Great American Assurance Co. v. Varco Pruden Buildings (2013)

MEMORANDUM OF DECISION RE MOTIONS FOR SUMMARY JUDGMENT # 138 AND 145

This action arises out of the February 7, 2011 collapse of a building located at 1001 Day Hill Road in Windsor due to the weight of accumulated snowfall.   For the purposes of deciding the two motions for summary judgment that are currently before the court, the following facts are undisputed.¹  By way of a contract dated April 6, 2005 and signed the following day, Mototown Properties, LLC (Mototown), the owner of the subject premises, entered into an agreement with Orlando Annulli & Sons, Inc. (Orlando Annulli), in which Orlando Annulli agreed to supply pre-engineered metal building components for the building project at issue.   Thereafter, on April 18, 2005, Orlando Annulli entered into a purchase order contract with VP Consolidated Holdings, Inc. (VP), wherein Orlando Annulli agreed to purchase the metal building components, including purlins, girders and “other metal component parts,” from VP. The building was subsequently constructed by the other two defendants in this action, North American Metal Masters, LLC and Eastern Steel Erectors, LLC.² All of the materials ordered by Mototown were delivered to the job site by March 8, 2006, and the construction work on the building was substantially complete by July 27, 2006.

In 2006, during the erection of this pre-engineered metal building, a dispute arose between Mototown, Orlando Annulli and VP regarding payment for the materials that VP and Orlando Annulli furnished for the project.   Specifically, the disputes involved alleged non-payment from Mototown to Orlando Annulli and resulting non-payment from Orlando Annulli to VP. A series of lawsuits were filed between these three parties in the Superior Court for the judicial district of Hartford.³

On October 27, 2006, the parties entered into a general release regarding these lawsuits.   This release provides, in relevant part, that Mototown “has remised, released and forever discharged ․ all manner of action and actions, cause and causes of action, suits, debts, dues, sums of money, accounts, reckoning, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever in law or in equity, which against the said Release it ever had, now has or which its successors or assigns hereafter can, shall or may have for, upon or by reasons or any matter, cause or thing whatsoever from the beginning of the world to the day of these presents.”   The release specifically mentions the four lawsuits filed between Mototown, Orlando Annulli and VP, as well as “[a][m]aterials [c]ontract [p]roposal dated April 6, 2005 between Orlando Annulli & Sons, Inc. and Mototown Properies, LLC.” Nevertheless, the release specifically exempts “the warranty rights contained in the [m]aterials [c]ontract [p]roposal dated April 6, 2005 between Orlando Annulli & Sons, Inc. and Mototown Properties, LLC and any associated warranty documents for all of the defects unknown at this time in workmanship or material.”

Following the February 2011 building collapse, the plaintiffs,⁴ Great American Assurancc Company (Great American) ⁵ and Mototown, brought this lawsuit in June 2012.   Orlando Annulli and VP's successor-in-interest, Varco Pruden Buildings, a division of Bluescope Buildings North America, Inc. (Varco Pruden),⁶ were named as defendants, along with the erectors of the building.⁷  Only two counts in the operative pleading, the second revised complaint dated March 3, 2013 and filed the following day,⁸ are levied against Varco Pruden and Orlando Annulli.   In count one, the plaintiffs allege a strict liability cause of action pursuant to General Statutes §§ 52–572m through 52–572q, the Connecticut Product Liability Act, against Varco Pruden.   Count two alleges the exact same cause of action against Orlando Annulli.   Specifically, the plaintiffs allege that Varco Pruden and Orlando Annulli are strictly liable to them “as a result of the defectively designed and supplied commercial steel building.”   There is no allegation that these defendants breached any warranties made to the plaintiffs.

On January 17, 2013, Varco Pruden filed a motion for summary judgment (# 138) and a memorandum of law in support of its motion.   Orlando Annulli filed a motion for summary judgment (# 145) and a supporting memorandum on February 13, 2013.   Both Varco Pruden and Orlando Annulli contend that they are entitled to judgment as a matter of law because the plaintiffs' claims against them are barred by the general release.   In response, Great American filed a memorandum of law in opposition to the summary judgment motion on March 8, 2013. (# 164.)  Mototown filed opposing memoranda of law that incorporated Great American's arguments on May 13, 2013 and May 14, 2013. (# 188 and 190.)   Varco Pruden filed a reply memorandum on May 8, 2013 (# 183), and Orlando Annulli also filed a reply memorandum on May 15, 2013. (# 191.)  The court heard oral argument on the summary judgment motions on May 16, 2013.

“Practice Book § 17–49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  (Internal quotation marks omitted.)  Provencher v. Enfield, 284 Conn. 772, 790–91, 936 A.2d 625 (2007).  “[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way ․ [A] summary disposition ․ should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party.”  (Citations omitted;  internal quotation marks omitted.)   Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003).   The burden is on the moving party to demonstrate an absence of any triable issue of material fact and “[t]o satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ․ Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ․ It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17–45].”  (Internal quotation marks omitted.)  Zielinski v. Kotsoris, 279 Conn. 312, 318–19, 901 A.2d 1207 (2006).

In their respective memoranda of law, the defendants Varco Pruden and Orlando Annulli both argue that the plaintiffs' claims against them are barred as a result of the October 27, 2006 general release.   The defendants contend that the clear and unambiguous language of the release precludes the plaintiffs from bringing any claims that arise out of the events that occurred before the signing of the release.   According to the defendants, they had completed all of the acts alleged against them before the parties entered into the general release, and, as a result, the defendants' conduct is covered by the release.   Additionally, the defendants contend that even though it is not a signatory to the general release, Great American's claims are barred by that document because Great American is a subrogated party.⁹

In response, the plaintiffs argue that the release at issue cannot preclude them from bringing claims against Varco Pruden and Orlando Annulli because a release cannot extinguish causes of action based on events that have not occurred at the time that the release was executed.   Essentially, the plaintiffs focus on the 2011 collapse of the building as the relevant event, as opposed to the defendants who point to the fact that they were no longer involved in the project after Orlando Annulli's March 2006 delivery of materials to the job site.   The plaintiffs contend that because the building collapse was not foreseeable when the parties executed the release in October 2006, that, as a matter of law, the release does not bar the claims against Varco Pruden and Orlando Annulli.   Additionally, the plaintiff's point to the fact that the statute of limitations that governs products liability claims, General Statutes § 52–577a(a), commences on the date of injury, to support their conclusion that the relevant date here is when the building collapsed as opposed to when the defendants completed their conduct.

“It is well settled that a release, being a contract whereby a party abandons a claim to a person against whom that claim exists, is subject to rules governing the construction of contracts ․ The intention of the parties, therefore, controls the scope and effect of the release, and this intent is discerned from the language used and the circumstances of the transaction ․ Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact ․ [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law.”  (Citation omitted;  internal quotation marks omitted.)  Sakon v. Manager, 113 Conn.App. 802, 804–05, 969 A.2d 781 (2009).  “A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction ․ [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and ․ the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract ․ Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms.   A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity ․ Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms.”  (Internal quotation marks omitted.)  Bruno v. Whipple, 138 Conn.App. 496, 509, 54 A.3d 184 (2012).

The release at issue in this matter is very broad in scope.   By the plain language of the document, Mototown agreed to release “all manner of action and action, cause and causes of action ․ which against the said Release it ever had, now has or which its successors or assigns, hereafter can, shall or may have ․ from the beginning of the world to the day of these presents.”   The release specifically mentions a series of four lawsuits between Mototown, Orlando Annulli and Varco Pruden's predecessor-in-interest, VP, as being settled cases, as well as the April 6, 2005 materials contract between Mototown and Orlando Annulli.   The release was signed on October 27, 2006.   According to the undisputed affidavits offered in support of their respective motions for summary judgment, Varco Pruden had furnished all of its building components to Orlando Annulli by October 21, 2005, and Orlando Annulli had delivered these materials to the job site by March 8, 2006.   Although the release does specifically exempt “warranty rights contained in the [m]aterials [c]ontract [p]roposal dated April 6, 2005 between [Orlando Annulli] and [Mototown] and any associated warranty documents for all defects unknown at this time in workmanship or material” from its coverage, the plaintiffs in this action do not allege that Varco Pruden or Orlando Annulli breached any warranties.¹⁰  Rather, the sole claims brought against these defendants sound in products liability as the result of a design defect.   Accordingly, the plaintiffs' claims against these defendants would seemingly be barred by the general release.

Nevertheless, under Connecticut law, “[e]xcept in very rare instances, the settlement and release of a claim does not cover claims based on events that have not yet occurred ․ The usual general release, then, is not ordinarily construed to include in its coverage claims based upon occurrences which have their beginning after the instrument is executed ․ For that reason, language covering ‘future claims' and ‘unknown claims' in releases is ordinarily construed to cover only inchoate claims that are in being at the time of release but which have not yet manifested themselves.”  (Citations omitted;  internal quotation marks omitted.)  Muldoon v. Homestead Insulation Co., 231 Conn. 469, 481–82, 650 A.2d 1240 (1994).   As previously indicated, the plaintiffs contend that the general release cannot foreclose their causes of action against Varco Pruden and Orlando Annulli because the relevant event is the building collapse, which did not occur until 2011.   Therefore, the court will need to determine whether the plaintiff's claims against Varco Pruden and Orlando Annulli are “inchoate claims that [were] in being at the time of release ․” Id.

Although our Supreme Court's Muldoon decision does not precisely outline what types of claims would satisfy this standard, the word “inchoate” is defined as “[p]artially completed or imperfectly formed;  just begun.”   Black's Law Dictionary (9th Ed.2009).   A products liability cause of action, where a product is placed into the stream of commerce with a defect that may or not manifest itself until a future time, would ostensibly fit this definition.   In fact, the South Carolina Supreme Court has described a products liability claim as follows:  “Strict liability would be best analogized to a legal status:  inchoate at the moment when the product leaves the seller's hands in a defective condition that is unreasonably dangerous;  ripe for determination at the instant of injury;  and fixed by action and final judgment.”  Schall v. Sturm, Ruger Co., Inc., 278 S.C. 646, 649, 300 S.E.2d 735 (1983).   As all of Varco Pruden and Orlando Annulli's conduct with respect to the allegedly defective building materials occurred before the general release was signed, the court holds that the plaintiffs' claims against these defendants are barred under the principles enunciated by our Supreme Court in Muldoon.   See, e.g., Rousseau v. Windsor Locks Police Commission, United States District Court, Docket No. 3:10cv1312 (MRK) (D.Conn. July 31, 2012, Kravitz, J.) (stating that “Muldoon ․ allows for releases that cover ‘inchoate claims that are in being at the time of release but which have not yet manifested themselves' ”).

This conclusion is supported by the Connecticut Supreme Court's decision in Duni v. United Technologies Corp./Pratt & Whitney Aircraft Division, 239 Conn. 19, 682 A.2d 99 (1996).   In Duni, the plaintiff's decedent and the decedent's employer entered into a stipulated agreement that fully settled the decedent's workers' compensation claims against his employer.   This agreement also bound any party who may have a claim against the employer on account of the decedent's workplace injuries.   Following the decedent's death, his widow made a claim for survivor's benefits under the relevant section of the Connecticut Workers' Compensation Act, General Statutes § 31–306.   The decedent's widow argued that the stipulation did not bar her claim because the decedent's death was not contemplated at the time that the parties signed the settlement agreement.   Our Supreme Court disagreed that stated that “the claim asserted by the plaintiff is much more analogous to an ‘inchoate [claim] that [is] in being at the time of release but which [has] not yet manifested [itself]’ than it is to the unforeseeable subsequent injury that was suffered by the employee in Muldoon ․ Although it is true, of course, that the plaintiff's rights under § 31–306 did not arise until after the stipulation had been signed, the decedent's death was a reasonably foreseeable consequence of the disabling occupational injuries that he had suffered and, accordingly, such a consequence was likely within the contemplation of the parties when they agreed to bar all claims ‘on account of any condition in any way resulting out of the said injuries.’  “ (Citation omitted.)  Id., 29.   Like Duni, in the present case, the plaintiffs' claims against Varco Pruden and Orlando Annulli were waiting to manifest themselves when the parties signed the general release.   Therefore, it is inapposite that the plaintiffs could not have brought their products liability causes of action until after the building collapsed.

Notably, the Third Circuit Court of Appeals has upheld a Federal District Court's granting of summary judgment in a similar factual scenario to the present case.   In Sears, Roebuck & Co. v. Jardel Co, Inc., 421 F.2d 1048 (3d Cir.1970), a payment dispute arose between two contractors that were constructing a building.   The two contractors then settled their dispute and signed a general release.   Following the execution of the release, the building collapsed due to a leaking pipe.   The building's tenant brought suit against one of the contractors, who then initiated a third-party lawsuit against the other contractor.   The District Court, applying Pennsylvania law, determined that the release barred the third-party action.   On appeal, the Third Circuit Court of Appeals stated that:  “It is undisputed that the parties negotiating the release did not specifically mention or consider the leaking pipe causing the collapse of the Sears' building, nor can it be disputed, for the purposes of a motion for summary judgment, that the pipe was not installed in accordance with the contract or that this breach was the cause of the building's collapse.   Because of these facts, [the third-party plaintiff] argues that the release would not be binding ․ it argues that there can never be an enforceable accord and satisfaction to claims that neither party discussed or knew existed at the time of settlement ․ We do not believe that the law of Pennsylvania goes this far.   A general release, by its terms discharging a party of ‘all manner of actions and causes of action, suits, debts, dues, accounts, bonds, covenants, contracts, agreements, judgments, claims and demands whatsoever in law or equity arising or to arise from a contract between the parties,’ will ordinarily be enforced absent a showing that the parties did not intend what they wrote ․” Id., 1050–51.

Similarly, this court determines that the general release signed by the parties in this case must be enforced according to its terms.   It does not matter that the parties may not have contemplated the building collapse when the release was signed.   The plaintiffs' claims against Varco Pruden and Orlando Annulli are the type of inchoate claims that Connecticut law allows a general release to cover.   Moreover, the plaintiffs certainly could have exempted a design defect based products liability cause of action from the coverage of the release as they did with the breach of warranty claims.   For all of these reasons, the court holds that Mototown's claims are precluded by the October 27, 2006 general release.   Additionally, Great American's claims are barred because of the well-settled rule that “a subrogated insurer stands in the shoes of an insured, and has no greater rights than the insured ․ [T]he insurer ․ is subject to any defenses the third party would have had against the insured.”  (Internal quotation marks omitted.)  Allstate Ins. Co. v. Palumbo, 296 Conn. 253, 260, 994 A.2d 174 (2010).   Accordingly, the court grants the motions for summary judgment filed by Varco Pruden (# 138) and Orlando Annulli (# 145).

Dubay, J.

FOOTNOTES

FN1. See pleadings number 181 and 187, where the parties stipulate that the facts as set forth in the affidavits and discovery responses offered in support of the defendants' motions are undisputed for the purposes of deciding the instant summary judgment motions..  FN1. See pleadings number 181 and 187, where the parties stipulate that the facts as set forth in the affidavits and discovery responses offered in support of the defendants' motions are undisputed for the purposes of deciding the instant summary judgment motions.

FN2. North American Metal Masters, LLC is non-appearing.   Neither Metal Masters, LLC nor Eastern Steel Erectors, LLC are parties to the motions for summary judgment that are currently before the court..  FN2. North American Metal Masters, LLC is non-appearing.   Neither Metal Masters, LLC nor Eastern Steel Erectors, LLC are parties to the motions for summary judgment that are currently before the court.

FN3. These lawsuits are:  Orlando Annulli & Sons, Inc v. Mototown Properties, LLC, Docket No. HHD CV 06 5006363;  Mototown Properties, LLC v. VP Consolidated Holdings, Inc., Docket No. HHD CV 06 5003062;  Mototown Properties, LLC v. Orlando Annulli & Sons, Inc., Docket No. HHD CV 06 5003064;  VP Consolidated Holdings, Inc. v. Orlando Annulli & Sons, Inc., Docket No. CV 06 5005985..  FN3. These lawsuits are:  Orlando Annulli & Sons, Inc v. Mototown Properties, LLC, Docket No. HHD CV 06 5006363;  Mototown Properties, LLC v. VP Consolidated Holdings, Inc., Docket No. HHD CV 06 5003062;  Mototown Properties, LLC v. Orlando Annulli & Sons, Inc., Docket No. HHD CV 06 5003064;  VP Consolidated Holdings, Inc. v. Orlando Annulli & Sons, Inc., Docket No. CV 06 5005985.

FN4. When this case was initiated, GEMSA Loan Services, LP was also named as a plaintiff.   The plaintiffs withdrew this entity's claims on March 27, 2013..  FN4. When this case was initiated, GEMSA Loan Services, LP was also named as a plaintiff.   The plaintiffs withdrew this entity's claims on March 27, 2013.

FN5. The plaintiffs allege that Great American issued an insurance policy regarding the subject property and that it is subrogated for the $10 million dollars that it paid as a result of the building collapse..  FN5. The plaintiffs allege that Great American issued an insurance policy regarding the subject property and that it is subrogated for the $10 million dollars that it paid as a result of the building collapse.

FN6. In his affidavit offered in support of Varco Pruden's summary judgment motion, Roger Jones, Varco Pruden's senior financial services manager, attests that Varco Pruden “is the successor-in-interest to VP Consolidated Holdings, Inc․  Effective January 1, 2007, the assets and liabilities relating to [VP's] pre-engineered metal buildings business, known as the VP [b]uildings division, were transferred to [Varco Pruden].  [Varco Pruden] was merged with and into BlueScope Buildings North America, Inc ․ effective January 1, 2009.”   The plaintiffs do not dispute this attestation..  FN6. In his affidavit offered in support of Varco Pruden's summary judgment motion, Roger Jones, Varco Pruden's senior financial services manager, attests that Varco Pruden “is the successor-in-interest to VP Consolidated Holdings, Inc․  Effective January 1, 2007, the assets and liabilities relating to [VP's] pre-engineered metal buildings business, known as the VP [b]uildings division, were transferred to [Varco Pruden].  [Varco Pruden] was merged with and into BlueScope Buildings North America, Inc ․ effective January 1, 2009.”   The plaintiffs do not dispute this attestation.

FN7. The parties will collectively be referred to as “the plaintiffs” and “the defendants,” as well as separately by their names when appropriate.   Additionally, any reference to “the defendants” will only refer to the moving defendants, Varco Pruden and Orlando Annulli, unless the context otherwise dictates..  FN7. The parties will collectively be referred to as “the plaintiffs” and “the defendants,” as well as separately by their names when appropriate.   Additionally, any reference to “the defendants” will only refer to the moving defendants, Varco Pruden and Orlando Annulli, unless the context otherwise dictates.

FN8. Following the filing of this complaint, on March 19, 2013, Eastern Steel Erectors, LLC filed a request to revise.   On April 2, 2013, the plaintiffs filed an objection to this request to revise.   This objection was sustained by the court, Dubay, J., on that same date.   Therefore, the second revised complaint remains the operative complaint in the case..  FN8. Following the filing of this complaint, on March 19, 2013, Eastern Steel Erectors, LLC filed a request to revise.   On April 2, 2013, the plaintiffs filed an objection to this request to revise.   This objection was sustained by the court, Dubay, J., on that same date.   Therefore, the second revised complaint remains the operative complaint in the case.

FN9. Orlando Annulli also moves for summary judgment on the basis of the one year contractual period of limitations set forth in the contract between it and Mototown.   As the court has determined that Orlando Annulli is entitled to summary judgment on its first ground, it is unnecessary for the court to analyze this argument..  FN9. Orlando Annulli also moves for summary judgment on the basis of the one year contractual period of limitations set forth in the contract between it and Mototown.   As the court has determined that Orlando Annulli is entitled to summary judgment on its first ground, it is unnecessary for the court to analyze this argument.

FN10. In fact, in footnote 1 found of page 11 of Great American's memorandum of law in opposition, Great American admits that it does not assert a cause of action for breach of warranty against Varco Pruden and Orlando Annulli..  FN10. In fact, in footnote 1 found of page 11 of Great American's memorandum of law in opposition, Great American admits that it does not assert a cause of action for breach of warranty against Varco Pruden and Orlando Annulli.

Dubay, Kevin G., J.