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New Bern Riverfront Development, LLC v. Weaver Cooke Construction, LLC (In re New Bern Riverfront Development, LLC)

Citations: 516 B.R. 828; 2014 Bankr. LEXIS 4116Docket: CASE NO. 09-10340-8-SWH; ADVERSARY PROCEEDING NO. 10-00023-8-AP

Court: United States Bankruptcy Court, E.D. North Carolina; September 26, 2014; Us Bankruptcy; United States Bankruptcy Court

Narrative Opinion Summary

This case involves a legal dispute between Weaver Cooke Construction, LLC (Weaver Cooke) and East Carolina Masonry, Inc. (ECM) over an indemnity claim concerning the SkySail Luxury Condominiums project in North Carolina. Weaver Cooke sought indemnification from ECM for damages related to water intrusion issues, asserting both express and implied-in-fact indemnity claims. ECM challenged the validity of these claims, citing North Carolina General Statute 22B-1, which prohibits indemnity agreements that cover the indemnitee's own negligence. The court granted ECM summary judgment on the indemnity claim, emphasizing that the indemnity provisions in the subcontract violated public policy as they attempted to indemnify Weaver Cooke for its own negligence. Additionally, the court rejected Weaver Cooke's implied-in-fact indemnity claim due to insufficient pleading and the existence of a specific indemnity clause in the contract. The court also considered contributory negligence as a potential bar to the indemnity claim, given the complex interplay of multiple subcontractors and Weaver Cooke's own alleged negligence in the construction process. Ultimately, the court found no basis for ECM's exclusive liability for the water intrusion damages and denied Weaver Cooke's indemnity claims, affirming the validity of summary judgment in favor of ECM.

Legal Issues Addressed

Contributory Negligence as a Bar to Indemnity Claims

Application: The court noted that Weaver Cooke's potential contributory negligence in the construction process could bar its indemnity claim against ECM.

Reasoning: The court notes that Weaver Cooke's potential negligence in construction, supervision, and instructions could have contributed to the alleged defects, thus barring any indemnity claim.

Implied-in-Fact Indemnity Claims

Application: The court rejected Weaver Cooke’s implied-in-fact indemnity claim due to a lack of specific pleading and the presence of an express indemnity provision.

Reasoning: The court agrees, highlighting that a claim for implied-in-fact indemnity must be explicitly articulated in the complaint and that Weaver Cooke has failed to meet this requirement.

Indemnity Agreements in Construction Contracts Under N.C. Gen. Stat. 22B-1

Application: The court found that indemnity provisions requiring a subcontractor to indemnify a general contractor for the latter's own negligence are void under North Carolina law.

Reasoning: ECM argues that Weaver Cooke’s indemnity claim is invalid under N.C. Gen. Stat. 22B-1, as it attempts to indemnify for damages resulting from the promisee's negligence, which is against public policy.

Summary Judgment Standards in Contractual Disputes

Application: Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law, particularly in cases involving identical indemnity provisions.

Reasoning: The standards for summary judgment were cited, emphasizing that it is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law, while resolving conflicts in favor of the non-moving party.