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Chesapeake Bay Foundation, Inc. v. Weyerhaeuser Co.

United States District Court, D. Maryland, Southern Division

May 4, 2015

THE CHESAPEAKE BAY FOUNDATION, INC., et al., Plaintiffs,
v.
WEYERHAEUSER CO., et al., Defendants.

MEMORANDUM OPINION

PAUL W. GRIMM, District Judge.

Approximately fifteen years ago, the parties entered into various agreements governing the construction of new headquarters for Plaintiff Chesapeake Bay Foundation, Inc. ("CBF"), which included use of columns and beams that Defendants Weyerhaeuser Co. f/d/b/a Trus Joist MacMillan and Weyerhaeuser NR Co. f/d/b/a Trus Joist MacMillan (together, "Weyerhaeuser") manufactured and Third-Party Defendant Permapost Products Co. ("Permapost") treated. Some of the columns and beams were installed on the exterior of the building, where they deteriorated, leading to damage to the structure. CBF, along with Plaintiffs Clark Construction Group, LLC f/k/a the Clark Construction Group, Inc. ("Clark") and SmithGroup, Inc. d/b/a KCF-SHG Inc. ("SmithGroup"), took remediation measures, and this litigation ensued to recover damages related to the deteriorated columns.

Extensive summary judgment briefing has established that genuine disputes exist about the proximate cause of the deterioration and whether Weyerhaeuser owed SmithGroup or CBF a non-contractual duty with regard to the columns and beams. But, it is apparent that Permapost did not owe an independent tort duty to Weyerhaeuser, such that summary judgment is appropriate in favor of Permapost on the negligence claims asserted against it. And, it is undisputed that Clark's and SmithGroup's contribution claims have not yet accrued and should be dismissed. Additionally, the indemnification clause in the contract between Weyerhaeuser and Clark preempts Clark's common law indemnification claim, and summary judgment for Weyerhaeuser is appropriate on that claim. It remains unclear, however, whether the remaining indemnification claims have accrued, and therefore Clark and SmithGroup are ordered to show cause why those claims should not be dismissed without prejudice to renewal at such time that they have made payments under the terms of their settlement agreement. Thus, the pending summary judgment motions are granted in part and denied in part, as detailed below. Finally, Permapost's motion to amend its Answer is denied for failure to show good cause.

I. BACKGROUND[1]

CBF contracted with SmithGroup to design the Philip Merrill Environmental Center (the "Merrill Center"), CBF's headquarters, on the Chesapeake Bay in Annapolis, Maryland. Chesapeake Bay Found., Inc. v. Weyerhaeuser Co., 580 F.Appx. 203, 204 (4th Cir. 2014). CBF also contracted with Clark as general contractor to oversee the construction, which spanned from 1999 into 2000. Id. "SmithGroup's green' design called for exposed structural wood members outside the envelope of the Merrill Center, including some that penetrated the building's façade." Id. Weyerhaeuser, the manufacturer of Parallam PSL columns and beams ("Parallams"), agreed in a purchase order "to provide [Parallams to Clark] for use as the exposed wood members" ("Clark-Weyerhaeuser Purchase Order"). Id.

Parallams, which have a rough-hewn appearance, are manufactured by bonding together strips of wood. The wood strips' lack of uniformity creates channels, or "avenues, " that run longitudinally through the Parallams. Thus, water is expected to infiltrate Parallams used outdoors. To protect against rotting, Parallams are pressure-treated with a wood preservative intended to fully penetrate the avenues. Its contract with Clark [i.e., the Clark-Weyerhaeuser Purchase Order] required Weyerhaeuser to treat the Merrill Center's Parallams with the preservative PolyClear 2000. Weyerhaeuser engaged third party defendant Permapost Products Co. ("Permapost") to apply the PolyClear 2000 treatment to a specified retention level, and Permapost provided certificates to Weyerhaeuser - later shared by Weyerhaeuser with the plaintiffs - verifying that such retention level had been reached.

Id. at 205. However, for purposes of their pending motion for summary judgment, Permapost states that "the Court may assume that Permapost did not appropriately treat the Parallams" and "represented retention levels[2] were not retained." Permapost's Mem. 5 & n.7.

Water leaked through the avenues in the Parallams into the Merrill Center after it was finished, and Clark hired consultants to investigate the leaking in 2001 and 2002. Id. The consultants stated that water in the avenues "could cause deterioration or rot in the Parallams themselves if they were not properly treated with a wood preservative, " but "Weyerhaeuser assured the plaintiffs that the Merrill Center's Parallams had been properly treated with PolyClear 2000 and were not at risk of premature deterioration." Id. Sealants stopped the leaks in 2004. Nonetheless, five years later, Plaintiffs discovered that the Parallams indeed had rotted and deteriorated and "subsequently learned that the Parallams had not been treated with PolyClear 2000 as certified, that PolyClear 2000 was not in any event well-suited to the job of preserving the Parallams, and that Weyerhaeuser had knowingly given false assurances to the contrary." Id.

CBF, SmithGroup and Clark entered into a settlement agreement to remediate the Merrill Center ("Remediation Agreement") by removing and replacing all of the Parallams used on the exterior of the facility and to seek reimbursement from Weyerhaeuser. Compl. ¶¶ 49-50, ECF No. 2; see Remediation Agr., Def.'s Mem. re SmithGroup Ex. C, ECF No. 77-4. To recover their costs, they filed suit in Maryland state court against Weyerhaeuser, which removed to this Court, Notice of Removal, ECF No. 1, and filed a Third-Party Complaint against Permapost, ECF No. 17. Plaintiffs claimed breach of contract, including contractual indemnification, common law indemnification, contribution, negligent misrepresentation, and negligence against Weyerhaeuser, and Weyerhaeuser asserted the same five claims against Permapost. Plaintiffs allege that the cause of the Parallams' rot or deterioration was either the selection of PolyClear 2000 as the treatment or the improper application of PolyClear 2000 to the Parallams. Compl. ¶¶ 45, 46. Weyerhaeuser moved for summary judgment on the basis that "Plaintiffs' claims are barred by the three-year statute of limitations contained in Maryland Code Annotated, Courts & Judicial Proceedings § 5-101." ECF No. 61. The district court judge to whom this case was assigned agreed, and granted the motion, ECF No. 110, but the Fourth Circuit vacated and remanded, ECF No. 117, and the case was reassigned to me.

Pending are previously filed dispositive motions, ECF Nos. 76-79, 83-1, 84, 86, 87, 89, 90, 100, 103, as well as supplemental briefing that I permitted the parties to complete, ECF Nos. 126, 135. Now pending are:

1. Permapost's Motion for Summary Judgment against Weyerhaeuser, ECF No. 76, and the related briefing, ECF Nos. 76-1, 132, 137, which includes Weyerhaeuser's Cross-Motion for Partial Summary Judgment in ECF No. 132; as well as an Opposition from Plaintiffs, ECF No. 84, and Permapost's Reply, 94.
2. Weyerhaeuser's Motion for Summary Judgment against CBF, ECF No. 79, and the related briefing, ECF Nos. 90, 138;
3. Weyerhaeuser's Motion for Summary Judgment against SmithGroup, ECF No. 77, and the related briefing, ECF Nos. 86, 89, 138, 139;
4. Weyerhaeuser's Motion for Partial Summary Judgment against Clark, ECF No. 78, and Clark's Cross-Motion for Summary Judgment against Weyerhaeuser, ECF No. 87, and the related briefing, ECF Nos. 92, 100, 103, 138, 140; and
5. Permapost's Motion for Leave to File Amended Answer to Third Party Complaint, ECF No. 142, and the related briefing, ECF Nos. 143, 144.

A hearing is not necessary. See Loc. R. 105.6.

II. PERMAPOST'S MOTION FOR SUMMARY JUDGMENT

A. Standard of Review

Summary judgment is proper when the moving party demonstrates, through "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations... admissions, interrogatory answers, or other materials, " that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a), (c)(1)(A); see Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). If the party seeking summary judgment demonstrates that there is no evidence to support the nonmoving party's case, the burden shifts to the nonmoving party to identify evidence that shows that a genuine dispute exists as to material facts. See Celotex v. Catrett, 477 U.S. 317 (1986). A "genuine" dispute of material fact is one where the conflicting evidence creates "fair doubt"; wholly speculative assertions do not create "fair doubt." Cox v. Cnty. of Prince William, 249 F.3d 295, 299 (4th Cir. 2001); see also Miskin, v. Baxter Healthcare Corp., 197 F.Supp.2d 669, 671 (D. Md. 1999). The existence of only a "scintilla of evidence" is not enough to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). Instead, the evidentiary materials submitted must show facts from which the finder of fact reasonably could find for the party opposing summary judgment. Id.

B. Proximate Cause

Permapost asserts that Weyerhaeuser must prove proximate cause to prevail on any of its claims. Permapost's Mem. 8 n.8. Indeed, "[p]roximate cause analysis applies in contract actions as well as tort actions." CR-RSC Tower I, LLC v. RSC Tower I, LLC, 56 A.3d 170, 196 n.41 (Md. 2012). And, as noted, all of Plaintiffs' claims against Weyerhaeuser, which form the basis for Weyerhaeuser's Third-Party Complaint, hinge on the allegation that the cause of the Parallams' rot or deterioration was either the improper selection of PolyClear 2000 as the treatment or the improper application of PolyClear 2000 to the Parallams. See Compl. ¶¶ 45, 46. Thus, Permapost argues that summary judgment in its favor is appropriate on all counts of Weyerhaeuser's Third-Party Complaint because, according to Permapost, its conceded failure (for summary judgment purposes only) to treat the Parallams properly with PolyClear 2000 was not the proximate cause of Plaintiffs' injury.[3] Permapost's Mem. 5. Weyerhaeuser adopts Permapost's proximate cause argument as an alternative basis for judgment in its favor, against Plaintiffs, on "Plaintiffs' claims relating to improper treatment of the Parallams." Weyerhaeuser's Opp'n to Sum. J. 17.[4] But it also counters that summary judgment is not appropriate on its Third Party Complaint because genuine disputes of material fact exist regarding whether the inadequate application of PolyClear 2000 to the Parallams was a proximate cause of Plaintiffs' (and consequently Weyerhaeuser's) injury. Id. at 1-2.

To establish causation, a claimant must allege that the defendant's "negligence was both a cause in fact of the injury and a legally cognizable cause.'" Casey v. Geek Squad Subsidiary Best Buy Stores, L.P., 823 F.Supp.2d 334, 351 (D. Md. 2011) (quoting Young v. United States, 667 F.Supp.2d 554, 561 (D. Md. 2009) (citing Pittway Corp. v. Collins, 409 Md. 218, 973 A.2d 771, 786 (2009))).[5] It is causation in fact that Permapost insists cannot be proven.

The "cause in fact" inquiry "concerns whether defendant's negligent conduct actually produced an injury." [ Young, 667 F.Supp.2d at 561.] Maryland courts consider two tests in determining whether causation-in-fact exists: the "but for" test and the substantial factor test. Id. at 562. The "but for" test considers whether the injury "would not have occurred absent defendant's negligent conduct." Id. The substantial factor test applies in situations where more than one independent negligent act may be responsible for a plaintiff's injury. See id. Under the substantial factor test, an action is viewed as the cause of an injury only if the action was a "substantial factor' in bringing about plaintiff's injury." Id.

Casey, 823 F.Supp.2d at 351.

Thus, Permapost's inadequate application of PolyClear 2000 will be the cause-in-fact of the Parallams rotting or deteriorating if the evidence shows that the Parallams would not have rotted or deteriorated "but for" the inadequate application, or if the evidence demonstrates that the inadequate application was a "substantial factor" in causing the Parallams to rot or deteriorate. See id. Stated differently, the issue is whether the Parallams would have rotted or deteriorated anyway even with a sufficient application of PolyClear 2000. Permapost insists that "[d]iscovery has established that.... [n]o matter how well (or poor[ly]) Permapost treated the Parallams, they were destined to fail, deteriorate and need to be replaced" as a result of "the decision to use (or failure to reject) PolyClear 2000 as the wood preservative." Permapost's Mem. 1.

Relying on the PolyClear 2000 Product Information and Specification Guide ("Guide"), Permapost contends that PolyClear 20000 was "intended only for wood that was weather protected' or used in interior applications.'" Id. at 3 (citing Guide, Permapost's Mem. Ex. 2, ECF No. 76-2). It is true that the Guide states that "[t]reatment with the PolyClear 2000 preservative system provides protection for wood intended to be used in interior applications, or weather-protected, exterior above-ground applications under conditions favoring insect attack and attack by wood-degrading fungi." Guide 2. Yet, the Guide also provides that if PolyClear 2000 "is specified to be used for exterior applications, it must be protected from the weather with a water-resistant coating." Id. It states that PolyClear 2000 "is not approved for ground contact applications, " but it does not state that it is not approved for exterior applications. See id. Thus, the Guide does not support the premise that PolyClear 2000 categorically could not be used for exterior application, such that no amount of PolyClear 2000 could have been adequate to treat the exterior Parallams properly. Rather, it simply calls for the application of a water-resistant coating for exterior use. See id. Indeed, Plaintiffs' expert, Peter E. ...


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