Ledcor Industries (usa) Inc., App. v. Starline Windows, Inc., Res.

• Court: Court of Appeals of Washington
• Decided: October 5, 2015
• Docket: 72317-1
• Status: Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

BORDAK BROTHERS, INC., a No. 72317-1-1 Washington corporation, DIVISION ONE Plaintiff, on

O

v. 1

PACIFIC COAST STUCCO, LLC,

Defendant.

LEDCOR INDUSTRIES (USA), INC., a UNPUBLISHED Washington corporation, FILED: October 5, 2015 Appellant,

v.

SQI, INC., a Washington corporation; SCAPES & CO., INC., a Washington corporation; BORDAK BROTHERS, INC., a Washington corporation; UNITED SYSTEMS, INC., a Washington corporation; THE PAINTERS, INC., a Washington corporation; COATINGS UNLIMITED, INC., a Washington corporation; EXTERIOR METALS, INC., a Washington corporation; SKYLINE SHEET METAL, INC., a Washington corporation; and ROESTEL'S MECHANICAL, INC., a Washington corporation,

Defendants,

STARLINE WINDOWS, INC., a Washington corporation,

Respondent. No. 72317-1-1/2

Cox, J. — Ledcor Industries (USA) Inc. appeals three successive

summary judgment orders granting relief to Starline Windows Inc. There are no

genuine issues of material fact for any order. Starline is entitled to judgment as a

matter of law for each order. We affirm. We also deny Starline's motion to

dismiss Ledcor's appeal as untimely.1

This is a construction defect action that arises from the Admiral Way

mixed-use project. That project was substantially completed in April 2003.

Admiral Way LLC (Admiral) was the developer. Ledcor was the general

contractor. Ledcor hired Starline to supply window products for the project.

After the project was completed, the Admiral Condominium Owners

Association (COA) discovered defects in the building and sued Admiral, the

developer. Admiral impleaded Ledcor. Ledcor then commenced this action

against its subcontractors and suppliers. Ledcor did not initially include Starline

in this action.

Ledcor tendered defense and indemnity to Starline for the claim based on

the window products it supplied for the project. Ledcor also encouraged Starline

to contact the COA to "negotiate an issue release that absolves Starline and

[Ledcor] from any liability in any way related to the Starline products."2 Ledcor also informed the COA that only the COA could make claims

against Starline. In its correspondence with the COA, Ledcor stated:

Also, please let us know if (and when) you anticipate amending your Complaint to add claims against Starline. Please note that it is

1 RAP 2.2(d) and 5.2.

2 Clerk's Papers at 163 (emphasis omitted). 2 No. 72317-1-1/3

our position that such claims can only be made by the [COA] and that any damages that could (or should) be recovered by the [COA] from Starline are not recoverable from our client. Accordingly, we are not pursuing any claims against Starline.[3]

The COA then amended its complaint to assert claims directly against

Starline. Thereafter, Starline negotiated a settlement with the COA, as Ledcor

requested. Under the terms of the written settlement agreement, Starline paid

the COA $165,000 for release of claims. The settlement included an "Issue

Release" clause that "satisfie[d] and release[d] all of [the COA's] claims against

all parties to the litigation arising from the alleged defective design and/or

defective manufacture of STARLINE's window products."4

Subsequently, Ledcor also settled with the COA. Ledcor and its insurer

agreed to pay the COA $2,700,000 to settle the claims against it.

After this settlement, Ledcor amended its complaint in this action to join

Starline as a defendant. Ledcor asserted claims under the Washington Products

Liability Act and for breach of the purchase order agreement between the parties.

Ledcor sought indemnity and an award of its defense expenses.5 It also pled as

remedies equitable subrogation, equitable indemnity, and contribution.6

3 Id. at 157-58 (emphasis omitted).

4 Id. at 181 (emphasis added).

5 IdL at 24-26.

6 Id. at 26. No. 72317-1-1/4

Starline moved for summary judgment. The court granted Starline's

motion on Ledcor's claims with two specific exceptions.7 The court left pending

as "the only claims to be litigated" Ledcor's claim for defense costs and the claim

for breach of the duty to name it as an additional insured on Starline's policy.8

We granted discretionary review of the trial court's dismissal of Ledcor's

indemnity claims against its subcontractors and affirmed in an unpublished

decision.9 In that decision we stated:

We note that, on appeal, Ledcor and Admiral do not argue that the trial court erred in dismissing the indemnity claims against Starline. Therefore, any argument that summary judgment was not proper for Starline is waived.t10]

There was no further review of that decision.

On remand following this court's decision, the trial court granted summary

judgment to Starline on Ledcor's two remaining claims. Specifically, it granted

summary judgment on the duty to insure claim. The court also granted summary

judgment on the duty to defend claim, assessing $19,101.20 of Ledcor's defense

expenses against Starline.

Ledcor appeals all three summary judgment orders.

7 IdL at 2180-82.

8 Id, at 2182.

9 Bordak Bros, v. Pac. Coast Stucco, LLC, noted at 169 Wn. App. 1008, 2012 WL 2510956.

10 Id. at*7. No. 72317-1-1/5

INDEMNITY CLAIMS

Given this case's factual and procedural complexities, we first clarify that

Ledcor's indemnity claims are not before us. That is because the law of the case

doctrine bars considering these claims in this second review.

The term "law of the case" "means different things in different

circumstances."11 Here, we refer to "'the rule that questions determined on

appeal or questions which might have been determined had they been

presented, will not again be considered on a subsequent appeal in the same

case.'"12

In this case, Ledcor sought review of a decision on its indemnity claims

against its subcontractors.13 In that review, we noted that Ledcor failed to argue

"that the trial court erred in dismissing the indemnity claims against Starline."14

Thus, Ledcor waived any argument that summary judgment on the indemnity

claim was not proper.15 Accordingly, we affirmed that portion of the summary

judgment order.16

11 Roberson v. Perez, 156 Wn.2d 33, 41, 123 P.3d 844 (2005).

12 State v. Bailey. 35 Wn. App. 592, 594, 668 P.2d 1285 (1983) (quoting Davis v. Davis, 16 Wn.2d 607, 609, 134 P.2d 467 (1943)).

13 Bordak Bros., 2012 WL 2510956 at *2.

14 ]d, at *7.

15 jd,

16 Id. at *8. No. 72317-1-1/6

Because Ledcor waived this issue in the prior review, it cannot now

challenge summary judgment on this claim. Accordingly, we do not consider any

challenges to the court's dismissal of Ledcor's indemnity claim.

In this appeal, Ledcor is less than clear in describing what claims it

argues. For example, its briefing mentions "independent contractual and

equitable claims" without explaining exactly what this means. Accordingly, in the

remaining portions of this opinion, we discuss the claims that the various orders

before us address. To the extent the assignments of error or argument address

other matters, they are simply not properly before us.

CLAIMS OTHER THAN INDEMNITY

Ledcor challenges the summary judgment order entered on October 25,

2010. There are no genuine issues of material fact for the claims addressed by

this order. Starline is entitled to judgment as a matter of law.

This order granted summary judgment to Starline and denied Ledcor's

cross-motion for summary judgment. It also expressly reserves for further

litigation Ledcor's claim for defense costs and the claim for breach of the duty to

name Ledcor as an additional insured on Starline's policy

"Issue Release"

Ledcor argues that summary judgment was improper on the claims

against Starline that were the subjects of this motion. We disagree.

One of the grounds on which Starline based its summary judgment motion

was the settlement agreement with COA that released claims against all parties No. 72317-1-1/7

to the litigation. Thus, the effect of that agreement on Ledcor's claims against

Starline is a legal question before us.

"'A court may grant summary judgment if the pleadings, affidavits, and

depositions establish that there is no genuine issue as to any material fact and

the moving party is entitled to judgment as a matter of law.'"17 Summary

judgment is appropriate "if reasonable minds could reach only one conclusion

from the evidence presented."18

"[Settlement agreements are contracts."19 "Contract interpretation is a

matter of law."20 "During interpretation, a court's primary goal is to ascertain the

parties' intent at the time they executed the contract."21 Undefined terms in a

contract are "given their 'plain, ordinary, and popular meaning.'"22 After

interpreting a contract, we determine its legal effect.23

Here, after Starline settled with the COA, the COA had no claims against

Ledcor based on Starline's window products. Thereafter, when the COA settled

17 Wash. Fed, v. Harvey, 182 Wn.2d 335, 340, 340 P.3d 846 (2015) (quoting Lvbbert v. Grant County. 141 Wn.2d 29, 34, 1 P.3d 1124 (2000)).

18 Bostain v. Food Exp., Inc., 159 Wn.2d 700, 708, 153 P.3d 846 (2007).

19 Jackson v. Fenix Underground, Inc., 142 Wn. App. 141, 146, 173 P.3d 977 (2007).

20 Int'l Marine Underwriters v. ABCD Marine, LLC, 179 Wn.2d 274, 282, 313 P.3d 395 (2013).

21 Id.

22 Id. at 284 (quoting Queen City Farms v. Central Nat. Ins. Co of Omaha, 126 Wn.2d 50, 66, 882 P.2d 703, 891 P.2d 718 (1994)).

23 Id. at 288. No. 72317-1-1/8

with Ledcor, the COA had no remaining claims based on Starline's window

products. Thus, the court appropriately granted summary judgment in favor of

Starline.

Starline's settlement with the COA included an "Issue Release" clause.24

This clause read:

[The COA] hereby agrees that this Settlement Agreement and Release of Claims satisfies and releases all of [the COA's] claims against all parties to the litigation arising from the alleged defective design and/or defective manufacture of STARLINE'S window products at [the project], including claims for breach of express and implied warranties and claims under the Washington Products Liability Act. Specifically excluded from this Settlement Agreement and Release of Claims are any of [the COA's] claims against [the developer] and/or [Ledcor] for those parties' improper specification, installation, alteration, modification or repair of STARLINE'S window products at [the project].[25]

The plain language of this release indicates that the COA released all of

its claims "against all parties to the litigation arising from the alleged defective

design and/or defective manufacture of STARLINE'S window products."26 This

broad language included the COA's claims against Ledcor based on Starline's

defective window products. The only window claims that were excluded were

those related to Ledcor's "improper specification, installation, alteration,

modification or repair" of Starline's window products.27

24 Clerk's Papers at 181.

25 Id. (emphasis added).

26 jd. (emphasis added).

27 Id.

8 No. 72317-1-1/9

Thus, when Ledcor subsequently settled with the COA, the COA no longer

had any claims against it based on Starline's allegedly defective window

products. Accordingly, the court appropriately dismissed all of Ledcor's claims

against Starline, apart from those specifically reserved for future litigation in the

summary judgment order.

Ledcor argues that the court misinterpreted the scope of the issue release.

This argument is without merit.

First, Ledcor argues that Starline's settlement involved only windows, and

did not include the vinyl doors and specifications that Starline supplied. The

settlement releases all claims "arising from the alleged defective design and/or

defective manufacture of STARLINE'S window products."28 Ledcor argues that

"window products" means windows, and necessarily excludes other things

Starline provided.

But this argument essentially reads the word "products" out of the

settlement agreement. We decline to do so. "Window products" is broader than

mere "windows." Moreover, to the extent extrinsic evidence is required to give

further meaning to these words, that evidence has been provided by Starline,

one of two parties to that agreement. Ledcor, who was not a party to that

agreement, fails to point to any contrary extrinsic evidence.

Second, Ledcor argues that the issue release covered only a narrow

warranty claim. Ledcor argues that the only claim the COA could have brought

28 jd. (emphasis added). No. 72317-1-1/10

against Starline was based on "a limited manufacturer's warranty covering repair

or replacement only." Ledcor argues that it could bring much broader claims

against Starline, including claims for consequential damages.

But the plain words of the issue release are far broader. The provision

covers "claims against all parties to the litigation arising from the alleged

defective design and/or defective manufacture of STARLINE'S window products

at [the project], including claims for breach of express and implied warranties and

claims under the Washington Products Liability Act."29 Thus, the release was not

only for claims the COA could directly bring against Starline—it also included

claims the COA could bring against Ledcor. Thus, the claims released were

much broader than a limited manufacturer's warranty.

It is ironic that Ledcor now takes the position that the settlement

agreement between the COA and Starline fails to completely resolve all claims

against Ledcor that arise from Starline providing window products to the project.

Earlier, Ledcor asked Starline to reach a settlement with the COA to resolve such

claims. From our point of view, that is exactly what Starline did.

Finally, Ledcor argues that there were some claims only it could bring

against Starline. Ledcor is correct, but the court did not dismiss these claims.

The claims that only Ledcor could bring—claims about Starline's duties to defend

and insure Ledcor—survived summary judgment by the express terms of the

court's order.

29 Id. (emphasis added). 10 No. 72317-1-1/11

Because we affirm the court's order based on the issue release, we need

not reach Starline's alternative grounds for summary judgment. Likewise, we do

not reach Starline's other arguments on appeal.

In sum, the trial court properly granted summary judgment for the claims

at issue, reserving only two for further litigation.

DUTY TO INSURE

In its notice of appeal, Ledcor also noted the summary judgment order

dismissing its claim on the duty to insure. Because Ledcor fails to provide any

substantive argument on this issue, we deem it abandoned.

A party waives a claim of error by offering no argument on the claimed

error in its opening brief.30

Here, Ledcor makes no substantive argument about Starline's alleged

breach of the duty to insure. Further, Ledcor concedes that "[Starline's insurer]

had acknowledged Ledcor was an additional insured on its Starline CGL policies "31

DUTY TO DEFEND

Ledcor also appeals the summary judgment order on its final claim—the

duty to defend. There are no genuine issues of material fact, and Starline was

entitled to judgment as a matter of law.

30 Brown v. Vail, 169 Wn.2d 318, 336 n.11, 237 P.3d 263 (2010).

31 Brief of Appellant Ledcor Industries (USA) Inc. at 11 n.1. 11 No. 72317-1-1/12

Ledcor claims there is a genuine issue of material fact—the amount of its

defense expenses as damages for the breach of the duty to defend. On this

record, we disagree.

Here, the trial court decided that Ledcor "ha[d] elected to use the

proportionate share method to allocate its defense costs among its

subcontractors and suppliers."32 Ledcor does not challenge this decision.

This court approved the "proportionate share approach" in Ledcor

Industries (USA) Inc. v. Mutual of Enumclaw Insurance Co.33 In that case, the

trial court ordered a subcontractor to pay the portion of the contractor's defense

costs that were attributable to that subcontractor's work.34 The costs arising from

the subcontractor's work were not segregated from costs incurred based on other

subcontractors' work.35 Thus, the trial court determined the subcontractor's

share of the defense costs with "a proportionate share approach."36

This approach was a two-step process.37 First, the court compared the

amount of the subcontractor's settlement with the contractor to the amount of the

contractor's settlement with the developer.38 The court calculated that the

32 Clerk's Papers at 2189.

33 150 Wn. App. 1,15, 206 P.3d 1255 (2009).

34 Id

35 Id

36 \±

37 id,

38 Id, 12 No. 72317-1-1/13

subcontractor's settlement was 18.8 percent of the contractor's settlement.39

Accordingly, the court ordered the subcontractor to pay 18.8 percent of the

defense costs.40

Here, the trial court followed these principles. It calculated Starline's

proportionate share using the method described earlier. The court first

calculated the total settlement paid to the COA by adding Ledcor's settlement

with the COA to Starline's settlement with the COA. The court determined that

this was $2,865,000. The court then divided the amount of Starline's

settlement—$165,000—by that number. With these calculations, the court

calculated that 5.76 percent of the defense costs were attributable to Starline.

Ledcor does not dispute that this was the amount of the settlements or that the

court correctly calculated the percentage.

Thus, there was no genuine issue of material fact as to the amount of

damages. Ledcor had elected to use the proportionate share method. The court

merely calculated the amount due under that method based on undisputed facts.

Accordingly, the court did not err by determining the amount of damages on

summary judgment.

Ledcor argues that the court unconstitutionally invaded the province of the

jury by determining the amount of damages. On this record, this argument is

unpersuasive for the reasons we just discussed.

39 Id,

40 Id.

13 No. 72317-1-1/14

In its reply brief, Ledcor argues that the court should have used a value

other than Starline's settlement to calculate Starline's share of the costs.

Because this is an argument first made in a reply brief, we need not address it.41

ATTORNEY FEES

Trial Court

Starline appealed the trial court's order denying fees to both parties in a

separate, linked appeal. We addressed that challenge in our decision in that

appeal.42

On Appeal

Both parties seek fees on appeal based on their contract. Because

Starline is the prevailing party on appeal, we award it fees, subject to its

compliance with RAP 18.1.

Parties in Washington may recover attorney fees if a statute, contract, or

recognized ground of equity authorizes the award.43 "'A contractual provision for

an award of attorney's fees at trial supports an award of attorney's fees on

appeal under RAP 18.1.'"44

41 In re Marriage of Bernard, 165 Wn.2d 895, 908, 204 P.3d 907 (2009).

42 Ledcor Indus. (USA). Inc. v. Starline Windows, Inc., noted at Wn. App. , 2015 WL 4533933.

43 LK Operating. LLC v. Collection Grp.. LLC. 181 Wn.2d 117, 123, 330 P.3d 190(2014).

44 Thompson v. Lennox, 151 Wn. App. 479, 491, 212 P.3d 597 (2009) (quoting W. Coast Stationary Eng'rs Welfare Fund v. City of Kennewick, 39 Wn. App. 466, 477, 694 P.2d 1101 (1985)). 14 No. 72317-1-1/15

Here, the parties' contract states:

In the event that arbitration and/or litigation is instituted to enforce [or] contest the provisions of this Agreement or adjudicate any question(s) arising under this Agreement, the prevailing party shall be entitled to its actual attorneys' fees and all costs incurred in connection therewith.1451

Starline prevails in this appeal. Thus, it is entitled to a reasonable attorney

fees award.

We affirm all summary judgment orders on appeal. We award Starline

attorney fees on appeal, subject to its compliance with RAP 18.1.

tcrt.T. WE CONCUR:

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45 Clerk's Papers at 92. 15