Lowe's Home Centers, Inc. v. THF Clarksburg Development Two Limited Liability Company
Filing
248
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS MOTION FOR SUMMARY JUDGMENT DKT. NO. 180 , AND DENYING PLAINTIFFS MOTION FOR PARTIAL SUMMARY JUDGMENT DKT. NO. 182 . Signed by District Judge Irene M. Keeley on 3/18/2014. (Copy counsel of record via CM/ECF)(jmm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
LOWE’S HOME CENTERS INC.,
Plaintiff,
v.
//
CIVIL ACTION NO. 1:12CV72
(Judge Keeley)
THF CLARKSBURG DEVELOPMENT TWO,
LLC, and MICHAEL H. STAENBERG,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 180], AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 182]
Pending before the Court are the motion for summary judgment
(dkt. no. 180), filed by the defendants, THF Clarksburg Development
Two,
LLC
(“THF”)
(collectively,
the
and
Michael
“defendants”),
H.
Staenberg
and
the
motion
(“Staenberg”)
for
partial
summary judgment (dkt. no. 182), filed by the plaintiff, Lowe’s
Home Centers, Inc. (“Lowe’s”).
For the following reasons, the
Court GRANTS IN PART and DENIES IN PART the defendants’ motion for
summary judgment, and DENIES Lowe’s motion for partial summary
judgment.
I. FACTUAL BACKGROUND
THF owns a large commercial real estate development, known as
the Newpointe Plaza Shopping Center (“Newpointe”), located in
Clarksburg, West Virginia.
(Dkt. No. 3).
On January 30, 2002, THF
and Lowe’s entered into two agreements.
In the first, a ground
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
lease, THF agreed to lease a portion of the Newpointe land to
Lowe’s (the “Lowe’s Tract”).
(Dkt. No. 3-2).
In the second, the
Site Development Agreement (the “SDA”), THF agreed to develop the
Lowe’s Tract and Lowe’s agreed to compensate THF $4,087,154 for the
work.
(Dkt. No. 3-3).
Pursuant to the SDA, THF’s duties included, among other
things, surface and subsurface compaction, clearing and grading,
and providing a storm sewer system. Id. Significantly, Staenberg,
the managing partner and 50% owner of THF (dkt. no. 182-22),
personally guaranteed THF’s performance of its duties under the
SDA, as well as its payment of any costs and attorneys’ fees
incurred by Lowe’s to enforce the SDA.
(Dkt. No. 3-3).
The
warranty provision in Article VIII of the SDA states as follows:
[THF] hereby warrants and represents to Lowe’s that all
Site Improvement Work shall be free from defects of every
kind and nature for a period of at least one (1) year
after the date of opening of Lowe’s building on the
Lowe’s Tract to the public, and that provided that Lowe’s
gives Developer notice of any such defects within two (2)
years after the date of the opening of Lowe’s building on
the Lowe’s Tract, [THF] shall cause such defects to be
repaired, including the replacement of any Site
Improvement Work, and including repair and replacement of
other property which is required as a result of defects
in the Site Improvement Work, without cost to Lowe’s.
After such notice of any defects is given, any such
repair or replacement shall be commenced within ten (10)
2
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
days after demand and shall be pursued diligently to
completion. [THF] shall be responsible for making such
repair or replacement, without regard (unless the need
for repair or replacement results solely from the
negligent or intentionally wrongful acts of Lowe’s, its
agents or contractors) for the reason that such repair or
replacement is necessary. Nothing contained herein shall
limit any other obligation of Site Improvement Work in a
good and workmanlike manner in compliance with all
applicable laws, rules, regulations, ordinances, codes
and [THF’s] responsibility to repair latent defects,
which obligations shall not be limited by the time
periods or notice requirements set forth above.1
Id.
Article XII specifies that “[a]ll notices . . . must be in
writing
and
must
be
delivered
personally
or
by
nationally
recognized overnight courier or sent by United States certified
mail . . . to the parties at the respective addresses.”
Id.
Finally, Article VI of the SDA required THF to certify to
Lowe’s that the Lowe’s Tract had been “completed pursuant to the
Site Improvement Plans and that the location of the building
corners and elevation of the [Lowe’s Tract] subgrade complies with
the tolerances specifically set forth in the Site Improvement
Plans.”
Id.
Accordingly, on April 9, 2002, THF’s geotechnical
1
THF also provided Lowe’s with a separate Site Improvement Work
Warranty (dkt. no. 3-3 at 42), which contained nearly the same language
as the warranty in the SDA.
3
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1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
engineer, CTL Engineering of West Virginia, Inc. (“CTL”), provided
Lowe’s with a geotechnical certification stating the following:
I [CTL] certify that the building pad/limits for the
above referenced project, has [sic] been constructed in
accordance with the Geotechnical Investigation prepared
by
CTL
Engineering
date,
10/23/01,
and
Lowe’s
Specifications, dated 07/10/01. All earth cut and fills
have been installed competently, properly and have been
compacted under the supervision of the below certifying
Geotechnical Engineer. The building pad/limits has [sic]
been acceptably prepared to support the proposed
construction. A final report containing a description of
this grading work, on-site recommendations and the
results of testing and inspections has been prepared and
is dated 10/23/01.
(Dkt. No. 3-3 at 24).
The October 23, 2001 report referenced in the geotechnical
certification
contained
CTL’s
findings
from
a
investigation it had performed at THF’s request.
subsurface
That report
concluded that “dynamic compaction has been completed throughout
the entire building footprint.”
(Dkt. No. 187-6 at 6).
In
reaching this conclusion, CTL relied on a November 3, 2000 map
drawn
by
THF’s
(“Wolverton”).
project
engineer,
Wolverton
(Dkt. No. 187-4 at 11).
&
Associates
The report further
provided that “[s]hould layout of the proposed structure be changed
from those used in preparing this report, the Soils Engineer should
4
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
be
notified
to
make
the
necessary
modifications
recommendations to account for the changed conditions.”
in
our
(Dkt. No.
187-6 at 10).
After THF purported to deliver the developed Lowe’s Tract to
Lowe’s on April 15, 2002, Lowe’s constructed its store on a revised
site plan prepared and delivered by Wolverton to Lowe’s on April 8,
2002.
The Newpointe store opened for business in January, 2003.
(Dkt. No. 180-3).
Less than two years later, on April 20, 2004, Lowe’s sent
Staenberg an email notifying him of a “settlement issue . . . which
seems to be getting worse.”
(Dkt. No. 182-15).
Lowe’s engineer
explained that “[i]t is probable [that] foundation failure will
worsen and wall movement will continue.”
Id.
According to the
email, there had been 1.5" of movement at the rear of the store.
Lowe’s
also
notified
Staenberg
that
he
and
THF
had
“some
responsibility . . . to provide a stabile [sic] subsurface” under
the SDA.
Id.
Staenberg
immediately
forwarded
Lowe’s
email
to
two
THF
employees, who told Lowe’s to “[r]est assured, THF Realty takes our
responsibility very serious [sic] . . . and will do everything
5
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
possible to identify the problem and accept any obligations we may
have accordingly.”
(Dkt. No. 182-16). On April 29, 2004, THF sent
a follow-up email to Lowe’s that reiterated THF’s position that
“[i]f any failure or damage is due to anything we as landlords are
responsible for, rest assured we will pay for the ‘evaluation,
testing and repairs.’” (Dkt. No. 182-19).
THF’s email further
advised that “should the failure be related to something caused by
the
construction
of
the
facility
financial responsibility.”
Following
this
itself,
Lowe’s
will
accept
Id.
exchange
of
emails,
both
Lowe’s
and
employed engineers to determine the cause of the settlement.
August
25,
2004,
engineering
concluded
THF
received
consultants,
the
problem
Triad
was
a
report
from
Engineering
“caused
by
one
(“Triad”),
general
On
Lowe’s
that
differential
settlement of the fill materials below the structure.”
189-2).
of
THF
(Dkt. No.
Additionally, in November 2004, THF received a memorandum
from Lowe’s other consultant, Fayette Engineering (“Fayette”),
which found a 3" elevation difference from the front of the store
to the back.
According to Lowe’s, Fayette’s report confirmed
6
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Lowe’s theory of movement in the fill material.
(Id.; Dkt. No.
189-10).
THF sent the report of its engineering consultant, CTL, to
Lowe’s on March 22, 2005, in which CTL concluded the settlement was
“unrelated to the originally constructed fill and that the area is
likely being impacted by some external force.”
(Dkt. No. 189-3).
After receiving no response to CTL’s report, THF sent Lowe’s a
letter on November 16, 2005, stating: “Since I [THF] have not heard
back from you [Lowe’s] and our last report eliminated the pad as
the cause of the settlement, I will assume that Lowe’s is in
agreement with our engineer’s conclusion.”
(Dkt. No. 189-4).
For
nearly two years, THF received no further communication from
Lowe’s.
Nevertheless, on August 14, 2007, Lowe’s sent THF a letter via
UPS explaining that it had delayed its response until its engineers
had
completed
settlement.
tests
designed
(Dkt. No. 182-20).
to
determine
the
cause
of
the
Lowe’s further explained that it
“considers the underlying soil failures at the site to be a latent
defect to which [THF’s] extended warranty applies and hereby puts
[THF] on notice regarding that claim.”
7
Id.
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
THF refused to cure the settlement problems, leading Lowe’s to
sue THF on April 26, 2012.
In its complaint, Lowe’s alleged breach
of contract (Count I), breach of warranty (Count II), and breach of
the covenant of quiet enjoyment (Count III) against THF.
It also
alleged breach of contract (Count IV) against Staenberg.
As
relief, Lowe’s sought at least $4 million to cover the costs of
curing
the
engineering
settlement
problems;
costs;
least
at
at
$210,000
least
to
$925,000
cover
the
to
cover
costs
of
structural damage to the store; and an award for other fees and
costs.
On November 12, 2013, THF and Staenberg filed a motion for
summary judgment that argued Lowe’s had failed to comply with the
SDA’s notice requirements, and, as a consequence, its claims for
breach of contract and breach of warranty failed.
The motion also
argued that Lowe’s breach of contract claim against Staenberg was
time-barred by both the statute of limitations for contracts and
the statute of repose. Finally, THF contended that it was entitled
to judgment as a matter of law on Lowe’s claim for breach of the
covenant of quiet enjoyment because there was no genuine dispute as
to any material fact regarding abandonment or eviction.
8
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
In its response to THF’s motion, Lowe’s argued that it had
provided
timely
notice
alternatively,
that the
defects”
did
that
not
regarding
settlement
require
the
issues
notice.
settlement,
constituted
Lowe’s
and,
“latent
rejected
any
contention that its claims were time-barred, and asserted there
were genuine issues of material fact regarding whether THF had
breached the covenant of quiet enjoyment.
Also on November 12, 2013, Lowe’s filed a motion for partial
summary judgment arguing that it was entitled to summary judgment
on its breach of contract and breach of warranty claims.
The
defendants responded that genuine factual disputes exist as to the
cause of the settlement on the Lowe’s Tract, which precludes a
grant of judgment as a matter of law.
On March 13, 2014, the Court heard oral argument on the
parties’ assertions of waiver and estoppel, as well as their
theories of liability.
The motions are ripe for decision.
II. STANDARD OF REVIEW
Summary
documents,
judgment
is
electronically
declarations,
stipulations
appropriate
stored
.
.
9
where
the
information,
.,
admissions,
“depositions,
affidavits
or
interrogatory
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
answers, or other materials” show 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(c)(1)(A), (a).
When ruling on
a motion for summary judgment, the Court reviews all the evidence
“in the light most favorable” to the nonmoving party.
Providence
Square Assocs., L.L.C. v. G.D.F., Inc., 211 F.3d 846, 850 (4th Cir.
2000).
The Court must avoid weighing the evidence or determining
the truth and limit its inquiry solely to a determination of
whether genuine issues of triable fact exist.
Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986).
The moving party bears the initial burden of informing the
Court
of
the
basis
for
the
motion
nonexistence of genuine issues of fact.
477 U.S. 317, 323 (1986).
and
of
establishing
the
Celotex Corp. v. Catrett,
Once the moving party has made the
necessary showing, the nonmoving party “must set forth specific
facts showing that there is a genuine issue for trial.”
Anderson,
477 U.S. at 256 (internal quotation marks and citation omitted).
The “mere existence of a scintilla of evidence” favoring the
nonmoving party will not prevent the entry of summary judgment; the
10
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
evidence
must
be
such
that
a
rational
reasonably find for the nonmoving party.
trier
of
fact
could
Id. at 248–52.
III. DISCUSSION
A. Lowe’s Contract & Warranty Claims
As discussed, Article VIII of the SDA required Lowe’s to
provide notice of claims under the SDA to THF within two years of
the store opening.
that
notice
must
Furthermore, Article XII of the SDA specified
be
written
and
delivered
personally,
by
a
nationally recognized overnight courier or United States certified
mail,
to
THF’s
Improvement
Work
St.
Louis,
Warranty
Missouri
and
address.2
Staenberg’s
Both
personal
the
Site
guaranty
incorporated the SDA’s notice requirements.
It is undisputed that Lowe’s did not send written notice of
the settlement to THF until August 14, 2007 - more than four years
after the Newpointe store opened.
It is likewise undisputed that
Lowe’s sent actual notice of the settlement to THF via email on
2
At oral argument on March 13, 2014, Lowe’s suggested for the first
time that formal notice pursuant to the SDA was required only for
warranty claims under that provision. For purposes of this memorandum
opinion and order, the Court finds it unnecessary to address that issue.
11
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
April 20, 2004 - well within the two-year window prescribed by
Article VIII of the SDA.
Despite
having
received
actual
notice
of
the
settlement
issues, THF maintains that, had it received formal notice, its
attorney would have notified the subcontractors and the insurance
provider of Lowe’s potential claim.
In determining whether a
party’s substantial compliance with formal notice is sufficient to
trigger the counter-party’s duties, courts typically weigh the
severity of prejudice against the receipt of actual notice.
See,
e.g., Engineered Maint. Svcs., Inc. v. United States, 55 Fed. Cl.
637, 642 (Fed. Cl. 2003) (explaining that sufficiency of actual
notice and prejudice are two factors in determining whether a
party’s failure to provide formal written notice, as required by
contract, bars that party’s claim); City of Valdez v. Valdez Dev.
Co., 523 P.2d 177, 182-83 (Alaska 1974) (“We agree with the trial
court that this combination of actual notice and lack of prejudice
to the city excused Section 707's requirement of written notice.”).
Here, THF overstates the prejudice that resulted from Lowe’s
failure to send formal notice.
After April 20, 2004, THF had all
the requisite information it needed to place its subcontractors and
12
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
insurance carrier on notice of the settlement issues and potential
claims
against
it
under
the
SDA,
the
Site
Warranty, and Staenberg’s personal guaranty.
Improvement
Work
In fact, THF did
notify its geotechnical consultant, CTL, of the settlement even
before April 20, 2004.
(Dkt. No. 182-16 at 2).
Moreover, after
THF submitted its claim to its insurer when this litigation ensued
in 2012, the carrier denied THF’s claim on the basis that THF “had
initial notice of this claim in 2004 but failed to notify National
Surety at that time.”
(Dkt. No. 189-5 at 7).
Thus, THF’s
prejudice, if any, due to receiving electronic rather than written
notice in April, 2004 is a result of its own inaction, not lack of
notice.
Nevertheless, THF urges a strict application of the SDA’s
notice provisions, in accordance with West Virginia contract law,
as a complete bar to Lowe’s claims.
See, e.g., Syl. Pt. 2,
Bethlehem Mines Corp. v. Haden, 172 S.E.2d 126, 126 (W. Va. 1969).
That
argument,
however,
fails
to
account
for
THF’s
conduct
following its receipt of actual notice in April, 2004, which
amounted to a waiver of its contractual right to formal notice.
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LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
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MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
“[T]o
effect
demonstrates
an
a
waiver,
intentional
there
must
relinquishment
be
evidence
of
a
known
which
right.
Waiver may be established by express conduct or impliedly, through
inconsistent actions.”
Ara v. Erie Ins. Co., 387 S.E.2d 320, 323
(W. Va. 1989); see also Little Beaver Enters. v. Humphreys Rys.,
Inc., 719 F.2d 75, 79 (4th Cir. 1983) (“Like other contract
provisions, the requirement of written notice may be waived.
The
waiver need not be expressed to be effective; it is sufficient if
the acts or conduct of one party evidences an intention to relieve
the other party of his duty to strictly comply with the contract
terms.”).
Upon receipt of Lowe’s email, THF could have demanded formal
notice under Article XII of the SDA, or simply remained silent and
rested
on
its
rights.
Neither
of
these
actions
would
have
demonstrated THF’s intent to relinquish its right to formal notice.
But rather than pursue either course of conduct, THF responded to
Lowe’s email, affirming its intent to “do everything possible to
identify the problem and accept any obligations [it] may have
accordingly.”
Moreover, according to THF’s own timeline, it hired
engineers to inspect the settlement, authorized a survey crew to
14
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MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
check grades, conducted subsurface testing, drilled test borings,
hired a piering company, and sent Lowe’s updates through November,
2005.
THF thus acted exactly as if it had received formal notice
according to Article XII of the SDA.
The efforts it undertook and
the expenses it incurred manifested its relinquishment of its right
to formal notice, thus constituting waiver.
In its defense, THF points to the SDA’s “no waiver” clause,
which provides that “[t]he failure to enforce any particular
provision of this Agreement on any particular occasion shall not be
deemed a waiver by either party of any of its rights hereunder . .
. .” Within the various jurisdictions, there is a real question as
to the significance, if any, of no waiver provisions such as this
one.
See, e.g., Perry Eng’g Co. v. AT&T Commc’ns, Inc., 998 F.2d
1010 (4th Cir. 1993) (per curiam) (explaining that, under Virginia
law, “[l]ike all contractual rights, the rights under the ‘no
waiver’ clause are themselves subject to waiver”); Westinghouse
Credit Corp. v. Shelton, 645 F.2d 869, 873-74 (10th Cir. 1981)
(“[T]he weight of authority, and the view we think Oklahoma state
courts would follow, is that an ‘anti-waiver’ clause, like any
other
term
in
the
contract,
is
15
itself
subject
to
waiver
or
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
modification . . . .”); Hovnanian Land Inv. Grp., LLC v. Annapolis
Towne Centre at Parole, LLC, 25 A.3d 967, 983 (Md. 2011) (“[A]
party
may
waive,
by
its
actions
or
statements,
a
condition
precedent in a contract, even when that contract has a non-waiver
clause.”); see also 13 Williston on Contracts § 39:36 (4th ed.
2013) (“The general view is that a party to a written contract can
waive a provision of that contract by conduct despite the existence
of a so-called antiwaiver or failure to enforce clause in the
contract.”).
But see, e.g., Sacred Heart Health Sys., Inc. v.
Humana Military Healthcare Svcs., Inc., 601 F.3d 1159, 1182 (11th
Cir. 2010) (recognizing that Florida courts have consistently
enforced anti-waiver clauses).
The Court has not found, and the parties have not cited, any
West Virginia cases explicating the state’s position on this
issue.3
When faced with unsettled issues of state law, the Fourth
3
But see Dunbar Hous. Auth. v. Nesmith, 400 S.E.2d 296, 300 (W. Va.
1990) (noting in dicta that, hypothetically, had the subject lease
contained a non-waiver provision, the landlord could have accepted late
rent without waiving the tenant’s breach of the lease terms). This case
merely recognizes that, even in the majority of states that do not
enforce no waiver clauses, an exception is made in the context of late
payments. Compare, e.g., Fritts v. Cloud Oak Flooring Co., 478 S.W.2d
8, 14 (Mo. Ct. App. 1972) (“[A] provision that an express condition of
a promise or promises in the contract cannot be eliminated by waiver, or
by conduct constituting an estoppel, is wholly ineffective.”), with Wade
16
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Circuit
looks
to
generally
applicable area of law.
accepted
principles
within
the
See Horace Mann Ins. Co. v. Gen. Star
Nat’l Ins. Co., 514 F.3d 327, 329 (4th Cir. 2008) (“[I]f the West
Virginia courts have not addressed an issue, we will look to
generally accepted principles of insurance law, because we believe
that West Virginia’s Supreme Court of Appeals would adopt those
principles as its own.”).
Thus, the Court has no choice other than
to predict that West Virginia courts would follow the majority of
states and hold that no waiver clauses are themselves subject to
waiver upon a showing that the party asserting the clause has
waived its rights under another provision of the contract.
Despite THF’s waiver of its right to formal notice under the
SDA, it argues that Lowe’s likewise has waived its contractual
rights or is estopped from asserting them.
After each of the
parties had determined that the settlement was caused by the
other’s fault, THF heard nothing from Lowe’s for several months.
v. Ford Motor Credit Co., 455 F. Supp. 147, 149 (E.D. Mo. 1978)
(enforcing a no waiver clause in the context of late payments under a
lease agreement, despite Missouri’s general reluctance to do so in other
instances). Thus, to the extent the dicta in Dunbar Housing has value,
it does not necessarily place West Virginia in the minority of
jurisdictions that strictly enforce no waiver clauses.
17
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Therefore, on November 16, 2005, THF sent Lowe’s a letter, advising
that it would interpret Lowe’s continued silence as acquiescence to
THF’s conclusion that THF was not at fault for the settlement.
Lowe’s sent no further communications to THF until providing
formal, written notice of its claim in August, 2007. THF argues
that the twenty-one month period of silence between November, 2005
and August, 2007 resulted in waiver and estoppel of Lowe’s rights
under the SDA.
For support, THF relies on the Sixth Circuit’s decision in
Standard Alliance Indus., Inc. v. Black Clawson Co., 587 F.2d 813
(6th Cir. 1978).
There, Standard Alliance had purchased a forging
machine from Black Clawson.
Id. at 816.
The machine was installed
in October, 1967 and immediately experienced problems. Id. at 817.
Standard Alliance sent a letter to Black Clawson in December, 1967,
notifying it of the issues.
Id.
In response, Black Clawson sent
repairmen to the Standard Alliance plant, where they worked on the
machine for five months until June, 1968.
Id.
Without further
notice to Black Clawson, Standard Alliance filed suit in May, 1969.
Id. at 817, 823.
Black Clawson argued that the suit was barred
because Standard Alliance had given no notice that, after the
18
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
repairs, it still considered Black Clawson to be in breach. Id. at
822. The Sixth Circuit agreed, holding that, after Black Clawson’s
employees
finished
their
repair
work,
additional
required before Standard Alliance could file suit.
notice
was
Id. at 825.
THF’s reliance on Standard Alliance is misplaced.
Here,
Lowe’s did precisely what the Sixth Circuit required: before filing
suit, it sent THF additional notice in August, 2007, that it still
intended to pursue its claims.
Furthermore, unlike Black Clawson,
THF never engaged in repairs.
The Court thus is not persuaded by
THF’s reliance on Standard Alliance.
Moreover,
THF’s waiver
and
estoppel
argument
incorrectly
assumes that it had the power to impose an extra-contractual duty
on Lowe’s either to respond immediately to THF’s November, 2005
letter or otherwise to forfeit its claims.
The SDA granted THF no
such power, and Lowe’s did, in fact, respond to THF’s letter,
albeit some twenty-one months later.
In effect, THF attempted to
abbreviate the ten-year statute of limitations period simply by
sending
Lowe’s
its
November,
2005
letter.
Of
course,
this
unilateral attempt to reduce the permissible statutory time period
for Lowe’s to file suit had no effect.
19
This leads to the next
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
issue of whether Lowe’s met its obligation to file its complaint
within ten years of the accrual of its breach of contract claims.4
B. Statute of Limitations, W. Va. Code § 55-2-6
In their motion, the defendants argue that Count IV of Lowe’s
complaint, alleging breach of contract against Staenberg, is barred
by the ten year statute of limitations applicable to contract
claims.5
See W. Va. Code § 55-2-6.
Because Lowe’s does not
dispute the applicability of § 55-2-6, and because Lowe’s filed its
complaint on April 26, 2012, the sole question is whether Lowe’s
breach of contract claim accrued before or after April 26, 2002.
Both parties rely on the decision of the West Virginia Supreme
Court of Appeals in Gateway Commc’ns, Inc. v. John R. Hess, Inc.,
541 S.E.2d 595 (W. Va. 2000), in which the court recognized that
five alternative events can trigger the statute of limitations for
contracts.
These include (i) “when the breach of the contract
4
Having determined that the SDA’s notice requirements do not
preclude Lowe’s claims, the Court finds it unnecessary to address Lowe’s
argument that the settlement at its Newpointe store constitutes a latent
defect.
5
The defendants acknowledge that their statute of limitations
argument does not apply to Lowe’s breach of contract claim against THF
because, unlike Staenberg, THF signed a tolling agreement on January 30,
2008. (Dkt. No. 181).
20
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
occurs”; (ii) “when the act breaching the contract becomes known”;
(iii) “[when] the agreement is to be performed”; (iv) “[when]
payment becomes due”; or (v) “when the work is completed.”
541
S.E.2d at 599 (internal citations and quotation marks omitted). In
Gateway, the Supreme Court of Appeals explained that, in the
context of construction contracts, the date on which the plaintiff
discovers the breach does not apply.
See id.
Rather, the breach
accrues either when the contractor completes its work under the
contract, or when the owner makes its final payment under the
contract.
See id.
Here, THF urges the Court to confirm April 15, 2002 as the
date on which it completed its work under the SDA.
(Dkt. No. 181).
If THF is correct, then Lowe’s filed its claim eleven days beyond
the expiration of the ten-year limitations period.
evidence to support THF’s position.
There is
On May 9, 2002, THF sent
Lowe’s a letter stating: “[W]e delivered your building pad area on
April 15.”
(Dkt. No. 180-1).
THF argues that its purported
delivery of the building pad area establishes that it had completed
all its development work.
21
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Under Article II of the SDA, however, delivery of the building
pad could not occur until Lowe’s accepted it.
(Dkt. No. 3-3).
The
undisputed evidence establishes that, after THF attempted delivery
on April 15, Lowe’s refused acceptance because the pad did not meet
its specifications.
(Dkt. No. 186-1).
Furthermore, THF sent a
letter to Lowe’s on May 16, 2003, explaining that it was still
working
to
punchlist.
complete
the
remaining
(Dkt. No. 180-5).
items
on
Lowe’s
sitework
As late as July 9, 2003, Lowe’s
informed THF that certain items related to the building pad area
remained unfinished.
(Dkt. No. 180-6).
Additionally, Exhibit C of the SDA demonstrates that the final
5% of the value of the contract, or $204,357.70, was contingent
upon “completion of all Site Improvement Work.”
(Dkt. No. 3-3).
On August 13, 2003, THF sent Lowe’s a letter advising that “[a]ll
of the punchlist items pursuant to the above-referenced development
have been completed. . . . Consequently, please accept this as an
invoice for immediate payment on the balance of $204,357.70.”
(Dkt. No. 180-7).
This letter demonstrates not only that THF did
not complete its work until the summer of 2003, but also that
Lowe’s did not make its final payment until approximately the same
22
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
time. Thus, there is no factual dispute that the Court can discern
as to whether Lowe’s breach of contract claim against Staenberg
accrued
after
April
26,
2002.
Accordingly,
the
statute
of
limitations does not bar Lowe’s breach of contract claim against
Staenberg.
C. Statute of Repose, W. Va. Code § 55-2-6a
THF also argues that Lowe’s contract claim against Staenberg
is barred by West Virginia’s statute of repose.
Under that
statute,
[n]o action, whether in contract or in tort, for
indemnity or otherwise, nor any action for contribution
or indemnity to recover damages for any deficiency in
the planning, design, surveying, observation or
supervision
of
any
construction
or
the
actual
construction of any improvement to real property, or, to
recover damages for any injury to real or personal
property, or, for an injury to a person or for bodily
injury or wrongful death arising out of the defective or
unsafe condition of any improvement to real property,
may be brought more than ten years after the performance
or furnishing of such services or construction:
Provided, . . . The period of limitation provided in
this section shall not commence until the improvement to
the real property in question has been occupied or
accepted by the owner of the real property, whichever
occurs first.
W. Va. Code § 55-2-6a.
23
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
The statute of repose “limits the time period in which a suit
may
be
filed
for
deficiencies
in
the
planning,
design,
or
supervision of construction of an improvement to real property to
ten years.”
Syl. Pt. 1, Gibson v. West Virginia Dept. of Highways,
406 S.E.2d 440, 441 (W. Va. 1991).
“contemplates
that
someone
other
Additionally, the statute
than
the owner
of
the real
property has performed the enumerated activities or services.”
Stone v. United Eng’g, 475 S.E.2d 439, 448 (W. Va. 1996) (emphasis
in original).
Here, it is undisputed that THF is both the owner of the real
property, as well as the party that performed the improvements. As
its managing partner and 50% shareholder, Staenberg presumably was
responsible for supervising THF’s work.
However, with regard to
Lowe’s breach of contract claim against Staenberg, Lowe’s suit is
based not on Staenberg’s capacity as THF’s supervisor but rather as
THF’s personal guarantor. Because the claim has nothing to do with
Staenberg’s role at THF, the repose afforded under § 55-2-6a does
not extend to Staenberg for the alleged breach of his personal
guaranty.
D. Covenant of Quiet Enjoyment
24
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Finally, THF contends that it is entitled to summary judgment
on Lowe’s claim against it for breach of the common law covenant of
quiet enjoyment.
In Gaffney v. Stowers, 80 S.E. 501, 501-02 (W.
Va. 1913), the West Virginia Supreme Court of Appeals held that,
[t]o warrant recovery for breach of a covenant for quiet
enjoyment, it is necessary to prove the covenantee was in
some way denied or refused right to possession of the
premises, or evicted therefrom or molested or disturbed
as to his possession after having acquired it, by some
person having paramount title or a claim of right under
some act of the covenantor inconsistent with the right
the covenant guarantees.
Moreover, “[e]viction, or the equivalent thereof, seems to be
essential to a breach of the covenant for quiet enjoyment.”
Ford
v. Ball, 86 S.E. 562, 564 (W. Va. 1915); see also McClintock v.
Fontaine, 119 F. 448, 450 (N.D.W. Va. 1902) (“It is well settled
that an eviction is necessary to a breach of the covenants for
quiet enjoyment and of warranty.”).
Although it is undisputed that Lowe’s store remains open for
business
and
remediation
it
of
has
the
not
been
settlement
evicted,
Lowe’s
at
Newpointe
the
necessarily entail its constructive eviction.
contends
store
that
will
The store’s market
director, Kenneth R. Haines, testified that various parts of the
store will have to be shut down for more than 300 days in order to
25
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
fix the building site pad problem.
(Dkt. No. 186-20).
Even
assuming that THF will be required to fix the settlement, Mr.
Haines’ predictions regarding constructive eviction in the future
are
insufficient
to
support
a
present
eviction
claim:
“No
constructive eviction of a tenant by his landlord occurs unless the
tenant abandons the premises.” Cato v. Silling, 73 S.E.2d 731, 744
(W. Va. 1952); see also Wilkinson v. Searls, 184 S.E.2d 735, 743
(W. Va. 1971).
Because Lowe’s has not been evicted and has not
abandoned the premises, no breach of the common law covenant of
quiet enjoyment has occurred.
E. Lowe’s Motion for Partial Summary Judgment
The Court turns next to the question of whether Lowe’s is
entitled to partial summary judgment on liability concerning its
claims against THF and Staenberg for breach of contract and breach
of warranty.
breached
the
Counts I and II of Lowe’s complaint allege that THF
SDA
and
the
Site
Improvement
Work
Warranty,
respectively, and Count IV alleges that Staenberg breached his
personal guaranty.
After careful review, the Court concludes that there are
material questions of fact in dispute surrounding THF’s liability
26
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
for the alleged differential settlement at Lowe’s Newpointe store
that
preclude
include, but
partial
are
summary
not limited
judgment.
to,
These
whether
Lowe’s
disputes
may
should
have
constructed its store on the April 8, 2002 site plans after
receiving geotechnical certification from CTL that Lowe’s knew or
should
have
known
erroneously
certified
a
building
pad
area
different from the one specified in the SDA; how much settlement
has actually occurred in the various areas of the store, and
whether THF is liable for all of it; whether all of the settlement
is the result of a defect, latent or otherwise, in THF’s site
development work; what part of the building pad on which the
Newpointe store was built was dynamically compacted; and was the
dynamic compaction performed in accord with the terms of the Site
Improvement Plans incorporated in the SDA?
Again, these may
represent only a few of many disputed factual issues that remain
unresolved and preclude summary judgment on the liability of THF.
IV. CONCLUSION
In conclusion, the Court finds that Lowe’s failure to send its
initial notice of settlement at its Newpointe store to THF in the
manner specified in the SDA does not preclude this lawsuit because
THF, through its course of conduct, waived its right to formal
27
LOWE'S HOME CENTERS V. THF CLARKSBURG DEV. TWO, ET AL.
1:12CV72
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT
notice.
THF, however, is entitled to summary judgment on Lowe’s
claim for breach of the covenant of quiet enjoyment. Lowe’s is not
entitled to partial summary judgment on liability because material
questions of fact concerning THF’s liability remain unresolved and
must be decided at trial.
For these reasons, therefore, the Court
GRANTS IN PART and DENIES IN PART the defendants’ motion for
summary judgment, and DENIES Lowe’s motion for partial summary
judgment.
It is so ORDERED.
The Court directs the Clerk of Court to transmit copies of
this Order to counsel of record.
DATED: March 18, 2014.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
28
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