Opinion ID: 1290303
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: This case involves a dispute between a contractor and five employees of an engineering firm. Appellant, Wiekhorst Brothers Excavating & Equipment Company, brought this action against appellees, Otto Ludewig, Michael McMeekin, Brett Wawers, Jeff Ray, and Loren Steenson, in their individual capacities. The appellees are all employees of the engineering firm Lamp, Rynearson & Associates, Inc. (LRA). LRA was employed as a design engineer on two unrelated projects by two sanitary and improvement districts (SID's) located in Douglas County. SID No. 337 employed LRA to design and assist in the construction of a public improvement, Storm Sewer Section I, within the Nelson Creek Subdivision in 1986. That same year, SID No. 291 employed LRA to design and assist in the construction of public improvements in the Pacific Meadows Subdivision. LRA's duties required it to prepare the plans and specifications for the projects to be constructed by the two SID's. LRA's duties also included the preparation of contract documents and handling of the public bid-letting. In addition, LRA was required to ensure that the construction of the public improvements complied with the plans and specifications and the contract documents. Appellee Ludewig was vice president and director of LRA and was the head of its construction administration division. Appellee McMeekin was the head of LRA's civil engineering department. Steenson was a civil engineer and was the project engineer for SID No. 337. Wawers was an engineer and was Ludewig's chief assistant in the construction administration division. Ray was an engineer and was LRA's construction observer on the SID No. 337 project. Appellant was the low bidder for Storm Sewer Section I of SID No. 337. Storm Sewer Section I involved the construction of a storm sewer following the alignment of a tree-lined intermittent creek. Preserving the greatest number of trees possible was considered essential to the project, which centered around maintaining the natural beauty of the subdivision. Appellees allege that the quality of appellant's work suffered from the beginning of the project. Some of these allegations are recounted below with appellant's responses. Appellee Steenson avers that he observed several problems. The pipes were not properly aligned either vertically or horizontally, dirt was being removed from adjacent building lots, and trees marked for preservation were being damaged or destroyed. Appellant admits that it damaged and removed trees which were marked to be saved, but claims that it was going to compensate the developer by paying liquidated damages. Appellant admits that it removed substantial amounts of dirt from adjacent building lots, but states that it was going to replace the dirt at a later time. Part of the project called for 72-inch equivalent horizontal elliptical reinforced concrete pipe. The 72-inch pipe was difficult to lay. It is elliptical and therefore relatively flat on both the top and the bottom. One end of the pipe has a male coupler and the other end of the pipe has a female coupler. Those sections must be pushed together to make a tight fit. A number of the sections had unacceptable gaps, in excess of 1 inch. Appellant was repeatedly asked to fix the gaps by pouring concrete collars around the joints. Prior to fixing the gaps and pouring concrete collars, appellant covered the pipe with dirt, including most of the defective pipe. Appellant admits that many of the joints between the pipes were faulty, but states that it was going to go back and fix the joints at a later time. The contract required the pipe to be laid on a crushed rock bed, and the pipe and the rock bed to be encased in a geotechnical cloth material to provide stability to the pipe sections. Ludewig called Michael Siedschlag from Geotechnical Services, Inc., and Scott Wiekhorst to the jobsite on October 17, 1986. Siedschlag determined that appellant was not laying the rock bed correctly and that water was not being pumped from the trench. Siedschlag suggested several corrective measures, none of which were taken by appellant. On or about November 3, 1986, vandals damaged most of the pipe remaining to be laid. Ludewig; the concrete supplier, Hydro Concrete; and Scott Wiekhorst met. Ludewig concluded that the problem could be corrected by turning over the pipe and repairing the top part. When Ludewig returned to the jobsite later in the day, he discovered that appellant was merely throwing the pipe into the trench and was not repairing the broken portion of the pipe. A survey of the site was performed on or about November 3, 1986, and it was determined that the storm sewers were off line horizontally and vertically. Appellant admits that the storm sewer pipe was out of vertical and horizontal alignment but blames LRA for specifying the wrong amount of rock base and improper staking. Ludewig and LRA's president and a member of its board of directors, Gary Kathol, discussed the problems and determined to contact the representatives of SID No. 337. A meeting was held at LRA on November 4, 1986. The meeting included Kathol and appellees Ludewig, McMeekin, Steenson, and Wawers. In attendance were Pat Jacobs, chairman of SID No. 337, Steve Jacobs, clerk of the SID, and John Rickerson, attorney for the SID. The various problems were discussed. According to appellees' affidavits, Ludewig suggested that appellant be given an opportunity to cure the defects, but also stated that it was his opinion that appellant did not have the capability and/or willingness to make the necessary corrections. All of LRA's employees agreed that some action had to be taken and that termination was justified from an engineering standpoint. Rickerson, the SID's attorney, stated that he believed that immediate termination was justified under the circumstances. Some discussion was had as to whether the contract required notification of the defects and time to cure prior to termination. Based upon LRA's opinion that permissible grounds for termination existed, and with the legal advice of its attorney, SID No. 337 terminated appellant from the job. LRA encountered difficulties with appellant a second time in 1986 on another SID project. LRA was the engineer for a storm sewer project to be constructed by SID No. 291, and appellant was the successful bidder. The third and most difficult phase of the project involved a crossing under the Union Pacific Railroad main line and a merger with a storm sewer system in the Papio Creek. The feared risks, if the work was done improperly, included collapse of the railroad track. LRA was concerned about appellant's capability to successfully tunnel under the railroad's main line. However, appellant informed LRA that it was going to engage an experienced subcontractor to do the tunneling work during Phase III. The contract documents required that appellant provide special public liability insurance to protect against the risk to the railroad's main line. On November 26, 1986, Ludewig, on behalf of LRA, wrote to appellant setting forth the insurance requirements. Appellant needed to provide liability insurance in an amount not less than $2,000,000 per person and $6,000,000 per accident and property damage in an amount not less than $6,000,000. Ludewig demanded that appellant produce proof of insurance within 10 days. Appellant claims that there was some confusion regarding the required amount of insurance prior to November 26 and that this confusion delayed the procurement of insurance. Appellant never produced a certificate of insurance. Appellant responds that it did obtain a quote from an insurance company on January 6, 1987. As the time approached to begin the tunneling under the railroad's main line, appellant informed Ludewig that it had decided not to bring in an experienced subcontractor and that it was going to perform the tunneling work itself. LRA was convinced that appellant could not properly and safely tunnel under the Union Pacific main line and was concerned about its duty to its client and the public. The board of directors of LRA met with its corporate attorney, John Ford, and decided that LRA should advise SID No. 291 that if appellant was permitted to do the tunneling, LRA could not act as engineer for the SID. Kathol, as president of LRA, was instructed by the board of directors to attend the next SID meeting. At the SID board meeting on December 12, 1986, Kathol notified the SID that LRA would withdraw as engineer for Phase III of the project if appellant was permitted to act as the contractor responsible for the tunneling work. SID No. 291 terminated appellant and finished the job with another contractor. Appellant filed a petition in the district court for Douglas County on August 10, 1987. Appellees' demurrers to this petition, and three subsequent petitions, were sustained. On September 5, 1990, appellant filed a fourth amended petition. In so doing, appellant attempted to add a new defendant, Kathol. The fourth amended petition alleged two causes of action. For its first cause of action, appellant alleged that the Defendants, having entered into a mutual agreement and acting with a common purpose, have engaged in actions that constitute a conspiracy to intentionally harm and injure the Plaintiff by disrupting the business operations of the Plaintiff and damaging the business reputation of the Plaintiff. Appellant further alleged that as a direct and proximate cause of the actions of the Defendants, and each of them, the Plaintiff has suffered a pecuniary loss of profits from and after November 4, 1986 and a pecuniary loss for damage to its business reputation. Appellant's second cause of action alleged that each of the defendants, by virtue of their employment by LRA, had a contractual duty to appellant to accurately design and survey the storm sewer projects. Appellant alleged that the defendants failed to perform their duties with reasonable care and diligence and that such failure constituted negligence. Appellees again demurred. Kathol, the newly named defendant, demurred on the basis that all of the allegations contained in the fourth amended petition were barred against him pursuant to the statute of limitations for professional negligence, Neb.Rev.Stat. § 25-222 (Reissue 1989). The other defendants, appellees in this action, demurred to appellant's second cause of action for the reason that it was also barred by § 25-222. The trial court sustained both demurrers, from which no appeal is taken. Appellees then answered the allegations of the first cause of action of appellant's fourth amended petition on March 12, 1992. Appellees admitted that they were employees of LRA, but denied all other material facts. Appellees asserted an affirmative defense that as employees of LRA, they acted at all times within the scope of their employment and for the benefit of and on behalf of their employer and thus were incapable of conspiring with each other. Appellees further asserted that they were protected by a quasi-judicial privilege afforded design professionals. On November 19, 1992, appellees filed a motion for summary judgment. On February 26, 1993, proceedings were had before the district court, and depositions and affidavits were submitted by both parties. Appellant objected to the introduction of various affidavits offered by appellees on the basis of hearsay and foundation. The court reserved ruling on appellant's objections. On May 28, the district court, without explanation, overruled appellant's hearsay objections and granted appellees' motion for summary judgment. From that order, appellant has appealed.