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Cash & Carry America, Inc. v. Roof Solutions, Inc.

Court of Special Appeals of Maryland

June 30, 2015

CASH & CARRY AMERICA, INC.
v.
ROOF SOLUTIONS, INC., ET AL.

Eyler, Deborah S., Woodward, Thieme, Raymond G., Jr. (Retired, Specially Assigned), JJ.

OPINION

Eyler, Deborah S., J.

The primary question in this case is whether a roofing contractor who performs work on a structure owes a duty of care in tort to a third party owner of personal property inside the structure. The answer is yes, although there are limits on the type of property damage encompassed by this duty of care, as we shall discuss.

Cash & Carry America, Inc. ("CCA"), the appellant, is a business owned in part by Merle Coe, who is its Chief Executive Officer. In the Circuit Court for Montgomery County, CCA sued Diogo Depaula and Roof Solutions, Inc. ("Roof Solutions"), the appellees, alleging that their negligence in carrying out roof replacement work on a townhouse owned by Coe caused the roof of the townhouse to catch fire, which damaged property belonging to CCA that was inside the townhouse. The court granted summary judgment in favor of Depaula and Roof Solutions, a ruling CCA challenges on appeal.[1] We shall reverse the judgment and remand for further proceedings.

FACTS AND PROCEEDINGS

Coe owns and lives in a townhouse in Washington, D.C. In 2010, he contacted Roof Solutions about replacing the townhouse's roof, which was old. Artem Chanturiya, a roofing specialist with that company, met with Coe at the townhouse. According to Coe, the two walked through the townhouse, and in doing so saw two computers sitting on the floor of an upstairs bedroom he used as an office. Coe told Chanturiya that the computers belonged to CCA, a company he ran, and that the office and property of CCA had been moved into his townhouse.

On September 13, 2010, Coe signed a roof replacement contract with Roof Solutions and paid a deposit. Pursuant to a subcontracting agreement in force since 2008, Roof Solutions hired Depaula to perform the roof replacement work.

The work started on September 22, 2010, and still was in progress on September 24, 2010. That evening, the last worker left the townhouse at 7:30 p.m. At 9:34 p.m., a neighbor called the District of Columbia Fire Department ("DCFD") to report smoke on the roof of the townhouse. (Coe was not at home.) Fire Department personnel quickly arrived, spotted a fire burning on the roof, and put it out. By 10:00 p.m., DCFD investigators Rodney L. Taylor and Keith Byrd had started their origin and cause ("O&C") investigation of the fire. In their report of findings, Taylor opined that the "roofers were using a torch to heat tar paper. The flame/heat from the torch ignited the structural members of the roof." He classified the fire as "accidental."

The day after the fire, Chanturiya and Coe again walked through the townhouse. According to Chanturiya, Coe pointed out some computers on the floor in the second story bedroom he used as an office. They were sitting in water that had come into the townhouse when the DCFD was putting out the fire. Coe told Chanturiya the computers were for a business he was trying to start. According to Chanturiya, this was the first he had heard about Coe's business. Coe said he was unsure about the future of the business because he did not know if the hard drives on the computers could be salvaged. Chanturiya took photographs of the computers.

Coe made a claim with State Farm Insurance Company ("State Farm"), his homeowners insurance carrier, and State Farm hired Firemark, Inc., to perform an O&C investigation. Ward Caddington, an investigator with Firemark, performed the work and wrote a report, in which he concluded that "[t]he fire was started as a result of heat from the roofer's torch ignited [sic] wooden framework of the roof at the area of the office which was located on the second floor."

In his insurance claim, Coe sought to recover, among other things, $298, 743.20 in personal property losses that may have included losses he alleged CCA had sustained as a result of the fire. CCA is a Delaware corporation that, according to Coe, is in the business of developing computer cash register systems. The company is owned by Coe and one Thomas Snyder. Its principal place of business is at Snyder's house in Bethesda. In the early 2000's, CCA built two computers that were prototype cash registers. The computers use "CRISPTM" technology software, which CCA developed. Until 2005, the computers were kept in a storage facility in Capitol Heights, Maryland. In 2005, they were moved to Florida. Eventually, they were moved to Coe's townhouse in D.C.

On September 6, 2011, Coe and CCA sued Depaula and Roof Solutions for negligence. They alleged that Depaula had breached the standard of care in performing the roof replacement work, thereby causing the roof to catch fire; and that Roof Solutions was vicariously liable for Depaula's negligence. They also alleged that Roof Solutions had negligently hired, retained, and supervised Depaula as a roofing subcontractor.

As relevant here, in Count Three, [2] CCA averred that the fire, and more particularly the water used to put it out, had damaged the interior of the townhouse and items inside it, including CCA's computers. It sought compensatory damages for:

• the cost of repairing and/or replacing components in CCA's computers.
• the cost of repairing and/or replacing the software in CCA's computers.
• the value of the time expended by Coe, as CCA's CEO, and other principals of CCA in connection with repairing and/or replacing the computer components and the software.
• the cost of disruption and delay in implementing CCA's business plan.
• the loss of anticipated revenues from implementation of CCA's business plan.

CCA identified Taylor and Byrd, with the DCFD, and Caddington, with Firemark, as expert witnesses. Depaula identified Michael Tracey, a structural engineer with CED Technologies, as an expert witness.[3]

On October 18, 2012, Depaula filed a motion for summary judgment and request for hearing. In an attached affidavit he attested that, until Coe and CCA filed suit, he did not know that CCA existed and knew nothing about any computers belonging to CCA being inside Coe's townhouse. He also attached Coe's deposition testimony that the damaged computers were of a 2000 to 2004 vintage and the damaged software had not been run since 2004.[4] He argued that he did not owe a duty of care in tort to CCA, and that CCA was not a third party beneficiary of his subcontracting agreement with Roof Solutions. He also argued that CCA's claims were barred by the "economic loss doctrine."

CCA filed an opposition. It furnished an affidavit by Coe and additional portions of his deposition; the Statement of Loss Coe filed with State Farm; and eight photographs of the damaged computers. In his affidavit, Coe attested that Snyder and Donald Bosic, Executive Vice President and Director of CCA, "were aware that the contents of the [CCA] office on Montgomery Avenue in Bethesda, Maryland was moved into" Coe's townhouse. CCA argued that there were genuine disputes of material fact that precluded the grant of summary judgment; Depaula owed it a duty of care in tort; and, specifically, Depaula owed CCA a duty to perform the roofing work with requisite care, so as to avoid damaging CCA's property inside the townhouse. CCA argued that the damage to its property was not a purely economic loss.

On October 25, 2012, Roof Solutions also filed a motion for summary judgment. It relied upon the documents furnished by the other parties, and some additional documents. It argued that it did not owe a duty of care in tort to CCA; CCA was not a third-party beneficiary of its contract with Coe; if it owed any duty of care to CCA, it did not breach it and no damages were sustained; if any damages were sustained, they were not proximately caused by any breach of duty on its part; and there was no evidence to support the claim that it negligently selected, hired, or supervised Depaula.

CCA filed an opposition, relying upon evidence already in the summary judgment record and additional documents, including the DCFD O&C investigation report; an excerpt from the deposition of Michael Tracey, in which he opined that Roof Solutions had breached the standard of care by using a substrate material for the replacement roof that was a quarter inch less thick than required (although he did not opine that that had caused or contributed to the fire); an excerpt from the deposition of Russell Deighton, President of Roof Solutions; and portions of the report prepared by Caddington, of Firemark, for State Farm. It argued that there were numerous disputes of material fact that precluded summary judgment; Roof Solutions owed it a duty of care in tort; and Roof Solutions breached that duty by choosing the wrong materials for the roof, selecting an incompetent subcontractor, failing to adequately supervise the subcontractor's work, and allowing the subcontractor to use a torch on the roof.

The summary judgment hearing took place on November 30, 2012. After hearing argument of counsel, the court granted summary judgment in favor of Roof Solutions and Depaula on CCA's negligence claim. It explained:

The primary issue . . . is whether or not the defendants have a legal duty to the plaintiff in this case. . . . [CCA] is a corporation which is incorporated in Delaware, its corporate address is . . . in Bethesda. The plaintiff's corporate records do not identify Mr. Coe's . . . residence as a business address, and the records and documents and photographs do not mention or depict any software computer equipment at Mr. Coe's residence prior to the fire. The contract that was entered into itself is with Mr. Coe. Mr. Coe paid the defendants Roof Solutions, from his personal account, there's no evidence that Mr. Coe consulted with [CCA] about replacing the roof. In addition, the work order . . . reflects that Mr. Coe is the client for whom the work is being performed, not [CCA]. I understand what plaintiff is saying with respect to the applicable law and whether or not there's an extension of duty that should be applied under the facts of this case. And given the state of the law, the facts of this case, I do agree that to allow this claim to proceed would be essentially the equivalent of allowing anyone who had property at the plaintiff's residence at the time of the fire to make the claim for damages, and would result in a slippery slope that I'm just not prepared to recognize, given the state of the law at this time. In addition, given the pleadings that have been submitted, I'm also going to grant summary judgment on the issue of causation.

The court entered orders memorializing its rulings. Thereafter, CCA noted a timely appeal.

We shall include additional facts as necessary to our discussion of the issues.

STANDARD OF REVIEW

A circuit court may grant a motion for summary judgment if it finds that there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Montgomery Cnty. v. Soleimanzadeh, 436 Md. 377, 397 (2013). Both these issues are questions of law, and therefore our standard of review is de novo. Myers v. Kayhoe, 391 Md. 188, 203 (2006). In assessing whether the circuit court erred in deciding whether there was a genuine dispute of material fact, we must keep in mind that a ...


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