The opinion
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
___________________________________
)
)
PHILADELPHIA INDEMNITY INSURANCE )
CO., A/S/O 1441 RHODE ISLAND AVE )
CONDOMINIUM ASSOCIATION, )
)
Plaintiffs, )
) Civil Action No.15-765
) (EGS)
v. )
)
)
LEND LEASE (U.S.) )
CONSTRUCTION, INC. )
)
)
)
Defendant. )
___________________________________)
MEMORANDUM OPINION
In January 2014, a water sprinkler line burst inside the
condominium property located at 1441 Rhode Island Ave. in
Washington, D.C. Compl., Docket 1-2 at ¶ 7. The condominium
Association’s insurer, Philadelphia Indemnity Insurance Company
(“Plaintiff”), compensated the Association for all losses,
totaling $107,552.74. Id. ¶ 10. 1 Plaintiff filed this lawsuit
against Defendant Lend Lease (U.S.) Construction, Inc.
(“Defendant”) for breach of contract and negligence due to its
1 Plaintiff Philadelphia Indemnity Insurance Company moves as
subrogee of 1441 Rhode Island Ave. Condominium Association
(“Association”). The Court will refer to Philadelphia Indemnity
Insurance Company as “Plaintiff” and the Condominium Association
as “Association” in this opinion.
alleged faulty construction of the condominium between 2002 and
2004. Id. ¶¶ 13-20. Plaintiff now concedes that its breach of
contract claim fails, but argues discovery should proceed on its
negligence claim. 2 Pl.’s Mem. Opp., Docket No. 11 at 6. Defendant
moves for Judgement on the Pleadings arguing that the
Association is a successor of the original owner of the
property, Fairfield D.C. Limited Partnership (“Fairfield”), who
signed a 2002 construction contract (“Contract”) with the
Defendant. Def.’s Mem. Supp. Mot. J. Pleadings, Docket No. 10.
Defendant argues a finding that the Association is a successor
prohibits Plaintiff’s negligence claim pursuant to the
Contract’s waiver-of-subrogation clause. Id. Upon consideration
of the motion, the response and reply thereto, the applicable
law, the entire record, and for the reasons stated below,
Defendant’s motion is DENIED.
I. BACKGROUND
A. The Contract
On June 19, 2002, Defendant signed a Contract with
Fairfield to construct a nine-story apartment building and
refurbish an adjacent townhouse located at 1441 Rhode Island
Avenue NW. Pl.’s Mem. Opp. at 1. Defendant completed its
2 “As noted, Plaintiff has conceded it is not a contracting party
in this case. As a consequence, the only remaining count would
be Plaintiff’s negligence count, which sounds exclusively in
negligence law.” Pl.’s Mem. Opp., Docket No. 11 at 6.
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construction in late 2004, at which time the units were ready
for occupancy. Compl. ¶ 5. At some point in 2004, Fairfield sold
the Building to 1441 Rhode Island Avenue, LLC (“1441 LLC”).
Def.’s Statement of Points at 2. The property was later conveyed
to the Association. Id. 3
The 2002 Contract signed by Fairfield and Defendant
includes the following provisions:
. . . [I]f after final payment property insurance is to
be provided on the completed Project through a policy or
policies other than those insuring the Project during
the construction period, the Owner shall waive all
rights in accordance with the terms of Subparagraph
11.4.7 for damages caused by fire or other cause of loss
covered by this separate property insurance. All
separate policies shall provide this waiver of
subrogation by endorsement or otherwise. 4
Contract, Docket No. 10-1, Sec. 11.4.5. (emphasis added). The
Waiver of Subrogation clause states:
[t]he Owner and Contractor waive all rights against (1)
each other . . . for damages caused by fire or other
causes of loss to the extent covered by property
insurance . . . A waiver of subrogation shall be
effective as to a person or entity even though that
person or entity would otherwise have a duty of
indemnification, contractual or otherwise.
3 The exact date that the Association acquired the property is
unknown. Pursuant to unexecuted copies of the Condominium
Declaration, Plaintiff suggests that Fairfield’s ownership
interest ceased sometime between June 19, 2002 and March of
2004. Pl.’s Mem. Opp. at 2; see also Ex. A., Docket No. 11-2.
4“Owner” means “the Owner or the Owner’s authorized
representative.” Contract, Docket No. 10-1 at Sec. 2.1.1. The
first page of the Contract identifies Fairfield as the “owner”.
Id. at 3.
3
Id. at Sec. 11.4.7. (emphasis added). The Contract also includes
a “Successors and Assigns” provision, which states:
“[t]he Owner and Contractor respectively bind
themselves, their partners, successors, assigns and
legal representatives to the other party hereto and to
partners, successors, assigns and legal representatives
of such other party in respect to covenants, agreements,
and obligations contained in the Contract Documents.” 5
Id. at Sec. 13.2.1. (emphasis added).
II. STANDARD OF REVIEW
A Rule 12(c) motion is “functionally equivalent” to a Rule
12(b)(6) motion and governed by the same standard. Rollins v.
Wackenhut Servs., Inc., 703 F.3d 122, 130 (D.C. Cir. 2012). A
motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
“tests the legal sufficiency of a complaint.” Browning v.
Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A complaint must
contain “a short and plain statement of the claim showing that
the pleader is entitled to relief, in order to give the
defendant fair notice of what the . . . claim is and the grounds
upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation marks
omitted; alteration in original). While detailed factual
allegations are not necessary, plaintiff must plead enough facts
“to raise a right to relief above the speculative level.” Id.
5 Successor is not defined by the Contract.
4
“The court is limited to considering acts alleged in the
complaint, and documents attached to or incorporated by
reference in the complaint, matters of which the court may take
judicial notice, and matters of public record.” Maniaci v.
Georgetown Univ., 510 F. Supp. 2d 50, 59 (D.D.C. 2007) (internal
citations omitted). The Court must construe the complaint
liberally in plaintiff's favor and grant plaintiff the benefit
of all reasonable inferences deriving from the complaint. Kowal
v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).
However, the Court must not accept plaintiff's inferences that
are “unsupported by the facts set out in the complaint.” Id.
“Nor must the court accept legal conclusions cast in the form of
factual allegations.” Id. “[O]nly a complaint that states a
plausible claim for relief survives a motion to dismiss.”
Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173
L.Ed.2d 868 (2009). 6
6 Defendant asserts that Maryland law should be applied to this
dispute, pursuant to the choice of law provision included in the
Contract. Def.’s Mem. Supp. at 3, fn 2. Plaintiff does not
dispute application of Maryland law. See Pl.’s Mem. Opp. at 4,
citing Maryland law. The Court will therefore apply Maryland law
in resolving this dispute.
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III. DISCUSSION
Defendant argues that the Association is a successor to
Fairfield under the Contract, thereby barring Plaintiff’s
negligence claim. Def.’s Reply, Docket No. 13 at 2. Plaintiff
insists the Association is not a successor to Fairfield because
(1) it is the second owner since Fairfield; (2) there is no
evidence that the Association had any knowledge of the Contract
when it purchased the property; and (3) the “full benefit of the
exchange” was complete before the Association acquired the
property. Pl.’s Opp. Mem. at 3-4.
Although it is possible that Plaintiff’s negligence claim
is barred by a finding that the Association is a “successor”
under the Contract, see Contract at Sec. 11.4.7. ([t]he Owner
and Contractor waive all rights against (1) each other . . . for
damages caused by fire or other causes of loss), the current
record is insufficient to determine whether the Association
should be deemed a successor.
In non-labor contract cases, successor is generally defined
as “one who takes the place that another has left, and sustains
the like part or character.” Safer v. Perper, 569 F.2d 87, 95
(D.C. Cir. 1977) (citations omitted). Applying Maryland law, the
Safer Court considered the following factors to determine
successorship: (1) the nature of the relationship between the
original contracting party and the new owner; (2) whether there
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was any overlap between the two entities; and (3) if the
original party’s obligations were completely discharged prior to
the successor assuming interest in the property. Id. In Safer,
the purchaser of a foreclosure (Somerset) took the place of the
original owner (Winthrop) by paying the contractor. The Court
concluded that:
Thus with respect to the very obligations created by the
construction contract itself, [Somerset] occupied the
place that Winthrop abdicated. Not only did [Somerset]
“sustain the like part” as Winthrop, it sustained the
very same part as Winthrop.
Id. at 96. Guided by Safer, the Court in Crown Oil and Wax Co.
of Delaware, Inc. v. Glen Const. Co. concluded that Frederick
Hotel Limited Partnership (“Frederick”) was successor to Crown
Oil and Wax Co. (“Crown”) because:
[Frederick] took [Crown’s] place by agreeing that the
construction contract costs would be its sole
responsibility. … [a]lso, there is continuity in
management for the owner of the hotel project and some
continuity of equitable ownership in the succession from
[Crown] to [Frederick].
320 Md. 546, 569 (Ct. App. Md. 1990).
The record in this case is devoid of similar facts.
The record does not indicate (1) when Defendant completed
construction; (2) when full payment was received; (3) whether
the Association assumed any responsibility for payments to
Defendant; (4) when the Property passed from Fairfield to 1441
LLC; (5) when the property was conveyed to the Association; (6)
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what, if any, knowledge the entities who purchased the property
from Fairfield had about the Contract; and (7) if there was any
overlap in management between Fairfield and the Association. 7
Defendant asserts that Fairfield’s “obligations under the
Contract were not yet fully satisfied” when the Association
purchased the property. Def.’s Reply Mem. at 3. Nothing in the
record supports this argument. Defendant also claims that “the
property owner and Land Lease agreed to have a certain meeting
one month before the expiration of the one-year warranty.” It is
unclear if Defendant is merely restating the general provision
included in the Contract or rather asserting that it agreed to
have a meeting with the Association. Id.
For these reasons, the Court cannot determine whether the
Association should be deemed the successor of Fairfield on the
current record. Therefore, the parties shall meet and confer and
submit a proposed schedule for discovery that is limited to the
questions identified supra and any other facts identified by the
parties that are necessary for the Court to properly determine
the question of successorship.
7 The Condominium Declaration identifies Sonil S. Gehani as the
manager of 1441 Rhode Island, LLC, and Keith J. Willness as
trustee, but the record does not contain other references to
these individuals or identify managers for the Association.
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III. CONCLUSION
For the reasons stated above, Lend Lease’s Motion for
Judgment on the Pleadings is DENIED. An appropriate order
accompanies this Memorandum Opinion.
Signed: Emmet G. Sullivan
United States District Judge
March 18, 2016
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