Dan Ryan Builders, Inc v. Crystal Ridge Development, Inc
Filing
PUBLISHED AUTHORED OPINION filed. Originating case number: 1:09-cv-00161-IMK-JSK. [999567628]. [13-2234]
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-2234
DAN RYAN BUILDERS, INC., a Maryland Corporation,
Plaintiff - Appellant,
v.
CRYSTAL
RIDGE
DEVELOPMENT,
INC.,
a
Corporation;
LANG
BROTHERS,
INC.,
a
Corporation; ROBERT S. LANG, an individual,
West
West
Virginia
Virginia
Defendants - Appellees,
v.
HORNOR BROTHERS ENGINEERS,
Third Party Defendant - Appellee,
and
BRYCO BORE & PIPE, INC.; LOUDOUN VALLEY CONCRETE,
DINGESS TRANSPORT, INC.; NORTH STAR FOUNDATION,
PENNSYLVANIA SOIL AND ROCK INCORPORATED,
INC.;
INC.;
Third Party Defendants.
Appeal from the United States District Court for the Northern
District of West Virginia, at Clarksburg.
Irene M. Keeley,
District Judge. (1:09-cv-00161-IMK-JSK)
Argued:
December 10, 2014
Decided:
Before MOTZ, GREGORY, and WYNN, Circuit Judges.
April 20, 2015
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Affirmed by published opinion.
Judge Motz wrote the majority
opinion, in which Judge Wynn joined.
Judge Gregory wrote a
separate opinion concurring in part and dissenting in part.
ARGUED: Avrum Levicoff, LEVICOFF, SILKO & DEEMER, P.C.,
Pittsburgh, Pennsylvania, for Appellant.
Tiffany R. Durst,
PULLIN, FOWLER, FLANAGAN, BROWN & POE, PLLC, Morgantown, West
Virginia, for Appellees. ON BRIEF: Julie A. Brennan, LEVICOFF,
SILKO & DEEMER, P.C., Pittsburgh, Pennsylvania, for Appellant.
Nathaniel D. Griffith, PULLIN, FOWLER, FLANAGAN, BROWN & POE,
PLLC, Morgantown, West Virginia, for Appellees Crystal Ridge
Development, Inc., Lang Brothers, Inc., and Robert S. Lang.
Frank E. Simmerman, Jr., Chad L. Taylor, SIMMERMAN LAW OFFICE,
PLLC, Clarksburg, West Virginia, for Appellee Hornor Brothers
Engineers.
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DIANA GRIBBON MOTZ, Circuit Judge:
After a bench trial in this diversity case, the district
court ordered Robert Lang and his construction business, Lang
Brothers, Inc. (collectively “Lang”) to pay Dan Ryan Builders,
Inc. (“Dan Ryan”) limited damages for breach of contract.
Ryan appeals, seeking additional damages.
Dan
We affirm.
I.
We
briefly
summarize
the
relevant
facts,
which
are
undisputed. 1
Lang owned seventy acres of land in West Virginia, on which
he
sought
to
Development.
build
In
a
2005,
housing
pursuant
development,
to
a
Lot
Crystal
Purchase
Ridge
Agreement
(“LPA”), Lang subdivided the land and contracted to sell Dan
Ryan
all
143
lots
in
Crystal
Ridge.
The
LPA
detailed
the
responsibilities of both parties, including lot inspection, fill
compaction, and building schedules.
The parties also entered into a number of other written
contracts
in
Contract
with
connection
Independent
with
the
Contractor
development,
(“fill
slope
including
a
contract”).
They agreed in that contract that Lang would construct a fill
1
Dan Ryan concedes that “[t]he district court’s findings of
fact are beyond reproach.” Appellant’s Br. 52. Similarly, Lang
does not challenge them in any way.
3
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slope that would provide grading on certain lots to accommodate
the construction of houses.
Lang completed the grading work and
was paid in full by Dan Ryan.
In 2006, Dan Ryan paid Lang for the first twelve lots in
accord with the LPA.
Dan Ryan also entered into additional
contracts with Lang including a second fill slope contract.
In
2007, Dan Ryan purchased another five lots, and Lang continued
to work on the infrastructure of the Crystal Ridge Development.
In March 2007, cracks appeared in the basement slab and
foundation walls of a partially constructed house on one of the
first lots that Dan Ryan had purchased.
An engineering firm
engaged by Dan Ryan concluded that stabilization of that house,
as well as of another house displaying similar cracks, required
remediation.
exacerbated
These
existing
problems
tensions
and
their
between
Dan
associated
Ryan
and
costs
Lang,
ultimately leading to a “divorce” (the parties’ term) between
the two.
The parties memorialized the divorce in the “First
Amendment to Lot Purchase Agreement” (the Amendment).
Under the
Amendment, Dan Ryan agreed to purchase from Lang the remaining
thirty-three lots in Crystal Ridge, and the parties’ development
responsibilities were apportioned differently.
In December 2007, the slope behind the lot that had first
exhibited cracks began sliding downhill toward a nearby highway.
A geotechnical study concluded that the slope had failed due to
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its natural composition, soil type, and poor construction.
Dan
Ryan also encountered difficulties related to Crystal Ridge’s
stormwater management system, development permits, and entrance
drive.
In December 2009, Dan Ryan filed this lawsuit against Lang
seeking monetary damages.
three causes of action.
In its complaint, Dan Ryan asserts
Initially and principally, Dan Ryan
alleges negligence by Lang in connection with construction of
the fill slope.
Second, Dan Ryan alleges that Lang breached
several of its contractual duties under both the LPA and the
Amendment.
The
third
cause
of
action
alleges
fraudulent
misrepresentation by Lang; Dan Ryan abandoned this last claim at
trial.
Following several pre-trial conferences and numerous pretrial
trial.
submissions,
The
the
court
district
admitted
court
many
held
a
exhibits
testimony from more than a dozen witnesses.
five-day
and
bench
considered
After extensive
post-trial submissions, 2 the court issued a detailed, ninety-page
order setting forth findings of fact and conclusions of law.
2
The court permitted the parties to submit up to eighty
pages of proposed findings of fact and conclusions of law.
After the deadline for these submissions had passed, Dan Ryan
moved for leave to file a supplemental post-trial memorandum.
The district court denied that motion.
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On the contract claim, the district court awarded Dan Ryan
$175,646.25 in damages and $77,575.50 in pre-judgment interest
for breach of the LPA and the Amendment with respect to claims
for repairs on the road leading to Crystal Ridge.
The court
found that Dan Ryan had failed to carry its burden of proof with
respect to other asserted breaches of the LPA and the Amendment,
i.e.,
those
relating
to
an
entrance
easement,
a
stormwater
management and erosion control system, and other “miscellaneous
J.A. 2353. 3
bad work.”
Accordingly, the court denied further
contract damages.
The district court then rejected Dan Ryan’s
negligence claim.
The court reasoned that this claim failed
under West Virginia’s “gist of the action” doctrine, which bars
recovery in tort when the duty that forms the basis of the
asserted
tort
relationship.
claim
arises
solely
from
a
contractual
Dan Ryan timely noted this appeal.
We “review a judgment following a bench trial under a mixed
standard of review -- factual findings may be reversed only if
clearly erroneous, while conclusions of law, including contract
construction, are examined de novo.”
Roanoke Cement Co. v. Falk
Corp., 413 F.3d 431, 433 (4th Cir. 2005).
On appeal, Dan Ryan
does not challenge the district court’s resolution of its claim
for breach of the LPA and the Amendment.
3
Rather, Dan Ryan
Citations to the “J.A.” refer to the Joint Appendix filed
by the parties to this appeal.
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appeals only the court’s determination that the “gist of the
action” doctrine bars its tort claim, and the court’s failure to
recognize that its tort claim was really a claim for breach of
the fill slope contracts. 4
II.
Dan Ryan offers two reasons why the district court erred in
its “gist of the action” holding.
We consider each in turn.
A.
First, citing Greenlaw v. United States, 554 U.S. 237, 243
(2008),
Dan
Ryan
contends
that
the
“principle
of
party
presentation” ought to have prevented the district court from
relying
on
presentation
the
“gist
principle
of
the
action”
generally
doctrine.
cautions
a
The
federal
party
court
to
consider only the claims and contentions raised by the litigants
before
it.
Dan
Ryan
asserts
that
the
party
presentation
principle applies here because neither it nor Lang raised the
“gist of the action” doctrine in submissions to the district
court.
Greenlaw is the Supreme Court’s most robust articulation of
the party presentation principle.
4
There, in language on which
The district court also dismissed as moot the derivative
claims Lang had brought against third-party defendant Hornor
Brothers Engineering for contribution. Dan Ryan does not appeal
that ruling.
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Dan Ryan rests its claim, the Court stated that “in the first
instance and on appeal, . . . we rely on the parties to frame
the issues for decision.”
Greenlaw, 554 U.S. at 243.
But
although Greenlaw paints the concept of party presentation in
broad
brushstrokes,
appellate
court
its
may
nonappealing party.”
holding
not
is
alter
much
a
narrower,
judgment
Greenlaw, 554 U.S. at 244.
i.e.,
to
“an
benefit
a
In fact, other
than in Greenlaw, the Court has invoked the party presentation
principle only twice, both times in stressing the limits of the
principle.
See Wood v. Milyard, 132 S.Ct. 1826, 1833-34 (2012)
(courts may sua sponte consider statute-of-limitations defenses
overlooked by the State in habeas cases); Arizona v. California,
530
U.S.
392,
preclusion
412-13
defense
(2000)
the
(courts
parties
may
failed
sua
to
sponte
raise
in
raise
a
special
circumstances).
Moreover, neither in Greenlaw nor in any other case has the
Court
ever
constrains
suggested
a
that
court’s
controlling law.
the
party
fundamental
presentation
obligation
to
principle
ascertain
A party’s failure to identify the applicable
legal rule certainly does not diminish a court’s responsibility
to apply that rule.
the
rule
of
law
The judiciary would struggle to maintain
were
it
limited
to
assertions about what the law requires.
well
established
that
“[w]hen
an
8
issue
the
parties’
competing
For this reason, it is
or
claim
is
properly
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before the court, the court is not limited to the particular
legal theories advanced by the parties, but rather retains the
independent power to identify and apply the proper construction
of governing law.”
90, 99 (1991).
a
“court
may
Kamen v. Kemper Fin. Servs., Inc., 500 U.S.
Thus, the Supreme Court has long recognized that
consider
an
issue
‘antecedent
to
.
.
.
and
ultimately dispositive of’ the dispute before it, even an issue
the parties fail to identify and brief.”
U.S. Nat’l Bank of Or.
v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 447 (1993)
(quoting
Arcadia
v.
Ohio
Power
Co.,
498
U.S.
73,
77
(1990)
(alterations in original)).
Here, West Virginia’s “gist of the action” doctrine is just
such an “antecedent” and “dispositive” issue, since it goes to
the duty element of any West Virginia tort claim.
The “gist of
the action” doctrine requires plaintiffs seeking relief in tort
to
identify
a
non-contractual
duty
breached
by
the
alleged
tortfeasor.
See Gaddy Eng’g Co. v. Bowles Rice McDavid Graff &
Love,
746
LLP,
S.E.2d
568,
577
(W.
Va.
2013).
“[T]he
determination of whether a plaintiff is owed a duty of care by a
defendant must be rendered by the court as a matter of law.”
Lockhart v. Airco Heating & Cooling, Inc., 567 S.E.2d 619, 622
(W. Va. 2002) (internal quotation marks and citation omitted).
To determine whether Dan Ryan established all of the required
elements of a tort claim under West Virginia law, the district
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necessarily
had
to
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consider
the
“gist
of
the
action”
doctrine and identify the source of any asserted duty.
We must therefore reject Dan Ryan’s contention that the
party
presentation
adjudicating
a
principle
West
barred
Virginia
the
tort
district
claim,
from
court,
when
considering
whether the elements of such a claim had been met. 5
B.
Dan Ryan also contends that the district court erred in
holding that the “gist of the action” doctrine dooms its tort
claim.
This contention is meritless.
Given that Dan Ryan’s
tort claim rests on Lang’s asserted negligence in performing two
contracts –- the LPA and the Amendment –- and not on any duty
independent
of
those
contracts,
the
“gist
of
the
action”
doctrine does indeed bar that claim.
“To prevail in a negligence suit, the plaintiff must prove
by a preponderance of the evidence that the defendant owed a
5
We note that third-party defendant Hornor Brothers
Engineering did develop the “gist of the action” doctrine in its
post-trial submissions to the district court. See J.A. 2186-88
(“[T]ort liability cannot arise from a breach of contractual
duty. . . . [T]he principle is that if a defendant would have
no duty of care to plaintiff but for the fact that the parties
have a contract, no independent professional negligence claim
may be maintained.” (citing Lockhart, 567 S.E.2d 619, and other
relevant West Virginia cases)). In so doing, Hornor alerted the
court (and other parties) to the principle and its application
to this case.
Accordingly, this is hardly a case in which a
court has “sall[ied] forth . . . looking for wrongs to right.”
Greenlaw, 554 U.S. at 244 (internal quotation marks and citation
omitted).
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legal duty to the plaintiff.”
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Strahin v. Cleavenger, 603 S.E.2d
197, 205 (W. Va. 2004) (emphasis added).
action”
doctrine,
a
party
to
a
Under the “gist of the
contract
can
prevail
on
a
negligence claim only if he can demonstrate “the breach of some
positive legal duty imposed by law because of the relationship
of the parties, rather than from a mere omission to perform a
contract obligation.”
Lockhart, 567 S.E.2d at 624 (internal
quotation marks and citation omitted). 6
negligence
“action
in
tort
existence of the contract.”
citation omitted).
[must]
Id.
arise
In other words, the
independent
of
the
(internal quotation marks and
“If the action is not maintainable without
pleading and proving the contract, where the gist of the action
is the breach of the contract, either by malfeasance or nonfeasance,
whatever
it
is,
in
may
be
the
Appalachian
Power
substance,
Co.,
form
246
of
an
the
S.E.2d
action
on
the
pleading.”
624,
628
contract,
Cochran
(W.
Va.
v.
1978)
(internal quotation marks and citation omitted).
6
This requirement -- that a tort claim must rest on a noncontractual duty -- is hornbook law in most jurisdictions, even
if they do not employ the “gist of the action” nomenclature.
See Black’s Law Dictionary (10th ed. 2014)(defining “tort” as
“[a] civil wrong, other than breach of contract, for which a
remedy may be obtained, . . . a breach of a duty that the law
imposes”); Restatement (Third) of Torts:
Liab. for Econ. Harm
§ 3 (Tentative Draft No. 1, 2012) (explaining the general rule
that “there is no liability in tort for economic loss caused by
negligence in the performance or negotiation of a contract
between the parties”).
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Only two years ago, in Gaddy, the West Virginia Supreme
Court of Appeals reiterated this requirement.
There, the court
unequivocally held that a plaintiff cannot recover in tort if
the complaint does no more than include “the bare bones averment
that
‘Defendants
negligently
with’ [the plaintiff].”
.
.
.
breached
their
746 S.E.2d at 577.
agreement
Here, a “bare
bones” recitation is all that the Amended Complaint offered with
respect to the fill slope claims:
Lang
“negligently
development
performed
obligations
under
or
the
Dan Ryan alleged only that
failed
LPA
to
and
substantial damage to [Dan Ryan]’s property.”
perform
various
Amendment
causing
J.A. 47 ¶ 39.
Gaddy further explains, in words that resonate here, that
recovery in tort will be barred if any of the following factors
is demonstrated:
contractual
“(1) where liability arises solely from the
relationship
between
the
parties;
(2)
when
the
alleged duties breached were grounded in the contract itself;
(3) where any liability stems from the contract; and (4) when
the tort claim essentially duplicates the breach of contract
claim or where the success of the tort claim is dependent on the
success of the breach of contract claim.”
577.
Gaddy, 746 S.E.2d at
Here, of course, Dan Ryan specifically alleges that Lang’s
liability for “negligent[] perform[ance]” of two contracts -the LPA and the Amendment -- caused its damages, and thus that
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its tort claim asserting negligence in constructing the fill
slope arises from these contracts.
In
its
briefing
on
appeal,
Dan
Ryan
additional source of Lang’s supposed duty:
duty of care owed by a contractor.”
points
to
one
“[t]he common law
Appellant’s Br. 30.
But
if, as Dan Ryan contends, “the gravamen of the breach was the
failure to construct the fill slope in a good and workmanlike
manner,” id. at 31, Lang breached not an independent legal duty
but an implied warranty arising out of –- in fact, created by -the LPA and the Amendment.
See Thacker v. Tyree, 297 S.E.2d
885, 887 (W. Va. 1982) (“In the area of construction contracts,
. . . there is general recognition that an implied warranty of
fitness and workmanlike quality attaches to such contracts.”).
In
sum,
plaintiff’s
this
claims
is
precisely
are
“simply
masquerading as” tort claims.
the
kind
breach
of
of
case
in
contract
which
claims
Gaddy, 746 S.E.2d at 577.
See
also Covol Fuels No. 4, LLC v. Pinnacle Mining Co., LLC, No. 141395,
Slip
doctrine
Op.
at
applicable
25
(4th
where
Cir.
party’s
2015)
(gist
tort
claims
[its] claim for breach of contract”).
of
the
action
“simply
recast
The district court did
not err in invoking the “gist of the action” doctrine, and in
concluding that Dan Ryan’s “negligence” claim was actually a
claim for breach of contract.
Thus, Dan Ryan’s negligence claim
fails as a matter of law.
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III.
Alternatively, Dan Ryan now seeks damages under contract
claims never alleged or even asserted before the district court.
Specifically, Dan Ryan contends that the district court should
have
awarded
it
damages
for
a
breach
of
the
fill
slope
contracts.
Nowhere in its pleadings did Dan Ryan assert such a claim.
The district court pointed out that Dan Ryan did not reference
the fill slope contracts in its original complaint.
Indeed,
neither Dan Ryan’s Amended Complaint, nor its pre-trial listing
of contested issues of fact and law, nor its seventy-eight-page
post-trial proposed findings of fact and conclusions of law even
mentions the fill slope contracts -- let alone alleges that Lang
breached them.
Dan Ryan concedes, as it must, that this is so.
Nevertheless, Dan Ryan maintains that “the absence of explicit
reference to the [fill slope contracts] in the pleadings is of
no consequence,” because a claim as to breach of those contracts
was tried by consent, as permitted by Federal Rule of Civil
Procedure 15(b)(2).
That
Rule
Appellant’s Br. 48.
provides
that
“an
issue
not
raised
by
the
pleadings” will be treated as if it were raised, provided it is
“tried by the parties’ express or implied consent.”
Civ. P. 15(b)(2).
Fed. R.
Of course, Rule 15(b)(2) does not offer a
failsafe for any and every faulty pleading.
14
Rather, the Rule
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sets forth “an exception to the general rules of pleading . . .
when the facts proven at trial differ from those alleged in the
complaint, and thus support a cause of action that the claimant
did not plead.”
Gilbane Bldg. Co. v. Fed. Reserve Bank of
Richmond, 80 F.3d 895, 901 (4th Cir. 1996).
notice
to
the
defendant
of
the
allegations
But “[b]ecause
to
be
proven
is
essential to sustaining a cause of action, Rule 15(b) applies
only when the defendant has consented to trial of the non-pled
factual issues and will not be prejudiced by amendment of the
pleadings to include them.”
Id. (emphasis added).
Thus, Rule
15(b)(2) requires that a party expressly or impliedly consent to
trial on an unpled claim and not be prejudiced by doing so.
Dan
Ryan cannot satisfy the Rule’s requirements.
First,
the
record
offers
no
support
for
Dan
Ryan’s
assertion on appeal that Lang expressly consented to trial of
any claim of breach of the fill slope contracts.
Dan Ryan
maintains
Lang
did
pre-trial
contested
issues
of
so
fact,
by
including,
the
question
among
of
its
whether
“the
Lang
Defendants [are] liable to [Dan Ryan] for breach of contract in
relation to” the fill slope contracts.
J.A. 305.
But Lang’s
single reference to a breach of the fill slope contract in its
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pre-trial memorandum does not constitute consent. 7
This pre-
trial submission demonstrates only that Lang regarded breach of
the fill slope contracts as a potential issue, which might be
raised by Dan Ryan at trial.
Dan Ryan mistakes Lang’s caution
in this regard for consent.
In fact, as early as the final pretrial conference, Lang
pointed
out
the
absence
of
any
reference
contracts in the Amended Complaint.
to
the
fill
slope
Lang’s counsel specifically
noted that “there were additional agreements” that “were not
attached as exhibits to the complaint” and distinguished the
obligations in those unpled contracts from the obligations in
the
LPA
and
the
contract claims.
Amendment,
on
which
J.A. 380-81.
Dan
Ryan
did
rest
its
Similarly, in its post-trial
submission, Lang noted that although the fill slope contracts
were
introduced
as
evidence
at
trial,
they
were
not
“even
mentioned anywhere within the Complaint or Amended Complaint”
and so could not provide Dan Ryan with a basis for recovery.
Far
from
consenting
to
trial
of
unpled
issues,
then,
Lang
consistently and expressly disclaimed any consent to trial on
the unpled claim of breach of the fill slope contracts.
7
We have said as much before.
See Interstate Petroleum
Corp. v. Morgan, 249 F.3d 215, 221 (4th Cir. 2001) (en banc)
(noting that even where an issue was “discussed on occasion
during the course of [the] case,” that alone did not establish
trial by consent).
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Moreover, in Dan Ryan’s own submissions to the district
court
it
Rather,
confirmed
when
expressly
Dan
that
Ryan
identified
it
did
raised
the
not
advance
contract
pertinent
such
claims
contracts
a
at
that
claim.
trial,
formed
it
the
source of the asserted breach -- the LPA and the Amendment -not the fill slope contracts.
Furthermore, after trial, in its
proposed findings of fact and conclusions of law, Dan Ryan set
forth in numbered paragraphs each of the damage awards sought
for breach of the LPA and the Amendment.
Dan Ryan did not
devote a numbered paragraph to any damage claim under the fill
slope contracts.
Dan Ryan did not propose that the district
court find that Lang breached the fill slope contracts.
And Dan
Ryan did not ask the district court to hold that Lang had any
specific obligations arising out of the fill slope contracts.
In sum, Dan Ryan’s own statements about the theory of its
case,
as
well
as
its
repeated
omission
of
the
now-asserted
breach of the fill slope contracts from any argument at trial or
post-trial confirm what Lang’s submissions make clear:
Lang did
not consent to trial of claims for breach of the fill slope
contracts.
See Pinkley, Inc. v. City of Frederick, 191 F.3d
394, 401 (4th Cir. 1999) (when a party “sets out in [a list of]
numbered paragraphs . . . its legal theories for recovery,” its
omission
of
a
particular
legal
theory
from
those
numbered
paragraphs militates against a finding of trial by consent); see
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also Elmore v. Corcoran, 913 F.2d 170, 173 (4th Cir. 1990).
Accordingly,
Dan
Ryan
did
not
put
Lang
on
notice
of
any
potential liability under those contracts.
Moreover, Dan Ryan cannot establish Lang’s implied consent
by demonstrating that evidence at trial clearly supported only
this unpled claim.
We have previously explained that admission
without objection of evidence related to the unpled claim may be
“an indicium of implied consent” to trial of that claim.
v. Stevens, 617 F.2d 1038, 1040 (4th Cir. 1980).
McLeod
But if that
evidence is also “germane” to claims expressly in the pleadings,
its admission “cannot be treated as implied consent” to trial of
the unpled claim.
Id. at 1040-41.
Accord, Trinity Carton Co.
v. Falstaff Brewing Corp., 767 F.2d 184, 193 (5th Cir. 1985);
see also 6A Charles Alan Wright & Arthur R. Miller, Federal
Practice & Procedure § 1493 (3d ed. 2014).
Dan Ryan contends that consent to trial of a breach claim
under the fill slope contracts may be implied from its evidence
related generally to the slope failure and from the admission of
the two fill slope contracts themselves.
But evidence of the
slope failure was admitted in support of the claim that Lang
negligently constructed the slopes, not that it breached the
18
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fill slope contracts. 8
to
an
asserted
Pg: 19 of 27
Accordingly, the evidence was “germane”
tort
claim
actually
present
in
Dan
Ryan’s
pleadings and cannot establish trial by consent of a phantom
contract claim.
Admission of the fill slope contracts, without
more, cannot establish consent to trial of a claim that those
contracts were breached.
Moreover, Lang would undoubtedly be prejudiced if we were
to accept Dan Ryan’s contention on appeal that the opposite is
true.
See
Withrow
v.
Williams,
507
U.S.
680,
696
(1993)
(holding that where the record “reveals neither thought, word,
nor deed . . . that could be taken as any sort of consent” to
trial
of
an
unpled
claim,
the
party
“was
manifestly
prejudiced”).
Dan Ryan had opportunities before, during, and after trial
to clarify its contract claims against Lang. 9
Yet at none of
8
Nor does the district court’s observation that Lang
“failed to live up to its contractual obligations” under the
fill slope contracts establish that breach of those contracts
was tried by consent.
J.A. 2375.
For the court had earlier
identified the LPA and the Amendment as the sole bases for all
breach of contract claims alleged by Dan Ryan.
See J.A. 232456.
Further, the court explained that any “[m]ention of the
Fill Slope Contract[s] was conspicuously absent from” Dan Ryan’s
complaint. J.A. 2373. Thus the court was clear that the claims
Dan Ryan might have alleged are distinct from the claims it
actually did allege.
9
Dan Ryan repeatedly failed to clarify the precise claims
under which it sought relief and the specific evidence
supporting each claim.
Examination of the trial transcript
(Continued)
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these junctures did Dan Ryan contend that Lang breached the fill
slope contracts.
The omission of the claim at one of these
stages in the litigation –- in the amended complaint, or in the
pre-trial submissions, or in the presentation of the theory of
the
case,
or
in
the
post-trial
submissions
–-
might
evince
inadvertence and so allow the district court to consider the
claim.
But the repeated omission of the claim permits only one
conclusion:
Dan Ryan’s now-asserted claim that Lang breached
the fill slope contracts was not tried by consent, it was simply
omitted. 10
IV.
This is a messy case, spanning four years and thousands of
pages
of
trial
submissions.
During
the
course
of
such
reveals the district court’s frustration with Dan Ryan’s
haphazard submissions throughout the trial. For example, in an
order issued after trial, the court instructed that “Dan Ryan
shall clarify, within its proposed findings of fact and
conclusions of law/post-trial legal memorandum, or in an
attachment thereto, which of its claimed damages flow from its
breach of contract theory and which flow from its negligence
theory.”
Summ. Order 4, Aug. 30, 2012, ECF No. 249.
But Dan
Ryan utterly failed to do this.
10
In the alternative, we hold that Dan Ryan has waived any
breach of contract claim based on the fill slope contracts. See
Helton v. AT&T Inc., 709 F.3d 343, 360 (4th Cir. 2013) (holding
that appellant’s argument not raised during a bench trial or in
proposed findings of fact and conclusions of law is waived on
appeal).
20
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protracted
sight
of
Filed: 04/20/2015
litigation,
the
parties
necessity
of
Pg: 21 of 27
must
be
pleading
vigilant
and
not
proving
all
to
lose
of
the
elements of each cause of action.
The
district
court
properly
dismissed
Dan
Ryan’s
tort
claim, alleging negligence in construction of the fill slope,
because Dan Ryan rested that claim solely on asserted breach of
two contracts -- the LPA and the Amendment.
We now hold that
Dan Ryan never alleged, and the parties never consented to trial
on, a claim of breach of the fill slope contracts.
Contrary to
Dan Ryan’s contention, this result does not unfairly penalize it
for a purely formal error.
Rather, it simply holds Dan Ryan to
the requirements of the law.
A claim grounded on breach of
contract (here, the LAP and the Amendment) does not give rise to
tort liability, and a claim never pled (here, breach of the fill
slope contracts) will not be regarded as pled unless actually
tried
by
consent.
These
are
the
only
fair
standards,
for
without them litigants and courts alike would be unable to ever
adequately prepare for trial.
against
shadow
claims,
and
Parties would be forced to defend
trial
courts
would
be
forced
to
search, as for a needle in a haystack, for unpled causes of
action purportedly hiding in the parties’ submissions.
It
through
is
not
the
ambiguously
responsibility
or
of
incorrectly
a
trial
labeled
court
allegations
pursuit of any potential basis for awarding relief.
21
to
wade
in
In the case
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at hand, the district court did a commendable job of sorting
through a museum of non-sequiturs to identify the plaintiff’s
meritorious claims.
Notwithstanding Dan Ryan’s dissatisfaction
with the resulting judgment, it is clear that the district court
committed no error.
The judgment of the district court is
AFFIRMED.
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GREGORY, Circuit Judge, concurring in part and dissenting in
part:
Dan Ryan Builders, Inc. (“Dan Ryan”) contracted with Robert
Lang
and
his
construction
business,
Lang
Brothers,
Inc.
(collectively “Lang”) to fix the steep gradation of a portion of
land that would not have otherwise supported the construction of
homes.
Lang
botched
the
job,
$1,722,104.91 to fix it. *
elements
of
a
breach
of
and
Dan
Ryan
had
to
pay
The district court found all the
contract:
that
the
contract
was
enforceable, J.A. 2369 n.43, that Dan Ryan paid Lang in full for
the
work,
J.A.
2307,
and
that
Lang
“[u]nquestionably
. . .
failed to live up to its contractual obligations, and [Dan Ryan]
suffered damages as a result,” J.A. 2375.
Yet, because Dan Ryan
did not formally amend its complaint to name one of the several
contracts at issue, the district court allowed Lang to escape
liability.
I cannot agree with this inequitable result, which
is
what
exactly
Rule
15(b)
of
the
Procedure was designed to prevent.
Federal
Rules
of
Civil
I therefore must dissent
from Part III of my good colleagues’ opinion.
Rule 15(b) allows liberal amendment of the pleadings to
conform to the evidence presented at trial.
*
See Equal Emp’t
This figure is based on Dan Ryan’s post-trial submission
asserting that expenses related to the slope remediation totaled
$1,772,104.91 before prejudgment interest.
Pl.’s Proposed
Findings of Fact and Conclusions of Law at 70, ECF No. 256.
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Opportunity Comm’n v. Gen. Elec. Co., 532 F.2d 359, 367 n.17
(4th
Cir.
required.
1976).
Formal
amendment,
however,
See Fed. R. Civ. P. 15(b)(2).
is
not
always
“When an issue not
raised by the pleadings is tried by the parties’ express or
implied consent, it must be treated in all respects as if raised
in the pleadings,” and “failure to amend does not affect the
result of the trial of that issue.”
Id.
This liberalism was
meant to obviate the necessity of a new trial every time an
opposing party points to a technical deficiency in pleading.
See 6A Fed. Prac. & Proc. Civ. § 1491 (3d ed. 2014) [hereinafter
Fed. Prac. & Proc.]; see also Deere & Co. v. Johnson, 271 F.3d
613, 621 (5th Cir. 2001) (“As has been often said, the principal
purpose of Rule 15(b) is judicial economy.”).
In fact, the rule
has always been construed to promote resolution of cases on the
merits, rather than on the pleading skills of counsel.
Prac.
&
Proc.
litigants
and
§ 1493.
the
courts
In
other
“avoid
words,
the
Rule
tyranny
of
See Fed.
15(b)
helps
formalism.”
Kirkland v. District of Columbia, 70 F.3d 629, 634 (D.C. Cir.
1995); Dunn v. Ewell (In re Santa Fe Downs, Inc.), 611 F.2d 815,
817 (10th Cir. 1980).
The
majority
insists
on
formalism,
finding
no
implied
consent to try the issue of whether Lang breached the Fill Slope
Contract.
trial.
However, this was the entire gravamen of the five-day
We may find implied consent where the defendant:
24
1)
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fails to object to evidence relating to the unpleaded issue; 2)
actually produces evidence bearing on the issue; or 3) offers
direct arguments contesting the issue.
See Fed. Prac. & Proc.
§ 1493; see also McLeod v. Stevens, 617 F.2d 1038, 1040 (4th
Cir. 1980) (finding admission of evidence without objection an
indicium of implied consent).
here.
Even
mention
of
though
the
Dan
Fill
All three criteria are present
Ryan’s
Slope
post-trial
Contract,
Lang
submission
did
not
omitted
object
to
introduction of the contract into evidence, and the issue also
had
been
teed
statement.
up
since
at
least
the
parties’
pre-trial
Dan Ryan specified in its brief statement of its
claims that “the Lang Defendants owed legal duties to [Dan Ryan]
from four separate and distinct contractual undertakings.”
293-94.
J.A.
Dan Ryan’s theory was unambiguously that Lang breached
these duties by “[i]mproper placement and compaction of fill
material.”
in
its
own
J.A. 294.
section
Lang confronted these arguments head on
of
the
pre-trial
statement:
“The
Defendants did not breach any contract with [Dan Ryan].”
296.
Lang
J.A.
Lang’s theory was that even if it had followed proper
construction practices, “the slope would have still failed due
to a layer of colluvium in the soil.”
J.A. 301.
It thus sought
to place the blame on Horner Brothers Engineering, which Lang
alleged drew up lot grading plans that did not take into account
certain soil properties.
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In
this
Filed: 04/20/2015
way,
Lang
was
Pg: 26 of 27
fully
prepared
to
litigate,
and
indeed litigated in substance, whether it was “liable to [Dan
Ryan] for breach of contract in relation to [the Fill Slope
Contract].”
proposed
J.A. 305 (contested issue from pre-trial statement
by
Lang).
During
the
trial,
“[t]he
experts
all
agree[d] that [Lang Brothers Inc.] did not employ the standard
construction practices that, if applied in the first instance,
would have ensured the slope’s stability.”
J.A. 2374 n.44.
It
turns out that Lang built the fill slope based on rudimentary
drawings
that
were
never
meant
to
serve
engineering plans and specifications.
as
a
full
set
of
Lang did not ensure the
slope foundation was built according to the proper ratio, and
did not install the appropriate draining system, among other
failings.
Basically, Lang picked up dirt from one part of the
development and set it on top of another.
The district court
had no trouble ascertaining that, according to the “credible
evidence,”
Lang’s
“poor
construction
proximate cause of the slope failure.”
practices
were
the
sole
J.A. 2374 n.44.
This is not a case where the evidence “incidentally tends”
to
establish
that
Lang’s
shoddy
construction
contractual duty to build a viable fill slope.
City
of
Frederick,
determining
whether
191
F.3d
394,
401
an
issue
has
been
(4th
tried
breached
a
Pinkley, Inc. v.
Cir.
by
1999).
In
consent,
we
rightly should be concerned with the defendant’s potential lack
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of opportunity to defend against a new allegation.
But here, in
addition to Lang having had adequate notice of just what was at
issue,
treating
the
Fill
Slope
Contract
as
if
it
included in the pleadings in no way prejudices Lang.
had
been
Prejudice
occurs, like in the Withrow case cited by the majority, where
there
is
present
“failure
evidence
to
afford
bearing
on
[a
that
litigant]
[new]
an
opportunity
claim’s
Withrow v. Williams, 507 U.S. 680, 696 (1993).
even
claim
any
potential
prejudice,
perhaps
to
resolution.”
Lang does not
because
it
must
admit that inclusion of the Fill Slope Contract in Dan Ryan’s
complaint would not have compelled presentation of any different
evidence, or reliance on any alternative theory of defense.
Given the ample notice, implied consent, and utter lack of
prejudice to Lang, I would reverse the district court and find a
breach of the Fill Slope Contract.
27
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