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State v. United States Steel Corp.6/24/1996
MOON, C.J., LEVINSON, NAKAYAMA, AND RAMIL, JJ., AND CIRCUIT JUDGE MILKS, IN PLACE OF KLEIN, J., RECUSED
Opinion OF THE COURT BY MOON, C.J.
In this case, dealing with the rusting steel structure of O'ahu's Aloha Stadium, plaintiff-appellant/cross-appellee State of Hawai'i (state) appeals from the judgment, after a jury trial, entered in favor of defendant-appellee/cross-appellant United States Steel Corporation (USX, USS, or U.S. Steel). On appeal, the state argues that: (1) the circuit court erred in granting USX's motion to dismiss its negligent misrepresentation claim on the basis that the claim was barred by the "economic loss" rule; (2) the trial court's jury instructions regarding the state's unfair and deceptive trade practices claim were erroneous; and (3) USX's alleged failure to turn over requested documents during discovery warrant the grant of a new trial. In addition, USX cross appeals from the trial court's denial of its motion for attorneys' fees.
For the following reasons, we hold that: (1) the "economic loss" rule does not bar the state's negligent misrepresentation claim; (2) the trial court's jury instructions regarding the state's claim for unfair or deceptive acts or practices in the conduct of any trade or commerce erroneously stated the law; and (3) the state waived any claim of discovery abuse by not raising the issue at trial. We therefore vacate the circuit court's grant of USX's motion to dismiss, vacate the judgment in favor of USX as to the state's claim for unfair or deceptive acts or practices in the conduct of any trade or commerce, and remand this case for further proceedings. In view of our remand, we need not reach USX's cross appeal. The judgment of the trial court is affirmed in all other respects.
I. BACKGROUND
In 1966, the City and County of Honolulu (the City) decided to build a multi-purpose sports stadium in Halawa. The City budgeted the stadium project at $25,000,000.00 and was particularly desirous of a design that would be able to accommodate both football and baseball. The City solicited design proposals from various architectural firms, and the firm that was eventually awarded the bid, Charles Luckman Associates (CLA), proposed building a stadium with movable stands that could be positioned in both football and baseball configurations. However, because a movable stand design required a structure constructed of a material lighter and more flexible than concrete, a central feature of CLA's proposed design was that the stadium be constructed of steel.
Through USX's advertising and the personal experience of Rudy Veland, CLA's chief designer for the stadium project, CLA became aware of a product generically referred in the steel industry as "weathering steel," a type of steel designed to be used in an unpainted condition in appropriate circumstances. Ideally, when exposed to the normal wetting and drying cycles of the atmosphere, weathering steel would form a patina of rust that allegedly would protect the steel from further corrosion. USX marketed its brand of weathering steel, which was known as "Cor-Ten," as being four times as resistant to corrosion as ordinary carbon steel.
CLA investigated the propriety of using weathering steel for the stadium project and received letters from steel companies, including USX, expressing favorable opinions regarding the propriety of using weathering steel in the stadium project. In a letter to Veland, dated October 1, 1968, Frank E. Felix, USX's construction industry representative, wrote:
In response to your request to our Mr. G. Tupac earlier this month, we are pleased to have the opportunity to comment o
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