Court Opinion

ID: 146445
Source: CourtListenerOpinion
Date Created: 2010-05-14 00:02:04+00
Date Added: 2024-06-11T08:36:00.760079
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             MAY 13 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S . CO U RT OF AP PE A LS

                            FOR THE NINTH CIRCUIT

TURNBERRY PAVILLON PARTNERS,                     No. 09-15942
L.P.,
                                                 D.C. No. 2:07-cv-01042-KJD-PAL
              Plaintiff - Appellant,

  v.                                             MEMORANDUM *

M.J. DEAN CONSTRUCTION, INC.,

              Defendant - Appellee.

                    Appeal from the United States District Court
                             for the District of Nevada
                     Kent J. Dawson, District Judge, Presiding

                       Argued and Submitted April 16, 2010
                            San Francisco, California

Before: ARCHER, Senior Circuit Judge,** and CALLAHAN and BEA, Circuit
Judges.

       Turnberry Pavilion Partners, L.P. ('Turnberry') appeals the district court's

order granting summary judgment to M.J. Dean Construction, Inc. ('Dean'). The

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

        **
              The Honorable Glenn L. Archer, Jr., United States Circuit Judge for
the Federal Circuit, sitting by designation
district court held that a settlement agreement in a prior case released Turnberry's

claims in this case. We have jurisdiction under 28 U.S.C. y 1291, and we reverse

and remand.1

                                           I.

      This court reviews de novo a district court's grant of summary judgment.

Nevada VTN v. Gen. Ins. Co. of Am., 834 F.2d 770, 773 (9th Cir. 1987). This court

must determine whether, viewing the evidence in the light most favorable to the

nonmoving party, there are any genuine issues of material fact and whether the

district court correctly applied the relevant substantive law. Id.

                                          II.

      This case is the third in a series of cases that arose from the construction of a

luxury condominium tower in Las Vegas, Nevada. Turnberry, the developer, hired

Dean as the concrete subcontractor and construction manager, and Malco, Inc.

('Malco') as the subcontractor for the interior drywall and site walls.

      In the first case, Malco, the Nevada state trial court found that Dean had

caused Malco 'lost production' and 'uncompensated overtime' due both to

Malco's negligent concrete worµ and negligent construction management. While

      1
        Because the parties are familiar with the facts of the case, we will repeat
them here only to the extent necessary to explain our decision.

                                           2
cross-appeals were pending before the state supreme court, Turnberry paid Malco

ü2.1 million to settle Malco's claims. In the second case, One Turnberry, the

condominium association sued Turnberry in Nevada state court for construction

defects in the finished tower. Turnberry filed a third-party complaint against Dean

and other subcontractors on the ground that their negligence caused those finished-

product construction defects. All the parties reached a settlement in which

Turnberry and Dean agreed to pay the condominium association ü2 million and

ü600,000, respectively. In this case, Turnberry seeµs indemnity and contribution

from Dean for Turnberry's Malco settlement payment, which was partly based on

the 'lost production' and 'uncompensated overtime' caused Malco by Dean's

negligent concrete worµ and negligent construction management.

      The district court erred in holding that the plain meaning of the One

Turnberry settlement agreement clearly and unambiguously released Turnberry's

indemnity and contribution claims in this case. Nevada law governs the

interpretation of the One Turnberry settlement agreement because this case is

based on diversity of citizenship jurisdiction. Nevada VTN, 834 F.2d at 773.

Under Nevada law, the interpretation of a contract is a legal issue for the judge to

determine. Sheehan & Sheehan v. Nelson Malley and Co., 117 P.3d 219, 223

(Nev. 2005). Principles of contract law govern the interpretation of a settlement

                                          3
agreement. May v. Anderson, 119 P.3d 1254, 1257 (Nev. 2005). Nevada courts

interpret an unambiguous contract, which is not reasonably susceptible to more

than one interpretation, according to its plain meaning. Canfora v. Coast Hotels

and Casinos, Inc., 121 P.3d 599, 603 (Nev. 2005) (per curiam).

      The One Turnberry settlement agreement releases 'claims . . . now µnown

with respect to the Claims asserted in the Litigation[.]' 'Litigation' is defined to

include only 'claims asserted in the [One Turnberry] Subject Action, . . . as set

forth in Plaintiff's Complaint, Chapter 40 Notice to Builder, Defendant's Third-

Party Complaint, all Fourth Party Complaints, and . . . the final and supplemental

reports of the following Plaintiff's experts: Christopher Allen, [etc.]' There is no

claim in any of the One Turnberry pleadings for indemnity and contribution based

on 'lost production' and 'uncompensated overtime' due to either Dean's negligent

concrete worµ or negligent construction management. Nor does such a claim

appear in Mr. Allen's 'preliminary' report, which in any event is not a 'final' or

'supplemental' expert report included in the 'Litigation.' No other plaintiff expert

reports appear in the record. Nor does the 'Chapter 40 Notice.'

      Nothing suggests that the negligent concrete worµ that caused Malco the

'lost production' and 'uncompensated overtime' damages at issue in Malco also

caused the finished-product construction defects at issue in One Turnberry. To the

                                           4
contrary, Malco incurred 'lost production' and 'uncompensated overtime'

damages because it had to 'redo' and 'correct' Dean's negligent concrete worµ.

For example, the Malco court found that 'a substantial portion of [Malco's] worµ

was required to be redone,' and that, 'to correct Dean's bad concrete worµ, Malco

was required to devote substantial additional time and expense to 'sculpt' the foam

portions of the exterior of the building.' Thus, if anything, the record suggests that

the negligent concrete worµ that caused Malco 'lost production' and

'uncompensated overtime' did not remain as finished-product construction

defects.

      There is also nothing to suggest that Dean's negligent construction

management caused the finished-product construction defects at issue in One

Turnberry. As the One Turnberry court noted, 'whether you do [the worµ] slowly

or whether you don't; that doesn't turn to the issue of construction defect.'

Negligent construction management may have slowed the construction process,

causing Malco 'lost production' and 'uncompensated overtime,' but it does not

necessarily cause construction defects.

                                          III.

      Because there is no claim in any of the One Turnberry pleadings, written

notices, and plaintiff expert reports for indemnity and contribution based on 'lost

                                           5
production' and 'uncompensated overtime' due to Dean's negligent concrete worµ

or negligent construction management, we hold that the One Turnberry settlement

agreement did not release Turnberry's claims in this case. We therefore need not

consider whether the doctrine of judicial estoppel applies here.

      REVERSED and REMANDED.

                                          6
                                                                              FILED
Turnberry Pavilion Partners, L.P., No. 09-15942                               MAY 13 2010

                                                                         MOLLY C. DWYER, CLERK
CALLAHAN, CIRCUIT JUDGE, dissenting:                                       U.S . CO U RT OF AP PE A LS

      I dissent from the majority's decision to reverse the district court and

remand. I would affirm the decision of the district court and hold that the

settlement agreement in the prior case, One Turnberry, clearly and unambiguously

released Turnberry Pavilion Partners, L.P.'s ('Turnberry') indemnity and

contribution claims against M.J. Dean ('Dean') arising from the earlier Malco

action.1

      In the One Turnberry litigation, the condominium association's complaint

asserted that the alleged defects, including the defective concrete worµ, arose from

deficiencies in the 'design, specification, planning, supervision, observation of

construction, [and] development . . .' of the property caused by Turnberry and the

contractors and subcontractors, which would include both Dean and Malco, Inc.

('Malco'). Similarly, Turnberry's Third-Party Complaint against, among others,

Dean and Malco, generally alleged that each of the third-party defendants were

negligent because '[i]f the Property is defectively designed, developed and/or

constructed, the acts and/or omissions of the Third Party Defendants were the

direct and proximate cause of any and all damages incurred by Turnberry.' In

      1
        Because the parties are familiar with the facts of the case, I will repeat
them here only to the extent necessary to explain my dissent.
particular, the Third-Party Complaint sought indemnity and contribution against

Dean for Dean's 'fail[ure] to act reasonably in the design, development and/or

construction' of the One Turnberry property.'

      The One Turnberry settlement agreement releases 'all past, present, and

future claims µnown relative to defects and deficiencies alleged in this Litigation.'

This includes 'any and all . . . damages . . . of whatsoever µind and nature . . . now

µnown with respect to the Claims asserted in the Litigation.' 'Claims' includes

'any of the actionable omissions, conduct or damage of every µind and nature

whatsoever, µnown, alleged, or asserted in the Litigation.' 'Litigation'

encompasses both the Plaintiff condominium association's complaint in the One

Turnberry action, as well as Turnberry's Third-Party Complaint.

      First, I would find that the settlement agreement applied to Turnberry's

claims against Dean related to Dean's negligent concrete worµ. The settlement

agreement is broadly written to release all claims related to 'defects and

deficiencies in the building.' Dean's defective concrete worµ is also a µnown

'Claim' as it was at issue in the Malco action and it is encompassed by the

pleadings in the 'Litigation,' as both the condominium association's and

Turnberry's Third-Party Complaint bring claims related to the defective concrete

                                          -2-
worµ.2 I would therefore find that any claim Turnberry had against Dean for

Dean's negligent concrete worµ was released.

      I would also hold that the settlement agreement released Turnberry's claims

against Dean related to Malco's 'lost production' and 'uncompensated overtime'

due to Dean's negligent construction management during the construction phase.

Although I agree that the One Turnberry action focused on design defects, I would

find that language in the relevant pleadings and the broad language of the

settlement agreement also released Turnberry's claims. Specifically, Turnberry's

claims against Dean related to Malco's losses due to Dean's negligent construction

management were µnown 'Claims' within the meaning of the settlement

agreement, because Malco's complaints regarding Dean's negligent construction

management were first raised in the Malco action. Further, these 'Claims' are

encompassed by the pleadings in the 'Litigation,' as the condominium

association's complaint alleged deficiencies in the ' planning, supervision, . . .

[and] development . . .' (emphasis added) of the property caused by Turnberry and

the contractors and subcontractors. Similarly, the Third-Party Complaint against

      2
             In the Malco action, the court found that Malco suffered
'unanticipated delay and expense' due to the 'quality of Dean's concrete worµ.'
The court also found that Dean's improper coordination of the subcontractor's
worµ schedules caused 'problems, delays and additional costs' to Malco.

                                          -3-
the contractors alleged claims related to defective design, development and/or

construction. In my view, the words 'planning,' 'supervision,' and

'development' are sufficient to encompass Turnberry's claims against Dean for

Malco's 'lost production' and 'uncompensated overtime' due to Dean's negligent

construction management during the construction phase.

      Because the settlement agreement is broadly written to release all of the past,

present and future 'Claims' raised in the 'Litigation,' and because Turnberry's

claims against Dean for Dean's negligent concrete worµ and negligent construction

management satisfy the requirements for being 'Claims' in the 'Litigation,' I

would affirm the district court.

                                         -4-