Village of Cross Keys, Inc. v. U.S. Gypsum Co.

• Decision Date: 01 September 1987
• Docket Number: Nos. 36 and 37,s. 36 and 37
• Citation: 315 Md. 741,556 A.2d 1126
• Parties: The VILLAGE OF CROSS KEYS, INC. and The Rouse Company v. The UNITED STATES GYPSUM COMPANY. FRANK O. GEHRY & ASSOCIATES INC. v. THE UNITED STATES GYPSUM COMPANY. ,
• Court: Maryland Court of Appeals

Page 741

315 Md. 741

556 A.2d 1126

The VILLAGE OF CROSS KEYS, INC. and The Rouse Company v. The UNITED STATES GYPSUM COMPANY.

FRANK O. GEHRY & ASSOCIATES INC. v. THE UNITED STATES GYPSUM COMPANY.

Nos. 36 and 37, Sept. Term, 1987.

Court of Appeals of Maryland.

May 3, 1989.

Motion For Reconsideration Denied June 6, 1989, for No. 37 only.

Paul V. Niemeyer (Lewis A. Noonberg, E. Fremont Magee, H. Mark Stichel and Piper & Marbury, Baltimore, and Richard R. Goldberg and Richard E. Galen, of counsel, Columbia, on the brief), for appellants in No. 36.

Michael J. Jack (Smith, Somerville & Case, on the brief), Baltimore, for appellant in No. 37.

Allan J. Malester (Gloria M. Belgrad, Jerrold A. Thrope and Gordon, Feinblatt, Rothman, Hoffberger & Hollander, on the brief), Baltimore, for appellee in Nos. 36 and 37.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, McAULIFFE, ADKINS and BLACKWELL, JJ.

McAULIFFE, Judge.

The Council of Unit Owners of Harper House Condominium sued the Village of Cross Keys, Inc. (VCK) and the Rouse Company (Rouse), contending that VCK and Rouse, as developers of the Harper House building, were responsible for damages resulting from defective exterior walls. VCK and Rouse, hereinafter referred to collectively as the developer, ¹ in turn sued Frank O. Gehry & Associates, Inc., the design architect, for indemnity or contribution. ² The developer and the architect each sued United States Gypsum Company (USG), claiming that they relied upon USG's design for the construction of the exterior walls, and that the design and certain representations concerning it were faulty. USG filed motions to dismiss, contending, among other things, that: it had not designed a proprietary exterior wall system; any representations it made concerning a generic system shown in its brochure were accurate; it had not contracted with anyone in connection with the construction of the Harper House building; its materials were not involved in the construction of the exterior walls; and, it owed no legal duty to the developer or to the architect. Judge Thomas E. Noel of the Circuit Court for Baltimore City treated USG's motions as motions for summary judgment and, after considering the voluminous depositions and exhibits that had been produced by extensive discovery, granted the motions. The trial judge then entered final judgment in favor of USG, expressly finding that there was no just reason for delay. Maryland Rule 2-602(b). The developer and the architect appealed, and we granted certiorari before consideration by the Court of Special Appeals.

This appeal presents interesting and difficult questions concerning potential liability for negligence. In this case, petitioners' claim that a tort duty must be imposed upon one who has erred generates the specter of "liability in an indeterminate amount for an indeterminate time to an indeterminate class," a liability that concerned Justice Cardozo in Ultramares Corporation v. Touche, 255 N.Y. 170, 174 N.E. 441, 444 (1931), and continues to concern courts today. We are asked to consider the sometimes subtle difference between a cause of action for negligence in general and one for negligent misrepresentation, and whether the difference is material here. Additionally, we are asked to revisit the question of economic loss versus risk of physical harm, and the impact of each type of damage upon the question of how far a duty should extend. See Council of Co-Owners v. Whiting-Turner, 308 Md. 18, 517 A.2d 336 (1986). For a better understanding of the context in which these questions arise, we set forth a more detailed description of the underlying facts.

The building in question is a 15 story, 194 unit, luxury high-rise condominium. The developer began planning for construction in the late 1960's, and construction specifications were issued in March 1974. Shortly after completion of the building in 1976, water leaks were reported in various units throughout the building, and to date at least 50 units have shown evidence of intrusion of water from the outside. The developer attempted several corrective measures, but was not successful. The exterior wall system was examined by a number of experts, who predictably came to somewhat different conclusions concerning the cause of the problem. There is substantial evidence, however, to support the contention of the developer that the only adequate means of correcting the defective conditions that now exist involve the complete removal of the brick veneer, replacement or correction of the backup wall system as required, and installation of new brick. This work has begun, and according to the developer will cost 15-20 million dollars, in addition to the 3 million dollars already expended in the initial remedial measures.

The extensive record already developed in this case suggests there may be multiple causes of the exterior wall problem, including deficiencies in materials, workmanship, supervision, design, and specifications. Petitioners contend that at least a substantial cause of the problem may be the design of the brick veneer, steel stud, curtain wall system used in the building--a design they say was developed, published and promoted by USG.

Curtain wall systems have been employed by the building industry for some time. A curtain wall is not a part of the structural skeleton of the building, as would be a weight bearing wall. It simply spans an upper and lower deck (or floor) of the building, enclosing that floor. A wall system consists of the exterior surface, such as brick or stucco, the interior surface, such as plaster, gypsum board, or paneling, and the core or "backup" to which each surface is in some manner connected. The curtain wall used in this building consists of an exterior surface of one wythe of laid-up 4 inch brick, and a backup of 2-1/2 inch steel studs fastened into steel runners at the top and bottom. Exterior sheathing is attached to the outside of the steel studs, and interior gypsum board (wallboard) is attached to the inside. The exterior wall of brick for each floor rests on an angle iron that is fastened to the concrete deck at the base of each floor, and is laid so that there is an air space of approximately 1 inch between the brick and the sheathing. To provide additional support for the brick wall, and apparently to transfer some part of the forces exerted on the brick wall to the backup structure, metal ties, called wall ties or brick ties, are placed at specified intervals. In this system, the ties used are corrugated metal strips, 1 inch wide and several inches long, with a galvanized coating. These ties are supposed to be securely screwed to the steel studs at the same time as or after the exterior sheathing is attached, and the free end of each tie is then to be inserted into a bed of mortar between the bricks as the wall is laid.

Brick veneer walls are not new. Until the mid-1960's, however, metal stud systems had not been used as a backup for brick veneer on high-rise buildings. Rather, concrete or other masonry walls were used as backup in such cases. For low-rise commercial and residential buildings, a wooden stud system often served as the backup for a brick veneer wall. As metal stud systems proved increasingly popular for use in constructing interior non-load bearing walls, the manufacturers of those systems turned their attention to the potential of utilizing steel studs as a backup for exterior walls in high-rise buildings. USG's interest is documented by an internal report dated 14 July 1964, which stated:

At present the U.S. Gypsum Company does not participate in the curtain wall market to any appreciable extent. The development of "the curtain wall system" has been undertaken to allow the company to expand into this very large and potentially profitable area.

Six years later, another USG internal report evaluated the market in these terms:

The curtain wall market is huge. If we could make only a 1% penetration, this would result in gross sales of more than $15,000,000 now; $19,500,000 in 1975; and $22,500,000 in 1980. (These are in constant 1968 dollars.)

Using their own architects and engineers, USG in the late 1960's or early 1970's developed and issued specifications for a brick veneer, steel stud, gypsum board curtain wall system. There is evidence that USG sales representatives reported difficulty in selling the system because architects were having trouble defining the system from the limited specifications given up to that time. As a result USG developed a more comprehensive 24-page publication known as System Folder SA-805, USG Curtain Wall Systems (hereinafter, the "805"). The first 805, issued in 1973, was later described by USG as providing "complete details and specifications for the USG Brick Veneer Curtain Wall System, including wind load limiting height tables."

The 805, which petitioners insist was the document relied upon by the architect in designing the curtain wall system for Harper House, contained several parts. In addition to the narrative portions which described and extolled the system in its several applications, there were photographs of buildings built with the system; detail drawings of the system in several different applications; technical data charts, including structural properties of the studs, fire ratings, heat transfer characteristics, and height limitations correlated to wind load requirements and size and spacing of studs; and, proposed written specifications.

Although there is evidence that the developer had decided to use a steel stud backup system before USG's 805 was seen by the developer or architect, and there is evidence that brochures of other major steel stud and gypsum board manufacturers were obtained and considered before a decision was made, we find the evidence sufficient to support petitioners' contention that the Harper House plans and specifications issued on 29 March 1974, relied heavily upon the 805...