Turner Constr. Co. v. Bfpe Int'l, Inc.

• Decision Date: 25 March 2016
• Docket Number: CIVIL NO. JKB-15-368
• Citation: Turner Constr. Co. v. BFPE Int'l, Inc., CIVIL NO. JKB-15-368 (D. Md. Mar 25, 2016)
• Parties: TURNER CONSTRUCTION COMPANY, Plaintiff v. BFPE INTERNATIONAL, INC. Defendant
• Court: U.S. District Court — District of Maryland

TURNER CONSTRUCTION COMPANY, Plaintiff v. BFPE INTERNATIONAL, INC. Defendant

CIVIL NO. JKB-15-368

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

March 25, 2016

MEMORANDUM

Turner Construction Company ("Turner" or "the Contractor"), a corporation organized under the laws of New York, brought a breach-of-contract action in diversity against BFPE International, Inc. ("BFPE" or "the Subcontractor"), a corporation organized under the laws of Maryland.¹ Turner demands that BFPE reimburse it for costs it sustained in connection with a construction incident. (ECF No. 1.) BFPE answered Turner's Complaint and pleaded a counterclaim, alleging that Turner owes it $27,863.02 for services performed under a subcontract agreement. (ECF No. 8.)

Now pending before the Court are cross-motions for summary judgment filed by Turner (ECF Nos. 18 & 19) and BFPE (ECF No. 22) pursuant to Rule 56 of the Federal Rules of Civil Procedure. Also pending is Turner's Motion to Strike Inadmissible Matter (ECF No. 25). The issues have been briefed, and no hearing is required, see Local Rule 105.6 (D. Md. 2014). For the reasons explained below, all pending motions will be DENIED.

I. Background and Procedural History²

A. The Contracts

In April 2013, Turner executed a contract ("the General Contract") with the University of Maryland Medical Center ("UMMC" or "the Owner") whereby Turner agreed to perform certain renovation services at the UMMC Anesthesia Faculty Offices, located on the eleventh floor of the South Hospital at 22 South Greene Street, Baltimore, Maryland ("the Work" or "the Project"). (ECF No. 22-3.)³ Thereafter, Turner entered into a subcontract agreement with BFPE ("the Subcontract") whereby BFPE agreed to "perform and furnish all the work, labor, services, materials, plant, equipment, tools, scaffolds, appliances and other things necessary for Fire Protection" on the Project ("the Subcontract Work"). (ECF No. 22-5 at 2.)⁴

The General Contract comprises two primary documents, both boilerplate forms promulgated by the American Institute of Architects ("AIA"): Document A133^TM-2009, titled "Standard Form of Agreement Between Owner and Construction Manager as Constructor" ("A133"); and Document A201^TM-2007, titled "General Conditions of the Contract forConstruction ("A201").⁵ Several provisions of A201 are particularly relevant to the Court's analysis of the pending motions. Section 11.3.1 provides that "the Owner shall purchase and maintain . . . property insurance written on a builder's risk 'all-risk' or equivalent policy form . . . comprising total value for the entire Project at the site on a replacement cost basis without optional deductibles." (ECF No. 22-4 at 31.)⁶ The specified insurance "shall include interests of the Owner, the Contractor, Subcontractors and Sub-subcontractors in the Project." (Id.) Section 11.3.7, the "Waiver of Subrogation," then provides as follows:

The Owner and Contractor waive all rights against . . . each other and any of their subcontractors . . . for damages caused by fire or other causes of loss to the extent covered by property insurance obtained pursuant to this Section 11.3 or other property insurance applicable to the Work . . . . A waiver of subrogation shall be effective as to a person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise . . . .

(Id. at 32 (emphasis added).) Section 11.3.5 amplifies the Waiver of Subrogation:

If during the Project construction period the Owner insures properties, real or personal or both, at or adjacent to the site by property insurance under policies separate from those insuring the Project . . . the Owner shall waive all rights in accordance with the terms of Section 11.3.7 for . . . causes of loss covered by this separate property insurance.

(Id. at 31-32.)

Several provisions of the Subcontract are also essential to the Court's analysis. Article II cross-references and incorporates the General Contract, providing that

the Subcontractor agrees to be bound to Contractor by each and all of the terms and provisions of the General Contract . . . and to assume toward Contractor all of the duties, obligations and responsibilities that Contractor . . . assumes toward the Owner, and the Subcontractor agrees further that Contractor shall have the same rights and remedies as against the Subcontractor as the Owner . . . has againstContractor with the same force and effect as though every such duty, obligation, responsibility, right or remedy were set forth [in the Subcontract] in full.

(ECF No. 22-5 at 2.) Article II adds that the Subcontract's terms and provisions "are intended to be and shall be in addition to and not in substitution for any of the terms and provisions of the General Contract" and that the provisions of the two documents are "intended to supplement and complement each other and shall, where possible, be thus interpreted." (Id.)⁷

In spite of the parties' apparent intent to integrate the two agreements, the Subcontract includes several provisions that seem inconsistent with the General Contract—and specifically, with the Waiver of Subrogation. Foremost among these seemingly contrary provisions is Subcontract Article XXIII, the "Assumption of Liability" (and the primary bone of contention in this lawsuit):

The Subcontractor hereby assumes the entire responsibility and liability for any and all actual or potential damage or injury of any kind or nature whatsoever . . . to all persons and entities . . . or to all property . . . caused by, resulting from, arising out of or occurring in connection with the execution of the [Subcontract] Work, or in preparation for the [Subcontract] Work . . . . Should any claims for such actual or potential damage or injury . . . be made or asserted, whether or not such claims are based upon an Indemnified Party's⁸ alleged active or passive negligence or participation in the wrong . . . the Subcontractor agrees to indemnify and save harmless the Indemnified Party from and against any and all such claims and further from and against any and all loss, cost, expense, liability, damage, penalties, fines or injury, including legal fees and disbursements, that the Indemnified Party may directly or indirectly sustain . . . as a result thereof . . . .

(Id. at 12.) In the event that any such "claims, loss, cost, expense, liability, damage, penalties, fines or injury" arise or are asserted, Article XXIII authorizes Turner to "withhold from any payments due or to become due to the Subcontractor an amount sufficient in its judgment to protect and indemnify the Indemnified Party." (Id.)

In keeping with its obligations—including its duties of indemnification—BFPE is required, per Article XXIV, to maintain a $5,000,000 commercial general liability insurance policy inclusive of "CONTRACTUAL LIABILITY INSURANCE AGAINST THE LIABILITY ASSUMED HEREINABOVE." (Id. at 12.)⁹ Turner and UMMC must be listed as additional insureds on BFPE's policy; the "coverage to be provided to the additional insureds shall be for all liability arising out of the [Subcontract] Work." (Id. at 14.)

It is expressly agreed . . . that all insurance . . . afforded the additional insureds shall be primary insurance to any other insurance available to the additional insureds and that any other insurance carried by the additional insureds shall be excess of all other insurance carried by the Subcontractor and shall not contribute with the Subcontractor's insurance.

(Id. (emphasis added).)

Finally, the Court notes the compensation arrangements under Article IV, which specifies five conditions precedent to final payment from Turner to BFPE: (1) Turner's receipt of final payment from UMMC; (2) Turner's acceptance of BFPE's completed work; (3) BFPE's provision of evidence that no outstanding claims, obligations, or liens remain in relation to its work; (4) BFPE's execution of a general release in favor of Turner and UMMC; and (5) BFPE's "complete and full satisfaction of all claims, demands and disputes, and all obligations and responsibilities . . . arising out of or related to the Subcontract," including those as between Turner and BFPE. (Id. at 4.)¹⁰

B. The Sprinkler Incident

As noted above, Turner hired BFPE to perform fire-protection services on the Project. Certain of these services, such as demolition tasks, could only be performed if UMMC's sprinkler system was first deactivated. BFPE was required to "[c]oordinate all necessary outages with Turner and UMM[C]." (Id. at 22.)¹¹

On or about January 9, 2014, Dennis Reter, Sr., BFPE's project superintendent, spoke with Craig Coulter, Turner's project supervisor, about demolition work to be performed in the C wing of the South Hospital's eleventh floor. (ECF No. 22-14 at 3.) Following their conversation, Coulter "prepared . . . [a] sprinkler outage request and submitted the same to UMMC as required by UMMC procedures." (Id.)¹²

The Subcontract requires BFPE to supply "competent supervisory personnel," and it further provides that the appointed supervisor (Reter) "shall [be] present on site at any time work is being performed." (ECF No. 22-5 at 21.) Yet on January 21, 2014—the day of the scheduled C wing outage—Reter was not on site. Instead, Joe Palle, another BFPE superintendent, walked the C wing with Craig Coulter and two BFPE technicians, Dennis Rivera and Kaylin Ortiz.(ECF No. 22-15 at 3.) Coulter informed the team that they were to (1) demolish certain hose cabinets and (2) perform work on certain sprinkler pipes. Palle "advised Mr. Coulter that [they] would begin with the hose cabinets and then do the other sprinkler work." (Id.) Palle placed a call to Keith Geffen, UMMC's outage coordinator; Palle then departed for another job site, leaving Rivera and Ortiz to walk the floor with Geffen. Rivera asserts that he "identified to Mr. Geffen all work that BFPE had been told by Turner to perform that day and pointed out all areas where that work was to take...