Municipality Anchorage v. Concepts
| Decision Date | 31 October 2016 |
| Docket Number | Case No. 3:13-cv-00063-SLG |
| Parties | MUNICIPALITY OF ANCHORAGE, Plaintiff, v. INTEGRATED CONCEPTS AND RESEARCH CORPORATION, a corporation; PND ENGINEERS, INC., a corporation; CH2M HILL ALASKA, INC., a corporation; and GEOENGINEERS, INC. a corporation, Defendants. CH2M HILL ALASKA, INC. a corporation, Third-Party Plaintiff, v. TERRACON CONSULTING, INC., a Delaware corporation, Third-Party Defendant. |
| Court | U.S. District Court — District of Alaska |
This litigation concerns the Port of Anchorage Intermodal Expansion Project (the Project), and the Open Cell Sheet Pile (OCSP) design used in the Project's construction. The facts of this case are familiar to the parties and set out in the Court's order at Docket 67. There are currently several motions for summary judgment pending. This order addresses one of those motions: CH2M Hill Alaska's Motion for Summary Judgment at Docket 280. The motion has been fully briefed1 and oral argument was held on June 29,2016. For the reasons set out below, the motion will be granted in part and denied in part.
The Municipality of Anchorage's (MOA) First Amended Complaint at Docket 145 alleges three tort claims: negligence, professional negligence, and negligent misrepresentation against PND, CH2M Hill Alaska, and GeoEngineers.2 MOA has not alleged any contractual claims against these Defendants because MOA did not have a direct contractual relationship with any of these parties. CH2M Hill Alaska,3 specifically, is four times contractually removed from MOA.
Defendants have asserted that none of MOA's alleged losses are recoverable in tort. In July 2014, PND and CH2M Hill Alaska filed motions for summary judgment4 in which they argued that the economic loss doctrine precluded all of MOA's tort claims. In response, MOA laid out three categories of damages: Category I Damages, which MOA described as property damage; and Category II and III Damages, which MOA acknowledged constitute economic losses. In its briefing on those earlier motions, MOA argued that the economic loss doctrine did not preclude its recovery of its Category Idamages and that an exception to that doctrine applied to its recovery of economic losses.5
In an order issued in March 2015, the Court denied both motions for summary judgment without prejudice, allowing for renewal when the record became more fully developed. But the Court did hold that MOA could not recover under a theory that the Backlands constitute "other property" that would fall outside the economic loss doctrine. The Court also held that the economic loss doctrine applies to parties not in privity; accordingly, MOA cannot recover in tort for its economic losses unless an exception to the economic loss doctrine applies. The prior order also delineated possible exceptions to the economic loss doctrine under Alaska law; but the Court's prior order did not determine whether any exception to the doctrine applies in this case.6
CH2M Hill Alaska has now filed another motion for summary judgment. The motion addresses MOA's claims for property damage, the exceptions to the economic loss doctrine that were discussed in the March 2015 Order, and MOA's claim for negligent misrepresentation, which was filed after the briefing on the first summary judgment motions was completed.
CH2M Hill Alaska maintains that MOA's attempt to characterize its losses as property damage fails as a matter of law. It argues that there has not been damage to other property and the alleged defective design did not create a significant risk of personalinjury or property damage. Moreover, CH2M Hill Alaska asserts that it was not the cause of any safety risk because it did not contribute to the final design.7
CH2M Hill Alaska also argues that MOA is seeking only economic damages, which are barred by the economic loss doctrine, as no exception to that doctrine applies. It maintains that MOA was not a particularly foreseeable plaintiff to CH2M Hill Alaska because it prepared its March 2007 report for PND, and did not intend for the report to be submitted to MOA. CH2M Hill Alaska also maintains that MOA's claim for professional negligence cannot stand against CH2M Hill Alaska because the network of contracts between the parties "allocated the parties' respective risks, duties, and remedies," and the parties set their fees accordingly.8 Finally, CH2M Hill Alaska argues that MOA's claim for negligent misrepresentation fails as a matter of law because there is no evidence of any reliance by MOA on CH2M Hill Alaska's statements.9
In opposition, MOA argues that the economic loss doctrine is inapplicable because it is seeking compensation, at least in part, for property damage. MOA explains that damage to "other property" has already occurred to both the property upon which the OCSP system stands and to the navigable waters of Cook Inlet.10 It also argues that there are material disputes of fact as to whether the Project creates a significant risk of property damage and personal injury.11
As for its economic losses, MOA argues that certain exceptions to the economic loss doctrine apply such that it can maintain these claims. And it asserts that its claims encompass not only CH2M Hill Alaska's March 2007 Report, but a validation letter authored by CH2M Hill Alaska in 2006. For its negligence claim, MOA contends that the particularly foreseeable plaintiff exception applies. It explains that CH2M Hill Alaska knew or should have known that any negligence on its part would harm MOA, the owner of the Port. With respect to professional negligence, MOA argues that this claim is not precluded by the indirect contractual relationship between these two parties. In support, it points out that CH2M Hill Alaska has not identified any relevant contractual language in which the risk of a defective design was allocated to another party. Finally, MOA maintains that there are disputed material facts regarding MOA's negligent misrepresentation claim, and specifically with respect to MOA's reliance on CH2M Hill Alaska's alleged misrepresentations. For all of its claims, MOA characterizes CH2M Hill Alaska's work as directly traceable to the alleged defective design.12
The Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1442(a)(1), the federal officer removal statute.13 The Court also has supplementaljurisdiction pursuant to 28 U.S.C. § 1367 because all claims arise from the same transaction or occurrence. The "invocation of removal jurisdiction by a federal officer does not revise or alter the underlying law to be applied."14 Here, all of MOA's claims are based on Alaska law, so Alaska substantive law applies to this case.
Federal Rule of Civil Procedure 56(a) directs a court to "grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."15 In cases where the non-moving party bears the burden of proof at trial, the moving party "need only prove that there is an absence of evidence to support the non-moving party's case."16 If the moving party meets this burden, then the non-moving party must present specific evidence demonstrating the existence of a genuine issue for trial, i.e., "evidence from which a jury could reasonably render a verdict in the non-moving party's favor."17 When considering a motion for summary judgment, a court must draw "all justifiable inferences" in the non-moving party'sfavor.18 If the evidence provided by the non-moving party is "merely colorable" or "not significantly probative," summary judgment is appropriate.19
Under Alaska law, tort-based claims that seek only a recovery for economic losses are generally precluded by the economic loss doctrine. But when the action seeks damages for personal injury or property damage, the economic loss doctrine does not apply and such damages may be recoverable. The line between property damage and economic loss is at times difficult to discern. Under Alaska law, damage to "other property" that is separate and distinct from the defective product is recoverable in tort.20 In addition, the Alaska Supreme Court has held that a party may recover for damage to the defective product itself when the loss occurs under dangerous circumstances that created a significant risk of personal injury or property damage.21 Here, MOA argues both that the OCSP system has damaged "other property" and that the OCSP system creates a significant risk of personal injury or property damage such that the losses associated with the alleged defects in the Project itself are recoverable.
In MOA's opposition to the earlier summary judgment motions at Docket 109, it argued that it had suffered property damage in the form of damage to the Backlands. Butthe March 2015 Order held that the Backlands are not "other property" because they constitute "the expanded acreage that was the object MOA bargained for."22
MOA now maintains that CH2M Hill Alaska's alleged negligence has damaged other property, separate and apart from the Backlands. This other property, asserts MOA, consists of two areas: the land upon which the OCSP currently sits and the navigable waters of Cook Inlet. With regard to the property underneath the OCSP system, MOA maintains that it "never bargained for, or thought, it would be left with a nine story tall one-half mile long unusable, unstable, and dangerous structure sitting on its property."23 According to MOA, CH2M Hill Inc. has estimated that MOA must spend approximately $135 million to remove the OCSP structure from the land. As to the waters of Cook Inlet, MOA alleges that property damage began in July 2010, when sinkholes developed behind the face of the OCSP wall that caused fill material to leak into the inlet. Soon after, the U.S. Army Corps of Engineers notified MOA that it was in...
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