New Bern Riverfront Dev., LLC v. Weaver Cooke Constr., LLC (In re New Bern Riverfront Dev., LLC)

590 B.R. 328
CourtUnited States Bankruptcy Court, E.D. North Carolina
DecidedJune 26, 2018
DocketCASE NO. 09-10340-8-SWH; ADVERSARY PROCEEDING NO. 10-00023-AP
StatusPublished

This text of 590 B.R. 328 (New Bern Riverfront Dev., LLC v. Weaver Cooke Constr., LLC (In re New Bern Riverfront Dev., LLC)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New Bern Riverfront Dev., LLC v. Weaver Cooke Constr., LLC (In re New Bern Riverfront Dev., LLC), 590 B.R. 328 (N.C. 2018).

Opinion

In both of its supplemental memoranda, ECM focused on the contributory negligence issue, to the exclusion of the first issue cited by the district court. D.E. 1413, 1509. Weaver Cooke did the same. D.E. 1436, 1518. The court will, however, address both of those issues, as well as the related question of proximate cause.

DISCUSSION

The specific damages that Weaver Cooke alleges ECM to have caused are set out in the Barbour Report, wherein Mr. Barbour opines that ECM failed to:

*3371. Install adequate brick ties;
2. Sufficiently seal and integrate through-wall flashing with other building components;
3. Install adequate mortar netting; and
4. Leave airspace or insert a compressible filler material between bricks and the shelf angles in order to allow for expansion of the brick veneer.

ECM Mem. in Support of Sum. J. at 4-5 (D.E. 686) ("ECM Mem."). In addition, Mr. Barbour faulted ECM for allegedly installing brick veneer where shelf angles were missing.5 Weaver Cooke Mem. in Response to ECM Mot. for Sum. J. at 6-7 (D.E. 754) ("Weaver Cooke Response"). According to Weaver Cooke,

the issues with the through-wall flashing and mortar netting are related to water intrusion. The failure to install all of the brick ties, the failure to leave airspace or insert compressible filler, and ECM's installation of brick veneer where shelf angles were missing are structural in nature and have nothing to do with water intrusion.

Id. at 7.

Before the court now are issues raised in ECM's initial motion for summary judgment, and noted by the district court as remaining unresolved and therefore potentially viable on remand: First, whether, under the specific terms of the subcontract , Weaver Cooke is entitled to seek indemnity from ECM for injury or damage to ECM's own work; specifically, the masonry work. For the reasons set out below, the court will enter summary judgment for ECM on this ground. To the extent that Weaver Cooke theoretically could still pursue its contractual indemnity claim for water intrusion damages outside the scope of ECM's work, the court will enter summary judgment for ECM on the alternative ground originally raised in ECM's summary judgment motion, which is that Weaver Cooke failed to establish the element of proximate cause. Finally, the district court observed that the question of whether ECM and Weaver Cooke are in pari delicto -i.e., whether Weaver Cooke was contributorily negligent with respect to the specific damages at issue vis-a-vis ECM-also remained open for disposition. Because the contractually indemnity claim is fully resolved by the court's conclusions as set out below, the court need not, and does not, consider the issue of contributory negligence.

1. Indemnity Agreement Excludes Damages to the Subject of the Contract

The district court pointed out in its order that this court had not yet addressed ECM's argument, set out in its original motion for summary judgment, that "even if Weaver Cooke's own failure to properly supervise ECM's work does not completely preclude it from receiving indemnity, the damages for which it is entitled to indemnity are limited by the terms of the subcontract." D.E. 1328 at 1 n.1; see also ECM Mem. (D.E. 686) at 32. The language to which the district court and ECM refer provides as follows:

*33816.2 To the fullest extent permitted by law, Subcontractor shall indemnify and hold harmless Contractor, its agents and employees from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from Subcontractor's performance of Subcontractor's Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than Subcontractor's Work itself ) including loss of use resulting therefrom, if caused in whole or in part by the negligent acts or omissions of Subcontractor, a sub-subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. Such obligation shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity, which would otherwise exist as to a party or person described in this Article.

D.E. 686, Ex. 1, ¶ 16.2 (emphasis added). The subcontract between Weaver Cooke and ECM defines the "Subcontractor's Work" in Attachment A-1 to their subcontract, as follows: "Work includes furnishing and installing brick, concrete masonry units, cavity insulation, joint reinforcing, wall ties, grout, thru-wall flashing, pre-formed control joints, dove tail anchors, mortar stop, dampproofing, clean up, mortar, sand, supervision, labor, equipment, and taxes." D.E. 686-1, at 4.

It is evident that ECM's unique fact set is such that there are two separate "kinds" of possible damages-those allegedly caused by leaking water, and, those damages Weaver Cooke attributes purely to the brickwork not being properly done, per the expert reports upon which Weaver Cooke relies. Here, it is abundantly clear that only "the issues with the through-wall flashing and mortar netting are related to water intrusion." Weaver Cooke Response at 7. The remainder "are structural in nature and have nothing to do with water intrusion." Id. It is readily apparent that the alleged "structural" damages come squarely within the scope of ECM's "Work" and, for that reason, they are specifically and wholly excluded from the scope of damages for which Weaver Cooke may endeavor to seek indemnification.

Moreover, with respect to these remaining potential damages in connection with thru-wall flashing and mortar netting, notwithstanding Weaver Cooke's contention that there are defects in these construction elements that are in some way "related to water intrusion," that position in no way changes the fact that thru-wall flashing and mortar netting also are specifically and wholly within ECM's scope of work. Again, per the language of its own subcontract, Weaver Cooke may seek indemnity for those damages "arising out of or resulting from Subcontractor's performance of Subcontractor's Work, provided that such claim, damage, loss or expense is attributable to ... injury to or destruction of tangible property (other than Subcontractor's Work itself). " D.E. 686, Ex. 1, ¶ 16.2 (emphasis added). To the extent that Weaver Cooke seeks damages based on alleged injury to these components , that recovery is precluded by the language just discussed. In contrast, to the extent that Weaver Cooke seeks to argue that deficiencies in ECM's installation of the thru-wall flashing and mortar netting ultimately caused water intrusion damages to the SkySail Project-i.e., damages to tangible property other than ECM's "Work itself"-then that argument would be viable, in theory. In practice, however, for the reasons set out below, that argument is *339precluded by Weaver Cooke's failure to satisfy its burden on proximate cause.

2. Lack of Proximate Cause

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Bluebook (online)
590 B.R. 328, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-bern-riverfront-dev-llc-v-weaver-cooke-constr-llc-in-re-new-bern-nceb-2018.