Williams et al v. Home Depot USA, Inc
Filing
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MEMORANDUM AND OPINION entered GRANTING IN PART AND DENYING IN PART 15 MOTION for Reconsideration of 14 Memorandum and Order. A Status Conference is set for 4/16/2012 at 05:30 PM in Courtroom 11B before Judge Lee H Rosenthal.(Signed by Judge Lee H Rosenthal) Parties notified.(leddins, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
RANDY W. WILLIAMS, TRUSTEE OF
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THE WEST HILLS PARK JOINT VENTURE §
BANKRUPTCY ESTATE,
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Plaintiff,
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v.
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THE HOME DEPOT USA, INC.,
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Defendant.
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CIVIL ACTION NO. H-10-2493
MEMORANDUM AND OPINION
The Home Depot USA, Inc. (“Home Depot”) has moved for reconsideration, asking this
court to reverse its summary-judgment ruling that Home Depot must indemnify the West Hills Park
Joint Venture (“West Hills Park”) for a Texas state-court judgment arising out of work done to
prepare land owned by West Hills Park for development as a shopping center that included a Home
Depot store. The judgment awarded damages to the owner of adjoining land. West Hills Park based
its indemnity demand on its contract with Home Depot. That contract did not provide for indemnity
for a party’s own negligence. Home Depot argues that the Texas express-negligence doctrine
applies to preclude West Hills Park from obtaining indemnity from Home Depot for the state-court
judgment.
The state-court case was tried against West Hills Park after Home Depot settled with the
underlying plaintiff. The jury answered “yes” to two sets of questions: one asking whether West
Hills Park was negligent and whether that negligence proximately caused the plaintiff’s property
damage, and one asking whether the strict-liability theory of loss of lateral support applied and
whether that loss of support was a producing cause of the damage. (Docket Entry No. 15, Ex. A).
Judgment was entered on the verdict, without distinguishing between the two grounds for liability.
Randy Williams, the bankruptcy trustee for West Hills Park, sued Home Depot in this court,
seeking indemnity for the state-court judgment under the parties’ contract. The parties cross-moved
for summary judgment. In a memorandum and order dated June 23, 2011,1 this court concluded that
the express-negligence doctrine did not apply and that, based on undisputed facts in the record, the
contract required Home Depot to indemnify West Hills Park. This court denied summary judgment
for Home Depot and granted it for West Hills Park. (Docket Entry No. 14).
Home Depot has moved for reconsideration based on the express-negligence doctrine. Home
Depot relies on the state-court judgment and jury verdict. West Hills Park argues that this court
properly examined the summary-judgment record evidence, in addition to the jury verdict, in
determining the duty to indemnify. According to West Hills Park, the express-negligence doctrine
does not apply because the summary-judgment evidence it introduced showed that the property
damage was caused by an agent of Home Depot. According to Home Depot, the summary-judgment
evidence is insufficient to establish that its agent caused the property damage that was the basis of
the state-court judgment.
Based on the motion, response, and reply; the arguments of counsel; the record; and the
applicable law, this court grants the motion for reconsideration in part and denies it in part. The
summary-judgment ruling that, on this record, the express-negligence doctrine does not preclude
West Hills Park from seeking indemnity from Home Depot remains in place. Home Depot’s motion
for summary judgment is denied. But the prior ruling granting West Hills Park’s summary-judgment
1
That memorandum and order was released without adequate proofreading. The court apologizes for the
mistakes that remained as a result.
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motion is withdrawn. On reconsideration, this court concludes that the record is inadequate to show
that, as a matter of law, West Hills Park is entitled to indemnity by Home Depot for the state-court
judgment. As a result, the summary-judgment motion filed by West Hills Park is also denied. A
status and scheduling conference to resolve the remaining issues is set for April 16, 2012, at 5:30
p.m., in Courtroom 11-B.
The reasons for these rulings are explained below.
I.
Background
The background is set out fully in this court’s June 23, 2011 Memorandum and Order.
(Docket Entry No. 14).2 To summarize, Home Depot and West Hills Park agreed to develop
adjacent parcels of land in Huntsville, Texas to build a shopping center. They signed a Reciprocal
Easement and Operation Agreement (“Agreement”), dated October 16, 2001. The Agreement
contains the following reciprocal indemnification clause:
Each Owner shall indemnify, defend, save and hold every other
Owner, tenant, and occupant of the Center harmless (except for loss
or damage resulting from the tortious acts of such other parties) from
and against any damages, liabilities, actions, claims, and expenses
(including attorneys’ fees in a reasonable amount) in connection with
the loss of life, bodily injury, personal injury and/or damage to
property arising from or out of any occurrence in or upon such
Owner’s Parcel, or occasioned wholly or in part by any act or
omission of said Owner, its tenants, agents, contractors, employees,
or licensees.
(Docket Entry No. 5, Ex. A, ¶ 4.1). Home Depot and West Hills Park are the “Owners” under the
Agreement. (Id., Preliminary Statement).
The parties conducted excavation and grading work on West Hills Park’s land to develop it
2
See also Williams v. Home Depot USA, Inc., Civ. A. No. H-10-2493, 2011 WL 2517261 (S.D. Tex. June 23,
2011).
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as a shopping center, which would include a Home Depot store. Boxcars Properties owned adjacent
property. The excavation involved the removal of approximately ten feet of dirt near the Boxcars
property. Boxcars sued Home Depot and West Hills Park in Texas state court, alleging that the
excavation and related work damaged apartment buildings and a swimming pool on the Boxcars
property. Boxcars asserted causes of action for negligence and for loss of lateral support, a strictliability theory. Home Depot settled with Boxcars. The state court severed Boxcars’s claims against
Home Depot and nonsuited Home Depot before the trial between Boxcars and West Hills Park
began.
The jury found West Hills Park liable for negligence and strict liability and awarded Boxcars
$2,859,009. Neither the verdict nor the judgment specified whether the damages were based on
negligence or strict liability. West Hills Park did not appeal. Instead, West Hills Park sued Home
Depot in federal court, seeking indemnification for the state-court judgment under the Agreement.
West Hills Park alleged that Home Depot’s acts caused the damage to the Boxcars property. Home
Depot argued, and continues to argue, that West Hills Park cannot seek contractual indemnification
because: (1) the jury found West Hills Park negligent and strictly liable for the damage; and (2) the
contract between Home Depot and West Hills Park did not expressly provide indemnity for a party’s
own negligence or strict liability.
West Hills Park and Home Depot filed cross-motions for summary judgment. The issue was
whether the Agreement required Home Depot to indemnify West Park Hills for the state-court
judgment. On June 23, 2011, this court determined that the record evidence showed that a Home
Depot contractor had caused the damage for which West Hills Park was held responsible in the
underlying state-court action. The Texas express-negligence doctrine does not apply to conduct by
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a party other than the indemnitee. As a result, Home Depot was required to indemnify West Hills
Park. On July 27, 2011, Home Depot sought reconsideration of the June 23, 2011 memorandum and
order.
II.
The Standard for Reconsideration
“While the Federal Rules of Civil Procedure do not provide for a motion for reconsideration,
such a motion may be considered either a Rule 59(e) motion to alter or amend judgment or a Rule
60(b) motion for relief from judgment or order.” Shepherd v. Int’l Paper Co., 372 F.3d 326, 328
n.1 (5th Cir. 2004). Whether a motion is considered under Rule 59(e) or Rule 60(b) depends on
when it is filed. “If the motion is filed within ten days of the judgment or order of which the party
complains, it is considered a Rule 59(e) motion; otherwise, it is treated as a Rule 60(b) motion.” Id.
The 2009 amendments to the Federal Rules of Civil Procedure extended the time for filing a Rule
59(e) motion from 10 days to 28 days. See FED. R. CIV. P. 59 Committee Note (2009); Williams v.
Thaler, 602 F.3d 291, 303 n.7 (5th Cir. 2010). Neither Rule 59(e)’s 28-day deadline nor Rule
60(b)’s one-year deadline may be extended. FED. R. CIV. P. 6(b)(2).
Home Depot moved for reconsideration more than 28 days after this court granted summary
judgment for West Hills Park. Rule 60(b), not Rule 59(e), governs. “Unlike a motion for new trial
under Rule 59(a), however, Rule 60(b) only encompasses specifically enumerated grounds.”
Weckesser v. Chicago Bridge & Iron, 447 F. App’x 526, 529 (5th Cir. 2011) (per curiam). They are:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could
not have been discovered in time to move for a new trial under Rule
59(b);
(3) fraud (whether previously called intrinsic or extrinsic),
misrepresentation, or misconduct by an opposing party;
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(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based
on an earlier judgment that has been reversed or vacated; or applying
it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
FED. R. CIV. P. 60(b). Rule 60(b)(1) applies when the party seeking relief from judgment bases its
motion on a legal error by the district court. See Benson v. St. Joseph Regional Health Ctr., 575
F.3d 542, 547 (5th Cir. 2009).3 A Rule 60(b)(1) motion “may be used to rectify an obvious error
of law, apparent on the record.” Id. (internal quotation marks omitted); McMillan, 4 F.3d at 367.
The “focus on ‘obvious’ legal error, which [the Fifth Circuit] as a matter of course would correct
anyway, is to prevent a Rule 60(b) motion from being used as a substitute for a timely appeal on
disputed issues.” Benson, 575 F.3d at 547.
III.
Analysis
This court previously concluded that West Hills Park was entitled to contractual indemnity
for two reasons: first, the state-court verdict and judgment did not give rise to issue preclusion
preventing West Hills Park from arguing that Home Depot’s negligence and strict liability, not its
own, caused the Boxcars property damage; and second, the record evidence showed that the
excavation work at issue was performed by a Home Depot contractor. Home Depot argues that this
first conclusion is inconsistent with long-established binding Texas case law on the expressnegligence doctrine and that the second conclusion is unsupported by the record.
A.
Issue Preclusion and the Express-Negligence Doctrine
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Rule 60(b)(6) does not apply to claims of legal error: “claims of legal error or mistake . . . are subsumed under
subsection (1).” McMillan v. MBank Fort Worth, N.A., 4 F.3d 362, 367 (5th Cir. 1993); accord Castleberry v.
CitiFinancial Mortg. Co. Inc., 230 F. App’x 352, 356 (5th Cir. 2007) (per curiam).
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Home Depot argues that the express-negligence doctrine must apply because, until the
court’s previous memorandum and order, “there has never been a case decided under Texas law in
which a party that was judged negligent by a jury was permitted to seek contractual indemnity for
that judgment without having to show that the contract of indemnity complied with the express
negligence doctrine.” (Docket Entry No. 15, at 2). Home Depot relies on the state-court judgment
and underlying jury verdict.
This case is distinguishable from those cited by Home Depot. None of those cases involved:
(1) a jury’s findings in a state-court action that a defendant was negligent and strictly liable; (2)
asserted by a party to an indemnity contract who was neither a plaintiff nor a defendant in the
underlying action when it was tried; (3) as the sole basis for resisting contractual indemnity sought
by the state-court defendant in a subsequent declaratory-judgment action. The cases that Home
Depot cites did not hold that when, as here—(1) the party seeking contractual indemnity for a statecourt judgment was found negligent and strictly liable but no distinction was made between the two
bases for liability in the verdict or judgment; (2) the record before the court deciding the indemnity
issue does not include any evidence from the underlying trial; and (3) the contracting party against
whom indemnification is sought was not a party to the state-court suit when it was tried—the
following result is required: the state-court verdict and judgment is preclusive and prevents the party
seeking indemnity from presenting, and the court deciding indemnity from considering, evidence
that an agent of the contracting party—from whom indemnity is sought—was responsible for the
damage leading to the state-court judgment.
Under Texas law, the duty to indemnify depends not only on the verdict in the underlying
state-court case, but on the facts underlying the liability verdict. To determine the duty to
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indemnify, a court “may have to look beyond the verdict to the facts proven in the underlying state
court trial.” Nat’l Union Fire Ins. Co. of Pittsburgh, P.A. v. Puget Plastics Corp., 450 F. Supp. 2d
682, 695 (S.D. Tex. 2006) (citing, among other cases, Trinity Universal Ins. Co. v. Cowan, 945
S.W.2d 819, 821 (Tex. 1997)); see also Ins. Co. of N. Am. v. McCarthy Bros. Co., 123 F. Supp. 2d
373, 377 (S.D. Tex. 2000) (“In Texas, the underlying liability facts, rather than the legal theory of
liability, trigger the duty to indemnify.”). Home Depot was not a party to the state-court case when
the trial between Boxcars and West Hills Park took place. The record here does not include the
evidence presented at that trial. The record in this case about the state-court case consists only of
Boxcars’s original petition, the pretrial severance and nonsuit of Home Depot, the jury questions and
answers, and the judgment.
Home Depot faults this court for using issue-preclusion principles to help analyze whether
the express-negligence doctrine prevents West Hills Park from recovering under the Agreement’s
indemnification clause. But Home Depot’s argument for applying the express-negligence doctrine
rests on treating the jury’s findings that West Hills Park was negligent and strictly liable as
preclusive on the issue of whether West Hills Park is seeking indemnification for its own negligence
or strict liability. That turns on whether those findings are entitled to issue preclusion.4 Beyond
arguing that issue preclusion is not relevant, Home Depot has not argued more specifically that this
court’s application of Texas issue-preclusion law was incorrect. As this court explained in its
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Home Depot cites Texas Department of Transportation v. Metropolitan Transit Authority of Harris County,
No. 01-01-00613-CV, 2002 WL 724927 (Tex. App.—Houston [1st Dist.] Apr. 25, 2002, no pet.), an unpublished opinion
that this court cited in its initial opinion, for the proposition that Texas courts would rely on a jury’s finding to apply the
express-negligence doctrine. (See Docket Entry No. 15, at 7). Home Depot quotes TxDOT: “The express negligence
doctrine would be relevant to this case only if TxDOT had been found negligent by the jury and TxDOT was still seeking
indemnity from Metro.” Id. at *2. The TxDOT court was not faced with a situation in which it had a judgment that
rested on alternative grounds and in which there was an issue as to whether TxDOT or Metro was responsible for the
conduct. The TxDOT case is an example of the absence of a Texas case addressing the unusual legal issue presented
here.
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previous opinion, (Docket Entry No. 14, at 11–12), under Texas law, “[t]he general rule is that there
cannot be estoppel by alternative holdings.” Caprock Inv. Corp. v. Montgomery, 321 S.W.3d 91,
97 (Tex. App.—Eastland 2010, pet. denied) (citing Johnson & Higgins of Tex., Inc. v. Kenneco
Energy, Inc., 962 S.W.2d 507, 522 (Tex. 1998)). An exception “to the general rule of no preclusion
[exists] when alternative holdings are appealed and affirmed.” Johnson & Higgins, 962 S.W.2d at
522. “The rationale for this rule is that a determination in the alternative may not have been as
rigorously considered as it would have been if necessary to the result, and the losing party may be
dissuaded from appealing one determination because of the likelihood that the other will be upheld.”
Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 722 (Tex. 1990). In this case, the state-court jury
found against West Hills Park under two theories: negligence and strict liability. Either of these
theories could have supported the liability and damages findings. The state-court judgment was not
appealed. Issue preclusion does not apply to the jury’s verdict.
Issue preclusion is inapplicable for an additional reason. For one party to assert issue
preclusion against another party in a subsequent action, “the parties [must have been] cast as
adversaries in the first action.” John G. & Marie Stella Kenedy Mem’l Found. v. Dewhurst, 90
S.W.3d 268, 288 (Tex. 2002); see also RESTATEMENT (SECOND) OF JUDGMENTS § 27 cmt. a (“The
rule of issue preclusion is operative where the second action is between the same persons who were
parties to the prior action, and who were adversaries (see § 38) with respect to the particular issue,
whether the second action is brought by the plaintiff or by the defendant in the original action.”).
Home Depot was not a party to the underlying action when it was tried. Home Depot cannot rely
only on the state-court judgment and jury verdict to resolve the issue of whether West Hills Park is
seeking indemnity for its own negligence and strict liability.
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In sum, this court did not obviously err under Texas law from looking beyond the verdict and
judgment in the state court to determine indemnity. Home Depot’s motion for reconsideration of
the denial of its summary-judgment motion is denied.
B.
The Summary-Judgment Evidence
Home Depot next argues that, even if the express-negligence doctrine does not apply, West
Hills Park did not present sufficient evidence entitling it to summary judgment that it is entitled to
indemnity. (Docket Entry No. 15, at 13). After careful reconsideration of the record, the court
agrees that granting West Hills Park’s motion for summary judgment that it was entitled to
indemnity was obviously erroneous.
The evidence submitted by West Hills Park is insufficient to show that, as a matter of law,
the state-court judgment was for damage caused by a Home Depot contractor. West Hills Park’s
corporate representative, Alvin Freeman, testified that West Hills Park did not hire a contractor to
carry out the excavation work. (Docket Entry No. 9, at 25). West Hills Park presented evidence of
a contract between Home Depot and Rockwell Construction Corporation of Texas to construct the
Home Depot Store #6578. (Docket Entry No. 8, Ex. C). But the record does not make clear who
did the excavation and related work, whether that entity or person was hired by Home Depot or West
Hills Park, and whether that work caused the damage to the Boxcars property. Freeman’s deposition
testimony shows that West Hills Park and Home Depot shared at least one contractor or
subcontractor, a man named Grissom. West Hills Park hired Grissom to clear land after the
excavation. (Docket Entry No. 9, at 25–26). West Hills Park may have hired, or authorized,
Grissom—who had graded the Home Depot land—to grade its land as well. (Id., at 49–51).
Freeman’s deposition testimony indicates that West Hills Park had at least some involvement in
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hiring agents to perform the work to prepare its land for construction. And there is no evidence as
to what work caused the damage leading to the state-court damages award. On the record evidence
it submitted, West Hills Park is not entitled to summary judgment that, as a matter of law, it is
entitled to contractual indemnity.
IV.
Conclusion
Home Depot’s motion for reconsideration, (Docket Entry No. 15), is granted in part and
denied in part. On reconsideration, the parties’ cross-motions for summary judgment, (Docket Entry
Nos. 5, 8), are both denied. A status and scheduling conference is scheduled for April 16, 2012, at
5:30 p.m., in Courtroom 11-B.
SIGNED on March 30, 2012, at Houston, Texas.
______________________________________
Lee H. Rosenthal
United States District Judge
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