Village of Cross Keys, Inc. v. United States Gypsum Co.

McAULIFFE, Judge. The Council of Unit Owners of Harper House Condominium sued the Village of Cross Keys, Inc. (VCK) and the Rouse Company (Rouse), contending that VCK and Rouse, as developers of the Harper House building, were respon ⁷⁴⁴ sible for damages resulting from defective exterior walls. VCK and Rouse, hereinafter referred to collectively as the developer, 1 in turn sued Frank O. Gehry & Associates, Inc., the design architect, for indemnity or contribution. 2 The developer and the architect each sued United States Gypsum Company (USG), claiming that they relied upon USG’s design for the construction of the exterior walls, and that the design and certain representations concerning it were faulty. USG filed motions to dismiss, contending, among other things, that: it had not designed a proprietary exteri- or wall system; any representations it made concerning a generic system shown in its brochure were accurate; it had not contracted with anyone in connection with the construction of the Harper House building; its materials were not involved in the construction of the exterior walls; and, it owed no legal duty to the developer or to the architect.

Judge Thomas E. Noel of the Circuit Court for Baltimore City treated USG’s motions as motions for summary judgment and, after considering the voluminous depositions and exhibits that had been produced by extensive discovery, granted the motions. The trial judge then entered final judgment in favor of USG, expressly finding that there was no just reason for delay. Maryland Rule 2-602(b). The developer and the architect appealed, and we granted certiorari before consideration by the Court of Special Appeals.

This appeal presents interesting and difficult questions concerning potential liability for negligence. In this case, petitioners’ claim that a tort duty must be imposed upon one who has erred generates the specter of “liability in an indeterminate amount for an indeterminate time to an inde ⁷⁴⁵ terminate class,” a liability that concerned Justice Cardozo in Ultramares Corporation v. Touche, 255 N.Y. 170 , 174 N.E. 441, 444 (1931), and continues to concern courts today. We are asked to consider the sometimes subtle difference between a cause of action for negligence in general and one for negligent misrepresentation, and whether the difference is material here. Additionally, we 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.

See Council of Co-Owners v. Whiting-Turner, 308 Md. 18 , 517 A.2d 336 (1986). For a better understanding of the context in which these questions arise, we set forth a more detailed description of the underlying facts. The building in question is a 15 story, 194 unit, luxury high-rise condominium. The developer began planning for construction in the late 1960’s, and construction specifications were issued in March 1974.

Shortly after completion of the building in 1976, water leaks were reported in various units throughout the building, and to date at least 50 units have shown evidence of intrusion of water from the outside. The developer attempted several corrective measures, but was not successful. The exterior wall system was examined by a number of experts, who predictably came to somewhat different conclusions concerning the cause of the problem. There is substantial evidence, however, to support the contention of the developer that the only adequate means of correcting the defective conditions that now exist involve the complete removal of the brick veneer, replacement or correction of the backup wall system as required, and installation of new brick.

This work has begun, and according to the developer will cost 15-20 million dollars, in addition to the 3 million dollars already expended in the initial remedial measures. The extensive record already developed in this case suggests there may be multiple causes of the exterior wall problem, including deficiencies in materials, workmanship, supervision, design, and specifications. Petitioners contend ⁷⁴⁶ that at least a substantial cause of the problem may be the design of the brick veneer, steel stud, curtain wall system used in the building — a design they say was developed, published and promoted by IJSG. Curtain wall systems have been employed by the building industry for some time.

A curtain wall is not a part of the structural skeleton of the building, as would be a weight bearing wall. It simply spans an upper and lower deck (or floor) of the building, enclosing that floor. A wall system consists of the exterior surface, such as brick or stucco, the interior surface, such as plaster, gypsum board, or paneling, and the core or “backup” to which each surface is in some manner connected. The curtain wall used in this building consists of an exterior surface of one wythe of laid-up 4 inch brick, and a backup of 2-1/2 inch steel studs fastened into steel runners at the top and bottom.

Exterior sheathing is attached to the outside of the steel studs, and interior gypsum board (wallboard) is attached to the inside. The exterior wall of brick for each floor rests on an angle iron that is fastened to the concrete deck at the base of each floor, and is laid so that there is an air space of approximately 1 inch between the brick and the sheathing. To provide additional support for the brick wall, and apparently to transfer some part of the forces exerted on the brick wall to the backup structure, metal ties, called wall ties or brick ties, are placed at specified intervals. In this system, the ties used are corrugated metal strips, 1 inch wide and several inches long, with a galvanized coating.

These ties are supposed to be securely screwed to the steel studs at the same time as or after the exterior sheathing is attached, and the free end of each tie is then to be inserted into a bed of mortar between the bricks as the wall is laid. Brick veneer walls are not new. Until the mid-1960’s, however, metal stud systems had not been used as a backup for brick veneer on high-rise buildings. Rather, concrete or other masonry walls were used as backup in such cases.

For low-rise commercial and residential buildings, a wooden stud system often served as the backup for a brick veneer ⁷⁴⁷ wall. As metal stud systems proved increasingly popular for use in constructing interior non-load bearing walls, the manufacturers of those systems turned their attention to the potential of utilizing steel studs as a backup for exterior walls in high-rise buildings. USG’s interest is documented by an internal report dated 14 July 1964, which stated: At present the U.S. Gypsum Company does not participate in the curtain wall market to any appreciable extent. The development of “the curtain wall system” has been undertaken to allow the company to expand into this very large and potentially profitable area.

Six years later, another USG internal report evaluated the market in these terms: The curtain wall market is huge. If we could make only a 1% penetration, this would result in gross sales of more than $15,000,000 now; $19,500,000 in 1975; and $22,500,-000 in 1980. (These are in constant 1968 dollars.) Using their own architects and engineers, USG in the late 1960’s or early 1970’s developed and issued specifications for a brick veneer, steel stud, gypsum board curtain wall system. There is evidence that USG sales representatives reported difficulty in selling the system because architects were having trouble defining the system from the limited specifications given up to that time.

As a result USG developed a more comprehensive 24-page publication known as System Folder SA-805, USG Curtain Wall Systems (hereinafter, the “805”). The first 805, issued in 1978, was later described by USG as providing “complete details and specifications for the USG Brick Veneer Curtain Wall System, including wind load limiting height tables.” The 805, which petitioners insist was the document relied upon by the architect in designing the curtain wall system for Harper House, contained several parts. In addition to the narrative portions which described and extolled the system in its several applications, there were photographs of buildings built with the system; detail drawings of the system in several different applications; technical data charts, including structural properties of the studs, fire ⁷⁴⁸ ratings, heat transfer characteristics, and height limitations correlated to wind load requirements and size and spacing of studs; and, proposed written specifications. Although there is evidence that the developer had decided to use a steel stud backup system before USG’s 805 was seen by the developer or architect, and there is evidence that brochures of other major steel stud and gypsum board manufacturers were obtained and considered before a decision was made, we find the evidence sufficient to support petitioners’ contention that the Harper House plans and specifications issued on 29 March 1974, relied heavily upon the 805 for the curtain wall system.

Section 3.07 of the Harper House specifications, entitled “exterior walls,” provides: “install all of components in accordance with the drawings and the applicable portions of U.S. Gypsum Curtain Wall System Specification SA 805.” However, with the exception of the joint tape, joint compound, and corner beading to be used in the installation of the interior dry wall, the Harper House specifications did not require the use of USG products. Petitioners offered evidence that the 805 design was defective in several important respects, and that the 805 contained misrepresentations. Specifically, they contend that the design: permitted excessive infiltration of water; did not make adequate provision for the handling of infiltrating water; and did not provide a wall that would withstand the wind loads represented. Petitioners contend that the representations made in the 1973 and 1974 editions of the 805 concerning air and water infiltration were false.

The 1973 representation was that “the systems meet air and water infiltration standards set by FHA and NAAMN.” The 1974 representation was the same, with the addition of the words “and have been successfully tested at 90 mph wind pressure.” Petitioners claim as a result of deficiencies in the system, excess water has infiltrated the curtain wall of the Harper House, causing not only leaks into the interior of the units, but also rust and corrosion of the brick ties, the steel studs, ⁷⁴⁹ the metal runners into which the studs fit, and the bolts that are supposed to anchor the runners to the concrete deck. These conditions, they claim, have substantially undermined the structural integrity of the backup system, further diminishing its ability to provide the required stability for the brick wall. The evidence produced by pretrial discovery shows that there is a dispute among the experts concerning the ability of the 805 system to actually carry the wind load specified in the 805 tables. Petitioners point out, however, that they have produced evidence which would permit a trier of fact to find that the 805 system built to USG’s specifications with USG materials will not perform adequately.

Specifically, they say, the inadequacy of the brick anchors and the lack of inherent structural integrity of the steel stud system as specified would permit the brick veneer wall to flex four times as much as it should, thus causing severe cracking in the brick veneer and mortar joints, and over stressing the backup system at critical points. These factors, petitioners claim, have had a compounding effect on the wall at Harper House, allowing more and more water infiltration, and thus more rusting and loss of structural integrity to the point where anticipated wind loading could suck entire sections of the brick veneer wall off the face of the building. USG has vigorously defended these claims, insisting that the 805 system was properly designed, and will perform to specifications when properly constructed. It points out that specification 1.2 of the 805, entitled “Qualifications,” provides that “all materials, unless otherwise indicated, shall be manufactured by United States Gypsum Company, and shall be installed in accordance with its current printed directions,” but that no USG materials were used in the structural portions of the Harper House curtain wall system.

Additionally, USG says that the Harper House design and specifications contain significant deviations from the 805 system, and that various inspections have discovered ⁷⁵⁰ material and construction deficiencies that are sufficiently serious to have caused the current problems. Among the more significant of the design deviations to which USG points, and which the record undeniably shows exist, are as follows. The 805 detail drawings call for reinforcement of steel runners at the tops and bottoms of windows more than 4 feet wide by “nesting” two steel studs together, or reinforcing or nesting the runners at those points. The Harper House plans did not specify this requirement, nor were the steel studs actually used in Harper House construction designed to permit nesting. 3 More than 300 windows in Harper House were at least 8 feet wide, and apparently the backup system actually used was not reinforced in any way at these windows. 4 The 805 specifications required brick ties every 24 inches, vertically and horizontally.

The Harper House drawings reflected this, but the specifications left the number and location of the ties to the discretion of the mason. The 805 required the steel runners into which the studs fit to be securely fastened to the concrete slabs at 24 inch intervals. The Harper House specifications, although generally specifying that all components should be installed in accordance with the applicable portions of the 805, required fasteners for the steel runners only every 42 inches. The 805 required the use of 3-5/8 inch studs when the curtain wall exceeded 8 feet 6 inches in height, but the Harper House design ⁷⁵¹ specified 2-1/2 inch studs throughout, even though the span at the fourteenth floor was 9 feet 3/4 inches.

The alleged deficiencies in construction were also numerous, including: use of the wrong bricks; improper mortar; inadequate mortar to fill the head joints; use of the wrong brick ties, (galvanized before fabrication); brick ties completely missing, or too few in number, or connected improperly or not at all; bed mortar protruding into the air space; mortar allowed to accumulate at the base of the air space; inadequate weep holes to allow water to leave the interior of the wall; inadequate or nonexistent installation of flashing to direct interior water to weep holes; failure to use foil backed sheathing; inadequate fastening of exterior sheathing to studs; insufficient and inadequate fastening of steel runners to concrete decks; and, inadequate or non-existent fastening of steel studs to steel runners at top and bottom. Although we have set forth the alleged construction deficiencies to give a more complete picture of the controversy, we point out that if USG has potential liability to the petitioners, and if it is guilty of a negligent design or misrepresentation that is a legally cognizable cause of the current defective condition, the fact that the negligence of others may have contributed to the loss would not ordinarily excuse USG. See Cincinnati Riverfront Coliseum v. McNulty Co., 28 Ohio St.3d 333 , 504 N.E.2d 415, 419 (1986). We return, then, to the pressing question of whether USG may be liable under the circumstances of this case.

Because petitioners’ claims sound in negligence, we look first to whether USG owed a tort duty to these petitioners. As this Court said in W.Va. Central R. Co. v. Fuller, 96 Md. 652, 666 , 54 A. 669 (1903): [TJhere can be no negligence where there is no duty that is due; for negligence is the breach of some duty that one person owes to another. It is consequently relative and can have no existence apart from some duty expressly or impliedly imposed.

In every instance before negligence can be predicated of a given act, back of the act must be ⁷⁵² sought and found a duty to the individual complaining, the observance of which duty would have averted or avoided the injury____ As the duty owed varies with circumstances and with the relation to each other of the individuals concerned, so the alleged negligence varies, and the act complained of never amounts to negligence in law or in fact; if there has been no breach of duty. We discussed the concept of duty at some length in Jacques v. First Nat’l Bank, 307 Md. 527 , 515 A.2d 756 (1986). Quoting from Prosser & Keeton on The Law of Torts § 53, at 357 (5th ed.1984), we said that a tort duty “is ... an expression of the sum total of those considerations of policy which lead the law to say that the plaintiff is entitled to protection,” and that a tort duty is not necessarily coextensive with a moral duty. Jacques, supra, 307 Md. at 533-34 , 515 A.2d 756 .

We also discussed the question of duty in Ashburn v. Anne Arundel County, 306 Md. 617, 627 , 510 A.2d 1078 (1986), and there agreed with the observation of the Supreme Court of California that among the variables to be considered in determining whether a tort duty should be recognized are: [T]he foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered the injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost and prevalence of insurance for the risk involved. Tarasoff v. Regents of University of California, 17 Cal.3d 425 , 131 Cal.Rptr. 14 , 551 P.2d 334, 342 (1976). In Jacques , and more recently in Council of Co-Owners v. Whiting-Turner, supra, we discussed the relationship of the parties and the nature of the actual or foreseeable harm in a given case as additional