Ala. Teachers Credit Union v. Design Build Concepts, Inc.

• Decision Date: 10 August 2018
• Docket Number: CASE NO.: 4:16-cv-2027-KOB
• Citation: 334 F.Supp.3d 1171
• Parties: ALABAMA TEACHERS CREDIT UNION, Plaintiff, v. DESIGN BUILD CONCEPTS, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

334 F.Supp.3d 1171

ALABAMA TEACHERS CREDIT UNION, Plaintiff,

v.DESIGN BUILD CONCEPTS, INC., et al., Defendants.

CASE NO.: 4:16-cv-2027-KOB

United States District Court, N.D. Alabama, Middle Division.

Signed August 10, 2018

J. Lister Hubbard, R. Brooke Lawson, Capell & Howard P.C., Montgomery, AL, for Plaintiff.

Champ Lyons, III, Champ Lyons III, P.C., Birmingham, AL, David Humphreys, Dorsey R. Carson, Jr., Carson Law Group PLLC, Jackson, MS, for Defendants.

MEMORANDUM OPINION

KARON OWEN BOWDRE, CHIEF UNITED STATES DISTRICT JUDGE

Rain drops kept falling on their heads ... or at least leaking through the roof, ceilings, and walls of the building that the Defendant's predecessor designed and constructed. Yet Alabama Teachers Credit Union patiently endured ten years of water torture before finally seeking legal relief from its soggy dilemma. Ten years of rain showers, leaking into ATCU's building, with every drop serving as a reminder to ATCU of the Defendants' alleged failure to mop up the situation. Now, the mop has been handed to the court, albeit a little too late.

Before the court is Design Build/IBT LLC's ("IBT") Motion for Summary Judgment (doc. 78); Plaintiff Alabama Teachers Credit Union's Motion to Strike IBT's motion for summary judgment (doc. 83); ATCU's Motion to Strike IBT's Reply in Support of Summary Judgment (doc. 97); and ATCU's Motion for Leave to File a third Amended Complaint (doc. 82).

ATCU and IBT submitted a "Joint Proposed Plan for Initial Limited Discovery" in this case on June 20, 2017, which the court adopted on June 26, 2017. (Docs. 56, 57). As agreed in the joint plan, the court's order limited discovery to issues related to IBT's affirmative defenses and an asset purchase agreement between IBT and Design Build Concepts, Inc.¹ After IBT filed its motion for summary judgment on September 15, 2017, ATCU filed motions to strike IBT's motion for summary judgment and IBT's reply brief in support of summary judgment, arguing that IBT's briefings exceeded the limited scope of discovery. (Docs. 83, 97). ATCU's motion for leave to file a third amended complaint arises from its alleged discovery of evidence that IBT fraudulently suppressed material information regarding design flaws in ATCU's building. The motion seeks to add a ninth count of fraudulent suppression.

As explained below, the court will DENY ATCU's motion to strike IBT's motion for summary judgment (doc. 83); DENY its motion to strike IBT's reply brief (doc. 97); DENY ATCU's motion to file a third amended complaint (doc. 82), and will GRANT summary judgment in favor of IBT on all counts.

I. FACTUAL BACKGROUND

The Construction and Completion of the Building

On April 17, 2003, Plaintiff Alabama Teachers Credit Union and Design-Build Concepts, Inc. (a Georgia corporation) entered into a Program Services Agreement for DBC to design and construct a building for ATCU in Gadsden, Alabama. (Doc. 80-2). The agreement contained two warranties that began to run the date on which the building's "Certificate of Substantial Completion" was issued.

More specifically, the one-year warranty provided that "all materials and component parts used in the construction of the [building] will be free from defects under normal use and service and all workmanship will be within tolerances normally accepted in the industry. If a defect occurs, DBC ... will repair, replace or pay the Owner the reasonable cost of repairing or replacing the defective item(s)." The four-year warranty provided that "DBC will correct or repair any Major Structural Defects in the [building]," meaning "those defects in the materials or workmanship that reduce the stability, safety, or structural integrity of the [building] below acceptable standards or restrict the normal intended use of all or a part of the [building]." (Id. at 3).

ATCU moved into the building in January 2006, and the Certificate of Substantial Completion was issued on March 6, 2006. (Doc. 80-4). However, items remaining to be completed on the February 28, 2006, punch list included roof leaks and water intrusion damage. (Doc. 80-9).

IBT's Purchase of DBC's Assets

On July 31, 2007, IBT purchased substantially all of DBC's assets and assumed some of its liabilities pursuant to an asset purchase agreement—a deal ATCU alleges was a de facto merger. (Doc. 25-1). On August 3, 2007, Jim Givan (DBC's president) and Mylle Mangum (CEO of IBT Enterprises) sent a letter to Ron Summerall (president of ATCU) announcing that DBC had "reached an agreement to merge" with IBT Enterprises. (Doc. 85-5 at 58). The letter assured Mr. Summerall that the DBC team would continue to provide services to ATCU and would work with ATCU as in the past.

Then, on April 25, 2008, Mr. Givan sent Mr. Summerall a second letter, advising him that DBC had "merged capabilities with IBT Enterprises, LLC," had "transferred to Design Build Concepts/IBT, LLC all its assets as of July 31, 2007, and [would] conduct business in that name going forward." (Doc. 85-5 at 59).² The letter further stated that IBT would "remain the surviving entity, continuing performance under your [Program Services] Agreement." Last, the letter explained the Program Services Agreement "contemplates [that ATCU's] consent to the transfer of substantially all of DBC's assets may be required, as such transfer under the Agreement may constitute an assignment." Mr. Summerall signed the letter, DBC's officers and employees continued working for IBT after the asset purchase in the same capacities as before, IBT continued using the "DBC" name on its website, and IBT operated out of DBC's former office. (Doc. 84 at 11, 24).

Problems Continue with ATCU's Building

Aside from the initial leaks indicated on the February 2006 punch list, ATCU discovered more leaks and subsequent damage within four to six months after moving into the building. (Doc. 85-3 at 17). ATCU notified DBC of the problems, and DBC began making site visits to attempt to repair the defects. (Id. at 28). Thus began a long cycle of ATCU experiencing water intrusion damage, and DBC's (and later, IBT's), fruitless assurances and efforts to solve the problems. The record is sparse regarding DBC's and IBT's efforts to repair the building between 2006 and 2010, so ATCU's case centers on the events described below.

IBT's Chief Operating Officer, Mr. Lock, wrote Mr. Summerall on November 30, 2010, acknowledging five years of failed attempts to repair the leaks in ATCU's building. (Doc. 80-15). On December 8, 2010, Mr. Lock notified Mr. Summerall that he planned to obtain a quote from a roofing company to inspect the building's roofing membrane and flashing system, and to make any necessary repairs or adjustments. (Doc. 80-16). His email assured ATCU that IBT would "get to the bottom of the problem and bring this to a final resolution once and for all." (Doc. 80-15). Mr. Lock also told ATCU that if the leaks continued after the repairs or replacement of the membrane, IBT would continue searching for the source of the problem and solve it. (Doc. 85-13).

Approximately two weeks later, Mr. Lock wrote Mr. Summerall again with an update on the status of obtaining quotes to remove and replace the roof pavers and to inspect or replace the roofing membrane. (Doc. 80-17). He suggested the work would begin at the beginning of 2011. However, as of Mr. Lock's February 24, 2011, email to ATCU, the work still had not been completed. (Doc. 84 at 15–16). The record is unclear as to whether the parties resolved this particular issue, providing only that Mr. Lock followed up on the work on August 25, 2011. (Id. ).

On September 6, 2011, ATCU notified IBT of a new leak that appeared in the building's foyer. (Doc. 85-18 at 3). IBT responded that it would follow up with its client services manager, Billy Cowan. (Id. at 2). Four days later, on September 10, Mr. Cowan notified Mr. Lock that he had scheduled an inspection of the ATCU roof by Fiber-Tite, the roofing manufacturer; GKL Roofing, the original subcontractor that installed the roof and made multiple repairs at IBT's instruction; and Clarks Custom Roofing, whom IBT requested provide pricing for flashing around roof vents. (Doc. 85-19).

On October 31, 2011, Clarks Custom Roofing emailed Mr. Cowan regarding the cost to install drip edge flashing as IBT had requested. (Doc. 85-20). Clarks stated that the building envelope was "badly designed" and the roofing manufacturer, the exterior insulation finishing system ("EIFS") installer, and the roofing installer must have known that the work was unacceptable. Mr. Cowan forwarded the email to his IBT colleagues, but not to anyone at ATCU. (Doc. 85-27 at 3–4). No one at IBT ever revealed this information to ATCU. (Doc. 85-21 at 2–3).

Sometime in 2012, ATCU's loan manager, Mr. Clark, met Mr. Cowan and GKL on-site to discuss various repairs. (Doc. 84 at 18). After that visit, GKL made multiple attempts to repair the building up until sometime in 2015, but no evidence suggests that IBT paid GKL for those visits. IBT alleges that its last site visit occurred sometime in 2012, and its final email correspondence with ATCU occurred no later than February 2013. (Doc. 79 at 11). ATCU alleges that IBT made site visits in February 2013, but the court gleans no evidence supporting that proposition from the emails ATCU submitted. (Docs. 85-23; 85-24).

ATCU alleges GKL's repairs were on behalf of IBT, were according to IBT's instruction, and were an attempt to satisfy IBT's warranty obligations (docs. 84 at 18; 85-24; 85-27). However, Randall Lipscomb, a principal of GKL, testified that DBC hired GKL as the original subcontractor to install the roof at the ATCU building, but GKL never acted or represented itself as DBC's or IBT's agent. (Doc. 80-24 at 1). GKL's communications with IBT ceased sometime in 2013, and Mr. Lipscomb did not communicate with any IBT employee or representative after that time. (Id. at 2).

After direct communications between IBT and ATCU ceased in 2013, the building...