Dan Ryan Builders, Inc. v. Crystal Ridge Dev., Inc.

Citation783 F.3d 976
Decision Date20 April 2015
Docket NumberNo. 13–2234.,13–2234.
PartiesDAN RYAN BUILDERS, INC., a Maryland Corporation, Plaintiff–Appellant, v. CRYSTAL RIDGE DEVELOPMENT, INC., a West Virginia Corporation; Lang Brothers, Inc., a West Virginia Corporation; Robert S. Lang, an individual, Defendants–Appellees, v. Hornor Brothers Engineers, Third Party Defendant–Appellee, and Bryco Bore & Pipe, Inc. ; Loudoun Valley Concrete, Inc. ; Dingess Transport, Inc.; North Star Foundation, Inc.; Pennsylvania Soil and Rock Incorporated, Third Party Defendants.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED:Avrum Levicoff, Levicoff, Silko & Deemer, P.C., Pittsburgh, Pennsylvania, for Appellant. Tiffany R. Durst, Pullin, Fowler, Flanagan, Brown & Poe, PLLC, Morgantown, West Virginia, for Appellees. ON BRIEF:Julie A. Brennan, Levicoff, Silko & Deemer, P.C., Pittsburgh, Pennsylvania, for Appellant. Nathaniel D. Griffith, Pullin, Fowler, Flanagan, Brown & Poe, PLLC, Morgantown, West Virginia, for Appellees Crystal Ridge Development, Inc., Lang Brothers, Inc., and Robert S. Lang. Frank E. Simmerman, Jr., Chad L. Taylor, Simmerman Law Office, PLLC, Clarksburg, West Virginia, for Appellee Hornor Brothers Engineers.

Before MOTZ, GREGORY, and WYNN, Circuit Judges.

Opinion

Affirmed by published opinion. Judge MOTZ wrote the majority opinion, in which Judge WYNN joined. Judge GREGORY wrote a separate opinion concurring in part and dissenting in part.

DIANA GRIBBON MOTZ, Circuit Judge:

After a bench trial in this diversity case, the district court ordered Robert Lang and his construction business, Lang Brothers, Inc. (collectively Lang) to pay Dan Ryan Builders, Inc. (Dan Ryan) limited damages for breach of contract. Dan Ryan appeals, seeking additional damages. We affirm.

I.

We briefly summarize the relevant facts, which are undisputed.1

Lang owned seventy acres of land in West Virginia, on which he sought to build a housing development, Crystal Ridge Development. In 2005, pursuant to a Lot Purchase Agreement (“LPA”), Lang subdivided the land and contracted to sell Dan Ryan all 143 lots in Crystal Ridge. The LPA detailed the responsibilities of both parties, including lot inspection, fill compaction, and building schedules.

The parties also entered into a number of other written contracts in connection with the development, including a Contract with Independent Contractor (“fill slope contract”). They agreed in that contract that Lang would construct a fill slope that would provide grading on certain lots to accommodate the construction of houses. Lang completed the grading work and was paid in full by Dan Ryan.

In 2006, Dan Ryan paid Lang for the first twelve lots in accord with the LPA. Dan Ryan also entered into additional contracts with Lang including a second fill slope contract. In 2007, Dan Ryan purchased another five lots, and Lang continued to work on the infrastructure of the Crystal Ridge Development.

In March 2007, cracks appeared in the basement slab and foundation walls of a partially constructed house on one of the first lots that Dan Ryan had purchased. An engineering firm engaged by Dan Ryan concluded that stabilization of that house, as well as of another house displaying similar cracks, required remediation. These problems and their associated costs exacerbated existing tensions between Dan Ryan and Lang, ultimately leading to a “divorce” (the parties' term) between the two. The parties memorialized the divorce in the First Amendment to Lot Purchase Agreement” (the Amendment). Under the Amendment, Dan Ryan agreed to purchase from Lang the remaining thirty-three lots in Crystal Ridge, and the parties' development responsibilities were apportioned differently.

In December 2007, the slope behind the lot that had first exhibited cracks began sliding downhill toward a nearby highway. A geotechnical study concluded that the slope had failed due to its natural composition, soil type, and poor construction. Dan Ryan also encountered difficulties related to Crystal Ridge's stormwater management system, development permits, and entrance drive.

In December 2009, Dan Ryan filed this lawsuit against Lang seeking monetary damages. In its complaint, Dan Ryan asserts three causes of action. Initially and principally, Dan Ryan alleges negligence by Lang in connection with construction of the fill slope. Second, Dan Ryan alleges that Lang breached several of its contractual duties under both the LPA and the Amendment. The third cause of action alleges fraudulent misrepresentation by Lang; Dan Ryan abandoned this last claim at trial.

Following several pre-trial conferences and numerous pretrial submissions, the district court held a five-day bench trial. The court admitted many exhibits and considered testimony from more than a dozen witnesses. After extensive post-trial submissions,2 the court issued a detailed, ninety-page order setting forth findings of fact and conclusions of law.

On the contract claim, the district court awarded Dan Ryan $175,646.25 in damages and $77,575.50 in pre-judgment interest for breach of the LPA and the Amendment with respect to claims for repairs on the road leading to Crystal Ridge. The court found that Dan Ryan had failed to carry its burden of proof with respect to other asserted breaches of the LPA and the Amendment, i.e., those relating to an entrance easement, a stormwater management and erosion control system, and other “miscellaneous bad work.” J.A. 2353.3 Accordingly, the court denied further contract damages. The district court then rejected Dan Ryan's negligence claim. The court reasoned that this claim failed under West Virginia's “gist of the action” doctrine, which bars recovery in tort when the duty that forms the basis of the asserted tort claim arises solely from a contractual relationship. Dan Ryan timely noted this appeal.

We “review a judgment following a bench trial under a mixed standard of review—factual findings may be reversed only if clearly erroneous, while conclusions of law, including contract construction, are examined de novo.” Roanoke Cement Co. v. Falk Corp., 413 F.3d 431, 433 (4th Cir.2005). On appeal, Dan Ryan does not challenge the district court's resolution of its claim for breach of the LPA and the Amendment. Rather, Dan Ryan appeals only the court's determination that the “gist of the action” doctrine bars its tort claim, and the court's failure to recognize that its tort claim was really a claim for breach of the fill slope contracts.4

II.

Dan Ryan offers two reasons why the district court erred in its “gist of the action” holding. We consider each in turn.

A.

First, citing Greenlaw v. United States, 554 U.S. 237, 243, 128 S.Ct. 2559, 171 L.Ed.2d 399 (2008), Dan Ryan contends that the principle of party presentation” ought to have prevented the district court from relying on the “gist of the action” doctrine. The party presentation principle generally cautions a federal court to consider only the claims and contentions raised by the litigants before it. Dan Ryan asserts that the party presentation principle applies here because neither it nor Lang raised the “gist of the action” doctrine in submissions to the district court.

Greenlaw is the Supreme Court's most robust articulation of the party presentation principle. There, in language on which Dan Ryan rests its claim, the Court stated that “in the first instance and on appeal, ... we rely on the parties to frame the issues for decision.” Greenlaw, 554 U.S. at 243, 128 S.Ct. 2559. But although Greenlaw paints the concept of party presentation in broad brushstrokes, its holding is much narrower, i.e. , “an appellate court may not alter a judgment to benefit a nonappealing party.” Greenlaw, 554 U.S. at 244, 128 S.Ct. 2559. In fact, other than in Greenlaw, the Court has invoked the party presentation principle only twice, both times in stressing the limits of the principle. See Wood v. Milyard, ––– U.S. ––––, 132 S.Ct. 1826, 1833–34, 182 L.Ed.2d 733 (2012) (courts may sua sponte consider statute-of-limitations defenses overlooked by the State in habeas cases); Arizona v. California, 530 U.S. 392, 412–13, 120 S.Ct. 2304, 147 L.Ed.2d 374 (2000) (courts may sua sponte raise a preclusion defense the parties failed to raise in special circumstances).

Moreover, neither in Greenlaw nor in any other case has the Court ever suggested that the party presentation principle constrains a court's fundamental obligation to ascertain controlling law. A party's failure to identify the applicable legal rule certainly does not diminish a court's responsibility to apply that rule. The judiciary would struggle to maintain the rule of law were it limited to the parties' competing assertions about what the law requires. For this reason, it is well established that [w]hen an issue or claim is properly before the court, the court is not limited to the particular legal theories advanced by the parties, but rather retains the independent power to identify and apply the proper construction of governing law.” Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 99, 111 S.Ct. 1711, 114 L.Ed.2d 152 (1991). Thus, the Supreme Court has long recognized that a court may consider an issue ‘antecedent to ... and ultimately dispositive of’ the dispute before it, even an issue the parties fail to identify and brief.” U.S. Nat'l Bank of Or. v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 447, 113 S.Ct. 2173, 124 L.Ed.2d 402 (1993) (quoting Arcadia v. Ohio Power Co., 498 U.S. 73, 77, 111 S.Ct. 415, 112 L.Ed.2d 374 (1990) (alterations in original)).

Here, West Virginia's “gist of the action” doctrine is just such an “antecedent” and “dispositive” issue, since it goes to the duty element of any West Virginia tort claim. The “gist of the action” doctrine requires plaintiffs seeking relief in tort to identify a non-contractual duty breached by the alleged tortfeasor. See Gaddy Eng'g Co. v. Bowles Rice McDavid Graff & Love, LLP, 231 W.Va. 577, 746 S.E.2d 568, 577 (2013)....

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