Keller Industrial, Inc. v. Engineering & Construction Innovations, Inc.

Background

This diversity case arose from a January 2021 flood during a City of Minneapolis water-main project beneath the Mississippi River. Engineering & Construction Innovations, Inc. (ECI) was the general contractor. After ECI’s microtunnel boring machine became stuck at the retrieval shaft, ECI hired Keller Industrial, Inc. to design and install a temporary ground-freezing system intended to stabilize the soil and control groundwater while ECI recovered the machine.

Keller installed the system and authorized ECI to begin excavation and recovery work. ECI then attempted to move the machine into the retrieval shaft, including by cutting piping, removing parts of a reception seal, turning off nearby freeze pipes, and using heaters. On January 21, 2021, ECI found the launch shaft, retrieval shaft, and tunnel flooded. ECI withheld payments from Keller, and Keller filed a six-count amended complaint. ECI asserted counterclaims for breach of contract and negligence.

Summary Judgment

ECI moved for partial summary judgment because Keller had stipulated to dismiss Counts III and IV of the amended complaint. The court granted ECI’s motion.

Keller moved for partial summary judgment on ECI’s claimed delay-related damages, arguing that the Subcontract allowed such damages only if Keller’s equipment was defective or malfunctioning and that ECI lacked evidence of that condition. The court denied Keller’s motion. It determined that ECI presented enough circumstantial evidence for a reasonable factfinder to conclude that Keller’s temperature-monitoring equipment malfunctioned, including evidence concerning unexpectedly low temperature readings, the failure to detect the flood, and possibly frozen monitoring pipes.

Keller also sought summary judgment on ECI’s claimed share of liquidated damages that ECI might owe the City for project delays. The court rejected Keller’s argument that those damages were too speculative. The opinion stated that the City had assessed liquidated damages against ECI and that a reasonable factfinder could conclude the amount was sufficiently certain. The court therefore denied Keller’s summary-judgment motion.

Expert Testimony

The court applied Federal Rule of Evidence 702, which governs when expert testimony is sufficiently qualified, reliable, and helpful to the factfinder. Because the parties agreed to a bench trial, the court noted that the concerns underlying expert-testimony exclusion are reduced, but it still excluded testimony that lacked reliable support, was legally improper, or would not help decide the claims.

The court denied Keller’s motion to exclude ECI’s engineering expert, Dr. Arthur McGinn. Although Dr. McGinn was not a ground-freeze specialist, the court concluded that his civil and geotechnical engineering qualifications were sufficiently related to the subjects of his opinions. The court left the weight of his opinions for trial.

The court granted in part and denied in part ECI’s motion concerning Keller’s expert, Dr. Alan Auld. The court excluded Dr. Auld’s late supplemental report because Keller did not substantially justify or harmlessly explain its late disclosure. The court also excluded Dr. Auld’s opinions that ECI’s heaters caused the flood, that ECI’s grouting prevented the machine from advancing, and that ECI’s insulation was insufficient; those opinions lacked identified reliable principles or methods. The court excluded Dr. Auld’s opinions about ECI’s contractual duties and the parties’ contractual scope of work because those were legal issues for the court. It did not exclude his remaining testimony about the importance of contractor communications based on industry experience.

The court granted ECI’s motion to exclude Erin Fallon’s opinion that ECI’s liquidated-damages claim was legally appropriate. The court held that whether a category of damages is legally available is a question of law, not a proper subject for expert testimony. The court also excluded or declined to consider Fallon’s opinions about whether ECI and its damages expert had established that Keller’s equipment caused the flood, noting that Keller did not respond to that part of ECI’s motion and that the opinions would not assist the court in interpreting the contract or evaluating the evidence.

The court granted in part and denied in part ECI’s motion concerning Paul Wilkinson. The court allowed Wilkinson to testify about industry standards and the importance of ECI communicating its recovery methods to Keller, including his opinion that fuller communication might have prevented some flooding-related problems. The court excluded his opinions that ECI’s microtunneling drive was unsuccessful and that ECI lacked the experience or qualifications to perform the work, because those opinions would not help decide the claims.

Order

The court ordered that: (1) ECI’s motion for summary judgment was granted; (2) Keller’s motion for summary judgment was denied; (3) Keller’s motion to exclude Dr. McGinn was denied; (4) ECI’s motion to exclude Dr. Auld was granted in part and denied in part; (5) ECI’s motion to exclude Erin Fallon was granted; and (6) ECI’s motion to exclude Paul Wilkinson was granted in part and denied in part.