Equal Rights Center v. Archstone Smith Trust

• Decision Date: 18 March 2009
• Docket Number: Civil Action No. AMD 04-3975.
• Citation: 603 F.Supp.2d 814
• Parties: EQUAL RIGHTS CENTER, et al., Plaintiffs v. ARCHSTONE SMITH TRUST, et al., Defendant/Cross-Plaintiffs v. Niles Bolton Assos., Inc., Defendant/Cross-Defendant.
• Court: U.S. District Court — District of Maryland

603 F.Supp.2d 814

EQUAL RIGHTS CENTER, et al., Plaintiffs v. ARCHSTONE SMITH TRUST, et al., Defendant/Cross-Plaintiffs v. Niles Bolton Assos., Inc., Defendant/Cross-Defendant.

Civil Action No. AMD 04-3975.

United States District Court, D. Maryland.

March 18, 2009.

Joseph M. Sellers, Matthew Keith Handley, Cohen Milstein Sellers and Toll PLLC, Donald Lee Kahl, Isabelle Marie Thabault, Washington Lawyers Comm. for Civil Rights and Urban Affairs, Washington, DC, for Plaintiffs.

Gary A. Winters, Andrew A. Nicely, Richard Ben Veniste, Richard P. Caldarone, Lucius T. Outlaw, III, Mayer Brown LLP, Terrence Michael McShane, Lee and McShane PC, Lynn Estes Calkins, Holland and Knight LLP, Washington, DC, Richard O. Wolf, Robert Milton Moore, Moore and Lee LLP, McLean, VA, Howard Spessard Stevens, Wright Constable and Skeen LLP, Baltimore, MD, for Defendants.

Charles E. Rogers, Smith Currie and Hancock LLP, Cheryl H. Shaw, Kent T. Stair, Carlock Copeland Semler and Stair LLP, Atlanta, GA, Nicholas S. McConnell, Russell S. Drazin, Jackson and Campbell PC, Washington, DC, William D. Gillis, Jr., Donovan Hatem LLP, for Defendant/Cross-Defendant.

MEMORANDUM OPINION

ANDRE M. DAVIS, District Judge.

Plaintiffs (The Equal Rights Center ("ERC")), the American Association of People with Disabilities, and the United Spinal Association filed this action against Defendants Archstone Smith Trust and Archstone Operating Trust (together "Archstone"), Niles Bolton Associates, Inc. ("Niles Bolton"), Clark Realty Builders, VIKA, Inc., and Meeks + Partners (collectively "Defendants"), for violations of the Fair Housing Act, Title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988, 42 U.S.C. §§ 3601-3619, and the Americans with Disabilities Act, 42 U.S.C. § 12181 ("ADA"). Plaintiffs alleged that more than 100 Archstone multi-family properties around the nation were non-compliant with those federal statutes insofar as the properties were designed, constructed, and maintained in a manner that failed to render them fully accessible to disabled and handicapped persons. Niles Bolton provided architectural services for 15 of these properties.

On June 9, 2005, this court issued a Consent Decree detailing a settlement agreement reached by Archstone with Plaintiffs. Plaintiffs eventually reached settlement agreements with all Defendants, including Niles Bolton, and additional Consent Decrees were approved and entered by the court.

The serial settlement agreements and resulting Consent Decrees have disposed of all claims and cross-claims save Archstone's state-law cross-claim against Niles Bolton. Discovery as to the cross-claim has concluded and now before the court are the following motions: (1) Archstone's motion to amend its cross claim; (2) the parties' cross-motions for summary judgment; and (3) Niles Bolton's motion to exclude Archstone's expert opinion testimony. All the motions have been fully briefed and a hearing was held on February 12, 2009. For the reasons set forth within, I shall deny the belated motion to amend the cross-claim. Furthermore, consonant with emergent legal principles, I am persuaded that Archstone's cross-claim for indemnity conflicts with federal law and must be dismissed with prejudice.

I.

Plaintiffs are nonprofit membership organizations that further the interests of persons with disabilities. On December 20, 2004, they filed suit against Defendants alleging violations of the FHA and the ADA. Collectively, Defendants design, develop, construct, and operate apartment complexes throughout the country. The apartment complexes at issue are located in Maryland, Arizona, California, Colorado, Florida, Georgia, Illinois, Massachusetts, New Mexico, North Carolina, New Jersey, New York, Oregon, Tennessee, Texas, Virginia, Washington, and the District of Columbia. The remaining parties are Archstone, a real estate developer, and Niles Bolton, one of the architectural services design firms with which Archstone's predecessors contracted.

As mentioned above, in June 2005, Archstone and Plaintiffs entered into a settlement agreement, which was incorporated into a Consent Decree. The Consent Decree provided, inter alia, that Archstone would (1) pay to Plaintiffs $1.4 million in damages, attorney's fees, costs and other expenses and (2) survey and retrofit a total of 71 properties to bring them into compliance with the requirements of the FHA and the ADA. Fifteen of the 71 properties described in the Consent Decree were designed for Archstone's predecessor by Niles Bolton.

On July 1, 2005, Archstone filed a crossclaim for indemnity against Niles Bolton seeking to recover (1) the portion of the $1.4 million settlement payment to Plaintiffs attributable to Niles Bolton's designs; (2) the costs of retrofitting the Niles Bolton-designed properties encompassed by the Consent Decree; and (3) a portion of the attorney's fees Archstone has incurred in defending against Plaintiffs' claims and in seeking relief from Niles Bolton. Archstone's cross-claim relates to the following 15 properties: Governor's Green in Maryland; Reston Landing, Springfield Station, Stoneridge, Woodland Park, and Worldgate in Virginia; Archstone Matthews, Olde Apex (a/k/a Cameron Woods) and Archstone Preston (a/k/a Cameron Chase) in North Carolina; Barrett Creek, Cameron Landing, State Bridge, and North Point in Georgia; Rocky Creek in Florida; and Hickory Hollow in Tennessee.

Archstone's cross-claim against Niles Bolton relies on the following legal theories, each set forth in a separate count: (1) contractual indemnity; (2) implied indemnity; (3) breach of contract; and (4) professional negligence. Each of these theories rests on the law of one of the following states: (1) the state in which a particular contract was formed; (2) the state selected by a contractual choice-of-law provision; (3) the state where the property is located; and/or (4) Georgia, where Niles Bolton is headquartered. Archstone elaborates that it is "seeking damages only for those violations [of the FHA] that occurred because NBA specified an incorrect dimension or other detail in its construction documents, or otherwise failed to provide sufficient information for the builder to construct the project in accordance with the applicable accessibility requirements." See Archstone's Mem. in Supp. of Mot. Summ. J. at 5 (brackets added).

In October 2008, after more than three years of litigation, Archstone moved to amend its cross-claim, inter alia, to assert a claim for contribution. Archstone also moved for summary judgment on the issue of Niles Bolton's liability for failure to design FHA-compliant housing, arguing that only damages issues should require trial.

Niles Bolton has filed a cross-motion for summary judgment on all counts. Niles Bolton principally argues that, as a matter of settled principles of federal law, Archstone cannot seek, under state law, indemnification (or contribution), regardless of the state law legal theory employed. In the alternative, Niles Bolton argues that the state law claims are (1) barred by limitations; (2) barred because Archstone's settlement with Plaintiffs was an unreasonable but voluntary assumption of liability which it could have and would have avoided by defending itself in this action; (3) fatally undermined because, inter alia, Archstone has failed to project expert opinion evidence sufficient to sustain its burden to establish the applicable standard of care and any breach of professional duty. Finally, Niles Bolton argues that as a matter of law, it must prevail on the merits of the cross-claim. (Niles Bolton has filed a separate motion seeking to exclude Archstone's expert opinion testimony.)

In the view I take of the case, I need only reach the first issue presented by Niles Bolton's motion for summary judgment, preemption.

II.

Under Fed.R.Civ.P. 15(a)(2), "[t]he court should freely give leave [to amend pleadings] when justice so requires." The express language of the Rule reflects a tension between two important goals: (1) allowing easy amendment to reflect the changes in a party's position as the case develops, and (2) preventing prejudice to an opposing party who will have difficulty in determining how to present its case if a party is allowed to continuously change its position. The Fourth Circuit has construed Rule 15 liberally. See, e.g., Harless v. CSX Hotels, Inc., 389 F.3d 444, 447 (4th Cir.2004) ("The language of Federal Rule of Civil Procedure 15(a) has been construed to counsel a liberal reading of its application."). According to the Fourth Circuit, "leave to amend a pleading should be denied only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would have been futile." Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir.1986) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)).

Here, Niles Bolton opposes Archstone's motion for leave to amend its cross-claim. Niles Bolton argues that allowing Archstone to amend the cross-claim to include a claim for contribution will be (1) prejudicial, as Niles Bolton would have to conduct further discovery; and (2) futile, because federal law precludes a right to contribution under the FHA and the ADA. I will consider these issues in turn.

Prejudice

Whether an amendment would be prejudicial is a factual determination. Laber v. Harvey, 438 F.3d 404, 427 (4th Cir.2006). Courts look at the nature of the proposed amendment, the purpose of the amendment, and the time when the amendment was filed. Id. For example, a prejudicial amendment "raises a new legal theory that would require the gathering and analysis of facts not already considered by the opposing party [and is] offered shortly before or during trial." Johnson, 785 F.2d at 509 (citing Roberts v. Arizona Board of Regents, 661 F.2d 796, 798 (9th Cir.1981); Lyons v....