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The Washington House Condominum Association of Unit Owners v. Daystar Sills, Inc.

Superior Court of Delaware

August 8, 2017

THE WASHINGTON HOUSE CONDOMINUM ASSOCIATION OF UNIT OWNERS, On Its Own Behalf and On Behalf of Multiple Unit Owners, and WILLIAM E. MONTGOMERY, and TAMARA A. MONTGOMERY, Individually, Plaintiffs,
DAYSTAR SILLS, INC., a Delaware Corporation, DAVID N. SILLS, IV, WASHINGTON HOUSE PARTNERS, LLC, a Delaware Limited Liability Company, ARCHITECTURAL CONCEPTS, P.C., a Pennsylvania Corporation, AVALON ASSOCIATES OF MARYLAND, INC., a Maryland Corporation, and ENVIRONMENTAL STONEWORKS, LLC, a Delaware Limited Liability Company, Defendants.

          Submitted: March 10, 2017

         Environmental Materials, LLC d/b/a Environmental Stoneworks' Motion to Dismiss Daystar Sills, Inc.'s Crossclaims - DENIED

         Daystar Sills, Inc. and David N. Sills, IV's Motion for Summary Judgment -DENIED

         David N. Sills, IV's Motion for Summary Judgment - DENIED

         Architectural Concepts, P.C.'s Motion for Summary Judgment -DENIED

         Washington House Partners, LLC's Motion to Amend Crossclaim -GRANTED

          Elizabeth Wilburn Joyce, Esquire, Seton C. Mangine, Esquire, Pinckney, Weidinger, Urban & Joyce LLC, Attorneys for Plaintiffs.

          Victoria K. Petrone, Esquire, George T. Lees III, Esquire, Logan & Petrone, LLC, One Corporate Commons, Attorneys for Defendants Daystar Sills, Inc. and David N. Sills, IV.

          Roger D. Landon, Esquire, Lauren A. Cirrinicione, Esquire, Murphy & Landon, Attorneys for Defendants David N. Sills, IV and Washington House Partners, LLC.

          Patrick M. McGrory, Esquire, Tighe & Cottrell, P.A., Attorney for Defendant Architectural Concepts, P.C.

          David L. Baumberger, Esquire, Chrissinger & Baumberger, Three Mill Road, Attorney for Defendant Avalon Associates of Maryland, Inc.

          Gaston Loomis, Esquire, Delany McBride, P.C., Attorney for Defendant Environmental Stoneworks, LLC.




         This litigation arises from the allegedly defective design and construction of The Washington House Condominium ("Washington House" or "the Condominium"). Located on Main Street in Newark, Delaware, the Washington House contains fifty-four residential units and four commercial units, two of which are owned by the University of Delaware.[1]

         Construction of the Condominium concluded in the fall of 2008. It was not long before the Washington House was plagued by water infiltration issues, among other problems. The Condominium was eventually discovered to contain systemic design and construction defects, which resulted in, most notably, the failure and progressive detachment of the building's exterior masonry veneer. On January 14, 2015, Washington House Condominium Association ("WHCA"), an unincorporated association of unit owners, and individual unit owners William and Tamara Montgomery (collectively, "Plaintiffs") filed the instant action against Defendants, each of whom allegedly played a role in the defective design, construction, and repair of the Condominium.

         A. The Washington House Project

         Defendant Daystar Sills, Inc. ("Daystar") is a Delaware corporation engaged in the business of constructing and developing commercial and residential buildings. Defendant David N. Sills, IV ("Mr. Sills") is Daystar's President and sole stockholder. Mr. Sills also co-owns and manages Defendant Washington House Partners, LLC ("WHP").[2] Mr. Sills formed WHP in 2006 for purposes of purchasing the property upon which the Washington House was built.[3]

         Once WHP acquired the land for the Washington House project, it hired Daystar, as "Contractor, " to build the Condominium.[4] In this regard, Daystar would be responsible for reviewing architectural plans, soliciting bids, hiring subcontractors, and scheduling, producing, and invoicing work for the project, among other things.[5] In its contract with WHP, Daystar promised to "direct and supervise" the construction of the Washington House "using [its] best skill and attention."[6]

         Daystar hired Defendants Architectural Concepts, P.C ("AC"), Avalon Associates of Maryland, Inc. ("Avalon"), and Environmental Stoneworks, LLC ("ESW") in connection with the project. AC, an architectural firm, was retained in 2006 to prepare the design plans and specifications used to construct the Condominium. Avalon was hired as a project manager in February 2007. Avalon's project management obligations were fulfilled by the company's sole owner, Roger Edward Leonard, Jr. ("Mr. Leonard"). Sometime in 2008, Mr. Leonard was hired by Daystar directly, such that he began performing his management services as a Daystar employee. Finally, Daystar subcontracted with ESW to install the Condominium's exterior masonry veneer.

         AC's original design plans for the Washington House specified that the building would be constructed with a "full brick" exterior. However, sometime in late spring/early summer 2007, Mr. Sills approved the decision to use "thin brick" veneer in place of the full brick for cost and time-saving purposes. The design change was apparently discussed at a May 2007 meeting among AC and Daystar representatives. [7] AC representatives expressed concerns about using thin brick for a project like the Washington House. Daystar nevertheless sought to move forward with the thin brick system and AC modified its plans accordingly. AC's revised plans, dated June 13, 2007, were approved by the city on July 9, 2007.

         Mr. Sills and Leonard collaborated in selecting the manufacturer of the thin brick product ultimately used on the Condominium: non-party Marion Ceramics, Inc. This decision was apparently made despite the fact that, at the time, Marion Ceramics did not provide manufacturer installation instructions for their thin brick product. Pursuant to the August 20, 2007 subcontract, ESW was hired by Daystar to install the product on the building's exterior façade.[8]

         On February 22, 2008, Michael Cihlar ("Mr. Cihlar") of AC emailed Mr. Leonard. The email indicates that AC "continually expressed [its] concern" to Daystar "regarding the appropriateness of exterior thin brick on a building subject to freeze/thaw in the North East climate."[9] Mr. Cihlar explained that, despite further research, AC could not locate one "organization, institute, agency, or company that will stand behind a thin brick assembly as a whole in this climate."[10]As a result, AC informed Daystar that it was "proceeding at [its] own risk" and advised that Daystar continue its due diligence and carefully monitor the installation of the veneer to ensure "the ability of movement, flashing, and drainage of the system."[11]

         Mr. Leonard forwarded Mr. Cihlar's email to Mr. Sills, and also passed on AC's concerns to ESW. ESW assured Daystar that the exterior veneer would be installed according to ESW's standards and that ESW would have the manufacturer certify the installation.[12] It does not appear ESW ever retrieved any certification from the manufacturer about ESW's internal installation procedures. Nevertheless, Mr. Sills allegedly insisted construction move forward as planned in order to keep the project on schedule.

         B. The Declaration & Code of Regulations

         On October 17, 2008, with construction nearly completed, Mr. Sills signed and recorded a Declaration Establishing a Plan for Condominium Ownership ("Declaration") on WHP's behalf pursuant to Delaware's Unit Property Act.[13]WHP also adopted and recorded a Code of Regulations ("the Regulations") governing matters such as the use, occupancy, management, and operation of the Condominium.[14] The Regulations established the WHCA, through which the unit owners would be responsible for "administering the Condominium."[15] Although "the affairs of the Condominium" would ultimately be controlled by "the Council, " which possesses "all of the powers and duties necessary for the administration of…the Condominium."[16]

         WHP, as Declarant for the Condominium, had the power to designate the members of the Council during the "Developer Control Period."[17] The Developer Control Period would last until 80% of the Condominium's residential units were purchased from WHP, at which point the power to elect Council members would be turned over to the unit owners. WHP named Mr. Sills the original and sole member of the Council during the Developer Control Period.[18] Control and operation of the Washington House would not be fully turned over to a unit-owner-elected Council until January 19, 2012, as discussed further infra (the "Turnover").[19]

         Once the Condominium's governing documents were filed and recorded, WHP began selling units at the Washington House, with the first unit purchased on October 23, 2008. More than half of the residential units would be sold within the Condominium's first year.

         C. The ESW-Daystar Action

         Daystar was ultimately dissatisfied with ESW's work on the Washington House's exterior. In an email dated November 14, 2008, Mr. Sills told ESW that the work "look[ed] horrible" and characterized his predicament as a "no win" situation:

I have a poor job that has been torn down, re-done, and is still a poor job. If I re-do it again it affects people that have moved into the building and it affects sales and marketing. Do you want me to put a value on that? If I let you do it I have no confidence you could actually make it look good and the cost to the project would exceed any monies you think you are due. If I do nothing than it looks…bad. [20]

         Having not been paid for its services, ESW filed a mechanics' lien action against Daystar and WHP on January 30, 2009. Washington House unit owners were notified in February of 2009 that Daystar was "involved in a payment dispute with the subcontractor that installed the stone and brick work on the exterior of the building" and was "actively defending the claim through its attorneys."[21] The letter, signed by Mr. Sills, assured the owners that no action on their behalf was necessary and that Daystar would "indemnify all homeowners and the condominium from the proceeding."[22]

         On April 9, 2009, Daystar filed a counterclaim against ESW for breach of contract, breaches of express and implied warranties, and negligence. Daystar claimed the cast stone veneer ESW installed was "uneven, unsightly, " and unacceptable.[23] Daystar alleged that the veneer appeared "to be rolling and/or lumpy, " exhibited "uneven joints, " was missing caulk and bricks, contained inconsistent brick patterns and joints, and was otherwise deficient. [24]

         The dispute ultimately went to arbitration.[25] Daystar retained experts to evaluate the Condominium's exterior, [26] and cited to their reports its arbitration submissions. In its Closing Arbitration Brief, submitted December 6, 2011, Daystar claimed $1.4 million in damages as a result of ESW's failure to "install flashing and a weep system, " as required under the Subcontract, and "to correct deficiencies in its work, " and emphasized the recommendation of its expert that the veneer be entirely removed and replaced.[27]

         The Arbitrator issued an Order awarding Daystar $400, 000.00 on January 6, 2012.[28] The only information the unit owners received about the ESW-Daystar Action was that contained in the February 2009 notice letter. While Mr. Sills' letter indicated Daystar was actively defending a subcontractor's claim for payment, the unit owners were not aware of Daystar's negligence counterclaim, the expert reports, or the outcome of the 2012 Arbitration.

         D. Issues Experienced by Washington House Unit Owners

         The record reflects that, beginning in 2009, unit owners had experienced various water leak issues.[29] These issues were often noted at meetings of the Washington House unit owners ("Owners' Forum").[30] Unit owners would inform Daystar about any issues, and Daystar employees would undertake all repairs.[31]Daystar fixed water intrusion problems occurring in individual units, and throughout the Condominium.[32] Daystar repeatedly assured the unit owners it would remedy all of the leaks. Accordingly, the owners perceived the leaks as minor "punch list" or maintenance items.[33]

         In 2010, the unit owners began discussing the Turnover and establishment of an owner-controlled Council.[34] One of the unit owners' "primary concerns" was having the building inspected. The purpose of the inspection was apparently to identify: (1) "items that do not meet code (if any)" to address prior to the Turnover and (2) "items that homeowners need to be aware of so that they can be addressed in future years and budgeted based on priority of need and funds available at the time."[35] Unit owner Pamela Bobbs ("Ms. Bobbs") obtained a proposal from Alpha Engineering, Inc. ("Alpha") to conduct the inspection. The inspection would be delayed, however, as, at the time, WHP and Mr. Sills controlled the Council, as well as WHCA's records and funds. Under these circumstances, the unit owners felt "it did not seem necessary to obtain a building inspection from a third party until the transition to an owner-elected Council."[36]

         In 2010 and 2011, the owners continued to discuss the leaking issues. Unit owner John Piper experienced water leak issues almost immediately upon moving into the Washington House in 2009, and at the October 2010 Owners' Forum, residents were advised to "watch for similar problems."[37] At the January 2011 Owners' Forum, unit owners noted "property damage" concerns, including "sections of the garage ceiling fire retardant crumbling…related to larger water leak issues" and "unresolved leak problems." Owners with outstanding problems were advised to write to Mr. Sills directly.[38] All issues reported were recorded in a consolidated spreadsheet, which the unit owners maintained for purposes of "tracking the issues."[39] At the August 2011 meeting, the unit owners discussed water leaks in the foyer and stairwells and noted that "nothing on the building issues list seems to have been done."[40] As of October 2011, there had been "no action regarding the leaks."

         In November 2011, the owners revisited their plan to have the building inspected. According to the meeting summary, at that time, there was "nothing in the budget to cover the cost of the building inspection." Attendees agreed that, pending Alpha's confirmation, the inspection would be delayed until funds were available but that it would be "prudent" to ensure the inspection was accomplished before Mr. Sills was "out of the picture."[41] The November 2011 meeting summary also briefly notes that "[s]ome of the building stone work need[ed] to be repaired" and Mr. Persak indicated that this issue was on "the list."[42] In December 2011, Mr. Sills assured the owners he would review their list of issues throughout the building and "address all of them."[43]

         The Turnover took place on January 19, 2012 and a unit owner- elected Council assumed control of the Condominium. Initially, Mr. Sills refused to "recognize" the Turnover and relinquish control of the Condominium's financial records and bank accounts to the owner-elected Council. Upon threat of legal action, WHP and Mr. Sills turned over the requested information and authority in March 2012.

         On April 24, 2012, Mr. Persak, as Vice President of the Council, wrote to Mr. Sills on WHCA's behalf to notify him of "apparent defects related to the construction of the Washington House" and the Council's belief that Mr. Sills, as the developer of the Condominium, was "legally responsible for the correction of the[] problems."[44] Mr. Persak attached a "summary report" based on a survey of unit owners regarding the "water incursion problems."[45]

         E. Inspections of the Condominium

         Alpha's inspection of the Washington House took place on May 29, 2012. Alpha inspected only the Condominium's common areas, including the roof, exterior, corridors, elevators, etc. Alpha observed the exterior of the building to assess "the general condition of the foundation and super structure."[46] The walls and foundation were also inspected "to determine the general condition and to identify any major structural deficiencies that require costly repair."[47]

         Concerning the brick and stone veneer, Alpha's report provides that "[a]part from a missing stone and broken light lens, the exterior stone and brick appear in good condition."[48] However, upon "close examination, " Alpha observed "minor cracks." Alpha also noted "very obvious" separation between the sundeck supports "likely due to differential settlement, " which it advised "should be watched for further advancement." Alpha recommended corrective measures with respect to the exterior rainwater management, including adding gutters to the balconies and providing a catch basin.[49] Alpha also suggested further investigation of a leak in the deck above the parking garage in order to determine the appropriate repair.[50]

         In January 2014, the Council engaged a new property manager for the Condominium: Aspen Property Management, Inc. ("Aspen"). Aspen hired Cogent Building Diagnostics ("Cogent") to conduct a more thorough evaluation of the Washington House in August 2014. Cogent's inspection apparently revealed serious and systemic construction defects at the Condominium.[51] According to the Complaint, the building's walls, brick exterior, roofing, and drainage systems, among other things, were negligently designed, constructed, installed, and/or repaired.[52] With regard to the walls and exterior veneer, the alleged defects included:

a. Improper and insufficient attachment of the metal lath base under exterior brick veneer using non-code-complaint nails pneumatically driven into non-structural sheathing…resulting in lath which lacks proper support and has separated from the building face causing overlying exterior masonry veneer to pull away…and…fall from the building…;
b. Failure to install and/or improper installation of flashing and closures in exterior brick veneer walls, … resulting in water damage to the wall system and the occupied spaces of the building…;
c. Improper sealing and blockage of…water drainage pathways above windows, thus exacerbating …water damage…[to] exterior walls;
d. Failure to install and/or improper installation of sufficient expansion and control joints in exterior masonry veneer… causing… bricks on the outside of the building bulging and protruding away from the…veneer walls, fully detaching from the mortar base, and falling off the building;
e.…[I]nstallation of…veneer mortar base with insufficient thickness…;
f. Improper repairs to localized areas of brick veneer, wherein new lath was attached using unacceptable nailing methods and was not wired together with original lath to provide continuous wall support;
g. Improper installation of adhered dry stack manufactured stone veneer…over concrete masonry unit ("CMU") walls without continuous coverage of the CMUs, without water barriers or waterproofing, and without control or expansion joints, causing water intrusion into the building, water damage to the stone veneer, and water pocketing, resulting in stones detaching from…the building following normal freeze-thaw cycles;
j. Failure to install control/expansion joints and other closures in parking garage concrete surfaces, resulting in extensive concrete cracking and damage to deck pans; [53]

         As for defects discovered in the Condominium's drainage systems and roofing, the Complaint alleges:

h. Failure to provide sufficient surface drainage or proper drainage provisions at roofs, balconies, patios and walkways, including inadequate surface slope, insufficient and/or misplaced drain locations, irregular surface definition, and unnecessary routing of roof run-off water onto these surfaces resulting in ponding of water, water intrusion under doors and walls into occupied spaces, and damage to interior spaces and mechanical equipment;
i. Improper roof design and drainage and ice/snow fall protection that exposes passers-by to avoidable water exposure and potential harm;
m. Installation of heavily-sloped, raised metal…roofing far above ground level without any means of preventing ice and snow from falling a great distance…, thus posing a safety threat to people and property below;
o. Improper installation of membrane roofs, resulting in excessive water ponding…[and] premature roof leaks;
k. Failure to provide proper waterproofing and drainage provisions in the parking garage, resulting in drains backing up into the garage, water seeping through and around garage walls, leaking at drains, piping and unsealed penetrations through the concrete decking and damage to corrugated metal flooring supports;[54]

         In September 2014, the City of Newark issued a Notice of Violation stating that the exterior was constructed in violation of applicable building codes and the manufacturer's installation instructions.[55] The Notice required the erection of safety barriers and scaffolding around the entire building perimeter, in addition to the removal, repair, and replacement of the exterior masonry veneer.[56] The WHCA was responsible for implementing these corrective measures at a substantial cost to the unit owners.

         E. The Instant Litigation

         Plaintiffs filed this litigation on January 14, 2015 seeking recovery of damages including "costs of repair, costs of remediation, costs of temporary [and] emergency protection for the public way, expectation damages, costs of displacement, loss of use, loss of value, and other consequential damages." [57] The Complaint, as filed, asserted seven counts against Mr. Sills, Daystar, WHP, AC, Avalon, and ESW. [58]

         Plaintiffs have since voluntarily dismissed several counts of the Complaint, [59]and just recently settled their dispute with Avalon. Additionally, Plaintiffs' claims against ESW were dismissed on October 28, 2015, pursuant to a ruling by this Court granting ESW's Motion to Dismiss the Complaint. The Court found that Plaintiffs' claims against ESW were barred by res judicata as a result of the 2012 Arbitration and judgment.[60] Ultimately, what remains are Plaintiffs' claims for (1) negligence against AC, Daystar, Mr. Sills, and WHP; (2) negligent repair against Daystar, Mr. Sills, and WHP; and (3) violation of the Buyer Property Protection Act against WHP.

         Crossclaims for contribution and/or indemnification have also been filed among the Defendants. At the time of the Court's October 2015 decision, there were Crossclaims pending against ESW. That ruling did not address the then-pending Crossclaims, [61] and additional claims were filed against ESW thereafter. Daystar filed its Answer to the Complaint and Crossclaims seeking "contribution and/or indemnification" and "contractual indemnification" from ESW on February 1, 2016.[62] AC cross-claimed for contribution from each co-Defendant and ESW on February 18, 2016. [63]

         There are five motions presently before the Court. ESW has moved to dismiss Daystar's Crossclaims. Three Motions for Summary Judgment have been filed on behalf of: (1) Defendants Daystar and Mr. Sills ("Daystar Defendants"); (2) Mr. Sills in his capacity as co-manager of WHP;[64] and (3) AC. Lastly, WHP has moved to amend its Crossclaim against ESW. [65] This is the Court's decision on those Motions.


         On April 21, 2016, ESW moved to dismiss Daystar's Crossclaims pursuant to Delaware Superior Court Civil Rule 12(b)(6). [66] Under Rule 12(b)(6), the Court may grant dismissal for "failure to state a claim upon which relief can be granted."[67] In deciding a motion to dismiss, the Court must view the record in a light most favorable to the non-moving party and accept as true the well-pleaded allegations of Daystar's Crossclaims.[68] The Court will grant a motion to dismiss only where "it appears with reasonable certainty that, under any set of facts that could be proven to support the claims asserted, the [claimant] would not be entitled to relief."[69]

         ESW argues Daystar's Crossclaims must be dismissed as "procedurally defective" because they were filed after Plaintiffs' claims against ESW had already been dismissed. Additionally, ESW maintains Daystar's claims, together with "[a]ll cross claims against ESW, " should be dismissed as barred by the doctrine of res judicata.[70] Finally, ESW requests the imposition of costs and attorneys' fees because "Daystar's Crossclaims, brought months after Plaintiffs' claims have been dismissed and years after an arbitration award between ESW and Daystar, [are] vexatious and unfairly burdensome."[71] Daystar, WHP, Mr. Sills, Avalon, and AC have each opposed ESW's Motion and Plaintiffs filed a limited objection.

         The issue before the Court is essentially whether, given the 2012 Arbitration and the Court's previous ruling dismissing Plaintiffs' claims against ESW, the cross claims asserted against ESW for contribution and/or indemnification should remain part of the litigation. The Court will first address the procedural appropriateness of Daystar's Cross Claim, before turning to ESW's res judicata contentions.

         A. Is Daystar's Claim Against ESW "Procedurally Defective?"

         Daystar filed its Crossclaim on February 1, 2016, seeking contribution and/indemnification from ESW pursuant to 10 Del. C. § 6301, et seq., as well as contractual indemnification under a subcontract agreement between the parties.[72]In its pleading, Daystar acknowledged the Court's October 2015 decision and the curious procedural posture of the litigation, but asserted it was "required to assert its claim over against ESW" herein "for purposes of jury apportionment and application of the Uniform Contribution Among Tortfeasors Law…."[73] Otherwise, Daystar claims that it would "risk[] being precluded from having the jury allocate the percentage liability of ESW and the Court then reducing any subsequently entered verdict by the percentage liability allocated ESW, based upon the prior finding of liability and award of damages against ESW."[74] This is particularly critical to the other Defendants as ESW was the subcontractor who installed the faulty masonry work and, but for the Arbitration award and the Court's October 2015 ruling, would be in a position where significant liability could be found.

         Because Plaintiffs' claims against ESW were dismissed over three months before Daystar filed its Crossclaim against ESW, ESW argues Daystar's claims are "procedurally defective" and should be dismissed.[75] While ESW cites no rule or authority in support of this contention, the Court would think Superior Court Civil Rule 13(g) an appropriate starting point:

Cross-Claim Against Coparty. A pleading may state as a cross-claim any claim by one party against a coparty arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein, or relating to any property that is the subject matter of the original action. Such cross-claim may include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant.[76]

         Like its federal counterpart, Superior Court Civil Rule 13(g) allows a party to file cross claims against "co-parties."[77] In this regard, courts have held that "[a] cross-claim cannot be asserted against a party who was dismissed from the action previous to the assertion of the cross-claim."[78] That said, "dismissal of the original complaint as to one of the defendants named therein does not operate as a dismissal of a cross-claim filed against such defendant by a co-defendant."[79] In other words, where a Crossclaim is properly filed against a co-party, "[it] [will] not cease to be so because the party to whom they were addressed subsequently ceased to be a co-party."[80]

         There is no dispute that the Crossclaims filed against ESW prior to the October 28, 2015 dismissal ruling were "properly filed." The Crossclaims of Mr. Sills, and WHP against then-Defendant ESW fall squarely within Rule 13(g) and were thus unaffected by the Court's subsequent ruling dismissing Plaintiffs' claims against ESW. At the time Daystar filed its Crossclaims, however, ESW remained in the litigation solely as a Crossclaim-Defendant.[81] The issue then becomes whether Daystar and ESW could be considered "co-parties" for purposes of Rule 13(g).

         The term "co-party" is not defined in the Rules. As other courts have recognized, the term would clearly seem to exclude non-parties and opposing parties.[82] Indeed, as Rule 13(g) governs claims made among co-parties, Rule 14 addresses claims of a defending party against non-parties and Rule 13(a) provides for counterclaims against opposing parties.[83] While some courts have construed "co-party" as referring to a party of "like status, " others interpret the term more broadly to include "any party that is not an opposing party."[84]

         Ultimately, the Court finds the more broad interpretation of "co-party" appropriate under the circumstances of this case. ESW was undoubtedly still a party to the litigation at the time Daystar filed its Crossclaim and only from that point forward could the two parties be classified as formally opposing one another.[85] While the Court recognizes that Crossclaims are more commonly invoked among co-Defendants or co-Third Party Defendants, ESW has not raised any authority to persuade the Court to find that ESW and Daystar, as co-Crossclaim Defendants or as Defendant and Crossclaim Defendant, are not "co-parties" for purposes of Rule 13(g).[86]

         Nor is the Court convinced that dismissal on that basis would adhere to the requirement that the Delaware Superior Court Rules "be construed and administered to secure the just, speedy and inexpensive determination of every proceeding."[87] As Daystar points out, "the filing of a cross-claim is a prerequisite to the apportionment of liability between joint tort-feasors based upon relative degrees of fault."[88] Further, "the general policy behind allowing cross-claims is to avoid multiple suits and to encourage the determination of the entire controversy among the parties before the court with a minimum of procedural steps."[89] As a result, courts often interpret Rule 13(g) "liberally in order to settle as many related claims as possible in a single action."[90] Importantly, because ESW remained in the litigation and had not filed a Crossclaim against Daystar, the options of asserting any claim for indemnification and contribution as a counterclaim or in a third party complaint were simply unavailable to Daystar. Indeed, "[i]f a defending party cannot file a cross-claim against another party on the same side, but not at the same level, of an action, then the Rules are silent regarding how such a claim might be brought."[91]

         It appears granting ESW's request for dismissal of the Crossclaims as "procedurally defective" would result in multiple actions being pursued, create unnecessary procedural hurdles, and further complicate this already complex litigation. To facilitate this outcome would clearly "run[] contrary to the purposes of Rules 13 and 14, and the mandate of Rule 1"[92] and could lead to a verdict where fault is unfairly apportioned. As such, ESW's Motion to Dismiss Daystar's claims as procedurally barred is DENIED.

         B. Are the Crossclaims Against ESW Barred by Res Judicata?

         Next, ESW urges the Court to dismiss "any and all crossclaims" against it according to the doctrine of res judicata. Res judicata will bar a claim where the party raising the doctrine can show satisfaction of the following five-part test:

(1) the original court had jurisdiction over the subject matter and the parties; (2) the parties to the original action were the same as those parties, or in privity, in the case at bar; (3) the original cause of action or the issues decided was the same as the case at bar; (4) the issues in the prior action must have been decided adversely to the appellants in the case at bar; and (5) the decree in the prior action was a final decree.[93]

         The prior action upon which ESW relies is the 2012 Arbitration among ESW, Daystar, and WHP.[94] The 2012 Arbitration involved Daystar's counterclaim alleging negligence against ESW for the defective masonry work it completed on the Condominium. There, Daystar sought to recover the cost to correct, repair, and replace ESW's deficient work.

         In October 2015, this Court found res judicata precluded Plaintiffs' claim for negligence as against ESW as a result of the 2012 Arbitration. The Court reasoned:

Daystar and ESW consented to having the matter arbitrated and agreed to resolve all disputes and matters in controversy. The parties further agreed that the arbitration would be a final adjudication. … Plaintiffs are in privity with Daystar….Daystar pursued a claim against ESW for negligent workmanship in the construction of the stone veneer of the Condominium which is the same complaint Plaintiffs have with ESW.[95]

         According to ESW, the Court's res judicata reasoning applies with even greater force to Daystar's Crossclaims because Daystar was a party to the 2012 Arbitration.[96] ESW contends application of the doctrine is further warranted because the Crossclaims and the 2012 Arbitration "both involve" Daystar's assertions of "negligence/negligent workmanship and breach of contract…against ESW for its masonry work at the Condominium" and the 2012 Arbitration was decided adversely to ESW.[97]

         In the present litigation, Daystar asserts two Crossclaims against ESW. In the first, [98] Daystar seeks contribution and indemnification, "as applicable and allowed by law, " from ESW "who has already been determined to be liable for the harms alleged by Plaintiffs…."[99] Daystar demands that, should Plaintiffs prevail on their negligence claim, "liability be apportioned against all Defendants, including Cross-Claim Defendant ESW[, ]…for contribution" according to "each co-defendant's pro rata share" of fault and that any verdict entered be reduced "by the percentage negligence the jury finds attributable to the negligent conduct of ESW."[100] Daystar's second claim seeks contractual indemnification from ESW based on the ESW Subcontract.[101] The Subcontract obligated ESW to indemnify and hold harmless Daystar, "[t]o the fullest extent permitted by law, " "from and against claims, damages, lawsuits, losses and expenses, including but not limited to attorneys' fees" arising from ESW's work on the Condominium "but only to the extent caused by [ESW's] negligent acts or omissions…." Daystar claims it has and will continue to incur costs and attorney's fees in connection with this litigation and that ESW has not, to date, honored its obligations under the Subcontract.[102]

         In response to ESW's Motion to Dismiss, Daystar argues res judicata is inapplicable because neither indemnity nor contribution were litigated or adjudicated in the 2012 Arbitration. In support of its position, Daystar cites LaPoint v. AmerisourceBergen Corp. In LaPoint, the Delaware Supreme Court held that res judicata could not bar a claim for indemnification where the issue of indemnification had not been raised or "adjudicated" in the prior Chancery action.[103] The Court recognized that "[c]ontractual rights that are triggered and pursued after the initial action is filed…are not barred by res judicata because a prior judgment 'cannot be given the effect of extinguishing claims which did not even then exist.'"[104] The LaPoint Court emphasized that the record in that case "reflect[ed] that the events necessary to support an indemnification claim had not occurred before the conclusion of the proceedings in the Chancery Action" and "[t]hose facts were not, and could not have been, known to the plaintiffs in the second action at the time of the first action."[105]

         Here, like in LaPoint, there is simply no indication that Daystar's entitlement to indemnification or contribution had been raised in connection with the 2012 Arbitration. Nor could the issues of contribution and indemnification have been addressed at the 2012 Arbitration, given the apparent absence of third-party claims against Daystar at that time. Rather, the 2012 Arbitration was intended solely to resolve the parties' direct claims against one another for money damages. Plaintiffs did not discover the allegedly defective construction until 2014 and did not commence the instant litigation until January 2015. It was not until this point in time that Daystar's claims for contribution and indemnification first arose. Like the Chancery action in La Point, the Order issued in connection with the 2012 Arbitration will not "be given the effect of extinguishing claims which did not even then exist."[106] ESW's Motion to Dismiss Daystar's Crossclaims based on the doctrine res judicata is therefore DENIED. The Court will also deny ESW's request for attorney's fees and costs.

         Finally, ESW's Motion is denied to the extent it requests dismissal of crossclaims filed by other Defendants. Throughout its briefs, ESW argues that res judicata bars "any and all crossclaims" against it because the "remaining Defendants…are 'in privity' with Plaintiff[s]" and all share "the same apparent interest: to find ESW was negligent, and have ESW pay its fair share of the loss."[107] While the Court suspects that this assertion is flawed for a number of reasons, it is sufficient to deny the Motion on the same basis articulated above: the Defendants' contribution and indemnification claims against ESW were not, nor could have been, adjudicated in the 2012 Arbitration.


         The Court will grant summary judgment pursuant to Delaware Superior Court Civil Rule 56 "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."[108] In reviewing a Rule 56 motion, the Court must consider the facts in a light most favorable to the non-moving party.[109] The Court will deny summary judgment where the record before it "reasonably indicates that a material fact is in dispute or 'if it seems desirable to inquire more thoroughly into the facts in order to clarify the application of law to the circumstances.'"[110]

         A. Daystar Sills, Inc. & David Sills

         The claims that remain against Daystar and Mr. Sills include Count I (Negligence) and Count VI (Negligent Repair). Daystar and Mr. Sills (in his capacity for Daystar) contend they are entitled to summary judgment because: (1) all claims against Mr. Sills, individually, must fail because he was acting at all relevant times in his corporate capacity and, alternatively, because Plaintiffs have not produced expert testimony specific to his standard of care; (2) Count I of the Complaint (Negligence) is barred by the statute of limitations; and (3) WHCA lacks standing because it filed and pursued this litigation in a manner inconsistent with the Association's Code of Regulations. Defendant WHP has filed a Notice of Adoption with respect to the lack of standing argument.[111]

         1. David Sills

         Mr. Sills is represented by two different sets of counsel in this case. One law firm is representing him in conjunction with Daystar and the other is defending him in his capacity as co-manager of WHP.[112] As a result, two separate Motions for Summary Judgment have been filed implicating Mr. Sills. Both Motions assert essentially the same two grounds in support of summary judgment: (1) Mr. Sills cannot be held personally liable for the alleged negligence of WHP and Daystar; and (2) Plaintiffs have failed to identify an expert specific to Mr. Sills' individual negligence. The Court will address these issues, as they relate to both entities, collectively in turn.

         a. Personal liability

         Generally, an officer cannot be held liable for the actions of a corporation merely by virtue of his or her corporate position. However, under the "personal participation doctrine, " an officer who "directly participates in…tortious conduct" may face personal liability even if he or she was "acting on behalf of the corporation."[113] The doctrine aims to prevent corporate officers from escaping tort liability simply because the officer's actions were taken "in the name of the corporation."[114] For an officer-defendant to be held liable, "it must be for acts of their own, and not merely for acts or omissions of the Corporation."[115] Allegations of "nonfeasance or the omission of an act which a person ought to do" are insufficient.[116] Rather, the officer must be alleged to have acted affirmatively by "directing, ordering, ratifying, approving or consenting to the tort" to face personal liability.[117]

         Here, it is clear Mr. Sills not only possessed significant control over but was in fact Daystar, WHP, and the Washington House project. Daystar is wholly- owned by Mr. Sills and he serves as President of the construction company. When asked about the management of Daystar, Mr. Sills responded that he "pretty much run[s] the whole thing."[118] Mr. Sills also formed WHP for the sale and management of the project.[119] It would appear Mr. Sills used his control over these entities to cause WHP to hire Daystar as general contractor for the Washington House project, to name himself the sole Council member during the Developer Control Period, and to direct all repair and property management work to Daystar. All major decisions relating to the construction of the Condominium were made by Mr. Sills, and he signed all contracts, subcontracts, and payment applications on behalf of Daystar and WHP.

         While these facts alone are incapable of establishing liability under the personal participation doctrine, Plaintiffs have alleged sufficient facts supporting that Mr. Sills personally "directed, ordered, ratified, approved, or consented to" Daystar's negligent construction and repair of the Condominium. Significantly, Mr. Sills approved the decision to direct AC's modification of its design plans for the exterior façade from full brick to thin brick veneer. Mr. Sills also apparently participated in selecting the thin brick product ESW ultimately installed on the building's exterior. While it is unclear whether Mr. Sills knew or should have known the risks of using the thin brick system prior to directing the change to AC's drawings, [120] he was aware of AC's concerns with the veneer by February 2008 at the latest. At that time, Mr. Cihlar explained that AC had "continually expressed [its] concern…regarding the appropriateness of exterior thin brick" on a building like the Washington House, which is "subject to freeze/thaw in the North East climate."[121] AC's email emphasized the lack of support and guidance for utilizing thin brick assembly in such a climate, and advised that Daystar carefully monitor the installation of the veneer to ensure "the ability of movement, flashing, and drainage of the system."[122] Despite warnings, Mr. Sills directed that the project proceed and apparently even attempted to expedite ESW's installation of the veneer.[123] These facts, if proven, are exactly the kind that should and do prevent individual officers from escaping liability and clearly distinguish the instant case from those in which Delaware Courts have refused to impose personal liability.[124]The Motion for Summary Judgment filed on behalf of Mr. Sills in his capacity for Daystar will be DENIED.

         With regard to WHP, Plaintiffs also argue Mr. Sills should be held personally liable for WHP's negligence in selling units to purchasers without disclosing known defects and/or failing to adequately remedy the defects. These allegations, without more, are insufficient to invoke the personal participation doctrine. Personal liability cannot be assessed absent "active negligence" and a corporate agent's knowledge of defects and failure to warn or correct those defects will generally be considered acts of nonfeasance. [125] That said, the Court is not in a position to grant Mr. Sills' Motion as it finds that there remain disputed issues of facts that prevent summary judgment. For example, there is evidence suggesting that Mr. Sills actively directed that disclosures of defects not be provided to purchasers. It appears Mr. Sills made other questionable decisions based upon the financial pressures that were occurring with the project. This evidence may either directly or circumstantially suggest this was a deliberate and conscious decision by Mr. Sills and WHP to mislead others and that this conduct was approved and ratified by Mr. Sills. Therefore, Mr. Sills' liability in this regard will have to await resolution at trial. As such, the Motion as to Mr. Sills and WHP will also be DENIED.

         b. Expert testimony

         General negligence claims usually do not require expert testimony.[126]Where professionals are involved, however, the applicable standard of care must typically be established through the use of an expert.[127] The exception to this rule is when a lay person would be as competent as an expert to judge whether or not the particular conduct created an unreasonable risk.[128] "For example, the fact that people cut corners is commonly known and does not require expert testimony in a faulty landscaping design case."[129]

         In this case, Plaintiffs have identified two experts, each of whom detail the construction and design defects and opine as to WHP, AC, and Daystar's negligence as the project developer, architect, and contractor. There does not appear to be any testimony pertaining to Mr. Sills, individually. According to Defendants, Plaintiffs were required to engage an expert to opine specifically as to his standard of care and summary judgment is warranted as a result of their failure to proffer such testimony. Plaintiffs respond that their claims against Daystar and WHP is amply supported by expert testimony, and that, because their claim against Mr. Sills is for general negligence, rather than professional negligence, no further expert testimony is required.[130]

         The Court is confident that no further expert testimony is required as to Mr. Sills. Any factual information potentially falling outside the common knowledge of the jury would seem to be adequately addressed by the expert testimony as to general construction and oversight of the project, especially ...

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