Ilm Systems Inc. v. Suffolk Const. Co. Inc.

• Decision Date: 01 August 2002
• Docket Number: No. 00-CV-4531.,00-CV-4531.
• Citation: 252 F.Supp.2d 151
• Parties: ILM SYSTEMS, INC., v. SUFFOLK CONSTRUCTION CO., INC.
• Court: U.S. District Court — Eastern District of Pennsylvania

252 F.Supp.2d 151

ILM SYSTEMS, INC., v. SUFFOLK CONSTRUCTION CO., INC.

No. 00-CV-4531.

United States District Court, E.D. Pennsylvania.

August 1, 2002.

COPYRIGHT MATERIAL OMITTED

Shawn R. Farrell, Cohen, Seglias, Pallas & Greenhall, Philadelphia, PA, for plaintiff.

Edward I. Swichar, Blank, Rome, Comisky & McCauley LLP, Mark L. Rhoades, Blank, Rome, Comisky & McCauley, Philadelphia, PA, David A. Dorey, Blank, Rome, Comisky & McCauley LLP, Cherry Hill, NJ, for defendant.

MEMORANDUM & ORDER

SURRICK, District Judge.

The instant matter involves a construction claim by a drywall subcontractor, Plaintiff ILM Systems, Inc. ("ILM"), against a general contractor, Defendant Suffolk Construction Co., Inc. ("Suffolk"), for work ILM performed for Suffolk. ILM has brought this diversity action against Suffolk for breach of contract, unjust enrichment and breach of Pennsylvania's Contractor/Subcontractor Payment Act, 73 Pa.C.S.A. Ch. 14(A) § 501, et seq. (the "PCSPA"). Currently before the Court is Suffolk's Motion for Partial Summary Judgment (the "Motion," Docket No. 12). For the reasons that follow, the Motion is GRANTED in part and DENIED in part. In summary, we grant Suffolk's Motion on ILM's claims for a) damages based on alleged labor overrun ($594,340.44) and extra material cost ($20,929.95), b) unjust enrichment, and c) attorneys' fees and interest, except fees and interest based on unpaid change orders.

I. BACKGROUND

In 1998, CareMatrix Corporation (the "Owner") contracted with Suffolk to renovate a building at Logan Square in Philadelphia, Pennsylvania, and turn it into 135 assisted living units (the "Project"). As the general contractor, Suffolk entered into a subcontract with ILM on March 17, 1998 (the "Subcontract") to perform drywall work on the Project. ILM was responsible for framing the interior rooms and facilities, hanging drywall, taping and spackling, and installing acoustical ceilings. Originally, under the Subcontract, ILM's work was to be completed by July 27, 1998, and ILM was to be paid $1.7 million.

For various reasons, the Project was delayed, and ILM was unable to complete its work until May 1999. Suffolk does not contend that the delays were caused by ILM, but rather contends that they resulted from the Owner dramatically changing the number and configuration of units, which created a multitude of design adjustments and disjointed construction between floors. As a result, Suffolk did not close out the Project until August 1999, several months after the Project was scheduled to have been completed.

ILM maintains that Suffolk was responsible, at least in part, for the delays in the Project. According to ILM, the delays were caused by the following factors: 1) Suffolk providing ILM with drawings that contained dimensional discrepancies, which required re-layout of certain walls; 2) Suffolk inefficiently coordinating the subcontractors on the Project and, thus, failing to maintain a schedule for the timely completion of work; 3) Suffolk changing its Project Manager three times and Project Executive twice during the course of the Project; and 4) Suffolk's failure to approve ILM's change order requests and respond to its requests for information in a timely manner.

As a result of these undisputed delays and the additional work ILM was required to perform, ILM claims it is owed more than $900,000. First, ILM seeks payment of $61,582.51 for work it performed pursuant to unpaid change orders. See PI. Resp. to Def. First Set of Interrog. No. 4. In addition, ILM contends it suffered delay damages in excess of $800,000, stemming from labor overrun ($594,340.44), lost profit ($170,000), extra cost of material ($20,929.95), and extra supervision ($75,290.56). Id.

The manner by which Suffolk was to pay ILM is delineated in the Subcontract, which contains the following key provisions:

Article 4 Payment

The Subcontractor Amount shall be payable in monthly progress payments as follows .... Receipt of progress and/or final payments by the Contractor from the Owner with respect to the Work shall be, in each instance, a condition precedent to the Subcontractor's right to receive his share of any such payment from Contractor. The Subcontractor's applications for partial payments and final payment ("Requisitions") are to be submitted to the Contractor in the form set forth in one of the exhibits incorporated through Exhibit "A" and in the manner required by the Contractor.... Contractor may require, as a condition precedent to any periodic or final payment that Subcontractor provide executed releases from itself and each of its sub-subcontractors, laborers and material suppliers through the date covered by the most recent partial payment and, with respect to a pending progress payment, releases conditioned on receipt of that progress payment through the date covered by that progress payment....

Contractor shall not be obligated to make payment to the Subcontractor on any approved Requisition prior to the Contractor's receipt of payment from the Owner in respect of such Requisition....

[F]inal payment, constituting the entire unpaid balance of the Subcontract Amount, shall be due only when the Subcontractor shall execute and deliver to the Contractor a final release and lien waiver, in form satisfactory to the Contractor, of all claims of the subcontractor against the Owner and Contractor .... The Subcontractor's acceptance of final payment shall constitute full and final settlement of all obligations of the Owner and Contractor to the Subcontractor with respect to this Subcontract.

Article 6. Extensions

The Subcontractor agrees that he shall have no claim for money damages or additional compensation for delay no matter how caused, but for any delay or increase in the time required for performance of this Subcontract not due to the fault of the Subcontractor, the Subcontractor shall be entitled only to such extension of time for performance of his Work as shall be allowed to the Contractor by the Owner and/or Architect. All claims for such extension of time shall be made in the manner and within the time provided for in the General Contract for like claims by the Contractor upon the Owner.

Article 8. Subcontract Terms and Conditions.

8.3 Dependence of Work.

If the Subcontractor determines that any previous work required to be performed under the Contract Documents or any portion of work on which the Subcontractor's Work is dependent is not in accordance with the Contract Documents, the Subcontractor shall, prior to commencing that portion of the Work, promptly notify the Contractor in writing.

8.12 Claims. The Subcontractor shall not make any claims for additional compensation for any work performed by the Subcontractor or for damages sustained by the Subcontractor by reason of any act or omission of the Contractor, Owner, or Architect during the performance of this Subcontract unless such work is done pursuant to, or such damages are sustained as a result of, a written order from the Contractor and such claim is made in the manner set forth in the Contract Documents. Notice of all such claims (including disputes over the scope of work) shall be given to the Contractor in writing within ten (10) business days (unless a shorter period is specified in the Contract Documents) after the occurrence of the event giving rise to such claim, or the claim shall be considered abandoned by the Subcontractor. Notwithstanding anything to the contrary contained in this Subcontract, the Subcontractor shall have no claim for additional compensation with respect to alleged changes to the Work by the Owner, Architect or any of their agents or with respect to interpretation of the Contract Documents or Exhibit B, except to the extent that the Contractor shall have such claim under the General Contract, and such Contractor's claim and allowance thereof by the Owner shall be a condition precedent to the Subcontractor's claim and allowance thereof by the Contractor....

Subcontract (emphasis added). The Subcontract also specifies Suffolk's rights and remedies in Article 8, Paragraph 6. With respect to Suffolk's capacity to alter ILM's work, the Subcontract states that Suffolk had the right to make changes in the work pursuant to Paragraph 8.13, which requires that contract revisions, including all changes to the Subcontract and scope of the work, shall be confirmed in a writing signed by the Contractor and Subcontractor. See Subcontract, Ml 8.6.1 and 8.13. The Subcontract states that changes may consist of changes in the scope of the work. Subcontract, 118.6.1. Of particular importance to ILM's claims, adjustments in the Subcontract Amount paid to the Subcontractor would be determined in the manner set forth in the Contract Documents for reimbursement of Change Orders. Id.

As permitted by Article 4 of the Subcontract, Suffolk required ILM to execute a form release attached as Exhibit D to the Subcontract. The form provides:

In consideration of the receipt of the amount of payment set forth above and any and all past payments from contractor in connection with the project, undersigned acknowledges and agrees that it has been paid all sums due for all labor, materials and/or equipment furnished by the undersigned to or in connection with the project and the undersigned hereby releases, discharges, relinquishes and waives any and all claims suits, liens and rights ... against Suffolk on account of any labor, materials and/or equipment furnished through the date hereof.

Id., Ex. D. ILM, through its President, Charles Rogers, signed the release on several occasions during the Project, with the latter two releases dated March 16, 1999 and June 16, 1999. The June 16, 1999 release came one month after ILM retained its current attorney in May 1999, see Rogers Mar. 26, 2001 Dep. at 147, and after ILM's work on the Project was completed. See Aug. 16, 1999 letter ("The project has been completed for approximately two...