Statement of Case:
Plaintiff Cemstone Products Company (“Cemstone”) and Defendant L.R. Falk Construction Co. (“Falk”) founded Defendant Falkstone, LLC (“Falkstone”) in 2004 to produce aggregate from the Trenhaile Quarry in Northwood Iowa. Falkstone paid Falk to manage the quarry and mine and process the aggregate. Falkstone sold that aggregate to Cemstone. Cemstone included the Falkstone aggregate in concrete products used by its customers to place concrete for driveways and other exterior flatwork. Beginning in 2013, Cemstone’s customers began experiencing popouts in driveways containing Falkstone aggregate. Cemstone alleges that the Falkstone aggregate caused those popouts and brings Breach of Contract, Breach of Express Warranty, Breach of the Implied Warranty of Merchantability, Breach of the Implied Warranty of Fitness for a Particular Purpose, Third-Party Beneficiary, and Breach of Fiduciary Duty claims against Falk and Falkstone. Falk and Falkstone deny that they breached any contract, warranty, or duty with regard to the aggregate sold to Cemstone.
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Statement of Case Defendant:
The Plaintiff Cemstone Products Company produced and sold ready-mix concrete containing aggregate supplied by the Defendant Falkstone L.L.C. and processed by the Defendant L. R. Falk Construction Co. from the Trenhaile Quarry near Northwood, Iowa. The problems started when Cemstone oversold this concrete by suggesting to its customers that concrete containing Falkstone aggregate would outperform other concrete through the seasonal freeze-thaw cycles that are expected in Minnesota. Cemstone advertised that Falkstone would guarantee concrete with minimal popouts. There is no evidence that Falkstone or L. R. Falk ever made such performance claims. Indeed, David Falk and Lindsey Falk will testify that they never sold Falkstone aggregate as doing anything other than passing industry specifications (which it consistently did—throughout extensive quality control testing, much of which Cemstone performed, the aggregate used in the concrete in the claim passed all tests). The concrete did not perform as well as Cemstone suggested to its customers. The winters of 2012-2013 and 2013-2014 were two of the harshest winters in recent Minnesota history, as verified by MnDOT records. The freeze-thaw cycles experienced during such harsh winters, coupled with the high quantities of deicing salts, is known to corrode concrete surfaces. Cemstone started receiving a high number of complaints following those harsh winters. Upon receiving complaints, Cemstone would perform a cursory investigation, and then generally pay for repairs, and in many cases for complete tear-outs and replacements, based primarily on its customers’ demands. Cemstone did this despite having no apparent obligation, and despite having strong disclaimers about this very issue in its sales agreements and on every single load ticket. Cemstone admits there were instances where it did not feel responsible, but made a business decision to make its customers happy. Not only did Cemstone oversell its product, but it also overcommitted to paying upset customers for a multitude of issues. In many instances, the problem was not actually aggregate popouts, but was scaling, mortar flaking, or other defects that had nothing to do with aggregate. In many other instances, there is no evidence that popouts exceeded or even approached industry expectations for popouts (starting at 15 popouts per square yard). Finally, in all instances, Cemstone agrees that popouts did not affect the performance of the concrete, but were merely a cosmetic issue. So, anything beyond a modest repair or discount was completely unnecessary and wasteful. Overall, Cemstone is presenting a vastly exaggerated claim, based upon very little evidence. In short, Cemstone cannot prove its claims. |
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