CITIZENS INSURANCE COMPANY OF AMERICA v. MANVILLE

Filing 97

ORDER - on Pending Motions for Summary Judgment - We GRANT Johns Manville's Motion 68 for Partial Summary Judgment, and Count I of the Complaint accordingly is dismissed. We DENY Citizens's Motion for Summary Judgment 50 . Trial on Citizens's breach of warranty claim against Johns Manville shall proceed in due course as will Johns Manville's claim against Third Party Defendant Richmond Guttering Company. Signed by Judge Sarah Evans Barker on 4/9/2013. (CKM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

CITIZENS INSURANCE COMPANY OF
AMERICA a Michigan Corporation, as
Subrogee of Anderson University, Inc.,

)
)
)
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Plaintiff,
)
)
vs.
)
)
JOHNS MANVILLE a Delaware
)
Corporation,
)
)
Defendant.
)
___________________________________ )
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JOHNS MANVILLE, a Delaware
)
Corporation,
)
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Third-Party Plaintiff
)
)
vs.
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RICHMOND GUTTERING COMPANY,
)
)
Third-Party Defendant. )

No. 1:11-cv-01263-SEB-TAB

ORDER ON PENDING MOTIONS FOR SUMMARY JUDGMENT

This cause is before the Court on the Motion for Summary Judgment [Docket No.
50] filed by Plaintiff, Citizens Insurance Company of America (“Citizens”) on July 18,
2012, and the Motion for Partial Summary Judgment [Docket No. 68], filed by Defendant
and Third-Party Plaintiff, Johns Manville on October 24, 2012. Citizens seeks to recover
1

from Johns Manville under both breach of warranty and negligence theories, via its
subrogation rights, the amounts it paid under a property insurance policy for damages to
the Flagship Enterprise Center located in Anderson, Indiana. Johns Manville, in turn, has
moved for partial summary judgment solely on Citizens’s negligence claim arguing that it
is barred by the economic loss doctrine and the terms of the Johns Manville Guarantee.
Johns Manville also opposes Citizens’s motion as to the breach of warranty claim
contending that genuine issues of material fact remain as to the cause of the roof damage
at issue, thus precluding summary judgment. For the reasons detailed in this entry, we
DENY Citizens’s motion and GRANT Johns Manville’s motion. Trial will proceed on
Citizens’s breach of warranty claim.
Factual Background
The Flagship Enterprise Center
In 2009, the City of Anderson, Indiana, and Anderson University collaborated to
build the Flagship Enterprise Center, a technology based business accelerator. The
80,000 square foot building was created for use by fledgling entrepreneurs for light
manufacturing and prototyping. At all times relevant to this litigation, the Flagship
Enterprise Center was insured under Anderson University’s property policy issued by
Citizens.
Mike Montgomery, an architect with the architecture firm krM Architecture
(“krM”), performed as the architect of the Flagship Enterprise Center. krM provided
design services, prepared the schematic design and all of the construction documents, and
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was also oversaw the construction administration of the project. The firm designed the
Flagship Enterprise Center without a vapor barrier under the roof components and also
designed the HVAC system without a dehumidification component.1 krM specified that
the roof for the Flagship Enterprise Center would be a fully adhered TPO roofing system
with a water-based adhesive. krM approved Johns Manville as the supplier of the roof
system, but concedes that it did not read the Johns Manville product literature before
doing so.
Meyer Najem was hired as the general contractor on the Flagship Enterprise
Center project. As general contractor, Meyer Najem hired subcontractors to construct
and install various components of the building, including the roof. The Richmond
Guttering Company (“Richmond Guttering”) was hired to waterproof the building’s flat
roof. krM provided specifications for the installation of the roof, which it expected
Meyer Najem and its subcontractors, including Richmond Guttering, to follow.
However, although the krM roof specifications required a “Pre-Installation Roofing
Conference,” no such conference ever occurred.
Roof Installation
In August 2010, Richmond Guttering began its roofing work on the Flagship
Enterprise Center, installing a Johns Manville thermoplastic polyolefin (TPO) roofing

1

The design drawings for the HVAC system were not stamped by a professional engineer.
3

system2 on the building. Only Johns Manville “Approved Roofing Contractors” are
approved to install Johns Manville’s TPO roofs and Richmond Guttering was approved
by Johns Manville to install TPO roofing systems. One of the benefits of being an
Approved Roofing Contractor is the access it provides to a wide range of Johns Manville
products. Additionally, only Approved Roofing Contractors may apply for a Johns
Manville guarantee for the building owner.
By the time Richmond Guttering began to perform its roofing work, the precast
concrete walls, the steel girders, and most of the steel roof decking were all already in
place. By August 17, 2010, Richmond Guttering began installing the first layer of the
roof structure, which was the polyiso board, starting on the west end of the roof. On
August 31, 2010, the concrete contractor began pouring a section of the 80,000 square
foot concrete slab floor. On that same day, Richmond Guttering installed wood blocking,
or nailer board, on the metal roof decking as well as up and over the sides of the parapet
walls. Neither the nailer board nor the fasteners used to attach the nailer boards to the
parapet wall were Johns Manville products. Roger Allen of Richmond Guttering testified
that Richmond Guttering personnel improperly installed the nailer boards by failing to
fasten some of the boards to the roof deck.

2

According to the Johns Manville website, TPO roofing systems combine plastic and rubber to
create a reliable, cost effective, and environmentally friendly commercial roofing system that is
easy to install. Johns Manville’s TPO membranes “are reinforced with a polyester fabric and
manufactured using an ultraviolet-resistant thermoplastic polyolefin formulation.” TPO
Information Sheet.
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By September 4, 2010, Richmond Guttering had completed installation of the field
membrane and the parapet wall flashing, and was in the process of installing the coping
over the top of the flashing. None of the coping components were Johns Manville
products. After Richmond Guttering finished this portion of the roof installation, the
remainder of the concrete slab floor was poured and permitted to cure. The concrete
contractor poured portions of the concrete slab floor on September 4, September 20, and
September 29, 2010. The entire floor was poured by September 30, 2010. The
installation of windows and doors in the Flagship Enterprise Center was completed by
October 27, 2010, at which point the building was fully enclosed. Concrete reaches
design strength in approximately 28 days, but it continues to cure, meaning that water
continues to evaporate from the concrete, for some time after that. Thus, by the time the
building was fully enclosed, the concrete had not yet reached design strength or finished
curing.
On November 30, 2010 and December 1, 2010, Johns Manville’s Senior Technical
Service Representative Dean Kepler visited the site to inspect the Flagship Enterprise
roof in order to ensure that the roofing system was being installed to Johns Manville’s
standards. Generally, installation of a fully adhered Johns Manville TPO roofing system
involves, first, the fastening of insulation to the roof deck, and second, the use of
adhesive to attach a membrane to the insulation. Johns Manville will not guarantee
roofing systems that it has not inspected. Johns Manville also requires that Approved
Roofing Contractors provide the roof plans before any guarantee is issued. Johns

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Manville’s records reflect that it received the roofing plans for the Flagship Enterprise
Center.
Johns Manville Peak Advantage Guarantee
Following the inspections and Johns Manville’s receipt of the roofing plans,
Richmond Guttering paid Johns Manville $8,950 to issue to Anderson University a 20
year “Peak Advantage Guarantee” on the Flagship Enterprise Center’s roofing system
(“the Guarantee”). The Guarantee provided that Johns Manville promised to pay for the
materials and labor required to repair the roofing system if any leaks occurred due to
deficiencies either in the component materials or in the application of the roofing system.
Specifically, the Guarantee provided in relevant part as follows:
Johns Manville [hereinafter “JM”] guarantees to the original
Building Owner that during the Term commencing with the
Date of Completion, JM will pay for the materials and labor
required to promptly repair the Roofing System to return it to
a watertight condition if leaks occur due to: ordinary wear
and tear; or deficiencies in any or all of the component
materials of the Roofing System, or workmanship
deficiencies in the application of the Roofing System.
Pl.’s Exh. 9.
The Guarantee contained certain exclusions, including:
LIMITATIONS AND EXCLUSIONS
…
THE EXCLUSIVE RESPONSIBILITY AND LIABILITY
OF JM UNDER THIS GUARANTEE IS TO MAKE
REPAIRS NECESSARY TO MAINTAIN THE ROOFING
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SYSTEM IN A WATERTIGHT CONDITION IN
ACCORDANCE WITH THE OBLIGATIONS OF JM
UNDER THIS GUARANTEE.
JM AND ITS AFFILIATES WILL NOT BE LIABLE FOR
ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
TO THE BUILDING STRUCTURE (UPON WHICH THE
ROOFING SYSTEM IS AFFIXED) OR IT’S [sic]
CONTENTS, LOSS OF TIME OR PROFITS OR ANY
INCONVENIENCE. JM AND ITS AFFILIATES SHALL
NOT BE LIABLE FOR ANY DAMAGES WHICH ARE
BASED UPON NEGLIGENCE, BREACH OF
WARRANTY, STRICT LIABILITY OR ANY OTHER
THEORY OF LIABILITY OTHER THAN THE
EXCLUSIVE LIABILITY SET FORTH IN THIS
GUARANTEE.
…
Because JM does not practice Engineering or Architecture,
neither the issuance of this Guarantee nor any review of the
Building’s construction or inspection of roof plans (or the
Building’s roof deck) by JM representative shall constitute
any warranty by JM of such plan, specifications, and
construction or in any way constitute an extension of the
terms and conditions of this Guarantee. Any roof inspections
are solely for the benefit of JM.
Id.
Under the guarantee, Anderson University was obligated to notify Johns Manville
within 30 days of the discovery of any leak. Id.
Initial Problems with Water Damage
Within two months of final installation and acceptance of the roof, water damage
began to occur. On January 2011, Anderson University notified Meyer Najem of water
damage to ceiling tiles in the office section of the Flagship Enterprise Center.

7

Approximately one month later, in February 2011, the University notified Meyer Najem
of additional water damage to ceiling tiles in the same area of the building. Personnel
from Meyer Najem and Richmond Guttering inspected the roof at that time, but did not
find any leaks in the roof. However, the inspection revealed the parapet wall pulling
away from the roof decking, as well as moisture on the exterior walls of the building. In
March 2011, Richmond Guttering and Meyer Najem personnel removed portions of the
coping surrounding the roof because they believed that the water damage was being
caused by winds blowing rain up under the coping of the parapet wall rather than from
leaks through the roof. Johns Manville was neither involved in nor informed of the
investigation of the January and February water damage and the disassembly of the
coping.
Not until late March 2011, was Johns Manville first notified of the leaks and, upon
inspection, identified a condensation issue that in its judgment was causing the water
damage. Specifically, moisture was discovered between the roof membrane and the
polyiso board. Mr. Kepler, Johns Manville’s Senior Technical Representative, testified
that he believed the lack of a vapor barrier in the building allowed moisture from inside
the building to infiltrate the roof system. Mr. Montgomery, the architect for the Flagship
Enterprise Center agreed that there was vapor condensation on the bottom of the TPO
membrane and testified that it was possible that the moisture came from the curing of the
concrete slab floor.
Roof Failure During Wind Event
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On April 3, 2011, during a strong wind event, the TPO membrane on the Flagship
Enterprise Center began to separate from the roof structure. Richmond Guttering official
Jeff Vargo testified that “[t]he membrane was under pressure, elevated and billowing
along the parapet wall. And at least 6,000 or 7,000 square feet was up in the air … it was
almost as if it were inflated.” Vargo Dep. at 47. Shortly thereafter, a large section of the
TPO roof material completely “unadhered” from the structure and the TPO ended up
hanging over the side of the Flagship Enterprise Center. As an immediate response, the
general contractor’s employees and the staff at the Center placed tarps and plastic on the
roof and inside the building in an attempt to limit the intrusion of water.
The next day, on April 4, 2011, Johns Manville was contacted about the incident.
On April 5, 2011, Mr. Kepler, who on two previous occasions had inspected the
installation process, returned to survey the damage to the roofing system. On April 7,
2011, Meyer Najem advised Richmond Guttering that the temporary fix of tarping and
plastic sheeting was not keeping rainwater out of the building and that the Flagship
Enterprise Center was continuing to be damaged. Pursuant to Johns Manville’s
guarantee, Anderson University requested that a Johns Manville certified installer repair
the roofing system. In an April 8, 2011 email, Anderson University’s insurer, Citizens,
informed Richmond Guttering that it was eager to get the roofing system repaired to
avoid interior damage to the building. On that same day, staff at the Flagship Enterprise
Center notified Meyer Najem and Richmond Guttering via email that rain was entering

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the premises again through the roof and that more sheet plastic was being utilized inside
the building in an effort to protect the internal office space.
As of April 12, 2011, Johns Manville had not begun to fix the roofing system, and,
as a consequence, rainwater and other elements continued to damage the building. On
that date, Anderson University notified Johns Manville by letter that its refusal to fix the
roof, despite the guarantee, was increasing the damage to the building. When Johns
Manville failed to respond by fixing the roof, in an effort to prevent further damage the
University hired Fredericks Contractors to remove the failed TPO membrane and install a
new, mechanically-fastened TPO membrane over the existing roofing system. Johns
Manville subsequently informed the University that, because a different roofing system
had been installed, the company’s earlier guarantee was voided.
As Anderson University’s insurer, Citizens paid the University more than
$300,000 to repair the roofing system and to remediate the water damage. Citizens’s
payments following the loss also included the re-welding of the roof deck as well as the
repair of the HVAC system, the interior drywall, and the nailers on the tops of the parapet
wall on the roof.
Expert Testimony Regarding the Cause of the Roof Failure
Stephen Patterson, Director of Engineering Services for Roof Technical Services,
Inc., performed an inspection of the Flagship Enterprise Center’s roof after the April 3
wind event, observing a significant amount of condensation below the roof membrane in

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the areas where the roof detached. This moisture in his expert view affected the adhesion
and wind uplift resistance of the roof membrane to the insulation. According to Mr.
Patterson, roofing industry design standards require a vapor retarder in situations such as
this, which would prevent the vapor migration, condensation, and roof detachment. No
moisture was found in the areas where the roof still adhered. Patterson Aff. and Exh. A
at 5-6.
James Robert Stutzman, principal and managing partner of Architectural Forensic
Consultants, also conducted an investigation and analysis of the roof failure at issue in
this litigation. According to Mr. Stutzman’s report, the condensation resulted from
moisture from the concrete curing which penetrated the roofing system and condensed
under the TPO membrane, weakening the bond between the polyiso board and the
membrane. That moisture was subsequently exposed to low freezing winter
temperatures, resulting in ice formation that produced frost-heave forces which caused
the membrane to separate from the substrate. Stutzman Aff. and Exh. A at 10-11.
According to Mr. Stutzman’s report, the failure on the part of Meyer Najem to
anticipate the effect of concrete curing on interior moisture levels and to provide
adequate means of ventilation after concrete placement contributed to the condensation.
Mr. Stutzman also opined that the failure of the architect to design and specify a vapor
barrier on the underside of the polyiso insulation board allowed excessive internal
moisture to condense on the underside of the TPO membrane, weakening the adhesive
bond between it and the polyiso insulation board. Id. at 10-15.
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In addition to the condensation, Mr. Stutzman also observed that the coping and
nailer boards had been improperly designed and installed by Richmond Guttering. These
components were not part of the Johns Manville roofing system, and, according to Mr.
Patterson’s report, the improperly attached nailer boards and sheet metal coping and
subsequent failure of these components was a critical factor in the April 3 wind failure.
Patterson Aff. and Exh. A at 6-11. The failure of the coping along portions of the parapet
wall resulted in the loss of securement of the edge of the roof membrane, which increased
the effects from wind pressures and led to the peeling of the membrane. According to
Mr. Stutzman, not only was the coping improperly installed, but the architect also failed
to follow industry standard specifications and include compliance requirements for
roofing system edge securement, which contributed to the failure of the coping.
Stutzman Aff. and Exh. A. at 13-14, 16-17, 22-23.
The Instant Litigation
On September 16, 2011, Citizens filed its Complaint in this action seeking to
recover via its subrogation rights under both negligence and breach of warranty theories
the amounts it paid to Anderson University to replace the roof following the April 3rd
wind event. On July 18, 2012, Citizens filed its motion for summary judgment on all
claims, and, on October 24, 2012, Johns Manville filed a motion for partial summary
judgment on Citizens’s tort claim contending that the economic loss doctrine bars
recovery under a negligence theory.
Legal Analysis
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I.

Standard of Review
Summary judgment is appropriate when the record shows that there is “no genuine

issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Disputes concerning material facts are genuine where the evidence is such that a
reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). In deciding whether genuine issues of material
fact exist, the court construes all facts in a light most favorable to the non-moving party
and draws all reasonable inferences in favor of the non-moving party. See id. at 255.
However, neither the “mere existence of some alleged factual dispute between the
parties,” id., 477 U.S. at 247, nor the existence of “some metaphysical doubt as to the
material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986), will defeat a motion for summary judgment. Michas v. Health Cost Controls of
Ill., Inc., 209 F.3d 687, 692 (7th Cir. 2000).
The moving party “bears the initial responsibility of informing the district court of
the basis for its motion, and identifying those portions of [the record] which it believes
demonstrate the absence of a genuine issue of material fact.” Celotex, 477 U.S. at 323.
The party seeking summary judgment on a claim on which the non-moving party bears
the burden of proof at trial may discharge its burden by showing an absence of evidence
to support the non-moving party's case. Id. at 325.

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Summary judgment is not a substitute for a trial on the merits, nor is it a vehicle
for resolving factual disputes. Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th
Cir. 1994). Therefore, after drawing all reasonable inferences from the facts in favor of
the non-movant, if genuine doubts remain and a reasonable fact-finder could find for the
party opposing the motion, summary judgment is inappropriate. See Shields Enterprises,
Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992); Wolf v. City of
Fitchburg, 870 F.2d 1327, 1330 (7th Cir. 1989). But if it is clear that a plaintiff will be
unable to satisfy the legal requirements necessary to establish his or her case, summary
judgment is not only appropriate, but mandated. See Celotex, 477 U.S. at 322; Ziliak v.
AstraZeneca LP, 324 F.3d 518, 520 (7th Cir. 2003). Further, a failure to prove one
essential element “necessarily renders all other facts immaterial.” Celotex, 477 U.S. at
323.
II.

Defendant and Third-Party Plaintiff’s Motion for Partial Summary
Judgment
We turn first to address Johns Manville’s Motion for Partial Summary Judgment.

In its Motion, Johns Manville argues that the economic loss doctrine bars Citizens from
recovering under a negligence theory for damages allegedly sustained by the Flagship
Enterprise Center, and thus, that Count I of the Complaint must be dismissed.
The economic loss rule provides that “a defendant is not liable under a tort theory
for any purely economic loss caused by its negligence (including, in the case of a
defective product or service, damage to the product or service itself) – but that a
defendant is liable under a tort theory for a plaintiff’s losses if a defective product or
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services causes personal injury or damage to property other than the product or service
itself.” Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C.,
929 N.E.2d 722, 729 (Ind. 2010). Citizens does not dispute that the economic loss
doctrine precludes tort recovery here for damage to the Johns Manville roof system itself.
However, Citizens contends that it is entitled to recover for damages in tort to “other
property” that were incurred, including for damage to the metal decking of the roof, the
HVAC system, and the nailer boards attached to the top of the parapet walls.
The Indiana Supreme Court has previously addressed this issue on a few
occasions, to wit, what constitutes “other property” under the economic loss doctrine. In
Gunkel v. Renovations, Inc., 822 N.E.2d 150 (Ind. 2005), the plaintiff contracted for the
purchase of a new home with a general contractor and separately entered into a contract
with a stonemason to add a stone façade to the house. The stonemason allegedly
improperly constructed and sealed the façade, allowing water to seep behind the stone,
damaging not only the stone façade but also the interior walls and flooring of the home.
The Indiana Supreme Court concluded that, under the economic loss rule, the plaintiff
could not sue the stonemason in tort for the damage to the façade. However, the Gunkel
Court reasoned that “[t]he economic loss rule does not bar recovery in tort for damage
that a separately acquired defective product or service causes to other portions of a larger
product into which the former has been incorporated.” Id. at 156 (citation omitted).
Because the homeowner had entered into an arrangement with the stonemason to install
the stone façade that was separate and independent from the homeowner’s contract with

15

the general contractor to build the home, the Gunkel Court held that the plaintiff could
recover in tort for the damaged interior as that constituted “other property” separate from
the “product” purchased from the stonemason.
The Indiana Supreme Court again addressed the “other property” aspect of the rule
in Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C., 929
N.E.2d 722 (Ind. 2010) (hereinafter “IMCPL”). In IMCPL, the Public Library in the City
of Indianapolis brought suit against engineering subcontractors alleging that they
provided defective design and inspection services during construction of an underground
parking garage built as part of a renovation project of the entire library facility. The
IMCPL Court held that the dispositive question was what “product” the plaintiff had
contracted to purchase, because, under the rationale set forth in Gunkel,
[o]nly the supplier furnishing the defective property or
service is in a position to bargain with the purchaser for
allocation of the risk that the product or service will not
perform as expected. If a component is sold to the first user
as part of the finished product, the consequences of its failure
are fully within the rationale of the economic loss doctrine. It
therefore is not “other property.”
IMCPL, 929 N.E.2d at 731 (quoting Gunkel, 822 N.E.2d at 155).
Distinguishing the facts from those in Gunkel, the court in IMCPL reasoned that,
unlike the separate transactions in which the homeowner in Gunkel had engaged, the
Library had “purchased a complete renovation and expansion of all the components of its
facility as part of a single, highly-integrated transaction,” (IMCPL, 929 N.E.2d at 731),
and that the service purchased from the defendants “was an integral part of the entire
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library construction project, not independent from it.” Id. at 732. The IMPCL Court
concluded that the product the Library purchased was “the renovated and expanded
library facility itself,” (id. at 731), and thus, that “[a]ny damages alleged to have resulted
from the [d]efendants’ negligence were to the ‘product’ the Library purchased, not to
‘other property.’” Id. at 732.
Similar to the large commercial construction project at issue in IMCPL, in the case
at bar Anderson University entered into a construction contract with Meyer Najem for the
construction of the entire Flagship Enterprise Center building, including the roof system,
the metal decking of the roof, the HVAC system, and the nailer boards attached to the top
of the parapet walls. In order to perform under that overarching contract, Meyer Najem
subcontracted the purchase and installation of the roofing system to Richmond Guttering
who purchased certain materials to assemble the roofing system from Johns Manville.
The facts here are thus distinguishable from Gunkel in that the University did not enter
into a separate transaction with Johns Manville for an entirely independent service or
product that was not integral to the overall construction project. Thus, based on the
reasoning set forth by the Indiana Supreme Court in IMCPL, we find that the “product”
purchased by Anderson University was the entire building itself, and therefore, any
damage to the building, including to its component parts, was to the product the
University purchased, not to “other property.” Because the only damages alleged are
damages to the building, the economic loss doctrine clearly applies to bar Citizens’s

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claim for negligence. Accordingly, we GRANT Johns Manville’s Motion for Partial
Summary Judgment and Count I of the Complaint is dismissed.3
III.

Plaintiff’s Motion for Summary Judgment

Citizens contends that it is entitled to summary judgment on its breach of warranty
claim because it is undisputed that: (1) Johns Manville issued to Anderson University a
guarantee related to its roofing system that provided that Johns Manville would pay for
the materials and labor required to repair the roofing system if any leaks occurred
because of deficiencies in the component materials or deficiencies in installation; (2) the
roofing system failed; (2) Johns Manville received timely notice of the loss; (3) the
roofing system failure was directly related to its approved roofing contractor’s defective
installation; and (4) Johns Manville refused to honor its guarantee. Johns Manville
rejoins that there are genuine issues of material fact regarding whether it received timely
notice of the issues as required under the Guarantee and whether the damage to the roof
was caused by a deficiency that was covered under the Guarantee that preclude summary
judgment on Citizens’s breach of warranty claim. Before addressing the merits of these
arguments, we must resolve a choice of law issue that has arisen under these claims.
A. Choice of Law
In its brief in support of its motion for summary judgment on its breach of
warranty claim, Citizens cites exclusively Indiana law. However, Johns Manville
3

Given that the economic loss doctrine applies to bar Plaintiff’s negligence claim, we need not
address Defendant’s alternative argument in support of dismissal.
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contends that, based on the clear terms of the Guarantee, Colorado law applies. It is
undisputed that the Guarantee expressly provides: “All the terms and conditions of this
Guarantee shall be construed under the internal law of the state of Colorado without
regard to its conflicts of law principles.” Pl.’s Exh. 9. Citizens did not file a reply brief,
leaving Johns Manville’s argument uncontroverted. In light of Citizens’s apparent
acquiescence, coupled with the express language of the Guarantee, Colorado law will
govern the issues arising under the breach of warranty.4
Under Colorado law, enforcement of a warranty or guarantee is grounded in
contract principles. See Carpenter v. Donohoe, 388 P.2d 399, 401 (Colo. 1964) (“An
action for damages for breach of warranty, whether express or implied, involves the
relations between the parties arising out of contract.”). A party attempting to recover on
a claim for breach of contract must establish: (1) the existence of a contract; (2)
performance by the plaintiff or some justification for nonperformance; (3) breach by the
defendant; and (4) resulting damages. Western Distributing Co. v. Diodosio, 841 P.2d
1053, 1058 (Colo. 1992) (citations omitted).
B. Timely Notice
Under the terms of the Guarantee at issue here, Anderson University was required
to inform Johns Manville within 30 days of the discovery of a leak. Pl.’s Exh. 9. It is

4

We note, in passing, that if Indiana law was applied to this dispute, the result would be the
same as both Indiana’s and Colorado’s laws on warranty are based on the Uniform Commercial
Code’s Uniform Sales Act. Compare COL. REV. STAT. ANN. § 4-2-101 and Official Comment to
IND. CODE § 26-1-2-101 and Official Comment.
19

undisputed that Johns Manville received timely notice of the damage to the roof that
occurred on April 3, 2011, following a wind event. However, Johns Manville was not
notified within 30 days of prior water damage occurring in January and February 2011,
incidents which Johns Manville contends were related to the cause of the subsequent
failure of the roof on April 3, 2011. Again, because Citizens did not file a reply brief,
this argument is uncontroverted. Thus, we hold that genuine issues of material fact exist
regarding whether Anderson University provided timely notice to Johns Manville under
the Guarantee.
C. Cause of the Roof Damage
Genuine issues of material fact also remain regarding the cause of the roof damage
and whether the cause of the damage was covered under the Guarantee. Citizens
contends that Johns Manville personnel admitted in deposition testimony that the roofing
system failure was directly related to the defective installation by its approved roofing
contractor, which is a deficiency covered under the Guarantee. In support of this
contention, Citizens cites the following deposition testimony of Johns Manville’s
Midwest Technical Lead Manager Mark Tenison:
Q.

And what does the guarantee provide as far as if
there’s a problem with the TPO system, what
will Johns Manville do?

…
A.

The guarantee provides that JM will send out a
repair contractor within a timely manner to
investigate all roof leaks. And then the
guarantee covers, depending on the issue and
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what the language, you know, covers, it covers
leaks due to material or installation issues.
Q.

Okay. And will the repair contractor make
necessary repairs at Johns Manville’s expense if
necessary?

A.

If it’s covered under the terms of the guarantee,
yes.

Q.

Was there anything about this installation that
wasn’t covered under the terms of the
guarantee, in your opinion?

A.

No.

Tenison Dep. at 24-25.
We do not read this deposition testimony to establish that the roof failure at issue
here was due to a deficiency in installation. Rather, it appears that Mr. Tenison was
merely acknowledging that the Guarantee covers, in part, leaks due to deficiencies in
installation of the Johns Manville roofing system and that such a system had been
installed on the Flagship Enterprise Center. There is no admission of causation or fault,
for that matter.
Citizens also contends that Johns Manville admitted in its answers to discovery
that the reason the roofing system on the Flagship Enterprise Center failed was because
its approved installer, Richmond Guttering, improperly installed it. Specifically, Citizens
cites Johns Manville’s answer to Interrogatory 19:
19.
State the complete factual and legal basis for the
allegation that abuse, neglect, modification, alteration,
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negligent care, negligent maintenance and /or negligent
installation of the subject roof caused or contributed to
Plaintiff’s damages.
ANSWER:
…
Richmond Guttering Company did not follow all of the
manufacturer’s installation instructions[.]

Pl.’s Exh. 22. However, this excerpt cited by Citizens from Johns Manville’s answer
omits material portions. The full, relevant portion of the answer provides as follows:
ANSWER:
…
Investigation and discovery, include expert discovery, are
ongoing, and defendant continues to develop its defenses.
Significant discovery of the installation contractors,
Richmond Guttering, has not yet taken place. As such,
defendant reserves the right to supplement this Response as
needed. Furthermore, in accordance with Rule 33(d), see
documents previously produced evidencing the improper
installation and/or improper designed use of Johns Manville’s
roofing products. In addition, see the Report and
Findings/Roof Evaluation prepared by Rimkus Consulting
Group, Inc., which states, in part, that Richmond Guttering
Company did not follow all of the manufacturer’s installation
instructions as follows:
• the orientation of the insulation board;
• the placement of some fasteners through the decking troughs;
• the use of water-based adhesive on the vertical surfaces;
• the differing installation pattern of fasteners and reduced
quantities of fasteners used to attach insulation boards to the
decking both in the field and along the perimeter areas of the
roof; and
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• the reduced quantities of fasteners used to attach the wood
nailers along the parapet walls.

Id.
The complete response plainly shows that Johns Manville identified three
categories of “abuse, neglect, modification, alteration, negligent maintenance and/or
negligent installation” that it believed caused or contributed to Citizens’s damages,
including design issues, installation errors by Richmond Guttering of the Johns Manville
Roofing System, and installation errors of non-Johns Manville products (the nailer
boards, for example). Certain of these identified deficiencies are covered under the
Guarantee and others are not. This interrogatory did not seek an admission by Johns
Manville as to which of these deficiencies was the ultimate cause of the roof damage at
issue in this litigation, nor by its answer did Johns Manville make such an admission.
Johns Manville clearly disputes that the loss at issue here is covered by the terms
of the Guarantee and has presented evidence sufficient to create a genuine issue of
material fact as to the cause of the damage to the Flagship Enterprise Center’s roof.
Based on the testimony and opinions of Mr. Patterson and Mr. Stutzman, a reasonable
jury could conclude from the evidence that the roof failure was the result of deficiencies
not covered under the Guarantee, such as failures in the design of the building or failures
of non-Johns Manville components of the roof, as opposed to being caused by the
improper installation of one of Johns Manville’s approved installers.

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Citizens argues that under Indiana law in a breach of guarantee case, the plaintiff
need not prove why the guaranteed product failed, only that it did fail. Pl.’s Br. at 9
(citing Nelson v. Marchand, 691 N.E.2d 1264 (Ind. Ct. App. 1998); Orto v. Jackson, 413
N.E.2d 273 (Ind. Ct. App. 1980)). Despite the fact that these cases are decided under
Indiana rather than Colorado law, which makes them inapplicable as precedent, the cases
cited by Citizens are in any event distinguishable from the case at bar. At issue in both
Nelson and Orto were comprehensive warranties providing that construction would be
performed in a “good and workmanlike manner,” (691 N.E.2d at 1269), or that the
builder guaranteed “all materials and workmanship.” 413 N.E.2d at 274. In such cases,
“[w]here a homebuilder guarantees the quality of workmanship and materials, a
homeowner need not prove why a particular system failed, only that it did fail.” Nelson,
691 N.E.2d at 1270 (citations omitted). But the types of comprehensive guarantees
addressed in Nelson and Orto, to wit, where the guarantee covers the entire construction
project, are not at issue here.
In contrast, Johns Manville did not guarantee construction of the entire Flagship
Enterprise Center or even the entire roof structure. It did not guarantee the design of the
building, the design of the roof system, or the installation of non-Johns Manville roofing
components. Instead, the Johns Manville Guarantee is a limited guarantee providing that
it “will pay for the materials and labor required to promptly repair the Roofing System to
return it to a watertight condition if leaks occur due to: ordinary wear and tear, or
deficiencies in any or all of the component materials of the Roofing System, or

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workmanship deficiencies in the application of the Roofing System.” Pl.’s Exh. 9
(emphasis added). Accordingly, the element of causation must be established before
Johns Manville’s liability for a breach of the Guarantee is determined. Because genuine
issues of material fact remain regarding whether the roof failure was due to one of the
limited deficiencies covered by the Guarantee, Citizens’s motion for summary judgment
on its breach of warranty claim is DENIED.
IV.

Conclusion
For the reasons detailed above, we GRANT Johns Manville’s Motion for Partial

Summary Judgment, and Count I of the Complaint accordingly is dismissed. We DENY
Citizens’s Motion for Summary Judgment. Trial on Citizens’s breach of warranty claim
against Johns Manville shall proceed in due course as will Johns Manville’s claim against
Third Party Defendant Richmond Guttering Company.
IT IS SO ORDERED.
04/09/2013
Date: _________________________

_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana

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Distribution:
Grantland M. Clapacs
BINGHAM GREENEBAUM DOLL LLP
[e-mail]
Catherine L. Coash
BLACK & MOSS P.C.
[e-mail]
Michael J. Black
BLACK & MOSS, P.C.
[e-mail]
Daniel P. King
FROST BROWN TODD LLC
[e-mail]
Matthew Reed King
FROST BROWN TODD LLC
[e-mail]
Jon C. Abernathy
GOODIN ABERNATHY LLP
[e-mail]
Mary F. Schmid
STEWART & IRWIN
[e-mail]

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