UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1182
NORTH AMERICAN PRECAST, INCORPORATED; G&G BUILDERS,
INCORPORATED,
Plaintiffs - Appellants,
v.
GENERAL CASUALTY COMPANY OF WISCONSIN, a Wisconsin
corporation,
Defendant – Appellee.
Appeal from the United States District Court for the Southern
District of West Virginia, at Huntington. John T. Copenhaver,
Jr., District Judge. (3:04-cv-01307)
Argued: December 8, 2010 Decided: March 2, 2011
Before Sandra Day O’CONNOR, Associate Justice (Retired), Supreme
Court of the United States, sitting by designation, and DUNCAN
and AGEE, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Brent K. Kesner, KESNER, KESNER & BRAMBLE, Charleston,
West Virginia, for Appellants. Thomas L. Rosenberg, ROETZEL &
ANDRESS, Columbus, Ohio, for Appellee. ON BRIEF: Ellen R.
Archibald, KESNER, KESNER & BRAMBLE, Charleston, West Virginia,
for Appellants. Klodiana Basko, ROETZEL & ANDRESS, Columbus,
Ohio; Stephen W. Funk, ROETZEL & ANDRESS, Akron, Ohio, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
G&G Builders, Incorporated (“G&G Builders”) and North
American Precast, Incorporated (“NAP”) (collectively “the
Contractors”) appeal the district court’s judgment limiting
their claims against General Casualty Company of Wisconsin
(“General Casualty”) for damages arising from the collapse of
concrete planks used in the construction of a correctional
facility. Specifically, the Contractors challenge the district
court’s determinations that the insurance policy did not cover
loss of use damages, that the Contractors were not entitled to
punitive damages as a matter of law, and that G&G Builders had
not asserted a third-party Unfair Trade Practices Act claim.
For the reasons set forth below, we affirm the district court’s
judgment.
I.
G&G Builders was the primary contractor for the
construction of a jail for the West Virginia Regional Jail and
Correctional Facilities Authority. It sub-contracted to NAP the
manufacture of hollow core, precast, pre-stressed concrete
planks to be used on the project’s ceilings and floors. As
required under that contract, NAP obtained a comprehensive
insurance policy (“the Policy”) from General Casualty that
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included commercial general liability (“CGL”) and completed
operations coverage.
NAP fabricated the planks and delivered them to the
construction site, where G&G Builders used them in constructing
the jail. In July 2002, a NAP concrete plank that G&G Builders
had installed in the jail’s ceiling collapsed and fell to the
ground. As a result of the collapse, construction stopped until
December 2002, and repairs from the collapse were not completed
until April 2003. During this period, G&G Builders notified NAP
and General Casualty of the costs of repairs and nature of the
damages; General Casualty opened a claim, and subsequently
denied coverage after determining that the damages were not
covered by the Policy.
In a subsequent lawsuit, NAP and G&G Builders asserted
various claims against each other related to their contract and
the damages arising from the accident. NAP asked General
Casualty to provide a defense to the lawsuit, and General
Casualty again denied the request based on its determination
that the claims were not covered under the Policy. After almost
two years’ litigation, NAP and G&G Builders entered into a
settlement agreement in which NAP conceded liability and agreed
that G&G Builders’ damages totaled $1,807,109. In satisfaction
of this agreement, NAP paid $500 and assigned its rights against
General Casualty to G&G Builders.
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The Contractors then filed a complaint against General
Casualty in the Southern District of West Virginia seeking
declaratory judgment that the losses were covered under the
Policy and asserting claims for breach of contract, common law
bad faith, and violations of West Virginia’s Unfair Trade
Practices Act (“UTPA”) (W. Va. Code 33-11-1 et seq.).
Each party moved for summary judgment in its favor on the
issue of coverage. In March 2008, the district court granted
and denied each motion in part, holding that the Policy only
covered “damage to the masonry walls and concrete floor, if any
there be, caused by the collapse of the plank.” (J.A. 114.)
Relying on several West Virginia cases on point, the court
concluded that because “it was not the plank collapsing, but
rather the faulty workmanship, which caused the remainder of
[the Contractors’] damages,” including loss of use damages,
those damages were not covered under the Policy. (J.A. 109.)
The court also concluded Policy exclusions 2m and 2n would also
prohibit recovery of loss of use damages.
The remaining issues in the case were decided in a
bifurcated trial wherein the jury determined first that the jail
walls and floor were damaged as a result of the accident, that
the damage amounted to $94,474.71, and that General Casualty
received reasonable notice of G&G Builders’ claim of loss.
Nothing from that phase of the trial is at issue on appeal.
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The issues to be determined during the second phase of the
trial included the merits of the breach of contract, common law
bad faith, and UTPA claims. The Contractors also sought
punitive damages for the latter two claims. However, the
district court dismissed the Contractors’ claims for punitive
damages, holding that the evidence — viewed in the light most
favorable to them — did not rise to the level of actual malice,
which is necessary to sustain a punitive damages award under
West Virginia law.
The jury then found that General Casualty breached the
Policy, its duty of good faith and fair dealing, and violated
the UTPA. It awarded the Contractors over $3,000,000 in
damages. The district court granted General Casualty’s motion
for a new trial and/or remittitur, and gave the Contractors the
choice of accepting remittitur in the amount of $300,000 or a
new trial on the issue of damages.
The Contractors elected to reject remittitur and proceed
with a new trial on damages. Prior to the new trial, General
Casualty moved to exclude certain testimony, including testimony
of G&G Builders’ owner Gary Young, on the basis that he lacked
personal knowledge of NAP’s damages. The Contractors objected,
contending Young’s testimony was relevant to G&G Builders’
third-party UTPA claim. The district court held that even if
the complaint contained such a claim, the proposed integrated
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pretrial order, which superseded the complaint, did not.
Accordingly, it concluded that “[t]estimony in support of a
third-party [UTPA] claim not presented at the trial is deemed
beyond the scope of the limited retrial chosen by [the
Contractors].” (J.A. 1192.)
Following the district court’s orders setting out the
issues to be determined at the new trial, the Contractors
entered into a settlement with General Casualty, subject to
their right to appeal the three issues raised in this appeal.
The district court entered a final order dismissing the case,
and the Contractors noted a timely appeal. This Court has
jurisdiction based on 28 U.S.C. § 1291.
II.
The Contractors first appeal the district court’s
determination that the Policy did not cover loss of use damages
arising from the plank collapse. In their opening brief on
appeal, the Contractors challenge the court’s analysis of
whether the collapse constituted an “occurrence” under the terms
of the Policy. They do not address the district court’s equally
dispositive alternative basis for determining that the Policy
did not cover such damages: that even if loss of use damages
arose from an “occurrence,” they would nonetheless be excluded
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from the Policy under exclusions 2m and 2n. 1 Indeed, the opening
brief’s only reference to the exclusions is a conclusory
sentence toward the end of their argument that “[n]o Policy
exclusion bars coverage for G&G Builders’ loss of use damages.”
(Appellants’ Opening Br. 32.)
The Contractors assert they preserved this issue because
they broadly asserted error based on the determination of Policy
coverage, and they were not required to address the exclusions
at length until General Casualty mentioned them in the response
brief. This argument misses the point. Federal Rule of
Appellate Procedure 28(a)(9)(A) requires that the argument
section of an appellant’s opening brief contain the “appellant’s
contentions and the reasons for them, with citations to the
authorities and parts of the record on which the appellant
relies.” Failure to comply with the specific dictates of this
rule with respect to a particular claim triggers abandonment of
that claim on appeal. See 11126 Baltimore Boulevard, Inc. v.
1
Policy provision 2m excluded from coverage property damage
arising out of “[a] defect, deficiency, inadequacy or dangerous
condition” or “[a] delay or failure . . . to perform a contract
or agreement in accordance with its terms.” (J.A. 59.) Policy
provision 2n excluded from coverage “[d]amages claimed for any
loss, costs or expense incurred . . . for the loss of use [of
the impaired property] [i]f such product, work or property is
withdrawn or recalled from the market or from use by any person
or organization because of a known or suspected defect,
deficiency, inadequacy or dangerous condition in it.” (J.A. 112
(emphasis omitted).)
8
Prince George’s County, 58 F.3d 988, 993 n.7 (4th Cir. 1995) (en
banc)).
While the Contractors’ frame the issue raised on appeal
broadly, Federal Rule of Appellate Procedure 28(a)(9)(A)
requires the parties do more than just cast a wide net within
which any number of arguments could fall; it requires that a
party actually address and analyze what it is about the lower
court’s decision they contend was error. Here, the Contractors
only raised arguments related to the district court’s
determination that the accident did not constitute an
“occurrence” under the terms of the Policy. Even if we were to
accept those arguments, the district court’s dispositive
determination regarding the Policy’s exemptions remains
unaffected and independently supports its grant of summary
judgment on the issue of coverage. The Contractors were
required to challenge that holding in their opening brief in
order to preserve a challenge of the entire basis for the
court’s determination that the Policy did not cover the claimed
loss of use damages.
The Contractors’ fleeting reference to the exclusions in
the opening brief fails to satisfy this requirement because it
does not mention that the district court held otherwise, let
alone assert a basis for that holding being incorrect. It
simply posits without discussion that no exemptions bar
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recovery. The first time the Contractors challenge the district
court’s holding with regard to the exemptions is in their reply
brief. However, the Court will not consider issues raised for
the first time in a reply brief. See United States v. Brooks,
524 F.3d 549, 556 n.11 (4th Cir. 2008); Yousefi v. United States
INS, 260 F.3d 318, 326 (4th Cir. 2001) (“Because [the] opening
brief fails to raise a challenge to [a basis for the agency’s
decision], he has abandoned it. The fact that [he] pursues this
issue in his reply brief does not redeem his failure to do so in
the opening brief.” (internal citations omitted)); Edwards v.
City of Goldsboro, 178 F.3d 231, 241 n.6 (4th Cir. 1999).
Because the exemptions provide an independent basis for the
district court’s order granting summary judgment to General
Casualty, and because the Contractors abandoned any challenge to
that determination on appeal by failing to raise it in their
opening brief, we need not consider the underlying merits of
their argument. 2 See, e.g., Atwood v. Union Carbide Corp., 847
2
Even if the Contractors had preserved the issue, the
district court did not err in concluding that the claimed loss
of use damages are not covered under the Policy. The Policy
covers “bodily injury” and “property damage” “caused by an
‘occurrence,’” and “occurrence” is defined as “an accident,
including continuous or repeated exposure to substantially the
same general harmful conditions.” (J.A. 58, 60.) “Absent an
occurrence, as that term is defined under the policy, there can
be no coverage under the policy at issue, or any other
commercial general liability policy.” Webster County Solid
Waste Auth. v. Brackenrich & Assocs, Inc., 617 S.E.2d 851, 857
(Continued)
10
F.2d 278, 280 (5th Cir. 1988) (holding that where an issue
“constituted an independent ground for [the disposition] below,
appellants were required to raise it to have any chance of
prevailing in [their] appeal”).
III.
The Contractors next challenge the district court’s
determination that they were not entitled to an award of
punitive damages as a matter of law. In McCormick v. Allstate
Insurance Co., 505 S.E.2d 454 (W. Va. 1998), the West Virginia
Supreme Court of Appeals set out the standard for recovering
(W. Va. 2005). “Commercial general liability policies are not
designed to cover poor workmanship. Poor workmanship, standing
alone, does not constitute an ‘occurrence’ under the standard
policy definition of this term as an ‘accident’ including
continuous or repeated exposure to substantially the same
generally harmful conditions.” Id. at 856 (quotation and
citation omitted). Moreover, “damages to a building sustained
. . . as the result of a breach of a construction contract due
to a contractor’s faulty workmanship are a business risk to be
borne by the contractor and not by his commercial general
liability insurer.” Erie Ins. Prop. & Cas. Co. v. Pioneer Home
Improvement, Inc., 526 S.E.2d 28, 34 (W. Va. 1999). The
Contractors seek to establish an “occurrence” based on an act of
alleged professional negligence, which is not permitted under
West Virginia law. E.g., Brackenrich, 617 S.E.2d at 857-58.
For these reasons, and as explained in greater detail in the
district court’s March 31, 2008 order, the Contractors’ loss of
use damages are not covered under the Policy because it was not
the plank’s collapse, but rather the faulty workmanship, which
caused those damages.
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punitive damages where an insured brings a claim against an
insurance carrier:
[P]unitive damages shall not be awarded against the
insurer [in an action brought under the UTPA] unless
the policyholder can establish a high threshold of
actual malice in the settlement process. By “actual
malice” we mean that the insurance company actually
knew that the policyholder’s claim was proper, but
willfully, maliciously and intentionally utilized an
unfair business practice in settling, or failing to
settle, the insured’s claim.
Id. at 459. The court also referred to prior case law applying
the “actual malice” standard to observe that an insurance
company’s “‘preconceived disposition to deny the claim . . . did
not rise to the level of malice’ necessary for an award of
punitive damages.” Id. at 458 (quoting Hayseeds, Inc. v. State
Farm Fire & Cas., 352 S.E.2d 73, 81 (W. Va. 1986)). And it
further reiterated that this standard was intended “to be a
bright line standard, highly susceptible to summary judgment for
the defendant” because “[u]nless the policyholder is able to
introduce evidence of intentional injury — not negligence, lack
of judgment, incompetence, or bureaucratic confusion — the issue
of punitive damages should not be submitted to the jury.” Id.
(quoting Hayseeds, 352 S.E.2d at 80-81).
We have reviewed the evidence the Contractors point to as
creating a triable issue as to whether punitive damages are
appropriate. It does not rise to the level of showing
intentional injury. At most, it shows that General Casualty was
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aware of the Contractors’ claim, did not believe the Policy
provided coverage for the claim, and therefore denied the claim.
While such evidence demonstrates a disagreement over coverage,
it is not evidence of malice. Moreover, when General Casualty
declined coverage, it instructed that if the Contractors became
“aware of any information that might suggest coverage exists,
feel free to tender it to” General Casualty’s agent. (J.A.
1491.) This evidence hardly rises to the level of showing
intentionally injurious action toward the Contractors.
For these reasons, we conclude the district court did not
err in granting General Casualty’s motion to strike the evidence
of punitive damages.
IV.
Lastly, the Contractors assert the district court erred in
ruling they “waived G&G Builders’ third party UTPA claim”
because G&G Builders never intentionally relinquished their
right to pursue one. (Appellants’ Opening Br. 37.) It is
undisputed that the Contractors brought a UTPA claim based on
NAP’s injuries; however, the Contractors assert that they also
brought a second UTPA claim (“third-party claim”) asserting
damages based on G&G Builders’ injuries. As proof, they point
to the consistent use of the plural term “plaintiffs” in their
complaint and the integrated pretrial order as proof that two
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claims were being brought. Because use of the plural meant that
two “mirror-image UTPA claims were at issue,” they contend the
district court erred in holding that they waived the third-party
claim. (Appellants’ Opening Br. 39.)
The problem with the Contractors’ argument is that it
misstates the district court’s holding in two respects – first,
it treats the holding as if the district court awarded General
Casualty judgment as a matter of law on this point, and second,
it describes the holding in terms of “waiver.”
The district court’s ruling about G&G Builders’ third-party
UTPA claim came as part of its discussion about a motion in
limine to exclude certain testimony about G&G Builders’ damages
during the new trial on damages. The district court’s
determinations about a third-party UTPA claim are thus part of
its holding as to the admissibility of and limitations on that
testimony.
More importantly, the district court did not hold that G&G
Builders “waived” a third party claim. Instead, it held that
G&G Builders had not alleged a third-party claim. First, the
court observed that any allegations in the complaint were
“immaterial” to its analysis of the issue because “[t]hey were
superseded by the proposed integrated pretrial order entered
August 13, 2008.” (J.A. 1184.) Then it noted that the words
“third party” “appear nowhere in the August 13, 2008, integrated
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pretrial order” or subsequent written and oral discussions of
the issues remaining in the case, including the jury
instructions about the UTPA claim that were given in the first
trial. (J.A. 1185.) In light of this record, the court
concluded that G&G Builders’ arguments that it had raised a
third-party UTPA claim “strain[ed] credulity” and it held that
“[t]estimony in support of a third-party [UTPA] claim not
presented at the trial is deemed beyond the scope of the limited
retrial chosen by” the Contractors. (J.A. 1192.)
“Waiver” is never mentioned in the court’s discussion and
was not a basis for its determination. The Contractors are thus
challenging a holding the district court never made. But even
if we construe their arguments to challenge the district court’s
dispositive holding on this issue, we find no error. Assuming
the complaint alleged a third-party UTPA claim based on G&G
Builders’ injuries, the causes of action identified in the
integrated pretrial order would supersede the complaint. See
Fed. R. Civil Pro. 16(d); Rockwell Int’l Corp. v. United States,
549 U.S. 457, 474 (2007) (“[A] final pretrial order . . .
supersede[s] all prior pleadings and ‘control[s] the subsequent
course of the action.” (quotation omitted)). While the
integrated pretrial order refers to the plural “plaintiffs” and
“claims,” it does not delineate first or third-party claims.
Given that NAP had assigned its rights against General Casualty
15
to G&G Builders, and that both NAP and G&G Builders are named
plaintiffs in the case, the designation of the plural is hardly
dispositive as to the nature of the UTPA claims that were
brought. Our review of the record leads us to conclude there is
no foundation for the argument — an argument that was first made
during preparations for the new trial on damages — that G&G
Builders brought a separate third-party UTPA claim. Until that
time, the Contractors never specifically mentioned a third-party
claim, nor had they acted as if they were pursuing such a claim
through the presentation of evidence of G&G Builders’ damages or
the wording of jury instructions about such a claim. As the
district court’s September 15, 2009 opinion explains, the record
simply does not support the conclusion that G&G Builders’
alleged a third-party UTPA claim in this case.
V.
For the aforementioned reasons, the district court’s
judgment is
AFFIRMED.
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