Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-09-01453/USCOURTS-ca4-09-01453-0/pdf.json

Nature of Suit Code: 443
Nature of Suit: Civil Rights Accommodations
Cause of Action: 

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PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

EQUAL RIGHTS CENTER, a not for 

profit corporation; AMERICAN

ASSOCIATION OF PEOPLE WITH

DISABILITIES, a not for profit

corporation; UNITED SPINAL

ASSOCIATION, a not for profit

corporation,

Plaintiffs,

and

ARCHSTONE MULTIFAMILY SERIES I

TRUST; ARCHSTONE,

Defendants-Appellants,

v.  No. 09-1453

NILES BOLTON ASSOCIATES, a

Georgia Corporation,

Defendant-Appellee,

and

CLARK REALTY BUILDERS, LLC, a

Maryland Corporation; VIKA

INCORPORATED, a Maryland

Corporation; MEEKS PARTNERS,

f/k/a Kaufman Meeks and

Partners, a Texas partnership;

NATIONAL MULTI HOUSING COUNCIL,

Defendants. 

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Appeal from the United States District Court

for the District of Maryland, at Baltimore.

Andre M. Davis, District Judge.

(1:04-cv-03975-AMD)

Argued: January 27, 2010

Decided: April 19, 2010

Before NIEMEYER, KING, and SHEDD, Circuit Judges.

Affirmed by published opinion. Judge Shedd wrote the opinion, in which Judge Niemeyer and Judge King joined.

COUNSEL

ARGUED: David M. Gossett, MAYER BROWN, LLP,

Washington, D.C., for Appellants. Charles E. Rogers,

SMITH, CURRIE & HANCOCK, LLP, Atlanta, Georgia, for

Appellee. ON BRIEF: Andrew A. Nicely, Gary A. Winters,

MAYER BROWN, LLP, Washington, D.C., for Appellants.

Russell S. Drazin, JACKSON & CAMPBELL, PC, Washington, D.C., for Appellee.

SHEDD, Circuit Judge:

Archstone Multifamily Series I Trust and Archstone (collectively referred to as "Archstone") appeal an order of the

district court granting summary judgment in favor of Niles

Bolton Associates, Inc. ("Niles Bolton"). Archstone also

appeals the district court’s denial of its motion to amend its

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complaint to include a claim for contribution. In granting

summary judgment, the court concluded that Archstone’s

state-law claims are preempted by the Fair Housing Act

("FHA"), 42 U.S.C. § § 3601 et seq., and the Americans with

Disabilities Act ("ADA"), 42 U.S.C. § § 12101 et seq.; in

denying the motion to amend, the court concluded that allowing Archstone to amend its complaint would be prejudicial to

Niles Bolton and, in any event, futile. For the following reasons, we affirm.

I.

Archstone develops and owns multi-family housing projects throughout the United States. Archstone hired Niles Bolton as its architect to design a number of multi-family

apartment buildings on the East Coast in the 1990s. In 2004,

the Equal Rights Center and several other disability advocacy

groups ("Equal Rights plaintiffs") filed this lawsuit against

Archstone, Niles Bolton, various contractors, and other architects used by Archstone, alleging that these entities failed to

design and construct 71 apartment buildings so that they

would be accessible to persons with disabilities in compliance

with the FHA and ADA.

Archstone and the Equal Rights plaintiffs entered into a

Consent Decree to settle the lawsuit covering the 71 apartment communities, 15 of which were designed by Niles Bolton. Under the settlement, Archstone was required, inter alia,

to retrofit the 71 properties to make them compliant with the

FHA and ADA and pay the plaintiffs $1.4 million to cover

damages, attorneys’ fees, and expenses. Archstone has retrofitted a majority of the 71 properties and is in the process of

retrofitting the remainder. According to Archstone, the costs

of the retrofits at the sites designed by Niles Bolton exceed

$2.5 million. Niles Bolton was not a party to the settlement

between Archstone and the Equal Rights plaintiffs. However,

Niles Bolton later entered into a separate Consent Decree with

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the Equal Rights plaintiffs that did not include any admission

of liability. 

Following settlement with the Equal Rights plaintiffs,

Archstone filed a cross-claim against Niles Bolton asserting

four state-law causes of action: (1) express indemnity; (2)

implied indemnity; (3) breach of contract; and (4) professional negligence. The express indemnity claim focuses on

clauses in the contracts between Niles Bolton and Archstone

in which Niles Bolton promised to "make good any defects in

its services resulting from the failure of the Architect or any

of its Consultants to perform their respective services in a

manner that is commensurate with the professional standard

of care" and to "indemnify" Archstone "from and against all

losses, claims, liabilities, injuries, damages and expenses,

including attorneys’ fees and litigation costs . . . arising out

of or resulting from or in connection with, the performance,

or failure to perform, by the Architect or its employees." J.A.

37, 51-52. Niles Bolton and Archstone also agreed that "designs or specifications furnished by the Architect found to be

negligent will be promptly corrected by the Architect at no

cost to the Owner, and the Architect will be responsible to the

Owner for all damages, if any, resulting from such defective

designs or specifications." J.A. 148. They further agreed that

"[a]ny designs or specifications furnished by the Architect

which contain errors in coordination of details or dimensional

errors will be promptly corrected by the Architect at no cost

to the Owner". Id.

Archstone’s implied indemnity claim rests on the principle

that Niles Bolton "bears a substantially greater share of

responsibility for any failure of the Properties to be designed

according to the requirements of the FHA and the ADA,

given Niles Bolton’s superior knowledge, skill and involvement in the design of the properties." J.A. 369. The breach of

contract claim, as alleged by Archstone, arises because Niles

Bolton breached the warranties under its contracts with Archstone by failing to design properties that are in compliance

4 EQUAL RIGHTS CENTER v. NILES BOLTON

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with the FHA and ADA. Finally, Archstone’s professional

negligence claim results from Niles Bolton’s alleged "failure

to exercise the level of professional skill and care required of

an architect" to design the properties in question in a manner

that conforms to the requirements of the FHA and ADA. J.A.

370. For these state-law causes of action, Archstone sought

(1) to recover damages, attorney’s fees and costs paid by

Archstone to the Equal Rights plaintiffs, (2) to recover costs

it incurred retrofitting those portions of the Properties improperly designed by Niles Bolton, and (3) to be indemnified for

costs that Archstone will incur to modify the remainder of the

properties designed by Niles Bolton that have yet to be retrofitted. 

After Archstone filed its cross-claim, the parties conducted

discovery for approximately three years. During the course of

discovery, Niles Bolton sought to compel Archstone to disclose evidence regarding Archstone’s allocation of damages

among itself, Niles Bolton, and any other party. Archstone

resisted these discovery requests by arguing that it was seeking damages for the 15 of 71 properties that Niles Bolton

designed and all related settlement amounts, attorneys’ fees,

and costs paid to the Equal Rights plaintiffs, as well as the

costs of retrofitting the 15 properties designed by Niles Bolton. The district court affirmed the magistrate judge’s grant of

a protective order to Archstone because the allocation of damages was irrelevant to a claim for indemnity. The district court

further noted that "there is no suggestion in [the magistrate’s

discovery rulings] that the court perceived there to be a contribution claim presented by Archstone." Equal Rights Center v.

Archstone Smith Trust, et al., 603 F.Supp.2d 814, 819 (D.Md.

2009). 

Three weeks after the close of discovery and on the eve of

the deadline for dispositive motions, Archstone filed a motion

for leave to amend its cross-claim to include a claim for contribution. Under the amended complaint, Archstone sought to

recover contribution on the same grounds as its original

EQUAL RIGHTS CENTER v. NILES BOLTON 5

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claims. In a memorandum order, the district court denied the

motion for leave to amend on the ground that it would result

in prejudice to Niles Bolton. According to the court, because

a claim for contribution requires an analysis of the relative

fault of the parties while a claim for indemnification does not,

amending the complaint to add this claim would require additional discovery of the type previously rejected by the court

because of its view that Archstone was seeking only indemnification rather than contribution. Because Archstone did not

move for leave to amend the complaint until after three years

of discovery and on the eve of dispositive motions, the court

held that the amendment would prejudice Niles Bolton. Further, the court held that even if there were no prejudice, a

state-law claim for contribution would be futile because it

would be preempted under federal law. 

The district court also granted summary judgment in favor

of Niles Bolton. The court reasoned that although styled as

state-law claims for relief, Archstone’s causes of action were

indemnity and de facto indemnity claims for violations of the

FHA and ADA. Because no right to indemnification exists

under these laws, and because allowing indemnification on

the state-law claims asserted by Archstone would be antithetical to the purposes of the FHA and ADA, the court held that

federal law preempted these claims under the doctrine of conflict, or obstacle, preemption. 

Archstone timely appealed the grant of summary judgment

and the denial of its motion for leave to amend. We address

each issue in turn.

II.

A.

Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits

show that there is no genuine issue as to any material fact and

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that the movant is entitled to judgment as a matter of law."

Fed. R. Civ. P. 56(c). We review the district court’s order

granting summary judgment de novo. Jennings v. U.N.C., 482

F.3d 686, 694 (4th Cir. 2007) (en banc). Likewise, we also

review the district court’s preemption determination de novo.

AES Sparrow Point LNG, LLC v. Smith, 527 F.3d 120, 125

(4th Cir. 2008). 

Archstone argues that the district court erred because its

state-law claims are not antithetical to Congress’ purpose in

enacting the FHA and ADA. Archstone claims that no conflict

or obstacle exists because its cross-claim does not impose

requirements that make compliance with federal law impossible. Further, it claims that it only seeks partial indemnity

because it seeks to recover only the damages caused by Niles

Bolton. Archstone also contends that the court erred in finding

its breach of contract and negligence claims are preempted as

de facto claims for indemnification. Archstone asserts that its

claims are not derivative because it is not attempting to

enforce the duties that Niles Bolton owed to the Equal Rights

plaintiffs, but rather is seeking to enforce the duties Niles Bolton owed to Archstone. Having conducted a de novo review

of the record, we hold the district court did not err in finding

these claims preempted. 

B.

Obstacle preemption applies "where state law ‘stands as an

obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’" Freightliner Corp. v.

Myrick, 514 U.S. 280, 287 (1995) (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). The Supreme Court has found

state-law claims preempted under obstacle preemption where

a state-law claim "interferes with the methods by which the

federal statute was designed to reach [its] goal." Gade v. Nat’l

Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 103 (1992) (internal

quotation marks and citation omitted). We have explained that

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[a] decision about [obstacle preemption] requires the

court independently to consider national interests

and their putative conflict with state interests. . . .

[P]reemption under [an obstacle preemption] theory

is more an exercise of policy choices by a court than

strict statutory construction. 

Abbot v. Am. Cyanamid Co., 844 F.2d 1108, 1113 (4th Cir.

1988). Obstacle preemption can apply not only to positive

enactments of state law but also to state tort claims. See, e.g.,

Geier v. Am. Honda Motor Co., 529 U.S. 861 (2000) (holding

that negligence action against a manufacturer was preempted

because it conflicted with a federal agency standard). 

In finding Archstone’s state-law claims preempted, the district court correctly used the guidance we set forth in Baker,

Watts & Co. v. Miles & Stockbridge, 876 F.2d 1101 (4th Cir.

1989) (en banc). In Baker, Watts & Co., we considered

whether the Securities Exchange Act of 1933 preempted a

state-law claim for indemnity. In holding the indemnification

claim is preempted, we analyzed whether the claim represented an obstacle to the regulatory goals of the federal law.

We explained that "Congress ha[d] not provided a right to

indemnification in the federal securities laws under any circumstances." Id. at 1108. Furthermore, we emphasized the

total nature of a claim for indemnity, concluding that "it

would run counter to the basic policy of the federal securities

laws to allow a securities wrongdoer . . . to shift its entire

responsibility for federal violations on the basis of a collateral

state action for indemnification." Id. (emphasis added). As we

explained, "[t]he goal of the 1933 and 1934 Acts is preventive

as well as remedial, and ‘denying indemnification encourages

the reasonable care required by the federal securities provisions.’" Id. (internal citations omitted). 

We believe this reasoning applies with equal force to an

indemnity claim brought under the FHA and ADA. To begin,

as with the securities laws at issue in Baker, Watts & Co., the

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goals of the FHA and ADA are "regulatory rather than compensatory." The principal purpose of the ADA is to "(1) . . .

provide a clear and comprehensive national mandate for the

elimination of discrimination against individuals with disabilities [and] (2) to provide clear, strong, consistent, enforceable

standards addressing discrimination against individuals with

disabilities." 42 U.S.C. § 12101(b). The primary purpose of

the FHA is "to provide . . . for fair housing throughout the

United States." 42 U.S.C. § 3601. Furthermore, compliance

with the ADA and FHA, as conceded by Archstone, is "nondelegable" in that an owner cannot "insulate himself from liability for . . . discrimination in regard to living premises

owned by him and managed for his benefit merely by relinquishing the responsibility for preventing such discrimination

to another party." See Walker v. Crigler, 976 F.2d 900, 904

(4th Cir. 1992). Under these principles, it is clear that, like the

securities laws at issue in Baker, Watts & Co., the regulatory

purposes of the FHA and ADA would be undermined by

allowing a claim for indemnity. 

Here, Archstone sought to allocate the full risk of loss to

Niles Bolton for the apartment buildings at issue. Allowing an

owner to completely insulate itself from liability for an ADA

or FHA violation through contract diminishes its incentive to

ensure compliance with discrimination laws. If a developer of

apartment housing, who concededly has a non-delegable duty

to comply with the ADA and FHA, can be indemnified under

state law for its ADA and FHA violations, then the developer

will not be accountable for discriminatory practices in building apartment housing. Such a result is antithetical to the purposes of the FHA and ADA. Accordingly, we find

Archstone’s indemnification claims are preempted.1

1Archstone argues that because 28 C.F.R. § 36.201(b) permits "allocation of responsibility for complying with the obligations" of the ADA,

indemnity is not preempted. We find this argument unpersuasive. The history of this regulation demonstrates that this allocation provision is unique

to the landlord-tenant relationship and does not impact the relationships

between architects, builders, and other parties. See Nondiscrimination on

the Basis of Disability by Public Accommodations and in Commercial

Facilities, 56 Fed. Reg. 35544, 35555-56 (July 26, 1991). 

EQUAL RIGHTS CENTER v. NILES BOLTON 9

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We also hold that the district court correctly held Archstone’s state-law breach of contract and negligence claims to

be de facto indemnification claims and, thus, preempted. Our

conclusion is buttressed by Archstone’s argument in its brief,

and repeated at oral argument, that it seeks — regardless of

how it labels its claim — to recover 100% of the losses at the

15 sites where Niles Bolton provided architectural services.

Such a claim for relief is a de facto claim for indemnification

derived from violations of these federal statutes. Although

Archstone suggests that these claims are not derivative

because it only seeks to enforce duties Niles Bolton owes to

Archstone, we find that this argument fails because Archstone

really seeks to have Niles Bolton pay all damages that arise

under the FHA and ADA at these sites. 

Therefore, we agree with the district court that these de

facto indemnification state-law claims by Archstone are preempted under federal law. See Baker, Watts & Co., 876 F.2d

at 1108 (holding that plaintiff’s pendent common law actions

are preempted to the extent that they are de facto claims for

indemnification). Accordingly, we affirm the district court’s

grant of summary judgment in favor of Niles Bolton. 

III.

We must next decide whether the district court erred by

denying Archstone leave to amend its complaint to include a

claim for contribution. We review the district court’s denial

of a motion to amend a complaint under the deferential abuse

of discretion standard. See Glaser v. Enzo Biochem, Inc., 464

F.3d 474, 476 (4th Cir. 2006). Although leave to amend

should be "freely give[n] when justice so requires," Fed. R.

Civ. P. 15(a)(2), a district court has discretion to deny a

motion to amend a complaint, so long as it does not outright

refuse "to grant the leave without any justifying reason."

Foman v. Davis, 371 U.S. 178, 182 (1962). A district court

may deny a motion to amend when the amendment would be

prejudicial to the opposing party, the moving party has acted

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in bad faith, or the amendment would be futile. See Laber v.

Harvey, 438 F.3d 404, 426 (4th Cir. 2006) (en banc). Here,

the district court gave two bases for denying Archstone’s

motion to amend — prejudice and futility. Because we

believe the district court did not abuse its discretion on at least

one of these bases, we affirm.

As to the first basis — prejudice — the district court held

that the addition of a contribution claim after the close of a

three-year long discovery process and on the eve of the deadline for dispositive motions would have required it to reopen

discovery and thereby prejudice Niles Bolton. See Equal

Rights Center, 603 F.Supp.2d at 820. In finding that the addition of a claim for contribution would change the character of

litigation, the court stated: 

Niles Bolton correctly infers from the proposed

claim for contribution that Archstone is essentially

admitting liability for some of the violations at the

Niles Bolton-designed properties Archstone developed and operates. This admission, according to

Niles Bolton, would require further discovery into

the nature of each and every alleged violation (under

myriad states’ laws) to which Archstone is impliedly

conceding liability.

In other words, as the case had been framed in the

more than three years before the motion to amend

was filed, Niles Bolton was alleged, by virtue of the

claim for indemnification, to be solely liable under

the FHA and the ADA for all of the violations in the

complexes it designed. . . . To permit an eleventh

hour change in litigation theory to one of partial liability would mean that Niles Bolton has been prejudiced in its ability to assess rationally its exposure to

a damages award in favor of Archstone, as its litigation plan did not contemplate such an atomistic battlefield. Furthermore, Niles Bolton’s settlement

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posture would of necessity have been quite different

three years ago (before the expenditure of large sums

for attorney’s fees and litigation expenses) had it

known that it was not facing a liability in excess of

15/71 of $1.5 million plus some share of the cost of

retrofitting, but something considerably below that

amount. . . .

Unquestionably, any reasonable litigant in Niles Bolton’s position would have sought specific discovery

into how Archstone believed it appropriate to allocate fault for the violations alleged by Plaintiffs, e.g.,

was Niles Bolton 25% at fault; 35%; 75%? Plainly,

in the face of a claim solely for indemnification, no

litigant would have been motivated to undertake

such discovery, and Niles Bolton has not done so.

Indeed, Niles Bolton attempted in some ways to

obtain certain discovery that, indisputably, would

have been relevant to a contribution claim but not to

an indemnity claim. Archstone resisted such discovery and both Magistrate Judge Gesner (who managed discovery) and I sustained Archstone’s

objections, each of us on the understanding that

Archstone was pursuing indemnity. 

Id. at 818-819 (emphasis in original). 

We hold that the district court did not abuse its discretion

in finding the proposed amendment would be unduly prejudicial to Niles Bolton. We find compelling the court’s analysis

that the amendment — coming so belatedly — would change

the nature of the litigation and, would therefore, prejudice

Niles Bolton.2See Deasy v. Hill, 833 F.2d 38, 42 (4th Cir.

2We need not reach the district court’s futility analysis because we find

the district court’s prejudice analysis is a sufficient basis to affirm the

denial of the motion to amend. Accordingly, we do not reach the question

of whether a state-law claim for contribution is preempted under federal

law. 

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1987) (noting that "[b]elated claims which change the character of litigation are not favored").3

Archstone argues on appeal that its proposed amendment

would not prejudice Niles Bolton because it would not change

the character of the litigation. Specifically, Archstone argues

that it seeks the same relief that it has sought throughout the

litigation and no further discovery would be needed — hence,

no prejudice would result for Niles Bolton. See, e.g., Appellant’s Br. 50 (arguing that it "seeks the same relief under both

its indemnity and contribution theories"). Indeed, at oral argument, Archstone conceded that its contribution claim would

seek to have Niles Bolton cover 100% of the damages at the

15 properties in question. Archstone’s position demonstrates

a fundamental misunderstanding of the difference between

contribution and indemnification. See Baker, Watts & Co.,

876 F.2d at 1103 (noting that "[i]ndemnification, of course,

involves shifting the entire loss from one wrongdoer to

another; contribution requires each wrongdoer to pay his proportionate — or pro rata — share of the adverse judgment").

As presented on appeal, the claim which Archstone presents

in its amended complaint is a de facto indemnification claim,

and such a claim is preempted under federal law. Therefore,

allowing Archstone to amend under these circumstances to

include a so-called contribution claim is, in any event, futile.

3We have repeatedly affirmed denials of motions to amend which

change the character of the litigation late in the proceedings. See Smith v.

Angelone, 111 F.3d 1126, 1135 (4th Cir. 1997) (holding that given the

delay in amending, the late hour of the motion to amend, and the burdens

it would impose on the opposing party, the district court did not abuse its

discretion in denying the motion to amend); see also Deasy, 833 F.2d at

40 (affirming the district court’s discretion to deny the motion to amend

because of the undue delay and prejudice caused to the opposing party);

Barnes Group, Inc. v. C&C Products, Inc., 716 F.2d 1023, 1035 n. 35 (4th

Cir. 1983) (affirming the district court’s denial of defendant’s motion to

amend). 

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Accordingly, we affirm the district court’s denial of the

motion to amend.4

IV.

For the foregoing reasons, we affirm both the district

court’s grant of summary judgment in favor of Niles Bolton

and its denial of Archstone’s motion to amend its complaint.

AFFIRMED

4At oral argument, there was discussion concerning whether the district

court abused its discretion in denying this amendment because the original

complaint included the word "contribution" in one of the counts. However,

any such argument has been waived because it was not raised in Archstone’s opening brief. See United States v. Jones, 308 F.3d 425, 427 n.1

(4th Cir. 2002) (holding that an argument not raised in the opening brief

is waived). 

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