., District Judge Jill N. Parrish

Defendants.

Southwest Pipeline and Trenchless Corporation entered into a contract with Salt Lake City Corporation to rehabilitate a sewer line. Safeco Insurance Company of America, Inc. issued a performance bond for the project. Salt Lake City later sued Southwest and Safeco, alleging that the rehabilitated sewer line was leaking. The city asserted that Southwest, among other things, breached a warranty provision contained in the contract. Salt Lake City also claimed that Safeco breached its obligation under the performance bond to either remedy Southwest’s breach or indemnify the city for its losses. Before the court are two motions filed by Salt Lake City. First, the city moves for summary judgment in its favor on its breach of warranty claim against Southwest and its performance bond claim against Safeco. ECF No. 215. Second, the city moves to strike portions of Southwest’s and Safeco’s responses to the motion for summary judgment. ECF No. 225. The court DENIES the motion for summary judgment and finds the motion to strike to be MOOT. BACKGROUND A. Southwest Enters into a Contract with Salt Lake City to Rehabilitate a Failing Sewer Line In the mid-1960s, Salt Lake City installed the 1800 North sanitary sewer trunk line, which conveys much of the city’s wastewater to a water reclamation facility. By 2009, this main sewer line had become severely deteriorated. Large amounts of groundwater infiltrated the sewer line, and it was at risk of catastrophic failure. The city commissioned a geotechnical investigation from RB&G Engineering to determine the feasibility of a project to rehabilitate the sewer line. In October 2009, RB&G issued its final report. RB&G concluded that any rehabilitation project would likely require the contractor to bore two wells in order to pump out groundwater from the

project area. The report estimated that each well should be designed to pump water at the rate of one cubic foot per second (cfs). In late-2009, Salt Lake City advertised for bids to perform a trenchless rehabilitation of the sewer line. Southwest decided to explore the possibility of submitting a bid for the project and attended a November 17, 2009 pre-bid meeting held by the city. At the meeting, Salt Lake City encouraged potential bidders to read the RB&G report. Southwest submitted a bid and on or about January 8, 2010, Salt Lake City awarded the project to Southwest. On January 14, 2010, Southwest obtained a performance bond from Safeco. The contract between Salt Lake City and Southwest governing the rehabilitation project consists of two main documents that are relevant here: (1) the Project Manual and (2) the 2007

edition of the Manual of Standard Specifications promulgated by the Utah chapter of the American Public Works Association (APWA Manual). The project-specific terms of the contract were contained in the Project Manual, which provided that Southwest would rehabilitate the failing 2 sewer line by installing a SPR PE liner within the existing pipe. The Project Manuel stated that “[t]he primary contract objective is the structural and hydraulic renewal of the existing sewer.” A section of the Project Manual labeled “INSPECTION” provides: B. The SPR PE shall be free from visual defects, damage, or deflection. There shall be no visible infiltration through the liner, at the joints, lateral connections, at manhole connections or through manholes. C. Acceptance of the installed liner shall be based on the video CCTV inspection after grouting to assure all joints are properly assembled, no damage exists, and that no visible leakage or deformation exists as determined by the Engineer. . . . D. Correction of failed liner deemed defective from post-installation CCTV inspection shall be repaired at no extra cost to [Salt Lake City]. The Project Manual also obliged Southwest to provide “[a] written guarantee of 3-year minimum shall be provided by the Contractor [Southwest] against any shortcomings in the workmanship.” This warranty is known as the “workmanship warranty.” The Project Manual incorporated by reference the terms of the APWA Manual, which provides general terms applicable to a broad scope of public works contracts. The APWA Manual contains an additional warranty: “CONTRACTOR [Southwest] warrants and guarantees to OWNER [Salt Lake City] that all work will be in accordance with the Contract Documents [e.g., the Project Manual] and will not be defective.” The APWA Manual goes on to state: “CONTRACTOR’s obligation to perform and complete the Work in accordance with the Contract Documents shall be absolute.” This warranty is known as the “APWA warranty.” B. Southwest Attempts to Rehabilitate the Sewer Line. After Southwest began work on the project, it discovered that the volume of the groundwater flowing through the project area was much greater than anticipated. Salt Lake City granted two change orders totaling approximately $346,000 in additional funding to pump water 3 away from the project area. Southwest dug four wells and pumped out over 4.5 cfs of groundwater. But this was still not enough to properly dewater the project area. In November 2012, Southwest notified Salt Lake City that it had completed the sewer line rehabilitation project. In December 2012, the city advised Southwest that it had discovered “a

significant defect and leak in the liner.” In August and September of 2013, Southwest attempted to fix this leak but was unsuccessful. In early 2015, Salt Lake City obtained CCTV footage of the interior of the sewer line showing multiple leaks. In June 2015, Southwest sent a letter to Salt Lake City asserting that further attempts to repair the leaks were not feasible until the project area could be adequately dewatered. Southwest further claimed that it had no contractual obligation to conduct further repairs and that if the city provided a design for a project, it would provide an estimate to complete further repairs. Salt Lake City interpreted this letter as a statement that Southwest was abandoning the project. In June 2016, Salt Lake City hired Water Works Engineers to identify and evaluate alternatives for fixing the leaks in the sewer line. After extensive testing and analysis, Water Works

issued its final report in March 2018. Water Works advised that the best alternative for Salt Lake City was to construct a new trunk sewer line along a new alignment. Water Works advised against further attempts to repair the existing sewer line in place because of the expense, the high risk of failure, and the limited useful life of a repaired sewer line. Water Works found that one of the challenges of attempting further repairs of the existing sewer line was the significant groundwater flows in the area. It estimated that repairing the sewer line would require pumping between 22 cfs and 44 cfs of groundwater away from the construction area in order to adequately dewater a potential repair project.

4 C. Salt Lake City Sues Southwest for Breach of Contract In November 2017, Salt Lake City sued Southwest and Safeco. It asserted three claims against Southwest: (1) breach of contract, (2) breach of the APWA warranty, and (3) breach of the workmanship warranty. Salt Lake City asserted one claim against Safeco for breach of its obligation under the performance bond to either remedy Southwest’s breaches of contract or to

indemnify the city for its losses.

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