210 F. Supp. 3d 192
D.D.C.2016Background
- Cooper Carry designed the Marriott Marquis Hotel under a design services contract originally with Marriott; Marriott assigned the contract to Hensel Phelps, the general contractor, who relied on Cooper Carry's preliminary and partial construction documents to price and begin construction.
- Cooper Carry completed Design Development (Phase 3) in 2008 and was in the Construction Document Phase (Phase 4) when Hensel Phelps began construction using the delivered documents and interim drafts (e.g., GMP drawings, 60% CDs).
- After construction began, numerous design defects surfaced (18 alleged problems), requiring midstream design changes and remedial work that increased Hensel Phelps's costs.
- Cooper Carry substantially completed its design services in April 2014; Hensel Phelps exhausted contract claims procedures in January 2015 and sued in November 2015 for breach of contract and for indemnification.
- Cooper Carry moved for dismissal or summary judgment arguing (1) breach claims are time-barred by the D.C. three-year statute of limitations and (2) the indemnity clause does not cover Hensel Phelps’s own remediation costs; the court converted to summary judgment and treated the parties’ chronology as undisputed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did breach accrual occur for design defects? | Accrual waits until Cooper Carry’s design services were "substantially complete." | Statute began when the nonconforming design documents were delivered and accepted (first breach rule). | Court: accrual when defective documents were delivered/accepted; claim is time-barred. |
| Whether unitary-construction rule delays accrual | Project is a unitary construction contract so limitations run at substantial completion. | Not a unitary construction contract; design deliverables were severable and accepted earlier. | Court: not a unitary construction case; first-breach rule controls. |
| Scope of indemnification clause | Indemnity covers Hensel Phelps’s costs to fix Cooper Carry’s design errors (including its own remediation costs). | Indemnity covers third-party claims/liabilities (narrow construction). | Court: indemnity is limited to third-party liabilities; Hensel Phelps’s remediation costs not covered. |
| Whether further discovery precludes summary judgment | Need discovery to oppose SJ. | Facts are undisputed (Hensel Phelps’s Claim Narrative) and no disputed factual issues exist. | Court: summary judgment appropriate; Hensel Phelps conceded chronology, so SJ granted. |
Key Cases Cited
- Felter v. Kempthorne, 473 F.3d 1255 (D.C. Cir. 2007) (general accrual rule: actions accrue when they come into existence)
- United States v. Lindsay, 346 U.S. 568 (U.S. 1954) (accrual principles referenced)
- Capitol Place I Assocs. L.P. v. George Hyman Constr. Co., 673 A.2d 194 (D.C. 1996) (contract accrual occurs when contract is first breached)
- Wright v. Howard Univ., 60 A.3d 749 (D.C. 2013) (first-breach rule applies even if other duties remain)
- Ehrenhaft v. Malcom Price, Inc., 483 A.2d 1192 (D.C. 1984) (discovery tolling of statute of limitations acknowledged)
- Constr. Interior Sys., Inc. v. Donohoe Companies, 813 F. Supp. 29 (D.D.C. 1992) (unitary construction contract accrual at substantial completion)
- Landmark Health Solutions, LLC v. Not for Profit Hosp. Corp., 950 F. Supp. 2d 130 (D.D.C. 2013) (narrow construction of indemnity clauses; indemnity tied to third-party claims)