Saturday, May 30, 2015

Be the Squeaky Wheel

Stratton Corp. v. Engelberth Construction, Inc., 2015 VT 69

By Andrew Delaney

It all starts when the roof leaks. And it ends in a hurry if you don't speak up.

Our tale today comes from a dispute between developer (Stratton), general contractor (Engleberth), and a subcontractor (Evergreen Roofing) involved in a condominium construction project. The ultimate lesson is that you need to raise issues at trial or the appeal is not going to go your way.

Back when the project started, developer bought some insurance for the project that usually gets called “wrap-up” insurance. It generally covers most if not all parties performing work at a particular site. There was a general-contractor-indemnifies-developer provision that included an obligation for general contractor to indemnify on behalf of subcontractors as well as itself.

So, general contractor hired subcontractor to do the roofing. That contract required that subcontractor indemnify general contractor. For those keeping score at home, the arrangement amongst the parties is illustrated by the first rule of plumbing.

The project got finished and the next year the condo association threatened to sue over numerous issues, “including certain alleged construction defects in the roofing.” That case settled and once it did, developer went after general contractor, who in turn sued subcontractor.

The case wound its way through the court system as these things do, and a year before trial, general contractor moved for summary judgment on the basis that the parties’ agreement required proof that claims were not covered by developer’s insurance before general contractor was required to indemnify. Subcontractor said it supported general contractor’s motion at the hearing on the motion.

The trial court denied the motion. Apparently there was a declaratory judgment thing going in federal court; whether builder’s risk was intended to be included in the package was a disputed issue, and so on.

After trial, the jury found that general contractor had breached its contract with developer, and further, that subcontractor had breached its contract with general contractor and so subcontractor was on the hook to indemnify general contractor. Subcontractor appeals.

As the SCOV puts it, subcontractor suggests that the denial-of-summary-judgment “issue was revisited at trial.” Apparently, general contractor tried to amend its answer the day before trial to add some defenses but the trial court wasn’t having that. Developer then moved to exclude evidence of the wrap-up insurance and apparently nobody objected once developer waived its negligence claim.

Subcontractor claims that general contractor “submitted requests to instruct the jury based on breaches of the indemnity clause in its agreement with developer.” While general contractor admits it did so, it notes that the trial court wasn’t having those either and, again, nobody objected.

Subcontractor’s argument is essentially that the contract between developer and general contractor should’ve barred the claims in this case, pointing to general contractor’s motion for summary judgment, general contractor’s attempt to amend, and general contractor’s proposed jury instructions.

Once a trial runs its course, summary judgment motions become moot. Subcontractor didn’t raise the issue at trial. The SCOV reasons that subcontractor also didn’t join general contractor’s “motion to amend its answer; it did not object to the exclusion of [wrap-up insurance] evidence; it did not object to the jury instructions; and it did not move for judgment as a matter of law.”

Because subcontractor failed to properly raise the issues at trial, the SCOV just isn’t going there. Game over.

2 comments:

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