Hexagon Holdings, Inc. v. Carlisle Syntec Inc.

• Decision Date: 17 January 2019
• Docket Number: WC 15-512,No. 2017-175-Appeal.,2017-175-Appeal.
• Citation: 199 A.3d 1034
• Parties: HEXAGON HOLDINGS, INC. v. CARLISLE SYNTEC INCORPORATED et al.
• Court: Rhode Island Supreme Court

199 A.3d 1034

HEXAGON HOLDINGS, INC.

v.CARLISLE SYNTEC INCORPORATED et al.

No. 2017-175-Appeal.

WC 15-512

Supreme Court of Rhode Island.

January 17, 2019

Justice Indeglia, for the Court.

The plaintiff, Hexagon Holdings, Inc. (Hexagon), appeals from the grant of summary judgment in favor of defendant McKenna Roofing and Construction, Inc. (McKenna). This matter originally appeared before the Court on an order to show cause why the issues in the case should not be summarily decided. In an order dated March 5, 2018, the Court returned the case to the regular calendar for full argument. Hexagon Holdings, Inc. v. Carlisle Syntec Incorporated , 179 A.3d 146, 147 (R.I. 2018) (mem.). In doing so, we "specifically direct[ed] the parties to brief the third-party intended beneficiary issue among such other issues that they consider germane to decide the issue before this Court." Id. The parties appeared before the Court on October 3, 2018, for oral argument. For the reasons set forth in this opinion, we affirm the judgment of the Superior Court.

IFacts and Travel

The pertinent facts are as follows. In 2006, Hexagon entered into a contract with A/Z Corporation to construct a new facility at the Quonset Business Park, located in North Kingstown, Rhode Island. As general contractor, A/Z Corporation subcontracted the roofing installation to McKenna, authorizing McKenna to install a specific roofing system manufactured by defendant Carlisle Syntec Incorporated (Carlisle). Hexagon alleges that, almost immediately, the new roof began to leak.

On October 14, 2015, approximately nine years after first contracting with A/Z Corporation, Hexagon filed a complaint in Washington County Superior Court against Carlisle and McKenna, alleging breach of contract as to both defendants (Count I); breach of express warranty as to Carlisle only (Count II); and breach of the implied warranty to construct in good and workmanlike manner (Count III), misrepresentation (Count IV),¹ and negligence (Count V), against both defendants.² Hexagon alleged that McKenna had improperly installed the roof and sought to recover the cost of replacing it. Hexagon did not assert claims against A/Z Corporation, the general contractor, for reasons Hexagon later described as "judicial efficiency and not choosing to damage a relationship with somebody that [it] had a positive relationship with * * *." McKenna moved for summary judgment pursuant to Rule 56 of the Superior Court Rules of Civil Procedure and provided the following as the undisputed statement of facts:

"The plaintiff entered into a contract with A/Z Construction [sic ] to act as a general contractor for the construction of its building located at 250 Circuit Drive, North Kingstown, RI in 2006. * * * Plaintiff alleges that Carlisle supplied a ‘Carlisle Golden Seal Total Roofing System’ to the building. * * * Plaintiff's Complaint further alleges that Carlisle supplied it with a written warranty concerning the roofing system dated July 15, 2006. * * * McKenna was a subcontractor on the project, and installed the Carlisle roofing system.

"Plaintiff alleges that the roofing system failed. * * * Specifically, the plaintiff claims that the roof began leaking in 2006. * * * The plaintiff further alleges that the leaks are due to defects in materials and/or installation."

In its memorandum in support of its motion, McKenna argued that Hexagon did not allege viable claims for breach of contract and breach of implied warranty against McKenna because no contract existed between the parties. McKenna further argued that Hexagon failed to specifically plead that Hexagon was an intended beneficiary of the subcontract between McKenna and A/Z Corporation, as required by Rule 8 of the Superior Court Rules of Civil Procedure. In addition, McKenna argued that the economic loss doctrine barred Hexagon from recovering economic damages on the negligence claim in Count V of its complaint.

In its opposition to McKenna's motion for summary judgment, Hexagon accepted McKenna's undisputed facts in their entirety, and countered that its claims against McKenna for breach of contract and breach of implied warranty were sustainable because third-party intended beneficiaries can maintain a breach-of-contract claim even in the absence of a contract between a plaintiff and a defendant. Hexagon added that this theory did not need to be specifically pled and that, for summary-judgment purposes, it had provided sufficient proof of this third-party intended beneficiary theory by accepting the undisputed facts offered by McKenna. In this regard, we note that Hexagon failed to submit either the general contract between Hexagon and A/Z Corporation or the subcontract between McKenna and A/Z Corporation in its opposition to the motion. Addressing its negligence claim, Hexagon argued that the economic loss doctrine, which bars recovery for pure economic loss in a negligence action, does not apply to this case because no privity of contract existed between Hexagon and McKenna.

The hearing on McKenna's motion for summary judgment was held on November 21, 2016. The motion justice granted the motion, holding that Hexagon was only an incidental beneficiary, as opposed to an intended beneficiary, of the subcontract between McKenna and A/Z Corporation. The court reasoned that Hexagon had failed to show that it was directly and unequivocally an intended beneficiary. He held that the economic loss doctrine applied, barring Hexagon's claim for pure economic loss, because the parties were engaged in a commercial transaction. An order granting McKenna's motion for summary judgment was entered on December 6, 2016. On December 19, 2016, Hexagon prematurely appealed to this Court.³ Final judgment was entered on December 27, 2016, in favor of McKenna on all counts of Hexagon's complaint, pursuant to Rule 54(b) of the Superior Court Rules of Civil Procedure.

IIStandard of Review

A motion for summary judgment "is designed to decide in an expeditious fashion cases presenting groundless claims * * *." Gallo v. National Nursing Homes, Inc. , 106 R.I. 485, 487, 261 A.2d 19, 21 (1970). When we review a hearing justice's grant of a motion for summary judgment, we conduct our analysis de novo . Jessup & Conroy, P.C. v. Seguin , 46 A.3d 835, 838 (R.I. 2012). If we determine that "there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law[,]" then we will affirm the grant of the motion. Sisto v. America Condominium Association, Inc. , 68 A.3d 603, 611 (R.I. 2013) (quoting Zanni v. Voccola , 13 A.3d 1068, 1071 (R.I. 2011) ). In this endeavor, "[w]e view the evidence in the light most favorable to the nonmoving party." Narragansett Indian Tribe v. State , 81 A.3d 1106, 1109 (R.I. 2014). However, once the moving party establishes "the absence of a material factual issue, the party opposing the motion has an affirmative duty to establish either by affidavit or by other means the material issue of fact to be decided." Grissom v. Pawtucket Trust Co. , 559 A.2d 1065, 1066 (R.I. 1989). The party opposing the motion cannot establish a genuine issue of fact merely by resting on denials in its pleadings. Volino v. General Dynamics , 539 A.2d 531, 533 (R.I. 1988). Rather, the opposing party must "respond with specific facts that would constitute a genuine issue for trial." Id.

In cases where a party seeks summary judgment on a negligence claim, "[t]he motion justice may treat the issue of negligence as a matter of law only if the facts suggest only one reasonable inference." Berard v. HCP, Inc. , 64 A.3d 1215, 1218 (R.I. 2013) (quoting DeMaio v. Ciccone , 59 A.3d 125, 130 (R.I. 2013) ).

IIIDiscussion

AContract Claims

Hexagon contends that the hearing justice erred in granting summary judgment with respect to Counts I and III of its complaint, which allege breach of contract and breach of implied warranties. The thrust of Hexagon's argument is that, armed with McKenna's undisputed statement of facts, a reasonable jury could find that McKenna owed a contractual duty to Hexagon as a third-party beneficiary to the subcontract between A/Z Corporation and McKenna. We are therefore called upon to determine whether the owner of a building may survive summary judgment based on a third-party-beneficiary theory where the only evidence presented was that the subcontractor may have had knowledge of the identity of the property owner, who was the ultimate beneficiary of the work that was performed.

We deal first with McKenna's argument that Hexagon's third-party beneficiary assertion is not properly before this Court because it was not specifically pled. Rule 8(a) requires a complaint to contain: "(1) A short and plain statement of the claim showing that the pleader is entitled to relief; and (2) A demand for judgment for the relief the pleader seeks." A viable complaint must "give the opposing party fair and adequate notice of the type of claim being asserted[,]" even if it does not plead the ultimate facts or precise legal theory upon which the claim is based. Berard v. Ryder Student Transportation Services, Inc. , 767 A.2d 81, 83-84 (R.I. 2001) (quoting Haley v. Town of Lincoln , 611 A.2d 845, 848 (R.I. 1992) ). Here, even though Hexagon did not specifically reference the subcontract between A/Z Corporation and McKenna in its complaint, McKenna was on notice that Hexagon was bringing a claim for breach of contract with respect to this same transaction, even though the ultimate facts upon which Hexagon now relies are different from those set out in its complaint.

Further, "[i]t is well settled that ‘[w]hen one party for valuable consideration, engages another by contract to do some act for the benefit of a third party, the latter who would enjoy the benefits, may maintain an action for breach of contract.’ " Glassie v. Doucette , 157 A.3d 1092, 1097 (R.I. 2017) (quoting Davis v. New England Pest Control Co. , 576 A.2d 1240, 1242 (R.I. 1990) ). "If the third p...