C&I Steel, Llc v. Peabody Construction Co.
| Decision Date | 28 February 2007 |
| Docket Number | PLCV20030664 |
| Citation | 2007 MBAR 148 |
| Parties | C&I Steel, LLC v. Peabody Construction Co., Inc. et al.[1], [2] |
| Court | Massachusetts Superior Court |
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Troy, Paul E., J.
This matter arises over a contract dispute in which C&I Steel, LLC ("C&I") claims that Peabody Construction Co., Inc. ("Peabody") has refused to pay C&I for work performed pursuant to a written contract on a construction project for the Alden Elementary School and Arts Theater in Duxbury ("the Project"). C&I asserts claims for breach of contract, breach of the covenant of good faith and fair dealing, quantum meruit, negligence, violations of a payment bond issued pursuant to G.L.c. 149, §29, and violations of G.L.c. 93A. C&I also asserts claims under G.L.c. 149, §29 and G.L.c. 93A, §§2, 11 against Peabody's surety, Travelers Casualty and Surety Company of America ("Travelers").
Peabody contends that it does not owe C&I the disputed amounts because C&I breached the contract through failure to perform on time and defects in performance which resulted in a delay in completion of the project and caused the Town of Duxbury ("Duxbury") to assess liquidated damages and withhold these damages from its payment to Peabody. Peabody asserts that to the extent there were any defects in the design documents which contributed to C&I's delays in performance, Peabody as the general contractor only acted as a "pass-through," and Duxbury is responsible for payment of such damages. Peabody has filed a third-party complaint against Duxbury and C&I's surety, the Continental Insurance Company ("Continental") alleging violations of G.L.c. 149, §29 and G.L.c. 93A, §§2, 11.
This matter is before the court on Continental's motion for summary judgment. After a hearing, the court ALLOWS the third-party defendant's motion for summary judgment.
The following undisputed facts are taken from the summary judgment record. Peabody was the general contractor on Duxbury's renovation of the Alden Elementary School and Arts Theater. Drummey Rosane Anderson, Inc. ("DRA") was the project architect and approved or rejected work on the project. Travelers issued a performance bond for Peabody with Duxbury as its obligee. On August 14, 2001, C&I and Peabody entered into a subcontract in which C&I agreed to perform $378,000 in miscellaneous metals and ornamental iron work. Continental, as C&I's surety, issued a performance bond on the Project with Peabody as its obligee. Peabody then issued change order 1 in which C&I agreed to perform $1,742,000 of structural steel work on the Project. C&I asserts that Peabody ordered it to perform an additional $1,389,746 in change order work during the course of the project. Peabody contends that the additional work was caused by C&I's delayed or initially inadequate performance. C&I claims that it performed a total of $3,509,746 of work on the project, and has been paid $1,342,420.
Continental's performance bond provides, in pertinent part:
[I]f the subcontractor shall faithfully perform and fulfill the subcontract... and shall fully reimburse and repay the General Contractor all outlay and expense which the General Contractor may incur in making good any such default... then this obligation shall be null and void...
Whenever the Subcontractor shall be, and declared by the General Contractor to be in default under the Subcontract, the General Contractor having performed its obligations hereunder, the Surety shall, if required in writing by the General Contractor, either
(i) promptly remedy the default; or
(ii) promptly complete the Subcontract;
(iii) promptly obtain bid or bids for submission to General Contractor for completing the Subcontract.
Throughout much of C&I's work on the Project, Peabody and C&I had ongoing disputes about C&I's performance on the Project. C&I claimed that the specifications Peabody provided were inadequate and that Peabody mismanaged the Project. Peabody claimed that C&I did not adequately staff the Project and did not complete work on a timely basis. On August 27, 2002 Peabody sent C&I a letter stating, in pertinent part,
Please be advised that Peabody Construction Co, Inc. ("Peabody") and its Subcontractors are being severely damaged by your lack of performance on the above referenced project. You are hereby directed to have an erection crew and crane on site no later than August 28, 2002 at 7: 00 A.M. This erection crew and crane (the third erector of this job) are directed to resume erection on 8/28/02 and perform all work continuously and to have all erection completed in the Performing Arts Center ("PAC") no later than September 25, 2002. Any and all costs attributed to your firm not being able to man this project properly, will be diligently pursued with your bonding company.
Peabody has repeatedly requested wind posts for the PAC building to no avail. Be advised, Peabody is ordering and will erect the referenced wind posts and back charge your contract accordingly.
Peabody can no longer tolerate your complete disregard of the construction schedule and the terms and conditions of your contract with Peabody. Your firm is in default of your contract with Peabody. Therefor, if you do not comply with the schedule and terms of your contract Peabody will terminate your contract in seven (7) days.
It is neither Peabody's intention nor our desire to terminate your contract. We sincerely wish for C&I to comply with all terms and conditions of their contract with Peabody.
Joan C. Clements ("Clements"), an authorized representative from Continental, responded to this letter on August 27, 2002. Clements' letter acknowledged receiving a copy of the letter and requested a variety of documents in order to investigate the issues. Her letter stated that it was sent for purposes of investigation only and should not be construed as an admission of liability or a promise to pay. It also demanded that Peabody strictly comply with all of the terms of the bond, the contract, and all applicable statutes. Following these letters, Continental and Peabody had a number of meetings and phone conversations.
On September 23, 2002, after discussions between Peabody and C&I, Peabody sent Continental a letter which stated
PCCI does not wish to exercise the performance and payment conditions of the contract in order to motivate C&I Steel to perform, but will if required. PCCI's 9/27/02 notification of contract default and potential termination has initiated an action by C&I Steel, Inc. to take a proactive role and at this time C&I is erecting steel at the PAC complex. PCCI will closely monitor C&I Steel to ensure the PAC phase of the project progresses without interruptions due to C&I performance issues.
Continental responded to Peabody's letter on September 30, 2002, stating that The record does not contain any documents showing that Peabody replied to this letter.
On October 21, 2002, John Paulding ("Paulding") of Peabody sent Ronald Votta (Votta") of C&I a letter stating that
Peabody has been notified that effective today C&I Steel has ceased all activities in erecting structural and miscellaneous steel and has removed equipment/cranes from the Alden Elementary School Job site... Failure of C&I Steel to properly manage their contract continues to impede the on time delivery of critical components required to complete their contract... This correspondence is C&I Steel's 48 hour notice to comply with the Contract requirements. Failure to comply with this notice is C&I Steel's seven day notice of contract default.
[Emphasis in original.]
Also on October 21, 2002, Peabody sent a letter to Clements, informing her that Peabody had received a request for payment from C&I Steel's subcontractor for ornamental metal work. The letter stated, in pertinent part
This demand for payment from CI Steel's subcontractor encumbers PCCI from further payments to C&I Steel without express written direction from CNA. Henceforth PCCI must receive from C&I Steel all material and subcontractor lien releases for PCCI's payment to C&I steel to date. PCCI's third notice (12/210/02) [sic] to CNA regarding C&I Steel performance and subcontractors demands necessitates this action requesting CNA [Continental] to authorize payment. PCCI reserves all rights allowed in the Peabody Construction Co, Inc./Cape and Island Steel Inc. contract for the Alden School Project.
The record includes a memorandum of agenda for a meeting on Peabody's premises on November 19, 2002, which Clements attended, along with representatives from Peabody and C&I, to discuss ways to resolve the ongoing performance issues. The record also contains numerous examples of correspondence between Peabody and C&I, in which Peabody expresses its dissatisfaction with C&I's delays in performance and urges C&I to speed up its work or to meet specific project deadlines, and C&I contends that Peabody's mismanagement and DRA's inadequate specifications caused its delay. The record indicates that Peabody forwarded copies of this correspondence to Continental.
A letter from Peabody to C&I dated November 26, 2002 states that ...
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