Brunobuilt, Inc. v. Strata, Inc.
| Citation | 457 P.3d 860,166 Idaho 208 |
| Decision Date | 05 February 2020 |
| Docket Number | Docket No. 46638 |
| Court | United States State Supreme Court of Idaho |
| Parties | BRUNOBUILT, INC., an Idaho corporation, Plaintiff-Appellant, v. STRATA, INC.; Chris M. Comstock; H. Robert Howard; Michael G. Woodworth, Defendants-Respondents |
McConnell Wagner Sykes & Stacey, PLLC, Boise, attorneys for Appellant. Rick L. Stacey and Chad M. Nicholson, Boise, argued.
Duke, Scanlan & Hall, PLLC, Boise, attorneys for Respondent. Kevin A. Griffiths, Boise, argued.
BrunoBuilt, Inc., ("BrunoBuilt") appeals a district court's dismissal of its claims against Strata, Inc. ("Strata"), Chris M. Comstock, H. Robert Howard, and Michael G. Woodworth (collectively "the Strata Defendants"). BrunoBuilt filed a professional negligence action against the Strata Defendants alleging that when the Strata Defendants rendered engineering services for the Terra Nativa Subdivision they failed to identify a pre-existing landslide and negligently failed to recommend construction of infrastructure that would stabilize and prevent further landslides within the Subdivision. A home BrunoBuilt had contracted to build and the lot on which the dwelling was located were allegedly damaged as a result. The district court dismissed BrunoBuilt's claims after holding that the parties had entered into an enforceable settlement agreement, or alternatively, that summary judgment was warranted in favor of the Strata Defendants based on the economic loss rule. We affirm the district court judgment because the parties entered into an enforceable settlement agreement.
In 1992, owners of land in the Boise foothills began developing a multiple phase subdivision that would ultimately become known as the Terra Nativa Subdivision ("Subdivision"). The developers retained Strata to perform geotechnical engineering services throughout the development of the Subdivision. The current matter arises from earth movement affecting property located at Lot 16, also known as 238 N. Alto Via Court ("Lot 16") in the Subdivision. Amy and William Dempsey purchased Lot 16 in 2014 and signed a contract with BrunoBuilt to construct a home. Pursuant to the contract, the Dempseys quitclaimed Lot 16 to BrunoBuilt to construct a home, and upon completion BrunoBuilt was to re-convey the lot to the Dempseys in exchange for the contract price. Prior to commencing construction on the Dempsey home, BrunoBuilt built a residence on neighboring property down the street for Paul and Becky Rowan.
Around February 2016, portions of the land in the Subdivision began to slide. In February and March 2016, final building inspections were performed in anticipation of securing a certificate of occupancy from the City. The home BrunoBuilt constructed for the Dempseys on Lot 16 passed all the final building inspections; yet, sometime between April and June of 2016, the slide became noticeable within Lot 16 with visible cracking in the front yard. The house itself was not damaged by the earth movement, but all utilities, highway district, and fire department services in the area were terminated. As a result, the City withheld issuing a certificate of occupancy for the house on Lot 16. Unable to occupy their home, the Dempseys refused to pay under the contract and BrunoBuilt retained ownership of Lot 16.1
Predictably, the ground displacement within the Subdivision resulted in several lawsuits. On October 6, 2016, the Rowans sent BrunoBuilt a demand letter under Idaho's Notice and Opportunity to Repair Act ("NORA") for the damage occurring to their home on Alto Via Court. BrunoBuilt tendered the NORA notice to Strata, demanding that Strata defend and indemnify BrunoBuilt with respect to the Rowans’ claim; however, Strata rejected BrunoBuilt's tender based on a contract that was executed between Strata and BrunoBuilt for the Rowan project. The Rowan damages arose from the same earth movement that damaged Lot 16, both of which were the subject of a separate action against the Strata Defendants, Sericati, et al. v. Strata, Inc., et al. , Ada County Case No. CV OC 16-09068 (the "Sericati case").
On December 19, 2016, BrunoBuilt filed another action, BrunoBuilt v. Kleinfelder, et al. , Ada County Case No. CV01-16-22915 (the "Kleinfelder case"). In the Kleinfelder case, Brunobuilt named several individuals and entities involved in the development of the Subdivision, including the Strata Defendants. BrunoBuilt did not serve the Strata Defendants at that time because the parties were engaged in settlement discussions.
On January 3, 2017, counsel for the Strata Defendants, Kevin Scanlan, met with counsel for BrunoBuilt, Wyatt Johnson, to discuss potential dismissal of the claims against the Strata Defendants in the Kleinfelder case. Scanlan proposed that if BrunoBuilt would agree to dismiss its pending claims against the Strata Defendants in the Kleinfelder case, the Strata Defendants would negotiate with the Rowans in the Sericati case to secure a covenant not to sue, by which the Rowans would agree not to sue BrunoBuilt for any landslide damage caused to their home. In a declaration, Johnson testified that Scanlan made it clear that the Strata Defendants were not proposing any payment to BrunoBuilt for damages BrunoBuilt had sustained as a result of the 2016 landslide (which damages were sustained in connection with the agreement between the Dempseys and BrunoBuilt). Instead, the sole consideration the Strata Defendants were offering in exchange for BrunoBuilt's agreement to dismiss its pending claims against the Strata Defendants was an agreement by the Strata Defendants to secure a covenant from the Rowans that they would not sue BrunoBuilt for the landslide damages caused to their home. Johnson told Scanlan he would discuss the Strata Defendants’ settlement offer with his client and get back to him. Between January 3, 2017, and January 10, 2017, Scanlan negotiated with counsel for the Rowans regarding including the covenant not to sue in the settlement of the Sericati case and with Johnson regarding settlement of the Kleinfelder case.
On January 5, 2017, Scanlan called Johnson to ask about the status of the offer. Johnson informed Scanlan that BrunoBuilt's principal, Robert Bruno, was still considering it. Scanlan gave Johnson until January 9 to accept. During the call, Johnson and Scanlan also discussed (1) whether BrunoBuilt would be willing to provide a Pierringer2 release to the Strata Defendants in the Kleinfelder case, through which it would only dismiss the Strata Defendants and maintain its claims against the other defendants, or (2) whether it would dismiss the entire case. Johnson advised Scanlan he would discuss the Pierringer release option with his client and get back to him on whether his client would agree to the proposal.
On January 9, 2017, during a phone call, Johnson informed Scanlan that BrunoBuilt would be willing to dismiss its claims against the Strata Defendants in exchange for a release from the Rowans, but BrunoBuilt required that it have the direct and independent right to enforce any covenant not to sue that the Rowans might give to the Strata Defendants in the Sericati case. Johnson specified that any settlement between the Strata Defendants and BrunoBuilt had to be conditioned on the Strata Defendants securing a covenant not to sue signed by the Rowans that communicated that BrunoBuilt was an intended third-party beneficiary of that covenant. Because BrunoBuilt was not privy to any confidential settlement negotiations that the Strata Defendants were purportedly having with the Rowans and the other homeowner plaintiffs in the Sericati case, Johnson explained it was important that BrunoBuilt have something in writing signed by the Rowans it could rely on if the Rowans tried to sue BrunoBuilt for their landslide damage. Johnson stated that Scanlan seemed reluctant to agree to BrunoBuilt's insistence that it be made an express third-party beneficiary of any covenant not to sue that the Rowans may sign in the Sericati case.
On January 10, 2017, Scanlan and Johnson spoke again, with the conversation centering on whether any settlement agreement reached between the parties would contain a Pierringer release from BrunoBuilt to the Strata Defendants.
On January 12, 2017, a confidential release of all claims and indemnity agreement was executed between the plaintiffs in the Sericati case and the Strata Defendants. A provision in the agreement was the Rowans’ covenant not to sue BrunoBuilt; however, Scanlan did not inform Johnson or BrunoBuilt that the Sericati settlement agreement had been signed at that time.
On January 20, 2017, Scanlan called Johnson to ask about BrunoBuilt's position on the settlement terms the Strata Defendants had proposed. Johnson informed Scanlan that he had spoken to his client and BrunoBuilt would agree to provide the Strata Defendants with a Pierringer release.
On February 9, 2017, Scanlan provided Johnson with a draft release agreement in which the claims against the Strata Defendants would be dismissed with prejudice in exchange for the Rowan covenant. Upon reviewing the release, Johnson noted that although there was a passing reference to the covenant not to sue executed by the Rowans in favor of BrunoBuilt, the express language was not included nor was a copy of the covenant provided to Johnson. Johnson also pointed out that the draft contained a confidentiality provision, which had not been discussed by the parties. Johnson described this as a material term that he and his client had not agreed to.
On March 1, 2017, Johnson informed Scanlan that BrunoBuilt would not sign the draft agreement because it did not reflect the terms counsel had discussed. Johnson also told Scanlan that BrunoBuilt believed the Strata Defendants failed to deliver on its promise to provide BrunoBuilt with a written, signed covenant not to sue from the Rowans.
On March 3, 2017,...
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