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Wanzek, A Mastec Co. v. Allstate Tower, Inc.

United States District Court, Eighth Circuit

June 25, 2013

Wanzek, a MasTec Company, Plaintiff,
v.
Allstate Tower, Inc., a Foreign Corporation, Defendant.

MEMORANDUM OPINION & ORDER ON MOTIONS FOR SUMMARY JUDGMENT

RALPH R. ERICKSON, Chief District Judge.

I. INTRODUCTION

Before the Court are the parties' cross motions for summary judgment (Docs. #16 & 21). On December 11, 2009, a cellular tower located in Fergus Falls, Minnesota broke apart as it was being dismantled, damaging Plaintiff Wanzek, a MasTec Company's (hereafter "Wanzek") crane. Wanzek seeks to recover repair costs for the crane and rental costs for substitute cranes from Allstate Tower, Inc. (hereafter "Allstate"). The Court, having carefully considered the arguments of the parties, now issues this memorandum opinion and order.

II. SUMMARY OF DECISION

In order for Wanzek to prevail on its breach of contract claim, it must show Allstate, as the principal, intentionally or by want of ordinary care caused Wanzek to believe SiteTech was Allstate's agent when SiteTech rented the crane from Wanzek. Argabright v. Rodgers , 659 N.W.2d 369, 371 (N.D. 2003). There is contradictory evidence in the record on whether Allstate's conduct could cause a reasonable fact finder to conclude SiteTech was acting as an ostensible agent of Allstate. Genuine issues of material fact preclude summary judgment on Wanzek's breach of contract claim.

Wanzek has failed to present sufficient evidence or disputed facts in order to meet the requirements necessary for its negligence claims. Thus, Allstate is entitled to summary judgment on these claims.

III. RELEVANT FACTS

In late 2009, Charter Communications wanted a 550-foot guyed cellular tower located in Fergus Falls, Minnesota dismantled and removed from the site (Doc. #17-1, Dep. Walker, p. 9; Doc. #17-4, Attachment "A" to Master Subcontract Agreement). Charter Communications contracted with Allstate Tower, Inc. ("Allstate") for the removal of the tower. Allstate subcontracted with Sundance Group Inc./ SiteTech Wireless Division (hereafter "SiteTech")[1] to perform the following work:

1. Mobilize to tower site.
2. Dismantle (1) 550' guyed tower with gin pole and haul off site for disposal.
3. Cut anchor rods 1'below grade, base pier to remain.

(Doc. #17-4). Under the terms of the subcontract, SiteTech was responsible for providing the labor, tools, equipment, gin pole, and offsite disposal. Id . Allstate agreed to pay SiteTech a lump sum of $19, 000 for completion of the work. Id . SiteTech kept Allstate, whose principal place of business is Henderson, Kentucky, apprised of the project's progress through a series of emails, pictures, and telephone calls (Doc. #17-3, Dep. Calandros p. 68; Doc. #17-1, Dep. Walker pp. 39-41).

The particular project involved the use of a gin pole to dismantle the tower. A gin pole resembles a tower with a large winch (Doc. #17-1, Dep. Walker, p. 17). Steel cables and pulleys are used to pull the gin pole up the tower. Id . Once in place, approximately 20 feet of the tower's top is unbolted and lowered to the ground with the winch. The gin pole is then relocated to the tower's next highest section and the process is repeated. Id . As the tallest affordable cranes only reach to a height of approximately 300 feet, a gin pole is necessary to reduce a tower's height until a crane can access and remove the remaining portion of the tower (Doc. #17-1, Dep. Walker p. 18). SiteTech estimates that a crane with a 500 foot boom costs about $60, 000 a day to rent (Doc. #17-3, Dep. Calandros p. 71). A crane with around a 300 foot boom costs about $15, 000 a day to rent. Id.

SiteTech used a gin pole to remove the top 180 feet of the 550 foot tower. Given that the tower was now approximately 370 feet tall, SiteTech decided to use a crane to remove the remaining tower (Doc. #17-3, Dep. Calandros pp. 13, 149). Michael Calandros, who was employed by SiteTech as the project manager/foreman, testified that his boss at SiteTech told him to "call in a crane." Id. at 13. Calandros approved of the plan, as it was very cold outside, it was taking a longer time to remove the sections because of the cold, and his crew was complaining about the cold. Id. at pp. 16, 71. SiteTech notified Allstate by telephone of the stage of the work and that they were going to rent a crane to complete the project (Doc. #17-1, Dep. Walker p. 109). Allstate did not jointly or separately rent the crane. Id. at p. 108.

SiteTech entered into a Crane Service Work Order Agreement ("the Agreement") with Wanzek for the crane rental along with a trained crane operator. Calandros signed the Agreement on behalf of SiteTech. (Doc. #17-3, Dep. Calandros p. 149). Allstate's name is handwritten on the Agreement next to the term "Company", as indicated below:

EXHIBIT A

Calandros testified that "Allstate Tower" was included on the Agreement because SiteTech did not have sufficient credit to rent a crane. Id. at p. 185. Allstate denies that it ever authorized the rental of the crane through the use of its credit. Wanzek, on the other hand, asserts it understood Allstate would be responsible if there were any problems (Doc. #24, Aff. Kevin McCrory ¶ 4). Wanzek avers SiteTech employees represented that SiteTech had the authority to sign the rental agreement on behalf of Allstate. Id. at ¶ 10. Regardless of Wanzek's assertions, only SiteTech is listed in the section of the agreement entitled "CUSTOMER ACCEPTANCE AND AUTHORIZATION OF CRANE SERVICE." There is nothing in the written contract to indicate that Allstate ever accepted or authorized the crane rental.

The record contains contradictory information about who paid Wanzek. Wanzek avers that it expected to be paid by Allstate (Doc. #24, Aff. McCrory ¶ 11). SiteTech contends Allstate paid Wanzek and then Site Tech reimbursed Allstate for the crane rental (Doc. #17-3, Dep. Calandros p. 149). Allstate asserts it did not pay for the crane rental, as the subcontract required SiteTech to pay for all equipment needed for the project (Doc. #17-1, Dep. Walker p. 109). No invoice, cancelled check, or other affirmative evidence is in the record to resolve this dispute.

Wanzek delivered and set up the crane at the site (Doc. #17-3, Dep. Calandros p. 10). SiteTech attached the tower to the crane according to the crane operator's instructions. Id. at pp. 18-20. The crane operator directed the SiteTech crew to use Wanzek's cables to attach the tower to the crane. Id. at pp. 10, 19. SiteTech put the cables "right where he [the crane operator] wanted them because he knew his hook height and everything." Id. at p. 19. SiteTech estimated that the remaining tower sections weighed approximately 12, 000 pounds, which was well within the crane's weight capacity of 26, 000 pounds. Id. at p. 17.

Wanzek's crane operator picked up the load and the SiteTech crew cut the guy wires and disconnected the tower from the base. The crane operator lifted the tower off the ground and moved it 180 degrees from the base, as planned. At this point versions of what happened diverge. SiteTech claims the crane operator panicked while the crane was flexing, stopped the load, and caused the tower to begin "snapping." Id. at pp. 10, 16-18. SiteTech denies all responsibility for the tower's collapse. Rather, SiteTech asserts the crane operator "shocked the load [and] he broke [the tower] all to pieces." Id. at pp. 13, 18. Calandros testified that he has been in the tower removal business for 25 years, removed hundreds of towers using a gin pole, and has only had one other tower break during the removal process - both times because the crane operator suddenly stopped movement of the tower and "shocked" the load. Id. at pp. 11, 18, 68.

Wanzek denies this version of events. Its retained structural engineer opines that the tower broke apart because it of its size at the time it was moved (Doc. #23-1). The engineer believes the tower, during the lowering process, would have behaved as intended by the original designer if it was removed in 100 foot sections rather than a single 300 foot section. Id . Wanzek contends the loss was occasioned by a bad plan, rather than bad crane operation.

Wanzek alleges it sustained damages consisting of: (1) $219, 244.26 to repair the crane; (2) $76, 950.00 to rent replacement cranes from January through March 2010; and, (3) $2, 528.89 to tear down the damaged crane onsite (Doc. #23-2). Wanzek alleges Allstate is obligated to pay for the damages under the terms of the Crane Service Work Order Agreement because at the top of the Work Order, both SiteTech and Allstate are listed on the line next to the term "Company." (Doc. #17-6, Crane Work Order, p.1). The Agreement contains an indemnification clause, which provides:

To the fullest extent permitted by law, Customer agrees to indemnify and save Wanzek, its employees and agents, harmless from all claims, loss, damage or injury to... property including without limitation the crane... regardless of any negligence or fault of Wanzek or the crane operator or a defect or failure in the crane. Customer's duty to indemnify shall include all costs and expenses associated with the foregoing, including without limitation all court and/or arbitration costs, costs of investigation, attorney fees and costs of settlement....

Wanzek contends that even though Allstate did not sign the Agreement, it is still liable because SiteTech was acting as Allstate's authorized agent. Allstate disputes the existence of an agency relationship and further contends it has no liability because SiteTech exclusively accepted and authorized the crane service without Allstate's approval.

In the alternative, Wanzek alleges liability based on Allstate's negligent business practices. The alleged negligent business practices include negligent hiring, supervision, and exercise of control over a subcontractor. Allstate claims no duty existed to either supervise or exert control over SiteTech because SiteTech was an independent contractor, and even if there was a duty, it did not breach its duty to exercise due care.

IV. ISSUES

The parties raise a number of issues in their summary judgment motions:

(1) Whether Allstate is contractually obligated to indemnify Wanzek for its damages because SiteTech was an agent of Allstate.
(2) Whether North Dakota or Minnesota law applies to Wanzek's tort claims.
(3) Whether Wanzek has a cognizable claim for breach of a duty of care for failing to supervise SiteTech.
(4) Whether Wanzek has a cognizable claim for negligence in failing to employ a competent and careful contractor.
(5) Whether Wanzek has a cognizable claim because the removal of the tower was inherently dangerous work.

V. DISCUSSION

I. Applicable Procedural Law

Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett , 477 U.S. 317, 322-23 (1986). The burden is on the moving party to establish the basis for its motion. Donovan v. Harrah's Md. Heights Corp. , 289 F.3d 527, 529 (8th Cir. 2002). Evidence must be viewed in the light most favorable to the nonmoving party, and the nonmoving party enjoys the benefit of all reasonable inferences to be drawn from the facts. Quinn v. St. Louis County , 653 F.3d 745, 750 (8th Cir. 2011). If the moving party shows there are no genuine issues of material fact, the burden shifts to the non-moving party to set forth facts showing a genuine issue for trial. Donovan , 289 F.3d at 529.

II. Applicable Substantive Law

A. Breach of Contract Claim

Both parties agree that the choice-of-law clause in the Crane Service Work Order Agreement (Doc. # 17-6) demands that North Dakota law governs the breach of contract claim. For a breach of contract claim, the forum selection clause is "presumptively valid and should be enforced unless such enforcement is shown to be unreasonable or unjust or the clause is shown to be invalid because of fraud or overreaching." KaeRen Accomodations, Inc. v. Country Hospitality Corp. , 243 F.Supp.2d 993, 995 (N.D. 2002). Neither party has made a claim that the choice-of-law provision is invalid. Assuming Allstate is liable under the terms of the contract between Wanzek and SiteTech, North Dakota law will govern such a claim.

(1) Whether Allstate is contractually obligated to indemnify Wanzek for its damages because SiteTech was an agent of Allstate.

Wanzek contends SiteTech was an agent of Allstate, and as such, Allstate is liable for SiteTech's actions. "An agency relationship results when one entity, called the principal, authorizes another entity, called the agent, to act for the principal in dealing with third parties." Stockman Bank of Montana v. AGSCO, Inc. , 728 N.W.2d 142, 148 (N.D. 2007) (citing N.D. CENT. CODE § 3-01-01). Agency is either actual or ostensible. N.D. CENT. CODE § 3-01-03 (2011). Actual agency exists when the agent truly is employed by the principal. Id . An ostensible agency exists when "the principal intentionally or by want of ordinary care causes a third person to believe another to be his agent, who really is not employed by him." Argabright v. Rodgers , 659 N.W.2d 369, 371 (N.D. 2003).

There is no evidence to suggest an actual agency relationship existed between SiteTech and Allstate. Analysis is thus limited to the existence of an ostensible or apparent agency, with the focus on whether SiteTech had actual or implied authority to bind Allstate to the rental contract. The existence of an ostensible agency is determined by "conduct or communications of the principal which, reasonably interpreted, causes a third person to believe that the agent has authority to act for and on behalf of the principal. Id . An agency relationship is never presumed, and Wanzek has the burden of proving the existence of an ostensible agency relationship by clear and convincing evidence. Id. at 372.

Wanzek points to the following factors to support its assertion of an agency relationship. First, it notes Allstate's name is written on the Crane Service Work Order Agreement, (Doc. #17-6), and it points to N.D. CENT. CODE § 3-03-04, which states that "[a]ny instrument within the scope of the agent's authority by which an agent intends to bind the agent's principal does bind the principal if such intent is plainly inferable from the instrument itself." Second, Wanzek's employee, Kevin McCrory, has submitted an affidavit indicating, at the time of the rental agreement, Wanzek relied upon representations from SiteTech that Allstate would be ultimately responsible. McCrory avers that he would not have rented to a company like SiteTech, which had an insufficient credit rating and history to qualify for the rental, if Allstate's name was not on the contract. Third, Wanzek claims Allstate had a system whereby it would allow subcontractors to use its name to rent equipment, and because Allstate never demanded repayment from SiteTech for the crane rental, and did not "black-list" SiteTech, i.e. prevent SiteTech from using Allstate's name to authorize future rentals for future projects is evidence that Allstate ratified SiteTech's authority to rent the crane.

Allstate directs the Court to the testimony of Mike Calandros (SiteTech) who testified that he signed the rental agreement on behalf of SiteTech alone. Calandros also testified the name "Allstate" was added to the Crane Service Work Order Agreement after he had signed it. Allstate also points to a second location on the Agreement where only SiteTech is listed as the customer. Allstate denies it authorized SiteTech to rent the crane. Allstate concedes it was informed of the crane rental, but states it was not in a position to give or withhold permission for SiteTech to do so, as SiteTech was responsible under the subcontract to provide the tools and equipment needed to complete the project. Allstate acknowledges that sometimes subcontractors use Allstate's name to rent ...


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