United States District Court, N.D. Oklahoma
LEXINGTON INSURANCE COMPANY; GAVILON FERTILIZER, LLC; CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON; and GAVILON GRAIN, LLC, Plaintiffs,
NEWBERN FABRICATING, INC., and BAUCOM CONCRETE CONSTRUCTION, INC., Defendants, and NEWBERN FABRICATING, INC., Third-Party Plaintiff,
DOVELAND ENGINEERING CO., Third-Party Defendant.
OPINION AND ORDER
V. BAGAN UNITED STATES DISTRICT JUDGE.
before the Court is the report and recommendation (Dkt. #
324) of Magistrate Judge T. Lane Wilson recommending that the
Court grant the motion in limine (Dkt. # 141) of plaintiffs
Gavilon Grain, LLC and Gavilon Fertilizer, LLC (Gavilon
plaintiffs) to the extent it seeks to bar evidence at trial
that the relevant contract imposed on the Gavilon plaintiffs
a duty to inspect and approve any welds or other methods of
attachment used on the rebar. Defendants Newbern Fabricating,
Inc. (Newbern) and Baucom Concrete Construction, Inc.
(Baucom) filed an objection (Dkt. # 327) to the report and
action arises from the collapse of a wall of a storage
facility at the Tulsa Port of Catoosa. Gavilon Grain owned
the building, which Gavilon Fertilizer used to store
fertilizer. Dkt. # 142, at 2. In 2004, Gavilon Grain
contracted with Newbern, a construction company that builds
river terminals and equipment, to build a concrete storage
facility. Id. Baucom worked as the subcontractor
responsible for the concrete work on the project.
Id. The construction contract between Gavilon Grain
and Newbern provides that “[Gavilon's] project
manager to observe and approve of all steel placement and
sizes prior to concrete being poured.” Dkt. # 142-7, at
March 7, 2013, a reinforced concrete wall of the facility
collapsed. Id. Plaintiffs Lexington Insurance
Company and Lloyd's of London paid a number of claims
related to the losses sustained from the wall collapse. Dkt.
# 54, 4-5. The Gavilon plaintiffs assert that they both
suffered losses from the wall collapse, including damage to
the building and associated equipment and loss of profit and
use of facilities. Id. at 5. Plaintiffs filed this
action against defendants Newbern and Baucom, asserting that
the damages were caused by inadequate design and installation
of the concrete columns. Id. at 5-9.
plaintiffs filed a motion in limine (Dkt. # 141) asking the
Court, inter alia,  to prevent defendants from
“offering, referring to, or attempting to convey to the
jury in any manner evidence suggesting that the design/build
contract between Newbern and [Gavilon] imposed an obligation
on [Gavilon] to inspect and/or approve the welds on the
fertilizer building's rebar supports.” Dkt. # 142,
at 8-9. The magistrate judge issued a report and
recommendation recommending that the Gavilon plaintiffs'
motion be granted as to this issue. Dkt. # 324. Newbern and
Baucom object to the magistrate judge's recommendation.
Dkt. # 327.
Court may refer any pretrial matter pending before it to a
magistrate judge for a report and recommendation. 28 U.S.C.
§ 636(b)(1)(A). However, the parties may object to the
magistrate judge's recommendation within fourteen days of
service of the recommendation. Schrader v. Fred A. Ray,
M.D., P.C., 296 F.3d 968, 975 (10th Cir. 2002); Vega
v. Suthers, 195 F.3d 573, 579 (10th Cir. 1999). The
Court “shall make a de novo determination of those
portions of the report or specified proposed findings or
recommendations to which objection is made.” 28 U.S.C.
§ 636(b)(1). The Court may accept, reject, or modify the
report and recommendation of the magistrate judge in whole or
in part. Fed.R.Civ.P. 72(b).
a contract is ambiguous is a matter of law for the Court to
determine. K & K Food Serv., Inc. v. S & H,
Inc., 3 P.3d 705, 708 (Okla. 2000). “The mere fact
the parties disagree or press for a different construction
does not make an agreement ambiguous.” Pitco Prod.
Co. v. Chaparral Energy, Inc., 63 P.3d 541, 545 (Okla.
2003). A “contract is ambiguous only if it is
susceptible to two constructions on its face from the
standpoint of a reasonably prudent layperson.”
Haworth v. Jantzen, 172 P.3d 193, 196 (Okla. 2006).
When a contract's terms are unambiguous and clear, the
language should be accorded its ordinary, plain meaning and
enforced so as to carry out the parties' intentions.
Bituminous Cas. Corp. v. Cowen Const., Inc., 55 P.3d
1030, 1033 (Okla. 2002); see also Okla. Stat. tit.
15, § 160 (“The words of a contract are to be
understood in their ordinary and popular sense.”).
“Courts ‘will not create an ambiguity by using a
forced or strained construction, by taking a provision out of
context, or by narrowly focusing on the
provision.'” Combs v. Shelter Mut. Ins.
Co., 551 F.3d 991, 997 (10th Cir. 2008) (quoting S.
Corr. Sys. v. Union Pub. Sch., 64 P.3d 1083, 1089 (Okla.
2002)). When a contract is unambiguous, its meaning should be
gathered by what is contained within the four corners of the
contract without consideration of extrinsic evidence. See
May v. Mid-Century Ins. Co., 151 P.3d 132, 140 (Okla.
cover letter to the contract from Gavilon to Newbern contains
twelve “conditions” upon which the contract was
“based on and priced to meet.” Dkt. # 327-1, at
1. Number seven states, “[Gavilon's] project
manager to observe and approve of all steel placement and
sizes prior to concrete being poured.” Id. at
2. The parties agree that “steel” refers to
rebar. Dkt # 327, at 3; Dkt. # 327-2, at 3. But Newbern and
Baucom argue that the word “placement” is
ambiguous and could be reasonably understood to include the
welds on the rebar. Dkt. # 327, at 3. The Gavilon plaintiffs
argue that the contract is unambiguous, and that it does not
impose a duty on the Gavilon plaintiffs to inspect and/or
approve the welds. Dkt. # 142, at 8-10.
relevant in this case, placement has two commonly understood
definitions. First, placement means physical location,
position, or arrangement. Second, placement means the act of
placing. See Merriam-Webster's Collegiate
Dictionary 888 (10thed. 1994). Newbern and Baucom argue
that placement could reasonably include the welds when
considered in the context of the building's construction
because without some sort of connection (by ties or welds)
the rebar would fall apart. Dkt. # 327, at 4-5. As Newbern
and Baucom describe the construction process, Baucom first
built rebar “cages, ” which involved using eight
large diameter vertical bars and affixing
“stirrups” (smaller diameter rebar bent into
squares) horizontally around the vertical rebar at twelve
inch intervals to hold the bars together to form the cages.
Id. at 4. The stirrups were connected to the
vertical rebar by either ties or welds. Id. at 4-5.
Baucom then used a crane to lift the cages into the column
locations and to attach them to footings. Id. at 5.
Baucom built wooden forms around the cages, filled the forms
with concrete, and removed the wooden forms to reveal the
completed columns after the concrete dried. Id.
Court finds that, within the context of the construction
project in this case, placement unambiguously means the
physical location of the rebar cages and the act of placing
(putting in place) the rebar cages. Neither the location of
the rebar, nor the act of putting it there, includes how the
rebar is connected. Newbern and Baucom argue that the welds
are incorporated into the act of placing the rebar, but
connecting the rebar by weld or tie is a separate step from
placing it in a location. Placement includes whether
the rebar cage is in the correct position, whether the cage
is of sufficient height, etc. Connection concerns
how the rebar is built in order for it to stay together and
stay where it has been placed. Placement and connection are
separate steps in the construction of the rebar cages. The
stirrups are wrapped around the vertical rebar, then they are
connected, and then the entire rebar cage is
placed in its final location. Whether the bars are
held together by ties or welds does not affect their
placement. There is no indication in the contract that the
parties meant for placement to include how the rebar was
connected, and a reasonably prudent layperson would not
interpret placement to include welds. Thus, the Court will
not strain the plain meaning of the contract to impose an
additional duty on the Gavilon plaintiffs, and defendants are
barred from arguing during trial that the contract imposed an
obligation on the Gavilon plaintiffs to inspect and/or
approve the welds of the rebar.
also argues that it should be able to argue to the jury that
its failure to supervise Baucom regarding the welding was
reasonable because it believed Gavilon was obligated to
oversee and approve the rebar installation, including the
welds or ties connecting the rebar. Dkt. # 327, at 7.
However, the Court has determined that Newbern's
interpretation of the contract is unreasonable. Evidence that
Newbern unreasonably interpreted the contract cannot show
that Newbern acted in a reasonable manner by relying on its
interpretation. It would be nonsensical to find that a party
acted reasonably by relying on an unreasonable interpretation
of a contract. Therefore, defendants will be barred from