Northern States Power Company, Southern Minnesota Municipal Power Agency, Aegis Insurance Services, LTD., and other interested insurers as subrogees of Northern States Power Company, Appellants,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-1687

Northern States Power Company,
Southern Minnesota Municipal Power Agency,
Aegis Insurance Services, LTD.,
and other interested insurers as subrogees of
Northern States Power Company,
Appellants,

vs.

General Electric Company, et al.,
Respondents.

Filed July 17, 2017
Reversed and remanded; motion denied
Smith, Tracy M., Judge

Sherburne County District Court
File No. 71-CV-13-1472

Timothy R. Thornton, Leah Ceee O. Boomsm a, Briggs and Morgan, P.A., Minneapolis,
Minnesota (for appellant Northern States Power Company)

David S. Evinger, Daniel W. Berglund, Grotefeld, Hoffmann, Schleiter, Gordon, Ochoa &
Evinger, LLP, Minneapolis, Minnesota (for appellants Aegis Insurance Services, Ltd. and
other interested insurers)

William E. Flynn, Jessica Me yer, Lindquist & Vennum, Minneapolis, Minnesota (for
appellant Southern Minnesota Municipal Power Agency)

Timothy R. Schupp, Robert W. Vaccaro, Ryan O. Vettleson, Gaskins, Bennett, Birrell,
Schupp, L.L.P., Minneapolis, Minnesota (for respondents)

Considered and decided by Connolly, Pr esiding Judge; Peterson, Judge; and Smith,
Tracy M., Judge.

2
U N P U B L I S H E D O P I N I O N
SMITH, TRACY M., Judge
A steam turbine in a coal-fired power-pro duction unit failed catastrophically as a
result of a phenomenon called stress corrosion cracking. Appellants, the power companies
that own the turbine, brought a number of to rt claims against resp ondents, the turbine’s
manufacturer and related companies. Respondents dispute the claims and assert a number
of defenses.
One of those defenses—the economic-loss doctrine—was the basis for the district
court’s summary-judgment dismissal of all of appellants’ tort claims. Appellants argue
that the district court erred in applying th at doctrine because, they assert, the alleged
tortious conduct underlying the claims was independent of the parties’ contract for the sale
of the turbine.
Because the district court erred in its application of the economic-loss doctrine and
did not address any of the other defenses raised by respondents in their summary-judgment
motion, we reverse the summary judgment and remand for the district court to decide the
remaining issues.
FACTS
Appellants Northern States Power Co. (NSP) and Southern Minnesota Municipal
Power Agency (SMMPA) 1 jointly own Unit 3, a coal -fired power-production unit
consisting of several turbines , a generator, an exciter, and a drum boiler, at NSP’s

1 Several interested insurers are also appellants in this case.

3
Sherburne Count y Generating Station (SHERCO), an electric generating facility.
Respondents General Electric Company (G E) and GE-related entities manufactured and
assembled what would become Unit 3.
Contracts
GE sold the turbine at is sue to NSP in 1977 pursuant to a contract (the sales
contract). In 1993, GE and NSP also entere d into a General Conditions Agreement (the
GCA) for equipment, parts, and service on Unit 3. GE performed some service projects on
Unit 3 pursuant to the GCA and individual contracts subject to the GCA between 1993 and
2011, although GE perfo rmed no service work on Unit 3’s low-pre ssure turbines after
1999.
GE Information Regarding Stress Corrosion Cracking
Stress corrosion cracking is a problem that occurs when certain materials used in
the construction of steam turbines are subjected to contaminants in the steam. Over time,
stress corrosion cracking can lead to turbine fa ilures. The most reliable method to detect
stress corrosion cracking is “magnetic partic le testing,” which requires removal of the
turbine blades. Blades attach to the turbine rotor wheel at an area called the “dovetail” by
one of two means: (1) a ta ngential-entry design or (2) a finger-attachment design, which
uses pins. Removal of blades with the finge r attachment is difficult and expensive, and
can only be performed a limited number of tim es because the pinholes used to affix the
blades to the rotor wheel are en larged each time the blades are removed, meaning that, if
the blades are removed too many times, the pi nholes will become too large to hold the
blades tightly.

4
Over the years since the sale of Unit 3 to NSP, GE occasionally issued “technical
information letters” (TILs) that informed turbine owners and operators of new information
about turbine hazards and recommendations for inspecting for those hazards. Neither the
sales contract nor the GCA required GE to pr ovide TILs or updated safety information to
NSP.
Also not pursuant to any contractual obl igation, GE offered turbine owners and
operators access to the GE Power Answer Center (PAC). Through the PAC, a unit operator
could ask a GE field-services representative questions about the operation and maintenance
of GE equipment. GE engineers would revi ew the PAC inquiries and deliver answers to
the field-service representatives. The field-service representatives would then provide the
answers to the turbine operators who made the inquiry. GE employees also attended
conferences where they discussed new information regarding GE turbines with people in
the industry, again not pursuant to a contractual obligation.
In 1993, GE issued TIL 1121-3ARI, which warn ed that stress corrosion cracking
may occur in turb ines with finger dovetails and expl ained how to inspect them using
magnetic particle testing. TIL 1121-3ARI recommended magnetic particle testing of finger
dovetails only after certain abnormal events or operational anomalies, or if the blades were
removed for another reason. GE issued TIL 1277-2 in 1999, recommending magnetic
particle testing after ten years of operation in certain types of turbines, including those with
finger dovetails, but only in connection with “once-through” boilers. That advice did not
apply to Unit 3, which used a different type of boiler called a drum boiler. Between 1999

5
and 2008, GE designed and pate nted an improved blade-attachment system that would
reduce susceptibility to stress corrosion cracking in steam turbines.
NSP employee Tim Murray attended a GE conference in 2001 at which GE
informally recommended that operators of drum-boiler units conduct time-based
inspections as prescribed fo r once-through-boiler turbines in TIL 1 277-2, on tangential-
entry-dovetail rotor wheels. At that time, GE did not recommend time-based inspections
for drum-boiler-unit rotor wheels with finger dovetails, like the ones at issue in Unit 3. In
2005, when seeking bids for service, Murray told GE that NSP would not inspect the finger
dovetails of Unit 3 unless GE recommended otherwise. GE made no recommendation.
In 2008, Murray asked a GE field-services representative a question, resulting in an
inquiry being entered in the PAC system. In February 2008, in response to the PAC
inquiry, a GE engineer wrote to the GE field-services representative:
Although TIL 1277 is written for once through boilers we have
been recommending customers w ith drum boilers follow the
recommendations also. We have found instances with SCC on
drum boiler units also and will likely continue to find more as
the age of the units continues to climb. It has been on my list
of TIL’s requiring a revision for some time now, just hasn’t
gotten to the top of the priority list.
Appellants assert that GE never provided this information to NSP.
Failure of Turbine and Lawsuit
On November 19, 2011, Unit 3 failed catastr ophically when a blade liberated from
the rotor wheel in a Unit 3 low- pressure turbine as a result of stress corrosion cracking in
the rotor wheel. The failure “substantially destroyed” components of Unit 3 and caused
other property damage to th e SHERCO facility. NSP and SMMPA lost profits for two

6
years during which Unit 3 was inoperable a nd SHERCO had to purchase energy on the
open market for its customers. No one was injured.
Appellants commenced this suit, allegi ng that respondents caused the damages by
failing to disclose technical information or recommend time-based service inspections that
would have reduced the likelihood of failure. Appellants alleged five causes of action:
(1) fraudulent concealment, (2) willful and wanton negligence, (3 ) gross negligence,
(4) professional negligence, and (5) post-sale failure to warn.
Appellants moved for summary judgment on the post-sale-failure-to-warn claim
(count V). The district court denied appellants’ motion and granted summary judgment in
favor of respondents on that claim on the gr ound that the economic-loss doctrine bars
recovery in tort for purely economic loss arising out of the parties’ contract for the sale of
Unit 3. Respondents then moved for summary judgment on the four remaining claims
(counts I-IV), arguing that (1 ) the economic-loss doctrine bars all of the claims;
(2) exculpatory clauses in th e parties’ contracts foreclos e any potential liability of GE;
(3) appellants did not establish the necessary elements of a fraudulent-concealment claim;
(4) the claims are barred by a statute of repos e because they arise out of improvements to
real property; and (5) the professional-negligence claim is unsupported. The district court
concluded that the economic-lo ss doctrine precluded tort recovery on all of the claims,
granted summary judgment for respondents, and dismissed counts I through IV with
prejudice. The district cour t did not reach any of respondents’ arguments other than the
economic-loss-doctrine argument.

7
This appeal follows. 2
D E C I S I O N
Summary judgment must be granted if the “pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that either party is entitled to a judgment as
a matter of law.” Minn. R. Civ. P. 56.03. A genuine issue of materi al fact exists if a
rational trier of fact, considering the record as a whole, could find for the nonmoving party.
Frieler v. Carlson Mktg. Grp., 751 N.W.2d 558, 564 (Minn. 2008). A district court “may
not decide factual issues on a motion for summary judgment; its sole function is to
determine whether fact issues exist.” Hamilton v. Ind. Sch. Dist. No. 114, 355 N.W.2d 182,
184 (Minn. App. 1984). Summary judgment is mandatory against a party who bears the
burden of proof and fails to make a showing sufficient to establish an essential element of
a claim. Carlisle v. City of Minneapolis, 437 N.W.2d 712, 715 (Minn. App. 1989).
On appeal from the summary-judgment dism issal of claims, we conduct a de novo
review to determine whether (1) there are any genuine issues of material fact, and
(2) judgment is appropriate as a matter of law. STAR Ctrs., Inc. v. Faegre & Benson,
L.L.P., 644 N.W.2d 72, 77 (Minn. 2002). We review the district court’s legal conclusions
de novo and view the evidence in the light most favorable to the party against whom

2 Appellants do not challenge the dismissal of the professional-negligence claim (count
IV).

8
summary judgment was granted. Commerce Bank v. W. Bend Mut. Ins. Co. , 870 N.W.2d
770, 773 (Minn. 2015).
I. Economic-Loss Doctrine
The district court granted summary judgme nt in favor of respondents and dismissed
all of appellants’ claims on the ground that the economic-loss doctrine bars recovery in tort
for damages arising out of a commercial sales contract. 3 The economic-loss doctrine
precludes a plaintiff from recovering in tort for purely monetary loss arising out of a
commercial-sales transaction. Ptacek, 844 N.W.2d at 538. “[T]he Uniform Commercial
Code must control exclusively with respect to damages in a commercial transaction which
involves property damage only.” Hapka v. Paquin Farms , 458 N.W.2d 683, 688 (Minn.
1990). The economic-loss doctr ine is founded on the principle that, for the Uniform
Commercial Code to be effective, “parties engaged in commercial activity must be able to
depend with certainty on the exclusivity of the remedies provided by the Code in the event
of a breach of their negotiated agreement.” Id. Appellants argue that the economic-loss
doctrine does not bar their claims because their losses arose not from a breach of the sales
contract but rather from alleged tortious conduct independent of the sales contract. See id.

3 Minnesota’s economic-loss doctrine is codified in Minn. Stat. § 604.101 (2016). Neither
that statute nor its predecessor, Minn. Stat. § 604.10 (1992), applies retroactively to claims
arising from a sale that occurred before the stat ute’s effective date of August 1, 2000, or
August 1, 1991, respectively. See Minn. Stat. § 604.101, subd. 6; Ptacek v. Earthsoils,
Inc., 844 N.W.2d 535, 539 (Minn. App. 2014); see also Marvin Lumber & Cedar Co. v.
PPG Indus., Inc., 223 F.3d 873, 882 (8th Cir. 2000). The parties agree that the common
law controls here rather than the statutes.

9
The district court first applied the ec onomic-loss doctrine in its May 2016 order
denying appellants’ summary-judgment mo tion and granting summary judgment for
respondents on the post-sale-failure -to-warn claim. The district court stated, “The first
question when evaluating the appropriateness of the application of the economic loss
doctrine is: did the contract between the parties involve the sale of goods and was the sale
a commercial transaction.” The district c ourt then determined that the “predominant
purpose” of the “parties’ relationship,” which included agreements fo r both the sale of
goods and the rendition of services, was for th e sale of goods. The district court next
determined that the sale was between two sophisticated parties and thus was a commercial
transaction. The court concluded that the post-sale-failure-to-warn claim was therefore
barred by the economic-loss doctrine.
In its August 2016 order granting respondents summary judgment on the remaining
claims, the district court expressly adopte d the economic-loss-doctr ine analysis from its
May order and, without conducting other an alysis, concluded that the economic-loss
doctrine also barred all of the negligence claims for the same reasons stated in its analysis
of the post-sale-failure-to-warn claim in the previous orde r. The district court also
concluded that the fraudulent-concealment claim was barred by the economic-loss
doctrine, reasoning that the only misreprese ntation alleged by appellants concerned “the
quality or character of the goods sold” and therefore the claim was within the scope of the
contract for the sale of Unit 3.
Appellants assert that the district cour t erred by analyzing only whether the case
involved a commercial sale of goods and fa iling to analyze whether appellants’ claims

10
arose out of or are independent of the commercial sale-of-goods contract. We agree. The
district court’s summary-judgment orders assu me that the claims ar ose out of a sale-of-
goods contract, without addressing appellants’ argument that the claims arose out of GE’s
voluntary provision of technical recommendations long after the sale of Unit 3. But the
economic-loss doctrine bars recovery only if the damages suffered actually arose out of the
contract. See ZumBerge v. N. States Power Co., 481 N.W.2d 103, 108 (Minn. App. 1992)
(concluding that economic-loss doctrine did not bar tort claims where the damages arose
from actions outside of the parties’ sales transaction), review denied (Minn. Apr. 29, 1992).
We thus must determine whether, on the su mmary-judgment record before the district
court, respondents are entitled to judgment as a matter of la w because appellants’ claims
are not independent of a sale-of-goods contract.
We must first identify the contract. The district court analyzed whether the
“predominant purpose of the parties’ relationship” was for the sale of goods or for the sale
of services, citing McCarthy Well Co., Inc. v. St. Peter Creamery, Inc. , 410 N.W.2d 312
(Minn. 1987). The district court concluded that the predominant purpose of the relationship
was for the sale of goods. But McCarthy Well does not identify a predominant-purpose-
of-the-relationship test. Rather, that case addresses how to classify a hybrid agreement that
involves both the sale of goods and the sale of services, and holds that, if the predominant
purpose of the contract is the sale of goods , then the contract is governed by the Uniform
Commercial Code and the economi c-loss doctrine may apply. McCarthy Well , 410
N.W.2d at 315. This case does not involve a hybrid agreement. Although the parties had
additional contractual relationships over the years, both appellants and respondents identify

11
the 1977 contract as a sale-of-goods contr act, and they agree th at that sale-of-goods
contract is the relevant contract for determining whether the tort claims arose from a sale-
of-goods contract and whether the economic-loss doctrine applies.4
Having identified the relevant contract, we turn to the claims. Appellants argue that
their tort claims arose not out of the sales contract but rather out of GE’s voluntary actions
that were independent of the contract, namely failing to advise appellants that they should
conduct time-based inspections of Unit 3 when GE learned that its contrary
recommendations in prior TILs and other co mmunications were imprudent or when NSP
asked for clarification.
We first observe that, on a ppeal, appellants cast their cl aims entirely in terms of
respondents’ voluntary assumption of duties post-sale. For example, in their opening brief,
appellants state, “GE’s failure to correct this no-longer-valid advisory [i.e., the 1993 TIL
1121], and not the sale of Unit 3, is the gravamen of the amended complaint.” And in their
reply brief, appellants write, “This lawsuit concerns GE’s voluntary assumption [of]
responsibility for updating turbine technical information.”
Respondents take issue with appellants’ characterization of their claims, arguing
that appellants are attempting to “distance themselves from their design and manufacturing
defect claim.” Respondents’ point is well ta ken. In their amended complaint and before
the district court, appellants based their tort claims not solely on an alleged duty arising

4 While respondents make other arguments ab out the impact of the GCA on appellants’
claims, they do not identify the GCA as a sale-of-goods contract.

12
after the sale of the turbine but also on the theory that GE failed to disclose a product defect
that it knew existed at the time of the sale.
To the extent that any of appellants’ cl aims was based on an alleged failure to
disclose a product defect present and known at the time of sale, the district court correctly
determined that such a claim is barred by the economic-loss doctrine. The decision of the
United States Court of Appeals for the Eighth Circuit in Marvin Lumber is persuasive. 223
F.3d at 873. In Marvin Lumber , the Eighth Circuit affirm ed the summary-judgment
dismissal of fraud and misrepresentation claims asserted by a window manufacturer against
the supplier of a wood preservative. Id. at 875. The Eighth Circuit reasoned that, while
fraudulent-inducement claims are independent of a contract and not barred by the
economic-loss doctrine, fraud and misrepresenta tion claims that concern “the quality or
character of the goods sold” are “substantially redundant with warranty claims” and thus
barred by the economic-loss doctrine. Id. at 885.
But the bases for appellants’ claims were not limited to an alleged product defect
and instead included the assump tion of a duty to provide updat ed technical information.
The sales contract does not provide for TILs or require GE to prov ide updated technical
information, and thus any duty to provide that information is not found in the contract.
Respondents argue that the sales contract nevertheless encompasses “the provision of
technical information” generally because the contract states that “instruction manuals” will
be supplied at the time of shipment. The instruction manual referenced in the sales contract
is the Operations and Maintenance Manual (OMM), which was delivered to NSP in 1979.
Included in the OMM is a document called GEK-63355, which mentions that GE provides

13
“[r]ecommendations to owners on specific matters” “by means of [TILs].” But GEK-
63355 is not a contract and does not obligat e GE to issue TILs or provide any other
information.
Because the undisputed facts demonstrate th at the sales contract does not encompass
any bargained-for obligation or allocation of liability related to the post-sale advice and
lack of advice at issue in this action, we co nclude that that alleged tortious conduct is
independent of the sales contract. See ZumBerge, 481 N.W.2d at 108. We therefore reverse
the district court’s grant of summary judgment based on the economic-loss doctrine. See
Ptacek, 844 N.W.2d at 538.5
II. Remaining Issues
While we disagree with the court’s ruling on the economic-loss doctrine, the district
court’s orders on multiple dispositive motions in this complex cas e were extensive and
thoughtful. Understandably, after concluding that respon dents were entitled to summary
judgment based on the economic-loss doctrine al one, the district court declined to reach
any of the alternative grounds for summary ju dgment asserted by respondents. We have
authority to consider the remaining legal issues in order to determine whether the grant of
summary judgment may be su stained on any ground. Archdiocese of St. Paul &

5 In arguing that appellants’ tort clai ms are barred by the economic-loss doctrine,
respondents assert that appellants cannot es tablish any duty owed by respondents outside
of the warranties and obligations of the sale s contract. Whether appellants can prove the
existence of a tort duty outside of the sale -of-goods contract, however, is a different
question from whether appellants’ alleged tort claims arise from the sale-of-goods contract
and are thus barred by the economic-loss doctrine. The existence, or not, of a duty in tort
goes to the merits of the tort claims, which we do not address on this appeal.

14
Minneapolis, 817 N.W.2d at 163. However, “a n undecided questi on is not usually
amenable to appellate review.” Hoyt Inv. Co. v. Bloomington Commerce & Trade Ctr.
Assocs., 418 N.W.2d 173, 175 (Minn. 1988). Furthermore, when the district court decided
not to address the statute-of-repose issue, it did not have the benefit of this court’s decision
in Great N. Ins. Co. v. Honeywell Int’l, Inc. , which, for the first time in a published
Minnesota case, defines “equipment” and “machinery” for purposes of the equipment-or-
machinery exception to the statute of repose. See Great N. Ins. Co. v. Honeywell Int’l, Inc.,
895 N.W.2d 255, 258-59 (Minn. App. 2017), review granted (Minn. June 28, 2017). Given
that intervening case and the district court’s familiarity with the record and the remaining
issues generally, we remand for the district court to decide the remaining issues in the first
instance. The district court has discretion to reopen the record on remand.6
Reversed and remanded; motion denied.

6 Appellants’ motion to supplement the record on appeal is denied.