Hensel Phelps Construction Co. v. Cooper Carry Inc.
2017 U.S. App. LEXIS 11671
| D.C. Cir. | 2017Background
- Marriott contracted with Cooper Carry (Mar 5, 2008) to design the Marriott Marquis Hotel; Cooper Carry agreed to professional standards and to comply with applicable building and NFPA fire codes.
- Agreement phases included construction contract administration; final payment due upon full completion of services.
- Marriott later assigned the design contract to Hensel Phelps when the Project converted to a design-build delivery and Hensel Phelps contracted to build (Oct 26, 2010).
- In Mar 2011 D.C. regulators flagged Cooper Carry’s noncompliance with fire codes; Hensel Phelps alleges remediation and other defects cost ~$8.5M and delayed issuance of construction documents.
- Hensel Phelps initiated contract dispute procedures in Jan 2015, mediation failed Oct 2015, and it sued (Nov 2015) for breach of contract and contractual indemnity.
- The district court granted summary judgment for Cooper Carry, holding Hensel Phelps’s breach claim time‑barred and the indemnity clause did not cover first‑party claims; the D.C. Circuit affirmed.
Issues
| Issue | Plaintiff's Argument (Hensel Phelps) | Defendant's Argument (Cooper Carry) | Held |
|---|---|---|---|
| When did the contract breach accrue for statute of limitations? | Accrual occurs at substantial completion (Apr 1, 2014); claim timely. | Accrual occurred when defective design documents were delivered/accepted (Oct 26, 2010); statute ran. | Court: Accrual per contract terms occurred before substantial completion (claim time‑barred). |
| Whether the assignment to Hensel Phelps or the design‑build change altered accrual rule | Assignment and design‑build change should shift the first‑breach rule to substantial completion. | The initial Agreement’s text permits dispute resolution and litigation once a dispute materially affects cost/progress; accrual then. | Court: Objective contract language controls; no temporal condition requiring waiting until substantial completion. |
| Whether the indemnification clause covers first‑party losses (direct costs to Hensel Phelps) | Indemnity language is broad and should cover losses Hensel Phelps incurred (including first‑party). | Indemnity clauses traditionally cover third‑party claims; the clause does not clearly and unambiguously include first‑party claims. | Court: Indemnity construed narrowly; does not cover first‑party claims absent clear, unequivocal language. |
| Whether factual ambiguity precluded summary judgment | Contract ambiguous as to accrual and indemnity; factual issues exist. | Contract plain meaning and context resolve both issues as legal questions. | Court: No genuine ambiguity; summary judgment appropriate for Cooper Carry. |
Key Cases Cited
- Carlyle Inv. Mgmt. L.L.C. v. Ace Am. Ins. Co., 131 A.3d 886 (D.C. 2016) (contracts interpreted objectively; plain language governs absent ambiguity)
- Debnam v. Crane Co., 976 A.2d 193 (D.C. 2009) (ambiguity raises fact issue for factfinder; otherwise plain meaning controls)
- Wright v. Howard Univ., 60 A.3d 749 (D.C. 2013) (breach‑of‑contract actions generally accrue at time of breach)
- Murray v. Wells Fargo Home Mortg., 953 A.2d 308 (D.C. 2008) (same accrual principle for contract claims)
- Hilliard & Bartko Joint Venture v. Fedco Sys., Inc., 522 A.2d 961 (Md. 1987) (discussing first‑breach rules for design vs. construction contracts)
- Comptroller of Va. ex rel. Va. Military Inst. v. King, 232 S.E.2d 895 (Va. 1977) (authority on first‑breach timing in construction contexts)
- Am. Bldg. Maint. Co. v. L’Enfant Plaza Props., 655 A.2d 858 (D.C. 1995) (indemnification clauses strictly construed; no indemnity unless plainly stated)
- James G. Davis Constr. Corp. v. HRGM Corp., 147 A.3d 332 (D.C. 2016) (interpreting indemnity provisions in context; parties’ word choices inform scope)