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Star City School District v. ACI Building Systems, LLC

United States Court of Appeals, Eighth Circuit

January 6, 2017

Star City School District Plaintiff- Appellant
v.
ACI Building Systems, LLC Defendant-Appellee ACI Building Systems, LLC Third Party Plaintiff
v.
Southeast Building Concepts, Inc.; Metal Building Components, Inc. Third Party Defendants

          Submitted: September 21, 2016

         Appeal from United States District Court for the Eastern District of Arkansas - Pine Bluff

          Before WOLLMAN, ARNOLD, and KELLY, Circuit Judges.

          WOLLMAN, Circuit Judge.

         Star City School District (the District) filed suit against ACI Building Systems, LLC (ACI), a company that manufactured and supplied roofing materials that were used in the construction of a high school building. The complaint alleged that the building's roof was not watertight and that ACI had failed to repair or replace the roof, despite its promises and obligation to do so. The district court[1] granted ACI's motion to dismiss the claims of fraud and constructive fraud and later granted summary judgment in favor of ACI on the remaining claims of breach of warranty, breach of contract, and negligence. We affirm.

         I. Background

         In 2003, the District entered into a construction contract with Southeast Building Concepts, Inc. (SBC), for SBC to construct a new high school building. SBC served as the general contractor for the project and issued a performance and payment bond that named the District as the obligee. Steve Elliot served as the District's architect.

         SBC began working on the project in late April 2003 and thereafter entered into an agreement with ACI, under which ACI agreed to supply SBC with certain metal building and roofing materials to be used in the construction of the high school building. ACI was not a party to the construction contract between SBC and the District, and ACI did not install the roof. That work was completed by SBC or others as directed by SBC.

         The school's roof was not properly installed and has never been watertight. In a December 2004 letter addressed to the president of SBC and copied to the District's superintendent, Elliot's architectural firm expressed concerns that SBC had not yet repaired "several major roof leaks that [had been] brought to the job superintendent's attention several months ago." An ACI employee also discovered problems related to the roof's installation while inspecting the roof in March 2005. In an email to another ACI employee, he wrote: "I did a preliminary inspection on this roof yesterday-3/23/05. Absolutely pitiful. . . . I don't know if it will ever pass inspection. This is primarily FYI and to have a record in file." SBC later assured ACI that it had made the necessary repairs.

         Elliot's architectural firm issued a certificate of substantial completion on March 28, 2005, and the District took possession of the building that June. In February 2006, ACI and SBC issued a 10-year warranty on the roof that provides, in part:

[T]he total liability and warranty of [SBC] shall be only to provide such workmanship as is necessary to repair or replace any defective material or workmanship without cost to the original owner, and the total liability and warranty of [ACI] shall be only to repair or replace any material without cost to the original owner.

         The warranty further provides:

2.) This warranty shall not be enforceable if the roof system was not erected in accordance with ACI Building Systems, Inc. erection drawings . . . .
3.) This warranty does not apply to cover any damages or leakage caused by or associated with . . . roof penetrations, trim, flashing, evidence of repair work done by unqualified or un-authorized personnel, or any modifications or ...

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