Skanska USA Building Inc. v. J.D. Long Masonry, Inc.

Filing 30

MEMORANDUM. Signed by Judge J. Frederick Motz on 1/13/2017. (jnls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

SKANSKA USA BUILDING, INC.

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v.

J.D. LONG MASONRY, INC.

Civil No. JFM-16-0933

MEMORANDUM
Plaintiff Skanska USA Building Inc. (“Skanska”) brings this lawsuit against defendant
J.D. Long Masonry, Inc. (“Long”), seeking money damages for sums incurred and/or to be
incurred by Skanska in connection with Long’s alleged breach of a subcontracting agreement
between the parties. Skanska asserts that Long has materially breached the parties’ subcontract
by failing to indemnify Skanska and pay the costs of remediation work required after several
rows of brick façade fell from the face of the building on which Long had been hired to do
masonry work. Now pending is Long’s motion for summary judgment on issues of the statute of
limitations and release/accord and satisfaction. (ECF No. 21). The motions are fully briefed and
no oral argument is necessary. See Local R. 105.6. For the reasons set forth below, Long’s
motion for summary judgment is denied.
BACKGROUND
This dispute arises out of a subcontract agreement (the “Subcontract”) entered into by
Skanska and Long on October 12, 2004. Skanska was hired by the National Institute of Health
(NIH) as the construction manager on a project to build a new bio-medical research facility (the
“Project”) on the Bayview Campus at Johns Hopkins University in Baltimore, Maryland. (ECF
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No. 1 ¶ 7). In October of 2004, Skanska retained Long to perform masonry work on the Project,
and the parties executed an extensive subcontract (the “Subcontract”) outlining their rights and
obligations. (Id. ¶ 9–10). The Subcontract provided, generally, that Long would assume all
responsibility and liability for injury or damage resulting from or related to the masonry work
performed and that Long would indemnify Skanska for losses or expenses incurred in connection
with its performance. (Id. ¶ 12(C)–(D), Ex. A, Art. 23.1, 30.1). Additionally, the Subcontract
holds Long responsible for necessary repairs or replacement of any materials at its own expense
in the event that defective work is discovered within one year of the final acceptance of the
Project by the architects and owner. (Id. Ex. A, Art. 21.1). On October 12, 2007, Skanska
notified Long that it had received a certificate of substantial completion dated October 4, 2007,
and that “service warranties/guarantees are to begin on this date.” (ECF No. 21, Ex. 2).
While the Project received its certificate of completion, NIH had apparently noted, both
over the course of construction of the Project and after it was finished, a number of structural
issues with the building, including some related to the masonry work performed by Long. (See
ECF No. 25 ¶ 5). While Skanska and NIH were attempting to resolve NIH’s concerns and come
to an agreement on final payment for Skanska and its subcontrators, Long filed a lawsuit against
Skanska in the Circuit Court for the City of Baltimore, Maryland, seeking additional payments
under the Subcontract. (Id. ¶ 9). In 2009, NIH engaged engineering firm Wiss, Janey, Elstner
Associates, Inc. (“WJE”) to perform a visual condition assessment of various parts of the
Project’s outer façade, document any issues that may constitute a potential hazard to pedestrians
or vehicular traffic below the affected areas, and prepare an investigative report. (See id. ¶ 5–6).
WJE prepared a “Draft Report” on October 30, 2009, which documented visible evidence of
exterior façade issues such as cracking, spalling, and planar displacement. (Id.).

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Additionally, in 2010, the Office of General Counsel for Health and Human Services and
NIH retained Exponent, Inc. to conduct an engineering assessment of the cause of distress to the
building. (Id. ¶ 7). Exponent concluded that “total and differential settlement is ongoing and is
expected to occur in the future, and may occur in areas that previously did not exhibit signs of
distress.” (Id. ¶ 5; see also ECF No. 21, Ex. 5).
Both the 2009 WJE Report and the 2010 Exponent Report apparently served as the basis
for ongoing mediation efforts between NIH and Skanska that had resulted from significant
disagreements regarding the amounts due to Skanska on the Project and the necessary repair and
remediation of issues NIH and WJE had identified. (See ECF No. 25 ¶ 8; see also ECF No. 21, ¶
5). Skanska and NIH eventually entered into a settlement agreement which created a list of
Known Facility Issues or a “warranty list” detailing various items the parties agreed would be
repaired or remediated by Skanska and its subcontractors. (See ECF No. 25 ¶ 8; see also ECF
No. 21, Ex. 8). The portion of the “warranty list” pertaining to the masonry work on the Project
was submitted to Long, and Long performed all of the listed repairs in 2010. (See ECF No. 21 ¶
10, Ex. 8; see also ECF No. 25 ¶ 8). On August 3, 2011, Skanska and Long entered into a
Settlement Agreement and Release (the “Release”), seeking to “resolve all issues between them
on the Project . . . with no admission of liability by any party.” (ECF No. 1, Ex. B, p. 5). 1
On April 9, 2013, approximately 20 rows of brick façade fell from an outer wall on the
eighth story of the Project onto a grassy area bordering the building (the “Incident”). (See id. ¶
13). Skanska promptly contacted Long by letter on April 19, 2013, notifying Long of the
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The Release also states that it “shall not be construed to modify, amend, or otherwise alter the
terms of the Subcontract entered into between J.D. Long and Skanska . . . .” (ECF No 1, Ex. B, §
6.2). Furthermore, the Release provides that “J.D. Long expressly agrees that it shall remain
liable for . . . J.D. Long’s continuing warranty or indemnity obligations, if any, as set forth in the
Subcontract . . . and [l]atent defects not yet identified as of the date of this Agreement for which
J.D. Long would otherwise be responsible under contract law.” (Id.).
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Incident and informing Long of its obligation to indemnify and hold Skanska harmless for all
related claims and damages. (See id., Ex. C).
WJE was again hired to investigate the Incident and assess the cause of the damage. (See
id. ¶ 19). On April 24, 2013, Skanska informed Long of its opportunity to participate in the WJE
investigation should it so choose. (See id., Ex. D). WJE issued a report on July 31, 2013,
outlining its conclusions regarding the causes of the Incident and making certain
recommendations for remediation and repair work to the building’s structure and façade. (See
id., Ex. E). The 2013 WJE report lists a number of alleged deficiencies related to Long’s
masonry work, including lack of horizontal soft joints, improper spacing and location of lateral
veneer anchors, and inadequate bearing for the clay brick veneer on the shelf-angles. (See id.,
Ex. E, p. 6; see also ECF No. 21, p. 7). WJE also made a number of recommendations for
repairing the damage, which included the removal and reinstallation of the brick façade above
and below each floor-line shelf-angle and potentially the replacement of the brick veneer in its
entirety. (See ECF No. 1, ¶ 24, Ex. E, p. 8).
Skanska instituted temporary stabilization methods and provided a copy of the WJE
report to Long. (Id. ¶ 24–25). In mid-April 2014, Skanska sent Long a letter demanding Long
take responsibility for the Incident and perform the suggested repairs or, alternatively, provide
Skanska with evidence that Long was not at fault for the Incident. (See id. ¶ 26, Ex. F). Long
did not provide Skanska with information that was responsive to the WJE report. (See id. ¶ 27;
see also ECF No. 8 ¶ 25). On May 2, 2014, Skanska sent Long another letter declaring Long in
default under the Subcontract for failure to take responsibility for the Incident and perform
repairs. (See ECF. No. 1 ¶ 27, Ex. G).

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In April of 2015, WJE provided a comprehensive remediation plan to Skanska and NIH,
and Skanska informed Long of its intention to coordinate with NIH regarding the remediation
work on the façade. (See id. ¶ 28–29, Ex. H). According to Skanska, the repair work will cost
an estimated $3.5 million. (See id. ¶ 30). Skanska filed a complaint in this court on March 29,
2016, asserting one count of breach of contract against Long. On September 22, 2016, defendant
Long filed a motion for summary judgment on issues of the statute of limitations and
release/accord and satisfaction pursuant to Rule 56 of the Federal Rules of Civil Procedure.
(ECF No. 21).
STANDARD
Rule 56(a) of the Federal Rules of Civil Procedure provides the “court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “By its very
terms, this standard provides that the mere existence of some alleged factual dispute between the
parties will not defeat an otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247–48 (1986) (emphasis in original). A genuine issue of material fact exists
where “the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Id. The party seeking summary judgment bears the initial burden of demonstrating the
absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). When reviewing a motion for summary judgment, the court must take all facts and
inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372,
378 (2007).

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The party opposing summary judgment must, however, “do more than simply show that
there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986); see also In re Apex Express Corp., 190 F.3d 624, 633
(4th Cir.1999). The non-movant “‘may not rest upon the mere allegations or denials of [his]
pleadings,’ but rather must ‘set forth specific facts showing that there is a genuine issue for
trial.’” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003)
(alteration in original) (quoting Fed. R. Civ. P. 56(e)); see also Adickes v. S. H. Kress & Co., 398
U.S. 144, 160 (1970). A court should enter summary judgment when a party fails to make a
showing sufficient to establish elements essential to a party’s case, and on which the party will
bear the burden of proof at trial. Celotex Corp., 477 U.S. at 322.
ANALYSIS
Defendant Long moves to dismiss Skanska’s breach of contract claim on the bases that
(1) Skanska’s claim is barred by Maryland’s statute of limitations for civil actions; and (2)
Skanska’s claim against Long is barred by the release/accord and satisfaction agreement
executed between the parties in 2011. Long’s defenses are addressed in turn.
I.

Statute of limitations
Defendant Long contends Skanska’s breach of contract claim is time-barred by

Maryland’s statute of limitations for civil actions because Skanska had actual or implied
knowledge of Long’s alleged breach more than three years prior to the initiation of the present
lawsuit. (ECF No. 21, p. 2). Specifically, Long asserts that the report WJE prepared in 2013
following the Incident identified deficiencies in the masonry façade that were substantially
similar or identical to those identified by WJE in 2009. (Id. at p. 7). Because Skanska was
aware of masonry façade problems and the potential hazard to pedestrian and vehicular traffic in

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2009, Long argues, Skanska had actual or inquiry notice of Long’s alleged breach and was
required to file its claim within three years of WJE’s 2009 report. (Id. at p. 18).

According to

Skanska, there exist genuine issues of material fact with respect to when the statute of limitations
began to run under Maryland’s discovery rule because the 2013 WJE report identified new issues
with the masonry façade that differed in important ways from those revealed in 2009, and many
of the defects were latent and undiscoverable prior to the Incident. (See id. at p. 14). 2
Maryland’s statute of limitations provides that “[a] civil action at law shall be filed within
three years from the date it accrues unless another provision of the Code provides a different
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Skanska also contends that because its breach of contract claim is based on Long’s failure to
indemnify Skanska according to the parties’ Subcontract, its claim did not accrue until Long
refused to indemnify Skanska after the Incident in 2013. (See ECF No. 25, p. 13). Skanska’s
reliance on limited Maryland case law language addressing the applicable statute of limitations
in cases involving claims against liability insurers is misplaced. In Jones v. Hyatt Ins. Agency,
Inc., the court stated that “[an] insurer's contractual duty to indemnify an insured is ordinarily not
breached until an injured tort claimant has obtained a determination of liability and damages in
an underlying tort action, and the insurer refuses to pay.” 741 A.2d 1099, 1103 (Md. 1999).
Jones stands for the proposition that since “[an] insurer's promise is to indemnify or to pay what
its insured is legally obligated to pay,” id. at 1104, a liability insurer cannot breach its promise
until it refuses to pay the claimant following a judgment in the underlying tort case. Id. Both
Jones and the case it primarily relies on, Washington Metro. Area Transit Auth. v. Queen, 597
A.2d 423 (Md. 1991), involve actions by third party tort claimants against the alleged
wrongdoers’ liability insurer. In this specific circumstance, the court concluded, the statute of
limitations will not run until the third party claimant has obtained a determination of liability for
the damage and the insurer subsequently denies its obligation to indemnify the insured. See
Jones, 741 A.2d at 1103. Jones did not, however, alter the statute of limitations principles
generally applicable to breach of contract actions, see id. at 1103–04, and its facts are readily
distinguishable from the instant case. Skanska’s breach of contract claim against Long is
principally based on Long’s allegedly defective masonry work and Long’s noncompliance with
the remediation terms of the Subcontract, and Skanska is seeking to recover economic damages
it expects to incur as costs of repair to the façade. (See ECF No. 1 ¶¶ 36–41). As Long points
out, Skanska is not seeking damages related to injury of persons or property resulting from the
Incident. (See ECF No. 29, p. 3). Accordingly, Skanska’s claim is subject to the standard statute
of limitations for breach of contract claims, and accrual will be evaluated according to
Maryland’s discovery rule.
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period of time within which an action shall be commenced.” MD. CODE ANN., CTS. & JUD.
PROC. § 5-101 (West 2016). Recognizing that stringent application of the statute of limitations is
in many cases inequitable, Maryland courts have held that civil claims will not always accrue at
the time of the breach or injury, but instead will accrue when the plaintiff either knows or
reasonably should have known the breach or injury occurred. See Poffenberger v. Risser, 290
Md. 631, 636 (1981). The so-called “discovery rule” in effect “tolls the accrual date of the
action until such time as the potential plaintiff either discovers his or her injury, or should have
discovered it through the exercise of due diligence.” Poole v. Coakley & Williams Const., Inc.,
423 Md. 91, 131 (2011); see also Lumsden v. Design Tech Builders, Inc., 358 Md. 435, 445
(2000) (stating that “limitations begin to run when a claimant gains knowledge sufficient to put
her on inquiry. As of that date, she is charged with knowledge of facts that would have been
disclosed by a reasonably diligent investigation”). The discovery rule “applies generally in all
civil actions.” Hecht v. Resolution Trust Corp., 333 Md. 324, 334 (1994). The plaintiff will be
charged with “inquiry notice” of “all facts which [] an investigation would in all probability have
disclosed if it had been properly pursued” from the time that he or she gains “knowledge of
circumstances which ought to have put a person of ordinary prudence on inquiry” about a
potential breach or injury. Poffenberger, 290 Md. at 681. The statute of limitations period is
triggered when the plaintiff is charged with inquiry notice. See id. “If there is a genuine dispute
of material fact as to when the plaintiff was on inquiry notice, summary judgment is
inappropriate.” Brown v. Neuberger, Quinn, Gielen, Rubin & Gibber, P.A., 731 F. Supp. 2d 443,
449–50 (D. Md. 2010), aff'd, 495 F. App'x 350 (4th Cir. 2012); see also Frederick Rd. Ltd., 360
Md. at 93–94 (stating that summary judgment was inappropriate where there was a genuine
dispute of material fact regarding whether plaintiffs could be charged with notice of their cause

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of action and exercised due diligence to protect their rights); cf. O'Hara v. Kovens, 305 Md. 280,
294–95 (1986) (“Whether or not the plaintiff's failure to discover his cause of action was due to
failure on his part to use due diligence, or to the fact that defendant so concealed the wrong that
plaintiff was unable to discover it by the exercise of due diligence, is ordinarily a question of fact
for the jury.”). The burden of demonstrating a viable statute of limitations defense is on the
asserting party, and the plaintiff “is under no obligation to plead facts in a complaint to show the
timeliness of her claims.” Evans v. Beneficial Fin. I, Inc., No. 14-1994, 2015 WL 535718, at *2
(D. Md. Feb. 9, 2015).
Long contends that Skanska should be charged with actual or inquiry notice of Long’s
alleged breach of the Subcontract because the WJE report commissioned by Skanska and NIH in
2009 made Skanska aware of the deficiencies in the masonry façade and of the potential for
complete wall failure. (See ECF No. 21, p. 18) Certainly, both the 2009 and the 2013 WJE
reports appear to identify some similar issues with the masonry work, including cracking and
spalling of lipped brick. (Compare id. at p. 11, and Ex. 10, p. 6). The problems specified in the
two reports, however, are not identical, and there is not an overwhelming amount of obvious
overlap. (Compare id. at p. 10–12, and Ex. 10). As Skanska points out, there are issues raised in
WJE’s 2013 report that appear to be new and distinct from those raised in 2009. (See id.; see
also ECF No. 25, p. 16). Furthermore, according to Skanska, the defects WJE identified in 2009
were “primarily related to the effect of water infiltration caused by perched water,” (ECF No. 25,
p. 15), and were not, in its assessment, the underlying cause of the eventual collapse of the
masonry façade in 2013. (See id.). Lastly, Long performed the remediation work recommended
by WJE in 2009 and, to Skanska’s knowledge, adequately addressed all of the structural issues
with the masonry façade. (See id. at p. 16).

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While Long claims that the 2009 WJE Report identified all of the relevant problems with
the masonry façade and put Skanska on notice that deterioration or collapse was possible,
Skanska maintains that the causes of the Incident in 2013 were defects unknown and
undiscoverable in 2009 or at any time prior to the collapse. At a minimum, there is a genuine
dispute of material fact with respect to whether the 2009 WJE report put Skanska on actual or
constructive notice of the defects that caused the collapse of the masonry façade in 2013, and the
issue of notice is a question for a jury. Accordingly, I cannot, at the summary judgment stage,
hold that Skanska’s breach of contract claim is barred by the statute of limitations.
II.

Release/Accord and Satisfaction
Long also asserts that Skanska’s claim is barred by the Release executed between the

parties in 2011. (See ECF No. 21, p. 20). According to Long, the Release was intended to
permanently resolve any and all issues between the parties with limited enumerated exceptions,
none of which apply Skanska’s claim resulting from the Incident in 2013. (See id. at p. 21–22).
Skanska contends that the Release expressly preserves Long’s indemnity obligations under the
Subcontract as well as Skanska’s right to recover from Long for latent defects in the masonry
work. (See ECF No. 25, p. 8 ¶ 12–13).
Under Maryland law, contracts are interpreted according to the “objective test,” see, e.g.,
Benson v. Bd. of Ed. of Montgomery Cty., 373 A.2d 926, 932 (1977), which dictates that
“[w]here the language of the contract is unambiguous, its plain meaning will be given effect,”
Aetna Cas. & Sur. Co. v. Ins. Com'r, 445 A.2d 14, 19 (Md. 1982). “A court construing an
agreement under [the objective] test must first determine from the language of the agreement
itself what a reasonable person in the position of the parties would have meant at the time it was
effectuated.” Gen. Motors Acceptance Corp. v. Daniels, 492 A.2d 1306, 1310 (1985). If the

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language of a contract is ambiguous, the construction of the agreement becomes a question of
fact. See Martin Marietta Corp. v. Int'l Telecommunications Satellite Org., 991 F.2d 94, 97 (4th
Cir. 1992).
Maryland courts interpret settlement and release agreements according to “ordinary
contract principles,” and “the principal rule governing the interpretation of a release, as with
other contracts, is to effect the intention of the parties.” Chicago Title Ins. Co. v. Lumbermen's
Mut. Cas. Co., 707 A.2d 913, 917 (Md. App. 1998). Furthermore, as this court has explained,
“there must be a clear showing that the parties understood that the tendered settlement would
extinguish all claims.” Azimirad v. HSBC Mortg. Corp., No. CIV.A. DKC 10-2853, 2011 WL
1375970, at *7 (D. Md. Apr. 12, 2011).
In support of its contention that the Release bars Skanska’s breach of contract claim,
Long highlights the language stating the parties intended to “resolve all issues between them on
the Project in accordance with the terms of this Settlement agreement with no admission of
liability by any Party.” (ECF No. 21, p. 21; Ex. 9, p. 5). This language, Long argues, is
unambiguous and clearly demonstrates the parties meant for the Release to effectively terminate
all existing and potential disputes between them. (See ECF No. 21, p. 20–21). Long admits,
however, that the parties carved out a number of exceptions to the general disclaimer of ongoing
liability. (See id.; Ex. 9 ¶¶ 6.1–6.2). First, the Release explicitly states “[t]his Settlement
Agreement shall not be construed to modify, amend, or otherwise alter the terms of the
Subcontract entered into between J.D. Long and Skanska . . . .” (See ECF No. 21, Ex. 9 ¶ 6.2).
Furthermore, according to the terms of the Release, Long “expressly agrees” to remain liable for
(1) “[o]bligations arising under this Settlement Agreement;” (2) “[its] continuing warranty or
indemnity obligations, if any, as set forth in the Subcontract or applicable contracts or documents

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at law;” and, critically, (3) “[l]atent defects not yet identified as of the date of this Agreement for
which J.D. Long would otherwise be responsible under contract or law.” (Id. at ¶¶ 6.2.1–6.2.3).
Long maintains, however, that it had no continuing warranty or indemnity obligations at the time
of the Incident, and that the defects identified by WJE in 2013 were not “latent.” (See ECF No.
21, p. 22).
According to Skanska, Long is liable for the remediation costs resulting from the Incident
in 2013 both under its original indemnity obligations in the Subcontract as well as under the
terms of the Release, because the defects causing the façade collapse were in fact “latent defects
not yet identified” at the date of settlement. (See ECF No. 25, p. 24). The Release, Skanska
contends, was meant only to “resolve the existing payment dispute between the parties arising
out of the lawsuit filed by J.D. Long,” and was not intended to extinguish any and all liability for
Long going forward. (See id. at p. 23). As the parties’ interpretive dispute makes clear, the issue
of liability depends in large part on the determination of the factual cause of the Incident. 3
If, as Long argues, the façade collapse was caused by defects for which Skanska on
notice at the time the parties signed the Release in 2011, Long would likely be absolved of
liability for the remediation costs. If, however, the Incident was caused by defects that were
latent and unidentifiable at the time the Release was negotiated, Long may be liable to Skanska.
There appears, at the very least, to be a genuine dispute of material fact between the parties as to
the underlying cause of the Incident in 2013. (See id. at p. 24). Accordingly, I cannot hold that
Skanska’s claim is barred by the Release as a matter of law, and the issue of cause is
appropriately resolved by a jury.

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Long indicates that it has performed an independent investigation of the cause of the Incident
and expressly denies responsibility for the façade collapse. (See ECF No. 8 ¶ 25). Long has not,
however, provided Skanska or the court with the results of its investigation. (See id.).
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CONCLUSION
For the foregoing reasons, defendant’s motion for summary judgment on the issues of the
statute of limitations and the release/accord and satisfaction is denied. A separate order follows.

1/13/2017

/s/
J. Frederick Motz
United States District Judge

Date

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