Court Opinion

ID: 205826
Source: CourtListenerOpinion
Date Created: 2011-03-02 20:35:16+00
Date Added: 2024-06-11T17:27:49.648584
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                                No. 10-1182

NORTH   AMERICAN     PRECAST,     INCORPORATED;      G&G   BUILDERS,
INCORPORATED,

                Plaintiffs - Appellants,

           v.

GENERAL   CASUALTY    COMPANY      OF   WISCONSIN,     a   Wisconsin
corporation,

                Defendant – Appellee.

Appeal from the United States District Court for the Southern
District of West Virginia, at Huntington.  John T. Copenhaver,
Jr., District Judge. (3:04-cv-01307)

Argued:   December 8, 2010                    Decided:     March 2, 2011

Before Sandra Day O’CONNOR, Associate Justice (Retired), Supreme
Court of the United States, sitting by designation, and DUNCAN
and AGEE, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Brent K. Kesner, KESNER, KESNER & BRAMBLE, Charleston,
West Virginia, for Appellants.   Thomas L. Rosenberg, ROETZEL &
ANDRESS, Columbus, Ohio, for Appellee.     ON BRIEF: Ellen R.
Archibald, KESNER, KESNER & BRAMBLE, Charleston, West Virginia,
for Appellants.   Klodiana Basko, ROETZEL & ANDRESS, Columbus,
Ohio; Stephen W. Funk, ROETZEL & ANDRESS, Akron, Ohio, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.

                               2
PER CURIAM:

     G&G    Builders,        Incorporated         (“G&G    Builders”)              and    North

American    Precast,         Incorporated         (“NAP”)        (collectively             “the

Contractors”)       appeal    the      district        court’s    judgment           limiting

their   claims    against       General      Casualty       Company           of    Wisconsin

(“General Casualty”) for damages arising from the collapse of

concrete    planks     used     in    the   construction         of       a    correctional

facility.     Specifically, the Contractors challenge the district

court’s determinations that the insurance policy did not cover

loss of use damages, that the Contractors were not entitled to

punitive damages as a matter of law, and that G&G Builders had

not asserted a third-party Unfair Trade Practices Act claim.

For the reasons set forth below, we affirm the district court’s

judgment.

                                            I.

     G&G    Builders         was      the       primary     contractor              for    the

construction of a jail for the West Virginia Regional Jail and

Correctional Facilities Authority.                 It sub-contracted to NAP the

manufacture      of    hollow      core,     precast,       pre-stressed             concrete

planks to be used on the project’s ceilings and floors.                                      As

required    under     that    contract,          NAP    obtained      a       comprehensive

insurance     policy    (“the        Policy”)     from     General        Casualty        that

                                            3
included        commercial      general        liability               (“CGL”)      and     completed

operations coverage.

      NAP       fabricated      the      planks          and       delivered         them    to    the

construction site, where G&G Builders used them in constructing

the jail.        In July 2002, a NAP concrete plank that G&G Builders

had installed in the jail’s ceiling collapsed and fell to the

ground.     As a result of the collapse, construction stopped until

December 2002, and repairs from the collapse were not completed

until April 2003.          During this period, G&G Builders notified NAP

and General Casualty of the costs of repairs and nature of the

damages;        General    Casualty          opened          a    claim,      and     subsequently

denied     coverage       after       determining            that      the    damages       were   not

covered by the Policy.

      In    a    subsequent       lawsuit,         NAP       and       G&G    Builders       asserted

various claims against each other related to their contract and

the   damages         arising     from       the       accident.             NAP    asked     General

Casualty        to    provide     a    defense          to       the    lawsuit,      and     General

Casualty again denied the request based on its determination

that the claims were not covered under the Policy.                                    After almost

two   years’         litigation,       NAP    and       G&G       Builders         entered    into   a

settlement agreement in which NAP conceded liability and agreed

that G&G Builders’ damages totaled $1,807,109.                                     In satisfaction

of this agreement, NAP paid $500 and assigned its rights against

General Casualty to G&G Builders.

                                                   4
       The    Contractors      then    filed        a    complaint       against       General

Casualty      in    the   Southern     District          of     West    Virginia       seeking

declaratory        judgment    that    the        losses      were     covered      under      the

Policy and asserting claims for breach of contract, common law

bad    faith,      and    violations     of       West     Virginia’s         Unfair      Trade

Practices Act (“UTPA”) (W. Va. Code                     33-11-1 et seq.).

       Each party moved for summary judgment in its favor on the

issue of coverage.            In March 2008, the district court granted

and denied each motion in part, holding that the Policy only

covered “damage to the masonry walls and concrete floor, if any

there be, caused by the collapse of the plank.”                                  (J.A. 114.)

Relying      on    several    West    Virginia          cases    on    point,       the   court

concluded that because “it was not the plank collapsing, but

rather the faulty workmanship, which caused the remainder of

[the   Contractors’]         damages,”       including          loss    of    use    damages,

those damages were not covered under the Policy.                                 (J.A. 109.)

The court also concluded Policy exclusions 2m and 2n would also

prohibit recovery of loss of use damages.

       The    remaining       issues    in        the    case     were       decided      in    a

bifurcated trial wherein the jury determined first that the jail

walls and floor were damaged as a result of the accident, that

the damage amounted to $94,474.71, and that General Casualty

received      reasonable      notice    of        G&G    Builders’       claim      of    loss.

Nothing from that phase of the trial is at issue on appeal.

                                              5
      The issues to be determined during the second phase of the

trial included the merits of the breach of contract, common law

bad   faith,    and     UTPA   claims.           The    Contractors     also   sought

punitive    damages     for    the    latter      two     claims.      However,    the

district court dismissed the Contractors’ claims for punitive

damages, holding that the evidence — viewed in the light most

favorable to them — did not rise to the level of actual malice,

which is necessary to sustain a punitive damages award under

West Virginia law.

      The   jury    then   found     that       General    Casualty    breached    the

Policy, its duty of good faith and fair dealing, and violated

the   UTPA.        It   awarded      the    Contractors       over    $3,000,000    in

damages.      The district court granted General Casualty’s motion

for a new trial and/or remittitur, and gave the Contractors the

choice of accepting remittitur in the amount of $300,000 or a

new trial on the issue of damages.

      The Contractors elected to reject remittitur and proceed

with a new trial on damages.                Prior to the new trial, General

Casualty moved to exclude certain testimony, including testimony

of G&G Builders’ owner Gary Young, on the basis that he lacked

personal knowledge of NAP’s damages.                    The Contractors objected,

contending     Young’s     testimony       was     relevant    to     G&G   Builders’

third-party UTPA claim.            The district court held that even if

the complaint contained such a claim, the proposed integrated

                                            6
pretrial         order,      which      superseded        the     complaint,       did     not.

Accordingly,        it      concluded       that     “[t]estimony        in   support     of    a

third-party [UTPA] claim not presented at the trial is deemed

beyond      the     scope        of   the       limited     retrial      chosen     by     [the

Contractors].”             (J.A. 1192.)

      Following            the   district       court’s       orders     setting    out     the

issues      to    be       determined     at     the    new     trial,    the    Contractors

entered     into       a    settlement      with       General    Casualty,      subject       to

their right to appeal the three issues raised in this appeal.

The district court entered a final order dismissing the case,

and   the    Contractors          noted     a    timely     appeal.       This     Court    has

jurisdiction based on 28 U.S.C. § 1291.

                                                II.

      The        Contractors          first        appeal       the    district      court’s

determination that the Policy did not cover loss of use damages

arising from the plank collapse.                          In their opening brief on

appeal,      the       Contractors        challenge         the   court’s       analysis       of

whether the collapse constituted an “occurrence” under the terms

of the Policy.             They do not address the district court’s equally

dispositive alternative basis for determining that the Policy

did not cover such damages: that even if loss of use damages

arose from an “occurrence,” they would nonetheless be excluded

                                                 7
from the Policy under exclusions 2m and 2n. 1                    Indeed, the opening

brief’s     only   reference         to   the     exclusions       is    a     conclusory

sentence    toward    the   end      of   their       argument    that    “[n]o    Policy

exclusion bars coverage for G&G Builders’ loss of use damages.”

(Appellants’ Opening Br. 32.)

     The Contractors assert they preserved this issue because

they broadly asserted error based on the determination of Policy

coverage, and they were not required to address the exclusions

at length until General Casualty mentioned them in the response

brief.      This     argument     misses        the    point.      Federal       Rule   of

Appellate     Procedure     28(a)(9)(A)           requires       that    the     argument

section of an appellant’s opening brief contain the “appellant’s

contentions    and    the   reasons       for    them,     with    citations      to    the

authorities    and    parts     of    the   record       on     which    the    appellant

relies.”     Failure to comply with the specific dictates of this

rule with respect to a particular claim triggers abandonment of

that claim on appeal.             See 11126 Baltimore Boulevard, Inc. v.

     1
       Policy provision 2m excluded from coverage property damage
arising out of “[a] defect, deficiency, inadequacy or dangerous
condition” or “[a] delay or failure . . . to perform a contract
or agreement in accordance with its terms.” (J.A. 59.) Policy
provision 2n excluded from coverage “[d]amages claimed for any
loss, costs or expense incurred . . . for the loss of use [of
the impaired property] [i]f such product, work or property is
withdrawn or recalled from the market or from use by any person
or organization because of a known or suspected defect,
deficiency, inadequacy or dangerous condition in it.” (J.A. 112
(emphasis omitted).)

                                            8
Prince George’s County, 58 F.3d 988, 993 n.7 (4th Cir. 1995) (en

banc)).

       While the Contractors’ frame the issue raised on appeal

broadly,      Federal           Rule      of     Appellate               Procedure        28(a)(9)(A)

requires the parties do more than just cast a wide net within

which any number of arguments could fall; it requires that a

party actually address and analyze what it is about the lower

court’s decision they contend was error.                                  Here, the Contractors

only     raised          arguments         related            to     the            district   court’s

determination            that       the        accident            did     not         constitute      an

“occurrence” under the terms of the Policy.                                     Even if we were to

accept     those         arguments,            the       district          court’s        dispositive

determination            regarding          the          Policy’s              exemptions      remains

unaffected         and     independently             supports            its    grant     of   summary

judgment      on     the    issue         of    coverage.                The        Contractors      were

required to challenge that holding in their opening brief in

order    to   preserve          a   challenge            of   the        entire        basis   for    the

court’s determination that the Policy did not cover the claimed

loss of use damages.

       The Contractors’ fleeting reference to the exclusions in

the opening brief fails to satisfy this requirement because it

does not mention that the district court held otherwise, let

alone    assert      a     basis     for       that      holding         being        incorrect.       It

simply     posits         without         discussion           that            no     exemptions      bar

                                                     9
recovery.    The first time the Contractors challenge the district

court’s holding with regard to the exemptions is in their reply

brief.     However, the Court will not consider issues raised for

the first time in a reply brief.          See United States v. Brooks,

524 F.3d 549, 556 n.11 (4th Cir. 2008); Yousefi v. United States

INS, 260 F.3d 318, 326 (4th Cir. 2001) (“Because [the] opening

brief fails to raise a challenge to [a basis for the agency’s

decision], he has abandoned it.         The fact that [he] pursues this

issue in his reply brief does not redeem his failure to do so in

the opening brief.” (internal citations omitted)); Edwards v.

City of Goldsboro, 178 F.3d 231, 241 n.6 (4th Cir. 1999).

     Because the exemptions provide an independent basis for the

district    court’s   order   granting   summary   judgment   to   General

Casualty, and because the Contractors abandoned any challenge to

that determination on appeal by failing to raise it in their

opening brief, we need not consider the underlying merits of

their argument. 2     See, e.g., Atwood v. Union Carbide Corp., 847

     2
       Even if the Contractors had preserved the issue, the
district court did not err in concluding that the claimed loss
of use damages are not covered under the Policy.     The Policy
covers “bodily injury” and “property damage” “caused by an
‘occurrence,’” and “occurrence” is defined as “an accident,
including continuous or repeated exposure to substantially the
same general harmful conditions.”   (J.A. 58, 60.)   “Absent an
occurrence, as that term is defined under the policy, there can
be no coverage under the policy at issue, or any other
commercial general liability policy.”     Webster County Solid
Waste Auth. v. Brackenrich & Assocs, Inc., 617 S.E.2d 851, 857
(Continued)
                                   10
F.2d 278,   280     (5th   Cir.   1988)       (holding     that    where      an   issue

“constituted an independent ground for [the disposition] below,

appellants     were    required     to   raise     it   to    have       any   chance   of

prevailing in [their] appeal”).

                                         III.

       The    Contractors      next      challenge       the    district         court’s

determination       that     they   were    not    entitled         to    an   award    of

punitive damages as a matter of law.                    In McCormick v. Allstate

Insurance Co., 505 S.E.2d 454 (W. Va. 1998), the West Virginia

Supreme Court of Appeals set out the standard for recovering

(W. Va. 2005).   “Commercial general liability policies are not
designed to cover poor workmanship.    Poor workmanship, standing
alone, does not constitute an ‘occurrence’ under the standard
policy definition of this term as an ‘accident’ including
continuous or repeated exposure to substantially the same
generally harmful conditions.”      Id. at 856 (quotation and
citation omitted).    Moreover, “damages to a building sustained
. . . as the result of a breach of a construction contract due
to a contractor’s faulty workmanship are a business risk to be
borne by the contractor and not by his commercial general
liability insurer.” Erie Ins. Prop. & Cas. Co. v. Pioneer Home
Improvement, Inc., 526 S.E.2d 28, 34 (W. Va. 1999).           The
Contractors seek to establish an “occurrence” based on an act of
alleged professional negligence, which is not permitted under
West Virginia law.     E.g., Brackenrich, 617 S.E.2d at 857-58.
For these reasons, and as explained in greater detail in the
district court’s March 31, 2008 order, the Contractors’ loss of
use damages are not covered under the Policy because it was not
the plank’s collapse, but rather the faulty workmanship, which
caused those damages.

                                           11
punitive    damages     where    an    insured     brings     a   claim        against     an

insurance carrier:

      [P]unitive damages shall not be awarded against the
      insurer [in an action brought under the UTPA] unless
      the policyholder can establish a high threshold of
      actual malice in the settlement process.  By “actual
      malice” we mean that the insurance company actually
      knew that the policyholder’s claim was proper, but
      willfully, maliciously and intentionally utilized an
      unfair business practice in settling, or failing to
      settle, the insured’s claim.

Id. at 459.      The court also referred to prior case law applying

the   “actual    malice”     standard       to    observe     that        an    insurance

company’s “‘preconceived disposition to deny the claim . . . did

not rise to the level of malice’ necessary for an award of

punitive damages.”        Id. at 458 (quoting Hayseeds, Inc. v. State

Farm Fire & Cas., 352 S.E.2d 73, 81 (W. Va. 1986)).                                And it

further    reiterated     that     this    standard     was    intended         “to   be    a

bright line standard, highly susceptible to summary judgment for

the defendant” because “[u]nless the policyholder is able to

introduce evidence of intentional injury — not negligence, lack

of judgment, incompetence, or bureaucratic confusion — the issue

of punitive damages should not be submitted to the jury.”                                Id.

(quoting Hayseeds, 352 S.E.2d at 80-81).

      We have reviewed the evidence the Contractors point to as

creating    a   triable    issue      as   to    whether    punitive       damages       are

appropriate.       It     does     not     rise    to   the       level    of     showing

intentional injury.        At most, it shows that General Casualty was

                                           12
aware    of       the   Contractors’     claim,    did   not    believe     the   Policy

provided coverage for the claim, and therefore denied the claim.

While such evidence demonstrates a disagreement over coverage,

it is not evidence of malice.                  Moreover, when General Casualty

declined coverage, it instructed that if the Contractors became

“aware of any information that might suggest coverage exists,

feel free to tender it to” General Casualty’s agent.                                (J.A.

1491.)        This       evidence   hardly    rises   to   the    level     of    showing

intentionally injurious action toward the Contractors.

        For these reasons, we conclude the district court did not

err in granting General Casualty’s motion to strike the evidence

of punitive damages.

                                             IV.

     Lastly, the Contractors assert the district court erred in

ruling    they          “waived    G&G   Builders’    third      party    UTPA    claim”

because       G&G       Builders    never    intentionally       relinquished      their

right to pursue one.                 (Appellants’ Opening Br. 37.)                 It is

undisputed that the Contractors brought a UTPA claim based on

NAP’s injuries; however, the Contractors assert that they also

brought       a    second    UTPA    claim    (“third-party       claim”)    asserting

damages based on G&G Builders’ injuries.                       As proof, they point

to the consistent use of the plural term “plaintiffs” in their

complaint and the integrated pretrial order as proof that two

                                             13
claims were being brought.                Because use of the plural meant that

two “mirror-image UTPA claims were at issue,” they contend the

district court erred in holding that they waived the third-party

claim.     (Appellants’ Opening Br. 39.)

     The    problem         with    the    Contractors’      argument   is    that   it

misstates the district court’s holding in two respects – first,

it treats the holding as if the district court awarded General

Casualty judgment as a matter of law on this point, and second,

it describes the holding in terms of “waiver.”

     The district court’s ruling about G&G Builders’ third-party

UTPA claim came as part of its discussion about a motion in

limine to exclude certain testimony about G&G Builders’ damages

during     the    new       trial    on     damages.      The    district     court’s

determinations about a third-party UTPA claim are thus part of

its holding as to the admissibility of and limitations on that

testimony.

     More importantly, the district court did not hold that G&G

Builders “waived” a third party claim.                     Instead, it held that

G&G Builders had not alleged a third-party claim.                        First, the

court    observed       that       any    allegations   in    the    complaint   were

“immaterial” to its analysis of the issue because “[t]hey were

superseded       by   the    proposed      integrated     pretrial    order   entered

August 13, 2008.”            (J.A. 1184.)         Then it noted that the words

“third party” “appear nowhere in the August 13, 2008, integrated

                                             14
pretrial order” or subsequent written and oral discussions of

the   issues      remaining         in     the     case,          including      the        jury

instructions about the UTPA claim that were given in the first

trial.       (J.A.     1185.)       In     light      of    this     record,     the       court

concluded     that     G&G   Builders’      arguments         that    it   had    raised        a

third-party UTPA claim “strain[ed] credulity” and it held that

“[t]estimony      in    support       of    a    third-party         [UTPA]      claim       not

presented at the trial is deemed beyond the scope of the limited

retrial chosen by” the Contractors.                   (J.A. 1192.)

      “Waiver” is never mentioned in the court’s discussion and

was not a basis for its determination.                      The Contractors are thus

challenging a holding the district court never made.                               But even

if we construe their arguments to challenge the district court’s

dispositive holding on this issue, we find no error.                               Assuming

the   complaint      alleged    a   third-party            UTPA    claim   based       on    G&G

Builders’     injuries,      the    causes       of    action       identified      in       the

integrated pretrial order would supersede the complaint.                                     See

Fed. R. Civil Pro. 16(d); Rockwell Int’l Corp. v. United States,

549 U.S. 457,     474   (2007)      (“[A]     final     pretrial      order       .    .   .

supersede[s] all prior pleadings and ‘control[s] the subsequent

course   of     the     action.”         (quotation        omitted)).            While       the

integrated pretrial order refers to the plural “plaintiffs” and

“claims,” it does not delineate first or third-party claims.

Given that NAP had assigned its rights against General Casualty

                                            15
to G&G Builders, and that both NAP and G&G Builders are named

plaintiffs in the case, the designation of the plural is hardly

dispositive       as   to    the   nature    of   the   UTPA   claims   that   were

brought.     Our review of the record leads us to conclude there is

no foundation for the argument — an argument that was first made

during preparations for the new trial on damages — that G&G

Builders brought a separate third-party UTPA claim.                     Until that

time, the Contractors never specifically mentioned a third-party

claim, nor had they acted as if they were pursuing such a claim

through the presentation of evidence of G&G Builders’ damages or

the wording of jury instructions about such a claim.                        As the

district court’s September 15, 2009 opinion explains, the record

simply     does    not      support   the    conclusion    that   G&G     Builders’

alleged a third-party UTPA claim in this case.

                                            V.

     For     the       aforementioned       reasons,    the    district     court’s

judgment is

                                                                          AFFIRMED.

                                            16