Legatski v. Bethany Forest Assoc., Inc., C.A. No. 03C-10-011-RFS (DE 4/28/2006)
| Decision Date | 28 April 2006 |
| Docket Number | C.A. No. 03C-10-011-RFS. |
| Parties | Legatski v. Bethany Forest Assoc., Inc., v. Harris et al. |
| Court | United States State Supreme Court of Delaware |
James D. Griffin, Esquire, Griffin & Hackett, P.A., Georgetown, DE.
Timothy G. Willard, Esquire, Fuqua & Yori, Georgetown, DE.
Craig A. Karsnitz, Esquire, Young, Conaway, Stargatt & Taylor, Georgetown, DE.
Paul Enterline, Esquire, Georgetown, DE.
Dear Counsel,
This is my decision regarding Defendant Bethany Forest Associates Inc.'s Motion for Summary Judgment. For the reasons set forth herein, the motion is denied.
On October 12 1993, the Plaintiffs, Richard and Mary Legatski ("the Legatskis") entered into a contract with Bethany Forest Associates, Inc. ("Bethany Forest") to buy a lot in the Bethany Forest subdivision and to have a custom home built on it. The contract obligated Bethany Forest to design and construct a septic system for the house. Bethany Forest applied for and received a permit from the Department of Natural Resources Environmental Control ("DNREC") to install a septic system. The permit required the system to be inspected by DNREC's Division of Water Resources once installed and prior to be it being covered with fill dirt. The septic system was designed by J. Ross Harris ("Harris"), a Professional Engineer of Environmental Consultants International Corp. ("ECI"). Bethany Forest hired Ormil Savage ("Savage"), a subcontractor, to install it. Harris, Savage and ECI are all third-party defendants in this case.
Plaintiffs allege that once the system was installed, DNREC was never notified and the Division of Water Resources never inspected it, as was required by law. It was covered with fill dirt, and Plaintiffs began to reside in the house part-time shortly thereafter. Plaintiffs further allege that the Certificate of Occupancy was obtained upon the false representations of Bethany Forest that the septic system had been properly installed and inspected. A further addition onto the home was built by Bethany Forest in 1996.
In September of 2002, after the Legatskis had recently begun residing in the house full-time, the septic system alarm activated, indicating problems. Soon after, it was discovered that the drain field lines were blocked and the pump was not in the proper location. In addition, there was dirt in the tank and water standing on the drain field. A subsequent DNREC inspection determined that the system had failed prematurely, most likely because of poor site inspection and improper construction practices. A replacement system had to be installed.
Upon inspection of the failed unit, Harris opined that the system had only lasted as long as it did because the house was rarely occupied. He stated that it would likely have showed signs of failure within the first year had the house been occupied full-time immediately after construction.1
Plaintiffs filed a Complaint on July 29, 2003, alleging negligence, breach of fiduciary duty and fraud. Bethany Forest filed an answer as well as an additional Complaint against third-party defendants Harris, ECI and Savage. Harris and Savage then answered this second Complaint, both alleging cross-claims back against third-party plaintiff Bethany Forest, as well as against one another.
On April 11, 2005, Defendants Bethany Forest then filed a Motion for Summary Judgment against the Legatskis alleging that none of the three legal theories of Plaintiffs' claim have the necessary factual or legal support. On June 27, Plaintiffs filed a Motion to Amend the Complaint to include counts of breach of contract and breach of warranty. On September 15, 2005, this Court granted the Motion to Amend. An Amended Complaint was then filed by Plaintiffs on September 27, 2005.
Summary judgment cannot be granted where material issues of fact exist; only a jury can resolve them. Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979). The moving party must establish the lack of material factual issues. Id. Should the moving party establish the absence of material factual issues, the nonmoving party must prove the presence of such issues in order to prevent summary judgment. Id. at 681. In consideration of a motion for summary judgment, the evidence is viewed in a light most favorable to the nonmoving party. Id. at 680. Where the moving party has produced sufficient evidence under Superior Court Civil Rule 56, the non-moving party may not rely solely upon her pleadings. Id. Evidence must be produced showing a material issue of fact. Steffen v. Colt Industries, 1987 WL 8689, *3 (Del. Super. Ct.) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986)). Summary judgment is not appropriate if the Court determines that it does not have sufficient facts to enable it to apply the law. Reese v. Wheeler, 2003 WL 22787629, * 2 (Del. Super. Ct.) (citing Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962)).
The five claims in the complaint (As amended) all arise from the same basic circumstances. The Plaintiffs bought a house from Defendant Bethany Forest. Defendant was selling pre-construction houses, essentially acting as both the seller and contractor for this project. The Defendant was to install a septic system for the house which was to be completed before occupancy. The septic system failed and Plaintiffs seek damages.
The case for negligence is based on the determinations that the septic system was negligently installed. The accusations are two-fold. First, that the actual septic system was negligently installed and constructed. Second, that Bethany Forest was negligent both in their supervision of their subcontractor and in their duties to the Plaintiffs. Plaintiffs allege that it was the responsibility of Bethany Forest, as the land owner and permit holder for the septic system to ensure that the system was properly installed and inspected before the occupancy by the Plaintiffs for two reasons. First, because it is required under the laws of the State of Delaware, and second, because Defendants were contractually obligated to do so.
Essentially, Plaintiffs assert that Defendants' failure to obtain the permits for the septic system, or the Certificate of Occupancy, amount to negligence at common law. Defendants were under a duty to the Plaintiffs, imposed by contract and statute, to obtain documented certification for the work done on the house. The allegations are that this duty was breached. Had the certifications been obtained, the defects in the septic system would have been found and corrected. Instead, the alleged breach has directly caused financial damage to the Plaintiffs.
Bethany Forest alleges that the assigning of the duties of installing the septic system to a subcontractor as well as contracting with ECI to inspect the system relieves them of any negligence. However, in a similar case before this Court, Hawthorne v. Summit Steel, Inc., 2003 WL 23009254 (Del. Super.), where the record was silent as to the contractual relationship between the contractors and subcontractors, this Court ruled that absent some evidence to the contrary, the obligation for overall workplace supervision and oversight was not contracted away from one party to another, but rather was shared between them.
Bethany Forest's reliance upon the subcontractors to design and build the septic system and also to secure all appropriate government approvals does not relieve it of liability because there is evidence that even though the approvals never were obtained, Bethany Forest provided assurances to the Plaintiffs that the approvals had been obtained. In order to support its argument, Defendant must at least show that its assurances that all necessary approvals were obtained was not negligent.
Further, Defendant has cited no law in support of its proposition that because the installation and construction of the septic system was completed by a subcontractor, Bethany Forest cannot be liable to the Plaintiffs for any deficiencies. Thus, there are substantial questions of fact left to be determined. Therefore, summary judgment on this issue is not appropriate.
Additionally, it has long been held that issues of negligence are generally not to be disposed of on summary judgment. Our Supreme Court has held that, "only where there can be no reasonable difference of opinion as to the conclusion to be reached on the question of whether an intervening cause is abnormal, unforeseeable, or extraordinarily negligent, should the question be determined by the Court as a matter of law." Duphily v. Delaware Elec. Coop., Inc., 662 A.2d 821, 831 (Del. 1995). That is not the case here.
Plaintiffs allege that a fiduciary duty was breached by Bethany Forest when it did not abide by all the state regulations and inspections prior to the septic system being covered and placed in service. Defendant states that there is no basis under the law to create fiduciary obligations in this type of transaction, a contractual relationship between a vendor and a vendee in an arm's length transaction.
It is understood in Delaware law that the Heller v. Kiernan, 2002 WL 385545 (Del.Ch.).
Black's Law Dictionary (8th ed. 2004) defines a fiduciary as: "A person who is required to act for the benefit of another person on all matters within the scope of their relationship; one who owes to another the duties of good faith, trust, confidence, and candor." It then further defines a fiduciary relationship as:
A relationship in which one person is under a duty to act for the benefit of another on matters within the scope of the relationship. • Fiduciary relationships usually arise in one of...
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