Board of Education v. Plymouth Rubber Co.

ALPERT, Judge. This case is about a roof that just wouldn’t stop leaking. We are presented with an appeal from judgments entered in two separate actions, Civil Action Nos. 85-895 and 86-1428, which were consolidated and tried together before a jury. ¹⁴ Appellant, the Board of Education of Charles County (“The Board”), was the plaintiff. The Davis Corporation (“Davis”), J.B. Eurell Company, Inc. (“Eurell”), Plymouth Rubber Company (“Plymouth”), and Mark Beck Associates, Inc. (“Beck”) were defendants.

Various cross-claims and third-party actions were asserted amongst the parties defendant. After a prolonged trial, the jury, by answers to a jury verdict sheet, returned a verdict in favor of appellant for $633,145 against appellee Plymouth and a defendant’s verdict for appellee Davis. The jury did not award Plymouth a recovery on its cross-claim against Eurell. Beck was dismissed without opposition prior to submission of the case to the jury.

At the beginning of the trial, the court had dismissed the Board’s claims against Eurell. This action commenced over four years ago on August 5, 1985, when the Board, as owner, sued Davis, the general contractor, for installing a defective roof supplied under a construction contract for the alteration and renovation of what is now known as the Milton M. Somers Middle School (“the School”) in LaPlata, Maryland. This was Civil Action No. 85-895. Davis subsequently filed a third party complaint against Beck, as the architect/engineer; Eurell, as the subcontractor who installed the roof; and Plymouth, as the supplier of the roofing system.

Approximately a year later, in August of 1986, Davis filed a motion for summary judgment contending that the Board’s action against it was barred by limitations. The motion was granted in October of 1986 and the action was dismissed. An appeal followed. In June of 1987, this court vacated the judgment and remanded the case to the trial court.

The Board of Educ. of Charles County v. The Davis Corporation, No. 1512, September Term, 1986 (opinion filed June 1, 1987). The Court of Appeals had previously denied Davis’s Petition for Writ of Certiorari while the case was pending before this court. Board of Educ. of Charles County v. Davis Corp., 308 Md. 270 , 518 A.2d 732 (1987). ¹⁵ Shortly after the dismissal of Civil Action No. 85-895, the Board instituted Civil Action No. 86-1428, which asserted various claims separately against Plymouth, Eurell, and Beck for recovery of damages caused by installation of the defective roof at the School. A joint motion for summary judgment was filed in Civil Action 86-1428 by Davis, Plymouth, and Eurell on January 28, 1987, asking the court to dismiss pursuant to Maryland Rule 2-332 because these three parties were third-party defendants in 85-895 who had not been named as defendants by the Board.

This motion was denied by an order dated May 27, 1987. The two cases were then consolidated by an order dated October 7, 1987 for purposes of pre-trial proceedings and trial. During a pre-trial hearing, the trial court reconsidered and granted the Board’s previously denied motion for leave to file an amended complaint, and continued the trial at the request of Eurell. A new trial date was set for September 19, 1988.

The consolidated proceedings finally proceeded to trial on September 21, 1988. Prior to any testimony in the case, however, the court granted Eurell’s oral motion in limine to exclude the deposition testimony of a deceased witness, James Benn. Immediately thereafter, the court dismissed the Board’s fraud and civil conspiracy claims against Eurell and Plymouth upon the Board’s proffer that without the testimony of James Benn it had insufficient evidence to pursue its fraud and civil conspiracy claims. Consistent with the jury verdict of October 21, 1988, judgment was entered by docket entries on October 24,1988 in Civil Action No. 85-895 in favor of Davis and in Civil Action No. 86-1428 for the Board against Plymouth in the amount of $633,145 with interest and costs.

The jury found that Plymouth was not entitled to reimbursement in whole or in part from Eurell on Plymouth’s cross-claim for indemnification and/or contribution. ¹⁶ Plymouth filed a motion to reform the verdict and revise the judgment and a motion for judgment n.o.v. or, in the alternative, for a new trial. Both motions were denied. Appeals and cross-appeals followed, resulting in the following designation of the parties. The Board was an appellant with respect to the judgment in favor of Davis in Civil 85-895, having filed a notice of appeal on November 22, 1988.

Davis was a cross-appellant with respect to that same judgment in Civil 85-895, having filed a notice of cross-appeal on December 2, 1988. 1 The Board is an appellant with respect to the judgment in favor of Eurell on the fraud and civil conspiracy counts in Civil 86-1428, having filed a notice of appeal regarding that judgment on January 26, 1989. Plymouth is an appellant with respect to the judgments against it in favor of Eurell (on Plymouth’s cross-claim), and a cross-appellant with respect to the Board, having filed its order for appeal on February 16, 1989. The Board is a cross-appellant with respect to the judgment against Plymouth, having filed a notice of cross-appeal on February 24, 1989. The various appeals and cross-appeals present this court with a host of issues.

To settle the rights of the respective parties, we must determine whether the trial court erred: 1. by ruling that the Board could not use the deposition testimony of James Benn in support of its claims against Eurell of fraud and civil conspiracy; 2. in allowing the plaintiff below, the Board, to proceed with a second suit naming as defendants parties who were third-party defendants below; 3. in ruling as a matter of law that the Plymouth warranty was ambiguous and that the term limiting damages applied only to consequential damages; ¹⁷ 4. in admitting evidence of the cost of the new roof as a measure of damages; 5. in excluding the Plymouth letter of January 4, 1985, making an offer of settlement; 6. in excluding evidence of the cost of the resident inspector's services and other related expenses; and 7. in failing to reform the verdict or revise the judgment to grant Plymouth's cross-claim against Eurell for contribution. We hold that the deposition testimony of James Benn was admissible under Maryland Rule 2-419(a)(3)(A). Accordingly, we remand Civil Action No. 86-1428 for a trial on the fraud and civil conspiracy claims asserted against Eurell and Plymouth. We also hold that the trial court erred in ruling as a matter of law that the Plymouth warranty term limiting damages applies only to consequential damages.

We believe that, under the circumstances, interpretation of the warranty is a matter for the jury, and we shall therefore vacate the judgment against Plymouth and remand for further proceedings. We affirm the orders and judgment of the lower court as to all other issues. Facts This case concerns a defective and leaky single-ply roof installed at the School in 1980 and torn out and replaced in 1987 with a built-up roof. At trial, no party challenged the contention that the roof failed and had to be replaced.

The trial focused only upon who was responsible and what damages should be awarded. On or about April 30, 1980, Davis, as general contractor, and the Board, as owner, entered into a contract for the installation of a fully adhered Plymouth SRC membrane roof for the School by virtue of the execution of a change order to the contract executed on or about December 7, 1979 for the alteration and renovation for conversion of the School. Eurell contracted with Davis to install the roof. ¹⁸ The roofing materials were supplied by Plymouth, who issued a limited ten-year warranty. The Plymouth roof was installed by Eurell and certified as satisfactory by Plymouth in a letter dated December 17, 1980.

Leaks began shortly thereafter. Eurell had an arrangement with Plymouth to perform any necessary repairs of the roof pursuant to Plymouth’s warranty. Despite repeated repair efforts by Eurell during 1981, leakage continued and worsened. In the spring of 1981, Eurell, directed by Plymouth, undertook cleaning of the roof and re-taping of the joints in an apparent attempt to stem the tide of leaks.

This work was completed around November of 1982. By the beginning of 1988, the general repair work had been completed. After an initial period of relatively infrequent leaks, further serious leakage developed and worsened over the next two years. After repeated efforts to repair the roof failed, the Board requested that Plymouth and, later, Davis, as general contractor, replace the roof.

In March of 1986, after no agreement was reached with either party, the Board contracted with Raintree Industries, Inc. for the replacement of the Plymouth roof with a new roof. All work was completed on the new roof by the summer of 1987. Deposition Testimony of James Benn James Benn’s deposition had been taken on April 22,1988 with all parties in attendance. Benn, project superintendent for Eurell at the time, testified at the deposition that a representative of Plymouth and he discussed the problems with the roof, realized that the roof was failing, and understood that ongoing repairs would not stem the tide of leaks.

Following instructions from Plymouth, Benn, nevertheless, wrote the Board recommending that the repair work be continued as before. Benn admitted that he knew that ongoing repair efforts were but a “band-aid” approach for a roofing system that had to be replaced. This testimony prompted the Board to seek leave to file an amended ¹⁹ complaint in order to add fraud and civil conspiracy counts against Eurell and Plymouth. On July 28, 1988, Mr. Benn suddenly died of a massive heart attack.

Thus, the Board was forced to rely upon Mr. Benn’s deposition testimony. Eurell moved to preclude the use of Mr. Benn’s deposition testimony. Arguing that this testimony, in particular to the extent relied upon by the Board in support of its fraud and civil conspiracy claims, should be excluded as inadmissible hearsay since there supposedly was no “identity of issues” at the time Mr. Benn was deposed and at trial. When Mr. Benn’s deposition was taken, the Board’s complaint did not assert fraud or concealment against Eurell, only negligent repair or installation of the roof (and a third-party beneficiary claim).

Subsequent to and because of Mr. Benn’s deposition, the Board amended its complaint to assert fraud and civil conspiracy claims against Eurell and Plymouth. Because at the time of the deposition no such claims were pending, Eurell argued that there was insufficient opportunity to cross-examine Mr. Benn and that accordingly his testimony was inadmissible. The Board argues that Maryland Rule 2-419(a)(3)(A) removes any hearsay impediment to admissibility of the deposition testimony of a deceased person. It argues that in the case at bar, the prerequisites of this rule have been satisfied and thus Mr. Benn’s deposition testimony was admissible.

We agree. Maryland Rule 2-419(a)(3) enumerates the circumstances under which a party may introduce a deposition in lieu of live testimony. Before the rule becomes applicable, deponent must be unavailable and the party against whom the deposition is being used must have been present at the deposition or at least have had notice of it. Shives v. Furst, 70 Md.App. 328 , 521 A.2d 332 , cert. denied, 309 Md. 521 , 525 A.2d 636 (1987).

Eurell contends, however, that Maryland Rule 2-419(c), not Rule 2-419(a), applies. It argues that the filing of the fraud and civil conspiracy counts comprised a “separate, independent and new action” against ²⁰ Eurell and that, accordingly, Mr. Benn was deposed in “another action.” Rule 2-419(c), which governs the use of a deposition taken in another action, predicates admissibility of the deposition testimony upon both the action in which the testimony was given and the action in which it was offered involving the “same subject matter.” Eurell claims that the subject matter of the supposed separate action instituted against Eurell for fraud and civil conspiracy and the originally filed action are different. We find no merit in this contention. There was only one action, Civil Action 86-1428, in which Eurell was named as a defendant by the Board.

Under the Maryland Rules, “Action means collectively all the steps by which a party seeks to enforce any right in a court____” Md.Rule l-202(a). Upon the Board’s filing of its Amended Complaint, the Board may have stated a different cause of action but the action itself did not disappear. Thus, we hold that Rule 2-419(a), not 2-419(c), is applicable. The trial court relied on Huffington v. State, 304 Md. 559 , 500 A.2d 272 , cert. denied, 478 U.S. 1010 , 106 S.Ct. 3310 , 92 L.Ed.2d 722 (1985), in granting the motion to exclude the deposition testimony.

(We note that Huffing-ton addressed the use of testimony from one criminal trial in a later criminal trial in a different action, a situation more analogous to the situation that Rule 2-419(c) with its same subject requirement is intended to cover.) The court there, quoting McCormick’s Handbook of the Law of Evidence § 255 (3d. ed. 1984) stated: More important, and more often drawn in question is the requirement that the party against whom testimony is now offered, or party of like interest must have a reasonable opportunity to cross-examine. Actual cross-examination, of course, is not essential if the opportunity was afforded and waived. The opportunity must have been such as to render the conduct of cross-examination or the decision not to cross-examine meaningful in the light of the circumstances which prevail when the former testimony is offered. ²¹ Counsel for Eurell and Plymouth had the opportunity to cross-examine James Benn. All parties were present and participated in the deposition during which Mr. Benn testified that he knew that the roof was failing and that ongoing repairs were futile.

They chose not to direct their questioning toward this testimony. After the deposition of Mr. Benn on April 22, 1988, the Board filed its proposed amended complaint. On May 10, 1988, the trial court reconsidered and granted the Board’s previously denied motion for leave to file the amended complaint, continued the trial at the request of Eurell, and re-opened discovery until August 19, 1988 for the purpose of discovery as to the new claims in the amended complaint. Mr. Benn died July 28, 1988, over three months after he was originally deposed.

Counsel for Eurell, who defended the fraud and civil conspiracy claims asserted by the Board, admitted no knowledge of his death until after his return from a vacation on August 6,1988. Thus, between May 10, 1988 and August 6, 1988 there was no request by Eurell that Mr. Benn be redeposed. In effect, Eurell had an opportunity to cross-examine Mr. Benn at the time of the original depositions and subsequent thereto, but failed to do so. Benn’s testimony was not so remote from the existing issues as to render it unworthy of further exploration.

We hold, then, that the testimony of Mr. Benn was admissible to support the fraud and civil conspiracy claims against Eurell. Statute of Limitations Appellee Eurell further contends that the Board’s amended complaint was barred by the three-year statute of limitations prescribed by § 5-101 of the Courts and Judicial Proceedings Article of the Maryland Code. Eurell argues that the claims are time-barred because the Board allegedly knew by “late 1984” or “early 1985” that the Plymouth roof had failed and needed replacement. We disagree. ²² In Maryland, limitations do not commence to run as to a tort claim until the plaintiff knows or reasonably should know of a basis for the cause of action asserted.

Pennwalt Corp. v. Nasios, 314 Md. 433, 452 , 550 A.2d 1155 (1988). Until the deposition of Mr. Benn on April 22, 1988, the Board had no reasonable basis to believe that Eurell had intentionally misrepresented to it the true condition of the Plymouth roof in order to avoid replacing it. This alleged misrepresentation is the basis for their fraud and conspiracy claims against Eurell. Maryland Rule 2-332 Appellant Plymouth asserts that the filing of Civil Action No. 86-1428 was barred by Maryland Rule 2-332.

Rule 2-332(c) states: (c) Plaintiffs Claim Against Third Party. — The plaintiff shall assert any claim against the third party defendant arising out of the transaction or occurrence that is the subject matter of the plaintiffs claim against the third-party plaintiff, and the third-party defendant thereupon shall assert defenses as provided by Rules 2-322 and 2-323 and may assert counterclaims and crossclaims as provided by Rule 2-331. If the plaintiff fails to assert any such claim against the third-party defendant, the plaintiff may not thereafter assert that claim in a separate action instituted after the third-party defendant has been impleaded. This section does not apply when a third-party