Marydale Preservation Associates, LLC v. Leon N. Weiner & Associates, Inc.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
MARYDALE PRESERVATION )
ASSOCIATES, LLC AND CATHOLIC )
MINISTRY TO THE ELDERLY, INC., )
)
Plaintiffs, )
v. ) C.A. No. N19C-05-348 AML CCLD
)
LEON N. WEINER & ASSOCIATES, )
INC.; LNW&A CONSTRUCTION )
CORP.; LNWA DEVELOPERS LLC; )
KITCHEN AND ASSOCIATES )
SERVICES, INC., AND ALLIED )
WORLD INSURANCE COMPANY, )
)
Defendants, )
)
And )
)
LNW&A CONSTRUCTION CORP., INC., )
)
Third-Party Plaintiff, )
)
v. )
)
J.F. SOBIESKI MECHANICAL )
CONTRACTORS, INC., )
)
Third-Party Defendant. )
Submitted: August 4, 2022
Decided: September 23, 2022
MEMORANDUM OPINION
Upon Defendant Allied World Insurance Company’s Motion for Summary
Judgment: GRANTED.
Upon Defendants Weiner & Associates, Inc., LNWA Developers, LLC. and
LNW&A Construction Corp.’s Motion for Summary Judgment: GRANTED in part
and DENIED in part.
Upon Defendant Kitchen and Associates Services, Inc.’s Motion for Summary
Judgment: GRANTED in part and DENIED in part.
Upon Defendants Weiner & Associates, Inc., LNWA Developers, LLC. and
LNW&A Construction Corp.’s Cross-Motion for Summary Judgment: DENIED.
Upon Third-Party Defendant J.F. Sobieski Mechanical Contractors, Inc.’s Cross-
Motion for Summary Judgment: DENIED.
Mark L. Reardon, Esquire and Jessica L. Reno, Esquire of ECKERT SEAMANS CHERIN
& MELLOTT, LLC, Wilmington, Delaware, Attorneys for Plaintiffs Marydale
Preservation Associates LLC, and Catholic Ministry to the Elderly, LLC.
William A. Crawford, Esquire and Eric Scott Thompson, Esquire of FRANKLIN &
PROKOPIK, Newark, Delaware, Attorneys for Defendants Leon N. Weiner, LNWA
Developers, LLC, LNW&A Construction Corp., and Allied World Insurance
Company.
Patrick M. McGrory, Esquire of TIGHE & COTTRELL, P.A., Wilmington, Delaware,
Attorney for Defendant Kitchen Services Associates, Inc.
Amy M. Taylor, Esquire of HECKLER & FRABIZZIO, Wilmington, Delaware, Attorney
for Defendant J.F. Sobieski Mechanical Contractors, Inc.
LeGrow, J.
This is a construction defect case masquerading as a complex commercial
dispute. Plaintiffs, which own and manage a multi-unit residential property, allege
the defendants designed and installed faulty HVAC systems that resulted in high
relative humidity levels and mold growth in many of the apartments. Defendants
are the contractors and architect retained to make improvements to Plaintiffs’
apartments, including to the HVAC systems.
Although the focus of Plaintiffs’ claims is their contention that Defendants
were negligent in their design and installation of the HVAC systems, Plaintiffs’
amended complaint contains numerous additional contractual and tort-based claims
asserting alternative theories of relief along with an almost completely gratuitous
claim for punitive damages. Defendants seek summary judgment as to at least some
of those claims. The scattershot nature of the claims and Defendants’ motions defies
a helpful or comprehensive summary of the issues raised in the motions and
addressed by the Court.
The following opinion grants summary judgment with respect to many of
Plaintiffs’ ancillary claims but denies summary judgment as to the core negligence
claims against each defendant. Unless the parties are able to negotiate a reasoned
and reasonable resolution to the surviving claims, a jury will have to sort out the
factual disputes and causes of action that remain.
1
FACTUAL AND PROCEDURAL BACKGROUND
The following facts are drawn from the record submitted by the parties in
connection with the pending summary judgment motions. This case arises out of a
construction project at Marydale Retirement Village (the “Property”), a housing
community1 for low-income and senior citizens with disabilities.2 The Property’s
original interior space consisted of wood-studded walls, carpet and tile flooring,
drywall finishes, and electric baseboard heating with cooling provided through wall
units.3 Between July 2016 and October 2017, the Property’s owners undertook a
major renovation, which the parties refer to as the “Marydale Project.” Defendants
improved insulation, removed and replaced interior drywall and flooring, and
designed and installed new heating, ventilation, and air conditioning systems
(“HVAC systems”).4 But by 2018, mold was detected in several of the units,
purportedly as a result of Defendants’ faulty design and installation of the HVAC
systems. In summary, Plaintiffs contend Defendants designed and installed (i)
1
The housing community included one-hundred and eight residential units and one community
building at Marydale Retirement Village, located in Newark, Delaware. Compl. ¶ 1.
2
Compl. ¶ 1.
3
Def. Kitchen and Associates Services, Inc. Br. in Supp. of its Mot. for Summ. J. (hereinafter
“K&A’s Br. in Supp.”) at 1.
4
Pls.’ Br. in Opp. to Defs.’ Kitchen and Associates Services, Inc. and LNWA Entities’ Motion for
Summ. J. (hereinafter “Pls.’ Br. in Opp.”) at 3; Id., Ex. A, Vible Depo. at 212-13.
2
oversized HVAC units, and (ii) leaky ductwork that led to the development of mold
in many of the Property’s apartment units. This litigation followed. 5
A. The Parties to the Litigation
Plaintiff Marydale Preservation Associates, LLC (“Marydale”) owns the
Property.6 Plaintiff Catholic Ministry to the Elderly, Inc. (“CME”) is a nonprofit
corporation under the auspices of the Catholic Diocese of Wilmington and is
Marydale’s managing member and property manager (collectively, Marydale and
CME are referred to as “Plaintiffs”).7 All Defendants in this case entered into
contracts with Marydale or its general contractor to perform various roles in
connection with the Marydale Project.
Defendant Leon N. Weiner and Associates, Inc. (“Weiner”) and Defendants
LNWA Developers, LLC, and LNW&A Construction Corp.8 (collectively,
“LNWA”) perform development and construction services throughout the mid-
Atlantic region, including Delaware, and were hired because of their expertise in
developing residential housing for low-income individuals.9 Defendant Kitchen and
5
Specifically, Plaintiffs allege high levels of humidity in the residential units has led to the growth
of mold, and the newly installed HVAC units have defects that permit infiltration of outside air
through the ductwork. Mot. of Leon N. Weiner & Associates, Inc., LNW&A Construction Corp.,
and LNWA Developers, LLC for Summ. J. on Pls.’ Claims for Negligence, Fraudulent and/or
Negligent Misrepresentation and Concealment, Civil Conspira[cy], Prohibited Trade Practices,
and Punitive Damages (hereinafter “Weiner and LNWA’s Mot. for Summ. J.”) at 4, Ex. 3.
6
Pls.’ Br. in Opp. at 4.
7
Id.
8
LNW&A Developers, LLC provided development and design services. LNWA Construction
Corp. is Weiner’s construction division. Compl. ¶ 32.
9
Pls.’ Br. in Opp. at 5.
3
Associates Services Inc. (“K&A”) is an architectural and engineering firm based in
New Jersey that Weiner retained in 2014 to design the Marydale Project, including
the HVAC systems at issue in this case.10 LNW&A Construction Corp. hired Third-
Party Defendant J.F. Sobieski Mechanical Contractors, Inc. (“Sobieski”) as a
subcontractor to install the HVAC systems.11
B. Contracts at Issue
Five specific contracts involving the Property and the Marydale Project are
important to this case. CME first contracted with Weiner for assistance with the
Marydale Project’s development on March 12, 2014 (the “CME Development
Agreement”).12 Under the CME Development Agreement, CME formed an entity,
Marydale, to which it transferred ownership of the Property.13 Marydale, as its own
entity, then entered into a development agreement with Weiner on July 14, 2016 (the
“Marydale Development Agreement”).14 On the same day, Marydale contracted
with LNWA and K&A for the development, design, and construction of the
Marydale Project (LNWA’s “Construction Contract” and K&A’s “Architect
10
Id. at 6. On September 4, 2013 (rev. Feb. 17, 2014), K&A submitted a “Letter of Understanding
for Professional A/E Services” to Weiner. Weiner and LNWA’s Mot. for Summ. J., Ex. 2. The
Letter of Understanding incorporated minutes of two meetings held in January 2014 with K&A,
LNWA, and representatives of CME all present. K&A’s Br. in Supp. at 2. Under the Letter of
Understanding, K&A agreed to provide architectural and engineering design services for the
Marydale Project, and the Letter of Understanding stated the parties ultimately would enter a more
formal contract. Id.
11
Pls.’ Br. in Opp. at 6.
12
Id. at 5. See id. Ex. E, Development Agreement.
13
Compl. ¶ 23.
14
Pls.’ Br. in Opp., Ex. E, Development Agreement with Amendments.
4
Contract”).15 Sobieski entered into a contract (the “Subcontract”) with LNW&A
Construction Corp. on July 19, 2016.16 The Construction Contract, Architect
Contract, and Subcontract each are separate “AIA Documents.”17 AIA Documents,
including the agreements at issue here, purportedly are “standard” in the construction
industry.18
1. The CME Development Agreement
In the CME Development Agreement, Weiner represented it had extensive
experience in the design, construction, development, and financing of affordable
housing.19 The CME Development Agreement included representations and
warranties that Weiner, for example, would (i) enter and enforce contracts with
qualified professionals; (ii) oversee and manage the Project’s plans; (iii) construct
the Project per plans and specifications; and (iv) inspect the progress and inform
CME regularly regarding the Project’s status.20 Additionally, under the CME
Development Agreement’s terms, LNWA had complete authority to negotiate, enter
15
Pls.’ Br. in Opp. at 5; Ex. F, Ex. G. LNWA Developers, Marydale, and K&A were parties to the
Architect Contract. Pls.’ Br. in Opp. at 6; Ex. G.
16
Pls.’ Br. in Opp. at 6. See AIA Subcontract, Ex. I.
17
AIA stands for The American Institute of Architects.
18
See, e.g., AIA DELAWARE, aiadelaware.org/about-aia-delaware.html (last visited Aug. 30,
2022).
19
Pls.’ Br. in Opp. at 7, Ex. E at 5. Plaintiffs allege Weiner received a developer fee of $860,000
in exchange for its expertise; Id., Ex. E at 1, “D”.
20
Id., Ex. E; see also K&A’s Br. in Supp. at 3, Ex. 3.
5
into, administer, and enforce contracts with architectural and engineering
professionals.21
2. The Marydale Development Agreement
The CME Development Agreement was amended twice; the 2016 revisions
amended the original CME Development Agreement to include the newly created
Marydale entity as the Owner of the Project and LNWA Developers, LLC as the
Developer.22 On July 14, 2016, CME transferred the Property to Marydale, with
CME remaining as the property manager.23 That same day, Marydale entered into
the Marydale Development Agreement with LNWA Developers, LLC in furtherance
of the CME Development Agreement.24 The roles and responsibilities of Marydale
and LNWA Developers, LLC largely remained the same as those CME and LNWA
held under the earlier agreements.25 Citing the Marydale Development Agreement,
Plaintiffs allege LNWA Developers, LLC accepted responsibility for administering
the construction, improvement, and development of the Marydale Project.26
Specifically, LNWA Developers, LLC agreed it would (i) assist in planning the
construction, improvements, and development of the Marydale Project; (ii) establish
and implement appropriate administrative and financial controls for the design and
21
K&A’s Br. in Supp. at 3, Ex. 3.
22
Id. at 4, Ex. 4.
23
Compl. ¶ 26.
24
Id. ¶ 27. See also, Pls.’ Br. in Opp., Ex. E, “Development Agreement” at 1.
25
K&A’s Br. in Supp. at 4.
26
Pls.’ Br. in Opp., Ex. E “Development Agreement.”
6
construction of the Marydale Project; (iii) keep Plaintiffs fully informed on a regular
basis of the design’s progress and the Marydale Project’s construction; (iv) inspect
the progress of the construction’s course and verify construction was being carried
out substantially in accordance with the plans and specifications approved by
Plaintiffs; and (v) notify Plaintiffs in the event construction was not meeting that
standard.27 According to K&A, under the agreement, Marydale did not retain any
oversight role in the Marydale Project and intentionally deferred all decision-making
authority to LNWA.28
3. The Construction Contract
On July 14, 2016, Marydale also entered into the Construction Contract with
LNW&A Construction Corp.29 Under the Construction Contract, LNW&A
Construction Corp. was required to perform construction work in accordance with
the contract documents’ plans and specifications.30 LNW&A Construction Corp.
agreed to (i) indemnify Marydale from loss or damages caused by LNW&A
Construction Corp.’s negligent acts or omissions; (ii) comply with all laws, statutes,
ordinances, codes, rules, and regulations concerning the safety of persons or
27
Id., Ex. E, “Development Agreement” at 2-3.
28
K&A’s Br. in Supp. at 5.
29
Compl. ¶ 32.
30
Pls.’ Br. in Opp., Ex. F.
7
property; (iii) comply with Delaware State Housing Authority’s (“DSHA”)
standards; and (iv) provide insurance coverage.31
The Construction Contract also included terms concerning LNWA
Developers, LLC. The Construction Contract incorporated the construction
specifications by reference, and Plaintiffs allege LNWA Developers, LLC was
required to, inter alia, (i) review the construction’s compliance with contract
documents; (ii) install and connect all mechanical systems per the manufacturer’s
instructions and best trade practices; (iii) be responsible for all mechanical
equipment performance and correct deficiencies or replace equipment to achieve the
required performance at no cost to Marydale; (iv) ensure the HVAC systems
performed satisfactorily and acceptably; (v) provide testing and balancing of all
mechanical and HVAC systems with an independent certified balancing contractor
under the supervision of a professional engineer; and (vi) provide pressure testing
for ductwork, seal all ducts with mastic, and install volume dampers at point on
supply, return, and exhaust systems where branches extend from the larger ducts.32
In addition, LNWA Developers, LLC was to “supervise and direct” the Marydale
Project with its best skill and attention.33 Importantly, LNWA Developers, LLC was
“not relieved of obligations to perform the Work in accordance with the Contract
31
See Pls.’ Br. in Opp., Ex. F.
32
Compl. ¶ 33.
33
K&A’s Br. in Supp. Ex. 17, Section 3.3.1.
8
Documents either by activities or duties of the Architect in the Architect’s
administration of the Contract.”34
4. The Architect Agreement
On July 14, 2016, Marydale also signed the Architect Agreement with K&A
for K&A’s architectural and engineering services. Weiner was an additional
signatory and expressly recognized as developer for the Marydale Project.35 LNWA
also signed the Architect Agreement because it was responsible for administration
and oversight of the Marydale Project’s design.36 The Architect Agreement allowed
K&A to communicate directly with Weiner.37 Under its terms, K&A’s obligations
involved the “usual and customary structural, mechanical, and electrical engineering
services.”38 K&A agreed to (i) provide professional services with the skill and care
ordinarily provided by architects practicing in the same locality; and (ii) perform its
services as expeditiously as is consistent with professional skill and care.39 Plaintiffs
allege K&A was tasked with designing a “functioning HVAC system and specifying
approximately sized heating and cooling units for the Marydale Project, among other
things.”40 Additionally, K&A was required to provide “construction phase services”
34
Id. Ex. 17, Section 3.1.3.
35
Compl. ¶ 37.
36
K&A’s Br. in Supp. at 8-9.
37
Compl. ¶ 40.
38
K&A’s Br. in Supp. at 9.
39
Pls.’ Br. in Opp., Ex. G. at 2-5,
40
Pls.’ Br. in Opp. at 9.
9
which included periodic site visits, and to keep Marydale and LNWA reasonably
informed about the Marydale Project’s quality and progress.41
5. The Subcontract
LNW&A Construction Corp. entered into the Subcontract with Sobieski on
July 14, 2016.42 Sobieski was required to prepare and submit drawings showing how
it would accomplish the Marydale Project.43 According to K&A, these “shop
drawings” are not contract documents, but in submitting shop drawings, the
contractor represents to the owner and architect that he or she (i) has reviewed and
approved them; (ii) verified the materials, field measurements, and field construction
criteria related thereto; and (iii) checked and coordinated the information within
those submittals against the contracts’ requirements.44 According to K&A, even the
architect’s approval of deviations from the contract documents did not excuse
LNWA from responsibility for those deviations.45
C. The Marydale Project’s Original Design Drawings
Marydale’s original drawings requested the baseboard heat and through-wall
AC units be replaced with a “split HVAC system (outside condenser and electric
41
K&A’s Br. in Supp. at 10.
42
Id. Ex. 18. On July 19, 2016, Sobieski entered into an AIA Contract with LNWA. Open. Br. in
Supp. of Third-Party Def. Sobieski Mot. for Summ. J. on Third-Party Pl. LNW&A (hereinafter
“Sobieski Br. in Supp. Mot. for Summ. J.”) at 5.
43
Id. at 13.
44
Id. at 14.
45
Id.
10
heat air handler).”46 The HVAC equipment upgrade included a heat pump.47 The
initial design first was submitted to the various authorities with jurisdiction over it
on October 23, 2015.48 The final design drawing approval was issued on April 12,
2016.49 The expected duration of the Marydale Project was sixteen months.50
Seventy-two residential units were finished and occupied by June 2017.51
D. Defendants’ Deviation from the Marydale Project’s Original Design
Once construction began, several problems arose, resulting in deviations from
and updates to the original, approved drawings. The major deviations included (i)
the size of the indoor air-handling unit and (ii) the associated ductwork.
According to K&A, the original, approved design for the HVAC Heat Pump
unit was a York LX Series.52 Those series include a nominal 3-ton indoor air-
handling unit with a cooling capacity of 36,000 BTUs.53 Sobieski, however,
replaced the York LX Series during the drawing process with “similarly-sized
46
Id. at 5, Ex. 1 p. 214-218; Ex. 5.
47
Id. at 5, Ex. 6.
48
Id. at 6. Ex. 10. The Marydale Project did not commence until 2015 due to an unsuccessful
application for DSHA tax credits in April 2014. K&A’s Br. in Supp. at 6.
49
Id. at 6.
50
Id. at 17.
51
Id.
52
Id. at 12. Specifically, the approved units were a YHJF18S outdoor unit and AHE24B indoor
unit. Id., Ex. J. According to K&A, these models “equate” to a 2-ton air handling unit and a 1.5-
ton heat pump. Id. at 12. These models were selected by the manufacturer during the design
process. Id. All parties agree the smallest available heat pump split system is 1.5-tons. Id. at 13.
53
BTU is defined as “British Thermal Unit,” a unit of measurement that shows how much energy
an air conditioner uses to remove heat from the dwelling within an hour.
11
Lennox equipment,” and that model ultimately was installed.54 The replacement
model was a 2-ton indoor air-handling unit and 1.5-ton outdoor heating pump with
a total cooling capacity of 19,200 BTUs.55
As for ductwork, Plaintiffs allege the approved design called for a “fully
ducted supply” and “return ductwork” in all residential units. 56 An increased
potential for leaky ductwork purportedly arises from the use of panned ductwork
rather than prefabricated ducts (also called “fully ducted”).57 Prefabricated ducts are
formed with sheet metal and require only one joint to be sealed using mastic.58
Panned ductwork, in contrast, utilizes sheet metal and framing members and may
require many more joints to be sealed with mastic.59 Panned ductwork therefore
involves a higher potential for human error during installation and a higher
likelihood of leaky joints as a result.60
According to Plaintiffs, one reason Sobieski’s bid was successful was its
capacity to create the requisite ductwork in-house rather than by subcontracting.61
Sobieski submitted drawings in August 2016, revealing the need to install 14.00” x
54
K&A’s Br. in Supp. at 14, Ex. 21.
55
Pls.’ Br. in Opp. at 10.
56
Id.
57
Pl. Br. in Opp., Ex. N at 73-75.
58
Id., Ex. N at 74.
59
Id.
60
Id., Ex. N at 73-75.
61
Id. at 10, Ex. O. According to Plaintiffs, any change to the return ductwork required Marydale’s
approval. Id.
12
2.25” sized ductwork in certain locations instead of reframing as necessary.62 K&A
approved that design drawing on August 5, 2016.63
But on August 26, 2016, the construction team onsite (LNW&A Construction
and Sobieski) concluded Sobieski’s prefabricated return ductwork (the full ducting)
would not fit in the wall between the bedroom and living room of the residential
units.64 After recognizing the issue, a representative of LNWA Developers, LLC,
Chad Reynolds (“Reynolds”) called K&A architect Tammy Schiavo (“Schiavo”) for
approval to deviate from the contract specifications. According to LNWA, approval
was provided over the phone.65 That deviation resulted in the use of panned
ductwork.66 No change order was issued to reflect the change from the original,
approved design because, according to Weiner and LNWA, the Marydale Project’s
overall cost and schedule remained unchanged even with the updated design.67 The
Court infers from this argument that had panned ductwork affected the Marydale
62
K&A’s Br. in Supp. at 16. According to K&A, Sobieski stated it was because 14.00” x 2.25”
“will be the most you can get out of the wall opening.” Id. Ex. 23.
63
Id. at 16. K&A contends “[n]owhere does it state that Sobieski was intending to not fabricate
and install fully rigid sheet metal ducts in any locations.” Id.
64
Pls.’ Br. in Opp. at 10.
65
Chad Reynolds and Brad Feldman of LNWA met with Bill Cannon from Sobieski. Id. Reynolds
testified the parties were in agreement that the return air ductwork would be panned ductwork,
utilizing framing members to form a return air plenum, as opposed to the prefabricated, 100%
ductwork called for in the contract drawings and specifications prepared by K&A. Id. 10-11; Ex.
N at 79-86. DSHA was part of these discussions as well. Weiner and LNWA’s Mot. for Summ. J
at 15. “Unfortunately, much of the discussion regarding the use of panned ducting with
representatives of Kitchen was done verbally and not recorded in writing.” Weiner and LNWA’s
Mot. for Summ. J. at 16. (citing Reynolds Dep. 85:17-86:4.)
66
Pls.’ Br. in Opp. at 11; Ex. N. at 83-84.
67
Weiner and LNWA’s Mot. for Summ. J. at 16.
13
Project’s overall cost or schedule, the updated design would have needed an
executed change order.
K&A argues Sobieski deviated from original, approved designs beyond the
selection of different HVAC units and use of panned ductwork. According to K&A,
Sobieski originally submitted to LNW&A Construction Corp. and K&A drawings
of a thermostat with control option features to address humidity levels.68 But,
according to K&A, “[f]or some unexplained reason,” Sobieski did not install the
approved thermostat.69 Instead, the thermostat installed did not include the option
to control for humidity and temperature.70
E. The Progress Meetings & MEP # 1 Report
On September 9, 2016, LNWA, K&A, Marydale, and DSHA held an on-site
progress meeting (the “First Progress Meeting”).71 According to LNWA, the
problem with return ductwork and Sobieski’s solution to that problem was shared
with all parties at this time, and Plaintiffs voiced no objection.72 Plaintiffs dispute
this factual assertion.73 On September 19, 2016, Schiavo of K&A issued a Field
68
K&A’s Br. in Supp. at 14-15. Among these is a capability to command the indoor fan to a
lower speed, extend the fan runtime to improve air mixing and lower the target setpoint up to two
degrees Fahrenheit to allow time for proper dehumidification. Sobieski Br. in Supp. Mot. for
Summ. J. at 15, Ex. 22.
69
K&A’s Br. in Supp. at 15.
70
Id.
71
Pls.’ Br. in Opp. at 11.
72
Id. at 12.
73
According to Plaintiffs, during discovery, Reynolds was unable to identify the Marydale
representative who purportedly consented to the alternative arrangement. Pls.’ Br. in Opp. at 12;
Ex. N at 91-93. Additionally, Reynolds was unable to identify a Marydale representative who was
14
Meeting Report memorializing the First Progress Meeting.74 The Field Meeting
Report did not contain any reference to the ductwork field conflict or to the change
in the return air ductwork from “fully ducted” as specified in the contract documents
to “panned ductwork.” The Field Meeting Report also did not state that the panned
ductwork would require the use of framing members, which specifically were
prohibited in the contract documents.75 And the Field Meeting Report indicated duct
sizes were to be left as documented and the construction team “must get owner’s
approval for any change.”76
A scheduled progress field inspection was held on September 22, 2016 (the
“Second Field Meeting”); the report reflecting that inspection was issued on
September 27, 2016 (the “MEP#1 Report”). 77 Angel Placeras (“Placeras”) authored
the MEP #1 Report, and it was given to Marydale, LNWA Construction, DSHA, and
the financial institutions involved in the Marydale Project.78 In the MEP#1 Report,
advised of the field conflict, alternative resolution, or potential cost and/or quality implications
concerning the ductwork. Id. Ex N at 175-178. As expected, Marydale denies ever being advised
of the ductwork field conflict in a meaningful way and denies consenting to the ultimate decision
to use panned return ductwork on the Marydale Project. Id. at 12; Ex. A.
74
Id. at 13.
75
Id. at 13. Ex. O.
76
Id., Ex. O at 11.
77
K&A’s Br. in Supp. at 16, Ex. 25
78
Pls.’ Br. in Opp. at 13, Ex. P; Doc. 5, at 17, Ex. 25 Item No.1. In the MEP#1 Report, Placeras
first identified the framing members in the return air ductwork. Pls.’ Br. in Opp. at 13, Ex. P, n. 1.
K&A’s lead engineer testified the MEP#1 Report indicated work was not done in conformance
with contract documents and was a “course correct” notice moving forward and an order to
remediate the prior work. Id. See Ex. Q. Plaintiffs allege nothing in writing indicated “approval”
change from 100% fully ducted return ductwork to panned ductwork utilizing framing members.
Id. at 14. The MEP #1 Report stated “that wall framing members will be used as part of the return
15
Placeras first identified the framing members in the return air ductwork.79 LNWA
continued to move forward with the Marydale Project after the MEP #1 Report was
issued.
F. Failure to Test and Balance the HVAC Units
On September 23, 2016, LNW&A Construction Corp. asked K&A whether
testing and balancing of the HVAC units was required during construction of the
first set of apartments.80 Placeres responded that the HVAC systems were required
to be balanced.81 According to Plaintiffs, however, Reynolds informed colleagues
that testing and balancing forms for the units should not be completed because the
procedure would cost $300-$400 per apartment, increasing overall construction
costs by $30,000 or $40,000.82 Testing and balancing of the HVAC systems in the
apartment units ultimately was not completed.
G. The Marydale Project’s Completion and the Mold Complaints
In the summer of 2018, after construction for the Marydale Project was
complete, some residents at the Property began complaining about high levels of
system. K&A recommends that the return air system be 100% ducted, meaning sheet metal branch
ductwork should be extended from the return air trunk to all return grilles.” K&A’s Br. in Supp. at
17, Ex. 25 Item No.1.
79
Pls.’ Br. in Opp. at 13, Ex. P, n. 1
80
Id. at 14, Ex. R.
81
Id.
82
Id. at 15, Ex. S. According to Reynolds, informal testing and balancing was performed by the
HVAC subcontractor. Id., Ex. N at 44-50. But the HVAC’s subcontractor’s project manager
testified his team did not do any type of testing and balancing. Id., Ex. T at 77.
16
humidity in their residential apartments.83 Marydale contends once mold growth
was identified, it immediately alerted both LNWA and K&A. 84 Marydale then
contracted with 1 Source, an environmental hygiene company, to identify the type
of mold at issue and the remediation efforts necessary to ensure a safe living
environment for residents.85 Since September 2018, Marydale has held monthly
mold inspections and remediated mold growth based on 1 Source’s
recommendations.86 Several residents have experienced mold growth since
September 2018 in their apartments, some up to six times.87 According to Plaintiffs,
after the first affected unit was identified in September 2018, mold growth was found
in thirty-eight of the apartment units by November 2018.88
H. Brightfields’ Onsite Consultation and Report with Findings
Before this lawsuit was filed, the parties to the litigation initially cooperated
to identify and resolve potential causes of mold growth.89 The parties conferenced
weekly to discuss issues and possible solutions.90 In 2018, Marydale contracted with
83
Pls.’ Br. in Opp. at 3; Ex. A, Vible Depo at 164, 260-62.
84
Id. at 18.
85
Id. at 16
86
Id. at 16, Ex. B. 1 Source reviews and re-inspects to confirm that mold growth has been
appropriately remediated after INX Indoor Air Quality, the company hired to remediate the mold,
remediates them. Id.
87
Id. at 22.
88
Id. at 3. Plaintiffs contend by April 2021, seventy-three out of the one-hundred and eight
apartments experienced some level of mold growth and needed mold remediation; thirty-two units
experienced recurring mold and needed multiple rounds of remediation. Id., Ex. B.
89
Id. at 18.
90
Id. at 19. During the collaboration, at least two engineering firms, one environmentalist, one
industrial hygienist, one testing and balancing agency and two mold remediation companies were
17
Brightfields, an environmental consulting firm, to determine the cause of the
elevated humidity levels and mold.91 K&A alleges that when a resident first
complained of water leaks and high humidity in her apartment, Unit 177, Sobieski
responded and determined the HVAC unit was overcharged and corrected the
problem.92 A second complaint from Unit 79 was recorded on August 23, 2018.93
On September 14, 2018, Brightfields inspected Units 177 and 79.94 One week later,
Brightfields issued a report (the “Brightfields Report”) with its findings concerning
those units.95
The Brightfields Report indicated the recorded humidity level in the units
ranged from 64.1%-66.4%.96 Specifically, after investigating Unit 177, Brightfields
found the relative humidity around 60% while also determining that the “HVAC unit
may be sized too large for the space, causing ‘short cycling.’”97 Short cycling occurs
retained to identify the mold and potential causes at Marydale. Id. At the time, according to
Plaintiffs, all parties agreed to the selected testing entities to help identify the root cause of high
relative humidity. Id.
91
Id. at 18, Ex. W.
92
K&A’s Br. in Supp. at 17. Marydale apparently reported there was a “noticeable difference in
the humidity in the unit after operating in just a few minutes.” Id., Ex. 26 at LNWA 4073.
93
Id. at 17. LNWA suggested Marydale engage in an environmental consultant following the
complaint. Id. at 18. Marydale hired Brightfields, Inc. on September 11, 2018. Id., Ex. 28.
94
Id. at 18.
95
Id. at 18., Ex. 29
96
K&A’s Br. in Supp. at 19. ASHRAE Standard 55-1992 recommends relative humidity (RH)
levels in the indoor environments to be between 30% and 60%. Pls.’ Br. in Opp., Ex. W at 7. “High
relative humidity within the unit may be caused by moisture intrusion into the slab and/or the unit’s
HVAC system inefficiently removing moisture from the indoor air. No other moisture intrusion
was identified within the unit.” Id. at 11.
97
K&A’s Br. in Supp. at 18, Ex. 28.
18
when a furnace or air conditioner reaches the designated temperature too quickly
and therefore turns off before the system can remove humidity from the air.
Brightfields noted the occupant set the temperature to below the recommended level
but identified the presence of mold on personal effects.98 With respect to Unit 79,
the Brightfields Report identified the presence of mold on personal effects and
recorded humidity ranging from 77.4%-81.0%.99 With this Unit, according to K&A,
the resident was not using the air conditioner, an issue that would result in problems
“regardless of renovations.”100 Marydale staff told the occupant she needed to run
her air conditioning, explaining the benefit of doing so.101
Overall, concerning the humidity, the Brightfields Report indicated active
moisture intrusion may be present through the slab or the HVAC system may not be
removing moisture efficiently.102 Specifically, the Brightfields Report found
“improper refrigerant charging” and “short cycling: due to an improperly sized
98
Id. at 18-19. Brightfields also spot-measured the relative humidity but no data has been provided
for the tests. Id.
99
Id. at 18. K&A contests the conclusion drawn from this test. K&A contends (i) the AC unit
was not running in Unit 79; (ii) Brightfields spot-measured the relative humidity in the Unit at an
undiscovered number of times in undisclosed locations, and (iii) no data has been provided of
Brightfields’ tests. Id. The measured moisture content of the walls and carpet were rated “dry”,
and tile registered as “risk.” Id. None registered as “wet.” Id. These factual issues cannot be
resolved on the pending motions.
100
K&A’s Br. in Supp. at 18, Ex. 28 at 3.
101
Id. at 17.
102
Id. at 19.
19
HVAC unit, and/or improper HVAC balancing” as possible reasons for elevated
relative humidity.103
I. Brightfields Returns and K&A Installs Data Loggers
Brightfields returned to the Property on October 17, 2018 to inspect two more
units: 130 and 156.104 In Unit 130, the thermostat was set to “cool” at 76 degrees
while the outdoor temperature was at 61.1 degrees; the HVAC system therefore was
not running.105 Brightfields registered the relative humidity in Unit 130 between
62.8% and 64.6%.106 For Unit 156, Brightfields noted the system was set to “off”
and not in operation.107 Even so, the relative humidity readings were in the
acceptable range at 52.5%-54.4%.108 The remaining residential units were inspected
in November 2018, and mold was identified in 38 of the 108 units.109 Marydale then
hired a mold remediation consultant.
103
Id. K&A contends in reaching the conclusions, Brightfields never measured the HVAC unit
run times. Id.; Pls.’ Br. in Opp. Ex. W at 12.
104
K&A’s Br. in Supp. at 19, Ex. 30.
105
Id. at 19.
106
Id. K&A indicates this is “surprising” because the AC unit was not used by the occupant. Id.
107
Id.
108
Id. at 20. K&A takes issue with the fact Brightfields’ conclusions and recommendations are the
same for each unit though the conditions observed were different for each unit. Id. Brightfields
responds by saying (i) there may have been high relative humidity and that such condition may be
because moisture is wicking through the slab or that the moisture in the air is condensing on the
colder tile; or (ii) the HVAC systems may not be adequately removing moisture even in units
where it established occupants are not operating the systems. Id. According to K&A, following
Brightfields’ involvement, Marydale changed the HVAC filters but declined K&A’s request to
review the thermostats which had been placed to gather certain data. Id., Ex. 31, 32. K&A alleges
the change of filters was the first time in years. Id.
109
Id. at 20, Ex. 33.
20
In the fall of 2018, the parties decided K&A would install data loggers in four
units.110 K&A collected over 34,000 measurements from October 29, 2018 to
November 17, 2018.111 The data, according to K&A, establishes that while
operating, the HVAC systems adequately and properly maintained relative humidity
levels at around 50%-55%.112 But at this time of the year, the systems were operating
in heating mode, not cooling. The parties therefore agreed K&A would install more
data loggers in March 2019 to run through the 2019 cooling season.113
But, according to K&A, Marydale grew impatient with the process and sent a
letter in April 2019 to all residents claiming the instances of mold growth were the
direct result of design and installation errors in the HVAC systems.114 In July 2019,
at the recommendation of David Hoffman (“Hoffman”), a licensed engineer with
Gipe Associates, Inc., Marydale retained mechanical system contractor Modern
Controls to install a “temporary fix” to help dehumidify the apartments as the air-
handling units ran.115 A few months later, Marydale replaced every thermostat in
110
Id. at 21.
111
Id. at 20. Ex. 35.
112
Id. at 21.
113
Id.
114
Id. at 22, Ex. 36.
115
Pls.’ Br. in Opp. at 16. The temporary fix is a thermostat pre-set that makes the heat pump run
simultaneously with the air-handling unit while the apartment is in cooling mode. Id., Ex. U. This
process ensures the systems are not short-cycling and run for a long enough time to bring the
temperature in the apartments down and dehumidify as it cools. Id. Installation of the temporary
thermostats cost Marydale $43,295.00. Id. Plaintiffs emphasize the temporary nature of this fix;
the current solution is energy inefficient and highly costly to the low-income residents at Marydale
and does not address moisture infiltration associated with the leaky ductwork. Pls.’ Br. in Opp. at
17, Ex. C at 15-15; Ex. D at 514-15, 520, 529-531.
21
every unit and modified the HVAC equipment to add a reheat sequence to actively
control humidity levels.116
Plaintiffs continued to have an industrial hygienist perform monthly mold
inspections, but Defendants contend the data was not shared with the other parties.117
Mold was visibly observed on twenty-four more occasions during monthly
inspections between September and December 2019.118 The units were inspected
again from June through November 2020, and the relative humidity was recorded.119
At this time, the observed relative humidity for each of the units was between 37%-
46% during the cooling season; Hoffman testified the modified equipment was
adequately controlling humidity.120 But despite the indoor relative humidity being
in check, K&A alleges there were still twenty-five additional observed mold
conditions in units during 2020; of these, eight were observed in units that had not
previously experienced mold.121
Marydale filed suit in May 2019, claiming (i) the HVAC equipment was
oversized for cooling loads and therefore short cycling; and (ii) defendants failed to
116
K&A’s Br. in Supp. at 22. Marydale installed the thermostats from July 24, 2019, to August
23, 2019. Id., Ex. 37. The modification of the installed equipment was designed and directed by
David Hoffman. Id., Ex. 38.
117
K&A’s Br. in Supp. at 23.
118
Id. K&A points out fourteen of the instances were found in November, during the heating
season. Id.
119
Id., Ex. 40.
120
K&A’s Br. in Supp. at 23.
121
Id.
22
inform Plaintiffs of their decision to “pan” supply and return duct work, instead of
utilizing solid ductwork as required by the plans and specifications.122
J. Filings in this Court
Plaintiffs filed this case on March 31, 2019 against Weiner, LNW&A
Construction Corp., LNWA Developers LLC, and K&A.123 Plaintiffs asserted
negligence claims against all Defendants; breach of the CME Development
Agreement against Weiner; breach of the Marydale Development Agreement against
LNWA Developers, LLC; breach of the Construction Contract against LNW&A
Construction Corp.; breach of the Architect Agreement against K&A; breach of
implied warranties of habitability and workmanship against LNW&A Construction
Corp.; fraudulent and/or negligent misrepresentation and concealment against all
Defendants; civil conspiracy against all Defendants; prohibited trade practices
against all Defendants; and a claim for punitive damages against all Defendants.124
Plaintiffs filed an Amended Complaint on August 20, 2019 to include a claim against
Defendant Allied World Insurance Company (“Allied”) for breach of the
performance bond that Allied issued to LNW&A Construction Corp. in connection
with the Marydale Project.125
122
Compl. ¶¶55(d), 100; K&A’s Br. in Supp. at 22. Marydale also demanded the data loggers be
removed. Id.
123
D.I. 1.
124
D.I. 1.
125
D.I. 7. Plaintiffs allege, despite repeated requests, “Allied has been unable or unwilling to honor
its obligations under the Performance Bond. Specifically, Allied has failed to correct the defective
23
Weiner, LNW&A Construction Corp., and LNWA Developers, LLC filed
their joint answer with affirmative defenses to the Amended Complaint on October
10, 2019, which included a third-party complaint against Sobieski.126 K&A filed an
answer with affirmative defenses, a cross-claim and counterclaim on October 11,
2019, alleging a cross-claim for contribution and indemnification against “each co-
Defendant for any amount which [K&A] may be require[d] to pay to Plaintiffs.”127
K&A’s counterclaim alleged breach of contract for unpaid “additional services”
against Marydale.128 Sobieski filed its answer on January 6, 2020, alleging
affirmative defenses and a cross-claim for contribution and indemnification.129
Allied filed a Motion for Summary Judgment (“Allied’s Motion”) on May 6,
2022, which is unopposed.130 Weiner and LNWA filed a joint Motion for Summary
Judgment (“Weiner and LNWA’s Motion”) that same day against Plaintiffs and a
Cross-Motion for Summary Judgment (“Weiner and LNWA’s Sobieski Motion”)
against Sobieski.131 Sobieski filed its Cross-Motion for Summary Judgment
construction work performed by LNWA Construction or to complete the work that LNWA
Construction failed to perform under the Construction Contract. Id. ¶ 146. Plaintiffs allege
“Allied’s inactions are a default under the terms of the Performance Bond” and “[d]espite timely
notice from Marydale, Allied has failed or refused to remedy its default under the Performance
Bond.” Id. ¶ 148.
126
D.I. 21
127
D.I. 22 at 17.
128
Id.
129
D.I. 30.
130
D.I. 166
131
D.I. 167, 168.
24
(“Sobieski’s Motion”) on May 6, 2022 as well.132 K&A filed its Motion for
Summary Judgment (“K&A’s Motion”) on May 7, 2022, along with two Motions in
Limine - one relating to Plaintiff’s Expert David R. Hoffman, PE and one relating to
Plaintiff’s Expert Richard Donze, DO.133 Those motions in limine are resolved in a
separate letter opinion issued contemporaneously with this decision (the “Daubert
Letter Opinion”).
K. Parties’ Contentions
Plaintiffs’ complaints concerning the Marydale Project’s design and
execution distill to issues with (i) oversized HVAC units, (ii) leaky ductwork; and
(iii) lack of testing and balancing. Plaintiffs contend the defective design and
installation of the HVAC systems caused high relative humidity and resulted in
significant mold growth in the tenants’ apartments.134 According to Plaintiffs,
following the mold growth and resulting apartment inspections, every engineer
analyzing the cooling capacity of the HVAC units determined they were grossly
oversized.135 Plaintiffs contend from September 2018, when mold first was
132
D.I. 169.
133
D.I. 170. Weiner and LNWA joined both of the motions in limine. See D.I. 173-174. Sobieski
likewise joined both motions in limine. See D.I. 178-179.
134
Pls.’ Br. in Opp. at 4.
135
Id. at 19, Ex. Z. The ACCA Manual S, published by the Air Condition Contractors of America,
guides HVAC equipment sizing. Manual S states that HVAC heat pump equipment shall satisfy
the load requirements at design condition with a total cooling capacity of 95-115%. Id. at 20. The
HVAC units installed are oversized by 142-234%. Id., Ex. Z at 20. K&A’s expert acknowledges
ACCA Manual S would inform the design professional’s standard of care regarding equipment
selection. Id., Ex. AA at 86-87.
25
discovered, to February 2019, the parties discussed leaky ductwork at nearly every
weekly meeting and conducting leakage tests, blower door tests and smoke tests,
with each test yielding results that illustrated leaky ductwork.136 Plaintiffs further
allege every air flow test performed in the apartments identified a significant
deviation in airflow between supply and return; at least two-hundred cubic feet per
meter more airflow measured coming from the supply versus the return side.137 With
this differential, the return side will pull air from other sources, through an
“envelope” allowing moisture intrusion during periods of high outdoor humidity.138
Plaintiffs allege they dedicated hundreds of hours and thousands of dollars
inspecting apartments for mold growth and professionally remediating the mold
found.139 Lastly, Plaintiffs allege testing and balancing of the HVAC units
contractually was required but was not conducted. That testing, Plaintiffs argue,
could have identified the issues before construction was complete.140
Weiner and LNWA contend the Plaintiffs’ access to the Property never was
restricted and Plaintiffs never sought to monitor the construction’s progress.141
Those defendants allege the HVAC units were inspected by county agencies, the
136
Id. at 21, Ex. Q at 34; 49-51; BB, CC, EE; FF, GG.
137
Id. at 20, Ex. FF; Ex. C at 12-13; Ex. BB, CC.
138
Id. at 21, Ex. D. at 508-509.
139
Id. at 3, Ex. B.
140
Id. at 14, Ex. R.
141
Weiner and LNWA’s Mot. for Summ. J at 10; Vible Dep., 69:9-70:7.
26
architect, DSHA and Plaintiffs during the construction phase.142 Weiner and LNWA
argue LNWA’s responsibilities included having conversations with Plaintiffs to
determine what problems were occurring during the Marydale Project’s construction
and to seek final approval from Plaintiffs for the solutions addressing those
problems.143 But the architect, K&A, was responsible for ensuring renovations and
construction specifications complied with contract documents.144 According to
Weiner and LNWA, LNWA’s day-to-day work involved reviewing workforce
direction and fixing workmanship issues.145 It was K&A, not the contractor, Weiner
and LNWA contend, who signed the payment application and in doing so, confirmed
to the owner the work was acceptable and payment should be made.146 Further,
Weiner and LNWA allege Schiavo with K&A coordinated the creation and
production of the original design documents.147
With respect to design issues, Weiner and LNWA contend the problems
cannot be attributed to them. For example, Weiner and LNWA argue the as-installed
HVAC systems would have been operational for two to three weeks before
construction concluded, and someone would have noticed issues with temperature
142
Id. at 17.
143
Id. at 9; Reynolds Dep. 27:6-28:22.
144
Id. at 17.
145
Id. at 10.
146
Id. at 12.; T. Schiavo Dep. 25:12-21, 39:23-43:3.
147
Id. at 13.
27
control.148 Weiner and LNWA also allege the use of panned ducting “was not a
glaring issue” and Plaintiffs did not protest its application during any of the many
walk-throughs.149 Fully ducted and panned ducting, according to Weiner and
LNWA, are acceptable under codes for renovating and new construction.150 As for
testing and balancing, Weiner and LNWA contend testing and balancing of HVAC
units was not required in the Marydale Project because, under the New Castle
County Code, only HVAC systems that are installed in commercial spaces or involve
“new construction” require testing and balancing.151 The renovations to the
residential units in the Marydale Project, according to Weiner and LNWA, involved
neither a commercial space nor new construction.
Concerning Sobieski, Weiner and LNWA argue Sobieski is liable for failing
to install the HVAC systems and associated ductwork in accordance with the
contract.152 Weiner and LNWA also contend Sobieski contractually was required to
defend and indemnify LNWA.153
148
Id. at 13; Reynolds Dep. 50:8-51:4.
149
Id. at 11. Defendants Weiner and LNWA allege meetings with walk-throughs of the Project
were conducted twice a week. Id. at 10.
150
Id. at 15; Reynolds Dep. 73:23-74:14; 75:18-76:11.
151
Id. at 13; Reynolds Dep. 44:15-50:7. Defendants Weiner/LNWA argue only the community
building of the Marydale Project would require testing as it was the only commercial space and
the residential units were not “new construction.” Id.
152
Br. in Supp. of Opp. of Third-Party Def. J.F. Sobieski Mechanical Contractors, Inc.’s Mot. for
Summ. J. on Third-Party Pl. LNW&A Construction Corp. Inc.’s Third Party Compl. (hereinafter
“Br. in Opp. of Sobieski”) at 3.
153
Id.
28
K&A’s Motion disputes the facts as the other parties present them.
According to K&A, it provided full architectural and engineering design services for
the Marydale Project.154 But unlike “normal construction projects, K&A had no
authority” on the Marydale Project “to authorize or approve even minor changes to
the work.”155 K&A further points out there were no reports of mold or humidity
issues in all of 2017, even after seventy-two residential units were occupied by June
of that year.156
Lastly, Sobieski contends LNWA’s claims that Sobieski’s work was
performed in an unworkmanlike manner, without due care, or in violation of
applicable building codes and construction practices is without factual support.157
Sobieski also contends LNWA’s claim for indemnification fails as a matter of law
because the contractual indemnification requirement was not triggered by the
pleadings and LNWA has no factual support for implied indemnification.158
Similarly, Sobieski contends the Subcontract does not impose on Sobieski a duty to
defend LNWA.159
154
K&A’s Br. in Supp. at 6.
155
Id. at 10. K&A alleges all approvals for any changes could only come from Marydale, CME or
LNWA.
156
Id. at 17.
157
Opening Br. in Supp. of Third-Party Def. J.F. Sobieski Mechanical Contractors, Inc.’s Mot. for
Summ. J. on Third-Party Plaintiff LNW&A Construction Corp. Inc.’s Third-Party Complaint
(hereinafter “Sobieski’s Mot.”) at 2.
158
Id.
159
Id. at 21.
29
ANALYSIS
This opinion resolves each of the defendants’ summary judgment motions.
Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits” show “there is
no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.”160 The movant bears the initial burden of
demonstrating its motion is supported by undisputed material facts.161 If that burden
is met, the non-movant then must demonstrate that there is a “genuine issue for
trial.”162 To determine whether material facts are in dispute, the Court construes the
record in the light most favorable to the non-movant.163
Where the parties have filed cross-motions for summary judgment, as is the
case for LNWA and Sobieski regarding the third-party complaint, “the standard for
summary judgment ‘is not altered.’”164 The mere filing of a cross-motion for
summary judgment is not a waiver of a movant’s right to assert the existence of a
160
Del. Super. Ct. Civ. R. 56(c).
161
Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979) (citing Ebersole v. Lowengrub, 180 A.2d
467 (Del. 1962)).
162
Del. Super. Civ. R. 56(e); see also Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995) (“If the
facts permit reasonable persons to draw but one inference, the question is ripe for summary
judgment.”).
163
Judah v. Del. Tr. Co., 378 A.2d 624, 632 (Del. 1977).
164
Capano v. Lockwood, 2013 WL 2724634, at *2 (Del. Super. May 31, 2013) (quoting Total Care
Physicians, P.A. v. O’Hara, 798 A.2d 1043, 1050 (Del. Super. 2001) (citing United Vanguard
Fund, Inc. v. TakeCare, Inc., 693 A.2d 1076, 1079 (Del. 1997))).
30
factual dispute as to the other party’s motion.165 Even when presented with cross-
motions for summary judgment, this Court is not relieved of its duty to deny
summary judgment if a material factual dispute exists.166 Each motion is considered
separately, and summary judgment will not be granted if the record indicates a
material fact is in dispute or “if it seems desirable to inquire more thoroughly into
the facts in order to clarify the application of law to the circumstances.”167
I. Allied World’s Motion for Summary Judgment is granted as
unopposed.
Allied World is the surety on a performance bond secured by LNWA.168
Under the bond’s terms, Allied World’s obligation arises after certain events. Those
events include: (i) Plaintiffs providing notice to LNW&A Construction Corp. and
Allied World that Plaintiffs are considering declaring LNW&A Construction Corp.
in default; (ii) Plaintiffs actually declaring LNW&A Construction Corp. in default,
terminating the Construction Contract, and notifying Allied World of these actions;
and (iii) Plaintiffs agreeing to pay the balance of the contract price in accordance
165
Capano v. Lockwood, 2013 WL 272 4634, at *2 (Del. Super. May 31, 2013) (quoting Total
Care Physicians, P.A. v. O’Hara, 798 A.2d 1043, 1050 (Del. Super. 2001) (citing United
Vanguard Fund, Inc. v. TakeCare, Inc., 693 A.2d 1076, 1079 (Del. 1997))).
166
Fasciana v. Electronic Data Systems Corp., 829 A.2d 160, 166 (Del. Ch. 2003).
167
Comet Systems, Inc. Shareholders’ Agent v. MIVA, Inc., 980 A.2d 1024, 1029 (Del. Ch. 2008)
(quoting Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962)).
168
Motion of Allied World Insurance Company for Summ. J. (hereinafter “Mot. of Allied World”)
at ¶ 2., Ex. 2.
31
with the terms of the Construction Contract to Allied World or to a contractor
selected to perform the Construction Contract.169
On April 5, 2019, Marydale provided notice to Allied World that it was
“considering declaring” LNW&A Construction Corp. in default.170 Allied World
argues that statement is not enough to trigger its obligation to honor the performance
bond commitments because “[a]t no time has the contract between [Marydale] and
LNWA been terminated.”171 Because Plaintiffs never expressly declared LNW&A
Construction Corp. in default, Allied World contends its obligation under the
performance bond has not arisen. Plaintiffs did not file any opposition to Allied
World’s Motion and conceded at oral argument that summary judgment was
appropriate. Allied World’s Motion for Summary Judgment therefore is granted.
II. Weiner and LNWA’s Motion for Summary Judgment against
Plaintiffs is granted as to punitive damages and fraudulent and/or
negligent misrepresentation and concealment, but denied as to
Plaintiffs’ claims for breach of contract and negligence.
As explained in detail above, three contracts govern Plaintiffs’ relationship
with Weiner and the LNWA entities: the CME Development Agreement, the
Marydale Development Agreement, and the Construction Contract.172 Weiner and
169
Id., Ex. 2, 3.1-3.3.
170
Id., Ex. 2.
171
Id. ¶ 4.
172
Once more, (a) the CME Development Agreement bound Plaintiffs with Weiner & Associates;
(b) the Marydale Development Agreement bound LNWA Developers, LLC., with Plaintiffs; and
(c) the Construction Contract bound LNW&A Construction Corp. with Plaintiffs.
32
LNWA do not seek summary judgment as to Plaintiffs’ breach of contract claims.
Rather, Weiner and LNWA contend they are entitled to summary judgment as to
Plaintiffs’ claims for negligence, fraudulent and negligent misrepresentation or
concealment, civil conspiracy, prohibited trade practices and punitive damages.173
Weiner and LNWA challenge Plaintiffs’ proof as to the applicable standard of care,
breach, and causation, and Plaintiffs contend there is no record supporting a punitive
damages claim. Plaintiffs additionally argue the economic loss doctrine bars
Plaintiffs’ claims arising in tort.
A. Weiner and LNWA’s Motion as to the economic loss doctrine is denied
because the Home Owner’s Protection Act applies to Plaintiffs’ tort
claim.
Delaware’s judicially created economic loss doctrine prohibits recovery in a
tort action where a product has damaged only itself and has not caused personal
injury or damage to other property.174 The doctrine arises from the distinct functions
served by tort law and contract law.175 Liability imposed by tort law protects an
individual and their property from risk of physical harm, while liability imposed by
contract protects a different interest: the “bargained for expectations” of both
173
Weiner and LNWA’s Motion did not address Counts II-IV, VI, or VIII. Those Counts
correspond to claims for breach of contract, breach of implied warranties of habitability and
workmanship, and prohibited trade practices.
174
Danforth v. Acorn Structures, Inc., 608 A.2d 1194, 1195 (Del. 1992) (citations omitted).
175
Id. (citing Moorman Mfg. Co. v. National Tank Co., 435 N.E. 2d 443, 448 (Ill. 1982)).
33
contracting parties.176 The Delaware Supreme Court has held that “the economic
loss doctrine is especially suited to cases where privity of contract” exists.177
For the Court to grant judgment in favor or Weiner and LNWA under the
economic loss doctrine, the Court first must consider whether the Delaware Home
Owner’s Protection Act178 (the “Act”) applies to the Marydale Project. The Act
precludes application of the economic loss doctrine in cases involving the
construction of residential property.179 The General Assembly passed the Act to
protect claims arising in “negligence actions in cases involving the construction of
residential dwellings.”180 It follows that if the Court finds the Act applies to the
Marydale Project, the economic loss doctrine will not bar the Plaintiffs’ tort claims
against Weiner and LNWA.181
176
Id. at 1196.
177
Id. at 1200. The cases to which the Court was referring were cases involving construction.
Marcucilli v. Boardwalk Builders Inc., 1999 WL 1568612, at *4 (Del. Dec. 22, 1999).
178
6 Del. C. §§ 3601-3603.
179
6 Del. C. § 3652.
180
Casale Construction, LLC v. Best Stucco LLC, 2014 WL 1316150, at *2 (Del. Super. Mar. 28,
2014) (“This Bill protects home owners by abolishing the economic loss doctrine adopted in
Danforth v. Acorn Structures, Inc., Del. Supr., 608 A.2d 1194 (1992) as it applies to actions for
negligence in the construction and/or improvement to property used as a residence. The economic
loss doctrine prohibits recovery for economic losses caused by the negligent acts of others. Under
this Bill, a home owner may recover for such losses. This Bill is intended to apply to any action,
regardless of when it occurs, unless otherwise prohibited by law.”) (citing 138th General
Assembly, House Bill No. 519 (Apr. 24, 1996)).
181
See, e.g., Marcucilli v. Boardwalk Builders Inc., 1999 WL 1568612, at *6 (Del. Dec. 22, 1999).
34
In construing and applying an unambiguous statute, the Court’s role is to give
effect to the plain meaning of the statute’s words.182 Neither side argues the Act is
ambiguous, and the Act’s plain terms encompass this case. The Act reads:
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.183
Weiner and LNWA argue the Act does not apply to the claims against them
because the Act was not intended to apply to claims made by a “commercial
entity,”184 like Marydale, or to a multi-unit apartment complex, like the Marydale
Project. But this argument finds no support in the statute itself or the cases applying
it. Although no court directly has addressed the Act’s application to an entity owner
of a multi-unit residence, nothing in the Act’s terms or in its limited legislative
history suggest this Court may or should create out of whole cloth the exception
Weiner and LNWA propose to the statute’s scope.
Plaintiffs’ tort claims allege Defendants’ design and installation of oversized
HVAC units and ductwork led to the presence of mold in residential apartment units.
182
Pavulak v. State, 880 A.2d 1044,1046 (Del. 2005) (citing Coleman v. State, 729 A.2d 847, 851
(Del.1999) (citing Hudson Farms, Inc. v. McGrellis, 620 A.2d 215, 217 (Del.1993))).
183
6 Del. C. § 3652.
184
Defendants use the phrase “commercial entity.” It is unclear what they intend to convey with
this characterization. To the best of the Court’s knowledge, Plaintiffs are both non-profit
organizations under the ultimate control of the Catholic Diocese.
35
Put differently, Plaintiffs are contending they should be permitted to recover for
“negligence in the construction or manner of construction” of “an improvement to
residential real property.” The Act’s terms do not limit its application to non-entity
owners or to single-unit homes. Instead, the Act broadly uses the words
“improvement” and “residential real property.” Under the Act, “improvement”
includes “buildings . . . and other structures affixed to and on land, as well as any
changes to the land itself” and “residential real property” “means any estate in real
property improved by a dwelling for use as a residence.”185 The Marydale Project
meets these broad definitions. It is an estate in real property and the improvements
were made so the property could be used as a residence for elderly and low-income
individuals. The improvements included structures affixed to and on the land. The
economic loss doctrine therefore does not apply to Plaintiffs’ tort claims, and Weiner
and LNWA’s Motion relying on the Act is denied.
B. Weiner and LNWA’s Motion as to standard of care and breach is denied
because Hoffman produced a timely report containing this information.
Weiner and LNWA next contend Plaintiffs’ negligence claim fails because
Plaintiffs have not identified the standards of care these defendants allegedly
breached. This argument rests on Weiner and LNWA’s contention that Plaintiffs’
expert, Hoffman, did not identify the specific standard of care applicable to Weiner
185
6 Del. C. §§ 3651(2), 3651(3).
36
and LNWA until Plaintiffs produced a chart186 (the “December 21st Chart”), which
was provided to Defendants after Plaintiffs’ expert report deadline had passed. The
record contradicts this characterization. Hoffman produced a timely 76-page
report187 (the “Hoffman Report”) that identified his opinions concerning both the
standards of care and associated breaches with respect to the Marydale Project. His
opinions are sufficient to support a claim of negligence. Although the Hoffman
Report does not expressly use the phrase “standard of care,” the report makes it clear
he is opining as to the standards (i) the defendants should have met; and (ii) how
their conduct fell short.188 The December 21st Chart was produced in advance of
Hoffman’s deposition and simply summarized the opinions set forth in his report. It
is plain from the record that Plaintiffs timely disclosed their expert’s opinion
regarding both the standard of care and breach necessary for a negligence claim to
survive a motion for summary judgment.189
186
K&A’s Mot., Ex. 40.
187
Pls.’ Br. in Opp., Ex. C.
188
See, e.g., Pls.’ Br. in Opp., Ex. C. Table #1 at 7 (“The installed split system heat pumps cannot
maintain these indoor conditions indicated as the ‘Basis of Design’ because the same have no way
of measuring space humidity and therefore during both full load and especially during part load
conditions the same is not capable of limiting the space relative humidity to 50%.”) See also, “We
did not observe duct lining on the return air duct to within 5 feet of the indoor air handling units.
This should be provided at all units to comply with the Contract Documents.” Id. “Volume
dampers are not installed on any of the return air grilles and are only installed within the registers
for the supply air ducts. Volume dampers are critical for allowing an HVAC system to be tested
and balanced…” Id. Table #2 at 8.
189
The defendants challenged Hoffman’s opinion on other bases in a Daubert motion. Those
additional arguments are addressed and rejected in the Court’s letter opinion addressing the
defendants’ Daubert motions.
37
C. Weiner and LNWA’s Motion as to causation is denied because there are
factual issues concerning causation that must be resolved at trial.
As to Weiner and LNWA’s argument that Plaintiffs have not provided
evidence of causation sufficient to sustain a negligence claim, the Court disagrees.
In summary, Plaintiffs allege improperly designed HVAC systems and leaky
ductwork led to high levels of relative humidity in the residential units. Their
position is supported by evidence in the record, thereby confirming the existence of
a factual dispute regarding causation. Among the evidence Plaintiffs cite is (i)
testimony by Brightfields to the effect that oversized units and short cycling was a
possible cause of heightened humidity and, therefore, mold growth; (ii) testimony
by Harry Neill, an industrial hygienist expert who opined the design, installation,
operation and/or maintenance of the HVAC systems played a critical role in causing
or contributing to high humidity conditions; and (iii) complaints by the residents
regarding humidity and mold in their residences. As explained in the Daubert Letter
Opinion, when forming his opinion, Hoffman is entitled to rely on testing by others,
including reports of high-humidity conditions in the units and the presence of mold
on personal property. Contrary to Weiner and LNWA’s position, Hoffman’s
temporary fix and the fact that some residential units still experienced mold
following the fix does not disprove causation. As indicated, the fix was temporary
and only addressed short-cycling concerns, not leaky ductwork.
38
D. Weiner and LNWA’s Motion as to Plaintiffs’ claims of fraudulent and/or
negligent misrepresentation and concealment is granted because
Plaintiffs have not provided evidence of reliance or wrongfulness.
Next, Weiner and LNWA seek summary judgment as to Plaintiffs’ claims of
fraudulent and/or negligent misrepresentation and concealment. Although Plaintiffs
resist summary judgment as to these claims, Plaintiffs do not plainly articulate their
theory with respect to these claims or point to record evidence to support any such
theory. Plaintiffs neither discuss the elements necessary to prove these claims nor
cite evidence in the record that would satisfy those elements.190 This alone is enough
to award summary judgment to Defendants as to these claims.191 For the sake of a
complete analysis, however, the Court briefly will discuss the absence of any
identified proof with respect to these claims.
Fraudulent concealment is an intentional nondisclosure of material facts by
one who owes a duty to disclose; typically, the defrauding party has knowledge of
the facts they are concealing.192 A valid claim for fraudulent concealment requires
that a plaintiff demonstrate the defendant engaged in an “affirmative act of
concealment” that “put the plaintiff off the trail of inquiry,” preventing them “from
gaining knowledge of the facts.”193 Put simply, a fraudulent concealment claim must
190
See Pls.’ Br. in Opp. at 30-31.
191
Broska, 668 A.2d at 1364.
192
Allen v. Layton, 235 A.2d 261, 264 (Del. Super. 1967).
193
Washington House Condominium Ass’n of Unit Owners v. Daystar Sills, Inc., 2017 WL
3412079, at * 18 (Del. Super. Aug. 8, 2017) (citing In re Dean Witter P'ship Litig., 1998 WL
442456, at *5 (emphasis added)).
39
adequately plead (i) actual knowledge of wrong done, or (ii) an affirmative act to
conceal facts from the plaintiff.194 As an example, the Court in Nardo v. Guido
DeAscanis & Sons, Inc.,195 held a claim of fraudulent concealment failed where the
plaintiff produced no facts indicating roof rafters were improperly placed with
fraudulent intent to conceal such a fact from the owner, or that there was ever any
affirmative act of concealment by the builder.196 The difference between negligent
and fraudulent concealment is that “allegations of scienter and of a positive act of
concealment are generally necessary” to establish fraudulent concealment but are
not required for negligent concealment.197
To maintain a claim for fraudulent misrepresentation, on the other hand, a
plaintiff must demonstrate (i) the defendant made a false representation; (ii) the
defendant knew or believed that representation was false or made it with reckless
indifference to the truth; (iii) the false representation was intended to induce the
plaintiff to do or not do something; (iv) the plaintiff’s action or inaction was taken
194
Layton v. Allen, 246 A.2d 794,798 (Del. 1968) (superseded by statute as acknowledged in GI
Associates of Delaware, P.A. v. Anderson, Del. Super. Feb. 15, 2021). But see Krahmer v.
Christie’s Inc., 903 A.2d 773, 780 (Del. Ch. 2006) (“After the Layton decision was rendered, the
Delaware General Assembly enacted 18 Del. C. § 6856, which restricted the court’s holding in
medical malpractice cases. However, Layton remained good law as applied in other contexts.”)
(internal citations omitted).
195
254 A.2d 254 (Del. Super. 1969).
196
Nardo v. Guido DeAscanis & Sons, Inc., 254 A.2d 254, 256 (Del. Super. 1969)
197
Allen v. Layton, 235 A.2d 261, 265 (Del. Super. 1967). Delaware has adopted the reasoning
behind the following cases concerning negligent concealment and fraudulent concealment: Guy v.
Schuldt, 138 N.E.2d 891, 895 (1956); Rosane v. Senger, 149 P.2d 372 (1944); and Hinkle v.
Hargens, 81 N.W.2d 888 (1957).
40
in justifiable reliance upon the representation; and (v) the plaintiff was damaged by
their reliance.198 To support a negligent misrepresentation claim, the plaintiff must
show (i) the defendant had a duty to provide the plaintiff with accurate information;
(ii) the defendant gave the plaintiff false information; (iii) the defendant failed to
exercise reasonable care in obtaining or communicating information; and (iv) the
plaintiff suffered a pecuniary loss caused by justifiable reliance upon the false
information.199
Nothing in the record would meet Plaintiffs’ burden of proof with respect to
these concealment or misrepresentation claims. Following the discovery of mold in
the residential units, the parties to this action worked together to identify the cause
and find a solution. Plaintiffs do not present evidence to the contrary; nothing in the
record establishes Weiner or LNWA acted to prevent Plaintiffs from knowing any
fact that would be of value to addressing mold concerns. Further, none of the
choices Weiner or LNWA made were a “wrong done;” although their design or
construction choices did not align with the Marydale Project’s dimensions, this was
198
Oglesby v. Conover, 2011 WL 3568276, at *3 (Del. Super. May 16, 2011)(citing Carrow v.
Arnold, 2006 WL 3289582 at *8 (Del. Ch. Oct. 31, 2006)).
199
Smith v. Peninsula Adjusting Co., Inc., 2011 WL 2791252, at *3 (Del. Super. June 16, 2011)
citing Atwell v. RHIS, Inc., 2006 WL 2686532 (Del. Super. Aug. 18, 2006); see also Outdoor
Techs., Inc. v. Allfirst Fin., Inc., 2001 WL 541472 (Del. Super. Apr. 12, 2001).
41
a construction error, rather than the “wrongfulness” necessary for a fraudulent
concealment claim.
Further, the only evidence Plaintiffs have put forth regarding any intentional
or knowing misrepresentation by Weiner and LNWA relates to the use of panned
ducting. But as to that representation, there is no evidence of reliance by Plaintiffs,
which is necessary to maintain a negligent or fraudulent misrepresentation claim.
Plaintiffs in this case have not come forward with any disputed issues of material
fact from which a fact finder could conclude Plaintiffs relied upon a purported
misrepresentation from Weiner and LNWA. Accordingly, Weiner and LNWA’s
Motion is granted as to Plaintiffs’ claims for fraudulent and negligent
misrepresentation and concealment.
E. Weiner and LNWA’s Motion as to punitive damages is granted because
Plaintiffs have not produced evidence of egregious conduct.
Finally, Weiner and LNWA’s Motion asks this Court to grant them judgment
as a matter of law concerning Plaintiffs’ claim for punitive damages. Punitive
damages, which serve as a deterrent against future wrongful conduct, are appropriate
when the record supports a conclusion that the defendant acted in a reckless and
egregious manner.200 Without “evidence of egregious conduct of an intentional or
200
Roberts v. Delmarva Power & Light Co. 2 A.3d 131, 145 (Del. Super. 2009) (citations omitted).
See also Jardel Co., Inc. v. Hughes, 523 A.2d 518, 528 (Del. 1987) “[P]unitive damages implicate
other societal policies. Though the injured plaintiff may receive the punitive damage award, to the
extent the plaintiff has already been fully compensated. By actual damages an award of punitive
damages is, in a real sense, gratuitous.” (citations omitted.).
42
reckless nature” in the record, a claim for punitive damages cannot survive.201
Where a defendant’s conduct, although unintentional, has been “particularly
reprehensible, i.e. reckless, or motivated by malice or fraud,” punitive damages may
be sought.202
Plaintiffs have not produced evidence of willful, fraudulent, malicious, or
reckless conduct by Weiner or LNWA. Plaintiff’s own opposition brief is vague
concerning its support for punitive damages against Weiner and/or LNWA.
Consuming little more than a page of Plaintiffs’ brief, the argument contains no
citations to specific evidence in the record revealing such conduct. When pressed
by the Court at oral argument for evidence supporting their punitive damages claim,
Plaintiffs argued (i) no work change order was issued concerning the ductwork
change; (ii) LNWA ignored the contractual requirement for testing and balancing
the HVAC units; (iii) Weiner and LNWA ignored written correspondence regarding
the use of panned ductwork; and (iv) the “as-built” drawings of the Marydale Project
did not show the use of panned ductwork. But at most, these factual issues could
establish negligence or breach of contract. Nothing in the record Plaintiffs cite
evinces malice, fraud or willful breach of contract that would permit a jury to award
punitive damages against Weiner and LNWA. Although Plaintiffs’ brief focuses on
201
Jardel Co., Inc. v. Hughes, 523 A.2d at 529.
202
Id.43
Marydale’s vulnerable population and their exposure to a microscopic fungus, that
argument does not address whether or how Defendants’ alleged conduct met the
punitive damages standard. Weiner and LNWA’s Motion as to Plaintiffs’ punitive
damages claim therefore is granted.
III. K&A’s Motion is granted as to Plaintiffs’ breach of contract and
punitive damages claims and denied as to the negligence claim.
The Architect Agreement sets forth K&A’s contractual obligations to
Plaintiffs. Plaintiffs’ claims against K&A include the following: negligence, breach
of contract, fraudulent or negligent misrepresentation or concealment, civil
conspiracy, prohibited trade practices, and punitive damages.203 But at oral
argument, Plaintiffs confirmed they were not pursuing claims for fraudulent or
negligent misrepresentation or concealment, prohibited trade practices, or civil
conspiracy against K&A. Those claims therefore are dismissed from this action.
A. K&A’s Motion is granted as to Plaintiffs’ breach of contract claim
because Plaintiffs have failed to point to the contractual provision
allegedly breached.
K&A contends Plaintiffs have failed to state a negligence claim or a breach
of contract claim against it because no evidence in the record points to K&A
breaching a specific duty or facts indicating such a breach was the proximate cause
203
Those claims correspond to the following counts in the Amended Complaint: Count I
(Negligence); Count V (Breach of Contract); Count VII (Fraudulent and/or Negligent
Misrepresentation and Concealment); Count VII (Civil Conspiracy); Count VIII (Prohibited Trade
Practices); and Count IX (Punitive Damages). Compl. at 21-33.
44
of mold growth found in the apartment units. Specifically, K&A argues Plaintiffs’
expert failed to articulate what K&A’s contractual or common law duty was or how
it was breached. In response, Plaintiffs continued to allege a breach of contract claim
against K&A but did not identify a single contractual provision allegedly breached.
Instead, Plaintiffs ask this Court to consider the Architect Agreement as a whole
when evaluating Plaintiffs’ breach of contract claim against K&A.
This is not how Delaware courts address breach of contract claims. Under
Delaware law, simply referring generally to the parties’ contract will not sustain a
claim for breach of contract.204 A party must identify the particular contractual terms
that were breached. K&A propounded interrogatories asking Plaintiffs to identify
the contractual provisions K&A purportedly breached, but Plaintiffs did not do so.
Instead, Plaintiffs responded to K&A’s interrogatories by copying and pasting
paragraphs 37-45 from their Complaint.205 Similarly, Plaintiffs did not identify a
single applicable contractual provision in their opposition brief or during oral
argument. In essence, Plaintiffs contend they can prove a breach of contract because
a contract governed K&A’s work and damages resulted from that work. That ipse
204
See, e.g., BET FRX LLC v. Myers, 2022 WL 1236955, at *1 (Del. Ch. Apr. 27, 2022) (“The
plaintiff’s claims for breach of the express and implied terms of the LLC agreement fail because
the plaintiff fails to identify any express or implied terms allegedly breached.”). See also, id. at *4
(“Plaintiff…admit(s) that the Amended Complaint does not expressly identify a provision of the
LLC Agreement allegedly breached. This deficiency is typically fatal.”) (citations omitted).
205
Compare Plaintiffs Marydale Preservation Associates, LLC and Catholic Ministry to the
Elderly, Inc. Responses to Defendant Kitchen and Associates Services, Inc. First Set of
Interrogatories Directed to Plaintiffs, ¶47 Answ. with Compl. ¶¶ 37-45.
45
dixit does not satisfy Plaintiffs’ burden in the face of a dispositive motion. It is not
incumbent on the Court to search through the contract for terms that might have been
breached. Accordingly, the Court awards K&A summary judgment as to the breach
of contract claim against it.
B. K&A’s Motion is denied as to Plaintiffs’ negligence claim because factual
disputes exist concerning K&A’s design and installation of the HVAC
systems.
As to the negligence claim against K&A, Plaintiffs and their expert, Hoffman,
have identified K&A’s purported duties and breaches in the design process.206
According to Hoffman, K&A was obligated to design an HVAC system appropriate
for the allotted space and consistent with the basis for that design. Hoffman identifies
multiple ways in which K&A failed to appropriately design the HVAC system. 207
K&A’s design called for York LX Series units, which were oversized for the space
per ACCA Manual S.208 The use of an oversized unit, Hoffman opines, led to short
cycling and high relative humidity. The record evidence, although disputed, is
sufficient to allow a jury to conclude that K&A breached its duty and caused damage
to the Plaintiffs, including harm to property and the need to take remedial measures.
K&A’s Motion as to the negligence claim therefore is denied.
206
See supra note 188.
207
Pls.’ Br. in Opp., Ex. C; K&A’s Mot., Ex. 40.
208
See supra note 135.
46
C. K&A’s Motion as to punitive damages is granted.
Plaintiffs confirmed during oral argument that they are not pursuing a punitive
damages claim as to K&A. K&A’s Motion as to that claim therefore is granted.
IV. LNWA and Sobieski’s Cross-Motions are denied because there are
disputed material facts concerning the third-party complaint.
LNWA and Sobieski are parties to the Subcontract and each filed summary
judgment motions against the other. None of the arguments raised in those motions
supports entry of judgment as a matter of law.
A. LNWA’s Cross-Motion as to Sobieski’s procurement of insurance is
denied because disputed issues of fact exist concerning this obligation.
LNWA argues it is entitled to summary judgment as to Sobieski’s breach of
its contractual obligation to procure insurance naming LNWA as an insured.209 But
disputed issues of fact exist concerning this claim. The record contains different
versions of an insurance certificate, and it is unclear to the Court at this time which
one is the operative certificate as to these parties. The jury’s resolution of that factual
issue will resolve whether Sobieski met its obligation to procure insurance. The
Court therefore denies LNWA’s Cross-Motion on that issue.
209
Mot. of LNW&A Construction Corp., Inc. for Summ. J. on Third-Party Compl. Against J.F.
Sobieski Mechanical Contractors, Inc. ¶ 4.
47
B. LNWA’s Cross-Motion as to Sobieski’s breach of its duty to defend is
denied because no such contractual obligation exists in the Subcontract.
LNWA also argues it is entitled to summary judgment regarding Sobieski’s
breach of its purported duty to defend. But the Court has not found, and LNWA has
not identified, any express “duty to defend” language in the Subcontract. The
Subcontract’s indemnification clause reads, in pertinent part:
To the fullest extent permitted by law, the Subcontractor shall
indemnify and hold harmless the Owner, Contractor, Architect,
Architect’s consultants, and agents and employees of any of them from
and against claims damages, losses and expenses, including but not
limited to attorney’s fees, arising out of or resulting from performance
of. The Subcontractor’s Work under this Subcontract, provided that any
such claim, damage, loss or expense is attributable to bodily injury,
sickness, disease or death, or to injury to or destruction of tangible
property (other than the Work itself) . . . 210
A “duty to defend” is a contractual obligation that is distinct from a “duty to
indemnify.”211 A duty to defend generally is broader than a duty to indemnify and
requires the obligor to pay the costs of defending the obligee against a particular type
of claim.212 In contrast, a duty to indemnify arises if an underlying claim is
successful.
LNWA acknowledges the Subcontract does not expressly refer to a duty to
defend. LNWA nevertheless argues Pike Creek Chiropractic v. Robinson213
210
Subcontract Agreement, Indemnification, § 4.6.1.
211
Liggett Group Inc. v. Affiliated FM Ins. Co., 2001 WL 1456995, at *2 (Del. Super. Sept. 12,
2001).
212
Id. at *3.
213
637 A.2d 418 (Del. 1994).
48
supports the proposition that the Subcontract’s “hold harmless” language must
encompass something broader than the duty to indemnify and therefore must create
a duty to defend. But that case does not support the proposition that “hold harmless”
language in an indemnification clause is equivalent to a duty to defend. To the
contrary, in that case the Delaware Supreme Court held that language requiring the
indemnitor to hold an indemnitee harmless against “any liabilities and expenses,
including attorney’s fees” meant the indemnitor was required to pay the attorneys’
fees the indemnitee incurred in enforcing the indemnification clause.214 The phrase
“duty to defend” appears only once in Pike Creek Chiropractic and that is in the
factual background portion of that case.
In short, there is no contractual duty to defend in the Subcontract. Settled case
law indicates a duty to indemnify arises at the conclusion of litigation.215 If LNWA
succeeds in its indemnification claim, it also may be entitled to the attorneys’ fees it
incurred to bring that claim, consistent with the Subcontract’s “hold harmless”
clause and Pike Creek Chiropractic. But LNWA has not pointed to any contractual
obligation requiring Sobieski to advance defense costs during the pendency of the
proceeding. Accordingly, LNWA’s Motion is denied as premature.
214
Pike Creek Chiropractic, 637 A.2d at 422-23. In other contexts, this is called “fees on fees” or
“fees for fees.”
215
Mine Safety Appliances Company v. AIU Insurance Company, 2015 WL 5829461, *6 (Del.
Super. Aug. 10, 2015).
49
C. Sobieski’s Cross-Motion is denied because whether an “injury” to
“tangible property” has occurred is a factual dispute for the jury to
resolve.
Sobieski argues it is entitled to summary judgment regarding LNWA’s
indemnification claim against it because, contrary to LNWA’s position, the
Subcontract’s indemnification clause has not been triggered. Sobieski contends
Plaintiffs in this case have made no claim for bodily injury, sickness, disease or
death, or for injury to or destruction of tangible property, and such a claim is
necessary to trigger an indemnification obligation under the Subcontract. But the
record is otherwise. Plaintiffs made a claim against LNWA for injury to “tangible
property.” According to Plaintiffs, as a result of Defendants’ negligence, Plaintiffs
had to address “injury” to their residents’ personal property, including the costs to
clean and replace personal effects due to mold growth. The jury will determine
whether Plaintiffs successfully prove this injury. Whether such an “injury” to
“tangible property” occurred as a result of Defendants’ conduct will determine
Sobieski’s indemnification obligations, but the Court cannot resolve that factual
question on the record before it.
D. Sobieski’s Cross-Motion as to liability is denied because expert testimony
has identified factual disputes regarding Sobieski’s failure to perform in
accordance with the Subcontract.
Lastly, Sobieski argues it is entitled to summary judgment regarding liability
because there is no factual support for LNWA’s claim that Sobieski’s work was
50
performed in an unworkmanlike manner, without due care, and in violation of
applicable codes and practices. But both Plaintiffs and LNWA have identified
expert opinions and factual record support for their contention that Sobieski was
negligent or failed to perform in accordance with the Subcontract. First, Sobieski
concedes it did not test and balance the HVAC equipment after installation.
Plaintiffs contend this obligation existed in contract.216 LNWA argues that if there
was a contractual obligation to test and balance the HVAC systems after installation,
it was Sobieski’s responsibility and not LNWA’s. Second, Plaintiffs’ and LNWA’s
experts identified evidence of leaky ductwork installed in the units, and ductwork
was Sobieski’s responsibility. These disputed facts and whether Sobieski ultimately
is responsible for problems resulting from the Marydale Project’s construction are
issues for trial. Sobieski’s Cross-Motion for Summary Judgment therefore is denied.
CONCLUSION
For the foregoing reasons, (i) Allied World’s Motion is GRANTED as
unopposed; (ii) Weiner and LNWA’s Motion is GRANTED as to fraudulent and/or
negligent misrepresentation and concealment and punitive damages and DENIED
as to negligence; (iii) K&A’s Motion is GRANTED as to breach of contract and
216
LNWA disputes the presence of the obligation within the contract but did not move for
summary judgment on this point.
51
punitive damages and DENIED as to negligence; (iv) LNWA’s Cross-Motion is
DENIED; and (v) Sobieski’s Cross-Motion is DENIED.
IT IS SO ORDERED.
52