United States District Court, W.D. Arkansas, Hot Springs Division
J.S. HAREN COMPANY PLAINTIFF
FAIRFIELD SERVICE COMPANY OF INDIANA, LLC DEFENDANT
FINDINGS OF FACT AND CONCLUSIONS OF LAW
T. DAWSON SENIOR U.S. DISTRICT JUDGE
J.S. Haren Company filed this action for damages against
Defendant Fairfield Service Company of Indiana, LLC alleging
claims for breach of contract, breach of express and implied
warranties, and revocation of acceptance arising from the
sale and purchase of equipment to be used in the upgrade of
the Stokes Pump Station in Hot Springs, Arkansas. Defendant
denies the claims and contends the equipment it furnished
materially complied with Plaintiff's specifications and
was fit for the intended purpose or, in the alternative, that
Plaintiff failed to timely reject the equipment, acted
unreasonably, and failed in its duty to mitigate its own
damages. The Court held a bench trial beginning the morning
of June 17, 2019 in Hot Springs, Arkansas. Plaintiff appeared
by and through its authorized representative, J.S.
“Sky” Haren, and was represented by its attorney
of record, James D. Lawson, P.C. Defendant appeared by and
through its authorized representative, Madu Murarka, and was
represented by counsel, Travis J. Morrissey of the Morrissey
trial, the Court admitted Plaintiff's Exhibits 1 through
41 (Exhibit and Witness List, June 18, 2019, ECF No. 37) and
Defendant's Exhibits 1 through 3. Id. The Court
heard testimony from Sky Haren, Larry Merriman, Chris Buntin,
David Poston, and Madu Murarka. (Witness List, June 18, 2019,
ECF No. 36.) Now having reviewed the record, witness
testimony, and the evidence presented, the Court issues the
following findings of fact and conclusions of law pursuant to
Rule 52(a) of the Federal Rules of Civil Procedure. For the
reasons explained below, the Court finds that Plaintiff is
entitled to judgment in the amount of $180, 000, with each
party to bear its own costs.
FINDINGS OF FACT
Plaintiff, J.S. Haren Company, is a Tennessee corporation
with its principal place of business in Athens, Tennessee.
Sky Haren is Plaintiff's authorized representative.
Defendant, Fairfield Service Company of Indiana, LLC is a
limited liability company with its principal place of
business located in Michigan City, Indiana. Madu Murarka is
company President and Defendant's authorized
Stokes Pump Station Upgrades project is owned by the City of
Hot Springs, Arkansas (the City). The project was designed to
improve the City's wastewater treatment capability. Larry
Merriman was the City's Project Manager.
Garver, LLC, is an engineering firm located in Fayetteville,
Arkansas, hired by the City to act as its representative in
connection with the Project. Garver also designed the
Project, including all plans, contract documents and
specifications. Chris Buntin, licensed professional engineer,
acted as the Project Manager for Garver. T.J. Bruck acted as
Garver's local Project construction observer.
part of the bidding process, Contractor was required to
complete a Bid Form complying with “the prescribed
requirements, and such alternates, unit prices, and other
data” as provided in the City's Bidding Documents.
(Specs. and Contract Docs., Pl's. Ex. 1, volumes 1 and 2,
Dec. 15, 2015.) The Bidding Documents are very precise and
detailed and include Bidding Requirements, Contract
Documents, Conditions, General Requirements, and Technical
Among the items of equipment specified for completion of the
Project were a Mechanical Bar Screen and a Washer Compactor
(the Equipment). (Id. at vol. 2, section 44 42
27.19.) The Bidding Documents specified that the Equipment
must be the end product of one responsible manufacturer and
that the Contractor would be responsible for providing the
Equipment as specified in the Bidding Documents. Id.
The Bidding Documents designated two responsible
manufacturers, including Fairfield and another named Duperon.
Contractor sought out bids from suppliers for the Equipment
in order to prepare its bid for the Project. On December 18,
2015, Fairfield submitted its proposal to supply the
Equipment as specified in the Bidding Documents at a cost of
$173, 000. Mark Hickok of BT Environmental acted as sales
representative for Fairfield.
Duperon proposal came in at $180, 000.
trial, Sky Haren testified that the Contractor chose to
purchase the Equipment from Fairfield based on its lower
price and past manufacturing experience.
January 21, 2016 the City notified Contractor that it was the
successful bidder for the Project. The City awarded the
Project to the Contractor after determining it was the lowest
responsible and responsive bidder. The total contract price
of the Project was $2, 317, 000.00 (two million, three
hundred seventeen thousand dollars). (Id. at vol.1,
section 00 51 00.)
contract between the City and Contractor specified that time
was of the essence regarding the timeline for achieving
Substantial Completion (320 calendar days) and completion and
readiness for final payment (365 calendar days). The contract
provided for liquidated and special damages in the event of
Contractor's failure to meet the Project timeline. The
Project timeline began to run on March 1, 2016. (Id.
at 00 52 00.)
contract is to be governed by the law of the State of
Arkansas (the state in which the Project is located.)
Id. at 00 72 00, Art. 18.07.
January 28, 2016, Contractor transmitted to Fairfield a
written Material Order in the amount of $173, 000 for
purchase of the Equipment, and Fairfield accepted the order.
(Material Order No. 4502, Feb. 9, 2016, Pl.'s Ex. 2.)
Payment terms were 90 percent within 30 days and the balance
due within 120 days after startup. Id.
terms of the Material Order specified the Equipment would be
manufactured in accordance with “Plans and
Specifications including General Conditions for the Stokes
Pump Station for the City of Hot Springs, AR dated November
25, 2015, and Addendum No. 1, dated December 15, 2015, as
prepared by Garver USA, Fayetteville, AR…”
Material Order stated that Fairfield would be liable for any
liquidated damages caused by its failure to meet the time
schedule, but that liquidated damages would “only be
charged if the contractor is accessed [sic] damages which are
directly attributable to Fairfield's performance or lack
Material Order does not include a provision for
Material Order bound Fairfield to provide submittal data to
Garver for approval prior to March 16, 2015 and to provide
the Equipment within 140 calendar days after approval.
Fairfield's submittal data was provided to Garver on
March 7, 2015.
support of its submittal data, Fairfield provided a Special
Warranty Letter for the Equipment dated May 25, 2016.
(Pl.'s Ex. 4.)
Garver approved Fairfield's submittal data in or around
May or June 2016.
or around October 28, 2016, Fairfield delivered the Equipment
to the Project site and invoiced Contractor the sum of $155,
700.00 (90 percent of the agreed price).
to unforeseen circumstances involving another vendor, the
Project was running behind schedule, and Contractor accepted
delivery of the Equipment and stored it outdoors on the
Project site for installation at a later date.
Upon receipt of the Equipment, Contractor performed a cursory
inspection that revealed a bent door. Contractor notified
Fairfield of the damage, and Fairfield replaced the door.
Haren testified that, because the Equipment was intended for
outdoor use in a wastewater facility, Contractor thought that
storing the Equipment outdoors would not cause it to suffer
damage. The cursory inspection made upon receipt of the
Equipment was thought to be enough, because there was no
reason to question whether Fairfield had manufactured the
Equipment in accordance with the Project plans and
specifications and the approved submittal data.
Haren is a credible and believable witness, and the Court
accepts his testimony as truthful and accurate.
July 6, 2017 a progress meeting was held between the City
(Merriman), Garver (Buntin) and Contractor (Sky Haren), and
it was agreed the installation of the Equipment would be
scheduled for the end of June 2017. This date was later
postponed to a time between July 10 and 14, 2017, and a
Substantial Completion inspection was scheduled for August 8,
July 11, 2017, T.J. Bruck, Garver's construction
observer, visited the Project site and noted visible
corrosion on the mechanical bar screen component of the
Equipment and sent photos to Chris Buntin, Garver's
Upon reviewing the photos, Buntin became concerned that the
materials used to construct the bar screen were not stainless
steel as specified and shown in Fairfield's submittal.
Buntin emailed Haren inquiring about the material used for
the Fairfield screen link system. (Pl.'s Ex. 8, Buntin
message, Tue., July 11, 2017 12:51 PM.)
After looking at the photos, Merriman emailed Buntin and
Haren and requested confirmation that the materials used to
manufacture the Equipment were as specified in the Bidding
Documents prior to installation. “No one will want to
remove it to validate or change any components…”
(Pl.'s Ex. 8, Merriman message, Tue., July 11, 2017 4:15
Mark Hickok of BT Environmental, acting on behalf of
Fairfield, emailed Haren to confirm that the “bar
screen links are made out of 304SS as specified” and
that “the screen & compactor are both supplied as
submitted & approved[.]” (Pl.'s Ex. 9, Hickok
message, Tue., July 11, 2017 5:28 PM.) Haren forwarded
Hickok's email to Buntin and Merriman.
Merriman emailed Haren, Buntin, and Hickok, “Based on
the field observation of the snap rings, I would have to
challenge that they are S/S. However, my eyes do not qualify
as a spectrometer so I will rely on those who have material
info to respond. As I first said, if we install it and it is
incorrect changing any component will surely be more
difficult.” (Pl.'s Ex. 9, Merriman message, Wed.
July 12, 2017 7:55 AM.)
July 12, 2017 there was an on-site inspection of the
Equipment performed by Hickok performed as Fairfield's
local representative. Hickok noted the lock-links, adjustable
roller arm pins, scrapper arm mounting bolts, and the
lock-link pin snap-rings were specified to be made of 304SS
(stainless steel), and Fairfield's approved submittal
data specified the parts were to be made of 316SS. It was
noted some of the parts appeared to be rusting. (Pl.'s
Ex. 5.) Additionally, it was noted that the screen doors were
mounted with SS bolts, when the specifications called for
Knurled Knobs and the submittal data specified SS Wing
Nuts/Thumb Nuts. Id. It was also noted that the Gear
Drive Box Motor supplied was a Marathon Motor and not the
Baldor Motor submitted and approved. Id.
After completing the inspection, Hickok emailed Merriman,
Buntin and Haren to say, “[Fairfield] will address the
items called out [and] supply verification of materials of
construction as requested. The snap-rings on the lock-link
pins are rolled steel, this was an oversite [sic] and these
will be replaced with SS snap-rings as required.”
(Pl.'s Ex. 9, Hickok message, Wed. July 12, 2017 2:04
letter addressed to Contractor dated July 13, 2017, Fairfield
addressed the Equipment irregularities noted by Hickok during
the inspection. (Pl.'s Ex. 5.) Fairfield promised to test
the lock-link material and submit a test report. Fairfield
admitted some fasteners on both the adjustable roller arm and
the scrapper arm were not stainless steel and promised to
provide new fasteners. Id. With respect to the
lock-link pin snap rings, Fairfield admitted the snap rings
were not stainless steel as specified by the Bidding
documents or as submitted by Fairfield and approved by
Garver. Fairfield explained that “stainless steel
Snap-Rings get loose after repeated application. Hence, we
have changed the material of the Snap-Rings [to] spring
steel.” According to Fairfield, while spring steel is
weak in corrosion resistance, it has better elastic
resilience. Id. Fairfield admitted the screen doors
were improperly mounted and promised the specified Knurled
Knobs would be provided. Finally, Fairfield addressed the
issue with the Gear Box Drive Motor, stating that the
alternate brand meeting the specifications and intended
performance had been supplied in order to meet the project
delivery schedule. Id.
letter dated July 13, 2017, Buntin notified Contractor that
the materials used to manufacture the mechanical bar screen
were not stainless steel as specified and noted in the
submittal data approved by Garver, and the materials did not
meet the Project plans and specifications. Questionable items
included the chain pin retaining ring material, chain links
material, various bolts material, lynch pins material, and
chain drive drum material. In addition, Buntin noted knurled
knobs had not been provided, several handles were missing
from Equipment panels, the motor provided was a Marathon
instead of the Baldor motor as specified, and the gear box
manufacturer was unknown because the tag had been removed.
“Non-conforming items will not be allowed for this
project. Please provide a corrective action plan and
verification of questionable items for review.”
(Pl.'s Ex. 10, Buntin letter, July 13, 2017.)
Monday, July 17, 2017, Buntin followed up with a second
letter to Contractor advising that additional items had been
discovered that did not meet the Project plans and
specifications. “We also anticipate there may be other
items not yet noted…Please consider this notice to
document that the [mechanical] bar screen is defective. All
items must be resolved, as approved by the Owner and
[Garver], prior to acceptance of this equipment.”
(Id., July 17, 2017 letter.) Buntin demanded a
corrective action plan, insisting that the plan include an
inspection of all Equipment components by a qualified
Fairfield representative. Buntin also requested
Fairfield's fabrication shop drawings and materials
testing reports. Id.
days later, Buntin emailed Haren requesting an update on the
mechanical bar screen and a schedule for all remaining work.
“Resolution is needed as soon as possible to be
substantially completed on August
8th….” (Pl.'s Ex. 10, Buntin
message, Wed., July 19, 2017 7:54 pm).
following Monday, Hickok emailed Haren and Buntin advising
that, according to Fairfield, the bar screen links were made
of 316 SS and appear to have oxidation deposits on them.
Hickok asked whether a spectrometer test of the of the bar
screen links would be acceptable to the City. Hickok also
inquired as to whether the City wanted the links cleaned up
or changed out. (Pl.'s Ex. 11, Hickok message, Mon. July
24, 2017 11:41 am.)
response to Hickok's email, Buntin emailed Haren,
“We will advise upon receiving a corrective action
plan, and the corrective action plan is pending the
previously requested items (Fairfield Inspection, Testing
Reports, and Fabrication Shop Drawings) to confirm all items
to be corrected. Please provide a schedule for correction of
defective work and all other items remaining for substantial
completion.” (Id., Buntin message, Mon., July
24, 2:04 pm.)
trial, Madu Murarka testified that the stainless steel used
to make the screen was certified by the manufacturer in
India. Any rust observed on the screen formed on
environmental contaminants deposited on the screen during the
manufacturing process. The observed rust could have been
sanded off at start-up of the Equipment.
Haren messaged Buntin acknowledging some confusion and
advised that Fairfield thought a corrective action plan had
been submitted in previous correspondence. “The
question is in regards to the stainless steel chains.
Providing these prove to be 316 stainless steel (316 SS),
will Fairfield be able to continue with their use even though
they are discolored…” Id. Haren
explained the discoloration was most likely caused by the
oxidation of residue deposits picked up during fabrication.
“Being the unit will operate in wastewater and future
coloration is most likely, it seems the coloration would not
be an issue…” Id., Haren message, Mon.,
July 24, 2017 3:05 PM.
Fairfield Project Manager Steve Schweinfurth emailed Haren to
advise that the Equipment had been inspected by BT
Environmental, Fairfield's local representative,
“to confirm the questionable components and
material.” Fairfield's plan was to replace the
steel components/defective material with stainless steel
“as submitted [and] approved per Fairfield's
response letter.” (Pl.'s Ex. 11, Schweinfurth
message, Mon., July 24, 2017 3:53 pm.) Schweinfurth
questioned why Fairfield was required to resubmit the
“shop/assembly drawings [that] were a part of the
approved submittal…” Finally, Schweinfurth
informed Haren that Fairfield “has complied in
providing 316 SS material for the bar rack links and
considers this a closed topic.” Id.
Haren passed Schweinfurth's email on to Hickok and
Buntin, explaining that the email provides “further
clarification from Fairfield as regarding the screen.
Fairfield will proceed with the replacement…so that
304 stainless steel is used.” Id., Haren
message, Mon., July 24, 2017 3:17 PM.
Hickok sent an email to Haren and Buntin confirming BT
Environmental would be onsite the next morning “to
remove and replace all of the non-stainless steel
(snap-rings, bolts [and] nuts) so that [Contractor] can
proceed with moving and setting it into place.”
(Id., Hickok message, Mon., July 24, 2017 4:49 PM.)
Buntin fired back an email to Haren and Hickok, “I am
confused. Confirmation of defective items is outstanding, and
the corrective action has not been approved.” Buntin
pointed out deficiencies in Fairfield's proposed plan:
the requested material testing reports had not been provided,
and the inspection of all Equipment components was supposed
to be performed by a qualified Fairfield representative, and
the inspection by its sales representative, BT Environmental,
was not acceptable. Furthermore, based upon an inspection of
the Equipment by Garver and the City, there were other
“non-conforming items remain[ing] to be identified,
including but not limited to the welds…. Skip welds
are not acceptable. The submittal did not include the
fabrication design, welding details, welder certification,
weld inspection reports. Please provide supplemental welding
information. Will qualified representatives from Fairfield
inspect all equipment as requested?” Id.,
Buntin message, Mon., July 24, 2017 7:03 PM.
next morning, Hickok emailed Schweinfurth to point out that
“the original specification…does require that
all welds below grade be seal-type welds, it also requires
that a copy of welder certification and weld inspection
reports be submitted prior to delivery to job site.”
Hickok stated that “repairing onsite is no longer an
option, the screen should be picked up to be returned to your
fabricator.” (Pl.'s Ex. 11, Hickok message, Tue.,
July 25, 2017 10:26 AM). Hickok admonished Schweinfurth and