Martin Construction, Inc. v. Roscoe Steel & Culvert Co.

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARTIN CONSTRUCTION, INC.,
Plaintiff - Appellant,
v.
ROSCOE STEEL & CULVERT CO.,
Defendant-third-party-
plaintiff - Appellee,
v.
LANE ENTERPRISES, INC.,
Third-party-defendant -
Appellee.
No. 12-35177
D.C. No. 1:10-cv-00072-RFC
MEMORANDUM*
Appeal from the United States District Court
for the District of Montana
Richard F. Cebull, Senior District Judge, Presiding
Argued and Submitted October 8, 2013
Portland, Oregon
Before: SILVERMAN, W. FLETCHER, and CALLAHAN, Circuit Judges.
FILED
OCT 22 2013
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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Martin Construction, Inc. (“Martin”) appeals the district court’s grant of
summary judgment in favor of defendant Roscoe Steel and Culvert Company
(“Roscoe”). We review de novo the district court’s decision on the interpretation
of the contract. Miller v. Safeco Title Ins. Co., 758 F.2d 364, 367 (9th Cir. 1985).
We may affirm on any basis supported by the record. Gordon v. Virtumundo, Inc.,
575 F.3d 1040, 1047 (9th Cir. 2009). We affirm.
This dispute arises out of Roscoe’s delayed performance of a contract to
deliver steel pipe. The contract obligated Roscoe to supply steel pipe to Martin, a
state government contractor building culverts for a Montana highway. Martin
claims that Roscoe did not initially ship enough nuts and bolts to assemble the
pipe, delaying Martin’s completion of the culvert. Martin alleges that the delay
caused monetary damages for which Roscoe should be held liable.
Paragraph Four of the parties’ contract precludes Martin from recovering
consequential damages for delayed delivery. Martin seeks to recover (1) liquidated
damages assessed against Martin by the Montana Department of Transportation
(“MDOT”), (2) time and expenses incurred negotiating with MDOT, (3) payments
to compensate Martin’s subcontractors for the delay, and (4) “productivity costs”
from continuing to dedicate personnel and equipment during the delay. Contrary
to Martin’s arguments, all of these claimed damages are consequential damages
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under Montana law. See Mont. Code Ann. § 30-2-715(2) (following the Uniform
Commercial Code). Therefore, they are barred by Paragraph Four of the contract.
The liquidated damages and negotiation expenses are consequential damages
because they were “incurred by the nonbreaching party in its dealings . . . with
third parties.” 67A Am. Jur. 2d Sales § 1153; see Cannon Builders, Inc. v. Rice,
888 P.2d 790, 793–94 (Idaho Ct. App. 1995); State ex rel. Concrete Sales & Equip.
Rental Co. v. Kent Nowlin Constr., Inc., 746 P.2d 645, 649–50 (N.M. 1987).
Martin’s payments to its subcontractors also arose out of its dealings with third
parties and so are traditional consequential damages. See 67A Am. Jur. 2d Sales
§ 1176; see also Wright Schuchart, Inc. v. Cooper Indus., Inc., 40 F.3d 1247, 1994
WL 621889, at *2 (9th Cir. Nov. 8, 1994) (stating that “additional subcontractor
costs” are consequential damages); Frontline Processing Corp. v. Am. Econ. Ins.
Co., 149 P.3d 906, 911 (Mont. 2006) (describing fees paid to third parties to
investigate employee fraud as consequential damages).
Martin’s “productivity costs” were caused by its out-of-sequence work,
extended overhead, and additional equipment costs. These, too, are classic
consequential damages. See Wright Schuchart, 1994 WL 621889, at *2; 67A Am.
Jur. 2d Sales §§ 1177, 1190; accord United States ex rel. Fed. Corp. v.
Commercial Mech. Contractors, 707 F.2d 1124, 1125–26, 1129 (10th Cir. 1982).
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Because we affirm on this ground, we do not reach the grounds relied on by
the district court.
AFFIRMED.
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