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Hensel Phelps Construction Co. v. Cooper Carry Inc.

United States Court of Appeals, District of Columbia Circuit

June 30, 2017

Hensel Phelps Construction Co., Appellant
Cooper Carry Inc., Appellee

          Argued April 21, 2017

         Appeal from the United States District Court for the District of Columbia (No. 1:15-cv-01961)

          Catherine E. Stetson argued the cause for appellant. With her on the briefs was Eugene A. Sokoloff.

          Paul J. Kiernan and Stephen B. Shapiro were on the brief for amicus curiae The Associated General Contractors of America and Associated General Contractors of Metropolitan Washington D.C. in support of appellant.

          Jonathan C. Shoemaker argued the cause for appellee. With him on the brief was James F. Lee Jr.

          Before: Brown and Pillard, Circuit Judges, and Silberman, Senior Circuit Judge.


          Brown, Circuit Judge

         This controversy concerns breach-of-contract and indemnification claims arising out of alleged defects in the design of the Marriott Marquis Hotel adjacent to the Walter E. Washington Convention Center ("the Project"). Hensel Phelps Construction Company ("Hensel Phelps") claims Cooper Carry "materially breached" its contractual obligations in eighteen respects, including by failing to meet the applicable standard of care and by failing to design the Project in accordance with applicable fire codes. Compl. ¶ 24, J.A. 10-11. Additionally, Hensel Phelps argues Cooper Cary is contractually obligated to indemnify Hensel Phelps for the losses associated with rectifying the alleged design errors. The district court granted summary judgment to Cooper Carry on both counts. We hold that the statute of limitations has run on Hensel Phelps's breach-of-contract claim, and the terms of the indemnification clause do not cover first-party claims. We accordingly affirm.



         Marriott International entered into an initial Agreement with Cooper Carry on March 5, 2008, under which Cooper Carry agreed to design and monitor the construction of the Project for a lump sum of $14, 335, 602. The Agreement divided Project completion into five phases: conceptual design, schematic design, design development, construction document, and construction contract administration. As the Project progressed, Cooper Carry would bill Marriott on a monthly basis, and final payment was due to Cooper Carry upon, among other things, "the full completion of the services hereunder." Agreement Art. 4.05.6, J.A. 25. The construction contract administration phase obligated Cooper Carry to perform tasks such as "shop drawing and construction materials sample review and approval, answering requests for information from contractor(s), preparing construction contract change order and field orders, confirming the contractors' percentage of completion of work to substantiate payment requests, reviewing and approving construction mock-ups, and conducting site observations and preparing reports." J.A. 39. It also required Cooper Carry to provide construction administration services as set forth in the as-of-yet-unwritten construction contract for the Project. Once the construction contract between Marriott and the construction entity was finalized, it would be sent to Cooper Carry for approval and incorporated by reference into the initial Agreement.

         Cooper Carry made numerous promises in the initial Agreement, two of which are particularly relevant to this litigation. First, Cooper Carry agreed to act in accordance with "the professional standards of skill, care and diligence ordinarily expected of leading, internationally recognized architectural firms on projects of comparable scope and complexity." Agreement Art. 2.01, J.A. 17. Second, Cooper Carry represented it was knowledgeable of all applicable laws, "codes, ordinances, rules, regulations and other requirements imposed by [relevant] governmental authorities, " "all . . . governmental approval requirements, " and "National Fire Protection Association ('NFPA') standards." Agreement Art. 2.05.1, J.A. 19-20. With respect to fire safety specifically, Cooper Carry agreed to design the Project in conformity with "the BOCA National Building Codes, the NFPA National Fire Codes (especially NFPA 101, Life Safety Code) and the Marriott Fire Protection/Life Safety design." J.A. 49. In addition to its service-related obligations and representations, Cooper Carry acknowledged "Marriott may sustain financial loss for which [Cooper Carry] may be liable if the Project or any part thereof is delayed because [Cooper Carry] negligently fails to perform the Services in accordance with this Agreement, including, but not limited to, the Schedule." Agreement Art. 3.01, J.A. 22. Cooper Carry also agreed to indemnify Marriott "[t]o the fullest extent permitted by law, . . . from and against any claim, judgment, lawsuit, damage, liability, and costs and expenses, including reasonable attorneys' fees, as a result of, in connection with, or as a consequence of [Cooper Carry's] performance of the Services under this Agreement . . . ." Agreement Art. 6.01, J.A. 27.

         The initial Agreement contained a dispute-resolution provision, which allowed "[a]ny party . . . from time to time" to "call a special meeting for the resolution of disputes that would have a material impact on the cost or progress of the Project." Agreement Art. 7.09.1, J.A. 31 (emphasis added). If an informal dispute-resolution process failed, the parties agreed to attempt mediation, which would last no more than twenty working days unless the parties agreed otherwise. "If [a] dispute [was] settled through the mediation process, the decision [would] be implemented by written agreement signed by all the parties involved." Agreement Art. 7.09.2, J.A. 31. The Agreement provided that "[a]ll claims and disputes not settled by mediation shall be resolved through litigation in [the] court having jurisdiction over same." Agreement Art. 7.09.3, J.A. 32. Additionally, the Agreement provided that "[t]he presence of any claim or dispute, or legal proceeding arising hereunder shall not relieve [Cooper Carry] from its obligation to properly ...

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