Regents of Univ. of Colo. v. HARBERT CONST., 00CA1276.

• Decision Date: 08 November 2001
• Docket Number: No. 00CA1276.,00CA1276.
• Citation: 51 P.3d 1037
• Parties: REGENTS OF the UNIVERSITY OF COLORADO on Behalf of the UNIVERSITY OF COLORADO AT BOULDER, and Buffalo Power Corporation, a Colorado not-for-profit corporation, Plaintiffs-Appellants, v. HARBERT CONSTRUCTION COMPANY, a division of Harbert International, Inc., a Delaware corporation; and U.S. Turbine Corporation, an Ohio corporation, Defendants-Appellees.
• Court: Colorado Court of Appeals

51 P.3d 1037

REGENTS OF the UNIVERSITY OF COLORADO on Behalf of the UNIVERSITY OF COLORADO AT BOULDER, and Buffalo Power Corporation, a Colorado not-for-profit corporation, Plaintiffs-Appellants, v. HARBERT CONSTRUCTION COMPANY, a division of Harbert International, Inc., a Delaware corporation; and U.S. Turbine Corporation, an Ohio corporation, Defendants-Appellees.

No. 00CA1276.

Colorado Court of Appeals, Div. III.

November 8, 2001.

Rehearing Denied December 20, 2001.

Certiorari Denied July 22, 2002.

Grund & Breslau, P.C., Brad W. Breslau, Della S. Nelson, Denver, CO; Sutton & Melonakis, P.A., Anthony Melonakis, Littleton, CO, for Plaintiffs-Appellants.

Brownstein Hyatt & Farber, P.C., Hubert Farbes, Jr., Mark T. Barnes, Denver, CO, for Defendant-Appellee Harbert Construction Company.

Burg Simpson Eldredge Hersh & Houliston, P.C., Scott J. Eldredge, Englewood, CO, for Defendant-Appellee U.S. Turbine Corporation.

Opinion by Judge STERNBERG.¹

This case arises from an explosion and fire at a cogeneration power facility. Plaintiffs, the Regents of the University of Colorado and Buffalo Power Corporation, challenge the summary judgment entered in favor of defendant, Harbert Construction Company, the contractor that built the facility. Plaintiffs also appeal from the judgment entered on a jury verdict in favor of defendant, U.S. Turbine Corporation, a subcontractor for the project. We affirm in part, reverse in part, and remand for further proceedings.

Plaintiffs hired the contractor to build a cogeneration facility on the University of Colorado's Boulder campus. The subcontractor was hired to provide the gas turbine engines for the project, as well as technical assistance when the turbines were installed. The subcontractor also trained the facility's staff in the maintenance and operation of the turbines.

Plaintiffs' contract with the contractor included a warranty for the contractor's work on the facility. Plaintiffs also purchased from the subcontractor a five-year "System Maintenance and Extended Warranty Agreement" for the turbines.

The explosion and fire occurred when a 500-gallon waste fuel tank in the facility's basement overfilled, causing fuel oil to back up into one of the turbines. Although no one was hurt in the incident, the facility sustained extensive damage.

Four factors contributed to the explosion. First, each turbine was connected to the inlet plenum drain, which permitted cleaning solution to be drained from the turbines after a crank soak wash, i.e., a wash in which the turbines were shut off. The design drawing prepared by the contractor's engineer called for the drain to empty into an open trench in the ground. The workers who built the facility connected the drain to the waste fuel tank. This alteration troubled the subcontractor's on-site representative, but he did not share his concerns with anyone.

Second, the inlet plenum drain included a hand valve that was to remain closed except when the subcontractor inspected the system or the facility staff drained the turbines after a crank soak wash. The valve was open when the accident occurred. Had it been closed, it would have prevented the fuel oil in the waste fuel tank from backing up into the turbine. The record is conflicting as to whether the subcontractor or a facility staff member left the valve open. Third, the contractor installed a vent stack on the waste fuel tank that should have provided an escape for any excess fuel oil. The fuel oil could not drain from the vent stack, however, because the stack was elevated above the waste tank to a point that was higher than the base of the inlet plenum drain. As a result, when the waste tank overfilled, the fuel oil backed up into the turbines before it could reach the end of the vent stack. The record is conflicting as to whether the contractor installed a vent stack that was too high or whether the facility staff improperly lengthened it after installation.

And fourth, the facility staff ignored a system alarm and allowed the waste tank to overfill. The alarm, which was triggered when the waste tank became two-thirds full, went off twice in the three weeks before the explosion. The staff had no sense of urgency about the alarm because the waste tank had filled to capacity only twice in the three and a half years of the facility's operation. The tank filled exceptionally quickly in this instance, however, due to a valve defect that allowed steam condensate to leak into the inlet plenum drain. A sight gauge on the tank allowed the staff to visually monitor the fluid level inside.

Plaintiffs sued the contractor for negligence, breach of contract, breach of express and implied warranties, strict liability, and indemnification. The trial court granted the contractor's motion for summary judgment on plaintiffs' claims of negligence, breach of contract, strict liability, and indemnification, based on its conclusion that the parties' contract precluded recovery for these claims. The court granted summary judgment for the contractor on the warranty claims because the contractor's warranty had expired when the accident occurred. The trial court denied plaintiffs' subsequent motion for reconsideration and awarded the contractor $76,236 in costs.

Plaintiffs sued the subcontractor for negligence and breach of contract. Those claims were tried to a jury, which returned a verdict in the subcontractor's favor.

I.

Plaintiffs contend that the trial court erred in entering summary judgment for the contractor on plaintiffs' claims for negligence, breach of contract, strict liability, and breach of express warranty. According to them, the court erred in concluding that the parties' contract precluded recovery for those claims. We disagree.

Our review of a grant of summary judgment in matters involving contract interpretation is de novo. The nonmoving party is entitled to the benefit of all favorable inferences that reasonably may be drawn from the undisputed facts, and all doubts must be resolved against the moving party. Our goal in interpreting the contract is to give effect to the parties' intent expressed in the contract language. Vu, Inc. v. Pac. Ocean Marketplace, 36 P.3d 165 (Colo.App.2001).

A.

The trial court concluded that § 9.4 of the parties' contract precluded recovery for negligence, breach of contract, and strict liability. Section 9.4 states in relevant part that, subject to certain exceptions (including warranty claims under § 18 of the contract) that do not apply here, "Acceptance of the work . . . shall constitute a release of all claims against CONTRACTOR. . . ." The trial court determined that § 9.4 was unambiguous and released the contractor from liability for claims related to negligence, breach of contract, and strict liability. We agree.

Section 9.4 extinguished liability for all claims, subject to exceptions that do not apply to the three claims at issue. Had the parties wished to exclude negligence, breach of contract, and strict liability claims from the scope of the release, they could have easily done so. If a contract clearly expresses the intent of the parties, it must be enforced as written. See Fox v. I-10, Ltd., 957 P.2d 1018 (Colo.1998).

Plaintiffs argue the variances in the inlet plenum drain and the vent stack are latent defects to which § 9.4 does not apply. Plaintiffs rely on five cases in making this argument: Zambakian v. Leson, 77 Colo. 183, 234 P. 1065 (1925); Cohen v. Vivian, 141 Colo. 443, 349 P.2d 366 (1960); Barker v. Nichols, 3 Colo.App. 25, 31 P. 1024 (1892); Driscoll v. Columbia Realty-Woodland Park Co., 41 Colo.App. 453, 590 P.2d 73 (1978); and City of Granville v. Kovash, Inc., 118 N.W.2d 354 (N.D.1962). These cases are distinguishable because they do not concern release provisions like § 9.4. A sixth case, Summit Construction Co. v. Yeager Garden Acres, Inc., 28 Colo.App. 110, 470 P.2d 870 (1970), is distinguishable because there an exception to the release allowed the plaintiff to pursue the claim at issue.

The language of § 9.4 is broad and unambiguous: it precludes plaintiff from recovering for claims of negligence, breach of contract, and strict liability. Thus, the contractor was entitled to summary judgment on those claims.

B.

Although § 9.4 excepts warranty claims from the general liability release, the trial court concluded that plaintiffs' express warranty claim was untimely because the warranty provided in the contract had expired when the accident occurred. Again, we agree with the trial court.

Section 18 of the parties' contract states that the contractor's "WORK will be performed in accordance with Contract Documents and in accordance with generally accepted engineering and construction principles and practices."

Section 18.2 warrants that the contractor's "WORK will be free from defects in design, workmanship, equipment and materials," and that "the CONTRACTOR shall promptly correct any defects, including nonconformance with the Contract Documents," that occur within the warranty period.

Section 18.3 provides: "The warranty period provided in Section 18.2 shall begin on Acceptance or the date that care, custody and control of a portion of the WORK is transferred to the OWNER . . . and shall end twelve (12) months later. . . ."

Plaintiffs contend that § 18 provides a separate warranty from that found in § 18.2 and thus is not subject to the twelve-month warranty period in § 18.3. A logical reading of the sections leads to a contrary conclusion. Section 18.2 specifically incorporates § 18 by requiring the contractor to correct defects that relate to "nonconformance with the Contract Documents" if those defects occur within the warranty period.

In construing a contract, the meaning and intent of the parties must be determined in light of the contract as a whole. Moreover, the construction of the contract must be consistent with its main purposes. Johnson Homes, Inc. v. Southwest Metro. Water & Sanitation...