Court Opinion

ID: 3186963
Source: CourtListenerOpinion
Date Created: 2016-03-18 18:02:15.178422+00
Date Added: 2024-06-11T11:05:48.854024
License: Public Domain

UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLUMBIA
___________________________________
                                    )
                                    )
PHILADELPHIA INDEMNITY INSURANCE    )
CO., A/S/O 1441 RHODE ISLAND AVE    )
CONDOMINIUM ASSOCIATION,            )
                                    )
               Plaintiffs,          )
                                    ) Civil Action No.15-765
                                    ) (EGS)
          v.                        )
                                    )
                                    )
LEND LEASE (U.S.)                   )
CONSTRUCTION, INC.                  )
                                    )
                                    )
                                    )
               Defendant.           )
___________________________________)

                       MEMORANDUM OPINION

     In January 2014, a water sprinkler line burst inside the

condominium property located at 1441 Rhode Island Ave. in

Washington, D.C. Compl., Docket 1-2 at ¶ 7. The condominium

Association’s insurer, Philadelphia Indemnity Insurance Company

(“Plaintiff”), compensated the Association for all losses,

totaling $107,552.74. Id. ¶ 10. 1 Plaintiff filed this lawsuit

against Defendant Lend Lease (U.S.) Construction, Inc.

(“Defendant”) for breach of contract and negligence due to its

1 Plaintiff Philadelphia Indemnity Insurance Company moves as
subrogee of 1441 Rhode Island Ave. Condominium Association
(“Association”). The Court will refer to Philadelphia Indemnity
Insurance Company as “Plaintiff” and the Condominium Association
as “Association” in this opinion.
alleged faulty construction of the condominium between 2002 and

2004. Id. ¶¶ 13-20. Plaintiff now concedes that its breach of

contract claim fails, but argues discovery should proceed on its

negligence claim. 2 Pl.’s Mem. Opp., Docket No. 11 at 6. Defendant

moves for Judgement on the Pleadings arguing that the

Association is a successor of the original owner of the

property, Fairfield D.C. Limited Partnership (“Fairfield”), who

signed a 2002 construction contract (“Contract”) with the

Defendant. Def.’s Mem. Supp. Mot. J. Pleadings, Docket No. 10.

Defendant argues a finding that the Association is a successor

prohibits Plaintiff’s negligence claim pursuant to the

Contract’s waiver-of-subrogation clause. Id. Upon consideration

of the motion, the response and reply thereto, the applicable

law, the entire record, and for the reasons stated below,

Defendant’s motion is DENIED.

    I.     BACKGROUND

           A. The Contract

         On June 19, 2002, Defendant signed a Contract with

Fairfield to construct a nine-story apartment building and

refurbish an adjacent townhouse located at 1441 Rhode Island

Avenue NW. Pl.’s Mem. Opp. at 1. Defendant completed its

2 “As noted, Plaintiff has conceded it is not a contracting party
in this case. As a consequence, the only remaining count would
be Plaintiff’s negligence count, which sounds exclusively in
negligence law.” Pl.’s Mem. Opp., Docket No. 11 at 6.

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construction in late 2004, at which time the units were ready

for occupancy. Compl. ¶ 5. At some point in 2004, Fairfield sold

the Building to 1441 Rhode Island Avenue, LLC (“1441 LLC”).

Def.’s Statement of Points at 2. The property was later conveyed

to the Association. Id. 3

     The 2002 Contract signed by Fairfield and Defendant

includes the following provisions:

     . . . [I]f after final payment property insurance is to
     be provided on the completed Project through a policy or
     policies other than those insuring the Project during
     the construction period, the Owner shall waive all
     rights in accordance with the terms of Subparagraph
     11.4.7 for damages caused by fire or other cause of loss
     covered by this separate property insurance. All
     separate   policies  shall   provide   this  waiver   of
     subrogation by endorsement or otherwise. 4

Contract, Docket No. 10-1, Sec. 11.4.5. (emphasis added). The

Waiver of Subrogation clause states:

     [t]he Owner and Contractor waive all rights against (1)
     each other . . . for damages caused by fire or other
     causes of loss to the extent covered by property
     insurance . . . A waiver of subrogation shall be
     effective as to a person or entity even though that
     person or entity would otherwise have a duty of
     indemnification,     contractual      or     otherwise.

3 The exact date that the Association acquired the property is
unknown. Pursuant to unexecuted copies of the Condominium
Declaration, Plaintiff suggests that Fairfield’s ownership
interest ceased sometime between June 19, 2002 and March of
2004. Pl.’s Mem. Opp. at 2; see also Ex. A., Docket No. 11-2.
4“Owner” means “the Owner or the Owner’s authorized
representative.” Contract, Docket No. 10-1 at Sec. 2.1.1. The
first page of the Contract identifies Fairfield as the “owner”.
Id. at 3.

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Id. at Sec. 11.4.7. (emphasis added). The Contract also includes

a “Successors and Assigns” provision, which states:

        “[t]he   Owner   and    Contractor   respectively   bind
        themselves, their partners, successors, assigns and
        legal representatives to the other party hereto and to
        partners, successors, assigns and legal representatives
        of such other party in respect to covenants, agreements,
        and obligations contained in the Contract Documents.” 5

Id. at Sec. 13.2.1. (emphasis added).

     II.   STANDARD OF REVIEW

     A Rule 12(c) motion is “functionally equivalent” to a Rule

12(b)(6) motion and governed by the same standard. Rollins v.

Wackenhut Servs., Inc., 703 F.3d 122, 130 (D.C. Cir. 2012). A

motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)

“tests the legal sufficiency of a complaint.” Browning v.

Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A complaint must

contain “a short and plain statement of the claim showing that

the pleader is entitled to relief, in order to give the

defendant fair notice of what the . . . claim is and the grounds

upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation marks

omitted; alteration in original). While detailed factual

allegations are not necessary, plaintiff must plead enough facts

“to raise a right to relief above the speculative level.” Id.

5   Successor is not defined by the Contract.

                                   4
    “The court is limited to considering acts alleged in the

complaint, and documents attached to or incorporated by

reference in the complaint, matters of which the court may take

judicial notice, and matters of public record.” Maniaci v.

Georgetown Univ., 510 F. Supp. 2d 50, 59 (D.D.C. 2007) (internal

citations omitted). The Court must construe the complaint

liberally in plaintiff's favor and grant plaintiff the benefit

of all reasonable inferences deriving from the complaint. Kowal

v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).

However, the Court must not accept plaintiff's inferences that

are “unsupported by the facts set out in the complaint.” Id.

“Nor must the court accept legal conclusions cast in the form of

factual allegations.” Id. “[O]nly a complaint that states a

plausible claim for relief survives a motion to dismiss.”

Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173

L.Ed.2d 868 (2009). 6

6 Defendant asserts that Maryland law should be applied to this
dispute, pursuant to the choice of law provision included in the
Contract. Def.’s Mem. Supp. at 3, fn 2. Plaintiff does not
dispute application of Maryland law. See Pl.’s Mem. Opp. at 4,
citing Maryland law. The Court will therefore apply Maryland law
in resolving this dispute.

                                 5
  III. DISCUSSION

     Defendant argues that the Association is a successor to

Fairfield under the Contract, thereby barring Plaintiff’s

negligence claim. Def.’s Reply, Docket No. 13 at 2. Plaintiff

insists the Association is not a successor to Fairfield because

(1) it is the second owner since Fairfield; (2) there is no

evidence that the Association had any knowledge of the Contract

when it purchased the property; and (3) the “full benefit of the

exchange” was complete before the Association acquired the

property. Pl.’s Opp. Mem. at 3-4.

     Although it is possible that Plaintiff’s negligence claim

is barred by a finding that the Association is a “successor”

under the Contract, see Contract at Sec. 11.4.7. ([t]he Owner

and Contractor waive all rights against (1) each other . . . for

damages caused by fire or other causes of loss), the current

record is insufficient to determine whether the Association

should be deemed a successor.

     In non-labor contract cases, successor is generally defined

as “one who takes the place that another has left, and sustains

the like part or character.” Safer v. Perper, 569 F.2d 87, 95

(D.C. Cir. 1977) (citations omitted). Applying Maryland law, the

Safer Court considered the following factors to determine

successorship: (1) the nature of the relationship between the

original contracting party and the new owner; (2) whether there

                                6
was any overlap between the two entities; and (3) if the

original party’s obligations were completely discharged prior to

the successor assuming interest in the property. Id. In Safer,

the purchaser of a foreclosure (Somerset) took the place of the

original owner (Winthrop) by paying the contractor. The Court

concluded that:

     Thus with respect to the very obligations created by the
     construction contract itself, [Somerset] occupied the
     place that Winthrop abdicated. Not only did [Somerset]
     “sustain the like part” as Winthrop, it sustained the
     very same part as Winthrop.

Id. at 96. Guided by Safer, the Court in Crown Oil and Wax Co.

of Delaware, Inc. v. Glen Const. Co. concluded that Frederick

Hotel Limited Partnership (“Frederick”) was successor to Crown

Oil and Wax Co. (“Crown”) because:

     [Frederick] took [Crown’s] place by agreeing that the
     construction   contract   costs   would   be   its   sole
     responsibility. … [a]lso, there is continuity in
     management for the owner of the hotel project and some
     continuity of equitable ownership in the succession from
     [Crown]                 to                   [Frederick].

320 Md. 546, 569 (Ct. App. Md. 1990).

     The record in this case is devoid of similar facts.

The record does not indicate (1) when Defendant completed

construction; (2) when full payment was received; (3) whether

the Association assumed any responsibility for payments to

Defendant; (4) when the Property passed from Fairfield to 1441

LLC; (5) when the property was conveyed to the Association; (6)

                                7
what, if any, knowledge the entities who purchased the property

from Fairfield had about the Contract; and (7) if there was any

overlap in management between Fairfield and the Association. 7

     Defendant asserts that Fairfield’s “obligations under the

Contract were not yet fully satisfied” when the Association

purchased the property. Def.’s Reply Mem. at 3. Nothing in the

record supports this argument. Defendant also claims that “the

property owner and Land Lease agreed to have a certain meeting

one month before the expiration of the one-year warranty.” It is

unclear if Defendant is merely restating the general provision

included in the Contract or rather asserting that it agreed to

have a meeting with the Association. Id.

     For these reasons, the Court cannot determine whether the

Association should be deemed the successor of Fairfield on the

current record. Therefore, the parties shall meet and confer and

submit a proposed schedule for discovery that is limited to the

questions identified supra and any other facts identified by the

parties that are necessary for the Court to properly determine

the question of successorship.

7 The Condominium Declaration identifies Sonil S. Gehani as the
manager of 1441 Rhode Island, LLC, and Keith J. Willness as
trustee, but the record does not contain other references to
these individuals or identify managers for the Association.

                                 8
  III. CONCLUSION

     For the reasons stated above, Lend Lease’s Motion for

Judgment on the Pleadings is DENIED. An appropriate order

accompanies this Memorandum Opinion.

Signed:   Emmet G. Sullivan
          United States District Judge
          March 18, 2016

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