Waterproofing Specialties, Inc. v. Weaver Cooke Construction, LLC

564 B.R. 276, 2017 WL 53034, 2017 U.S. Dist. LEXIS 1882
CourtDistrict Court, E.D. North Carolina
DecidedJanuary 4, 2017
DocketNo. 5:15-CV-145-BR
StatusPublished
Cited by2 cases

This text of 564 B.R. 276 (Waterproofing Specialties, Inc. v. Weaver Cooke Construction, LLC) is published on Counsel Stack Legal Research, covering District 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
Waterproofing Specialties, Inc. v. Weaver Cooke Construction, LLC, 564 B.R. 276, 2017 WL 53034, 2017 U.S. Dist. LEXIS 1882 (E.D.N.C. 2017).

Opinion

[278]*278ORDER'

W. Earl Britt, Senior U.S. District Judge

This matter is before the court on the appeals of Waterproofing Specialties, Inc. (“WSI”) and Weaver Cooke Construction, LLC (“Weaver Cooke”) from the 13 March 2015 order of United States Bankruptcy Judge Stephani W. Humrickhouse. The issues have been fully briefed and are ripe for disposition.

I. BACKGROUND

This dispute arises out of a real estate development project, a luxury condominium complex, in New Bern, North Carolina. Weaver Cooke served as the project’s general contractor and subcontracted with WSI. ‘WSI was responsible for, among other things, installing and applying concealed waterproofing, expansion joints and traffic coating[1] to the horizontal concrete surfaces of the [ ] project, which included the Project’s concrete balcony slabs and the parking and pool decks.” (8/27/14 Order, DE # 79-1, at 5.)

In March 2009, New Bern Riverfront Development, LLC (“New Bern”), the project owner/developer, filed suit in state court against various parties, including Weaver Cooke and some subcontractors, based on the allegedly defective construction of the project. In November 2009, New Bern filed a petition for relief under Chapter 11 of the bankruptcy code, and shortly thereafter, the state court action was removed to this court and transferred to the Bankruptcy Court. New Bern later voluntarily dismissed the subcontractors from the action and filed its first amended complaint which alleges a number of construction defects. Weaver Cooke and others remained defendants and new parties were added. In May 2010, Weaver Cooke answered .New Bern’s first amended complaint and asserted third-party claims against certain parties, none of whom were subcontractors on the project.

With leave of court, in June 2012, New Bern filed its first supplemental complaint which incorporates by reference its first amended complaint and an attached “cata-logue of issues” identified by its expert engineer George Barbour. (DE #65-1, at 61-66.) Shortly thereafter, Weaver Cooke filed its second third-party complaint, asserting claims against numerous subcontractors, including WSI, for negligence, contractual indemnity, and breach of express warranty. Rather than detail the defects purportedly related to each subcontractor’s work, Weaver Cooke referenced in, and attached to, its second third-party complaint New Bern’s first amended complaint and New Bern’s first supplemental complaint.

WSI subsequently filed a motion for summary judgment on all of Weaver Cooke’s claims. On 27 August 2014, the bankruptcy court issued its first order on WSI’s motion for summary judgment (“First Order”). It concluded that (1) the statute of limitations bars Weaver Cooke’s negligence and breach of express warranty claims to the extent such claims are based on defects in sequencing (i.e., the order in which building materials are applied in relation to one another) related to WSI’s application of traffic coating to concrete balconies and (2) ‘WSI is entitled to judgment as a matter of law on Weaver Cooke’s negligence and breach of warranty claims to the extent that they relate to work performed by WSI on the parking [279]*279and pool deck[s],” (DE # 79-1, at 17).2 On 26 September 2014, the bankruptcy court issued a second order on WSI’s motion for summary judgment (“Second Order”), granting the motion on Weaver Cooke’s indemnity claim.3

At a subsequent hearing, according to both parties, the bankruptcy judge expressed some uncertainty about whether these two prior orders resolved all issues between the parties. WSI then filed a motion “seeking clarification of whether any of the claims asserted against it by [Weaver Cooke] are still pending, or whether all such claims were extinguished pursuant to the court’s previously entered summary judgment orders.” (3/13/15 Order, DE # 1-1, at 3.) On 13 March 2015, the bankruptcy court disposed of this motion for clarification (“Clarification Order”), and it is this order from which the parties appeal.

In the Clarification Order, the bankruptcy court first considered “whether all of Weaver Cooke’s claims arising out [of] concealed waterproofing issues have been resolved.” (Id. at 6.) The bankruptcy court recognized that the First Order discussed sequencing defects associated with traffic coating but failed to address sequencing defects associated with concealed waterproofing. The bankruptcy court stated it intended to include concealed waterproofing in that discussion as the reasoning applies equally to the concealed waterproofing sequencing defects on the ground floor balconies (of units 116, 118, and 120) and thus the statute of limitations bars claims as to those defects. The bankruptcy court recognized that its prior ruling also dispensed with claims based on WSI’s application of both traffic coating and concealed waterproofing on the parking and pool decks because, as a matter of law, WSI’s work on the decks was not defective. In sum, the bankruptcy concluded that the First Order “resolved all claims for negligence and breach of express warranty against WSI for alleged defects relating to the concealed waterproofing on' the ground floor balconies, the parking decks and the pool decks.” (Id. at 7.)

Turning to the Second Order, the bankruptcy court noted that it had found the indemnity provision between the parties unenforceable as to the sequencing defects (based on both traffic coating and concealed waterproofing) because multiple parties were responsible for the resulting damage. It recognized that the same analysis applies to defects with the parking and pool decks, and that, at any rate, it had also found as a matter of law that WSI was not negligent as to its work on the decks; without negligence, WSI cannot be liable in indemnity to Weaver Cooke for damages. Accordingly, the bankruptcy eourt concluded the indemnity claim, to the extent based on all traffic coating and concealed waterproofing defects, had been resolved. Thus, the bankruptcy court ultimately determined that its prior summary judgment orders had in fact disposed of all Weaver Cooke’s claims relating to concealed waterproofing.

[280]*280Lastly in the Clarification Order, the bankruptcy court addressed Weaver Cooke’s argument that it had asserted a claim against WSI based on WSI’s expansion joint work and that the First and Second Orders did not resolve such claims. The court found that Weaver Cooke’s claims in fact encompassed expansion joint defects and that Weaver Cooke had not waived those claims in the course of opposing WSI’s motion for summary judgment. These claims were not addressed in the First and Second Orders. Therefore, the bankruptcy court concluded that Weaver Cooke’s claims for negligence, breach of warranty, and contractual indemnity based on WSI’s expansion joint work remain and amended its prior orders “to the extent needed to clarify the remaining claims and issues involving WSI.... ” (Id. at 11.)

On 27 March 2015, Weaver Cooke filed a notice of appeal from the Clarification Order and a motion for leave to appeal, both of which were docketed in Case No. 5:15-CV-138-BR. On 1 April 2015, WSI filed its notice of appeal from the same order, which was docketed in the instant case. On 14 May 2015, the bankruptcy court certified the Clarification Order as final. On 19 June 2015, this court certified the order as final and denied as moot Weaver Cooke’s motion for leave to appeal.

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Bluebook (online)
564 B.R. 276, 2017 WL 53034, 2017 U.S. Dist. LEXIS 1882, Counsel Stack Legal Research, https://law.counselstack.com/opinion/waterproofing-specialties-inc-v-weaver-cooke-construction-llc-nced-2017.