Filed: Jul. 31, 2014
Latest Update: Mar. 02, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-1515 THE CHESAPEAKE BAY FOUNDATION, INCORPORATED; SMITHGROUP, INCORPORATED, d/b/a KCF-SHG Incorporated; CLARK CONSTRUCTION GROUP, LLC, f/k/a The Clark Construction Group, Inc., Plaintiffs – Appellants, v. WEYERHAEUSER COMPANY, formerly doing business as Trus Joist MacMillan; WEYERHAEUSER NR COMPANY, formerly doing business as Trus Joist MacMillan, Defendants – Appellees, v. PERMAPOST PRODUCTS CO., Third Party Defendant – Ap
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-1515 THE CHESAPEAKE BAY FOUNDATION, INCORPORATED; SMITHGROUP, INCORPORATED, d/b/a KCF-SHG Incorporated; CLARK CONSTRUCTION GROUP, LLC, f/k/a The Clark Construction Group, Inc., Plaintiffs – Appellants, v. WEYERHAEUSER COMPANY, formerly doing business as Trus Joist MacMillan; WEYERHAEUSER NR COMPANY, formerly doing business as Trus Joist MacMillan, Defendants – Appellees, v. PERMAPOST PRODUCTS CO., Third Party Defendant – App..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1515
THE CHESAPEAKE BAY FOUNDATION, INCORPORATED; SMITHGROUP,
INCORPORATED, d/b/a KCF-SHG Incorporated; CLARK
CONSTRUCTION GROUP, LLC, f/k/a The Clark Construction
Group, Inc.,
Plaintiffs – Appellants,
v.
WEYERHAEUSER COMPANY, formerly doing business as Trus Joist
MacMillan; WEYERHAEUSER NR COMPANY, formerly doing business
as Trus Joist MacMillan,
Defendants – Appellees,
v.
PERMAPOST PRODUCTS CO.,
Third Party Defendant – Appellee.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Alexander Williams, Jr., District
Judge. (8:11-cv-00047-AW)
Argued: January 29, 2014 Decided: July 31, 2014
Before MOTZ, KING, and DIAZ, Circuit Judges.
Vacated and remanded by unpublished per curiam opinion.
ARGUED: Jack McKay, PILLSBURY WINTHROP SHAW PITTMAN LLP,
Washington, D.C., for Appellants. Tracy Lynn Steedman, NILES,
BARTON & WILMER, LLP, Baltimore, Maryland, for Appellees. ON
BRIEF: Paul S. Caiola, Ward B. Coe, III, Rebecca C. Salsbury,
GALLAGHER EVELIUS & JONES, LLP, Baltimore, Maryland, for
Appellant The Chesapeake Bay Foundation, Incorporated. Michael
Evan Jaffe, Glenn C. Kennett, Cynthia Cook Robertson, PILLSBURY
WINTHROP SHAW PITTMAN LLP, Washington, D.C., for Appellant Clark
Construction Group, LLC. Kevin J. Gleeson, Maria L. Meldrum,
SULLIVAN, WARD, ASHER & PATTON, P.C., Southfield, Missouri;
Laurence Schor, Susan L. Schor, ASMAR, SCHOR & MCKENNA, PLLC,
Washington, D.C., for Appellant SmithGroup, Incorporated.
Robert P. O'Brien, NILES, BARTON & WILMER, LLP, Baltimore,
Maryland, for Appellees Weyerhaeuser Company and Weyerhaeuser NR
Company. Matthew T. Angotti, Cullen B. Casey, ANDERSON, COE &
KING, LLP, Baltimore, Maryland, for Appellee Permapost Products
Co.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
The three plaintiffs in this diversity action — The
Chesapeake Bay Foundation, Incorporated, SmithGroup,
Incorporated, and Clark Construction Group, LLC (separately,
“CBF,” “SmithGroup,” and “Clark,” and collectively, the
“plaintiffs”) — appeal from the district court’s award of
summary judgment to defendants Weyerhaeuser Company and
Weyerhaeuser NR Company (together, “Weyerhaeuser”) on the ground
that the plaintiffs’ various state law claims are time-barred.
See Chesapeake Bay Found., Inc. v. Weyerhaeuser Co., No. 8:11-
cv-00047 (D. Md. Mar. 23, 2012) (the “Opinion”), ECF No. 109. 1
As explained below, we vacate and remand for further
proceedings.
I.
A.
This litigation arose from the construction in 1999 and
2000 of CBF’s headquarters facility, the Philip Merrill
Environmental Center (the “Merrill Center”), on the Chesapeake
1
The district court’s Opinion is published at 848 F. Supp.
2d 570 and also found at J.A. 868-94. (Citations herein to
“J.A. __” refer to the contents of the Joint Appendix filed by
the parties in this appeal.)
3
Bay in Annapolis, Maryland. 2 SmithGroup designed the Merrill
Center, and Clark oversaw its construction. SmithGroup’s
“green” design called for exposed structural wood members
outside the envelope of the Merrill Center, including some that
penetrated the building’s façade. Under a March 3, 2000
purchase order that it entered into with Clark, Weyerhaeuser
agreed to provide Parallam PSL columns and beams (“Parallams”)
for use as the exposed wood members.
Parallams, which have a rough-hewn appearance, are
manufactured by bonding together strips of wood. The wood
strips’ lack of uniformity creates channels, or “avenues,” that
run longitudinally through the Parallams. Thus, water is
expected to infiltrate Parallams used outdoors. To protect
against rotting, Parallams are pressure-treated with a wood
preservative intended to fully penetrate the avenues. Its
contract with Clark required Weyerhaeuser to treat the Merrill
Center’s Parallams with the preservative PolyClear 2000.
Weyerhaeuser engaged third party defendant Permapost Products
Co. (“Permapost”) to apply the PolyClear 2000 treatment to a
specified retention level, and Permapost provided certificates
2
For purposes of our review of the district court’s summary
judgment award, we recite the facts in the light most favorable
to the plaintiffs, as the nonmoving parties. See Durham v.
Horner, 690 F.3d 183, 185 n.3 (4th Cir. 2012).
4
to Weyerhaeuser — later shared by Weyerhaeuser with the
plaintiffs — verifying that such retention level had been
reached.
Following completion of the Merrill Center in late December
2000, water began leaking through Parallams into the building.
In 2001 and 2002, the leakage was investigated by two outside
consultants hired by Clark; the first of those consultants,
Wiss, Janney, Elstner Associates, Inc., issued a report on May
8, 2001 (the “2001 Report”), and the second, Vaughn Woodwork
Consultants, released a report on May 24, 2002 (the “2002
Report”). The focus of the 2001 and 2002 Reports was on the
cause of the leakage into the Merrill Center: water travelling
from the exterior to the interior of the building through the
avenues in the Parallams.
The 2001 Report also mentioned that such water could cause
deterioration or rot in the Parallams themselves if they were
not properly treated with a wood preservative. Although the
2002 Report could have been read to similarly warn about
Parallam deterioration, its author had not considered such a
possibility because he believed that the Merrill Center’s
Parallams had been properly treated with PolyClear 2000.
Indeed, three days before issuing the 2002 Report, he told the
plaintiffs that Parallams were a “good durable product” and “as
good as a [railroad] tie,” and that their “pressure treating
5
[was] good,” so they would “not rot for a long period of time.”
J.A. 671. Meanwhile, the plaintiffs worked closely with
Weyerhaeuser on the leakage problem and shared with it the 2001
and 2002 Reports. In response, Weyerhaeuser assured the
plaintiffs that the Merrill Center’s Parallams had been properly
treated with PolyClear 2000 and were not at risk of premature
deterioration. Moreover, at least three Weyerhaeuser
representatives examined the Parallams and failed to note the
presence of rotting.
After the leaking was stopped in 2004 with the use of
sealants, the plaintiffs anticipated no further problems with
the Parallams. During a routine inspection in July 2009,
however, Parallams were found to be deteriorating. The
plaintiffs subsequently learned that the Parallams had not been
treated with PolyClear 2000 as certified, that PolyClear 2000
was not in any event well-suited to the job of preserving the
Parallams, and that Weyerhaeuser had knowingly given false
assurances to the contrary.
B.
The plaintiffs initiated this action in the Circuit Court
for Montgomery County on December 3, 2010, and Weyerhaeuser
filed a notice of removal in the District of Maryland on January
6, 2011. The complaint focused on the deterioration of the
Merrill Center’s Parallams and sought damages for, inter alia,
6
the costs of investigating and implementing remedial measures.
According to the complaint, Weyerhaeuser breached its contract
with Clark (Count I), owed common law indemnity (Count II) and
contribution (Count III) to SmithGroup and Clark, and was liable
to CBF and SmithGroup for negligent misrepresentation (Count IV)
and negligence (Count V).
On January 20, 2011, Weyerhaeuser answered the complaint,
asserted counterclaims against the plaintiffs, and filed its
third party complaint against Permapost. Following extensive
discovery, Weyerhaeuser sought summary judgment on the
plaintiffs’ claims, invoking the applicable statute of
limitations. Weyerhaeuser and Permapost also made separate
summary judgment motions with respect to Weyerhaeuser’s various
cross- and counterclaims. By its Opinion and an accompanying
Order of March 23, 2012, the district court granted
Weyerhaeuser’s motion for summary judgment as to the plaintiffs’
claims and thus denied as moot all other summary judgment
motions. The plaintiffs timely noted this appeal, and we
possess jurisdiction under 28 U.S.C. § 1291.
II.
We review de novo a district court’s award of summary
judgment, viewing the facts and inferences reasonably drawn
therefrom in the light most favorable to the nonmoving party.
7
See Core Commc’ns, Inc. v. Verizon Md. LLC, 744 F.3d 310, 320
(4th Cir. 2014). A summary judgment award is appropriate only
when the record “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). The relevant inquiry is
“whether the evidence presents a sufficient disagreement to
require submission to a jury or whether it is so one-sided that
one party must prevail as a matter of law.” Anderson v. Liberty
Lobby, Inc.,
477 U.S. 242, 251-52 (1986).
III.
In awarding summary judgment to Weyerhaeuser, the district
court concluded that the plaintiffs’ state law claims are time-
barred. 3 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 period of time within which an action shall be
commenced.” Md. Code Ann., Cts. & Jud. Proc. § 5-101. Maryland
follows the discovery rule, which provides that “the cause of
action accrues when the claimant in fact knew or reasonably
should have known of the wrong.” Poffenberger v. Risser, 431
3
The district court correctly determined, and the parties
do not dispute, that Maryland law applies to the plaintiffs’
claims. See Opinion 9-11.
8
A.2d 677, 680 (Md. 1981). Where “the knowledge of a cause of
action is kept from a party by the fraud of an adverse party,
the cause of action shall be deemed to accrue at the time when
the party discovered, or by the exercise of ordinary diligence
should have discovered the fraud.” Md. Code Ann., Cts. & Jud.
Proc. § 5-203.
Rejecting the plaintiffs’ contention that their claims did
not accrue until they discovered the deteriorating Parallams in
2009, the district court ruled that the 2001 and 2002 Reports
put the plaintiffs on actual and inquiry notice of their cause
of action. Premised on those same Reports, the court further
determined that the plaintiffs could not rely on allegations of
fraud to toll the limitations period under § 5-203 —
particularly since the parties were “cosmopolitan commercial
counterparts.” See Opinion 25. The court summarized that it
agree[d] that a factual dispute exists regarding
whether the 2001 and 2002 Reports notified Plaintiffs
that the wood was rotting per se. All the same, the
rot is not a standalone injury lacking a meaningful
tie to the cracks, voids, splits, water penetration,
and potential for deterioration that the Reports
discuss. Rather, it is just the ultimate
manifestation of this constellation of injuries.
Id. at 21. The court thus calculated that the plaintiffs’
claims “accrued no later than May 2002 and expired more than
half a decade before they filed suit.”
Id. at 20.
9
We disagree with the district court. The court “confused
one harm — water infiltration through the exterior Parallams
into the interior of the Merrill Center, that was known to
everyone in 2001 — with another harm — potential wood rot in
the Parallams.” Br. of Appellants 20. Additionally, the court
relied on the premise that “[a]ny ordinary person knows that,
all else equal, wet wood rots.” See Opinion 16; see also id. at
22 (“To reiterate, just about anyone who has ever stained a deck
knows that cracked, waterlogged wood stands to rot.”).
Viewing the evidence in the light most favorable to the
plaintiffs, a genuine dispute exists as to whether knowledge of
the water infiltration problem would have put a reasonable
person on notice that the Parallams were susceptible to
premature deterioration and that their PolyClear 2000 treatment
would not preserve them. See Bank of N.Y. v. Sheff, 854 A.2d
1269, 1275 (Md. 2004) (“[I]f there is any genuine dispute of
material fact as to when the plaintiffs possessed that degree of
knowledge, the issue is one for the trier of fact to resolve;
summary judgment is inappropriate.”). The record is clear that,
when they are used outdoors, Parallams are expected to retain
water. The record also reflects that sealing a Parallam from
leaks and protecting it from rot are distinct enough that
evidence of water infiltration would not necessarily indicate a
danger of deterioration. Furthermore, although the 2001 and
10
2002 Reports indicated that Parallams are subject to rot if not
properly treated, the Reports did not expressly assert that the
treatment of the Merrill Center’s Parallams was inadequate.
To the extent that the 2001 and 2002 Reports nevertheless
may have put the plaintiffs on inquiry notice of the Parallam
deterioration, there is a genuine dispute as to whether the
plaintiffs conducted a reasonably diligent investigation by
seeking and receiving assurances from Weyerhaeuser that the
Parallams were properly treated. See Baysinger v. Schmid Prods.
Co., 514 A.2d 1, 4 (Md. 1986) (“Whether a reasonably prudent
person should then have undertaken a further investigation is a
matter about which reasonable minds could differ, and it was
therefore inappropriate for resolution by summary judgment.”).
Likewise, there is a genuine dispute as to whether Weyerhaeuser,
through fraud or concealment, frustrated the plaintiffs’ ability
to discover their claims. See Mathews v. Cassidy Turley Md.,
Inc.,
80 A.3d 269, 290 (Md. 2013) (“Whether a plaintiff’s
failure to discover a cause of action was attributable to
fraudulent concealment by the defendant is ordinarily a question
of fact to be determined by the factfinder, typically a jury.”
(citing O’Hara v. Kovens,
503 A.2d 1313, 1320 (Md. 1986))).
Finally, while the relative sophistication of the parties may be
considered by the jury, it is a credibility issue that has no
11
place in the summary judgment analysis. See id. at 289-90 &
n.39.
IV.
Pursuant to the foregoing, we vacate the district court’s
judgment and remand for such other and further proceedings as
may be appropriate.
VACATED AND REMANDED
12
