James Vault & Precast Co. v. B&B Hot Oil Serv., Inc.

927 N.W.2d 452
CourtNorth Dakota Supreme Court
DecidedMay 16, 2019
DocketNo. 20180317
StatusPublished
Cited by3 cases

This text of 927 N.W.2d 452 (James Vault & Precast Co. v. B&B Hot Oil Serv., Inc.) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
James Vault & Precast Co. v. B&B Hot Oil Serv., Inc., 927 N.W.2d 452 (N.D. 2019).

Opinion

McEvers, Justice.

*456[¶1] Steve Forster, Daniel Krebs, and Debra Krebs (collectively "Forster/Krebs") appeal from a summary judgment dismissing their claims against B&B Hot Oil Service, Inc. We conclude the district court correctly construed the language in the parties' lease agreement, as a whole, to operate as a waiver of claims against each other for damages to the leased building and the contents therein. We further conclude the provision in the parties' lease waiving any claims against the other for any loss or damage to the leased premises or property therein is unenforceable to the extent it exempts B&B Hot Oil from responsibility for a willful or negligent violation of law. We affirm in part, reverse in part, and remand for further proceedings.

I

[¶2] In October 2009, Daniel Krebs, as owner, executed a written agreement with B&B Hot Oil to lease the west half of a building in Dickinson owned by Forster and Daniel Krebs as joint tenants. B&B Hot Oil used the west half of the building to store two hot oil trucks-a 2005 truck designed and manufactured by Energy Fabrication and a 2009 "knockoff" truck built by B&B Hot Oil with help from JB's Welding through "reverse engineering" of the truck manufactured by Energy Fabrication. Each hot oil truck contained propane used in B&B Hot Oil's business. An explosion and fire in the building in January 2010, destroyed the building and its contents and extensively damaged surrounding property. An investigation revealed the explosion was caused by a propane leak from the "knockoff" truck, which, unlike the truck manufactured by Energy Fabrication, did not have an electronic failsafe control valve to shut off the flow of propane if the manual control valve failed to close. See Messer v. B&B Hot Oil Serv., Inc. , 2015 ND 202, ¶¶ 1-4, 868 N.W.2d 373 (outlining general underlying factual background and reversing summary judgment dismissal of adjoining building owners' strict products liability and negligence claims against JB's Welding for property damage).

[¶3] Several plaintiffs sued Forster/Krebs and B&B Hot Oil in this action for $378,502 in property damage caused by the explosion and fire. In October 2010, Forster/Krebs answered and crossclaimed against B&B Hot Oil for property damage relating to the destruction of the building and its contents. Forster/Krebs specifically alleged B&B Hot Oil breached paragraph 9 of the lease agreement requiring B&B Hot Oil to obtain a general public liability insurance policy naming Daniel Krebs and Steve Forster as an additional insured and requiring B&B Hot Oil to indemnify and save harmless Forster/Krebs from any and all liabilities arising from injury to persons or property. Forster/Krebs also alleged claims against B&B Hot Oil for negligence, res ipsa loquitur, and strict products liability, and asserted B&B Hot Oil improperly stored trucks containing propane in the building in violation of applicable code requirements and manufacturer's instructions. In November 2013, the district court granted Forster/Krebs' motion to amend their pleading to add JB's Welding as an additional crossclaim defendant for claims alleging negligence and strict products liability.

*457[¶4] In December 2013, the district court granted B&B Hot Oil's motion for summary judgment and dismissed Forster/Krebs' claims against B&B Hot Oil. The court decided that Forster was a party to the lease and that Forster/Krebs waived their claims for damages to their property under waiver language in paragraph 10 of the lease. The court explained that although Forster did not sign the written lease, both Forster and Krebs were parties to the lease and bound by the waiver language because their pleading admitted that they leased space in the building to B&B Hot Oil and that they were entitled to protection as owners under the lease. The court decided Forster/Krebs' claims against B&B Hot Oil for their property damage were waived as a matter of law under the unambiguous language in paragraphs 9 and 10 of the lease. The court explained the language in paragraph 9 was a standard indemnity and hold harmless clause that was limited to B&B Hot Oil's contractual responsibility to provide Forster/Krebs with indemnity protection against liabilities to third parties and not to protect Forster/Krebs for their property losses. The court said that B&B Hot Oil satisfied its contractual obligation under paragraph 9 by securing third-party liability coverage that designated Forster and Krebs as named insureds and that B&B Hot Oil's insurer indemnified Forster/Krebs for claims by third parties. The court also determined that under paragraph 10, Forster/Krebs waived any claims they had against B&B Hot Oil for any loss to their property, including their building and its contents. The court described the allegations in Forster/Krebs' breach of contract claim:

The Court further concludes that Forster/Krebs' claims against B&B, as set forth in their Answer, Jury Demand and Crossclaim dated October 28, 2010, did not include breach of contract claims based upon paragraphs 7 (Repairs) and 12 (Environmental Compliance) of the lease and claims upon B&B's "dishonest acts." Forster/Krebs have not moved to amend their crossclaim against B&B so as to assert new claims or bases for claims. B&B clearly has not agreed that claims not included in Forster/Krebs' existing Crossclaim against B&B can be litigated by consent. Therefore, the Court reviews the pending motions on the basis of the existing pleadings.
However, for reasons set forth herein below, even if the Court were to conclude that Forster/Krebs' pleadings did include breach of contract claims based upon paragraphs 7 (Repairs) and 12 (Environmental Compliance) of the lease and claims upon B&B's "dishonest acts", such would not alter the Court's conclusion or decision on the pending motions for summary judgment.

[¶5] In May 2014, the district court denied Forster/Krebs' motions to reconsider under N.D.R.Civ.P. 59(j) and to amend their crossclaim against B&B Hot Oil to specifically include claims for breach of contract based upon paragraphs 7 and 12 of the lease and claims for "dishonest acts." The court explained the proposed amendments would be futile because the court had already concluded they would not survive summary judgment.

[¶6] In July 2014, the district court decided Forster/Krebs' crossclaim against B&B Hot Oil did not include claims for concerted action and a joint venture with JB's Welding and denied another motion by Forster/Krebs to amend their crossclaim against B&B Hot Oil to include a claim for concerted action and a joint venture with JB's Welding. The court recognized it had not yet ruled on Forster/Krebs' remaining claims against JB's Welding and granted Forster/Krebs' motion to amend their pleading against JB's *458Welding to include claims for concerted action and a joint venture with B&B Hot Oil.

[¶7] In September 2014, the district court granted summary judgment dismissing claims by Forster/Krebs' insurer, Acuity, for subrogation against B&B Hot Oil.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Whitehead v. City of Oakland
California Supreme Court, 2025
Larson Latham Huettl v. Iversen
2023 ND 16 (North Dakota Supreme Court, 2023)

Cite This Page — Counsel Stack

Bluebook (online)
927 N.W.2d 452, Counsel Stack Legal Research, https://law.counselstack.com/opinion/james-vault-precast-co-v-bb-hot-oil-serv-inc-nd-2019.