STAR CITY SCHOOL DISTRICT v. ACI BUILDING SYSTEMS, LLC
No. 15-3723
United States Court of Appeals, Eighth Circuit
January 6, 2017
844 F.3d 1011
In Bailey, we considered whether an order denying dismissal of an indictment based on a plea agreement fell within Cohen‘s collateral order exception to the rule of finality. See Bailey, 34 F.3d at 690. Under Cohen, the collateral order exception applies, and a pretrial order is immediately appealable, “if (1) the order conclusively determines the disputed question, (2) it resolves an important issue separate from the merits of the action, and (3) it [is] effectively unreviewable on appeal from a final judgment.” Id. at 689 (internal citations omitted). We determined an appeal from a denial of a motion to dismiss an indictment based upon an alleged plea agreement did not meet the third Cohen factor because that type of claim can be reviewed on an appeal from final judgment. See id. at 691 (“[T]he availability of dismissal after final judgment will adequately protect and secure for the defendant the benefit of his bargain under the [plea] agreement if he is entitled to it.“). Without a final judgment, we lack jurisdiction to hear the merits of whether the government violated the plea agreement between Lewis
III. CONCLUSION
We dismiss this appeal for lack of jurisdiction.
George Jay Bequette, Jr., Bequette & Billingsley, Little Rock, AR, for Plaintiff-Appellant.
Richard D. Bennett, Farris & Bobango, Memphis, TN, for Defendant-Appellee.
Before WOLLMAN, ARNOLD, and KELLY, Circuit Judges.
WOLLMAN, Circuit Judge.
Star City School District (the District) filed suit against ACI Building Systems, LLC (ACI), a company that manufactured and supplied roofing materials that were used in the construction of a high school building. The complaint alleged that the building‘s roof was not watertight and that ACI had failed to repair or replace the roof, despite its promises and obligation to do so. The district court1 granted ACI‘s motion to dismiss the claims of fraud and constructive fraud and later granted summary judgment in favor of ACI on the remaining claims of breach of warranty, breach of contract, and negligence. We affirm.
I. Background
In 2003, the District entered into a construction contract with Southeast Building Concepts, Inc. (SBC), for SBC to construct a new high school building. SBC served as the general contractor for the project and issued a performance and payment bond that named the District as the obligee. Steve Elliot served as the District‘s architect.
SBC began working on the project in late April 2003 and thereafter entered into an agreement with ACT, under which ACI agreed to supply SBC with certain metal building and roofing materials to be used in the construction of the high school building. ACI was not a party to the construction contract between SBC and the District, and ACI did not install the roof. That work was completed by SBC or others as directed by SBC.
The school‘s roof was not properly installed and has never been watertight. In a December 2004 letter addressed to the president of SBC and copied to the District‘s superintendent, Elliot‘s architectural firm expressed concerns that SBC had not yet repaired “several major roof leaks that [had been] brought to the job superintendent‘s attention several months ago.” An ACI employee also discovered problems related to the roof‘s installation while inspecting the roof in March 2005. In an email to another ACI employee, he wrote: “I did a preliminary inspection on this roof yesterday—3/23/05. Absolutely pitiful. . . . I don‘t know if it will ever pass inspection. This is primarily FYI and to have a record in file.” SBC later assured ACI that it had made the necessary repairs.
Elliot‘s architectural firm issued a certificate of substantial completion on March
[T]he total liability and warranty of [SBC] shall be only to provide such workmanship as is necessary to repair or replace any defective material or workmanship without cost to the original owner, and the total liability and warranty of [ACI] shall be only to repair or replace any material without cost to the original owner.
The warranty further provides:
2.) This warranty shall not be enforceable if the roof system was not erected in accordance with ACI Building Systems, Inc. erection drawings. . . .
3.) This warranty does not apply to cover any damages or leakage caused by or associated with . . . roof penetrations, trim, flashing, evidence of repair work done by unqualified or un-authorized personnel, or any modifications or alterations to material beyond ACI‘s control. . . .
Despite the continued leaks, the District did not make a claim on the bond. It made the final payment to SBC in May 2006. SBC thereafter continued work to repair the roof, but in early 2007, it advised the District that it would no longer make repairs. SBC eventually went out of business and filed for bankruptcy protection.
ACI vice president and chief operating officer Ron Knapp testified that he first became aware of the leaks in September 2006, when Elliot wrote to him and reported that the roof was leaking. Sometime after SBC stopped making repairs to the roof, both the District and ACI asked Steve Naff, the owner of a local construction company, to inspect the roof and advise whether it could be repaired. Naff, who had worked on other construction projects for the District, believed that he could fix the roof. ACI authorized him to do the work, even though ACI believed that the problems were caused by improper installation and poor workmanship and that the work thus was beyond the scope of ACI‘s warranty. According to Knapp, ACI paid for the repairs as a gesture of goodwill.
According to the District, ACI repeatedly promised to repair or replace the roof. Naff made numerous repairs from 2007 through April 2011, but the roof continued to leak. Naff thereafter advised ACI and the District that he no longer believed that he could repair the roof. In December 2012, the District made a claim on the bond, which was denied.
The District filed suit against ACI in Arkansas state court in February 2013. ACI removed the action to federal district court on the basis of diversity jurisdiction.2 The District alleged in its amended complaint that it “ha[d] been damaged by reason of ACI‘s failure to appropriately manufacture and repair the roof on the Building in a workmanlike manner.” The District claimed that ACI had issued a warranty on the roof, even though an inspection by ACI “revealed significant deficiencies, which ACI failed to disclose.” The District further alleged that ACI had repeatedly promised to repair or replace the roof, that the repairs were unsuccessful, and that the roof continued to leak. The District alleged claims of fraud, constructive fraud, breach of warranty, breach of contract, and negligence.
Applying the substantive law of Arkansas, the district court dismissed the District‘s claims of fraud and constructive
II. Discussion
A. Fraud and Constructive Fraud
The District argues that the district court erred in dismissing its claims of fraud and constructive fraud. We review de novo a district court‘s order granting a motion to dismiss, accepting as true the allegations set forth in the complaint and drawing all reasonable inferences in favor of the nonmoving party. Farm Credit Servs. of Am., FLCA v. Haun, 734 F.3d 800, 803-04 (8th Cir. 2013). To withstand a motion to dismiss, the complaint must set forth sufficient factual allegations to provide the grounds on which the plaintiff‘s claims rest. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Under Arkansas law, a cause of action for actual fraud requires proof of the following elements: “(1) a false representation, usually of a material fact; (2) knowledge or belief by the defendant that the representation is false; (3) intent to induce reliance on the part of the plaintiff; (4) justifiable reliance by the plaintiff; and (5) resulting damage to the plaintiff.” Country Corner Food & Drug, Inc. v. First State Bank & Trust Co. of Conway, Ark., 332 Ark. 645, 966 S.W.2d 894, 897 (1998). The district court determined that Star City failed to plead a false representation or actual reliance. We agree.
The District first argues that it adequately pleaded a false representation, pointing to its allegations related to ACI‘s assurances “that ACI would do whatever was necessary to repair or replace the roof.” Those assurances, however, relate to a future event of repairing or replacing the roof, and generally a “misrepresentation must relate to a past event or a present circumstance.” Rice v. Ragsdale, 104 Ark. App. 364, 292 S.W.3d 856, 864 (2009); see also Delta Sch. of Commerce, Inc. v. Wood, 298 Ark. 195, 766 S.W.2d 424, 427 (1989) (“In general, an action for fraud or deceit may not be predicated on representations relating solely to future events.“); Anthony v. First Nat‘l Bank of Magnolia, 244 Ark. 1015, 1028, 431 S.W.2d 267 (1968) (“Representations that are promissory in nature or of facts that will exist in the future, though false, do not support an action for fraud.“).
The District argues that ACI‘S assurances are nonetheless actionable because they fall within “an exception to the ‘future events’ rule [that] arises if the promisor, at the time of making the promise, has no intention to carry it out.” Trakru v. Mathews, 2014 Ark. App. 154, 434 S.W.3d 10, 17 (2014). “[A] statement of future events may constitute fraud if the statement is false and the person making the representation or prediction knows it to be false at the time it is made.” See Morrison v. Back Yard Burgers, Inc., 91 F.3d 1184, 1187 (8th Cir. 1996) (citing Delta Sch. of Commerce, 766 S.W.2d at 426-27). The exception “requires actual knowledge of falsity.” Id. The District did not allege that ACI always knew the roof could not be repaired or that ACI had no intention
The amended complaint also did not plead actual reliance by the District on ACI‘s alleged misrepresentations. The Arkansas Supreme Court “has defined actual reliance to mean that the plaintiff acted or did not act by reason of the defendant‘s misrepresentation.” SEECO, Inc. v. Hales, 341 Ark. 673, 22 S.W.3d 157, 172-73 (2000). The District now argues that it “would have filed a claim on the surety bond or brought this action much sooner but for ACI‘s representations,” but the amended complaint did not identify these or any other acts that the District took or refrained from taking based on ACI‘s alleged misrepresentations. The district court thus properly dismissed the fraud and constructive fraud claims for failure to plead actual reliance. See Yarborough v. DeVilbiss Air Power, Inc., 321 F.3d 728, 730 (8th Cir. 2003) (“A claim for constructive fraud, which lies when there is a confidential relationship between the parties, requires proof of all of the elements of actual fraud except scienter.” (citing Morrison, 91 F.3d at 1188; SEECO, Inc., 22 S.W.3d at 172-73)).
B. Breach of Warranty, Breach of Contract, and Negligence
The District argues that the district court erred in granting summary judgment in favor of ACI on its remaining claims. We review de novo the district court‘s grant of summary judgment, viewing the evidence in the light most favorable to the nonmoving party and drawing all reasonable inferences in that party‘s favor. PHL Variable Ins. Co. v. Fulbright McNeill, Inc., 519 F.3d 825, 828 (8th Cir. 2008). Summary judgment is appropriate if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.
(a) No action in contract, whether oral or written, sealed or unsealed, to re- cover
damages caused by any deficiency in the design, planning, supervision, or observation of construction or the construction and repair of any improvement to real property or for injury to real or personal property caused by such deficiency, shall be brought against any person performing or furnishing the design, planning, supervision, or observation of construction or the construction or repair of the improvement more than five (5) years after substantial completion of the improvement. . . .
(f) Nothing in this section shall be construed as extending the period prescribed by the laws of this state for the bringing of any cause of action, nor shall the parties to any contract for construction extend the above prescribed limitations by agreement or otherwise.
The broad language of the statute of repose seems to include “virtually everyone involved in the construction project.” See 2 David Newbern et al., Arkansas Civil Practice and Procedure § 5:11 (5th ed. May 2016 Update). The statute has not been applied, however, to manufacturers of standardized goods or materials who are not involved in the installation process. See Brown v. Overhead Door Corp., 843 F.Supp. 482 (W.D. Ark. 1994). The District alleged in its complaint that it had “been damaged by reason of ACI‘s failure to appropriately manufacture and repair the roof on the Building in a workmanlike manner.” The District does not argue on appeal that the roofing material itself caused the roof to leak, and we agree with the district court‘s determination that there was no evidence that roofing material was at fault.
The District argues that the five-year statute of repose does not apply in this case because the building was never substantially completed. The term “substantial completion” is not defined in the statute, but it “generally means that the building or project has reached a point where it is ready for the use for which it was intended and whatever work remains to be done is minor.” Newbern et al., supra, § 5:11 (citations omitted). The District alleged in its complaint that “[t]he Building was substantially completed on March 28, 2005.” The District took possession of the building in June 2005, and the superintendent testified that the building was furnished and ready to function as a high school by the time of an open house held in July 2005. Because the building was substantially completed well before February 21, 2008—which is five years before the District filed this action—the statute of repose bars the District‘s claims.
The District next argues that the statute was tolled while ACI attempted to repair the roof. In support of its argument, the District cites Little Rock School District v. Celotex Corp., 264 Ark. 757, 574 S.W.2d 669 (1978), a case in which the Arkansas Supreme Court determined that it was for the jury to decide whether the “statute of limitations” was tolled while repairs were made to an improvement to real property. The Arkansas Supreme Court later clarified, however, that ”
Finally, the District argues that the statute of repose does not apply because the District is suing ACI under the warranty, and not a construction contract. The statute of repose is not limited to parties to a construction contract, however. In First Electric Cooperative Corp. v. Black, Corley, Owens & Hughes, P.A., No. CA 10–1257, 2011 WL 2473105 (Ark. Ct. App. June 22, 2011) (unpublished). The plaintiff later entered into a tolling agreement with the architect and the HVAC company to extend the limitations period. The Arkansas Court of Appeals rejected the plaintiff‘s arguments that
The judgment is affirmed.