BRT Mgmt. v. Malden Storage LLC
| Decision Date | 10 September 2021 |
| Docket Number | Civil Action 17-10005-FDS |
| Parties | BRT MANAGEMENT LLC, Plaintiff/Counterclaim Defendant, v. MALDEN STORAGE, LLC and PLAIN AVENUE STORAGE, LLC, Defendants/Counterclaim Plaintiffs/Third-Party Plaintiffs, and BRIAN WALLACE, Third-Party Defendant. |
| Court | United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts |
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND MEMORANDUM AND ORDER ON MOTION TO STRIKE AND CROSS-MOTIONS FOR DIRECTED VERDICT
This is a dispute between an owner and a contractor over the construction of two self-storage facilities, one in New Rochelle, New York, and one in Malden, Massachusetts. Plaintiff and counterclaim defendant BRT Management LLC is the contractor, and third-party defendant Brian Wallace is the principal of BRT. Defendants, counterclaim plaintiffs, and third-party plaintiffs Plain Avenue Storage, LLC and Malden Storage, LLC are entities created by the effective owner, a company doing business as Banner Real Estate Group. Jurisdiction is based on diversity of citizenship.
The matter was tried to the Court without a jury between April 26 and May 6, 2021. The Court's findings of fact and conclusions of law are set forth below.
1. BRT Management LLC is a limited liability company based in Massachusetts. (Tr. 1:31). It is owned by Brian Wallace, who is a resident of Massachusetts. (Id.; Tr. 1:27).
2. Malden Storage LLC and Plain Avenue Storage LLC (collectively, “Banner”) are limited liability companies organized under Delaware law that are based in Illinois. (Answer ¶¶ 2-3). They are affiliated with Banner Storage Group, LLC.
3. In 2014, Lynn Storage, LLC, which is also affiliated with Banner, contracted with BRT to remodel a storage facility in Lynn, Massachusetts. (Tr. 1:34; Tr. 6:90-91; Tr. 8:6-8). That contract was the first contract between BRT and an affiliate of Banner. (Id.).
4. The Lynn project was nearly complete by the beginning of 2015. (Tr. 6:95-96). Around that time, BRT submitted a series of change-order requests that totaled $478, 171. (Ex. 1558, at 1; Ex. 1021, at 16-24).
5. Bill Henry, President of Banner, and Jim Merkey, Vice President of Construction for Banner, reviewed those requests. (Tr. 6:97; Tr. 7:99). Upon their initial review, they believed that most of the requests were associated with the design-build components of the contract, for which they thought BRT was responsible. (Ex. 1348; Tr. 7:101). They, along with Gary Delaney, who at that time was President of Banner, planned a visit to the Lynn site to meet with Wallace to discuss the change orders. (Tr. 6:100; Tr. 7:106).
6. On February 10, 2015-the day before the site visit in Lynn-Henry, Merkey, and Delaney met in Boston and agreed that $300, 000 was a fair settlement amount for the change orders. (Tr. 7:110).
7. The following day, Henry, Merkey, and Delaney met with Wallace at the Lynn site. (Tr. 6:100; Tr. 7:107).[1] At the end of that meeting, they offered Wallace $300, 000 to settle the change-order dispute. (Id.). They believed that the remaining $178, 171 was contract work for which BRT was responsible. (Tr. 6:102; Tr. 7:107-08).
8. Wallace was not happy with the offer but nonetheless accepted it. (Tr. 6:102; Tr. 7:108-09).
9. Because Wallace was not happy with the settlement, Henry informed Wallace that Banner would give him the opportunity to work on a future project, which Banner would not put out for bid. (Tr. 6:109). Banner subsequently offered the New Rochelle and Malden projects to BRT without putting them out for bid. (Id.).
10. To execute the settlement, Banner agreed to approve the change orders totaling $478, 171, and Wallace agreed to submit a deductive change order in the amount of $178, 171. (Tr. 6:102; Ex. 1001). Wallace submitted that change order on March 16, 2015. (Tr. 3:105; Ex. 1021, at 25).
11. On June 10, 2015, Wallace executed the “Subcontractor Final Payment Certification, Release and Final Lien Waiver” before a notary public. (Ex. 1004). In doing so, Wallace certified, among other things, that BRT had “received in full for all labor, materials, and other items furnished in connection with improvements to real property or any other work performed” for the Lynn project for work performed through June 10, 2015. (Id.). That document states that the “Total Amount of Final Check” is $0. (Id.).
12. On June 19, 2015, Wallace confirmed by letter that Pay Application #10 was the “final” pay application on the Lynn project, which would result in $241, 701.76 to be paid to BRT. (Ex. 1006, at 1). That letter included as an attachment an executed “Certification, Waiver of Lien, and Release of Claims, ” which Wallace described as a “full and final lien waiver, ” and wiring instructions. (Id. at 1-4).
13. That same day, Wallace executed an “Estoppel Certificate” with Sovran Acquisition Limited Partnership, which had purchased the facility from Lynn Storage. (Ex. 1007). Wallace certified, among other things, that “[a]ll obligations of the parties” under the construction contract between BRT and Lynn Storage “have been complied with.” (Id. at 1). He further certified that “[a]ll payments, charges and other costs owed” under that contract “have been paid in full and are current.” (Id.).
14. As a condition of purchase, a Sovran subsidiary, Uncle Bob's Storage, requested that certain work beyond the original contract between BRT and Lynn Storage be completed at the Lynn facility. (Ex. 1008, at 6-7). On July 13, 2015, BRT and Lynn Storage executed a “punch-list” contract for completion of that work. (Id. at 2-5). That contract provided that Lynn Storage would pay $291, 818.69 to BRT for the punch-list work. (Id. at 2).[2]
15. BRT completed the punch-list work and was paid $291, 818.79. (Tr. 4:9-10; Ex. 1012; Ex. 1013; Ex. 1017).
16. In addition to the punch-list work, BRT completed further “extra” work beyond the original contract. (Ex. 1010, at 1). That work was memorialized in a “Summary” document initialed by Lynn Storage and BRT representatives on June 26, 2015. (Id.). That document indicates that the cost of that “extra” work totaled $48, 988.09. (Id.).
17. BRT completed the “extra” work and was paid $48, 988.09. (Ex. 1009).
18. In early 2016, after completion of the Lynn project, Banner, through its affiliates Plain Avenue Storage and Malden Storage, executed two contracts with BRT for construction of storage facilities. (Tr. 6:125; Ex. 1026; Ex. 1182).
19. The contract between Plain Avenue Storage and BRT called for construction of a storage facility in New Rochelle, New York. (Ex. 1026, at 2). It was executed on January 8, 2016, effective “as of” October 27, 2015. (Id.). It was amended in writing on April 19, 2016, to modify the insurance requirements imposed on BRT and its subcontractors. (Ex. 1026.1).
20. The Guaranteed Maximum Price (“GMP”) for the New Rochelle contract was $7, 838, 882. (Ex. 1026, at 6).[3] BRT was to earn a lump sum of $383, 500 and up to 4% of the cost of work for overhead and up to 6% of the cost of work for profit. (Id.).
21. The New Rochelle contract required that BRT achieve substantial completion of the work within 365 days from the date of commencement of the contract. (Id. at 5). The date of commencement was “upon receipt of all necessary permits, and full execution” of the contract, “whichever occurs last.” (Id. at 4).
22. The contract between Malden Storage and BRT called for construction of a storage facility in Malden, Massachusetts. (Ex. 1182, at 2). It was executed on February 2, 2016, effective “as of” October 27, 2015. (Id.).
23. The Guaranteed Maximum Price for the Malden contract was $7, 219, 173. (Id. at 6). BRT was to earn a lump sum of $350, 010 and up to 4% of the cost of work for overhead and up to 6% of the cost of work for profit. (Id.).
24. The Malden contract required that BRT achieve substantial completion of the work within 335 days from the date of commencement of the contract. (Id. at 5). Like the New Rochelle contract, the date of commencement was “upon receipt of all necessary permits, and full execution” of the contract, “whichever occurs last.” (Id. at 4).
25. The New Rochelle and Malden contracts included integration clauses: “The Design-Build Contract represents the entire and integrated agreement between the parties hereto and supersedes prior negotiations, representations or agreements, either written or oral.” (Ex. 1026, at 3; Ex. 1182, at 3). The contracts also stated that the parties agree that BRT had “performed certain design work” before the execution of the contracts and that that work would be “included and governed” by the contracts. (Ex. 1026, at 4; Ex. 1182, at 4).
26. The New Rochelle and Malden contracts provided that the “[t]ime limits stated in the Design-Build Documents are of the essence of the Design-Build Contract.” (Ex. 1026, at 40; Ex. 1182, at 34). They further provided that “[b]y executing the Design-Build Contract, the Design-Builder confirms that the Contract Time is a reasonable period for performing the Work” and that “[t]he Design-Builder shall proceed expeditiously with adequate forces and shall achieve Substantial Completion within the Contract Time, subject to the terms and conditions herein.” (Id.).
27. The New Rochelle and Malden contracts provided that progress payments would be based on the percentage of completion for each portion of work: “Applications for Payment where the Contract Sum is based upon the Cost of Work Plus a Fee with a Guaranteed Maximum Price shall show the percentage of completion of each portion of the Work as of the end of the period covered by the Application for Payment.” (...
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