Griffith v. Energy Independence, LLC ( 2017 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
DEBORAH GRIFFITH,
Plaintiff,
v. C.A. NO.: N17C-O3-011 AML
ENERGY INDEPENDENCE, LLC
JAMES WATSON, and
SOUTHLAND INSULATORS OF
DELAWARE, LLC d/b/a
DELMARVA INSULATION
COMPANY,
Defendants.
\/\/\/\ /\_/\ /\/\/\/\/\/\/\/\/
Submitted: September 15, 2017
Decided: December 13, 2017
MEMORANDUM OPINION
Upon Defendants’ Motion to Dismiss, Granted in part
Robert C. Collins II, Esq. of SCHWARTZ & SCHWARTZ, Dover, DelaWare,
Raeann Warner, Esq. of JACOBS & CRUMPLAR, P.A., Wilmington, Delaware;
Attorneys for Plaintij€.
Patrick M. McGrory, Esq., and Jason J. Cummings, Esq. of TIGI-[E &
COTTRELL, P.A., Wilmington, Delaware; Attorneysfor Energy Independence
and James Watson.
J. LeGROW
In August 2011, Energy Independence (“Energy”) and its agent James
Watson (collectively, the “Moving Defendants”) supervised the insulation and
encapsulation of Deborah Griffith’s (“Plaintiff’) crawlspace. Energy
subcontracted With Southland Insulators (“Southland”), a separate entity and non-
moving defendant, to perform the actual Work. Southland completed the Work
Without a dehumidifler or any other form of moisture-prevention Plaintiff alleges
moisture in the crawlspace promoted mold growth that caused her to contract lung
disease. Plaintiff brought suit for breach of contract, negligence, breach of the
implied Warranty of good quality and Worl129 A.3d 881 (Del. 2015) (citing Spence v. Funk, 396 A.2d 967, 968 (Del.
1978)).
3 Deuley v. DynCorp Int’l, Inc., 2010 WL 704895, at *3 (Del. Super. Feb. 26, 2010) (citing
Parlin v. DynCorp Im"l, Inc., 2009 WL 3636756, at *1 (Del. Super. Sept. 30, 2009) (quoting
Spence, 396 A.2d at 968))._ cg_ff"a.', 8 A.3d 1156 (Del. 2010).
4 F.f'.rh Eng ``g (``r')r,r.), v. Hurch."n.vrm, 162 A.2d 722, 724 (Del. 1960) (citing Danby v. Osteopathic
Hosp. Ass’n ofDel., 101 A.2d 308, 315 (Del. Ch. 1953), ajj"d, 104 A.2d 903 (Del. 1954)); Nero
v. Littleton, 1998 WL 229526, at *3 (Del. Ch. Apr. 30, 1998).
4
conclusory, well-pleaded allegations.5 In addition, “a trial court must draw all
reasonable factual inferences in favor of the party opposing the motion.”6
A. The parties’ contract does not preclude Plaintiff’s negligence claim
because the amended complaint alleges negligent performance of
contract.
Moving Defendants argue Plaintiff’ s negligence claim should be dismissed
because Plaintiff cannot sue in tort when the claim is based entirely on breach of
contract.7 This argument is inconsistent with this Court’s application of the
Restatement (SeconcD of Torts, which allows contracting parties to sue for
negligent performance of contractual obligations.
Section 323 of the Restatement (Secona’) of T orts provides:
One who undertakes, gratuitously or for consideration, to
render services to another which he should recognize as
necessary for the protection of the other’s person or
things, is subject to liability to the other for physical
harm resulting from his failure to exercise reasonable
care to perform his undertaking, if (a) his failure to
exercise such care increases the risk of such harm, or (b)
the harm is suffered because of the other's reliance upon
the undertaking8
5 !'f;‘cz_{fé:' v. Redsmne, 965 A.2d 676, 683 (_Dcl. 2009).
6 Doe v. Cahl``ll, 884 A.2d 451, 458 (Del. 2005) (citing Ramunno v. Cawley, 705 A.2d 1029, 1034
(Del. 1998) (citing Solomon v. Pathe Commc’ns Corp., 672 A.2d 35, 38 (Del. 1996)) (other
citations omitted)).
7 See Def.s’ Mot. Dismiss 2 (citing Data Mgmt. Intemationale, Inc. v. Saraga, 2007 WL
2142848, *3 (Del. Super. July 25, 2007)).
8 REsTATEMENT (SECoND) oF ToRTs § 323 (AM. LAW INST. 1965).
5
In Haynz``e v. Sheldon,9 this Court applied Section 323 to find the defendant water
supply company was negligent when it failed to provide adequate water supply and
water pressure to permit the plaintiff to extinguish the fire. The Court held that
“[h]aving undertaken this contractual duty, the risk of harm resulting from failure
to use reasonable care to supply adequate water to fight fires is obvious.”lo In
other words, the Court held a party to a contract may bring a negligence claim
when the other party fails to use reasonable care when performing its contractual
duty,ll
Additionally, in the Home Owner’s Protection Act (the “Act”), the General
Assembly “specifically provided for tort actions seeking to recover damages
resulting from negligent [improvement] of residential property to go forward.”12
The Act states:
No action based in tort to recover damages resulting from
negligence in the construction or manner of construction
of an improvement to residential real property and/or in
the designing, planning, supervision and/or observation
of any such construction or manner of construction shall
be barred solely on the ground that the only losses
suffered are economic in nature.13
9 1985 WL 549259(De1. Super. Jan. 21, 1985).
‘° Id. at *3.
11 Delaware courts generally follow the Restatement. See, e.g. Riea'el v. ICIAms., Inc., 968 A.2d
17, 20 (Del. 2009); Furek v. Um'v. of Delaware, 594 A.2d 506, 520 (Del. 1991); Stokes v.
Ru;)per! Lundscape, lnc., 2012 WL 4168041, at *1 (Dei. Super. Aug. 24, 2012).
'2 aniwich v. Hanby, 2010 WL 8250796, *3 (Del. Super. lilly 1, 2010).
13 6 Del. C. § 3652. The Act eliminated the economic loss doctrine in residential home
improvement cases and furthered the legislative intent to allow negligence actions in such cases
even when the only loss is economic. Casale Constr., LLC v. Best Stucco LLC, 2014 WL
6
The Act permits negligence claims in cases where the plaintiff was a party to a
contract, even when a prospective plaintiff did not suffer any bodily injury.14
Here, Plaintiff alleges Moving Defendants’ renovation fell below the
standard of reasonable care because no dehumidifier was recommended or
installed. Section 323 of the Restatement and the Act allow claims for negligent
performance of a contract in this factual context. Moving Defendants’ motion to
dismiss Plaintiff’s negligence claim against Energy therefore is denied.
B. Energy cannot evade Plaintiff’s breach of implied Warranty of good
quality and workmanship claim by subcontracting with Southland.
Moving Defendants argue Plaintiff s claim for breach of implied warranty of
good quality and workmanship should be dismissed as to Moving Defendants
because the amended complaint does not allege Energy performed the work at
issue. Moving Defendants contend the warranty applies only to Southland, who
performed the actual renovation.
Under Delaware law, “[w]here a person holds himself out as a competent
contractor to perform labor of a certain kind, the law presumes that he possesses
1316150, *2 (Del. Super. Mar. 28, 2014). Although the Home Improvement Act does not
directly apply to this case, because Plaintiff allegedly suffered bodily injury, it would be absurd
to conclude the General Assembly intended to permit negligence claims in home improvement
cases involving only economic damages, but did not intend to permit such claims where a
plaintiff suffers both economic and personal injury. If, under the Act, a plaintiff may sue for
negligence even where there only are economic damages and even where there is privity of
contract between plaintiff and defendant, it necessarily follows that a plaintiff with both personal
and economic injury may pursue both tort and contract claims.
14 See, e.g., Marcucilli v. Boardwalk Builders, Inc., 1999 WL 1568612 (Del. Super. Dec. 22,
1999); Healy v. Silverhill Const., lnc., 2009 WL 295391 (Del. Com. Pl. Feb. 5, 2009) (finding
defendant contractors liable in tort for mold-related damage to plaintiff s home).
7
the requisite skill to perform such labor in a proper manner, and implies as a part of
his contract that the work shall be done in a skillful and workmanlike manner.”15
The Delaware Supreme Court has held this warranty applies to a general contractor
even when the actual work is performed by a subcontractor.16
Here, Plaintiff’s amended complaint alleges all Defendants contracted to
perform the construction work. Southland’s contract with Plaintiff lists Energy
Independence under “Client #” and the Griffith Residence under “Job #.”17
Although Moving Defendants dispute who hired Southland, it is reasonable to infer
that Southland performed the construction as Energy’s subcontractor and the Court
must draw that inference for purposes of the pending motion. Accordingly, the
motion to dismiss Plaintiff’ s claim for breach of the warranty of good quality and
workmanship is denied.
C. Moving Defendants’ motion to dismiss Plaintiff’s implied covenant of
good faith and fair dealing claim is granted because nothing in the
record shows the parties intended to include a dehumidifier.
Moving Defendants argue Plaintiff failed to allege a sufficient factual basis
for her implied covenant claim. The amended complaint states Plaintiff would
have negotiated the installation of a dehumidifier “had they thought to negotiate
15 Bye v. Ger)rge W. Mc(.'crr.d!ey & Son (..``0., 76 A. 62], 622 (Del. Super. 1908).
16 (.``ouncil QfUniI ()wner.s‘ qur'eakwarer Hou.s'e (``.‘ondomlm``um v. Si'mplei-', 603 A.2d 792, 796
(Del. 1992) (“A developer who, under the circumstances of a particular casc, would otherwise be
subject to an implied warranty of good quality and workmanship cannot escape that warranty
merely by arranging for the actual construction to be performed by his contractual agent.”).
17 Ex. B to Am. Compl.
with respect to that matter[,]”18 but this, Moving Defendants argue, is insufficient
to support a breach of the implied covenant of good faith and fair dealing claim.19
To sufficiently plead “a breach of an implied covenant of good faith and fair
dealing, the plaintiff must allege a specific implied contractual obligation, a breach
of that obligation by the defendant, and resulting damage to the plaintiff.”20 In
21 the Court of Chancery
Aspen Advl'sors LLC v. United Artists Theatre Co.,
affirmed that an implied covenant is breached “only when the defendant engage[s]
in arbitrary or unreasonable conduct which has the effect of preventing the other
party from receiving the fruits of the contract.”22 In Aspen Advz``sors, plaintiffs held
warrants to buy common stock in United Artists (“UA”). Before the lawsuit,
several UA shareholders participated in an exchange agreement unrelated to the
warrants. The warrant holders claimed UA violated the implied covenant of good
faith and fair dealing because UA did not permit them to participate in the
exchange agreement The Court of Chancery found the warrants’ plain terms gave
the warrant holders no right to participate in the exchange agreement and that the
warrant holders’ rights were not affected by the exchange agreement To insert
such a right, the Court of Chancery found, would give plaintiffs “contractual
18 Am. compi. 11 37.
19 Df.s’ Partial Mot. Dismiss 4.
20 Southern Track & Pump, Inc. v. Terex Corp., 623 F. Supp. 2d 558, 562 (Del. D. 2009) (quoting
F:'!zgercrld v. Camr)r, 1998 WI., 842316, at *1 (Del. Ch. Nov. 10, 1998_)).
21 Aspcn Advr'.\'r)r.s' LLC v. United Arr.ists Theatre Co., 843 A.2d 697 (Del. Ch. 2004).
22 1a 31701.
protections that they failed to secure for themselves at the bargaining table.”23 The
Court of Chancery therefore dismissed the plaintiffs’ claim for breach of the
implied covenant of good faith and fair dealing
Here, Plaintiff’s claim suffers the same insufficiencies as the claim
dismissed in Aspen Advz'sors. First, nothing in the amended complaint or the
contract suggests the parties intended to install a dehumidifier. Rather, the
amended complaint alleges “[a]t no time did the Defendants suggest, recommend,
propose, or install a dehumidifier or any other method to reduce moisture in the
crawl space.”24 It is not enough to allege plaintiff would have included the
dehumidifier “had they thought of it.”25 As in Aspen Advz'sors, this Court cannot
use the implied covenant to insert contractual protections that Plaintiff failed to
secure for herself at the bargaining table.
Additionally, nothing in the amended complaint alleges the kind of arbitrary
or unreasonable conduct the implied covenant is intended to prevent. The
amended complaint alleges the Defendants were negligent, but not that they
attempted to deceive Plaintiff. Because nothing in the record permits an inference
that the parties intended to include a dehumidifier, or that the Moving Defendants
231a1
24 Am. Compi. 11 14.
25 ld. ar 11 37.
10
acted arbitrarily, the motion to dismiss Plaintiff’s breach of the implied covenant of
good faith and fair dealing claim is granted.
D. Moving Defendant’s motion to dismiss all claims against Watson is
granted because the amended complaint alleges no misfeasance or
active negligence.
Moving Defendants argue Plaintiff’s negligence claim against Watson
should be dismissed because the claim is based entirely on Energy’s alleged
breach. Moving Defendants argue Watson acted only as Energy’s agent during the
renovation and therefore cannot personally be held liable. In response, Plaintiff
argues that “[c]orporate officers acting within the scope of their employment can
be held liable for their own negligence.”26
In Gassis v. Corker;\),27 the case on which Plaintiff relies, the Court of
Chancery held that, under agency principles, “acts taken by [a] corporate principal
are not automatically imputed to its agents.”28 “[A] corporate officer may be liable
in tort only when she is actively involved in the commission of the tort in that she
directed, ordered, ratified, approved, or consented to the tort.”29 Importantly, the
Gassis Court held an officer only may be “held liable for misfeasance or active
. . . 3
negligence and not for nonfeasance or the omission of an act.” 0
26 Pl.’s Resp. Def.s’ Mot. Dismiss 5 (citing Gassis v. Corkery, 2014 WL 3565418 (Del. Ch. July
21, 2014)).
:; Gassis v. Corkery, 2014 WL 3565418, *5 (Del. ch. Juiy 21, 2014).
Id.
291d
301d
11
In Gassis, Bishop Macram Gassis accused officers of the Sudan Relief Fund
of misappropriating his likeness for fundraising after they removed Gassis as the
Fund’s chairman.31 The Court of Chancery found the complaint failed to allege the
Fund’s officers took affirmative steps on behalf of the Fund to use plaintiffs name,
and alleged only that they failed to prevent the use of his name for a short period of
time.32 Because the complaint did not allege the officers directed or ordered the
use of plaintiff’s name, the Court of Chancery held the defendants could not
personally be held liable.33
Here, Plaintiff argues Watson’s draft scope of work and recommended
renovations fell below the reasonable standard of care and caused Plaintiff harm.
Although the amended complaint does allege Watson directed the renovation that
eventually led to the mold growth, Watson’s actions as alleged in the amended
complaint at most would amount to an omission. Watson’s alleged omission is
similar to the Gassis defendants’ failure to prevent the use of Bishop Gassis’s
name after he left the Fund. In both cases, personal liability arguably would attach
if the individuals actively directed the destructive outcome. Because the amended
complaint, however, fails to allege misfeasance or active negligence, Watson
cannot personally be held liable and all claims against him therefore are dismissed.
31Ia'. at*l.
321¢1. at*6.
33Id
12
E. Count III and the negligence claim against Watson are dismissed
Without leave to amend.
In her opposition to Moving Defendants’ motion to dismiss, Plaintiff
requests, in the event the Court determines any claims inadequately were plead,
that she be given leave to further amend the complaint. Here, however, Plaintiff
already was given leave to amend after full briefing and argument on the motion to
dismiss.34 That amended complaint failed to remedy the pleading insufficiencies
for breach of the implied covenant of good faith and fair dealing and added no
allegations that would bolster a claim against Watson. Granting Plaintiff leave to
further amend the complaint would be an inefficient use of the parties’ and the
Court’s resources, especially because the majority of Plaintiff’s claims survived the
Motion. Count III and the negligence claim against Watson therefore are
dismissed with prejudice.
CONCLUSION
For the foregoing reasons, Energy’s Motion to Dismiss is GRANTED as to
Count III and is DENIED as to Counts I and II. Watson’s Motion to Dismiss is
GRANTED.
34 D.i. 20.
13