United States District Court, D. Alaska
ORDER RE PND's AND GEOENGINEERS' MOTIONS FOR
SUMMARY JUDGMENT
SHARON
L. GLEASON, UNITED STATES DISTRICT JUDGE.
Before
the Court are Defendants PND Engineers, Inc.'s and
GeoEngineers, Inc.'s motions for summary
judgment.[1] The motions have been fully
briefed;[2] oral argument was held on June 29,
2016.[3]
This
order should be read in conjunction with the Court's
order at Docket 478, in which the Court addressed Defendant
CH2M Hill Alaska's motion for summary
judgment.[4]The rulings of the prior order shall apply
to these parties. This order focuses on the distinct
arguments and factual issues raised by PND and GeoEngineers
in their motions.
BACKGROUND
The
facts of this case are known to the parties and set out in
the Court's order at Docket 188.
Both
PND and GeoEngineers argue that the economic loss doctrine
precludes MOA's tort claims and that no exception to that
doctrine applies. They argue that MOA's claims for
negligence are untenable because Alaska law requires more
than foreseeability to recognize a duty in negligence and the
other relevant factors weigh against the recognition of such
a duty. They also argue that MOA's professional
negligence claims should be precluded under Alaska law. Last,
they maintain that MOA's claims for negligent
misrepresentation are legally untenable and factually
unsupported.
In
response, MOA argues that Alaska law supports the finding of
a duty in negligence. And it maintains that Alaska law
permits an action for professional negligence against these
Defendants. Finally, MOA maintains that its negligent
misrepresentation claims are permitted under Alaska law and
that it has demonstrated that there are triable issues of
fact as to those claims.
DISCUSSION
This
Court has subject matter jurisdiction for the reasons set out
in the Court's prior order. The standard for summary
judgment is also set out in that order.[5]
1.
Negligence
As the
Court's prior order explained, pursuant to Geotek
Alaska, Inc. v. Jacobs Eng'g Grp., Inc.,
[6] it
will apply the multi-factor approach the Alaska Supreme Court
set forth in D.S.W. v. Fairbanks N. Star Borough Sch.
Dist. to determine whether an actionable duty in
negligence exists as to a particular defendant. The
Court's analysis of the D.S.W. factors in the
prior order with respect to CH2M Hill Alaska is substantially
the same for the two Defendants addressed here, with slight
factual differences for the factors of certainty of injury
and closeness of connection.[7]
Both
PND's and GeoEngineers' motions raise new factual
arguments that undermine the certainty of MOA's injury.
PND cites to the Port Director's testimony “that
the Backlands is permitted as a loading area for things like
construction equipment and windmills.”[8] PND also observes
that cargo trucks are permitted to drive across the Backlands
and the Port is leasing portions of the Backlands for cement
storage.[9]GeoEngineers echoes PND's argument and
maintains that rebuilding the Port Expansion is unnecessary
as the expansion area in its current state generates $10
million in annual revenue for MOA.[10] These arguments, along
with the reasons identified in the prior order,
[11]
demonstrate the uncertainty of MOA's injury. Accordingly,
this D.S.W. factor strongly weighs against finding a
negligence duty as to these two Defendants.
The
“closeness of connection” factor also differs for
these Defendants, as they each played distinct roles in the
Port Expansion Project. MOA argues that the harm caused by
PND and GeoEngineers is closely related to MOA's injury
because they were collectively responsible for the March 2008
Report, in which they concluded that the OCSP structure, if
constructed as designed, would be stable in both static and
seismic conditions.[12] But both the design and the construction
of the Port Expansion were the collaborative product of
several entities. PND was a third-tier subcontractor, whose
work was allegedly verified both internally by members of the
design team, and externally by independent
reviewers.[13] GeoEngineers was a fourth-tier
subcontractor, whose work was also internally and externally
reviewed.[14] The Court finds that the collaborative
nature of the project, combined with the extensive system of
internal and external review, diffuses the closeness of the
connection between MOA's asserted injury and each
Defendant's conduct. Accordingly, the Court finds that
this factor does not support the imposition of a negligence
duty as to these two Defendants.
Although
the Court has considered the different factual circumstances
related to these Defendants, the Court finds that the
D.S.W. factors weigh against the recognition of a
duty in negligence as to either of them. Accordingly, the
Court concludes that the economic loss doctrine precludes
MOA's negligence claims against both PND and
GeoEngineers.
2.
Professional Negligence
PND and
GeoEngineers each argue that MOA cannot maintain an action
for professional negligence. But as the Court previously held
in its prior order, Alaska law permits a project owner to sue
a design professional in tort for economic losses arising
from the professional's malpractice.[15] Here, both
PND and GeoEngineers were professional design and engineering
companies that were hired for their expertise. As such, each
company owed a duty to MOA, the project owner, to “use
such skill, prudence, and diligence as other members of the
profession commonly possess and
exercise.”[16]
A claim
for professional negligence requires more than a cognizable
duty. A plaintiff must also establish each of the following
elements: (1) “a breach of th[e] duty [of professional
care];” (2) “a proximate causal connection
between the negligent conduct and the resulting
injury”; and (3) “actual loss or damage resulting
from the professional's negligence.”[17]
None of
the parties address these other elements. Defendants instead
primarily argue that a professional negligence claim is not
maintainable because the parties “engaged in a
bargained-for allocation of risk in its chain of
contracts.”[18] PND asserts that through its contract it
understood that “ICRC would be able to sue PND in
contract for no more than $1 million.”[19] But the Court
has concluded that Alaska law imposes an independent duty in
tort on design professionals, regardless of the contractual
allocation of liability among the various parties. PND and
GeoEngineers may have each bargained for specific limitations
on liability to those to whom they are in privity of
contract, but in the Court's view, those contractual
limitations do not preclude MOA's claims of professional
negligence against either Defendant under Alaska law.
Accordingly, the Court will deny PND's and
GeoEngineers' motions for summary judgment on MOA's
claims for professional negligence.
3.
Negligent Misrepresentation
a.
The Legal Viability of MOA's Claims for Negligent
Misrepresentation
PND and
GeoEngineers both cite to Alaska Pac. Assur. Co. v.
Collins and maintain that MOA's negligent
misrepresentation claims are impermissibly based on
Defendants' contractual duties.[20] Alaska Pacific
involved allegations that an insurer had negligently breached
its contractual duties to its insured. Specifically, the
insured alleged that the insurer was liable for the
“negligent investigation and denial of his claim and
request for a litigation defense.”[21] The Alaska
Supreme Court recognized that an insurer “may be held
liable for torts independent from its contractual duties,
such as fraud, ” but held that “an action for
negligence in breaching a specific contractual duty sounds in
contract.”[22]The case focused on a negligence claim
between contracting parties, not a negligent
misrepresentation claim between non-contracting parties. As
such, the Court does not find its analysis to be applicable
to MOA's negligent misrepresentation claims.
PND
also cites State for the Use of Smith v. Tyonek Timber,
Inc., in which the Alaska Supreme Court affirmed its
“commitment ‘to draw the line between injuries
which properly find their remedy in tort and those which are
more appropriately governed by contract
principles.'”[23] The Court is unpersuaded that
Tyonek governs this case for two reasons. First,
that case addressed a claim for negligence, not negligent
misrepresentation. Second, the law in Alaska appears to have
evolved since Tyonek's determination in 1984,
perhaps most notably with the Alaska Supreme Court's
decision in Geotek.[24]
For the
foregoing reasons and consistent with the Court's ruling
in its prior order, MOA may maintain an action for negligent
...