Penta Corporation. Town of Newport. AECOM Technical Services, Inc. Third Party Defendant. WesTech Engineering, Inc. Third Party Defendant

Transcription

1 MERRIMACK, SS SUPERIOR COURT Penta Corporation v. Town of Newport v. AECOM Technical Services, Inc. Third Party Defendant v. WesTech Engineering, Inc. Third Party Defendant No CV ORDER This case arises out of upgrades to a wastewater treatment facility ( WWTF ) in Newport, New Hampshire. The Town of Newport ( Town ) found it necessary to upgrade its WWTF to comply with certain regulatory requirements. The Town engaged AECOM Technical Services, Inc. ( AECOM ) to design an upgrade the WWTF. The Town hired the Plaintiff, Penta Corporation ( Penta ), to construct the system. Penta purchased equipment from WesTech Engineering ( WesTech ), a subcontractor which manufactured the disc filters that were required to treat the wastewater in the upgraded WWTF. The WWTF was never able to meet the Town s requirements and it was declared

2 a total loss in This litigation began when Penta filed a Complaint against the Town for breach of contract based upon the Town s refusal to pay Penta, the general contractor, for building the WWTF. The Town brought a Counterclaim against Penta and a Third-Party Complaint against AECOM, the engineer that designed the WWTF, alleging in substance that the filter system for the WWTF was improperly designed and built. In turn, AECOM brought a Third-Party Complaint against WesTech. Penta filed a Cross-claim against AECOM, and AECOM brought a Counterclaim against the Town and a Cross-claim against Penta. The case has been vigorously litigated. Motions, sometimes based upon tort claims which do not exist, or strained readings of the straightforward contract documents, have fallen into the Court s file like autumn leaves. For the reasons stated in this Order, Penta s Motion for Summary Judgment as to Count II of the Town s Amended Counterclaim is GRANTED. Penta s Motion for Summary Judgment as to Count II of AECOM s Counterclaim is GRANTED. WesTech s Motion for Summary Judgment as to Cross-claims of the Town against WesTech is GRANTED. The Town s Motion for Summary Judgment on Counts I IV of WesTech s Counterclaim is GRANTED. WesTech s Motion to Dismiss Third-Party Claims of AECOM against WesTech is GRANTED. WesTech s Motion for Summary Judgment as to Third-Party Claims of AECOM against WesTech is DENIED as moot. I. Undisputed Facts The parties have filed a number of summary judgment motions. To prevail on a Motion for Summary Judgment, the moving party must show that there is no genuine - 2 -

3 issue as to any material fact and that the moving party is entitled to judgment as a matter of law. RSA 491:8-a, III. In order to defeat summary judgment, the non-moving party must put forth contradictory evidence under oath, sufficient... to indicate that a genuine issue of fact exists so that the party should have an opportunity to prove the fact at trial. Phillips v. Verax Corp., 138 N.H. 240, 243 (1994) (quotation omitted). A fact is material if it affects the outcome of the case under the applicable substantive law. Palmer v. Nan King Rest., Inc., 147 N.H. 681, 683 (2002). In considering a party s motion for summary judgment, the Court considers the evidence, and all inferences properly drawn from it, in the light most favorable to the nonmoving party. Sintros v. Hamon, 148 N.H. 478, 480 (2002). The following facts do not appear to be in dispute. 1 In 2007, the United States Environmental Protection Agency ( EPA ) issued National Pollutant Discharge Elimination Permits No. NH ( NPDES Permit ) to the Town. The NPDES Permit allowed the Town to discharge wastewater subject to certain effluent limitations, including limits on the discharge of phosphorus. In March 2009, the EPA issued an Administrative Order ( AO ) which reflected the EPA s conclusion that the WWTF was discharging wastewater into the Sugar River in violation of the limits contained in the NPDES Permit on the discharge of phosphorous. (Decl. of Cori Palmer in Opp n to Penta s Mot. Summ. J., Ex. 1.) The Town was ordered to submit a report identifying how it would upgrade and modify the WWTF to bring it into compliance with the effluent 1 Some, but not all of the relevant documents and contract excerpts are included as exhibits to WesTech s Common Statement of Facts in Support of Motions for Summary Judgment as to Third-Party Claims of AECOM Technical Services, Inc. and Cross-claims of Town of Newport against WesTech (hereinafter WesTech s Common Statement of Facts ). For convenience, the Court cites to many documents by the tab which they can be found in WesTech s Common Statement of Facts as, for example, Tab

4 requirements of the NPDES Permit by December 31, 2009, and to bring the WWTF into compliance with the NPDES Permit by October 31, (Id.) In order to comply with the EPA s AO, in August 2009, the Town entered into an Engineering Report Phase Contract with AECOM ( the Study Contract ). (Tab 3.) The purpose of the Study Contract was to provide an evaluation of alternatives and a recommendation for the upgrade of the WWTF necessary for the purpose of complying with the phosphorous limits contained in the... NPDES Permit. (Id.) During 2009 and 2010, AECOM worked closely with two companies, I. Kruger, Inc. ( Kruger ) and Inflicto Degremont DesnaDeg ( Inflicto ) in order to develop and test two phosphorusreducing treatment alternatives: (1) coagulation followed by direct filtration and (2) ballasted sedimentation process. (See Tab 6.) AECOM commissioned Kruger, a manufacturer of wastewater treatment equipment, to conduct a pilot test of the direct filtration treatment process, which took place in November (See Tab 4.) In January 2010, Kruger produced a report for AECOM entitled Hydrotech Discfilter Pilot Study Report ( Pilot Study ). (Id.) The Pilot Study included a disc filter process description, pilot unit specifications, coagulant and polymer chemical data and the pilot testing protocol. (Id. at 1 6.) Kruger concluded that the Hydrotech Discfilter would be a viable fit for the Newport WWTF capable of removing total phosphorous down below 0.35 mg/l. (Id. at E-1.) Around this same time, Kruger also submitted a disc filter system proposal to provide all necessary equipment for the filtration system ( First Kruger Proposal ). (Tab 5.) After reviewing the Pilot Study and another report from Inflicto, AECOM submitted to the Town an Evaluation of Phosphorous Removal Alternatives ( Evaluation ) in January (Tab 6.) AECOM concluded the disc filters - 4 -

5 and process proposed by Kruger was more cost effective than alternatives. (Id.) AECOM and the Town continued to discuss the scope of services that AECOM would provide through the remainder of the design process into the construction phase of the Project. On January 14, 2011, Dennis Setzko of AECOM wrote to the Town and stated, in relevant part, AECOM will provide the means and design a system that will provide for the Town and the contractor to allow continuous unaffected operation of the [WWTF] and to meet the requirements of permits issued, and that AECOM will, during design, specify the equipment and identify the responsibilities of the contractor. (Id.) In May 2011, the Town entered into a Preliminary Engineering Design Phase Contract for Professional Services for Treatment Works ( Preliminary Design Contract ), which called for AECOM to advance the design of phosphorous removal upgrades to the WWTF to comply with the AO issued by the EPA. (Tab 9.) Following execution of the Preliminary Design Contract, AECOM continued to solicit and rely on input from Kruger. On July 13, 2011, Kruger provided AECOM with a revised disc filter system proposal ( Second Kruger Proposal ). (Tab 10.) There were a number of differences between the First Kruger Proposal and the Second Kruger Proposal. AECOM responded to the Second Kruger Proposal with a series of questions, posed by AECOM and answered by Kruger on July 20, (Tab 11.) An exchange between Mark Stewart, a project manager for Kruger, and Timothy Wassell, a representative of AECOM, referenced the continued collaboration between Kruger and AECOM. (Tab 11.) The final project specifications mirrored the specifications contained in the Second Kruger Proposal in virtually all respects. (See Tab 10; Tab 24.) On August 3, 2011, Kruger submitted another revised proposal ( Third Kruger Proposal ), which - 5 -

6 was identical to the Second Kruger Proposal with the exception of the date and the price; the proposed disc filter system was identical. (Tab 11; Tab 12.) On September 9, 2011, AECOM and the Town executed a Final Engineering Design Phase Contract for Professional Services for Treatment Works ( Final Design Contract ). (Tab 13.) The Final Design Contract calls for AECOM to: [P]roceed with all engineering, calculations, and other work as required and necessary to meet [the Town s] obligation under its NPDES Permit... and to develop and produce final plans, specifications, and associated contract documents involved in the construction of treatment works for [the Project]. (Id. at 2.) AECOM continued to communicate with Kruger about the Project through the fall of On October 8, 2011, AECOM informed Kruger it was moving into final design of the Project and requested a number of additional items, including an equipment specification for discfilter [sic]. (Tab 14.) On October 20, 2011, in response to a concern raised by the Town regarding the generality with which the disc filter units were referenced in the design documents, AECOM assured the Town that: The design parameters have been worked through with Kruger. AECOM s design parameters are based on pilot testing and Kruger s report dated January 28, From this report AECOM designed the filters... as recommended in the Kruger report. All design parameters are identified both 0n the drawings and in the specifications. (Tab 17 (emphasis added).) AECOM continued to seek Kruger s input and adopt Kruger s recommendations until December (See Tabs ) WesTech is a manufacturer and supplier of process equipment for municipal wastewater applications and generally competes with Kruger in this market. (Tab 22, 4.) On November 2, 2011, prior to AECOM completing the final bid documents for the - 6 -

7 Project, WesTech submitted a budget proposal ( Budget Proposal ) to AECOM to supply a disc filter and backwash system. (Tab 23.) Following submission of the Budget Proposal, AECOM and WesTech exchanged s and engaged in discussions related to the Project. (See Tab 22, Affidavit of Craig Martin, 7.) On January 5, 2012, Robert Trzepacz, an independent sales representative of WesTech at the time, reviewed AECOM s project specifications and provided AECOM with notes and suggestions. (See Decl. of Cori Palmer in Opp n to WesTech s Mot. Summ. J., Ex. K; Tab 22, 5.) In January 2012, AECOM created a package called Information for Bidders, Forms for Bid, Agreement, and Bonds, Specifications for Phosphorous Removal Upgrade Newport Wastewater Treatment Facility, Newport, New Hampshire ( Bid Documents ). (Tab 24.) The Bid Documents included detailed specifications for each part of the Project, including Section 11398, which governed the disc filters to be supplied by the contractor. The Bid Documents stated the contractor could choose disc filters from Kruger, WesTech, or an acceptable equivalent product. (Id. at ) On February 13, 2012, WesTech submitted a bid proposal to supply the disc filters and related equipment for the Project ( Bid Proposal ). (Tab 25.) The Bid Proposal included a one-year limited warranty that the disc filters would be free from defects in material and workmanship. (Tab 25, at 8.) In connection with this limited warranty, WesTech included a disclaimer which was in capital letters: THIS WARRANTY IS EXPRESSLY MADE BY WESTECH AND ACCEPTED BY PURCHASER IN LIEU OF ALL OTHER WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHETHER WRITTEN, ORAL, EXPRESS, IMPLIED, OR STATUATORY. (Id.) An identical disclaimer appeared in Section 15 of the Bid Proposal within the - 7 -

8 General Terms and Conditions. (Id. at 10.) The bids were opened on February 16, 2012, and Penta was the successful bidder on the contract. (See Tabs ) On February 28, 2012, Penta forwarded an unsigned purchase order for disc filters and related equipment for a price of $296,000 ( PO ) to WesTech for review. (Tab 29.) On March 5, 2012, WesTech signed and returned the PO, after noting that its signature was per... letter dated , and included a letter adding certain terms. (Tabs ) In the letter, WesTech stated that its proposal number and any agreements after said proposal are the basis of our quote to you and part of this agreement. (Tab 31.) Penta subsequently signed the PO and returned it to WesTech. (Tab 30, Affidavit of James Hanson, 7; Tab 32.) Construction was completed at the WWTF between March and December During the course of construction, WesTech provided certain submittals required by the Bid Documents, including a so-called Certificate of Unit Responsibility. (Tab 33.) WesTech also submitted seismic calculations with respect to design load. (Tab 34.) Between late December 2012 and early January 2013, Penta and WesTech conducted performance testing of the new phosphorous treatment system. The Town concluded that the WWTF was not able to consistently reduce phosphorus in the treated wastewater to sufficiently comply with the NPDES Permit. The Town eventually shut down the filter system in April 2015, declaring it a total loss and taking steps to design and construct a new system. II. Penta s Motion for Summary Judgment as to Count II of the Town s Amended Counterclaim Penta has moved for summary judgment on Count II (styled as Professional Negligence ) of the Town s Amended Counterclaim. Count II alleges: - 8 -

9 76. Penta had a duty independent of the construction contract to provide Newport with professional design services in accordance with the professional standard of care. 77. Newport relied upon Penta s skill and expertise to design and provide disc filters that were designed in accordance with the applicable professional standard of care. 78. Penta breached this duty by failing to design and provide facilities designed in accordance with the professional standard of care. (Town s Amended Counterclaim, ) A Shortly after this litigation began, Penta moved to dismiss Count II based upon the economic loss doctrine. The economic loss doctrine is a judicially-created remedies principle that operates generally to preclude contracting parties from pursuing tort recovery for purely economic or commercial losses associated with the contract relationship. Plourde Sand & Gravel Co. v. JGI Eastern, Inc., 154 N.H. 791, 794 (2007) (quoting Tietsworth v. Harley-Davidson, Inc., 677 N.W.2d 233, 241 (Wis. 2004)). However, a narrow exception to the economic loss rule applies where the defending party owed an independent duty of care outside the terms of the contract. Wyle v. Lees, 162 N.H. 406, 410 (2011). New Hampshire courts have recognized that independent, extra-contractual duties of care may exist in actions claiming professional negligence. See Schaefer v. IndyMac Mortg. Servs., 731 F.3d 98, 104, n.5 (1st Cir. 2013) (recognizing an exception applying to malpractice-like claims based on the breach of extra-contractual duties arising from the qualifications of licensed professionals ). This principle is commonly referred to as the professional negligence exception to the economic loss doctrine. Sherman v. John Brown Ins. Agency, 38 F. Supp. 3d 658, 663 (W.D. Pa. 2014). For - 9 -

10 example, courts have traditionally held that legal malpractice cases may implicate both tort and breach of contract claims where the tort claim is based on breach of a professional standard of care. Wong v. Ekberg, 148 N.H. 369, 375 (2002). Similarly, architects and contractors have extra-contractual duties to design and construct in accordance with their respective professional standards of care. See Bruzga v. PMR Architects, P.C., 141 N.H. 756, 759 (1997) (recognizing that architects and contractors have a duty to design and construct safe structures ); Blanchard Pointe Condo. Owners Ass n v. Bowers Landing of Merrimack Dev. Grp., LLC, No CV-5003 (Jan. 13, 2011, N.H. Super. Ct.) (imposing an actionable duty of care on an architect because architects as professionals owe extra-contractual duties to those whom the architect may reasonably foresee suffering damages as a result of the architect s negligent design). that: On November 20, 2015, the Court denied Penta s Motion to Dismiss, reasoning Count II of the Town s counterclaim sufficiently pleads the professional negligence exception to the economic loss doctrine on the theory that there is an actionable duty against Penta to the extent it took on the professional responsibility of design. The Town s Amended Counterclaim alleges that pursuant to the Construction Contract, Penta undertook responsibilities as a design professional. Specifically, Penta agreed to design and provide materials for the construction of the disc filters that would meet the performance specifications delineated by AECOM. Penta Corp. v. Town of Newport, 2015 WL , at *6 (N.H. Super. Ct. Nov. 20, 2015). Penta now moves for summary judgment arguing that in order to establish a professional negligence claim, the Town must prove that (1) Penta undertook some design responsibilities regarding the disc filters; (2) Penta acted negligently in performing those design responsibilities; and (3) the Town relied upon Penta s performance of these design

11 responsibilities to its detriment. (Penta s Mot. Summ. J., at 2.) Penta persuasively argues that the documents between the parties establish that the Town neither sought nor relied on Penta s design of the disc filters because the Bid Documents required Penta to buy the filters from an approved third party manufacturer. (See Tab 24, at 11398, 1.06(G), 2.01(A).) The Bid Documents also required successful bidders to provide the Town with a Certificate of Design for the filters completed and signed by a registered professional engineer, as well as a Certificate of Unit Responsibility completed by an official authorized to certify on behalf of the manufacturing company. (Id. at 01300, 1.09, 1.10; Tab 33.) Because the manufacturer of the disc filters was WesTech and not Penta, Penta could not accept unit responsibility under the terms of the Certificate of Unit Responsibility, and only WesTech could certify that an engineer had been employed to design disc filters in accordance with Specifications Section WesTech to: Critically, after winning the date for the Project, Penta issued a purchase order to Furnish, fabricate and deliver, FOB job site, Disc Filters, complete per plans and specifications for the Newport Phosphorous Removal Upgrade, Newport NH, Design as prepared by AECOM Engineers, 1000 Elm Street, Manchester, NH The work in general is as described in Specification Section(s) 01300, 01680, 01900, 11398, and as reasonably inferred there from to produce the intended results. (Tab 32 (emphasis added).) These documents can only be read as requiring Penta, the contractor, to obtain materials consistent with the specifications set forth in the Bid Documents, which were produced by AECOM. B The Town s response to Penta s argument that it has no liability based upon its

12 supposed obligation to provide design services is based upon two erroneous premises. First, the Town argues that in ruling on Penta s Motion to Dismiss the Court concluded that Newport s Amended Counterclaim sufficiently alleged an actionable duty in tort due to the allegations that Penta agreed to design and provide materials for the construction of the disc filters that would meet the performance standards delineated by AECOM. (Town s Obj. to Penta s Mot. Summ. J., at 6.) Obviously, the Court s ruling on a Motion to Dismiss does not control its ruling on summary judgment. The Town points to no specific part of the contract between the parties or any other evidence which imposes design responsibilities upon Penta. Penta agreed to supply equipment in accordance with the Bid Documents, not to design the disc filters for the Project. Because Penta owed no design duties to the Town, it cannot, as a matter of law, be found to have breached any such duties. See Puckett, Taul & Underwood, Inc. v. Shreiber Corp., Inc., 551 So.2d 979, 983 (Ala. 1989). The Town also points to Penta s contractual vicarious liability for subcontractors by asserting that Penta is trying to escape liability for its supposed design obligations by claiming that it was WesTech and not Penta that carried out the design filter design. (Town s Obj. to Penta s Mot. Summ. J., at 8.) The Town misses the point. In the first place, as explained in the body of this Order, WesTech was a mere seller of goods, and did not take on design responsibilities. Second, Penta does not seek summary judgment on contractual vicarious liability; indeed, Penta recognizes that it could be liable pursuant to 32.2 of the General Conditions of the Bid Documents, which provides that Penta is liable to the Town for acts and omissions of its subcontractors. (See Decl. of Cori Palmer in Opp n to Penta s Mot. Summ. J., at Ex. 2, C-1.23, 32.2.) Penta makes this point clearly in

13 its Reply: Penta is not arguing that it is not liable for the acts and omissions of WesTech because it is an independent contractor. Penta is arguing that it can be liable only in contract for the acts and omissions of WesTech and even then only if WesTech is shown to be its subcontractor. (Penta s Reply to Town s Obj. to Mot. Summ. J., at 4, n.2 (emphasis in original).) However, a claim that Penta is liable for the negligence of WesTech beyond the scope of the liability imposed by the parties contract cannot succeed. As a general rule, a general contractor is not liable in tort for the negligent of independent contractors whose work he does not control. Arthur v. Holy Rosary Credit Union, 139 N.H. 463, 465 (1995). Even if WesTech were an independent contractor, rather than a mere merchant seller of goods, the Town s claim cannot survive summary judgment. C Further, even if a negligence claim were viable against Penta, it would be entitled to summary judgment on the ground that the Town has produced no expert testimony establishing that Penta had any design duties or that Penta failed to meet the professional standard of care. (Penta s Mot. Summ. J., at 8 9.) The Town does not dispute that expert testimony is required to maintain a professional negligence action against Penta. See Blanchard Pointe Condo. Owners Ass n, 2011 N.H. Super. LEXIS 4, at * 6 ( Generally, claims of professional negligence must be supported by expert testimony. ). Rather, the Town asserts only that its experts have opined that: WesTech participated in the design of the disc filters, the disc filters were improperly designed for application at Newport, WesTech was aware that its disc filters were the incorrect application for Newport, and the deficiencies in the design of the disc filters contributed to the inability of the Project to reach Permit levels

14 (Town s Obj. to Mot. Summ. J., at (emphasis in original).) The Town s Objection, in essence, concedes that no expert testimony has been produced to support a claim that Penta undertook design duties and defectively designed the disc filters. 2 The expert opinions referenced by the Town relate to WesTech s involvement with the design of the disc filters, and not to any actions of Penta. For these reasons, Penta s Motion for Summary Judgment as to Count II of the Town s Amended Counterclaim is GRANTED. III. Penta s Motion for Summary Judgment as to Count II of AECOM s Counterclaim Penta moves for summary judgment on Count II of AECOM s claim against Penta which seeks contribution under RSA 507:7-f. (AECOM s Cross-claim ) Penta reasons that if the Town s tort claim against it is dismissed, then only contractual claims remain, and the contribution statute is not applicable to tort claims. AECOM objects. 3 RSA 507:7-e was enacted as part of a comprehensive statutory framework for apportionment of liability and contribution. Nilsson v. Bierman, 150 N.H. 393, 395 (2003). This framework included RSA 507:7-d through RSA 507: 7-i, and was based upon 2 The Town asserts that [w]hile expert reports have been disclosed in this matter, discovery is ongoing and depositions have not yet been completed. Depositions may still provide new information regarding the entities at fault for the failure of the Project. (Town s Obj. to Mot. Summ. J., at 10 n.2.) The general assertion that expert opinions favorable to the Town may be discovered is insufficient to defeat Penta s Motion for Summary Judgment. See RSA 491:8-a, II (explaining that the party opposing summary judgment must, within 30 days, file contradictory affidavits based on personal knowledge or the opposing party files an affidavit showing specifically and clearly reasonable grounds for believing that contradictory evidence can be presented at trial but cannot be furnished by affidavits ). The Town has waived any such claim. 3 AECOM argues, in part, that Penta s Motions for Summary Judgment should both be denied for failure to submit affidavits that satisfy the requirements of RSA 491:8-a, II. The Court disagrees. Attorney Frank Spinella and William Ouellette have submitted adequate affidavits in support of Penta s Motions. Moreover, summary Judgment is to be granted or denied based on the entire record before the court. Brown v. John Hancock Mut. Life Ins. Co., 131 N.H. 485 (1989); see RSA 491:8-a, III. Numerous affidavits were filed prior to Penta s Motions that further support Penta s arguments. See Pella Windows & Doors v. St. Mary s Bank, 133 N.H. 582, 584 (1990) ( [I]t is sufficient for the purpose of RSA 491:8-a, II that such a motion is adequately supported by an affidavit already on file with the court in that case, irrespective of

15 the Uniform Comparative Fault Act in its treatment of comparative fault apportionment of tort damages. Jaswell Drill Corp. v. General Motors Corp., 129 N.H. 341, 344 (1987). The statute specifically references damages in tort. RSA 507:7-d. It was enacted to eliminate the joint and several liability rule which allowed injured plaintiffs to seek out and sue only deep pocket defendants tortfeasors with significant assets but a potentially low degree of fault who by virtue of joint and several liability may be responsible for the entire amount of recoverable damages. DeBenedetto v. CLD Consulting Eng rs Inc., 153 N.H. 793, (2006) (citation omitted). By its terms, RSA 507:7-d et seq. applies to tort claims and not contract. Economic loss resulting from a breach of contract does not constitute injury in tort to person or property. Contribution based on statutes such as RSA 507:7-d et seq. is not available in contract cases. See Global Ground Support, LLC v. Glazer Enterprises, Inc., 581 F. Supp. 2d 669, 673 (E.D. Pa. 2008) (applying Pennsylvania law); Wagner-Meinert, Inc. v. EDA Controls Corp., 444 F. Supp. 2d 800, 803 (N.D. Ohio 2006) (applying Ohio law); Strong Construction, Inc. v. City of Torrington, 255 P.3d 903, 913 (Wyo. 2011). Where the economic loss doctrine bars a claim for negligence, a defendant may not bring an action for indemnification or contribution. Franklin Grove Corp. v. Drexel, 936 A.2d 1272, 1278 (R.I. 2007) (decided under Uniform Contribution Among Tortfeasors Act). The rationale for this principle is well stated by the New York Court of Appeals in Board of Educ. of the Hudson City Sch. Dist. v. Sargent, Webster, Crenshaw & Folley, 517 N.E.2d 1360 (N.Y. 1987), in which the court declined to allow an architect to bring a contribution action against a general contractor pursuant to a statute much like RSA which party filed it.... )

16 507:7-e: To permit apportionment of liability, pursuant to CPLR 1401, arising solely from breach of contract would not only be at odds with the statute's legislative history, but also do violence to settled principles of contract law which limit a contracting party's liability to those damages that are reasonably foreseeable at the time the contract is formed. Here, Thompson was entitled to expect at the time it contracted with the District that its liability would be determined by its own contractual undertaking. Thompson should not now be confronted with potential liability based on the promise made by Sargent in its separate contract with the District. Sargent s argument that without a right of contribution, architects will be exposed to crushing liability is unpersuasive. Nothing prevented Sargent from negotiating for protection from liability in its contract with the District. Having neglected to do so, it may not now be heard to complain that it is exposed to a claim for damages. Nor are we persuaded that we should create a common-law right of contribution in contract actions. The policy considerations that underlay Dole the need to liberalize the inequitable and harsh rules that once governed contribution among joint tort-feasors are not pertinent to contract matters. Parties to a contract have the power to specifically delineate the scope of their liability at the time the contract is formed. Thus, there is nothing unfair in defining a contracting party's liability by the scope of its promise as reflected by the agreement of the parties. Indeed, this is required by the very nature of contract law, where potential liability is determined in advance by the parties. Id. at (citations omitted). Here, both AECOM and Penta have different contracts with the Town. This is not a case in which both parties entered into a contract including a promise to deliver identical performance. Each party may defend on the ground that it did not breach its contract, and that even if it breached, it did not cause the damage alleged. Each party may also argue that damage was caused by breach of another contract to which it was not a party. But each party s exposure is limited by the contract it made. 4 Since Penta has no liability to the 4 If both parties had contracted for identical performance, there is authority for the proposition that a trier of fact would be required to apportion liability, see Joseph M. Perillo, CORBIN ON CONTRACTS 55.9 (2005), but that is not the case here

17 Town in tort, the contribution statute is simply inapplicable. Accordingly, Penta s Motion for Summary Judgment as to Count II of AECOM s Counterclaim is GRANTED. IV. WesTech s Motion for Summary Judgment as to Cross-claims of the Town of Newport The Town has brought a Cross-claim against WesTech alleging breach of warranty under Article 2 of the Uniform Commercial Code ( UCC ) alleging that WesTech, in performing under its contract with Penta, breached an express warranty as defined by UCC 2-313, 5 as well as the implied warranties of merchantability and fitness for particular purpose set forth in UCC and A The sole basis for the Town s express warranty claim is the Certificate of Unit Responsibility submitted by WesTech. The certificate reads in its entirety: In accordance with Section 01300, paragraph 1.11 of the contract documents, the undersigned manufacturer accepts unit responsibility for all components of equipment furnished under Specification and the requirements specified in Section We hereby certify that these components are compatible and comprise a functional unit suitable for the specified and indicated performance and design requirements. (Tab 33, Certificate of Unit Responsibility.) In moving for summary judgment, WesTech does not argue the Certificate of Unit Responsibility is not an express warranty, but instead maintains that the Certificate of Unit Responsibility is limited in scope. Specifically, WesTech takes the position that the Certificate of Unit Responsibility furnished by WesTech was submitted for the sole purpose of certifying compliance with seismic requirement and that it does not warrant 5 The UCC was enacted as RSA 382-A, so that, for example, the correct citation of the referenced provision is RSA 382-A: For convenience, the Court will simply refer to the Code provisions

18 the design or performance of the disc filters or the WWTF. (WesTech s Mot. Summ. J. on Town s Cross-claim, at 6.). In relation to express warranties, the rules for interpreting them do not differ from those applied to other contracts. Daniel v. Ford Motor Co., 806 F.3d 1217, 1224 (9th Cir. 2015) (citation & quotation omitted). The interpretation of a contract, including whether a contract term is ambiguous, is ultimately a question of law for this court to decide. Birch Broad., Inc. v. Capitol Broad. Corp., 161 N.H. 192, 196 (2010). Absent ambiguity, the parties' intent will be determined from the plain meaning of the language used in the agreement. Behrens v. S.P. Const. Co., 153 N.H. 498, 503 (2006). When a contract is ambiguous, the Court must determine, under an objective standard, what the parties, as reasonable people, mutually understood the ambiguous language to mean. Sunapee Difference, LLC v. State, 164 N.H. 778, 790 (2013). In applying this standard, a court should examine the contract as a whole, the circumstances surrounding execution and the object intended by the agreement, while keeping in mind the goal of giving effect to the intentions of the parties. Id. In order to properly interpret the meaning of the Certificate of Unit Responsibility, the Court must not only consider the language in the certificate but also review the applicable portions of the Bid Documents incorporated by reference in the Certificate of Unit Responsibility. See Appeal of the State of N.H., 147 N.H. 426, 430 (2002). The Certificate of Unit Responsibility recites that it relates to Section 01300, paragraph 1.11 of the Bid Documents. Paragraph 1.11 simply states, Provide all schedules specified in the General Conditions. Paragraph 1.10, however, indicates that the Sections of the Bid Documents containing specifications will specify the Certificates of Compliance that

19 must be submitted during the Project. (Tab 24, 01300, 1.10.) While the definition of Certificates of Compliance appears to encompass all certificates required for the Project, (see id. at 1.10(A)), neither paragraph 1.10 nor Section expressly reference the Certificate of Unit Responsibility. The Certificate of Unit Responsibility goes on to reference two additional sections of the Bid Documents Sections and These sections only discuss the Certificate of Unit Responsibility in direct relation to seismic and wind requirements. Section 01900, captioned seismic and wind requirements, sets forth the minimum seismic and wind loading design requirements for architectural, mechanical, electrical and non-structural components. (Tab 24, Bid Documents.) Paragraph 1.05 of Section provides that: Where specified in the technical specifications, provide and complete the Certificate of Unit Responsibility form in Section 1300 and submit to Engineer prior to manufacture of components. (Id. (Emphasis added).) It further requires submittal of data signed by a professional engineer certifying that all systems, equipment, and other elements, including supporting structures, attachments and connections are designed to withstand the required seismic and wind forces and displacements. (Id. at 01900, 1.05(C).) It appears undisputed that WesTech submitted this data in connection with the Certificate of Unit Responsibility. (See Tab 34, Seismic Calculations.) Within the specifications for Section 11398, which relate to the disc filter component of the Project, paragraph 1.04, entitled seismic requirements, is the only paragraph referencing the Certificate of Unit Responsibility. (See id. at ) Consistent with paragraph 1.05 of Section 01900, paragraph 1.04 of Section requires that the Certificate of Unit Responsibility be submitted with certification for all

20 equipment signed by a registered structural engineer stating that computations were performed and that all components have been sized for the seismic forces specified and as indicated. (Id. at 11398, 1.04(C).) There is no other language in the technical specifications requiring submission of the Certificate of Unit Responsibilty. The purpose of the Certificate of Unit Responsibility was to verify compliance with the seismic and wind requirements set forth in both Section and Section The Town does not allege that WesTech s disc filters failed to comply with the seismic requirements, nor is there evidence in the record to support such a claim. Accordingly, WesTech is entitled to summary judgment on the Town s breach of express warranty claim. B Count II of the Town s Cross-claim alleges that [t]he Disc Filters provided by WesTech to the Project were not merchantable and were not fit for their ordinary purpose in breach of the implied warranty of merchantability as provided by RSA 382-A:2. (Town s Cross-claim, 56.) Count III alleges that [t]he Disc Filters provided by WesTech were defective, could not be backwashed, and failed to reduce the phosphorous levels in treated wastewater at the Project to Permit levels in violation of the implied warranty of fitness for a particular purposes as provided by RSA 382-A: (Id. 66.) The short answer to this claim is contained in UCC. The Town cannot maintain a claim that the disc filters supplied by WesTech breached the warranty of fitness for a particular purpose under UCC and merchantability under UCC because WesTech was provided with detailed specifications for the disc filters. (WesTech s Mot. Summ. J., at ). Under the UCC when goods are provided according to plans and

21 specifications furnished by the buyer, the seller does not impliedly warrant their fitness for a particular purpose, and no implied warranty of merchantability arises. Cumberland Farms, Inc. v. Drehmann Paving & Flooring Co., 520 N.E.2d 1321, 1325 (Mass. App. Ct. 1988); Rust Eng g v. Lawrence Pumps, 401 F. Supp. 326, 333 (D. Mass. 1975); Blockhead, Inc. v. The Plastic Forming Co., 402 F. Supp. 1017, 1026 (D. Conn. 1975). The commentary to UCC is particularly apposite: The situation in which the buyer gives precise and complete specifications to the seller is a frequent circumstance by which the implied warranties may be excluded. UCC 2-316, Cmt. 9. There is no evidence that WesTech failed to furnish disc filters in accordance with the specifications set forth in the Bid Documents. The Town asserts WesTech cannot maintain this specifications defense because WesTech participated in designing the disc filters. While there is evidence that WesTech communicated with AECOM about the specifications and suggested certain modifications that were adopted into the final Bid Documents by AECOM, this fact does not allow the Town s claims for breach of implied warranties to survive summary judgment; ultimately, the seller, WesTech provided a product pursuant to specifications provided by the buyer. UCC 2-313(1)(b); UCC Cmt. 9. Moreover, even assuming WesTech was involved with the design, 6 WesTech effectively disclaimed the implied warranties of merchantability and fitness for a particular purpose in accordance with UCC by incorporating its Bid Proposal, which contains conspicuous disclaimer language, into its contract with Penta. UCC provides that the 6 The Court notes there is overwhelming evidence in the record that AECOM worked closely with Kruger and relied almost exclusively on Kruger in designing the filtration system for the Project

22 implied warranty of merchantability may only be excluded or modified where the language mentions merchantability and in case of a writing must be conspicuous. 7 UCC 2-316(2). With respect to the implied warranty of fitness, the exclusion must be by a writing and conspicuous. Id. In support of its argument that WesTech s incorporation of the warranty disclaimer by reference does not satisfy the requirements of UCC 2-316(2), the Town cites a number of cases, all of which involve consumer purchasers. (See Town s Obj. to WesTech s Mot. Summ. J., at 16 (citing Smith v. TimberPro Inc., 2017 WL (Ten. App. Ct. Mar. 19, 2017) (consumer purchase of harvesting equipment from equipment dealer); Woodward v. Naylor Motor Sales, 1974 WL (Mich. Dist. Apr. 11, 1974) (consumer automobile purchase from a car dealership); Koellmer v. Chrysler Motors Corp., 276 A.2d 807 (Conn. App. Ct. 1970) (consumer truck purchase from dealership). But both Penta and WesTech are sophisticated business entities, who would be characterized as merchants under the UCC. UCC 2-104(3). Where the disclaimer is in a commercial transaction involving experienced business-persons rather than a consumer transaction involving ordinary purchasers, the concept of reasonableness under the circumstances depends on what a reasonable business person is expected to notice. FMC Finance Corp. v. Murphree, 632 F.2d 413, 419 (5th Cir. 1980). [T]he goal of commercial contract law is to efficiently facilitate business transactions between seasoned merchants. Std. Bent Glass Corp. v. Glassrobots Oy, 333 F.3d 440, 447 n.10 (3rd Cir. 2003). Incorporation by reference is a standard practice in the writing of contracts and it is proper where the underlying contract makes clear reference to a separate document, the identity of the separate document may be 7 There is no dispute that the disclaimer at issue mentions merchantability as required by UCC

23 ascertained, and incorporation of the document will not result in surprise or hardship. Std. Bent Glass Corp. v. Glassrobots Oy, 333 F.3d 440, 447 (3rd Cir. 2003). The Town argues without any support in the record that WesTech incorporated its Bid Proposal into the PO with Penta because the proposal number for both the Budget Proposal and the Bid Proposal was There is no evidence that Penta relied on or was even aware of the Budget Proposal, nor is there any reason to believe that WesTech s reference to proposal or proposal number meant anything other than the Bid Proposal. In its letter dated March 5, 2012, WesTech clearly indicated to Penta that its Bid Proposal was included in its contract with Penta, (see Tab 31), and WesTech unambiguously referenced that letter on the PO near the signature line, (see Tab 32). After receiving the letter and the PO with the notation that WesTech s signature was per the March 5 letter, Penta signed and returned the PO. Both parties are sophisticated business entities that are familiar with the bidding process for construction projects, bid proposals, and purchase orders. Given these facts, the Court concludes WesTech s incorporation of the Bid Proposal by reference does not render the disclaimer contained within the proposal invalid. Finally, the relevant disclaimer is sufficiently conspicuous within the Bid Proposal. UCC 1-201(10) provides that: Conspicuous, with reference to a term, means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is conspicuous or not is a decision for the court. Conspicuous terms include the following: (A) a heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and (B) language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the

24 surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language. In the Bid Proposal, WesTech s one-year limited warranty is included on a separate page following the information specific to the project. (Tab 25, Bid Proposal, at 8.) The following disclaimer is included on that page: THIS WARRANTY IS EXPRESSLY MADE BY WESTECH AND ACCEPTED BY PURCHASER IN LIEU OF ALL OTHER WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE, WHETHER WRITTEN, ORAL, EXPRESS, IMPLIED, OR STATUTORY. (Id.) The disclaimer is located in the middle of the page, in all capital letters, and in a stand-alone paragraph. With the exception of the heading, ONE YEAR WARRANTY, there are no other words written in capital letters on the page. With respect to the identical disclaimer located in paragraph 15 of the section General Terms and Conditions, (see id. at 10), the disclaimer is again the only provision written in all capital letters on the page. Even if the implied warranties were not disclaimed by the specifications, WesTech s disclaimer was sufficiently conspicuous, and, therefore, WesTech validly disclaimed the implied warranties of merchantability and fitness for a particular purpose. Because WesTech s warranty disclaimer is enforceable against the Town, see UCC 2-318, Cmt. 1 ( To the extent that the contract of sale contains provisions under which warranties are excluded or modified, or remedies for breach are limited, such provisions are equally operative against beneficiaries of warranties under [UCC 2-318]. ), WesTech is entitled to summary judgment on Counts II and III of the Town s Cross-claim

25 Accordingly, WesTech s Motion for Summary Judgment as to Cross-claims of the Town of Newport is GRANTED. V. Town s Motion for Summary Judgment on Counts I IV of WesTech s Counterclaim WesTech filed a Counterclaim against the Town alleging negligence (Count I), negligent misrepresentation (Count II), breach of warranty (Count III), and a violation of RSA 358-A, New Hampshire s Consumer Protection Act (Count IV). The Town moves for summary judgment arguing that Counts I through IV are barred by the three-year statute of limitations set forth in RSA 508:4 and that Count IV fails to state a claim. A In Counts I through III, WesTech essentially seeks to hold the Town vicariously liable for AECOM s purported negligence. The Town argues that summary judgment is appropriate because AECOM s claims are barred by the statute of limitations. The Court need not address this issue because WesTech has failed to allege or provide any evidence that would allow it to maintain its claims against the Town. There is nothing in the record to suggest that AECOM was anything more than an independent contractor for the Town. To hold the Town liable for the alleged negligence of AECOM would be in conflict with [t]he general rule that an employer is not liable for injuries caused by the negligence of an independent contractor. Elliot v. Public Serv. Co., 128 N.H. 676, 678 (1986). WesTech has neither alleged nor even suggested that any exceptions to this general rule would apply, and a review of the record does not support the application of any exception. See Lawyers Title Ins. Corp. v. Groff, 148 N.H. 333, 336 (2002) (outlining three exceptions to the rule that a principal is not liable for the negligence of an independent contractor). It follows that the Town is entitled to summary judgment on Counts I through III of WesTech s

26 Counterclaim against the Town. B Count IV, which is styled Consumer Protection Act Violation, alleges that AECOM, while engaging in the conduct of trade or commerce within the State of New Hampshire, used unfair or deceptive acts or practices within the meaning of RSA 358- A:2, and that WesTech was harmed by AECOM s violation of RSA 358-A:2. (WesTech s Counterclaim ) WesTech alleges that pursuant to RSA 358-A:10, it is entitled to recover up to three times the amount of its actual damages from the Town because the Town is wholly liable and responsible for the acts and omissions of its agent, AECOM, and for the consequences of such acts and omissions. (Id ) The Town argues that it is entitled to summary judgment on WesTech s CPA claim because it is not an entity engaged in trade or commerce within the meaning of the CPA. See Ellis v. Candia Trailers and Snow Equip., Inc., 164 N.H. 457, 465 (2012) (holding that while the CPA statute broadly defines trade and commerce, the scope of the CPA is narrower than its broad language may suggest, and that it does not encompass isolated sales or contracts that are not undertaken in the ordinary course of a trade or business ); Hughes v. DiSalvo, 143 N.H. 576, 578 (1999). WesTech s Counterclaim does not allege that the Town was engaged in trade or commerce within the meaning of the CPA or that the Town independently violated the CPA. In fact, WesTech s own argument appears to acknowledge that the Town and AECOM are separate entities performing different services. WesTech, in essence, seeks to somehow hold the Town vicariously liable for AECOM s alleged violations of the CPA. The CPA does not, by its terms, provide for vicarious liability and WesTech has

27 cited no authority to support that a person, as defined by the CPA, conducting trade or commerce is liable under the statute for all unfair or deceptive acts of any separate person conducting trade or commerce that it enters into a contract for services with. Simply put, there is no basis to conclude that WesTech can impute liability onto the Town for AECOM s alleged violation of the CPA. The Town is entitled to summary judgment on WesTech s CPA claim. VI. WesTech s Motion to Dismiss AECOM S Third-Party Claims against WesTech AECOM has brought a Third-Party Complaint against WesTech alleging four counts. Count I, styled a negligence count, alleges that WesTech submitted, during the Project Design Phase, a proposal to provide a disc filtration system which would sufficiently treat effluent phosphorus at the WWTF pursuant to the Permit and AO. (AECOM s Third-Party Compl. 58.) Prior allegations in the Third-Party Complaint make clear that the proposal in question was WesTech s Budget Proposal dated November 2, (See id. 28.) Count II, styled negligent misrepresentation, alleges WesTech negligently misrepresented that its filtration systems would be capable of treating the influent wastewater at the WWTF to the levels required by the AO and Permit. (Id. 70.) Counts III and IV purport to state claims for contribution and indemnity. A WesTech moves to dismiss Counts I and II arguing AECOM has failed to allege any misrepresentation by WesTech that could form the basis of a negligent misrepresentation claim. Specifically, WesTech maintains AECOM is not alleging here a statement of fact by WesTech, but only that WesTech proposed to provide a disc filtration system. A proposal,