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Black Diamond Hope House, Inc. v. U & I Investments, LLC

Superior Court of Delaware, Kent

May 22, 2018

U & I INVESTMENTS, LLC and USMAN SANDHU, Defendants, and U & I INVESTMENTS, LLC., and USMAN SANDHU, Defendants/Third-Party Plaintiffs,

          Submitted: April 27, 2018

          Charles J. Brown, III, Esquire, Gellert, Scali, Busenkell & Brown, LLC, Wilmington, Delaware, Attorneys for the Plaintiffs.

          Robert D. Cecil, Jr., Esquire, Tybout, Redfearn & Pell, Wilmington, Delaware, Attorney for the Defendants & Third Party Plaintiffs.

          Michael I. Silverman, Esquire, Silverman, McDonald & Friedman, Wilmington, Delaware, Paul Cottrell, Esquire, & Patrick McGrory, Esquire, Tighe & Cottrell, P.A., Wilmington, Delaware, Attorneys for Third Party Defendants.



         This property owner's suit alleges construction defects in a residential group home for adults with cerebral palsy. Plaintiff Black Diamond Hope House, Inc., and Dianne Bingham (hereinafter collectively "Black Diamond") assert that the general contractor, U & I Investments LLC (hereinafter "U & I"), is liable for negligence, breach of contract, negligent misrepresentation, fraud, violations of the Consumer Fraud Act, and breach of an implied warranty of workmanlike construction. The parties agree that 10 Del.C. § 8106's three-year statute of limitations applies to all counts. They disagree, however, as to the accrual date of the claims.

         For the reasons outlined herein, under well-settled rules of contract interpretation, the construction contract between the parties defined the accrual date of Black Diamond's causes of action to be no later than the point when persons first occupied the dwelling. Black Diamond's claims are barred by the statute of limitations because it did not file suit within three years of that date, as required by the parties' contract. Accordingly, U & I's motion for summary judgment is


         I. Factual and Procedural Background

         On June 18, 2008, Black Diamond contracted with U & I to construct a six-bedroom group home for adults with cerebral palsy (hereinafter "the Contract"). On February 18, 2009, a certificate of occupancy was issued for the property. Residents began occupying the property on April 6, 2009.

         Black Diamond asserts that U & I performed defective work in several ways. The allegedly substandard work included significant leaks, deviations from the architectural drawings, and inadequately constructed floors that caused pooling of water in certain areas. In its complaint, Black Diamond asserts it discovered these defects on September 17, 2013. Thereafter, on December 31, 2015, Black Diamond filed its complaint seeking damages.

         U & I moves for summary judgment alleging that the accrual clause in the Contract controls. Specifically, it alleges that a document incorporated into the contract defines the accrual of claims to begin on the substantial completion date of the project. Given Black Diamond's filing delay because it did not discover the defects sooner, U & I seeks summary judgment based on an expired statute of limitations.

         II. Standard of Review

         Summary judgment may only be granted if the record shows that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law.[2] The Court must view the evidence in the light most favorable to the non- moving party.[3] The burden of proof is initially on the moving party.[4] However, if the movant meets his or her initial burden, then the burden shifts to the non-moving party to demonstrate the existence of material issues of fact.[5] The non-movant's evidence of material facts in dispute must be sufficient to withstand a motion for judgment as a matter of law and must be sufficient to support the verdict of a rational jury.[6]

         In this case, the parties advocate competing interpretations of the contract. Under standard rules of contract interpretation, the Court must determine the parties' intent from the language of the contract.[7] Where there is no ambiguity, a contract is interpreted according to the "ordinary and usual meaning" of its terms.[8]

         III. Positions of the Parties

         Here, a three year statute of limitations applies to all claims asserted in the complaint.[9] In its complaint, Black Diamond asserts that it did not discover the defects until September 17, 2013. Accordingly, it relies upon the time of discovery rule and asserts that the statute of limitations did not expire until September 17, 2016.[10] U & I counters that, pursuant to the Contract, the statute of limitations ran from the project's "substantial completion date" which was no later than April 6, 2009. Consequently, U & I argues that Black Diamond's complaint became time barred on April 6, 2012, more than three years before Black Diamond filed it.

          At the outset, the parties do not dispute that under normal circumstances the date of discovery rule would apply and set the accrual date. Also, both parties acknowledge that contractual provisions can modify aspects of the statute of limitations as to contracting parties. Accordingly, the dispute in this case focuses solely on the terms of the contract between Black Diamond and U & I.[11]

         In examining the Contract, the parties agree that it incorporates by reference a version of the American Institute of Architects Document A201. [12] They disagree, however, regarding which version the Contract incorporated. The two possible versions include one that negates the time of discovery rule and one that preserves it.

         IV. The Contract and the Two Competing Versions of the Incorporated AIA Document

         Article 1, Section A, of the Contract provides that "[t]he Contract between the parties … consists of … the current edition of AIA Document A201." The parties executed the Contract on June 18, 2008. Consequently, the Court finds for purposes of its summary judgment analysis that the "current edition" of A201 at the time of contracting was the 2007 version of A201.

         Section B of Article 1 of the Contract, further provides:

[t]he Contractor shall furnish all the materials and perform all of the work … shown on, and in accordance with, the [d]rawings and [s]pecifications entitled Black Diamond Hope House HUD Project No. 032-HD033, Dated Feb. 21, 2008." [13]

         An addendum entitled "Black Diamond Hope House HUD Project No. 32-HD03, " is attached to the Contract.[14] In that referenced document, the 1997 version of A201 is in turn specifically ...

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