President and Directors of Georgetown College v. Madden

• Decision Date: 11 September 1981
• Docket Number: 80-1891,Nos. 80-1798,80-1892,s. 80-1798
• Citation: 660 F.2d 91
• Parties: The PRESIDENT AND DIRECTORS OF GEORGETOWN COLLEGE, Appellant, v. Dennis W. MADDEN, John M. Walton, Seymour Auerbach, Victor R. Beauchamp Associates, Inc., Reliance Insurance Company, Anchor Associates, Inc., Edward J. Scullen, Alvin Marchigiani, Appellees. The PRESIDENT AND DIRECTORS OF GEORGETOWN COLLEGE, Appellees, v. Edward M. CROUGH, as Trustee for Victor R. Beauchamp Associates, Inc., Appellant, and Dennis W. Madden; John M. Walton; Seymour Auerbach; Reliance Insurance Company; Anchor Associates, Inc.; Edward J. Scullen; Alvin Marchigiani, Defendants. The PRESIDENT AND DIRECTORS OF GEORGETOWN COLLEGE, Appellees, v. RELIANCE INSURANCE COMPANY, Appellant, and Dennis W. Madden; John M. Walton; Seymour Auerbach; Victor R. Beauchamp Associates, Inc.; Anchor Associates, Inc.; Edward J. Scullen; Alvin Marchigiani, Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 91

660 F.2d 91

The PRESIDENT AND DIRECTORS OF GEORGETOWN COLLEGE, Appellant, v. Dennis W. MADDEN, John M. Walton, Seymour Auerbach, Victor

R. Beauchamp Associates, Inc., Reliance Insurance

Company, Anchor Associates, Inc., Edward

J. Scullen, Alvin Marchigiani,

Appellees.

The PRESIDENT AND DIRECTORS OF GEORGETOWN COLLEGE, Appellees, v. Edward M. CROUGH, as Trustee for Victor R. Beauchamp

Associates, Inc., Appellant,

and

Dennis W. Madden; John M. Walton; Seymour Auerbach; Reliance

Insurance Company; Anchor Associates, Inc.; Edward

J. Scullen; Alvin Marchigiani, Defendants.

The PRESIDENT AND DIRECTORS OF GEORGETOWN COLLEGE, Appellees, v. RELIANCE INSURANCE COMPANY, Appellant, and Dennis W. Madden; John M. Walton; Seymour Auerbach; Victor

R. Beauchamp Associates, Inc.; Anchor Associates,

Inc.; Edward J. Scullen; Alvin

Marchigiani, Defendants.

Nos. 80-1798, 80-1891, 80-1892.

United States Court of Appeals, Fourth Circuit.

Argued June 3, 1981.

Decided Sept. 11, 1981.

Barry S. Simon, Washington, D. C. (Aubrey M. Daniel, III, Williams & Connolly, Washington, D. C., on brief), for appellant in 80-1798.

Tarrant H. Lomax, Washington, D. C. (Paul M. Rhodes, Gregory J. Miner, Rhodes, Dunbar & Lomax, Washington, D. C., Chartered on brief), for appellant in 80-1891.

Richard H. Nicolaides, Washington, D. C. (John F. Wilson, Jr., Paul B. Cromelin, III, Kelly & Nicolaides, Washington, D. C., on brief), for appellant in 80-1892.

Howard C. Goldberg, Baltimore, Md. (Michael James Kelly, Smith, Somerville & Case, J. Snowden Stanley, Bruce R. Parker, Semmes, Bowen & Semmes, J. Frederick Motz, Ronald B. Sheff, Baltimore, Md., Venable, Baetjer & Howard, Washington, D. C., on brief), for appellees.

Before WINTER, Chief Judge, and RUSSELL and WIDENER, Circuit Judges.

PER CURIAM:

The President and Directors of Georgetown College (Georgetown) brought this diversity action against the architects (Auerbach, Madden, and Walton), structural engineers (Scullen and Marchigiani), general contractor (Victor R. Beauchamp Associates, Inc.), masonry subcontractor (Anchor Associates, Inc.), and surety (Reliance Insurance Company) involved in the construction of Harbin Hall, a dormitory on the campus of Georgetown University, which was built during the years 1963 through 1966. Georgetown filed suit on August 25, 1977, in the United States District Court for the District of Maryland, seeking damages for alleged defects in the design and construction of the dormitory, the surface brick of which had undergone spalling, cracking, and bulging. Georgetown claimed that it first discovered the defective condition in the masonry work in September 1976.

Georgetown's amended complaint contained five counts. Count one alleged that Beauchamp had breached the construction contract. Count two alleged that Beauchamp's and Anchor's work on the Hall was performed negligently. Count three alleged that Beauchamp and Reliance (the successor in interest to Standard Accident Insurance Company) had breached a performance-payment bond executed by Standard, as surety, and Beauchamp, as principal, for the benefit of Georgetown. Count four alleged negligent design and negligent supervision of construction by the architects. Count five alleged negligence by all the defendants under the theory of res ipsa loquitur. Georgetown also filed a third-party complaint alleging negligent design and supervision of construction by the structural engineers. Reliance filed a cross-claim against Beauchamp seeking indemnification and exoneration should it be held liable to Georgetown on the performance bond. Because Beauchamp's corporate charter had been forfeited in 1973, copies of Georgetown's complaint and Reliance's cross-claim against Beauchamp were served on Edward M. Crough, who was a director of Beauchamp at the time of the forfeiture.

Several of the district court's orders are sought to be reviewed on these appeals. On January 27, 1978, the district court denied Crough's motion to quash service of process. By a memorandum opinion dated September 24, 1980, it granted the architects', engineers', and general contractor's motions for summary judgment on Georgetown's tort claims, denied Reliance's motion for summary judgment on Georgetown's claim against it under the performance bond, granted Crough's motion for summary judgment on Georgetown's breach of contract claim against Beauchamp, denied Crough's motion to dismiss Reliance's cross-claim against Beauchamp, and denied Crough's motion for summary judgment on all of Georgetown's claims against him as trustee of Beauchamp's assets.

With two exceptions, discussed below, the district court took the appropriate steps under 28 U.S.C. § 1292(b) and Federal Rule of Civil Procedure 54(b) to permit immediate appeals from its various orders, and we allowed the appeals. No. 80-1798 is Georgetown's appeal from the district court's grant of summary judgment for the architects, engineers, and general contractor. No. 80-1891 is Crough's appeal from the district court's denial of his motion to quash service of process and, purportedly, from its denial of his motion for summary judgment on Georgetown's claims against him and from its denial of his motion to dismiss Reliance's cross-claim against Beauchamp. No. 80-1892 is Reliance's appeal from the district court's denial of its motion for summary judgment on Georgetown's claim against it under the performance bond.

I.

The district court held that Georgetown's tort claims against the architects, engineers, and general contractor were barred by § 12-310 of the District of Columbia Code, which provides in pertinent part:

any action ... to recover damages for ... injury to real or personal property ... resulting from the defective or unsafe condition of an improvement to real property ... shall be barred unless ... such injury occurs within the ten-year period beginning on the date the improvement was substantially completed ....

D.C.Code Ann. § 12-310(a)(1)(1973). The statute does not apply to "any action based on a contract, express or implied ...." Id. s12-310(b)(1). Although Georgetown filed suit in Maryland, the district court applied § 12-310 because it found that that provision was substantive rather than procedural and would, therefore, have been applied by a Maryland court as the law of the place where the injury occurred in lieu of the relevant Maryland limitations provision, Md.Cts. & Jud.Proc.Code Ann. § 5-108 (1973) (twenty-year limitation period).

Georgetown challenges both aspects of the district court's ruling. First, it argues that § 12-310 is procedural rather than substantive and therefore Maryland's limitation period should have been applied. Second, even if § 12-310 is characterized as substantive, Georgetown contends, it should not bar Georgetown's action (a) because the action is based on a contract, (b) because it seeks damages for the design and construction deficiencies themselves rather than for injuries "resulting from" those deficiencies, and (c) because it suffered injury within the ten-year period, when the wall was built in 1964, even though it did not discover the defects until 1976.

We are unpersuaded by these arguments, and hold that the district court did not err in applying § 12-310 to bar Georgetown's tort claims. Georgetown's argument that § 12-310 should be characterized as procedural is refuted by the overwhelming weight of authority holding that statutes similar to that provision are substantive rather than procedural. E. g., Rosenberg v. Town of North Bergen, 61 N.J. 190, 293 A.2d 662 (1972); Overland Const. Co. v. Sirmons, 369 So.2d 572 (Fla.1979). In only one reported case has a court held otherwise, Regents of the University of California v. Hartford Accident and Indemnity Co., 21 Cal.2d 624, 147 Cal.Rptr. 486, 581 P.2d 197 (1978). While there is no direct Maryland authority, c. f. Allentown Plaza Associates v. Suburban Propane Gas Corp., 43 Md.App. 337, 338 n.2, 405 A.2d 326 (1979) (dictum), the many cases in other jurisdictions characterizing statutes similar to § 12-310 as substantive rather than procedural lead us to conclude that a Maryland court would also characterize § 12-310 as substantive.

The premise of Georgetown's proposed interpretation of § 12-310, an interpretation under which Georgetown's claims would not be barred, is that Congress did not intend that the statute would apply to actions brought by owners of buildings against design professionals for defects in the construction of the buildings. Because we think that premise faulty, we reject Georgetown's asserted interpretation of § 12-310 and hold that that provision applies to, and bars, Georgetown's tort claims. In enacting § 12-310, Congress sought to place reasonable limitations on the tort liability of persons and firms involved in the design and construction of improvements to real property. The legislative history with regard to the consideration and passage of the bills that became § 12-310 shows that Congress was concerned with the tort liability of architects, engineers, contractors, and other members of the building industry to all persons, to owners as well as to third parties. See, e. g., 118 Cong.Rec. 36940-41 (1972). There is nothing in the history supporting Georgetown's argument that Congress intended to exempt from § 12-310 tort actions brought by owners for defects in their buildings caused by negligent design or construction of the improvement. Accordingly, we affirm the district court's ruling on this issue.

II.

Reliance moved for summary judgment on Georgetown's claim against it under the performance bond it executed as surety. Acknowledging that the twelve-year statute of limitations for specialties applied to this claim, see Md.Cts. & Jud.Proc.Code Ann. § 5-102(a)(2) (1980), Reliance argues that Georgetown did not file its action within that period because its cause of action accrued when the allegedly defective wall at the Hall was built in...