Opinion
CV-03-856-ST.
July 2, 2004
OPINION AND ORDER
INTRODUCTION
These claims arose when the roof of a house owned by James and Carole Webb (the "Webbs") in Baker City, Oregon, began to leak. Plaintiff Country Mutual Insurance Company ("Country") insured the Webbs' house. After the leak was discovered, Country made a payment to the Webbs pursuant to their policy. Country now seeks subrogation in the amount of $84,761.91 from defendant Gyllenberg Construction, Inc. ("Gyllenberg"), who built the Webbs' house. Gyllenberg in turn has filed third-party claims against third-party defendants ASC Profiles, Inc., fka BHP Steel Building Products USDA, Inc. ("BHP"), who manufactured the roof, and Union Lumber Co., Inc., dba Bronson Lumber Co. ("Bronson"), who sold the roof materials to Gyllenberg.
I. Country's Claims
Country's First Amended Complaint (docket #17) alleges two claims against Gyllenberg. First, Country alleges that Gyllenberg was negligent in failing to "have installed and/or have chosen properly designed metal roof panel" for the Webb's home (First Claim). First Amended Complaint, ¶ 4.2. Second, Country alleges that Gyllenberg breached its contract by failing to "install and/or choose the proper roofing panels for the construction" (Second Claim). Id at ¶¶ 4.4, 4.5.
II. Gyllenberg's Affirmative Defenses and Third Party Claims
Gyllenberg denies liability based on eight affirmative defenses (while reserving the right to bring additional affirmative defenses): (1) statute of limitations/statute of ultimate repose; (2) failure to state a claim; (3) failure to mitigate damages; (5) contributory negligence/comparative fault; (6) spoilation of evidence; (7) Spearin Doctrine; and (8) contributory fault of others.
Additionally, Gyllenberg alleges that if it is found liable to Country for defects and/or failures in the performance of the roof, then third-party defendants BHP and Bronson are liable to Gyllenberg on a variety of theories. With respect to BHP, Gyllenberg alleges claims for indemnity (First Claim), contribution (Second Claim), negligent failure to design and manufacture a roof product that would protect buildings from the climate in and around Baker City, Oregon (Third Claim), breach of express warranty that the roof product was suitable for the intended use (Fourth Claim), and breach of the implied warranty of merchantability (Fifth Claim). With respect to Bronson, Gyllenberg alleges claims for indemnity (Sixth Claim), contribution (Seventh Claim), negligent failure to distribute a roof product that would protect the structure from the elements in the Baker City, Oregon area (Eighth Claim), breach of the implied warranty of merchantability (Ninth Claim), breach of the implied warranty of fitness for a particular purpose (Tenth Claim).
III. BHP and Bronson's Affirmative Defenses and Counterclaims
BHP alleges five affirmative defenses: (1) statute of limitations; (2) contributory negligence/comparative fault; (3) contract specification; (4) improper construction; and (5) improper design of the roof. BHP also alleges a counterclaim against Gyllenberg for attorneys fees.
Bronson alleges five affirmative defenses: (1) statute of limitations; (2) statute of ultimate repose; (3) failure to state a claim; (4) comparative negligence; (5) and spoilation of evidence. IV. Jurisdiction
Country is an Illinois corporation with its principal place of business in Bloomington, Illinois. First Amended Complaint, ¶ 2.1. Gyllenberg is an Oregon corporation with its principal places of business in Baker City, Oregon. Id at ¶ 2.2. Bronson is an Oregon corporation. Gyllenberg Answer, ¶ 15. BHP is a foreign corporation. Id at ¶ 16. Therefore, complete diversity of citizenship exists between the plaintiff, defendants and third-party defendants. Because the matter in controversy exceeds $75,000.00 exclusive of interests and costs, this court has diversity jurisdiction under 28 U.S.C. § 1332(a).
V. Motions
Gyllenberg originally moved for summary judgment (docket #48) against both of Country's claims. However, in its Reply to Plaintiff's Memorandum in Opposition to Gyllenberg's Motion for Summary Judgment (docket # 76), Gyllenberg withdrew its motion against Country's negligence claim (while reserving these arguments for trial).
Bronson's motion originally sought summary judgment (docket #53) against all of Gyllenberg's third-party claims. At oral argument, the parties represented that an agreement has been reached to dismiss all of Gyllenberg's third-party claims against Bronson, except its indemnity and contribution claims (Sixth and Seventh Claims). As a result, Bronson clarified at oral argument that its motion is directed only against Gyllenberg's indemnity and contribution claims.
For the reasons stated below, Gyllenberg's motion is denied and Bronson's motion is granted.
LEGAL STANDARDS
FRCP 56(c) authorizes summary judgment if "no genuine issue" exists regarding any material fact and "the moving party is entitled to judgment as a matter of law." The moving party must show an absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party does so, the nonmoving party must "go beyond the pleadings" and designate specific facts showing a "genuine issue for trial." Id at 324, citing FRCP 56(e). The court must "not weigh the evidence or determine the truth of the matter, but only determines whether there is a genuine issue for trial." Balint v. Carson City, 180 F.3d 1047, 1054 (9th Cir 1999) (citation omitted). A "` scintilla of evidence,' or evidence that is `merely colorable' or `not significantly probative,'" does not present a genuine issue of material fact. United Steelworkers of Am. v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir), cert denied, 493 U.S. 809 (1989) (emphasis in original) (citation omitted).The substantive law governing a claim or defense determines whether a fact is material. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir 1987). The court must view the inferences drawn from the facts "in the light most favorable to the nonmoving party." Id (citation omitted). Thus, reasonable doubts about the existence of a factual issue should be resolved against the moving party. Id at 631.
FACTS
I. The Building Plans
To design a new house on property purchased in Baker City, Oregon, the Webbs hired Don Gile ("Gile"), an architect in Boise, Idaho. James Webb Depo, p. 12, line 1-p. 13, line 16. Gile Depo, p. 14, line 9 — p. 15, line 7. Gile proceeded to prepare a set of building plans. Plaintiff's Exhibit 1 (copies of the Gile architectural plans).
Gile designed the roof of the new home to employ a "cold roof system." Gile Depo, p. 9, lines 2-22; p. 11, line 19 — p. 12, line 5; p. 13, line 20-p. 14, line 8. The cold roof system employs two pieces of plywood separated by 2 x 4s, covered by a 24 gauge sheet of metal roofing material with a ridge cap placed on top. Id at p. 54, lines 3-22. According to Gile, the cold roof system permits air to ventilate in a manner that keeps the roof at a constant temperature. Id at p. 9, lines 2-19. The air ventilation prevents heat loss from causing the snow to melt, drain into the eaves, freeze, and create ice dams. Id at p. 13, line 20-p. 14, line 6. In effect, Gile's cold roof system causes the roof to heat up and drain "all at one time." Id at p. 14, line 6-8. It also was also designed with a heavy gauge steel that could hold up to sliding snow. Id at p. 9, line 20-22.
Gile's building plans were submitted to the State of Oregon's Building Codes Agency and approved on April 13, 1993. Plaintiff's Exhibit 1, p. 1 (first page of the Gile drawings with a stamp of approval by the Building Code Agency on April 13, 1993).
II. Construction Contract
On April 30, 1993, the Webbs entered into a "Building and Construction Contract" (the "Contract") with Gyllenberg. Defendant's Exhibit 3, p. 9. Paragraph 1 of the Contract provides as follows:
DESCRIPTION OF WORK: Contractor shall perform the work described fully in Exhibit "A", attached hereto and by this reference incorporated herein, in accordance with the contract plans and specifications, herein called contract documents, at 295 Campbell Street, Baker City OR.Id at p. 1.
As discussed below, the parties dispute whether Exhibit A was attached to the Contract when it was signed, as well as the content of Exhibit "A" if it was attached. Gyllenberg has submitted an Exhibit A dated March 25, 1993, which states that: "the following notes describe the contract work for the completion of the residence as drawn on the plans labeled: A RESIDENCE FOR JIM AND CAROL WEBB BY GILE AND ASSOC. PA AIA." Defendant's Exhibit 3, p. 10. This version of Exhibit A then lists a number of construction details under a section entitled "Inclusions," including: "3.1) Cold Roof Deleted" and "8) Roofing Vic West Steel Zip Lock or equal." Id.
Paragraph 7 of the Contract states that:
Owner shall give all instructions, shall furnish all necessary surveys not yet completed for the work, and shall secure and pay for easements for permanent structure or permanent changes in existing structures or facilities on the work site, or other legal requirements which are necessary for construction. Owner shall also provide various materials, permits, etc. as noted on exhibit "B" attached hereto and by this reference incorporated herein.Id at p. 3.
The parties also dispute whether any Exhibit B was attached to the Contract when it was signed.
Gyllenberg, as the contractor, assumed the following relevant responsibilities as set forth in paragraph 8:
E. Contractor assumes full responsibility for acts, negligence or omissions of all employees on this project, for those of subcontractors and all other persons doing work under a contract with him.
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H. Contractor represents and warrants to owner that all equipment and materials used in the work, and made a part of the structures of such work, or placed permanently in connection with such work, will be new unless otherwise specified in the contract documents, of good quality, free of defects, and in conformity with the contract documents. It is understood and agreed between the parties to this agreement that all equipment and materials not so in conformity will be considered defective.
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J. Contractor agrees to indemnify and hold the Owner harmless with regard to any damages incurred by the owner as a result of breach of any of the warranties or representations.Id at pp. 2-3.
With respect to changes in the work, paragraph 10 allows the owner to "order additions, deletions, or revisions in the work" which "shall be executed under the applicable conditions of the contract documents" and "authorized by a written change order signed by the owner." Id at p. 6. In addition, paragraph 11 provides that "[t]he contract price may only be changed by a change order mutually agreed to in writing." Id at p. 7.
The Contract contains numerous other terms governing price, payments, completion dates, insurance, etc. Paragraph 14 only permits modification of the contract if "evidenced in writing signed by each party or an authorized representative of each party." Id at p. 7. Paragraph 17 agrees to the payment of attorneys fees to the prevailing party in any suit to enforce the contract. Id at p. 8.
III. The Construction and Leak
Despite Gile's drawings, Gyllenberg built a "cold roof system of [its] own design" on the Webb's house that used a different type of ventilating system. Gyllenberg Deposition, p. 55, line 1 — p. 56, line 1. It also built the roof using a 29 gauge Skyline Roofing system ( id at p. 71, line 6 — p. 72, line 1; p. 174, line 18 — p. 175, line 6), which is produced by BHP ( id at p. 175, lines 5-6), rather than the heavier 24 gauge roofing system specified in Gile's drawings ( id at p. 176, lines 3-5; Plaintiff's Exhibit 1, p. 4). Gyllenberg ordered the 29 gauge BHP Skyline Roofing system from Bronson on July 14, 1993. Bronson Exhibit 1, p. 2.
Nearly seven years later, on June 9, 2000, the Webbs discovered water damage in their dining room, library, and north entryway due to leaks in the roof after a rainstorm. Amended Complaint, ¶ 3.2. The Webbs allege these leaks were caused by metal roofing panels bent by heavy snow and ice accumulation. Id.
DISCUSSION
I. Gyllenberg's Motion Against Country's Breach of Contract ClaimThere is no dispute that the Webbs and Gyllenberg signed the Contract with Gyllenberg. However, the parties dispute the terms of that Contract and whether Gyllenberg breached those terms.
Country's expert witness, Rod McKee ("McKee"), opines that the Webbs' damages were caused by Gyllenberg's failure: (1) to install Gile's cold roof system; and (2) to use at least 24 gauge roof material. Defendant's Exhibit 1, p. 18. Gyllenberg's expert, Gerry Williams, reaches a similar conclusion. Id, Exhibit 2. Neither party disputes that the Webbs' house, as built by Gyllenberg, did not have the cold roof system designed by Gile and used 29 gauge instead of 24 gauge roof material. Therefore, the overall issue with respect to the breach of contract claim is whether the Contract (with or without Exhibit A) required Gyllenberg to use Gile's cold roof system and 24 gauge roof material.
A. Contract Terms
Paragraph 1 of the Contract specifically states that Gyllenberg "shall perform the work described fully in Exhibit "A," attached hereto and by this reference incorporated herein, in accordance with the contract plans and specifications." In addition, paragraph 7 references and incorporates Exhibit B.
"Where a written instrument refers in specific terms to another writing as containing a part of the agreement, the other writing is itself a part of the contract between the parties." U.S. Fidelity Guaranty Co. v. Long, 214 F. Supp. 307, 314 (Or 1963), citing Cerino v. Oregon Physicians' Serv., 202 Or. 474, 276 P.2d 397 (1954). However, the parties disagree whether the Contract includes Exhibits A and B submitted by Gyllenberg.
1. Whether Exhibit A is Part of the Contract
Gyllenberg claims that both Exhibits A and B were attached to the Contract when it was signed and that Exhibit A specifically deleted the cold roof system and allowed the substitution of "Vic West Steel Zip Lock or equal." Defendant's Exhibit 3, p. 10. The Vic West Steel Zip Lock roof was only manufactured in 29 gauge material. Defendant's Exhibit 1, p. 13. The Webbs liked the appearance of the BHP Skyline 29 gauge roof better than the Vic West Steel Zip Lock. Gyllenberg Depo., p. 72, line 7-p. 73, line 61. Therefore, Gyllenberg maintains that it complied with the Contract by installing the BHP Skyline roof that was equal to the 29 gauge Vic West Steel Zip Lock roof. It contends that the damage was caused by the Webbs' failure to hire Gyllenberg to construct the more expensive cold roof system in accordance with Gile's plans.
Brent Gyllenberg identified Exhibits A and B to the Contract as follows:
Q: Can you take a look at Exhibits 4 [the alleged version of Exhibit "A" to the Contract] and 5 [the alleged version of Exhibit "B" to the Contract] and tell us whether or not either of those two documents were incorporated by reference into the final construction contract for the construction of the Webb residence, which we've marked as Exhibit 2?
A: The Exhibit 4 is noted as Exhibit A in the contract under Paragraph 1, description of the work. Exhibit B is noted in Paragraph 7, responsibilities of the owner, and also in Paragraph 8, Section B.
Q: The Exhibit B referred to in the contract is the document we've marked as Exhibit 5 to your deposition?
A: That's correct.
Q: If you could look at Exhibit 4. First of all, who drafted Exhibit 4?
A: I did.
Q: And what was the purpose of Exhibit 4?
A: The purpose of Exhibit 4 was to clarify the things that we had agreed to that may or may not have matched the drawings, because of multiple changes, negotiations in formulating the contract.
Q: What did you call Exhibit 4 for practical purposes, how did you refer to it?
A: It's those things included in the project or included in our agreement. Q: Now, if you could look — I believe it's Item 8 on Exhibit 4.
A: Yes.
Q: Can you read that for us?
A: Item 8, "Roofing Vic West Steel Zip Lock or equal."
Q: Who picked that particular thing to include in the project?
A: The project, during our negotiations, the bidding process was more expensive that what the Webbs wanted to pay. And there was a request to try to get the project below a certain dollar amount. Exact dollar amount, I'm not sure what it was. But there were multiple changes made to try to reduce the total costs of the project.
Q: Was any such change made with respect to the roofing?
A: Yes. The roofing system that's noted in the keynotes as being a metal roof, it shows what's called a cold roof system. And that system was very expensive. And so as part of the negotiating process, that was deleted in Exhibit 4, Line Item 3.And so the roofing was spec'd out in the inclusion to be Vic West or equal to meet their budget.
Gyllenberg Depo, p. 46, line 1-p. 48, line 10.
In addition, Gyllenberg also argues the following testimony by Carol Webb authenticates Exhibit A:
Q: Do you recall any recollection if the work referred to in [the contract as] Exhibit A is the Exhibit A that says residential contract Exhibit A dated 3-25-93 at Exhibit 4 [Exhibit 4 to the deposition was the alleged version of Exhibit A Gyllenberg submitted].
A: Well, they certainly match. It says Exhibit A. So it could be.
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Q: Okay. Do you have any reason to believe that Exhibit 4 of the deposition is not the Exhibit A referred to in the contract?
A: It could be. I don't remember. There's no signature on it.
Q: Are you aware of an Exhibit A or Exhibit B that differs from these I just showed you.
A: No.
Carol Webb Depo, p. 21, lines 13-18; p. 22, lines 12-20.
However, James Webb testified that he did not recognize Gyllenberg's versions of Exhibits A and B, other than seeing them when he reviewed Brent Gyllenberg's deposition. James Webb Depo, p. 21, line 23-p. 22, line 8. Furthermore, James Webb testified that he never discussed the deletion of the cold roof system set forth in that version of Exhibit A:
I wasn't aware that Mr. Gyllenberg had not done the cold roof system per Don Gile's architectural drawings until I read his deposition. I don't recall having any conversations with him about he was going to do the Brent Gyllenberg version of the cold roof system or the Don Gile version of the cold roof system.Id, p. 50, line 25-p. 51, line 12.
Additionally, Country argues that the versions of Exhibits A and B submitted by Gyllenberg were not attached to the Contract when it was produced in response to a discovery request by Gyllenberg to Country. Indeed, on the identifying labels, the Contract is marked "GYL 00016," but the alleged versions of Exhibit A and B are marked substantially out of sequence as "GYL 00456" and GYL "00480," respectively. Compare Defendant's Exhibit 3, p. 1 with pp. 10 11. Additionally, numerous other versions of Exhibits A and B were produced by Gyllenberg (Plaintiff's Exhibit 7, pp. 1-9), many of which have different provisions written on them than the versions of Exhibit A and B Gyllenberg claims are authentic.
Gyllenberg responds to Country by noting that all the variations of Exhibits A and B it produced contain exactly the same provisions at issue in this case. All the versions of Exhibit A delete the cold roof and substitute "Vic West Steel Zip Lock or equal," and all versions of Exhibit B require any changes created by plan review to be submitted to the State of Oregon. Plaintiff's Exhibit 7, pp. 1-9.
It seems highly likely that some version of Exhibits A and B were attached to the Contract at the time it was signed because the Contract directly refers to them. Moreover, because all versions of Exhibits A and B contain the same terms regarding the deletion of the cold roof system, substitution of the roofing materials, and the submission of plans to the state, it seems likely that if Exhibits A and B were attached to Contract, they contained these terms.
On the other hand, despite this likelihood, a material issue of fact regarding the existence and substance of Exhibits A and B remains. The Webb's failure to recognize Exhibits A or B as documents that were attached to the Contract directly contradicts Brent Gyllenberg's testimony identifying these documents. More importantly, James Webb's testimony that he never agreed to delete the Gile's cold roof system directly contradicts the terms of the alleged Exhibit A. These contradictions create a material issue of fact as to whether Exhibits A and B were indeed attached to and made a part of the Contract when the Webbs signed it.
Carol Webb's deposition testimony does not resolve this issue because it is apparent that she was merely presented with a copy of the Contract, which mentions Exhibit A, and then asked if the alleged Exhibit A could be the document referenced in the Contract. Mrs. Webb then answered that "it could be" based on the title of the alleged Exhibit A. Under these circumstances, this court is not convinced that Mrs. Webb was authenticating the alleged Exhibit A, rather than just agreeing that its title matched the reference in the Contract.
Accordingly, Gyllenberg has not met its burden on summary judgment that the Contract includes the Exhibits A and B which he has submitted.
2. Existence of a Contract without Exhibit A
If Exhibit A was not part of the Contract, as Country claims, then Gyllenberg argues that it would have had no work to perform pursuant to the Contract (although the house might have been built according to some sort of oral agreement). This argument has no merit. Exhibit A is a list of various architectural modifications; it is not alone a sufficient plan for building an entire house. Therefore, the Contract must have required some work to be done that Exhibit A sought to modify.
A careful examination of the language in ¶ 1 of the Contract supports this finding. Paragraph 1 states: "Contractor shall perform the work described fully in [the attached and incorporated Exhibit A] in accordance with the contract plans and specifications, herein called contract documents[.]" Gyllenberg Exhibit 3, p. 1. A fair reading of this sentence is that "contract plans and specifications" (presumably Gile's drawings) exist which are the baseline contract documents and are modified by whatever changes are made in an Exhibit A. In the unlikely event there was no Exhibit A, Gyllenberg would still be required to perform work in accordance with the contract plans and specifications.
3. Legality of Exhibit A
Due to disputed fact issues, it is unnecessary to address Country's argument that even if Exhibit A was part of the Contract and permitted Gyllenberg to make the changes it detailed, Exhibit A was illegal and unenforceable. However, this court notes that the viability of this argument is in serious doubt.
Contracts which are illegal or against public policy are unenforceable. A-1 Sandblasting v. Baiden, 293 Or. 17, 22, 643 P.2d 1260, 1263 (1982) ("Such a public policy may be found in legislative enactments, administrative regulations, even in the constitution"); Hendrix v. McKee, 281 Or. 123, 128, 575 P.2d 134, 137 (1978) ("If the consideration for the contract or its agreed purpose is illegal or against public policy on its face, it will not be enforced"). However, neither Exhibit A nor Exhibit B mandate any illegal actions or purposes that violate public policy. Exhibit B required the submission of modified plans to the state, which is presumably in compliance with Oregon laws governing building construction. Exhibit A required certain changes be made in the construction plans, but it did not require these changes be made despite Exhibit B's mandate or state laws. Gyllenberg may not have actually submitted the modifications called for in Exhibit A to the state, thereby breaching Exhibit B's requirements and likely state law. But that omission does not make Exhibit A illegal under the judicial policy against the enforcement of illegal contracts. B. Whether a Breach Occurred
Regardless of whether the Contract included Exhibit A, Country argues that Gyllenberg can be held liable for breach of contract. Even if Exhibit A permitted Gyllenberg to delete Gile's cold roof system and substitute 29 gauge steel for 24 gauge steel, Country maintains that Gyllenberg breached ¶ 8(H) of the Contract by designing a defective cold roof system. If there was no Exhibit A, Country argues Gyllenberg breached the Contract by deleting Gile's cold roof system and using a different gauge roof material than called for in Gile's plans.
With or without Exhibit A, Gyllenberg maintains it should be granted summary judgment under the doctrine set out in United States v. Spearin, 248 U.S. 132, 136 (1918) (the " Spearin Doctrine"). The Spearin doctrine provides certain protection from liability to contractors who build a structure in accordance with the owner's plans. Id. 1. With Exhibit A
Paragraph 8(H) requires that "all equipment and materials used in the work, and made a part of the structures on such work, or placed permanently in connection with such work" be new, of good quality, free of defects and "in conformity with the contract documents." Gyllenberg Exhibit 3, p. 4. All non-conforming equipment and materials are considered defective. Id at 4-5. These provisions address Gyllenberg's use or installation of defective equipment or materials, such as installing roof panels that had holes in them, not negligent design of a roof system or negligent selection of the wrong type of roof material. In short, ¶ 8(H) supports suits for the use of defective goods, while Country alleges that Gyllenberg provided a defective service.
Therefore, if Exhibit A was attached to the Contract, Country cannot argue that Gyllenberg breached ¶ 8(H) by designing its own cold roof system. As a result, it is unnecessary here to evaluate Gyllenberg's arguments under the Spearin Doctrine.
However, Gyllenberg may have breached other terms of the contract not alleged in the First Amended Complaint. Paragraph 8(D) requires Gyllenberg to comply with all laws and ordinances relating to the performance of work under the Contract. Paragraph 8(I) requires Gyllenberg to do all work in a good and workmanlike manner in accordance with all laws and all accepted building practices. Gyllenberg may have breached these provisions if it failed to submit its new cold roof designs to the relevant building agencies. Additionally, Gyllenberg may also have breached its requirement under Exhibit B (if it existed) to submit any changes to the building plans to the state.
It is unnecessary to decide these issues here because Country's Amended Complaint only alleges breaches of ¶¶ 8(E), (H), and (J).
2. Without Exhibit A
Country's second argument has more merit. Without no Exhibit A allowing substitution of roof materials, then Gyllenberg breached ¶ 8(H) by failing to use "materials . . . in conformity with the contract documents" if the leak was caused by the failure to use 24 gauge roof material as required in Gile's drawings. Furthermore, Gyllenberg's deletion of the cold roof system and substitution of his own system likely violated ¶¶ 1, 10, and 14 for not building in accordance with the contract plans, submitting written work changes signed by the Webbs, or making modifications to the Contract in writing.
Without Exhibit A, regardless of which of Gyllenberg's actions caused the leak, the Spearin Doctrine does not prevent Gyllenberg from liability under the Contract. By deleting the Giles cold roof system, substituting its own cold roof system, and using a different roof material than called for by Gile's drawings, Gyllenberg did not follow the owner's plans. Thus, it receives no protection under the Spearin Doctrine. Spearin, 248 US at 136; see also Gilbert Pac. Corp. v. Dept. of Transp., 110 Or. App. 171, 175, 822 P.2d 729, 732 (Or App. 1991) (referring to the protection under the Spearin doctrine as the "owner's implied warranty of the sufficiency of the plans and specifications").
3. Conclusion
In sum, if Exhibit A was part of the Contract, Gyllenberg did not breach ¶ 8(H) of the Contract. If Exhibit A was not part of the Contract, Gyllenberg may be liable for breach of ¶ 8(H), as well as other terms of the Contract. Due to the factual dispute over whether Exhibit A was part of the Contract, Gyllenberg's motion for summary judgment against the breach of contract claim is denied.
II. Bronson's Motion Against Gyllenberg's Third-Party Claims
Bronson argues that to the extent Country's claims are based on product deficiencies, they are barred by the statutes of limitations and ultimate repose for product liability claims, and hence Bronson cannot be liable to Gyllenberg for indemnity or contribution. Because both Country and Gyllenberg's claims are endangered by Bronson's contentions, both of these parties submitted arguments against Bronson's motion. A. Elements of Claims
Country first argues that Bronson's motion should be disregarded for a failure to follow Local Rule 7.1, which requires parties to confer in good faith before filing a motion. Bronson admits it did not consult Country before filing its motion. The success of Bronson's motion against Gyllenberg's cross-claims does depend on Bronson's arguments that portions of Country's claims are barred by statute. However, Bronson only moves for summary judgment against Gyllenberg's third-party claims, not Country's claims. Therefore, Bronson was not required to confer with Country before filing its motion.
"In an action for common-law indemnity, the claimant must allege and prove that (1) he or she has discharged a legal obligation owed to a third party; (2) the defendant was also liable to the third party; and (3) as between the claimant and the defendant, the obligation should be discharged by the latter." Safeco Ins. Co. of Am. v. Russell, 170 Or. App. 636, 639, 13 P.3d 519, 520 (Or App. 2000), citing Fulton Ins. v. White Motor Corp., 261 Or. 206, 493 P.2d 138 (1972) (relying on rule stated in RESTATEMENT OF THE LAW OF RESTITUTION § 76 at 331 (1937)).
The elements of a contribution claim are set out in ORS 31.800. They are:
(1) joint liability in tort for the same injury (ORS 18.440(1) [renumbered ORS 31.800(1) in 2003]);
(2) payment by the contribution plaintiff of more than a proportional share of the common liability (ORS 18.440(2) [renumbered ORS 31.800(2));
(3) settlement extinguishing the contribution defendant's liability for the injury or wrongful death (ORS 18.440(3) [renumbered ORS 31.800(3)); and
(4) settlement that was not in excess of what was reasonable for the injury or wrongful death (ORS 18.440(3)).Jensen v. Alley, 128 Or. App. 673, 677, 877 P.2d 108, 111 (Or App. 1994).
B. Indemnity or Contribution for Country's Breach of Contract Claim
It is unnecessary to determine whether Country's breach of contract claim is a product liability action that is barred by the statutes of limitations and ultimate repose. Country's breach of contract claim can be passed through by Gyllenberg to Bronson in the form of an indemnity or contribution claim only if Bronson could have been liable to Country. However, Bronson was not a party to the Contract or otherwise in privity of contract with Country.
Even if, as Gyllenberg argues, ¶ 8(H) of the Contract is a general requirement that Gyllenberg act without negligence, and Gyllenberg is found to have breached that provision through some negligent action that also involves fault by Bronson (such as a misrepresentation to Gyllenberg), privity between Country and Bronson is still necessary. Accordingly, because Country has no viable breach of contract claim against Bronson, Country's breach of contract claim against Gyllenberg cannot be passed through to Bronson using a third-party indemnity or contribution claim.
C. Indemnity or Contribution for Country's Negligence Claim
Country's Amended Complaint, briefings, and oral argument clarify that Country is not alleging that the metal roofing product manufactured by BHP, sold by Bronson to Gyllenberg, and installed on the Webb's residence was defectively designed, fabricated, or failed to come with an appropriate warning. Instead, Country argues: (1) Gyllenberg negligently changed the original metal roofing product specified for installation by Gile's drawings and that this substitute product selected by Gyllenberg was not strong enough under the circumstances; and/or (2) the cold roof system Gyllenberg contrived and built was negligently designed. Rather than involving a product defect, Country argues that all of these actions constitute Gyllenberg's exercise of judgment (or lack thereof) in the performance of professional services.
Bronson argues that if Country's negligence claim is deemed a product liability action under ORS 30.900, then it is barred by the two-year statute of limitation and eight-year statute of ultimate repose governing product liability actions. ORS 30.905(1) and (2). As a result, Bronson argues it cannot be liable to Gyllenberg for indemnity or contribution because Gyllenberg was not liable to Country on the date the Complaint was filed.
This court agrees that Country's negligence claim is one for negligent design and selection, not for a product defect. Nevertheless, it cannot be passed through to Bronson in the form of an indemnity or contribution claim.
1. Character of Claim
a. Legal Standards and Precedents
ORS 30.900 defines a "product liability civil action" as:
a civil action brought against a manufacturer, distributor, seller or lessor of a product for damages for personal injury, death or property damage arising out of:
(1) Any design, inspection, testing, manufacturing or other defect in a product;
(2) Any failure to warn regarding a product; or
(3) Any failure to properly instruct in the use of a product.
Product liability as defined in ORS 30.900 "`embraces all theories a plaintiff can adduce in an action based on a product defect,' including theories of negligence." Jamison v. Spencer R.V. Center, Inc., 98 Or. App. 529, 531-32, 779 P.2d 1091, 1092 (Or App. 1989). Despite the breadth of a product liability claim under ORS 30.900, Country argues that it does not allege such a claim, but alleges negligent selection of a nondefective product. Oregon courts dealing with this sort of argument have differentiated between defective product claims and nondefective product claims.
In Hoover v. Montgomery Ward, 270 Or. 498, 528 P.2d 76 (1974), where the defendant sold and mounted tires on the plaintiff's vehicle, the plaintiff claimed the defendant failed to tighten the lug nuts when the tires were mounted. The issue was whether strict liability (which is based on a product defect) applied to the plaintiff's claim. The court held that the plaintiff's claims described the negligent installation of a non-defective product, such that strict liability did not apply. The court reasoned:
[I]t was not a dangerously defective tire which caused plaintiff's injuries, but rather the installation of the wheel on the hub and axle of the auto. In such case it might be said that plaintiff's auto became dangerously defective, but certainly not the tire.270 Or at 502-03, 528 P.2d at 78.
In Jamison, where the plaintiff "alleged negligent installation of a nondefective product, not a product defect, [and] that [such] negligence does not fall within the definition of ORS 30.900," differences in the facts led the court to reach a different conclusion than in Hoover. Jamison, 98 Or App. at 532, 779 P.2d at 1092. Plaintiff alleged that the seller was negligent in assembling the component parts of a trailer hitch system by making inadequate welds between several parts of the hitch system and installing a bar that was too short and weak to assist in the load bearing function of the hitch system. The trailer hitch bent and caused a car accident. The defendant argued that the plaintiff alleged that, in the course of negligently assembling the component parts of the hitch, the defendant created a product defect under ORS 30.900. The court agreed with the defendant, reasoning:
Those allegations [in the complaint], if proved, would show that assembly and installation of the trailer hitch created a defect in the hitch, resulting in a defective product being sold to plaintiff. Those facts are different from those in Hoover, in which the plaintiff alleged no defect in the product itself, the tire.
Id at 533, 779 P.2d at 1093 (footnote omitted)
b. Application
As clarified by Country, the allegations in the Amended Complaint, if proved, are closer to those in Hoover than in Jamison. The product involved in this case, if any, is the material that constitutes the Webbs' roof, not their house or even their roof as a whole. If Country claimed that Gyllenberg negligently installed the roof materials, such as by poking a hole in them, or in assembling their component parts, such as by improperly welding eaves together, this case would be similar to Jamison. Country would be arguing that Gyllenberg created a product defect in assembling or installing the roofing materials. Additionally, if Country were arguing that Bronson sold roofing materials that already had a defect in them, such as a hole or other structural weakness, that would certainly be a product liability case.
But here Country is arguing that Gyllenberg chose perfectly good roof materials to install as part of a cold roof system that was inadequately designed and selected for the Baker City weather. As in Hoover, it might be said that the Webbs' house or their roof became dangerously defective due to Gyllenberg's negligent design and selection, but not the roofing materials. Therefore, Country's negligence claim is not a product liability action under ORS 30.900, and is not subject to the statutes of limitation and ultimate repose in ORS 30.905.
2. Bronson's Liability for Gyllenberg's Negligent Design Selection
Even though Country alleges is a claim for negligent design and selection, Gyllenberg still cannot obtain indemnity or contribution claim from Bronson. In order to be liable for indemnity or contribution, Gyllenberg must prove that Bronson could be liable to Country in some way. However, if the only basis for Country's claim is Gyllenberg's negligent design and selection, there is no circumstance under which Bronson owed any liability to Country.
This case is very similar to Evans v. Howard Green Co., 231 N.W.2d 907 (Iowa 1975). In Evans, the estates of several workers killed as a result of poisonous gas released at a city water plant sued an architectural firm for negligent design of improvements to the plant that permitted the release. The architectural firm then sought indemnity from the contractor who built the improvements. After rejecting liability based on an indemnity clause in the city's contract, the court addressed the architectural firm's claim for common law indemnity based on the theory of primary responsibility. Rejecting the availability of this claim, the court wrote:
The right to indemnity, even in the absence of express contract, against one primarily responsible for a wrong is generally recognized against contractors. However the doctrine has no application to the facts presented in the case before us. In the instant case [the contractor] had nothing at all to do with the wrong for which recovery was sought and obtained [from the architectural firm]: negligent design.Id at 917 (internal citation omitted).
Here Country is essentially alleging that Gyllenberg acted as an architect by negligently designing a cold roof system and negligently selecting materials that were inadequate for use on a roof in Baker City. As with the architectural firm in Evans, Gyllenberg cannot pass liability for its own negligent design and selection to a third-party from whom the plaintiff, Country, never sought recovery.
Accordingly, Bronson's motion for summary judgment is granted in so far as it seeks dismissal of Gyllenberg's third-party claims for indemnity and contribution.
This court expresses no opinion whether Bronson is entitled to summary judgment against Gyllenberg's other negligence and breach of warranty claims, which Gyllenberg has agreed to dismiss.