UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Unity School District, Plaintiff

v. Case No. 15-cv-155-SM Opinion No.

Vaughn Associates, Inc., and Scott Vaughn, Defendants

v.

School Administrative Unit #6, Excel Mechanical, Inc., Superior Walls of Hudson Valley, Inc., and Town of Unity, Third-Party Defendants

O R D E R

In 2010, the Unity School District hired Vaughn Associates

and Scott Vaughn (collectively, “Vaughn”) to design and oversee

construction of a new elementary school in Unity, New Hampshire.

The project did not proceed as the School District had

envisioned. Construction was beset with delays and forced work

stoppages (by, for example, the state fire marshal) and costs

ballooned from the $4.7 million that Vaughn had promised to more

than $9 million. Eventually, Vaughn’s contracts with the School

District were terminated and the School District sued Vaughn for

damages. Those claims were settled and, in April of 2017, the School District’s suit against Vaughn was dismissed, by

agreement of the parties. See Stipulation of Dismissal

(document no. 100).

What remain are Vaughn’s third-party claims against two

subcontractors on the project: Excel Mechanical, Inc., and

Superior Walls of the Hudson Valley, Inc. Pending before the

court is Excel Mechanical’s motion for summary judgment, in

which Excel asserts that it is entitled to judgment as a matter

of law as to each of the three state law claims Vaughn advances

against it. Vaughn objects.

For the reasons discussed, Excel’s motion for summary

judgment is granted.

Standard of Review

When ruling on a motion for summary judgment, the court is

“obliged to review the record in the light most favorable to the

nonmoving party, and to draw all reasonable inferences in the

nonmoving party’s favor.” Block Island Fishing, Inc. v. Rogers,

(1st Cir. 2016) (citation omitted). Summary

judgment is appropriate when the record reveals “no genuine

dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a). In this

2 context, a factual dispute “is ‘genuine’ if the evidence of

record permits a rational factfinder to resolve it in favor of

either party, and ‘material’ if its existence or nonexistence

has the potential to change the outcome of the suit.” Rando v.

Leonard,

(1st Cir. 2016) (citation omitted).

Consequently, “[a]s to issues on which the party opposing

summary judgment would bear the burden of proof at trial, that

party may not simply rely on the absence of evidence but,

rather, must point to definite and competent evidence showing

the existence of a genuine issue of material fact.” Perez v.

Lorraine Enters.,

, 29–30 (1st Cir. 2014). In other

words, “a laundry list of possibilities and hypotheticals” and

“[s]peculation about mere possibilities, without more, is not

enough to stave off summary judgment.” Tobin v. Fed. Express

Corp.,

, 451–52 (1st Cir. 2014). See generally

Anderson v. Liberty Lobby, Inc.,

(1986).

Background

The factual background of this case has been set forth in

prior orders of the court. See, e.g., Order on Third-Party

Defendants’ Motion to Dismiss (document no. 42); Order on

Defendants’ Motion for Summary Judgment (document no. 55). It

need not be recounted again in detail. It is sufficient to note

the following. In 2010, the Unity School District entered into

3 two contracts with Vaughn to design and oversee construction of

a new elementary school. Construction began in late 2011.

Then, in August of 2012, the Unity School District hired Excel

Mechanical to perform rough and finish plumbing services. On

the same date, the School District entered into a separate

contract with William Knight, d/b/a LSE (“LSE”), to perform HVAC

and mechanical work on the project. LSE, in turn, entered into

a subcontract with Excel to provide “design drawings with

engineer’s stamp for both plumbing and mechanical.”

The upshot of all of this is the following: Vaughn had two

contracts with the Unity School District. It did not, however,

have any contractual relationship with Excel; Excel’s contracts

were with the School District itself, and with LSE. Moreover,

Excel’s contractual obligation to provide mechanical drawings

stamped by a licensed engineer - the critical element of

Vaughn’s claims - ran to LSE, not Vaughn. See AIA Standard

Agreement between Contractor and Subcontractor (document no.

139-7) at Article 8, and “Notes and Clarifications” to Contract

(document no. 139-8) at 3.

In its third-party complaint, Vaughn alleges that it

sustained compensable damages when it relied, both reasonably

and to its detriment, upon allegedly false and material

4 misstatements made by Excel concerning the presence of an in-

house mechanical engineer. Specifically, Vaughn alleges:

Excel represented to VAI [Vaughn] that it had a mechanical engineer who could complete the mechanical components of design and construction drawings.

Excel did not, in fact, have a mechanical engineer who fulfilled this role.

Excel’s purported engineering documents were produced in house by an unregistered engineering school graduate and then stamped by a licensed engineer who was not principally responsible for production of the engineering documents.

Excel knew or should have known that its representations were false when made.

Excel had a duty to VAI as agent for USD to be truthful in describing the scope of its abilities.

Excel made the representations in an effort to convince VAI to recommend that USD use Excel as the mechanical contractor on the project.

The representations were material.

VAI relied on the representations of Excel in recommending their use on the project and in not partnering with a separate mechanical engineer.

Excel’s failure to provide accurate stamped engineering drawings and/or to have a mechanical engineer on staff caused significant delays and costs on the project including but not limited to shutdowns from the various government agencies.

The representations of Excel constitute material, intentional misrepresentations.

Third Party Complaint (document no. 8) at paras. 178-87

(emphasis supplied). See also

at paras. 76-78.

5 According to Vaughn, Excel’s allegedly false and material

misstatements about having an in-house mechanical engineer

prompted Vaughn to recommend to the School District (and/or LSE)

that it contract with Excel, contributed to delays in completing

the project, and caused “reputational damages” to Vaughn, which

ultimately contributed to the School District’s decision to

terminate Vaughn as the project’s architect and construction

manager. See, e.g., Deposition of Scott Vaughn (document no.

139-3) at 197 (alleging that “Excel’s delay and this issue with

the engineer caused delays on the project and costs

increased.”); id. at 197-98 (“What specifically relates here and

why they [Excel] are a piece of the puzzle is that their

nonperformance and failure to perform directly impacted the

credibility of Vaughn Associates, and the credibility of Vaughn

Associates was important in terms of the confidence on the

project and the belief that I could get this done. . . . [T]heir

failure injured my reputation. Because it injured my

reputation, I . . . it was a piece of the puzzle for why I had

to withdraw as construction manager.”) (emphasis supplied).

Excel denies that it ever represented to anyone that it

employed or maintained an “in-house” mechanical engineer (and

asserts that its lack of an in-house engineer is not material).

It says all parties were aware that its mechanical drawings

6 would be (and, indeed, were) stamped by a licensed mechanical

engineer with whom Excel worked, but did not directly employ.

As evidence of Vaughn’s knowledge of that fact, Excel points to

a written change order, submitted by Excel (and accepted and

paid by Vaughn), for fees Excel incurred when the outside

engineer reviewed and stamped project drawings. See Exhibit C

to Affidavit of William Souza, “Change Order 8” (document no.

139-9) ($6,120 related to “Mechanical Engineering Costs”).

Moreover, and critical to this proceeding, Excel’s

subcontract with LSE did not require Excel to use an “in-house”

engineer. Rather it provided that Excel would supply “design

drawing[s] with engineer’s stamp for both plumbing and

mechanical.” AIA Standard Agreement between Contractor and

Subcontractor (document no. 139-7) at Article 8, and “Notes and

Clarifications” to Contract (document no. 139-8) at 3. There is

no dispute that Excel complied with those requirements of its

contract with LSE.

But, even assuming the truth of Vaughn’s claim about

alleged misrepresentations, Excel says Vaughn sustained no

compensable injuries from its use of an outside engineer.

First, Vaughn has pointed to no evidence linking Excel’s conduct

or alleged misrepresentations to an actual delay in the project.

7 That the project suffered numerous delays is undisputed and

undeniable. That Excel’s lack of an in-house engineer

proximately caused any of those delays is little more than

unsupported speculation by Scott Vaughn. Moreover, if any party

might legitimately complain about damages resulting from delays

allegedly caused by Excel’s failure to employ an in-house

engineer, it would be the School District (the project owner)

or, perhaps, LSE (the HVAC contractor with which Excel had

subcontracted and promised to provide stamped drawings). Yet,

LSE never sued Excel or complained about its lack of an in-house

engineer. Nor did the School District. In fact, when the

School District hired a new project manager to replace Vaughn,

it retained Excel and, in fact, expanded the scope of work to be

provided by Excel. Plainly, then, the School District was

neither dissatisfied with Excel’s work nor, it would seem, did

it blame Excel for any of the numerous and substantial delays

the project sustained while Vaughn was project manager.

Indeed, Scott Vaughn testified that, “The plumbing drawings

[prepared by Excel] were generally okay and workable. And in

terms of craftsmanship, Excel’s actual execution of the plumbing

work and the mechanical work was generally fine. It passed

inspection. People were happy with it. And they made good

contributions to buildability and coordination, those kinds of

8 things.” Deposition of Scott Vaughn (document no. 139-3) at

193-94. Although it is far from clear, it would seem that

Vaughn complains only about the HVAC work Excel performed under

its subcontract with LSE (again - work that did not require use

of an in-house engineer), not the work Excel performed under its

contract with the School District. Of course, Scott Vaughn’s

description of Excel’s “mechanical work” as “fine” undermines

that claim somewhat. Further undermining Vaughn’s assertion

that Excel was responsible for (or contributed to) costly

project delays is a letter dated December 22, 2013, in which

Vaughn wrote:

It is the belief of Vaughn Associates, Inc. (“VA”) in its capacity as Construction Manager for the work of the new Unity Elementary School (“UES”) that the best path forward for all parties to the HVAC work . . . is [that] LSE should assign its sub-contract with Excel Mechanical, Inc. (“Excel”) to the Owner [and] Excel should accept that assignment without contest and become the prime contractor for the HVAC work.

Letter from Vaughn Associates (document no. 139-10) at 1

(emphasis supplied). It is entirely unclear why Vaughn would

recommend that Excel “become the prime contractor for the HVAC

work” if, as Vaughn now contends, Excel failed to properly

perform under its contracts and/or contributed to damaging and

material delays in completing the project.

9 Discussion

In its third-party complaint, Vaughn advances three state

law claims against Excel: (1) intentional misrepresentation/

fraud (Count 7); contribution, pursuant to N.H. Rev. Stat. Ann.

(“RSA”) 507:7-f; and (3) common law indemnity. None has merit.

I. Intentional Misrepresentation.

Under New Hampshire law, to prevail on a claim for

intentional misrepresentation or fraud, a plaintiff must

establish: (1) that the defendant made a factual

misrepresentation; (2) with knowledge of its falsity or with a

conscious indifference to its truth; (3) with the intention that

the plaintiff rely on that misrepresentation; (4) that the

plaintiff did justifiably rely, to his or her detriment, upon

that misrepresentation; and (5) that the plaintiff suffered

compensable damages as a consequence. See, e.g., Ridlon v. N.H.

Bureau of Secs. Regulation, __ N.H. __,

, 1203

(N.H. July 24, 2019); Patch v. Arsenault,

(1995). See also Nichols v. Gen. Motors Corp., No. 99-C-566,

, at *4 (N.H. Super. Dec. 13, 1999). Here,

Vaughn’s fraud claim falls substantially short on several of

those elements.

10 First, Vaughn has identified no credible and admissible

evidence to support its claim that Excel actually represented to

Vaughn that it employed an in-house licensed engineer. As the

source of that alleged misrepresentation, Vaughn points to

Excel’s work proposal (document no. 139-8), which was

incorporated into Excel’s contract with LSE. See Vaughn’s

Opposition Memorandum (document no. 143-1) at 8-9. See also

Affidavit of Scott Vaughn (document no. 143-2) at para. 10 (“The

Excel Proposal includes a representation that Excel employs a

registered engineer who can prepare and stamp drawings for the

Project.”). That statement is demonstrably false. As noted

above, Excel’s proposal does not make any representations about

employing an in-house engineer. It states that Excel will

provide mechanical drawings that bear a licensed engineer’s

stamp. See Excel’s Work Proposal (document no. 139-8) at 3

(“Design drawing with engineer’s stamp for both plumbing and

mechanical are included in this proposal.”). 1

1 Excel’s owner, William Souza, testified that “we were requested [by Scott Vaughn] to add the engineer’s stamp into our proposal. So the engineer’s stamp for both the plumbing and mechanical came under Excel’s scope of work.” Deposition of William Souza (document no. 143-3) at 29. See also Id. at 20. He also testified that Scott Vaughn instructed him to add the cost associated with obtaining those engineering stamps to its anticipated budget. Id. at 30. Souza also testified that, “Excel Mechanical does not have a registered engineer to stamp a set of drawings, and you will notice [on the proposal (document no. 139-8), at 3] that I put that on there as bold.” Id. Souza then explained that, when needed, Excel utilized an outside

11 Moreover, Vaughn points to no evidence that might support

even an inference that Excel intended Vaughn to rely upon such

an alleged misstatement (or even why Vaughn believes Excel would

have misrepresented such a seemingly minor matter) - after all,

a professional stamp is required, but whether the stamping

engineer is an employee or a consultant would seem entirely

beside the point. Either circumstances might cause some delay

depending on a variety of factors, and either circumstance could

just as easily prove more, not less, timely. Nor is there

evidence that Vaughn relied to its detriment upon such an

alleged misstatement or that Vaughn suffered any compensable

damages as a result of such alleged reliance upon the alleged

misstatement.

Vaughn’s intentional misrepresentation claim is, at best,

vague and ill-defined - seemingly, deliberately so. And, the

“evidence” upon which Vaughn relies in support of that claim is

little more than “conclusory allegations, improbable inferences,

and unsupported speculation” set forth in Scott Vaughn’s

deposition and affidavit. Am. Steel Erectors, Inc. v. Local

Union No. 7, Int’l Ass’n of Bridge, Structural, Ornamental &

Reinforcing Iron Workers,

(1st Cir. 2008). It

engineering firm to stamp drawings, in exchange for a professional fee. Id. at 30.

12 is insufficient to stave off Excel’s motion for summary judgment

and no reasonable trier-of-fact could plausibly credit it as

true. See generally Scott v. Harris,

(U.S.

2007) (“When opposing parties tell two different stories, one of

which is blatantly contradicted by the record, so that no

reasonable jury could believe it, a court should not adopt that

version of the facts for purposes of ruling on a motion for

summary judgment.”).

II. Statutory Contribution and Common Law Indemnity.

As the court noted in a prior order (document no. 42), the

New Hampshire Supreme Court has explained the distinction

between contribution and indemnification as follows:

[I]ndemnity is distinguished from contribution because whereas indemnity shifts the entire burden of loss from one tortfeasor who has been compelled to pay it, to another whose act of negligence is the primary cause of the injured party’s harm, contribution is partial payment made by each or any of jointly or severally liable tortfeasors who share a common liability to an injured party.

Gray v. Leisure Life Indus.,

(2013) (citations

and internal punctuation omitted) (emphasis supplied).

13 A. Statutory Contribution - RSA 507:7-f.

In Count 8 of its third-party complaint, Vaughn alleges

that, “to the extent that VAI [Vaughn] is liable to USD [the

Unity School District] under a theory of negligence or any other

tort-based theory of recovery, . . . Excel is liable to VAI for

its negligence in causing or contributing to the damages of USD

in accordance with RSA 507:7-f.”

at para. 190. That

statute provides that, subject to certain conditions, “a right

of contribution exists between or among 2 or more persons who

are jointly and severally liable upon the same indivisible

claim, or otherwise liable for the same injury, death or harm.”

(emphasis supplied). But, “contribution is not available to a

person who enters into a settlement with a claimant unless the

settlement extinguishes the liability of the person from whom

contribution is sought, and then only to the extent that the

amount paid in settlement was reasonable.” RSA 507:7-f, II.

Vaughn’s claim for statutory contribution is without merit.

First, Vaughn has failed to demonstrate that, as part of the

settlement agreement between Vaughn and the Unity School

District, the School District released Excel from any claim on

which Vaughn paid a settlement amount. The settlement agreement

between Vaughn and the Unity School District plainly contains a

mutual release of claims. See Mediated Settlement Agreement and

14 Mutual General Release (document no. 139-4) at 3-4. The

agreement also contains a hand-written addendum that purports to

release Superior Walls of Hudson Valley from any claims that the

School District might have against it. See Id. at 6.

Critically, however, there is no similar release of the School

District’s claims against Excel. To be sure, Vaughn’s

settlement with the School District would have reduced the

amount of any judgment the School District might have

subsequently obtained against Excel related to claims as to

which Vaughn and Excel shared liability. But, that settlement

did not extinguish Excel’s liability to the School District on

those (or any other) claims. See RSA 507:7-f, II. See also

Leisure Life Indus.,

(“Although, as the

plaintiffs point out, their settlement with Orvis would have

reduced the amount of any judgment against the defendants by the

amount of consideration paid, it did not extinguish the

defendants’ potential liability to the plaintiffs. Since

Orvis’s settlement did not extinguish the defendants’ liability,

there was no basis for Orvis to obtain indemnity from the

defendants. The defendants were therefore entitled to judgment,

as a matter of law, on the indemnity claim.”) (citing RSA 507:7–

h). Vaughn’s failure to obtain from the School District a

release of all its claims against Excel is fatal to Vaughn’s

statutory contribution claim against Excel.

15 Additionally, even if it were possible to construe the

language of the settlement agreement as some sort of implied

release of the School District’s claims against Excel, Vaughn

has failed to demonstrate that Excel owed and breached any

cognizable common law duties to the School District that

proximately caused the injuries for which the School District

sought (and obtained) compensation from Vaughn. In other words,

Vaughn has failed to show that Excel is a joint tortfeasor that

should be held to account for its proportionate share of

Vaughn’s liability to the School District. See Leisure Life

Indus.,

(“contribution is partial payment made

by each or any of jointly or severally liable tortfeasors who

share a common liability to an injured party.”) (emphasis

supplied). See also Restatement (Third) Torts: Apportionment

Liab. § 23 (Am. Law. Inst. 2000) (noting that the party seeking

contribution must demonstrate that the party from whom it seeks

contribution proximately caused the plaintiff’s injuries).

At this point, it is probably worth revisiting the School

District’s original complaint against Vaughn. In it, the School

District advanced two tort claims against Vaughn: professional

malpractice (negligence) and negligent misrepresentation

(fraudulent inducement to enter the contracts with Vaughn). So,

to prevail on its statutory contribution claim, Vaughn must

16 point to both legal and factual support for its assertion that

Excel shares liability as a joint tortfeasor - that is, for

having either fraudulently induced the School District to enter

its contracts with Vaughn (contracts that were executed well

before Excel was ever involved in the project) or for having

committed architectural malpractice.

Given the evidence of record, it is difficult to conceive

of how Excel could have possibly been a joint tortfeasor with

respect to either of those torts. But, more importantly, Vaughn

has failed to point to admissible evidence supportive of such a

theory. Consequently, it’s claim for statutory contribution

necessarily fails.

B. Common Law Indemnity.

In Count 9 of its third-party complaint, Vaughn alleges

that:

Excel knew or should have known that VAI [Vaughn] would rely on Excel’s work (as represented to VAI) in completing its design of the new Unity School and during construction.

Excel performed its work negligently and with total disregard for project timelines.

Excel’s failures on the project caused damages to USD and/or VAI.

17 VAI should be entitled to recover its damages from Excel under a theory of common law indemnity.

Third-Party Complaint at paras. 192-95. As noted above,

“indemnity shifts the entire burden of loss from one tortfeasor

who has been compelled to pay it, to another whose act of

negligence is the primary cause of the injured party’s harm.”

Leisure Life Indus.,

(emphasis supplied). As

the court previously observed, in dismissing Vaughn’s indemnity

claims against SAU #6, see Order on Third-Party Defendants’

Motion to Dismiss (document no. 42), New Hampshire common law

recognizes three distinct types of indemnity: derivative or

imputed by law, express, and implied. See Leisure Life Indus.,

.

Vaughn has not clearly stated whether it is pursuing a

theory of implied indemnity or derivative/imputed indemnity. To

the extent it is the former, Vaughn faces a substantial problem:

“under New Hampshire law, a right to indemnification is rarely

implied.” Johnson v. Capital Offset Co., No. 11-cv-459-JD,

, at *8,

(D.N.H. Sept. 25, 2013)

(citation omitted). According to the New Hampshire Supreme

Court, “This disinclination [to infer an indemnification

obligation] reflects a simple notion founded in pragmatism and

fairness, that those who are negligent should bear

18 responsibility for their negligence.” Dunn v. CLD Paving, Inc.,

(1995) (citation and internal punctuation

omitted). For the same reasons discussed in this court’s prior

order, Vaughn has failed to demonstrate that the facts of this

case fall within any of the limited exceptions to the general

rule barring implied indemnifications agreements. See Order on

Third-Party Defendants’ Motion to Dismiss (document no. 42) at

10-12. See generally Leisure Life Indus.,

;

Jaswell Drill Corp. v. General Motors Corp.,

(1987).

To the extent Vaughn is pursuing Excel on derivative/

imputed theory of indemnity, that claim also fails. That theory

of recovery is based upon “the concept that one party is

unjustly enriched at the expense of another when the other

discharges liability that should be the first party’s

responsibility to pay.” Leisure Life Indus.,

(citation omitted) (emphasis supplied). As discussed above,

Vaughn has failed to show that Excel is the true party at fault

and should, therefore, be responsible for reimbursing Vaughn for

the sums it paid to settle the School District’s claims that

Vaughn engaged in professional malpractice and/or that Vaughn

fraudulently induced the School District to enter contracts with

it.

19 Finally, as is the case with statutory contribution, “an

indemnitee must extinguish the liability of the indemnitor[,]

either by a settlement with the plaintiff that by its terms or

by application of law discharges the indemnitor from liability

or by satisfaction of judgment that by operation of law

discharges the indemnitor.” Leisure Life Indus.,

(citation and internal punctuation omitted). The theory

behind that requirement is based in equity: “the indemnitee has

provided a benefit to the indemnitor by fully discharging the

indemnitor’s liability, making restitution appropriate.”

Such is not the case here. As noted above, the settlement

agreement between Vaughn and the School District did not, by its

terms or by operation of law, extinguish all potential liability

of Excel to the School District. Moreover, largely for the

reasons already given, because Vaughn has conferred no benefit

upon Excel (i.e., it has not paid any obligation Excel owed to

the School District), it cannot seek to recover from Excel on a

theory of indemnification.

Conclusion

Vaughn’s claim for intentional misrepresentation (fraud)

is, for the reasons given, without merit. With regard to its

contribution and indemnity claims, Vaughn has failed to show

that, when it settled with the School District, it somehow

20 resolved claims for which Excel might be jointly liable.

Rather, Vaughn extinguished only its own liability to the School

District for architectural malpractice and fraudulent

inducement. Having conferred no benefit upon Excel (and having

failed to obtain a release of the School District’s potential

claims against Excel), Vaughn cannot recover against Excel on

either theory.

For the foregoing reasons, as well as those set out in

Excel Mechanical’s comprehensive legal memorandum (document no.

139-1), the court concludes that there are no genuinely disputed

issues of material fact and, as a matter of law, Excel is

entitled to judgment. Excel’s Motion for Summary Judgment

(document no. 139) is granted. Excel’s Motion to Exclude VAI’s

Experts (document no. 140) is denied as moot.

SO ORDERED.

____________________________ Steven J. McAuliffe United States District Judge

November 19, 2019

cc: George T. Dilworth, Esq. Demetrio F. Aspiras, III, Esq. Melissa A. Hewey, Esq. Kenneth B. Walton, Esq. Lindsey D. Smith, Esq. Kristin Hartman, Esq. Michael P. Sams, Esq.

21 Daniel H. Conroy, Esq. Matthew V. Burrows, Esq. Samantha D. Elliott, Esq. Andrew B. Livernois, Esq.

22