9TH STREET APT. v. DRA ANDERSON CONSTRUCTORS CO.; 9TH STREET
APT. L.L.C. AND NASI V-TIF, APPELLANTS AND CROSS-APPELLEES,
v. DRA ANDERSON CONSTRUCTORS CO., APPELLEE AND
CROSS-APPELLANT.
No. A-08-1276.
NEBRASKA COURT OF APPEALS
2009 Neb. App. LEXIS 174
October 6, 2009, Filed
NOTICE: NOT DESIGNATED FOR PERMANENT PUBLICATION.
PRIOR HISTORY:
Appeal from the District Court for Douglas County: J. MICHAEL COFFEY, Judge.
DISPOSITION: Affirmed.
COUNSEL: Robert M. Slovek, Matthew M. Enenbach, and Norman M. Krivosha, of Kutak
Rock, L.L.P., and Richard C. Nelson and Robert F. Adams, of Nelson, Kinder,
Mosseau & Saturley, for appellants.
Larry E. Welch, Sr, and Larry E. Welch, Jr., of Welch Law Firm, P.C., for
appellee.
JUDGES: SIEVERS, CARLSON, and CASSEL, Judges.
OPINION BY: CARLSON
OPINION
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
CARLSON, Judge.
INTRODUCTION
9th Street Apt. L.L.C. and Nasi V-Tif (collectively referred to as "9th
Street") appeal from an order of the district court for Douglas County granting
summary judgment in favor of DRA Anderson Constructors Co. (DRA) and Midwest
Environmental, Inc. (Midwest), the defendants. 9th Street appeals, and DRA
cross-appeals. For the reasons set forth below, we affirm.
BACKGROUND
9th Street is the owner and developer of the Butternut Coffee building,
located in the Omaha Rail and Commerce District. In 2003, 9th Street hired DRA
as its general contractor to convert the building into an apartment and
commercial complex. DRA then contracted with Midwest for certain demolition work
on the project. The contract between 9th Street and DRA contains language
stating that 9th Street and DRA waive all claims against each other for
consequential damages due to fire, including losses of use of the Butternut
Coffee building. On the night of July 7, 2004, while the rehabilitation project
was nearing completion, a fire broke out in the building. 9th Street then
brought suit against DRA and Midwest, based on theories of breach of contract,
negligence, and gross negligence, claiming damages in the amount of $
27,176,191.
DRA and Midwest first moved for partial summary judgment in July and
September 2006, respectively. Both argued that the pleadings and evidence showed
that there was no genuine issue as to any material fact and that they were
entitled to judgment as a matter law.
In an order filed July 2, 2007, the trial court granted DRA's and Midwest's
motions for partial summary judgment. The court stated that 9th Street's claims
for damages against the defendants which were covered by insurance should be
dismissed but that genuine issues of material facts existed as to the liability
of DRA and Midwest for damages claimed by 9th Street which were not covered by
insurance.
Subsequently, 9th Street specified that it suffered damages of $ 10,820,972
which were not covered by insurance, including historic tax credits (HTC),
valued at $ 6,061,781; tax increment financing (TIF), valued at $ 2,083,000; and
other damages in excess of $ 2,600,000 for costs relating to site security, fire
investigation, engineering costs, damages paid to abutting landowners, postfire
carrying costs, claims adjuster fees, HTC liquidation costs, and demolition
costs.
9th Street alleges that the Butternut Coffee building was deemed a historic
landmark, and as a result, 9th Street was to receive HTC from the federal
government. These credits are tax incentives to support the rehabilitation of
historic buildings if certain conditions are met. 9th Street could not claim the
HTC until the building was finished.
9th Street also claims damages for loss of TIF from the city of Omaha. This
financing is a promissory note made by a political subdivision, here the city of
Omaha, with a conditional obligation to pay a qualifying sum over 15 years if
the tax proceeds generated through increased property value are sufficient to
support the payment. In order to obtain cash to finance the development of the
Butternut Coffee building, 9th Street assigned the TIF notes to Nasi V-Tif.
The defendants filed other motions for summary judgment on July 9, 2008,
stating that the trial court had previously granted their motions for partial
summary judgment as they related to 9th Street's damages that were covered by
insurance. The defendants alleged that since that ruling, 9th Street had
specified over 10 million dollars in damages not covered by insurance. The
defendants stated that these damages are not recoverable, either because of the
waiver of consequential damages contained in the parties' contract or because
Nebraska law does not recognize them as compensable elements of damage.
In an order filed July 28, 2008, the trial court granted the defendants'
motions for summary judgment. The court found that in order to claim the HTC or
to receive the benefits of the TIF, the apartments had to have been completed,
and therefore, 9th Street's loss of the HTC and TIF are the direct result of the
loss of use of the Butternut Coffee building due to the fire. The court noted
that under the parties' contract, 9th Street waived damages resulting from loss
of use of the Butternut Coffee building.
Furthermore, the court found that the damages sought by 9th Street, including
payments to abutting landowners, HTC liquation costs, demolition costs, and the
postfire carrying costs were consequential damages that 9th Street waived in the
parties contract. The court also found that 9th Street's damages for site
security, the cost of fire investigation, engineering costs, and claim adjuster
fees are litigation related costs that are not recoverable in this action.
Thus, the trial court found that no genuine issues of material fact existed
and that the motions for summary judgment filed by the defendants should be
sustained and that 9th Street's claims for the following damages be dismissed:
HTC, TIF, site security, cost of fire investigation, engineering costs, postfire
carrying costs, fee of insurance claims adjuster, HTC liquidation cost, damages
paid to abutting landowners, and demolition costs.
In an order filed August 5, 2008, the trial court dismissed 9th Street's
amended complaint against DRA and entered judgment for DRA. 9th Street appealed,
and this court dismissed 9th Street's appeal for lack of a final order because
DRA's cross-claim against Midwest remained unresolved. On October 28, the
district court entered an order dismissing DRA's claim against Midwest with
prejudice. 9th Street appeals, and DRA cross-appeals.
ASSIGNMENTS OF ERROR
On appeal, 9th Street argues that the trial court erred in (1) ruling that
9th Street's damage claims were barred by the waiver of consequential damages
clause in the parties' contract despite allegations and evidence that 9th
Street's damages were caused by DRA's gross negligence; (2) ruling that the loss
of the HTC and TRF were loss of use damages that were waived by the contract
between 9th Street and DRA; (3) ruling that payments by 9th Street to abutting
landowners, costs to demolish the building, carrying costs, and HTC liquidation
costs were consequential damages waived by the contract; (4) ruling that 9th
Street's claims for the costs of site security, an engineering assessment,
hiring an insurance adjuster, and investigation of the cause and origin of the
fire were litigation-related expenses that are not recoverable; (5) sua sponte
dismissing 9th Street's claim for damage to abutting property owners; and (6)
reversing its earlier ruling on the defendants' summary judgment motions in
which the court stated that genuine issues of material fact existed. In its
cross-appeal, DRA contends that the trial court erred in dismissing, with
prejudice, DRA's cross-claims for indemnification against Midwest.
STANDARD OF REVIEW
Summary judgment is proper when the pleadings and evidence admitted at the
hearing disclose that there is no genuine issue as to any material fact or as to
the ultimate inferences that may be drawn from those facts and that the moving
party is entitled to judgment as a matter of law. Worley v. Houston, 16 Neb.
App. 634, 747 N.W.2d 639 (2008). In reviewing a summary judgment, an appellate
court views the evidence in the light most favorable to the party against whom
the judgment is granted and gives such party the benefit of all reasonable
inferences deducible from the evidence. Id.
The meaning of a contract is a question of law. Lexington Ins. Co. v. Entrex
Comm. Servs., 275 Neb. 702, 749 N.W.2d 124 (2008). The determination of whether
a contract violates public policy is a question of law. Id. When reviewing
questions of law, an appellate court has an obligation to resolve the questions
independently of the conclusions reached by the trial court. Id.
ANALYSIS
Exculpatory Clause.
9th Street argues that the court erred as a matter of law by ruling that its
claims were barred by the waiver of consequential damage clause in the parties'
contract when there are allegations and evidence that 9th Street's damages were
caused by DRA's gross negligence. 9th Street contends that the consequential
damages waiver in the parties' contract is a pure exculpatory clause that must
be narrowly construed.
Section 4.3.10 of the parties' contract provides in relevant part:
[9th Street] and [DRA] waive Claims against each other for
consequential damages arising out of or relating to this Contract.
This mutual waiver includes: 1. Damages incurred by [9th Street] for
rental expenses, for losses of use, income, profit, financing,
business and reputation, and for loss of management or employee
productivity or the services of such persons; and 2. Damages incurred
by [DRA] for principal office expenses including the compensation of
personnel stationed there, for losses of financing, business and
reputation and for loss profit except anticipated profit arising
directly from the Work.
Section 11.4.3 provides:
[9th Street], at [9th Street's] option, may purchase and maintain
such insurance as will insure [9th Street] against loss of use of [9th
Street's] property due to fire or other hazards, however caused. [9th
Street] waives all rights of action against [DRA] for loss of use of
[9th Street's] property, including consequential losses due to fire or
other hazards however caused.
Nebraska has held that exculpatory clauses are not effective to bar claims of
gross negligence while waivers of subrogation are effective to bar a party's
claims of gross negligence. See, Lexington Ins. Co. v. Entrex Comm. Servs., 275
Neb. 702, 749 N.W.2d 124 (2008); New Light Co. v. Wells Fargo Alarm Servs., 247
Neb. 57, 525 N.W.2d 25 (1994).
In Lexington Ins. Co., the owner of a television broadcast tower that
collapsed brought suit against a contractor hired to replace an antenna on the
tower. The owners of the tower alleged that the tower collapsed due to the
contractor's gross negligence. The contractor moved for partial summary
judgment, claiming that a waiver of subrogation clause in the parties' agreement
barred the owner's claims to the extent insurance proceeds covered the damages.
The waiver of subrogation of clause read as follows: "'The Owner and Contractor
waive all rights against . . . each other and any of their subcontractors . . .
for damages caused by fire or other causes of loss to the extent covered by
property insurance . . . .'" Lexington Ins. Co., 275 Neb. at 707, 749 N.W.2d at
128.
The district court granted the contractor's motion for summary judgment, and
the insurer of the owners of the tower appealed. The Nebraska Supreme Court held
that a contractual waiver of subrogation as set out in Lexington Ins. Co. is
valid and bars a party's claims for gross negligence. In reaching its decision,
the court addressed the argument of the insurer of the owners of the tower that
New Light Co. controlled the outcome of their case, and dictated the conclusion
that the waiver of subrogation clause was void concerning claims of gross
negligence. Specifically, the court stated:
In New Light Co., a fire in the plaintiff's restaurant caused
extensive damage to the building and its contents. The plaintiff
alleged that the defendant was grossly negligent in designing,
installing, and maintaining a fire alarm system in the building. The
plaintiff further argued that public policy prevented the defendant
from relying on a contractual exculpatory clause or
limitation-of-damages provision to insulate itself from liability for
its gross negligence. In New Light Co., we held that allowing the
defendant to use a contractual agreement to insulate itself from
damages caused by its own gross negligence would violate public
policy.
. . . Lexington acknowledges that New Light Co. addressed a
contractual exculpatory clause and a limitation-of-damages provision,
rather than a waiver of subrogation clause. . . .
. . . We decline . . . to extend our discussion in New Light Co. to
this case involving a contractual waiver of subrogation.
Lexington Ins. Co., 275 Neb. at 709-10, 749 N.W.2d at 129-30.
The court stated that while a waiver of subrogation shares similarities with
a traditional exculpatory clause or limitation-of-damages provisions,
significant differences exist between waivers of subrogation and the exculpatory
clause or limitation-of-damages provision in New Light Co. Specifically, the
limitation-of-damages provision stated that the plaintiff agreed that the
defendant would not be liable for any of the plaintiff's "'losses or damages
irrespective of origin, to person or to property, whether directly or indirectly
caused by performance or nonperformance of any obligation imposed by this
agreement or by negligent acts or omissions of Wells Fargo alarm, its agents or
employees.'" New Light Co. v. Wells Fargo Alarm Servs., 2 Neb. App. 828, 830,
516 N.W.2d 260, 262 (1994) (emphasis omitted).
The Supreme Court noted that exculpatory clauses, like the one in New Light
Co., which do not allow one party any recovery against another party, even for
claims of gross negligence, has the effect of not allowing a party to recover
any damages for its losses. In contrast, the court stated that situations like
Lexington Ins. Co. involving waivers of subrogation only apply to losses covered
by insurance, so "'there is no risk that an injured party will be left
uncompensated.'" 275 Neb. at 709, 749 N.W.2d at 129.
The court stated that waivers of subrogation serve other important policy
goals that exculpatory clauses do not, including encouraging parties to
anticipate risks and to procure insurance covering those risks, avoiding future
litigation, and facilitating and preserving economic relations and activity.
In the instant case, we are faced with a waiver of consequential damages. 9th
Street argues that this waiver is an exculpatory clause like that in New Light
Co., while DRA argues that it is a waiver of subrogation clause like that in
Lexington Ins. Co. It appears to us that the waiver of consequential damages at
issue is neither a true exculpatory clause nor a traditional waiver of
subrogation. The authors of a treatise on construction law addressed
consequential damage waivers and stated:
In some respects, this mutual waiver reminds one of 11.4.7
involving waivers of subrogation. But unlike a waiver of subrogation,
the risk allocated under the mutual waiver of consequential damages is
not transferred to a third party who agreed to take the risk in
exchange for other payment of a premium. This provision also has
similarities to various exculpatory provisions, such as indemnity
agreements. In any given context, a mutual waiver of consequential
damages will act to leave one party bearing certain losses that were
caused by the other party in this way it acts like an indemnity
provision. Most indemnity agreements are drafted as unilateral risk
transfer mechanisms, i.e., risk is transferred from the indemnitee to
the indemnitor. By contrast 4.3.10 is drafted as a "mutual" waiver and
therefore does not, on its surface, appear to be as one-sided as most
indemnity agreements.
2 Philip L. Bruner & Patrick J. O'Connor, Bruner and O'Connor on Construction
Law § 5:115.
On this record, we conclude that the district court did not err in failing to
find that the waiver of consequential damages clause in the parties' contract
was an exculpatory clause. After reviewing Lexington Ins. Co. and New Light Co.,
we find that the waiver of consequential damages in the parties' contract is
more like a waiver of subrogation clause than an exculpatory clause because the
waiver is mutual and both parties waived their rights against the other for
certain damages.
In declining to extend New Light Co., the Lexington Ins. Co. court, 275 Neb.
at 711, 749 N.W.2d at 130, concluded:
We, like other jurisdictions, recognize the important policy goal
that waivers of subrogation serve in avoiding disruption of
construction projects and reducing litigation among parties to
complicated construction contracts. Concluding that waivers of
subrogation cannot be enforced against gross negligence claims would
undermine this underlying policy by encouraging costly litigation to
contest whether a party's conduct was grossly negligent. Therefore, we
conclude that "public policy favors enforcement of waivers of
subrogation even in the face of gross negligence [claims]."
Therefore, because the mutual waiver of consequential damage clause in the
instant case is more like a waiver of subrogation clause, we conclude that the
parties' waiver of consequential damages is valid and that public policy favors
enforcement of the waiver even in the face of 9th Street's gross negligence
claims.
Historic Tax Credits and Tax Increment Financing.
9th Street contends that the trial court erred in finding that its claims for
the loss of the HTC and TIF were consequential damages that were waived pursuant
to the parties' contract. General damages are defined as "[d]amages that the law
presumes follow from the type of wrong complained of . . . ." Black's Law
Dictionary 446 (9th ed. 2009). In contrast, consequential damages are defined as
"[l]osses that do not flow directly and immediately from an injurious act but
that result indirectly from the act." Id. at 445-46.
General damages are those that the law presumes will result from any injury
of a particular kind. Special or consequential damages--the two are
interchangeable--are the actual but not the necessary result of the injury
complained of. They are damages arising from the special circumstances of a
particular case. NJI 2d Civ. 4.59.
The issue of whether damages are consequential is a question of law. Chestnut
Hill Development Corp. v. Otis Elevator Co., 739 F. Supp. 692 (D. Mass. 1990).
When reviewing questions of law, an appellate court has an obligation to resolve
the questions independently of the conclusions reached by the trial court.
Lexington Ins. Co. v. Entrex Comm. Servs., 275 Neb. 702, 749 N.W.2d 124 (2008).
In the instant case, the relevant section of the parties' contract states:
[DRA] and [9th Street] waive Claims against each other for
consequential damages arising out of or relating to this Contract.
This mutual waiver includes: 1. Damages incurred by [9th Street] for
rental expenses, for losses of use, income, profit, financing,
business and reputation, and for loss of management or employee
productivity or the services of such persons . . . .
Additionally, section 11.4.1.3 of the parties' contract provides: "[9th
Street] waives all rights of action against [DRA] for loss of use of [9th
Street's] property, including consequential losses due to fire or other hazards
however caused."
The trial court found that in order to claim the HTC or to receive the
benefits of the TIF, the Butternut Coffee building had to have been in use, and
therefore that the loss of the HTC and TIF are loss of use damages resulting
when the building was destroyed by fire. Therefore, because 9th Street waived
all rights of action for the loss of use of its property under the contract, the
trial court found that 9th Street waived any claim to both the HTC and TIF as
loss of use damages.
Both parties agree that the law set out in "L" Investments, Ltd. v. Lynch,
212 Neb. 319, 322 N.W.2d 651 (1982), controls this case. The basic principle of
the law of damages is that such compensation in money shall be allowed for loss
sustained as will restore the loser to the same value of property status as he
occupied just preceding the loss. Id. Where an improvement upon realty is
damaged without damage to the realty itself and where the nature of the thing
damaged is such that it is capable of being repaired or restored and the cost of
doing so is capable of reasonable ascertainment, the measure of damages for its
negligent damage is the reasonable cost of repairing or restoring the property
in kind and quality, in addition to any other consequential damages which the
injured party may establish by proper proof. Id. If in fact, the cost of repair
or restoration of improvement upon realty exceeds the market value of the
property just before the injury, then the proper measure of damages is the
market value of the property just before the damages were incurred, less any
salvage. Id.
DRA argues that because the Butternut Coffee building cannot be restored, 9th
Street is limited to recovering the market value of the building, which was $
18,900,000 prior to the fire. DRA states that because 9th Street already
received $ 21,410,764 in insurance proceeds, 9th Street is not entitled to
recover additional damages. 9th Street argues that it is entitled to recover
additional damages because both the HTC and the TIF formed a substantial portion
of the market value of the property. According to 9th Street, the market value
of the building was $ 25,985,173 prior to the fire. 9th Street states that
because it only recovered $ 21,410,764 in insurance proceeds, it is entitled to
additional damages under "L" Investments, Ltd.
The depositions of two experts, Peter Korpacz and Patrick Morissey were
entered into evidence at the summary judgment hearing on the question of whether
the HTC and TIF are part of the market value of the Butternut Coffee property.
Korpacz stated that he would characterize the HTC and TIF as nonreal property.
Korpacz stated that the value of the real property prior to the fire was $
18,900,000 and that the HTC and TIF are not part of that value. Morrissey stated
that the fair market value of the Butternut Coffee building property on the day
before the fire was 26 million dollars, including the value of the building and
the HTC and TIF. Morrissey stated that in valuing the property, it is proper to
include the HTC and TIF in the total value of the property.
DRA argues that even if the HTC and TIF constitute real property and must be
added to the value of the property, 9th Street was required to purchase
insurance to cover such losses and failed to do so. We agree. Section 11.4.1 of
the parties' contract states that 9th Street "shall purchase and maintain . . .
property insurance . . . in the amount of the initial Contract Sum, plus value
of subsequent Contract modifications . . . comprising the total value for the
entire Project." Section 11.4.1.2 goes on to state that if DRA is damaged by the
failure or neglect of 9th Street to "purchase or maintain insurance as described
above," 9th Street "shall bear all reasonable costs properly attributable
thereto."
Therefore, we conclude that the trial court did not err in concluding as a
matter of law that the HTC and TIF are damages which 9th Street cannot recover
under its contract with DRA.
Other Damages.
9th Street argues that the trial court erred in finding that payments by 9th
Street to abutting landowners, costs to demolish the building, carrying costs,
and HTC liquidation costs were consequential damages waived by the contract.
Regarding carrying costs, 9th Street alleges that as a result of the fire, it
was required to carry several loans on the Butternut Coffee building property
for a longer period of time, and that as a result, it paid additional interest
charges. 9th Street also states that it had to repay HTC liquidation costs,
which means that it was required to repay its equity partner on account of the
loss of the HTC. 9th Street also contends that the trial court erred in ruling
as a matter of law that its claims for the costs of site security, an
engineering assessment, hiring an insurance adjuster, and the investigation of
the cause and origin of the fire were litigation-related expenses which were not
recoverable.
Initially, we note that section 11.4.1.1 of the parties' contract requires
9th Street to "procure property insurance on the Project against the perils of
fire including debris removal and all contractors' services and expenses
required as a result of the insured loss." Therefore, we conclude that the trial
court did not err in finding that 9th Street waived damages under the contract
for costs to demolish the building. Similarly, we find that the costs of an
engineering assessment, the hiring of an insurance adjuster, site security, and
fire investigation costs could all be construed as contractors' services
required as a result of the fire and waived under the parties' contract.
Additionally, we find that the trial court did not err in finding that 9th
Street's payments to abutting landowners, carrying costs, and HTC liquidation
costs are consequential, not direct, damages resulting from the fire. These
damages clearly did not flow directly from the fire, but, rather, they resulted
indirectly from the fire and the destruction of the Butternut Coffee building.
Therefore, the trial court did not err in finding that 9th Street cannot recover
for the following damages: payments to abutting landowners, carrying costs, HTC
liquidation costs, costs to demolish the building, costs of site security and an
engineering assessment, costs for the hiring of an insurance adjuster, and costs
to investigate the cause and the origin of the fire.
Payments to Abutting Landowners--Dismissal Sua Sponte.
9th Street argues that the trial court erred in dismissing sua sponte its
claims for damages to abutting property owners, because 9th Street did not ask
for such relief. In its motion for summary judgment filed July 9, 2008, DRA
stated that it was entitled to summary judgment because no genuine issue of
material fact existed. DRA also stated that the damages 9th Street sought are
not recoverable, either because of the waiver of consequential damages contained
in the parties' contract or because Nebraska does not recognize them as
compensable elements of damages. DRA's motion for summary judgment was clearly
broad enough to cover 9th Street's claim for payments 9th Street made to
abutting landowners after the fire. There is nothing in the record before us
that supports 9th Street's contention that DRA did not ask the court to dismiss
its claims for payments it made to abutting property owners. Therefore, we
cannot say that the trial court dismissed 9th Street's claims for payments to
abutting property owners sua sponte.
Reversal of Earlier Ruling.
9th Street also argues that the court abused its discretion by reversing its
first summary judgment ruling in which the trial court stated that genuine
issues of material fact remained. 9th Street also contends that DRA's second
motion for summary judgment was filed months after the dispositive motion
deadline and a week before trial.
In its July 2, 2007, order disposing of DRA's first motion for summary
judgment, the trial court stated that 9th Street's claims for damages against
DRA and Midwest which were covered by insurance should be dismissed. The trial
court further found that genuine issues of material fact existed as to the
liability of DRA and Midwest for damages claimed by 9th Street which were not
covered by insurance.
In July 2008, DRA and Midwest filed other motions for summary judgment
stating that the court had previously granted their motions for partial summary
judgment as it related to damages that were covered by insurance. DRA and
Midwest stated that since then, 9th Street had identified several items of
damages for which they had not been compensated by insurance. DRA contended that
these items were also unrecoverable. In an order filed July 23, the trial court
granted DRA's second motion for summary judgment, stating that 9th Street could
not recover any of its damages not covered by insurance.
9th Street alleges, "In this case, the District court offered no explanation
for why it reversed its previous ruling and determined after several more years
of costly litigation that [9th Street] could not recover any damages against
[DRA]." Brief for appellants at 37. We disagree. The trial court did set out the
reasons for its decision. Furthermore, as set forth above, we have concluded
that the trial court did not err in granting DRA and Midwest's second motion for
summary judgment. For these reasons, the trial court did not abuse its
discretion in reversing its previous ruling and finding that no genuine issues
of material fact exist.
DRA's Cross-Appeal.
DRA contends that the trial court erred in dismissing its cross-claim against
Midwest with prejudice. On August 5, 2008, the district court dismissed 9th
Street's complaint against DRA in its entirety and entered judgment in favor of
DRA. On November 18, 2008, 9th Street filed a motion to dismiss their complaint
against Midwest, with prejudice, citing an agreement it had reached with
Midwest. The motion also sought dismissal with prejudice of DRA's cross-claim
against Midwest for indemnification. 9th Street asserted that because of 9th
Street's settlement and indemnification agreement with Midwest, DRA's
cross-claim failed to state a claim upon which relief could be granted. On
November 24, the district court entered an order dismissing 9th Street's claims
against Midwest with prejudice, and further dismissed DRA's cross-claim for
indemnification against Midwest with prejudice.
DRA argues that the trial court must modify Midwest's dismissal with
prejudice because DRA could be left without a remedy for contribution "in the
event that the matter is returned for trial." Reply brief for cross-appellant at
2. Given our determination that the trial court did not err in granting summary
judgment in favor of DRA and dismissing 9th Street's complaint, we need not
consider DRA's cross-appeal.
CONCLUSION
After reviewing the record, we conclude that the trial court did not err in
ruling that 9th Street was precluded from recovering damages for its HTC and TIF
losses under the parties' contract or in failing to find that 9th Street's gross
negligence claims were barred by an exculpatory clause. The trial court was
correct in finding that the following damages are not recoverable by 9th Street:
payments by 9th Street to abutting landowners, costs to demolish the building,
carrying costs, HTC liquidation costs, costs of site security and an engineering
assessment, costs for the hiring of an insurance adjuster, and costs to
investigate the cause and origin of the fire. On this record, we find that the
trial court did not sua sponte dismiss 9th Street's claim for damages to
abutting property owners. Additionally, the trial court did not err in reversing
its earlier summary judgment ruling. We do not reach the issue of whether the
trial court erred in dismissing, with prejudice, DRA's cross-claims for
indemnification against Midwest. Therefore, we affirm the trial court's orders
granting judgment in favor of DRA and dismissing 9th Street's complaint.
AFFIRMED.