Blueberry Place Homeowners Ass'n v. Northward Homes, Inc.

• Decision Date: 14 February 2005
• Docket Number: No. 53630-3-I.,53630-3-I.
• Parties: BLUEBERRY PLACE HOMEOWNERS ASSOCIATION, a Washington Non-Profit Corporation; Leslie Jane Murphy; Betty Ann Thornhill; Alexander Reiss III; Jordan-Lee Miller and JeNae Miller, a marital community; Glenn Lamb and Carol Lamb, a marital community; John Earl Warner; Patrick T. O'Brien; Brandon Summers and Amy Summers, a marital community; Daniel Coats; Joseph Mobley; Diane Dempsey; Louise Hodges; Larry Huck and Peggy Huck, a marital community; Robert Gasca and Colleen Gasca, a marital community; Lori Peters; Chelsea Uyeda; Adrian Burns; Jim Mason; Brad Lawrence and Margie Lawrence, a marital community, Marie E. Niehaus; George Tang; Joseph Matuzaki and Dolly Matuzaki, a marital community; Jimie Yamaguchi; Angela Moral; Hernan Norambuena; Patricia E. Hackett; Anne Purcell; Nancy Osako; Thomas Norkool; Luann Wing; Brian Kramer; Harry Ungefug; Naomi Benton Robinson; Charles Fajarillo and Tracy Camus; Carol L. Wilden; Richard Nelson and Stephanie Nelson, a marital community; Alan Hoshino and Cheryl Hoshino, a marital community; Victor Goncharoff; Sharon Huvinen; Anne Anex; James C. Cheng; Kierstan Grunow; Carolyn Blott; George Townley and Susan Townley, a marital community; Eric Cameron and Donna Cameron, a marital community; Jeffrey Stuart; Carmen Ey; Mary Yansura; Stephen Szeman; Greg Szwed and Aneta Szwed, a marital community; Lynn Gerstner; John Sieben and Majorie Sieben, a marital community; Him Yin; Mohamed Elbasheer and Susan Elbasheer, a marital community; Derek Doremus; Robert Haynes and Kay Haynes, a marital community; Chantelle Jeanneret, Plaintiffs, v. NORTHWARD HOMES, INC., a Washington corporation; Northward, an unlicensed corporate entity; Northward Properties; a Partnership; Blueberry Place Communities, L.P., a Limited Partnership; Blueberry Communities, L.P., a Limited Partnership; Blueberry Place, Inc., an unlicensed corporate entity; Richard Gilroy and Loraine Gilroy, and the marital community comprised thereof; Chuck Orton and Jane Doe Orton, and the marital community comprised thereof; Mike Gooden and Jane Doe Gooden, and the marital community composed thereof; Gary Rogers and Jane Doe Rogers, and the marital community composed thereof; Plasco Manufacturing Corporation, n/k/a Uponor Canada, Inc., a Canadian corporation doing business in the State of Washington, Defendants, Northward Construction Company, Inc., an unlicesed corporate entity; Northward Construction, an unlicensed corporate entity; Northward Construction Company, a Washington Corporation, Defendants/Respondents, MacDonald-Miller Residential, Inc. a Washington corporation; MMR Holding Company, a Washington corporation, Defendants/Appellants. McDonald-Miller Residential, Inc., a Washington Corporation, Third-Party Plaintiffs, v. Pacific Plumbing Supply Company, a Washington corporation; Plasco Manufacturing, Inc., a Canadian corporation, Star Sales, Inc. d/b/a Nolan Northwest, a Washington corporation, and Specified Technologies, Inc., Third-Party Defendants. Northward Construction Company, a/k/a Northward Construction Company, Inc., a/k/a Northward Construction, a/k/a Northward Construction, Inc., (Collectively identified herein as "NCC"), Third/Fourth-Party Plaintiffs, v. J-S Contracting, Inc., a Washington corporation; Premium Concrete, LLC, a Washington Limited Liability Company; ASI Construction, Inc. a Washington Corporation; Peterson Buckingham kna Alexander Buckingham, Inc. a Washington Corporation; Lakeside Industries, a Washington General Partnership Joint Venture; McDonald-Miller Residential, Inc., a Washington Corporation; Puget Sound Mechanical, Inc., a Washington Corporation; Pacific Star Roofing, Inc., a Washington Corporation; Ceder County Construction, Inc., a Washington Corporation; Cascade Utilities, Inc., a Washington Corporation; James R. Messer, d/b/a Howard S. James Construction; T.E. Construction, Inc., a Washington Corporation, Mark Grose, d/b/a Summerset Const. Co.; Gavin T. Norquist, d/b/a Rolled Edge Concrete, Third/Fourth-Party Defendants.
• Court: Washington Court of Appeals

110 P.3d 1145

126 Wash.App. 352

BLUEBERRY PLACE HOMEOWNERS ASSOCIATION, a Washington Non-Profit Corporation; Leslie Jane Murphy; Betty Ann Thornhill; Alexander Reiss III; Jordan-Lee Miller and JeNae Miller, a marital community; Glenn Lamb and Carol Lamb, a marital community; John Earl Warner; Patrick T. O'Brien; Brandon Summers and Amy Summers, a marital community; Daniel Coats; Joseph Mobley; Diane Dempsey; Louise Hodges; Larry Huck and Peggy Huck, a marital community; Robert Gasca and Colleen Gasca, a marital community; Lori Peters; Chelsea Uyeda; Adrian Burns; Jim Mason; Brad Lawrence and Margie Lawrence, a marital community, Marie E. Niehaus; George Tang; Joseph Matuzaki and Dolly Matuzaki, a marital community; Jimie Yamaguchi; Angela Moral; Hernan Norambuena; Patricia E. Hackett; Anne Purcell; Nancy Osako; Thomas Norkool; Luann Wing; Brian Kramer; Harry Ungefug; Naomi Benton Robinson; Charles Fajarillo and Tracy Camus; Carol L. Wilden; Richard Nelson and Stephanie Nelson, a marital community; Alan Hoshino and Cheryl Hoshino, a marital community; Victor Goncharoff; Sharon Huvinen; Anne Anex; James C. Cheng; Kierstan Grunow; Carolyn Blott; George Townley and Susan Townley, a marital community; Eric Cameron and Donna Cameron, a marital community; Jeffrey Stuart; Carmen Ey; Mary Yansura; Stephen Szeman; Greg Szwed and Aneta Szwed, a marital community; Lynn Gerstner; John Sieben and Majorie Sieben, a marital community; Him Yin; Mohamed Elbasheer and Susan Elbasheer, a marital community; Derek Doremus; Robert Haynes and Kay Haynes, a marital community; Chantelle Jeanneret, Plaintiffs, v. NORTHWARD HOMES, INC., a Washington corporation; Northward, an unlicensed corporate entity; Northward Properties; a Partnership; Blueberry Place Communities, L.P., a Limited Partnership; Blueberry Communities, L.P., a Limited Partnership; Blueberry Place, Inc., an unlicensed corporate entity; Richard Gilroy and Loraine Gilroy, and the marital community comprised thereof; Chuck Orton and Jane Doe Orton, and the marital community comprised thereof; Mike Gooden and Jane Doe Gooden, and the marital community composed thereof; Gary Rogers and Jane

Doe Rogers, and the marital community composed thereof; Plasco Manufacturing Corporation, n/k/a Uponor Canada, Inc., a Canadian corporation doing business in the State of Washington, Defendants,

Northward Construction Company, Inc., an unlicesed corporate entity; Northward Construction, an unlicensed corporate entity; Northward Construction Company, a Washington Corporation, Defendants/Respondents,

MacDonald-Miller Residential, Inc. a Washington corporation; MMR Holding Company, a Washington corporation, Defendants/Appellants.

McDonald-Miller Residential, Inc., a Washington Corporation, Third-Party Plaintiffs, v. Pacific Plumbing Supply Company, a Washington corporation; Plasco Manufacturing, Inc., a Canadian corporation, Star Sales, Inc. d/b/a Nolan Northwest, a Washington corporation, and Specified Technologies, Inc., Third-Party Defendants.

Northward Construction Company, a/k/a Northward Construction Company, Inc., a/k/a Northward Construction, a/k/a Northward Construction, Inc., (Collectively identified herein as "NCC"), Third/Fourth-Party Plaintiffs, v. J-S Contracting, Inc., a Washington corporation; Premium Concrete, LLC, a Washington Limited Liability Company; ASI Construction, Inc. a Washington Corporation; Peterson Buckingham kna Alexander Buckingham, Inc. a Washington Corporation; Lakeside Industries, a Washington General Partnership Joint Venture; McDonald-Miller Residential, Inc., a Washington Corporation; Puget Sound Mechanical, Inc., a Washington Corporation; Pacific Star Roofing, Inc., a Washington Corporation; Ceder County Construction, Inc., a Washington Corporation; Cascade Utilities, Inc., a Washington Corporation; James R. Messer, d/b/a Howard S. James Construction; T.E. Construction, Inc., a Washington Corporation, Mark Grose, d/b/a Summerset Const. Co.; Gavin T. Norquist, d/b/a Rolled Edge Concrete, Third/Fourth-Party Defendants.

No. 53630-3-I.

Court of Appeals of Washington, Division 1.

February 14, 2005.

Publication Ordered March 9, 2005.

Steven Jager, Jager Law Office, Nicholas Jenkins, Lee Smart Cook Martin & Patterson, Seattle, WA, for Appellants.

Robert J. Burke, Arthur D. McGary, Oles Morrison Rinker & Baker LLP, Seattle, WA, Saphronia R. Young, Auburn, WA, for Respondents.

SCHINDLER, J.

¶ 1 MacDonald-Miller Residential, Inc. (MacDonald-Miller), one of the subcontractors for a condominium construction project, appeals the trial court's award of attorneys' fees and costs in favor of Northward Construction Company (Northward), the general contractor based on the theory of equitable indemnity. Northward cannot recover attorneys' fees and costs under the theory of equitable indemnity or the "ABC rule" if, in addition to the wrongful act or omission of MacDonald-Miller, there are other reasons why Northward was sued by the homeowners. Tradewell Group, Inc. v. Mavis, 71 Wash.App. 120, 857 P.2d 1053 (1993). The defective hydronic radiant heating system installed by MacDonald-Miller was not the only reason Northward was sued by the condominium homeowners. The trial court erred in ruling as a matter of law that Northward was entitled to an award of attorneys' fees and costs for defending the homeowners' claims under an equitable indemnity theory. We reverse and remand.

FACTS

¶ 2 Northward was the general contractor for Blueberry Place, a 57 unit condominium development. Northward contracted with MacDonald-Miller to design and install a hydronic radiant heating system. The subcontract required MacDonald-Miller to design and install the heating system "in a first-class and workmanlike manner to the satisfaction of" Northward and to indemnify Northward for loss or damage.¹ MacDonald-Miller used plastic pipes manufactured by Plasco Manufacturing Ltd. (Plasco) for the hydronic radiant heating system it installed in the Blueberry Place condominiums.

¶ 3 Starting in June 2000, Blueberry Place homeowners reported heating system tube ruptures to MacDonald-Miller. In December 2001, the Blueberry Homeowners Association and the individual homeowners (collectively, "homeowners") filed a lawsuit against Northward, MacDonald-Miller, Plasco, and Blueberry Place Communities, L.P. The homeowners alleged the construction defects included "water penetration and damage at walls, windows and roofs; cracking, leaking and sagging foundations, drainage problems, [and] heating and plumbing defects, including hot water heating tank deterioration and tube ruptures."² The homeowners claimed Northward and MacDonald-Miller were liable for breach of contract and warranties, misrepresentation, negligent construction, and Consumer Protection Act and Product Liability Act violations. While the terms of MacDonald-Miller's subcontract with Northward required MacDonald-Miller to pay Northward for any expense that was the result of MacDonald-Miller's failure to comply with the terms of the agreement, the subcontract does not contain a provision for attorneys' fees or for recovery of attorneys' fees in the event of litigation.³

¶ 4 In October 2002, Northward filed a third-party complaint and cross claims against MacDonald-Miller alleging breach of contract and requesting MacDonald-Miller defend and indemnify Northward against the homeowners' claims for the defective heating system. In September 2003, Northward filed an amended fourth-party complaint against MacDonald-Miller, alleging misrepresentation, unjust enrichment and constructive trust, common law indemnity and subrogation and violation of the Consumer Protection Act.

¶ 5 On October 9, 2003, Northward settled all claims with the homeowners, "including those arising out of the hydronic heating systems."⁴ As part of the settlement, Northward assigned its claims against MacDonald-Miller to the homeowners, but reserved its claim for the attorneys' fees and litigation costs related to defending the homeowners' defective hydronic heating system claims.

¶ 6 On October 17, 2003, Northward filed a motion for partial summary judgment asking the trial court to rule as a matter of law that Northward was entitled to recover attorneys' fees from MacDonald-Miller under the theory of equitable indemnity, and determine the amount after an evidentiary hearing or trial. MacDonald-Miller argued the court could not award attorneys' fees to Northward under the theory of equitable indemnity because the homeowners sued Northward for construction defects unrelated to the hydronic heating system. Two days before the hearing on Northward's summary judgment motion, MacDonald-Miller settled all claims with the homeowners.

¶ 7 On November 17, the trial court granted Northward's motion for partial summary judgment. The court ruled that as a matter of law the attorneys' fees and costs incurred by Northward in defending the homeowners' claims related to the heating system were authorized under the theory of equitable indemnity (the ABC rule). MacDonald-Miller disagreed with the court's decision. To avoid trial, MacDonald-Miller stipulated to its inequitable conduct for purposes of the ABC rule and to entry of a judgment against it for Northward's attorneys' fees and costs as the consequential damages for defending the homeowners' claims related to the heating system.

ANALYSIS

¶ 8 MacDonald-Miller contends the trial court erred when it ruled as a matter of law that Northward was entitled to attorneys' fees and costs incurred in defending against the homeowners' claims under the theory of equitable indemnity, also referred to as the "ABC rule."

¶ 9 On review of summary judgment, this court engages in the same inquiry as the trial court. Reynolds v. Hicks, 134 Wash.2d 491, 495, 951 P.2d 761 (1998). Summary judgment is properly granted when the pleadings and affidavits show there is no genuine issue of material fact and the moving party is entitled to judgment as a...