BEI BEACH, LLC v. Mashburn Christman ( 2023 )

THE STATE OF SOUTH CAROLINA
In The Court of Appeals
BEI-BEACH, LLC, Plaintiff,
v.
Mashburn Christman, JV, Lend Lease (US) Construction,
Inc., f/k/a Bovis Lend Lease, Inc., and McCrory
Construction Company, LLC, Defendants,
v.
Mashburn Christman, JV, Third-Party Plaintiff,
v.
Wallcraft Construction, Inc.; Alpha Insulation &
Waterproofing, Inc.; Baker Roofing, Inc.; Collins &
Wright, Inc.; Liberty Mutual Insurance Company; Old
Republic Surety Company; Hartford Fire Insurance Co.;
Travelers Casualty and Surety Company of America; The
Muhler Company, Inc., and Companion Property and
Casualty Insurance Company, Third-Party Defendants,
Lend Lease (US) Construction, Inc. f/k/a Bovis Lend
Lease, Inc., Third-Party Plaintiff,
v.
Spann Roofing & Sheet Metal, Inc.; Travelers Casualty
and Surety Company of America; Strickland
Waterproofing Company; Merchants Bonding Company;
Everest Reinsurance Company; Wallcraft Constuction,
Inc., Old Republic Insurance Company; Madison
Construction Group, Inc., Worthington Integrated
Building Systems; McDowell Commercial Construction,
LLC; Jollay Masonry; National Fire Insurance Company
of Hartford; R.J. Kenney Associates, Inc.; Antunovich
Associates; TG Construction, LLC; Luis Benegas d/b/a
Luis Trim Work; Nora Del Carmen Laos, Nora Del
Carmon Lagos d/b/a Luis Trim Work; and Ovation
Custom Trim, LLC, Third-Party Defendants,
McCrory Construction Company, LLC, Third-Party
Plaintiff,
v.
Collins & Wright; Baker Roofing; Glasstech Inc.;
Palmetto State Roofing and Sheet Metal; Strickland
Waterproofing; Maiday, Inc.; and Atlas Drywall &
Acoustics, Inc., Third-Party Defendants,
Spann Roofing & Sheet Metal, Inc., Fourth-Party
Plaintiff,
v.
Coastal Commercial Roofing Co., Inc., and Daniel
Kniffen d/b/a East Coast Improvements, Fourth-Party
Defendants.
Wallcraft Construction, Inc., Fourth-Party Plaintiff,
v.
Vienamin Petresku d/b/a BT Construction, LLC, Fourth-
Party Defendant,
of which Lend Lease (US) Construction Inc., f/k/a Bovis
Lend Lease, Inc. is the Appellant,
and
Antunovich Associates is the Respondent.
Appellate Case No. 2019-002001
Appeal From Horry County
William H. Seals, Jr., Circuit Court Judge
Opinion No. 5982
Heard November 15, 2022 – Filed April 26, 2023
AFFIRMED
Francis Heyward Grimball, of Richardson Plowden &
Robinson, PA, of Mount Pleasant, and James Atkinson
Bruorton, IV and Elizabeth Foy Nicholson, both of
Rosen Hagood, LLC, of Charleston, all for Appellant.
Michael B.T. Wilkes, of Wilkes Atkinson & Joyner,
LLC, of Spartanburg, and James Alexander Joyner, of
Wilkes Atkinson & Joyner, LLC, of Charleston, both for
Respondent.
MCDONALD, J.: In this construction defect litigation, Lend Lease (US)
Construction, Inc. (Lend Lease) appeals the circuit court's grant of partial summary
judgment to Antunovich Associates (Antunovich). Lend Lease argues the circuit
court erred in (1) failing to recognize its independent cause of action for
professional negligence against architect Antunovich; (2) failing to recognize the
special relationship between an architect and contractor for purposes of Lend
Lease's breach of warranty claim; and (3) limiting Lend Lease to a claim of
equitable indemnity. We affirm.
Facts and Procedural History
In January 2011, Plaintiff BEI-Beach, LLC (BEI) purchased The Market Common,
a 113-acre multi-use development in Myrtle Beach, from the developer,
LUK-MBl, LLC (LUK). Lend Lease was the general contractor for Market
Common buildings A6, A7, and A8; Antunovich, through its contract with LUK,
was the architect for buildings A2, A3, A4, A5, A6, A7, and A8 (the A-Buildings).
After BEI purchased Market Common, it discovered defects and deficiencies in the
A-buildings.
In October 2015, BEI sued Lend Lease and two other general contractors, alleging
various construction defects and building code violations. Lend Lease then filed a
third-party complaint against Antunovich, Antunovich's principal, and several
subcontractors, alleging design deficiencies and subcontractor errors. Lend Lease's
third-party action against Antunovich included claims for contribution,
professional negligence, equitable indemnity, and breach of warranty of plans and
specifications.
With its third-party complaint, Lend Lease filed the affidavit of licensed engineer
Richard H. Moore, who opined the vinyl windows Antunovich specified for
buildings A6, A7, and A8 were inappropriate for the designated wind zone design
pressure requirements for Market Common's location. In Moore's professional
opinion, Antunovich breached "a design professional's standard of care" in the
performance of its obligations to BEI and Lend Lease.
Antunovich moved for partial summary judgment as to Lend Lease's third-party
claims for contribution, negligence, and breach of warranty. Following a hearing,
the circuit court granted Antunovich's motion, finding Lend Lease's contribution
claim was premature and Lend Lease's claims for negligence and breach of
warranty were "merely disguised equitable indemnity claims" subject to dismissal
under Stoneledge at Lake Keowee Owners' Association, Inc. v. Clear View
Construction, LLC, 413 S.C. 615, 776 S.E.2d 426 (Ct. App. 2015) (Stoneledge I)
and Stoneledge at Lake Keowee Owners' Association, Inc. v. Builders
Firstsource-Southeast Group, 413 S.C. 630, 776 S.E.2d 434 (Ct. App. 2015)
(Stoneledge II).
In granting partial summary judgment, the circuit court rejected Lend Lease's
argument that its negligence and breach of warranty claims alleged damages to
Lend Lease's business and business reputation independent of the claims BEI
asserted against Lend Lease; the circuit court also rejected Lend Lease's argument
that it suffered business reputation damages separate and distinct from the damages
recoverable through its indemnity claim. The circuit court further found Lend
Lease failed to present admissible evidence that it incurred any such business
reputation damages.
Lend Lease filed a Rule 59(e), SCRCP motion as to its negligence and breach of
warranty claims but did not seek reconsideration of the dismissal of its contribution
claim. The circuit court denied the Rule 59(e) motion.
Standard of Review
"Rule 56(c) of the South Carolina Rules of Civil Procedure provides the circuit
court shall grant summary judgment if 'there is no genuine issue as to any material
fact and . . . the moving party is entitled to a judgment as a matter of law.'"
Stoneledge I, 413 S.C. at 620, 776 S.E.2d at 429. "When the circuit court grants
summary judgment on a question of law, we review the ruling de novo." Id. "In
determining whether any triable issue of fact exists, the evidence and all inferences
which can reasonably be drawn therefrom must be viewed in the light most
favorable to the nonmoving party." Id. (quoting Quail Hill, LLC v. Cnty. of
Richland, 387 S.C. 223, 235, 692 S.E.2d 499, 505 (2010)). "However, it is not
sufficient for a party to create an inference that is not reasonable or an issue of fact
that is not genuine." Id. (quoting Town of Hollywood v. Floyd, 403 S.C. 466, 477,
744 S.E.2d 161, 166 (2013)).
Law and Analysis
I. Negligence
Relying on Tommy L. Griffin Plumbing & Heating Co. v. Jordan, Jones &
Goulding, Inc., 320 S.C. 49, 463 S.E.2d 85 (1995), Lend Lease argues the circuit
court erred as a matter of law in failing to recognize a contractor's independent
cause of action for professional negligence against an architect. We disagree.
In support of its negligence claims against Antunovich, Lend Lease asserted:
The Plaintiff has alleged property damage resulting from
alleged construction and design deficiencies that violate
the applicable plans and specifications, applicable
building codes, applicable manufacturer's instructions
and generally recognized and accepted construction
industry standards and good construction practices.
....
Specifically as to the design professional services,
[Antunovich's] actions as [they relate] to the performance
of his professional obligations owed to the Owner and
Contractor, constitute[ ] a breach of a design
professional's standard of care and responsibilities as set
forth in the Affidavit of Richard H. Moore, P.E. being
filed along herewith.
As a result of the Third-Party Defendants [sic] gross
negligence and recklessness, Lend Lease has incurred,
and will continue to incur actual damages in an amount
to be determined by the court and may incur settlement
costs in settling the Plaintiffs' claims, plus the costs
associated with investigating the Plaintiffs' claims and
defending this action as well as special and consequential
damages, including damage to its business and business
reputation, in an amount to be proven at trial.
In Tommy L. Griffin Plumbing, our supreme court explained that a "breach of a
duty which arises under the provisions of a contract between the parties must be
redressed under contract, and a tort action will not lie. A breach of a duty arising
independently of any contract duties between the parties, however, may support a
tort action." 320 S.C. at 54–55, 463 S.E.2d at 88. Often, this duty arises from a
special relationship between the tortfeasor and the injured party. See id. at 55, 463
S.E.2d at 88 ("When, however, there is a special relationship between the alleged
tortfeasor and the injured party not arising in contract, the breach of that duty of
care will support a tort action.").
For example, South Carolina courts have permitted negligence actions against
lawyers, accountants, and engineers based on their professional duties owed to
plaintiffs. Id. at 55, 463 S.E.2d at 89. Yet, Tommy L. Griffin Plumbing does not
hold that a contractor owed such a duty may maintain tort claims against a design
professional without having suffered direct damages to support its claims. Id. In
Tommy L. Griffin Plumbing, the general contractor sought indemnification but also
claimed various tortious acts the defendant engineer allegedly committed directly
against it during the course of the project:
[General contractor] brought this action claiming
Engineer wrongfully closed the job for nearly a month
due to false allegations of OSHA violations, Engineer
made demands of [general contractor] which were not in
the contract, Engineer wrote a disparaging letter to
[general contractor's] bonding company, Engineer
erroneously interpreted the contract to the County and
[general contractor], and Engineer's false interpretations
of the contract required [general contractor] to hire an
expert to interpret the contract between [general
contractor] and the County. . . . County refused to
compensate [general contractor] for costs incurred by
[general contractor] as a result of Engineer's acts.
Id. at 51–52, 463 S.E.2d at 86–87.
Here, Lend Lease contends Antunovich provided deficient plans and specifications
(presumably to developer LUK) from which Lend Lease's claimed damages flow:
The damages to Lend Lease included the costs and fees,
including attorneys' fees, associated with the
investigations and defense of the Plaintiffs claims, as
well as special and consequential damages, including
injury and damage to Lend Lease's business reputation
and the liability for the damage to the Project building,
which, according to Plaintiffs' allegations, include
deterioration and failure of the building structure and
systems due to the acts and omissions of the Third-Party
Defendants . . . .
Lend Lease further contends it "has incurred, and will continue to incur actual
damages in an amount to be determined by the court and may incur settlement
costs in settling the Plaintiffs' claims, plus the costs associated with investigating
the Plaintiffs' claims and defending this action as well as special and consequential
damages, including damage to its business and business reputation, in an amount to
be proven at trial." On appeal, Lend Lease lists the following actual damages:
- Cost of windows purchased by Lend Lease that do not
meet required wind load, which are now recommended
for removal and replacement;
- Investigative fees paid to Richard H. Moore, P.E., to
analyze the project documents and determine whether the
windows specified and approved by Antunovich meet
applicable building code requirements at the time of
construction;
- Loss of business revenues as a result of pending
construction defect claim.
Under South Carolina law, a claimant cannot maintain derivative tort or breach of
warranty claims arising only from the claimant's potential liability for another
party's damages and the claimant's need to defend itself in litigation; such
contingent claims properly lie in indemnity. Stoneledge I, 413 S.C. at 622, 776
S.E.2d at 430; Stoneledge II, 413 S.C. at 637, 776 S.E.2d at 438. In the Stoneledge
cases, a homeowners' association sued a general contractor and its subcontractors
for construction defects at a townhome complex. Stoneledge I, 413 S.C. at 619,
776 S.E.2d at 428; Stoneledge II, 413 S.C. at 634, 776 S.E.2d at 436. The general
contractor filed cross-claims against its subcontractors for breach of contract,
breach of warranty, negligence, and equitable indemnity. Stoneledge I, 413 S.C. at
619, 776 S.E.2d at 428; Stoneledge II, 413 S.C. at 634, 776 S.E.2d at 436. Because
the general contractor's cross-claims were contingent upon whether the plaintiff
HOA prevailed against the general contractor, this court concluded the general
contractor's "cross-claims arose only when it faced potential liability for
Stoneledge's damages and incurred fees and costs defending against Stoneledge's
lawsuit. [The general contractor's] breach of contract and breach of warranty
cross-claims are nothing more than claims for equitable indemnity." Stoneledge II,
413 S.C. at 637, 776 S.E.2d at 438; see also Stoneledge I, 413 S.C. at 621, 776
S.E.2d at 429 (finding cross-claimant's negligence allegations showed Stoneledge
was the party suffering damages and contractor's "injuries arose exclusively from
having to defend itself in Stoneledge's lawsuit").
Like the general contractor in the Stoneledge cases, Lend Lease has not shown it
suffered independent damages as a result of Antunovich's alleged negligence.
Rather, Lend Lease's allegations and prayer for relief seek damages arising
exclusively from Lend Lease's need to defend itself against a potential judgment in
BEI's Market Common litigation, for which Lend Lease also seeks indemnity.
Thus, in granting partial summary judgment, the circuit court properly held Lend
Lease's negligence claims are not independent of its indemnity claim.
II. Breach of Warranty of Plans and Specifications
Lend Lease next argues the circuit court erred in failing to recognize the special
relationship between an architect and a contractor that would properly support a
cause of action for breach of warranty of the architect's plans and specifications.
As to its breach of warranty claims, Lend Lease asserted:
The Plaintiff has alleged multiple construction
deficiencies for [the A-Buildings] against three (3)
separate general contractors who each had different
subcontractors working for them. The only constant
variable among all buildings alleged to have deficiencies
by the Plaintiff is the Architect [Antunovich].
Deficiencies in the design professional services, as set
forth in the Affidavit of Richard H. Moore, by
[Antunovich] constitutes a breach of the warranty of
plans and specifications owed by [Antunovich] to Lend
Lease.
As a result of the Architect's breaches of warranty of
plans and specifications, Lend Lease has incurred, and
will continue to incur actual damages in the amount of
any money adjudged to be owed to the Plaintiff by Lend
Lease, or which Lend Lease must pay Plaintiff in
settlement of the Plaintiffs' claims, plus the costs
associated with investigating the Plaintiffs' claims and
defending this action. In addition, Lend Lease has
incurred and will continue to incur special and
consequential damages, including damage to its business
and business reputation . . . .
Lend Lease contends it presented evidence, through Moore's affidavit, that
Antunovich erred in preparing the design documents upon which Lend Lease relied
in completing its work on Market Common. And, Lend Lease correctly notes our
supreme court has recognized a duty owed by a design professional to a contractor,
independent of contractual duties, with regard to the design or supervision of a
project. See Tommy L. Griffin Plumbing, 320 S.C. at 55, 463 S.E.2d at 89 ("We
see no logical reason to insulate design professionals from liability when the
relationship between the design professional and the plaintiff is such that the
design professional owes a professional duty to the plaintiff arising separate and
distinct from any contractual duties between the parties or with third parties.").
However, as with the negligence claim discussed in Section I, supra, under the
Stoneledge cases, Lend Lease's allegations set forth no proper independent claim
resulting from any breach of warranty by Antunovich. Instead, the allegations
demonstrate BEI is the party that allegedly suffered damages, and Lend Lease's
alleged injuries arise exclusively from having to defend itself against BEI's lawsuit.
The damages Lend Lease seeks to recover would result only from its potential
liability to BEI and from the expenses Lend Lease must incur in defending itself.
Accordingly, the circuit court properly found Lend Lease's breach of warranty
claims are not independent of its equitable indemnity claim.
Additionally, we agree with Antunovich that Lend Lease's argument is without
merit under the Spearin doctrine. In United States v. Spearin, "considered by
many to be the most significant construction law case,"1 the United States Supreme
Court explained:
Where one agrees to do, for a fixed sum, a thing possible
to be performed, he will not be excused or become
entitled to additional compensation, because unforeseen
difficulties are encountered. Thus one who undertakes to
erect a structure upon a particular site, assumes ordinarily
the risk of subsidence of the soil. But if the contractor is
bound to build according to plans and specifications
prepared by the owner, the contractor will not be
responsible for the consequences of defects in the plans
and specifications.
248 U.S. 132, 136 (1918). Therefore, assuming arguendo that Lend Lease in fact
complied with Antunovich's plans and specifications, Lend Lease cannot be held
responsible if it can prove the specifications were defective, the defective
specifications caused the problem, and Lend Lease relied on the defective
specifications. See, e.g., Robert E. Lee & Co. v. Comm'n of Pub. Works of City of
Greenville, 248 S.C. 84, 90, 149 S.E.2d 55, 58 (1966) ("The statement in SC-25
before quoted, that the owner had made auger borings along the pipe line route to
determine the character of the subsurface materials, and that the location and logs
of these test holes were shown on the plans, was a representation that the
subsurface information revealed by the test hole borings had been accurately and
fully disclosed on the plans. The contractor was entitled to rely upon that
1
Buckner Hinkle, Jr., Still Spearin After All These Years?, 12 Journal of the
American College of Construction Lawyers 1 (January 2018) (quoting Bruner &
O'Connor on Construction Law § 9.1 (West 2016)).
representation; and the owner's responsibility under it was not overcome by the
disclaimer clauses above quoted.").
III. Equitable Indemnity
Lend Lease also challenges the circuit court's finding under Stoneledge I that a
contractor's claims against an architect in a construction defect case are limited to
claims of equitable indemnity. Specifically, Lend Lease seeks to distinguish its
claims from those in Stoneledge I by noting the Stoneledge claims arose from the
relationship between a general contractor and subcontractor rather than the special
relationship between a general contractor and an architect. We see this as a
distinction without a difference.
In Addy v. Bolton, 257 S.C. 28, 183 S.E.2d 708 (1971), a foundational South
Carolina equitable indemnity case, the supreme court explained:
Ordinarily, if one person is compelled to pay damages
because of negligence imputed to him as the result of a
tort committed by another, he may maintain an action
over for indemnity against the person whose wrong has
thus been imputed to him; but this is subject to the
proviso that no personal negligence of his own has joined
in causing the injury.
Id. at 34, 183 S.E.2d at 710 (quoting North Carolina Elec. Power Co. v. French
Broad Mfg. Co., 105 S.E. 394, 396 (N.C. 1920)). The court concluded that in
indemnity actions, "brought where the duty to indemnify is either implied by law
or arises under contract, and no personal fault of the indemnitee has joined in
causing the injury, reasonable attorneys' fees incurred in resisting the claim
indemnified against may be recovered as part of the damages and expenses." Id.For a party to properly maintain an equitable indemnity claim, there must be a
sufficient relationship between the claimant and the party against which it seeks to
recover. See Town of Winnsboro v. Wiedeman-Singleton, Inc., 307 S.C. 128, 132,
414 S.E.2d 118, 121 (1992) ("A sufficient relationship exists when the at-fault
party's negligence or breach of contract is directed at the non-faulting party and the
non-faulting party incurs attorney fees and costs in defending itself against the
other's conduct."); Tommy L. Griffin Plumbing, 320 S.C. at 55, 463 S.E.2d at 89(holding a special relationship sufficient to create an extra-contractual duty of care
may exist between a general contractor and a design professional).
The circuit court's order granting summary judgment on Lend Lease's negligence
and warranty claims neither ignored nor misapplied Tommy L. Griffin Plumbing
because it did not defeat Lend Lease's ability to maintain its equitable indemnity
claim against Antunovich. Instead, the circuit court determined Lend Lease's
negligence and warranty claims failed as a matter of law because they are "nothing
more than equitable indemnity claims."
Conclusion
Due to the derivative nature of Lend Lease's negligence and breach of warranty
claims, the circuit court's order granting partial summary judgment in favor of
Antunovich is
AFFIRMED.
GEATHERS, J., and HILL, A.J., concur.