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Crown Castle USA Inc. v. Fred A. Nudd Corp.

January 16, 2008

CROWN CASTLE USA INC., CROWN CASTLE GT COMPANY LLC, CROWN CASTLE ATLANTIC LLC, CROWN ATLANTIC COMPANY LLC AND CROWN COMMUNICATION INC., PLAINTIFFS,
v.
FRED A. NUDD CORPORATION, UNDERHILL CONSULTING ENGINEERS, P.C., GEORGE R. UNDERHILL, STEVEN F. CARINI AND DEREK R. HARTZELL, DEFENDANTS.



The opinion of the court was delivered by: Michael A. Telesca United States District Judge

DECISION and ORDER

INTRODUCTION

Crown Castle USA Inc., Crown Castle GT Company LLC, Crown Castle Atlantic LLC, Crown Atlantic Company LLC and Crown Communication Inc., (collectively "Crown") bring this action against defendants Fred A. Nudd Corporation ("Nudd"), Underhill Consulting Engineers, P.C., George R. Underhill (collectively ("Underhill"), Steven F. Carini ("Carini") and Derek R. Hartzell alleging breach of contract and professional negligence as to certain defendants in performing their work. Nudd moves for summary judgment seeking dismissal of the following: (a) all claims by Crown of breach of Contract (Count II) and breach of implied warranty (Count IV) relative to twenty-nine of the thirty-nine monopoles at issue in this litigation;*fn1 (b) Crown's claims of fraud (Count VI); (c) all claims made by Crown lacking ownership interest in any monopole; and (d) Crown's claims of negligence (Count V).

Nudd asserts that twenty-nine of the thirty-nine monopoles at issue in this action were purchased and delivery was tendered more than four years before the commencement of this law suit on April 8, 2005. According to Nudd, the monopoles constitute "goods" as that term is defined under the Uniform Commercial Code ("U.C.C."). Consequently, Nudd argues that the four-year statute of limitations provided in U.C.C. § 2-725 governs in this case and claims relating to the twenty-nine monopoles must be dismissed. In addition, Nudd contends that Crown's allegations of fraud lack particularity as required by Federal Rules of Civil Procedure 9(b) and thus are also subject to dismissal. Moreover, Nudd alleges that Crown's claims of negligence fail under the "economic loss" rule, which prohibits negligence claims where the damages are purely economic as seen in the allegations of the Complaint. Lastly, Nudd moves to dismiss for lack of standing as to Crown Castle USA Inc., Crown Castle GT Company, LLC and Crown Castle Atlantic, LLC because, according to Nudd, those companies do not possess an ownership interest in the goods at issue in this litigation.

Crown opposes Nudd's summary judgment motion and addresses each of Nudd's arguments. Crown argues that the Court should deny Nudd's motion and hold that the six-year statute of limitations applies to Crown's contract-based claims. In the alternative, Nudd's motion for summary judgment should be denied as premature and the Court should hold that the accrual date of the six-year statute of limitations for Crown's contract claim is a fact issue that can and should be determined only upon the completion of discovery in this case. In addition, Crown contends that the statute of limitations applicable to Crown's breach of contract claims may be tolled as a consequence of Nudd's conduct in performing services for Crown while concealing the known deficiencies in its monopoles. Moreover, Crown argues that dismissal of the fraud claims is improper at this time because discovery remains to be completed, the information for the fraud is within Nudd's control and such information will be developed only after Crown deposes Nudd's employees. Further, Crown claims that the economic loss doctrine does not apply to and does not compel dismissal of Crown's professional negligence claim against Nudd.

For the reasons set forth below, Nudd's motion for summary judgment is granted in part and denied in part.*fn2

BACKGROUND

Nudd fabricates steel and steel components and sells the fabricated products, including cellular phone towers ("monopoles") to various companies.*fn3 The monopoles are cylindrical shaped structures and they exceed 100 feet in height. They are also designed to carry loads such as antennas, platforms and other equipment necessary to transmit cellular signals through the air. See Affidavit of Lowell Nudd, ¶¶ 2-3 ("Nudd Aff.") The monopoles are transported by truck to the job site and depending on the customer's preference, either employees of Nudd or contractors hired by the customer install the monopoles. According to Nudd, maintenance of the monopoles is the responsibility of the customer. The contracts for sale of each monopole contained pricing for the monopole, related parts and delivery to the job site. Installation charges were invoiced separately if the customer selected Nudd to perform installation. See Affidavit of David P. Marcus, ¶ 20 ("Marcus Aff.")

During 1995 and March 3, 2000, Nudd fabricated and sold the monopoles that are at issue in this case to wireless carriers Frontier Cellular, NYNEX Mobile Communications, Bell Atlantic Nynex, Nextel Communications and Summit Technical Group. See Nudd Aff., ¶ 7. Crown subsequently acquired possession and ownership of all the monopoles between March 31, 1999 and October 6, 2000 through asset purchase agreements. See Marcus Aff., ¶ 12.*fn4 Two of the monopoles were acquired on resale by one of the Crown entities in 1999, and the remainder were acquired on resale by Crown in 2000. See Crown's Ans. to Underhill #2(i) attached as Ex. F to Marcus Aff. At the time Crown acquired the monopoles, they had been sold and delivered to the original purchaser and was placed in operation following the original sale. Id. Accordingly, each of the monopoles that Crown acquired from the asset purchase agreement was purchased by and delivered to the original purchaser between the years 1995 and 2000.

On January 12, 2001, Crown and Nudd executed a CSA. See Affidavit of Andrew Bazinet, ¶ 3 ("Bazinet Aff."), Ex. 3, Compl. ¶ 15. The CSA contained a Scope of Work, which described aspects of wireless tower construction and other services Nudd would provide to Crown. See id. According to Crown, pursuant to the CSA, Nudd designed, fabricated and/or constructed twelve monopoles directly for Crown. See id., ¶ 5. Accordingly, in addition to the monopoles Crown acquired from other entities that Nudd originally designed, fabricated and/or constructed, Nudd also constructed additional monopoles pursuant to the CSA. With respect to the twenty-seven monopoles*fn5 that Crown acquired from other entities, it is undisputed that there was no global service agreement between Nudd and its other customers similar to the CSA between Crown and Nudd for the twelve monopoles that were directly purchased under the CSA. Nudd does admit however, that "the contracts of sale for each monopole were generally comprised of various transaction documents such as quotations furnished by Nudd, a corresponding purchase order issued by Nudd's customers and Nudd's invoices." See Marcus Aff., ¶ 9.

According to Crown, Nudd was aware at least as early as June 2001 that the monopoles it designed, fabricated and constructed would not meet the specified design loading. See Affidavit of David Patrick ("Patrick Aff."), Ex. 5. Nudd notified other customers that it knew that its monopoles would not meet the design standard specified in Nudd's design documents, and that its customers' monopoles should be evaluated and may need to be modified to support their designed loads. See id. In particular, Nudd told a customer (not Crown) that "A further review of the design program indicated that an incorrect load factor was used for the design of this tower. This tower will not meet the EIA design standard. There may be other sites that will not meet the original design parameters." See id., ¶ 17 (emphasis in original). Moreover, Nudd advised another customer that "We will make these modifications with our personnel at our expense. We will provide SBA with stamped drawings reviewed by an outside engineer to ensure that all of these monopoles meet the original design specifications." See id., ¶ 31. Nudd did not notify Crown of the same monopole deficiencies at that time.

In November 2003, a monopole designed and constructed by Nudd for another company in Oswego, New York collapsed. See Bazinet Aff., ¶ 12. When Crown became aware of the collapse, it became concerned that the monopoles Nudd designed and manufactured by Nudd and sold to Crown were defective. See id. Accordingly, Crown began an investigation as to the monopoles. See id. The analysis by Crown revealed that the monopole shafts, base plates, anchor rods and foundations for each of the monopoles were defective, overstressed and did not have the capacity to support the loads for which they were designed. See Crown's Compl., Ex. ¶¶ 29-32.

Crown filed a Complaint against defendants on April 8, 2005 alleging that Nudd designed, fabricated and constructed monopoles for Crown that contained design and construction defects. In its Complaint, Crown's only claim for damage is the cost to repair the allegedly defective monopoles. See Marcus Aff., ¶ 16. Damages claimed are attributable solely to the cost to repair the allegedly defective monopoles. No damages are claimed for the provision of negligent service to Crown as it relates to the monopoles at issue in this motion. See id., ¶ 21.

DISCUSSION

I. Summary Judgment Standard

Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." See Fed.R.Civ.P. 56(c). A party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). "[T]he movant must make a prima facie showing that the standard for obtaining summary judgment has been satisfied." See 11 Moore's Federal Practice, ยง 56.11[1][a] (Matthew Bender 3d ed.) "In moving for summary judgment against a party who will bear the ultimate burden of proof at trial, the movant may satisfy this burden by pointing to an absence of evidence to ...


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