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Town of Georgetown v. Lee Rain, Inc.

United States District Court, D. Delaware

July 27, 2017

TOWN OF GEORGETOWN, a municipal corporation Plaintiff,
v.
DAVID A. BRAMBLE, INC. and LIBERTY MUTUAL INSURANCE COMPANY, Defendants,
v.
LEE RAIN, INC., a foreign corporation, and TRAVIS PATTERN & FOUNDRY INC., a foreign corporation Third-Party Defendants.

          Stephani J. Ballard, Law Offices of Stephani J. Ballard, LLC, Wilmington, DE Attorney for Plaintiff

          Scott E. Chambers, Gary E. Junge, Schmittinger & Rodriguez, P.A., Dover, DE Attorneys for Defendant David A. Bramble, Inc.

          Joelle E. Polesky, Stradley Ronon Stevens & Young, LLP, Wilmington, DE Patrick R. Kinglsey, Benjamin E. Gordon, Stradley Ronon Stevens & Young, LLP, Philadelphia, PA Attorneys for Defendant Liberty Mutual Insurance Company

          Roger D. Landon, Murphy & Landon, Wilmington, DE Attorney for Third-Party Defendant Lee Rain, Inc.

          MEMORANDUM OPINION

          STARK, U.S. District Judge.

         Plaintiff Town of Georgetown ("Plaintiff or the "Town") filed suit against Defendants David A. Bramble, Inc. ("Bramble") and Liberty Mutual Insurance Company ("Liberty Mutual" and, collectively, with Bramble, "Defendants") in Delaware Superior Court on June 3, 2015. (D.I. 1-1 Ex. A) On June 29, 2015, Defendants removed the case to this Court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. (D.I. 1) On August 6 and 7, 2015, Bramble and Liberty Mutual, respectively, filed third-party complaints against Third-Party Defendants Lee Rain, Inc. ("Lee Rain") and Travis, Pattern & Foundry, Inc. ("Wade Rain" and, collectively, with Lee Rain, "Third-Party Defendants"). (D.I. 11, 14)

         Pending before the Court are: (i) the Town's Motion for Partial Summary Judgment (D.I. 157) ("Town Motion"); (ii) Bramble's Motion for Summary Judgment Regarding Plaintiffs Claim (D.I. 159-2) ("Bramble Motion"); (iii) Liberty Mutual's Motion for Summary Judgment Against the Town (D.I. 156) ("Liberty Mutual Motion"); (iv) Bramble's Motion for Partial Summary Judgment Against Lee Rain (D.I. 145) ("Bramble Third-Party Motion"); and (v) Liberty Mutual's Motion for Joinder in Bramble's Motion for Partial Summary Judgment Against Lee Rain (D.I. 151) ("Motion for Joinder"). Certain other requests for relief have also been made during the course of briefing and oral argument, including the Town's request for summary judgment on Defendants' affirmative defense of design defect and Bramble's request for summary judgment on the applicability of the Town's shop drawings.

         For the reasons set forth below, the Court will grant the Town Motion, the Bramble Third-Party Motion, and the Motion for Joinder. The Court will deny the Bramble Motion, the Liberty Mutual Motion, and the requests relating to design defect and shop drawings.

         I. BACKGROUND

         In or around May 2012, the Town "solicited bids for the construction of a large, solid set spray irrigation system known as the 'Pettyjohn Woods Spray Irrigation Project'" (the "Project" or "System"). (D.I. 158 at 1) "The purpose of the System was to carry . . . wastewater . . . from the Town's wastewater treatment facility" to a 90-acre wooden area, using above-ground pipes. (Id.)

         After receiving numerous bids, in July 2012 the Town awarded the Project to Bramble in July 2012 for $1, 212, 786.85. (See id.) As the general contractor for the Project, Bramble entered into an Agreement ("Agreement" or "Contract") with the Town. (See D.I. 158-1 atA-32) The Agreement consisted of a signed Agreement, a number of General Conditions, and other Contract Documents. (See Id. at A-35-36) Pursuant to the Agreement, Bramble was required to obtain a Performance Bond, which was issued by Liberty Mutual as surety for Bramble. (See Id. at A-40)

         The Agreement also required Bramble to work with Davis, Bowen & Friedel ("DBF"), a private engineering firm designing the Project. (See Id. at A-32) Under the Agreement's terms, Bramble represented that it "ha[d] given Engineer [('DBF')] written notice of all conflicts, errors, ambiguities, or discrepancies that [Bramble had] discovered in the Contract Documents." (Id. at A-35) The Agreement further provided that Bramble would "be fully responsible to [the Town and DBF] for all acts and omissions of [its] Subcontractors, Suppliers, and other individuals or entities performing or furnishing any of the Work just as Contractor is responsible for Contractor's own acts and omissions." (Id. at A-l 13)

         Bramble hired Lee Rain, an irrigation subcontractor, for the above-ground pipe portion of the Project. (See Id. at A-54) Lee Rain, in turn, obtained materials for that portion of the project from supplier Wade Rain. (See Id. at A-181) Bramble submitted information and data on materials to DBF though a Shop Drawing process. (See Id. at A-l 15) In its Shop Drawings, Bramble represented that the materials met specified performance and design criteria for each specification. (See Id. at A-l 15-16) Moreover, before submitting each Shop Drawing, the Contract provided that Bramble was to have "determined and verified the suitability of all materials." (Id. at A-l 16) The General Conditions in the Contract further provided that "all materials and equipment incorporated into the Work shall be as specified or, if not specified, shall be of good quality and new." (Id. at A-l 12)

         Specification #15952 (the "Specification") required Bramble and Lee Rain to obtain self-draining gaskets. (See Id. at A-122-41) To meet the Specification, Bramble and Lee Rain selected Wade Rain's automatic self-draining lateral coupler gaskets: 10-6-6L and 10-6-4L" ("L-style gaskets"), which are characterized as "normal fast draining" gaskets. (See Id. at A-136) These L-style gaskets were identified in Shop Drawing 10, which was stamped as "[a]pproved" by DBF for "general compliance with the contract documents." (Id. at A-l22)

         Construction of the System began "on or about August 20, 2012." (Id. at A-13 ¶ 41) DBF acknowledged June 7, 2013 as the date of final completion, and Lee Rain issued its release of liens on or around that same date. (D.I. 168 at B-85) The Town began operating the System in October 2013. (See D.I. 158-1 atA-14¶50)

         The Town first discovered problems in the System's pipes in January 2014. (See D.I. 168 at B-90; D.I. 169 at B-222) On January 16, 2014, the Town discovered split pipes and broken couplers in the System. (See D.I. 169 at B-222) In the summer and fall of 2014, the Town also observed leaks from the pipes themselves. (See Id. at B-223) Despite the Specification's reference to L-style gaskets to be installed in the pipes, the Town discovered that the gaskets in the field were actually a combination of L-style and M-style gaskets, the latter of which are characterized as "normal slow draining" gaskets. (D.I. 158-1 at A-182)

         The Town notified Bramble of these problems through various correspondence in 2014 and 2015. (See, e.g., D.I. 168 at B-90) Bramble responded that any failures from the gaskets were "the result of [the] design and operation of the [S]ystem, unrelated to performance under the Contract." (D.I. 158-1 at A-17 ¶ 73; id. at A-57) (internal quotation marks omitted) Liberty Mutual agreed with Bramble "that the damages were ... the result of design and maintenance errors." (Id. at A-21 ¶ 87; id. at A-58) (internal quotation marks omitted)

         "Unable to obtain any informal resolution with Defendants, the Town formalized a claim under the [Performance] Bond and declared a Contractor's and Surety's default, ultimately resulting" in the instant litigation. (D.I. 166 at 2) The Town filed its complaint on June 3, 2015, alleging the following claims: breach of contract against Bramble (Count I); breach of warranty against Bramble (Count II); and breach of contract against Liberty Mutual (Count III). (D.I. 1-1 Ex. A¶¶96, 103, 107)[1]

         Thereafter, Bramble and Liberty Mutual both filed third-party complaints. On August 6, 2015, Bramble filed a complaint against DBF, Lee Rain, and Wade Rain, stating as particular claims: negligence/non-performance against DBF (Count I); breach of contract, indemnification, and negligent conduct against Lee Rain (Count II); breach of implied warranties against Lee Rain and Wade Rain (Count III); and breach of express warranties against Lee Rain and Wade Rain (Count IV). (D.I. 11) The next day, August 7, Liberty Mutual filed its third-party complaint against DBF, Lee Rain, and Wade Rain, specifically: contribution/indemnity against DBF (Count I); contribution/indemnity against Lee Rain (Count II); breach of implied warranties against Lee Rain and Wade Rain (Count III); and breach of express warranties against Lee Rain and Wade Rain (Count IV). (D.I. 14)

         The Town, Bramble, and Liberty Mutual filed their motions for summary judgment between February and April 2017. Briefing was completed on the last of the motions on May 31.[2] The Court heard oral argument on June 27, 2017. ("Tr.") The final pre-trial conference is scheduled for August 3, 2017 and a jury trial is scheduled to begin on August 14, 2017.

         II. LEGAL STANDARDS

         Under Rule 56(a) of the Federal Rules of Civil Procedure, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986). An assertion that a fact cannot be - or, alternatively, is - genuinely disputed must be supported either by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials, " or by "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1)(A) & (B). If the moving party has carried its burden, the nonmovant must then "come forward with specific facts showing that there is a genuine issue for trial." Matsushita, 475 U.S. at 587 (internal quotation marks omitted). The Court will "draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).

         To defeat a motion for summary judgment, the nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586; see also Podobnik v. U.S. Postal Serv., 409 F.3d 584, 594 (3d Cir. 2005) (stating party opposing summary judgment "must present more than just bare assertions, conclusory allegations or suspicions to show the existence of a genuine issue") (internal quotation marks omitted). The "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment;" a factual dispute is genuine only where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 411 U.S. 242, 247-48 (1986). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50 (internal citations omitted); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (stating entry of summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial"). Thus, the "mere existence of a scintilla of evidence" in support of the nonmoving party's position is insufficient to defeat a motion for summary judgment; there must be "evidence on which the jury could reasonably find" for the nonmoving party. Anderson, 477 U.S. at 252.

         III. DISCUSSION

         A. The Town's Motion for Summary Judgment

         The Town Motion consists of several subsidiary motions. The Court addresses each in turn.

         1. Choice of Law Governing the Contract

         The Town seeks summary judgment that Delaware law governs the Contract. (See D.I. 158 at 10) In response, Bramble does not raise a choice-of-law dispute or otherwise oppose this portion of the Town Motion. (See generally D.I. 170) At oral argument, Bramble's counsel stated that "as a matter of law, Delaware law governs the Contract." (Tr. at 19)

         Accordingly, the Court will grant summary judgment that Delaware law governs the Contract.

         2. Applicability of the Contract and Performance Bond

         The Town asks for summary judgment that Bramble is bound by the Contract and that both Bramble and Liberty Mutual are bound by the Performance Bond. (See D.I. 158 at 12) In their briefing, Defendants did not dispute the binding nature of the Contract or the Performance Bond. At oral argument, counsel for Defendants agreed that the Contract binds Bramble and that the Performance Bond binds both Defendants. (See Tr. at 50)

         Accordingly, the Court will grant summary judgment that the Agreement is applicable to the Town's claims against Bramble and that the Performance Bond is applicable to the Town's claims against both Defendants.[3]

         3. Bramble's Responsibility for Suppliers', Subcontractors', and Third- Parties' Acts and Omissions in Relation to the Project

         The Town seeks summary judgment that Bramble "is responsible ... for the acts and omissions of subcontractors and suppliers and third-parties who contributed to the Work of the Project."[4] (D.I. 158 at 16) In the Town's view, Bramble's responsibility for third parties' acts and omissions is unambiguously provided for in § 6.06 of the General Conditions of the Contract, which states:

Contractor shall be fully responsible to Owner and Engineer for all acts and omissions of the Subcontractors, Suppliers, and other individuals or entities performing or furnishing any of the Work, just as Contractor is ...

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