Florida State Bd. of Ad. v. Engin., Environ. Serv.

• Decision Date: 21 May 2003
• Docket Number: No. CIV. 02-4283 (DSD/FL).,CIV. 02-4283 (DSD/FL).
• Parties: FLORIDA STATE BOARD OF ADMINISTRATION, Plaintiff, v. LAW ENGINEERING AND ENVRONMENTAL SERVICES, INC., Defendant.
• Court: U.S. District Court — District of Minnesota

262 F.Supp.2d 1004

FLORIDA STATE BOARD OF ADMINISTRATION, Plaintiff, v. LAW ENGINEERING AND ENVRONMENTAL SERVICES, INC., Defendant.

No. CIV. 02-4283 (DSD/FL).

United States District Court, D. Minnesota.

May 21, 2003.

Robert J. Huber, Esq. and Leonard, Street and Deinard, Minneapolis, William R. Wildman, Esq., George A. Smith, Esq., Sarah T. Holloway, Esq. and Sutherland, Asbill & Brennan, Atlanta, GA, counsel for plaintiff.

Mary C. Yeager, Esq., Michael B. Lapicola, Esq. and Faegre & Benson, Minneapolis, J. Andrew Bertron, Jr., Esq., Thomas J. Guilday, Esq. and Huey, Guilday, Tucker, Schwartz & Williams, Tallahassee, FL, counsel for defendant.

ORDER

DOTY, District Judge.

This matter is before the court upon plaintiff Florida State Board of Administration's ("FSBA") motion for partial summary judgment on defendant Law Engineering and Environmental Services, Inc.'s ("Law") affirmative defenses of (1) improper venue, (2) statute of limitations, (3) economic loss doctrine, (4) no fiduciary duty, (5) failure to allege a cause of action for damages and (6) failure to state a cause of action for indemnity. This matter also is before the court upon defendant's motion for summary judgment on plaintiffs claims of (1) breach of fiduciary duty, (2) negligence, (3) negligent misrepresentation and (4) indemnification. Based upon a review of the file, record and proceedings herein, and for the reasons stated, the court grants plaintiffs motion for partial summary judgment on defendant's affirmative defenses of improper venue, statute of limitations, and the economic loss doctrine only as it applies to plaintiffs negligent misrepresentation claim. The court denies plaintiffs motion for partial summary judgment on defendant's affirmative defenses of the economic loss doctrine as it applies to plaintiffs fiduciary duty and negligence claims, failure to allege a cause of action for damages and failure to state a cause of action for indemnity. The court grants defendant's motion for summary judgment on plaintiffs breach of fiduciary duty, negligence and indemnification claims and denies defendant's motion for summary judgment on plaintiffs negligent misrepresentation claim.

BACKGROUND

Plaintiff is an agency of the State of Florida responsible for managing and investing the assets of various trust funds. In the summer of 1997, plaintiff expressed interest in purchasing commercially developed property in Eden Prairie, Minnesota. The property, known as the One Southwest Crossing Office Building ("One Southwest Crossing"), consists of a five-story, Class A office building and an attached three-level parking structure.

Before purchasing One Southwest Crossing, plaintiff hired defendant to assess its structural soundness. The parties executed a building assessment agreement. Pursuant to this agreement, defendant inspected One Southwest Crossing and issued a building condition assessment report. According to the report, "the structure did not exhibit signs of structural distress or excessive movement or distortion. With adequate and continued future maintenance, the parking structure should perform as designed well beyond the 10-year evaluation period." (PL's App. Tab 2, at 20.) The report also estimated that maintenance costs for the parking structure would not exceed $487,600 over the ten-year evaluation perk od, with only $34,600 of this amount needed for immediate repair. (PL's App. Tab 2, at 21.)

Plaintiff purchased One Southwest Crossing through its whollyowned subsidiary 11095 Viking, Inc. ("Viking") for $34,100,000. As plaintiff began to implement the maintenance program that defendant recommended, the parking structure experienced concrete failures including corroded reinforcing steel, concrete delaminations, spalling in the structural slabs, water intrusion, and distress on the structure's protective traffic coating. Plaintiff began repairs and it is estimated that the total cost of repairs and associated expenses will exceed $1.8 million. Plaintiff contends that if it had known that it would be required to spend at least $1.8 million to repair and maintain the parking structure, it would not have purchased One Southwest Crossing or would have negotiated a much lower price.

Plaintiff filed this action against defendant alleging (1) breach of contract (count one) (2) breach of fiduciary duty (count two) (3) negligence (count three), (4) negligent misrepresentaion (count four) and (5) indemnification (count five). Dedendant raiases several affirmative defenses, including: (1) improper venue, (2) statute of limitations, (3) the economic loss rule, (4) no fiduciary duty, (5) failure to allege a cause of action for damages and (6) failure to state a cause of action for indemnity, Plaintiff moves for partial summary judgment on those six affirmative defenses and defendant moves for summary judgment on counts two through five of the complaint.

After a review of the file, record and proceedings herein, and for the reasons stated, the court grants plaintiffs motion for partial summary judgment on defendant's affirmative defenses of improper venue, statute of limitations, and the economic loss doctrine only as it applies to plaintiffs negligent misrepresentation claim. The court denies plaintiffs motion for partial summary judgment on defendant's affirmative defenses of the economic loss doctrine as it applies to plaintiffs fiduciary duty and negligence claims, failure to allege a cause of action for damages and failure to state a cause of action for indemnity. The court grants defendant's motion for summary judgment on plaintiffs breach of fiduciary duty, negligence and indemnification claims and denies defendant's motion for summary judgment on plaintiffs negligent misrepresentation claim.

DISCUSSION

I. Standard for Summary Judgment

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." In order for the moving party to prevail, it must demonstrate to the court that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)(quoting Fed. R.Civ.P. 56(c)). A fact is material only when its resolution affects the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. See id. at 252, 106 S.Ct. 2505.

On a motion for summary judgment, all evidence and inferences are to be viewed in a light most favorable to the nonmoving party. See id. at 255, 106 S.Ct. 2505. The nonmoving party, however, may not rest upon mere denials or allegations in the pleadings, but must set forth specific facts sufficient to raise a genuine issue for trial. See Celotex, 477 U.S. at 324, 106 S.Ct, 2548. Moreover, if a plaintiff cannot support each essential element of its claim, summary judgment must be granted because a complete failure of proof regarding an essential element necessarily renders all other facts immaterial. Id. at 322-23, 106 S.Ct. 2548.

II. Parties' Motions for Summary Judgment

As stated, plaintiff moves for partial summary judgment on six of defendant's affirmative defenses: (1) improper venue, (2) statute of limitations, (3) the economic loss rule, (4) no fiduciary duty, (5) failure to allege a cause of action for damages and (6) failure to state a cause of action for indemnity. Defendant moves for summary judgment on plaintiffs breach of fiduciary duty, negligence, negligent misrepresentation and indemnification claims. The court considers each issue in turn, and, where appropriate, considers both parties' motions together.

A. Venue

Article XIV of Paragraph E of the contract between the parties provides:

This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. Consultant hereby irrevocably agrees that any legal action or proceeding against it with regard to this Agreement may be brought in the Courts of the State of Florida or in the United States District Court of Florida located in Leon County and by its execution and delivery of this Agreement, Consultant hereby irrevocably submits to each such jurisdiction and hereby irrevocably waives any and all objections which it may have as to venue in any of said courts. (App., Tab 1, Master Agreement, Art. XIV at ¶ E.) Based upon the forum selection clause in Paragraph E, defendant asserts that this action should be dismissed for improper venue in defendant's first affirmative defense. Plaintiff moves for summary judgment on that affirmative defense because, according to palintiff, the forum selection clause in Paragraph E is permissive rather than mandatory, and thus venu is proper in Minnesota. After careful review, the court grants that motion.¹

In construing a contract, the court must "give effect to the intention of the parties as expressed in the language they used in drafting the whole contract." Goebel v. North Suburban Agencies, Inc.,' 567 N.W.2d 511, 515 (Minn.1997). To-ascertain the parties' intentions, the court mustinterpret the contract as a whole and attempt to harmonize all the contract's terms. See, e.g., Jacobs v. Pickands Mather & Co., 933 F.2d 652, 657 (8th Cir.1991); Servais v. TJ Mgmt, 973 F.Supp. 885, 892 (D.Minn.1997); Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525 (Minn.1990); Brookfield Trade Ctr. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn.1998); S O Designs USA v. Rollerblade, Inc., 620 N.W.2d 48, 53 (Minn. Ct.App.2000); Republic Nat'l Life Ins. v. Lorraine Realty Corp., 279 N.W.2d 349,...