Chambco, a Division of Chamberlin Waterproofing & Roofing System, Inc. v. Urban Masonry Corp.

CATHELL, Judge. Appellant, Chambeo, a Division of Chamberlin Waterproofing & Roofing System, Inc. (Chambeo), filed suit in the Circuit Court for Montgomery County against appellee, Urban Masonry Corporation (Urban), in negligence. Appellant performed roofing, waterproofing, and flashing work on a project in Washington, D.C. Appellant alleged that appellee damaged its property when appellee performed masonry work on the same project. In a court trial, the court found for the appellee.

Appellant presents three issues for our review: 1. Whether Chambeo has established a valid cause of action based on negligence. 2. Whether the dismissal based on the theories of res judicata and collateral estoppel was supported by facts. 3. Whether a judge could raise the issue of res judicata or collateral estoppel sua sponte based on mere recitation of the affirmative defenses without any supporting facts. ⁶⁶⁷ Facts We shall abbreviate our recitation of the significant facts in light of our resolution of the questions presented.

Chambeo, as a subcontractor, entered into a contract with a general contractor, HCB Contractors, a Texas limited partnership with the Beck Company, as general partners. 1 The work to be performed by Chambeo related to roofing, flashing, sealing, and water proofing, etc. In addition to the normal provisions in such contracts as to performance, payment, etc., the contract, prepared by Beck, required: Subcontractor agrees at its own expense to (1) take all necessary precautions to protect the work of other trades from any damage caused by Subcontractor’s operations, and (2) to watch over, care for, and protect from damage or injury by any cause whatsoever, all of Subcontractor’s work, complete or otherwise and all of its materials, supplies, tools, and equipment at or near the Project. Subcontractor agrees, without loss or damage to Contractor, to make good any loss or damage to any and all such work, materials, supplies, tools, and equipment up to the final acceptance of the entire Project by Owner. Urban had entered into a separate contract with Beck to perform masonry work on the same project. Its subcontract contained a similar (if not exact) provision.

During construction, some of the work performed by Urban allegedly damaged the prior work performed by Chambeo. Chambeo, pursuant to the terms of its subcontract, made claims (back charges) against Beck to compensate Chambeo for the work it had done to repair same. Meanwhile, Urban, as a result of disputes as to payment and change orders, instituted suit against Beck in the Superior Court of the District of Columbia. Beck counterclaimed against Urban and included in its counterclaim the compensation (damages, etc.) that Chambeo was claiming for its repair work.

Beck also ⁶⁶⁸ filed, a third-party complaint against Chambeo. Chambeo answered and filed its own claim in those proceedings, including its claims for the repair work that had been, it alleged, necessitated by Urban’s negligence. Twenty months later, Chambeo instituted the instant case against Urban. On the day of the trial in the District of Columbia case, Chambeo settled its claims with Beck, and those parties allegedly entered into a written settlement agreement.

The District of Columbia suit continued between Beck and Urban and a final judgment was entered in that case disposing of all of Beck’s claims against Urban, including its claims arising out of the work performed by Urban that allegedly caused Chambco’s damage. What purported to be the settlement agreement between Beck and Chambeo was admitted into evidence below as plaintiffs exhibit No. 12. The exhibits themselves were not forwarded with the record. The record extract, however, contains, at page 74, what is referred to as an agreement.

It contains no indication that it was ever offered or received in evidence. Whatever it is, it was executed after the written settlement agreement. . It notes that: On March 1, 1993, Chambeo ... and HCB [Beck] entered into a written settlement concerning their disputes.... Pursuant to said written agreement, Chambeo settled with HCB for $150,000, which HCB paid to Chambeo on March 12, 1993....

That document, which, as presented in the extract, contains no indication of when it was made or whether it was ever admitted but does contain a provision that the actual settlement agreement of March 1, 1993, was attached to it as Exhibit A. Exhibit A, however, was not attached to the document included in the extract, and we have not found it in the record. Thus, the actual written settlement agreement is not available for our review. The writing found on page 74 of the extract is merely a document that purports to state what the prior settlement ⁶⁶⁹ agreement of March 1st provided. There is no indication of when this document was prepared and executed other than that it was after the original written settlement agreement.

This document could have been prepared the day before, or, in fact, as far as we know, 2 even after the trial of the case sub judice. We note initially that appellant challenges the trial court’s res judicata findings in this appeal. That settlement agreement, not a subsequent memorandum of what it provided, appears to be instrumental for a full consideration of the res judicata issue. It is not what the appellant and Beck said it says that would be determinative of the issue in this forum, it is what this Court holds that the agreement itself means that would resolve the issue.

Md. Rule 8—501(c) “Contents” states, in pertinent part: The record extract shall contain all parts of the record that are reasonably necessary for the determination of the questions presented by the appeal. In Bland v. Larsen, 97 Md.App. 125 , 627 A.2d 79 (1993), Bland asserted on appeal that the trial court had erred in failing to apply the doctrine of unclean hands. We declined to find any abuse of discretion or error on the part of the trial judge, noting: We are unable to find support for Bland’s allegations in the record extract, other than the discrepancy in Larsen’s testimony. There is no indication that Larsen was guilty of “willful wrongdoing.” As to Bland’s allegations ... mere bald allegations without evidentiary support will not be considered....

Id. at 137 , 627 A.2d 79 . We thus question whether appellant has properly presented the issue of the res judicata effect of its written settlement agreement with Beck, in that the agreement, as far as we can ascertain, is nowhere presented to us. As we shall resolve the ⁶⁷⁰ matter on other grounds, however, we need not further address questions two and three. We next note that, generally, materials or items incorporated into a building during construction become the property of the owner of the property where the building is situated, subject to the right of contractors, subcontractors, and materialmen to liens against the property.

The Court of Appeals in Schofer v. Hoffman, 182 Md. 270 , 34 A.2d 350 (1943), reiterated the law of fixtures, saying: [T]he rules for ascertaining whether an installation on or in real property is or is not a fixture are as follows: “The term ‘fixture’ is generally used in reference to some originally personal chattel which has been actually or constructively affixed either to the soil itself, or some structure legally a part of such soil. “The tests by which a fixture is determined are generally these: “(1) Annexation to the realty, either actual or constructive; “(2) adaptation to the use of that part of the realty with which it is connected; “(3) the intention of the party making the annexation to make the article a permanent accession to the freehold,— this intention being inferred from the nature of the article annexed, the situation of the party making the annexation, the mode of annexation, and the purpose for which it was annexed.” Id. at 273-74 , 34 A.2d 350 . The Court of Appeals more recently cited Schofer for its definition of a fixture in the tax case of State Department of Assessments and Taxation v. Town and Country-Woodmoor, Inc., 256 Md. 584, 587 , 261 A.2d 168 (1970), and Judge Motz, for this Court, recently reiterated that definition as applicable in Maryland in our tax case of State Department of Assessments and Taxation v. Metrovision, 92 Md.App. 194, 201 , 607 A.2d 110 (1992). ⁶⁷¹ Thus, it is clear that, unless agreements exist to the contrary—and none are proffered in the case at bar—roofing, waterproofing, etc., incorporated into a building during construction become annexed to that building. Upon annexation, they become the property of the owners. Appellant makes no viable argument to the contrary.

Indeed, its subcontract contains several provisions tacitly acknowledging the transformation of its efforts and materials into this building. See the following paragraph of that agreement: Paragraph 11.9 Subcontractor will save and keep the Project ... free from all mechanic’s liens and all other liens by reason of the Work ... or other things used therein. Paragraph 5.4 even made provisions for the owner to acquire title to stored materials not yet incorporated: [As to material to be, but not yet incorporated into the project for which payment is made] ... Subcontractor shall ... make any provisions necessary ... to ensure and protect Contractor’s or Owner’s title and right of possession and access to such materials. [Emphasis added.] Paragraph 2.56.2 provided further: [P]ayments for Stored Materials may be conditioned ... [on] such other procedures satisfactory to Owner to establish the Owner’s title and to insure and otherwise to protect the Owner’s interest---- [Emphasis added.] Additionally, the contract provisions as to the liens, etc., also indicate the nature of the incorporation of the materials and labor into the building and, thus, into the owner’s ownership.

These remedies are, as they relate to the property, generally limited to mechanics’ lien remedies. In that regard, section 9-101 “Definition” of Subtitle 1 Mechanics Liens of Title 9 Statutory Liens on Real Property provides in part- id) Contractor.—“Contractor” means a person who has a contract with an owner. ⁶⁷² (g) Subcontractors.—“Subcontractor” means a person who has a contract with anyone except the owner or his agent. Owner is defined in (f) as: “Owner” means the owner of the land.... We conclude that, once Chambco’s product was incorporated into the project, it was no longer the property of Chambeo but was, instead, the property of the owner.

Therefore, even if the flashing installed by Chambeo was in fact damaged by Urban, it was not Chambco’s property being damaged. Chambco’s entire claim can, therefore, only be premised upon economic loss—not damage to its property. The Law In its brief, Chambeo cites several foreign cases as authority for the maintenance of this suit upon negligence grounds. As we review those cases, they are factually distinct and/or inapposite.

Appellant sums up his recitation of foreign authority by summarizing the holding in Davison and Jones v. County of New Hanover, 41 N.C.App. 661 , 255 S.E.2d 580, 584 , cert. denied, 298 N.C. 295 , 259 S.E.2d 911 (1979): “According to the Court of Appeals of North Carolina, this liability arises from the negligent breach of a common law duty of care flowing from the parties’ working relationship.” Appellant then acknowledges that [wjhile Maryland has not addressed the issue of whether a contractor’s duty of due care extends to those who may foreseeable [sic] be subjected to the risk of mere property damage, the above-mentioned broad general rule has been adopted by Maryland law. citing Council of Co-Owners Atlantis Condominium, Inc. v. Whiting-Turner Contracting Co., 308 Md. 18 , 517 A.2d 336 (1986) (hereafter Whiting-Turner). First, as we read Whiting-Turner, it did not go as far as appellant suggests and was, as we shall explain, a narrowly drawn opinion that that Court and this Court have continually refused to expand. Secondly, as we have indicated, Chamb ⁶⁷³ co’s property was not damaged. By the time the alleged damage occurred, the property was no longer Chambco’s.

Thus, whatever damage was suffered by Chambeo was limited solely to economic damages. With that in mind, we turn to Whiting-Turner. In the seminal case of Whiting-Turner, 3 the Court described the issue as: [W]hether a builder or architect may, under any circumstances, owe a tort duty of reasonable care to a person with whom he has no contractual privity. 808 Md. at 24, 517 A.2d 336 . The Court noted that early law had been that architects and builders, in the building context, generally had no duty to those with whom they had no contractual privity.

Some exceptions were identified as: defects concealed by deceit, imminent or inherently dangerous conditions, nuisances per se, and some contractually created duties. The Court, after distinguishing Marlboro Shirt Co., Inc. v. American Dist. Tel. Co., 196 Md. 565 , 77 A.2d 776 (1951), and discussing Maryland and foreign authorities, held: We conclude that the determination of whether a duty will be imposed in this type of case should depend upon the risk generated by the negligent conduct, rather than upon the fortuitous circumstance of the nature of the resultant damage.

Where the risk is of death or personal injury the ⁶⁷⁴ action will lie for recovery of the reasonable cost of correcting the dangerous condition. Id. at 35, 517 A.2d 336 . It immediately noted, in footnote 5: It is the serious nature of the risk that persuades us to recognize the cause of action in the absence of actual injury. Accordingly, conditions that present a risk to general health, welfare, or comfort but fall short of presenting a clear danger of death or personal injury will not suffice.

A claim that defective design or construction has produced a drafty condition that may lead to a cold or pneumonia would not be sufficient. Whiting-Turner was first revisited in a building construction context 4 in the case of Village of Cross Keys, Inc. v. United States Gypsum Co., 315 Md. 741 , 556 A.2d 1126 (1989). There, the developer and designer sought indemnity or contribution by impleading the designer of a brick veneer curtain wall system that had allegedly permitted water damage in a project when that water damage had caused suit to be filed against the developer and architect by the Council of Unit Owners of Harper House Condominiums. The Court, early on, noted that the claim of tort duty put forth there “generates the specter of ‘liability in an indeterminate amount ... for an indeterminate time to an indeterminate class’.... ” Id. at 744-45 , 556 A.2d 1126 . “[W]e are asked to revisit the question of economic loss versus risk of physical harm, and the impact of each type of damage upon the question of how far a duty should extend.” Id. at 745 , 556 A.2d 1126 .

Nevertheless, the Court found it unnecessary to visit Whiting-Turner in light of its finding that the builder and developer had not used the process claimed to be defective in accordance with the directives of the