J.E. Dunn Constr. Co. v. S.R.P. Dev. Ltd. P'ship

• Decision Date: 13 July 2015
• Docket Number: Civil Action No. DKC 11–1948.
• Citation: 115 F.Supp.3d 593
• Parties: J.E. DUNN CONSTRUCTION CO. v. S.R.P. DEVELOPMENT LIMITED PARTNERSHIP, et al.
• Court: U.S. District Court — District of Maryland

115 F.Supp.3d 593

J.E. DUNN CONSTRUCTION CO.

v.S.R.P. DEVELOPMENT LIMITED PARTNERSHIP, et al.

Civil Action No. DKC 11–1948.

United States District Court, D. Maryland.

Signed July 13, 2015.

Adam Cizek, Robert Francis Carney, Whiteford Taylor and Preston LLP, Columbia, MD, for J.E. Dunn Construction Co.

Kevin Rodden Keogh, Timothy John Fitzgerald, Koehler Neal LLC, Cleveland, OH, Nicole Lefcourt Campbell, Huddles Jones Sorteberg and Dachille PC, Columbia, MD, Oneil Stephen King, Leftwich and Ludaway LLC, Washington, DC, for S.R.P. Development Limited Partnership, et al.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for resolution in this breach of contract case are: (1) a motion for summary judgment on counts I and VIII of its amended complaint filed by Plaintiff J.E. Dunn Construction Company ("J.E. Dunn" or "Plaintiff") (ECF No. 95); (2) a cross motion for summary judgment filed by Defendants S.R.P. Development Limited Partnership, The Smoot Corporation ("Smoot"), and Robuck Investment, Inc.'s ("Robuck") (collectively, "SRP" or "Defendants") (ECF No. 97); and (3) a motion for summary judgment filed by Defendant Metropolitan Baptist Church ("Metropolitan") (ECF No. 98).¹ The issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, J.E. Dunn's motion for summary judgment will be denied. SRP's cross-motion for summary judgment will be granted in part and denied in part. Metropolitan's motion for summary judgment will be granted.

I. Background

A. Factual Background

Unless otherwise noted, the following facts are undisputed. This case has three parties: J.E. Dunn, SRP, and Metropolitan and involves the efforts to build a new "megachurch" for

Metropolitan in Upper Marlboro, Maryland ("the Project"). On September 29, 2005, Metropolitan retained SRP to serve as its project manager for the Project through a Development Management Agreement ("Development Contract"), (ECF No. 33–1), and the Agreement Between Owner and Design Builder ("Design Build Contract") (ECF No. 33–2). The Development Contract provided that SRP would generally act as Metropolitan's trusted advisor by shepherding the Project through to completion, such as handling zoning, legal, financing issues, along with evaluating the drawings, cost estimates, and construction schedule of the general contractor. (ECF No. 33–1 § 2.2). The contract stated that each party reserved the right to cancel the agreement upon written notice to the other party. If the agreement were to be terminated for convenience, the parties were relieved of all further obligations, but Metropolitan would be obligated to pay SRP the costs and fees which had been authorized and incurred by SRP at the time of termination. (Id. § 6.1).

SRP subsequently entered into negotiations with J.E. Dunn for the Project's general contract services. J.E. Dunn evaluated the Project and provided a Guaranteed Maximum Price ("GMP") for the Project of $31,098,000. (ECF No. 33–4, at 2). A GMP is a method of cost control whereby the contractor is compensated for actual costs incurred not to exceed the GMP. On September 28, 2005, SRP acknowledged the GMP and authorized J.E. Dunn to begin procurement. (Id. ). SRP retained J.E. Dunn to serve as the Project's general contractor and entered into a modified AIA A491—1996 Agreement Between Design/Builder and Contractor ("the Subcontract") on November 29, 2005. (ECF No. 33–3). Rees & Associates was the architect on the Project. (ECF No. 33–3, at 3). Article 4.2.4 of the Subcontract stated:

Contractor [J.E. Dunn] will be furnished with Drawings and Specifications (the Bid Documents) issued by Design–Builder's Architect for the entire Project sufficiently developed so that Contractor can obtain bids from subcontractors and materialmen for the various scopes of work. Contractor shall have the right to bid any such scopes of work as a subcontractor. After the Bid Documents have been issued and an Estimated Cost of the Work determined, the Contractor and Design/Builder shall establish the Guaranteed Maximum Price ("GMP") and the Contractor's Fee, including fee on the cost of Preconstruction Services described in Exhibit H, by executing a written Amendment to this Agreement (the "GMP Amendment").

(ECF No. 33–3, at 6). Under Article 4.2.1 of the Subcontract, J.E. Dunn would recover a Contractor's Fee "as an amount equal to three and one-half percent (3.5%) of the Estimated Cost of the Work used to establish the [GMP]." (ECF No. 33–3, at 5). J.E. Dunn asserts that SRP and Metropolitan decided to release J.E. Dunn to perform particular scopes of work under the Subcontract and for the Project through ten (10) Work Authorization packages, in the total amount of $34,001,754. (ECF No. 94, Exh. A.1, Taylor depo, at 83 & Exh. A.9).

Construction started and problems ensued. On July 29, 2008, Metropolitan sent two letters to SRP terminating both agreements. (ECF No. 34–2).² Consequently, on August 18, 2008, SRP sent a termination letter to J.E. Dunn, which stated in relevant part:

As you are aware, the Owner has terminated each of its contracts with SRP Development Limited Partnership ("SRP"), and SRP has proposed that JE Dunn consent to the assignment of AIA Document A491—1996 Part 2 Standard Form of Agreement Between Design/Builder and Contractor (the "Agreement") from SRP to the Owner. At this juncture, JE Dunn has not consented to the proposed assignment.

Therefore, in the interests of moving the Project forward, and without waiving any rights thereunder, pursuant to § 14.1 of the Agreement, SRP hereby provides, to JE Dunn,

Notice of Termination of the Agreement effective as of August 6, 2008, based upon the Owner's termination of the agreements with SRP. SRP hereby requests that JE Dunn coordinate a meeting among SRP, JE Dunn, and the Owner [Metropolitan] for the purposes of facilitating an efficient transition of the Project, and addressing any and all remaining issues.

... Please also confirm whether JE Dunn will submit to SRP additional invoices and billings. With regard to open invoices, as has been the practice over the course of the Project, the Owner [Metropolitan] will make payment directly to JE Dunn.

(ECF No. 34–3, at 2).

SRP contends that J.E. Dunn did not respond to this letter. Instead, J.E. Dunn began to deal directly with Metropolitan and continued work on the Project. Tory Sigler, Vice President with J.E. Dunn, explained:

After Metropolitan terminated the Development and Design–Build Contracts, Metropolitan requested that [J.E.] Dunn continue performing work on the Project and represented to [J.E.] Dunn that it would pay [J.E.] Dunn for its work. At this time, Metropolitan represented that it was seeking additional financing to complete the entire project, including scopes of work and costs in excess of the work already approved by the Work Authorization packages 1 through 10.

(ECF No. 95–4 ¶ 5). Mr. Sigler avers that J.E. Dunn performed work on the Project directly for Metropolitan from mid-August 2008 through early October 2008. (Id. ¶ 7). Jason T. Martin, Vice President and Regional General Counsel for J.E. Dunn, avers that J.E. Dunn and Metropolitan discussed executing a formal written contract and "a draft AIA A101 contract was circulated and modified by the parties; however, ultimately, the contract was not executed." (ECF No. 95–3 ¶ 6). According to Mr. Sigler, at no point did Metropolitan object to the work performed or "retract its repeated requests that [J.E.] Dunn continue performing work on the Project or its representation that it would compensate [J.E.] Dunn for its work." (ECF No. 95–4 ¶ 7). Metropolitan never paid J.E. Dunn for the additional work performed, however. Mr. Martin contends that "[t]he reasonable value of the labor, materials and services, $3,629,891, provided directly to Metropolitan at its request [is] still due and owing to J.E. Dunn and J.E. Dunn has not been paid these amounts by Metropolitan, nor has it recovered them from any other source." (ECF No. 95–3 ¶ 7). J.E. Dunn also contends that SRP failed to pay J.E. Dunn amounts owed upon termination of the Subcontract in accordance with Article 14. More details will be provided in the analysis section below.

On November 24, 2008, J.E. Dunn served Metropolitan with a sworn Notice to Owner or Owner's Agent of Intention to Claim a Lien on the Property. (ECF No. 94–4). The Notice indicates that J.E. Dunn is owed $3,591,062 as of August 18, 2008 in connection with its Subcontract with SRP; and that Metropolitan owes it $3,629,891. (Id. at 3). On February 6, 2009, J.E. Dunn filed in the Circuit Court for Prince George's County a petition to establish and enforce a mechanic's lien on the Property in the amount of $7,220,953 (the combined total of the alleged amount owed by SRP and Metropolitan). (ECF No. 94–5). On March 31, 2009, a final mechanic's lien order was entered in the Circuit Court for Prince George's County in the principal amount of $7,220,953 in favor of J.E. Dunn against land owned by Metropolitan.³ (ECF No. 94–7).

B. Procedural Background

J.E. Dunn filed a complaint on July 15, 2011, alleging claims for breach of contract, negligence, negligent misrepresentation, quantum meruit, unjust enrichment, and promissory estoppel against Defendants SRP, Smoot, and Robuck. (ECF No. 1). SRP, Smoot and Robuck then moved to dismiss, alleging lack of subject matter jurisdiction or, in the alternative, for failure to state a claim. The motion was granted in part and denied in part on September 20, 2012. (ECF Nos. 25 & 26). As relevant here, the opinion indicated that "Smoot and Robuck, as SRP general partners, may be liable for any outstanding obligation after exhaustion of SRP's assets and, for that reason, are proper parties to this suit.... Because Smoot and Robuck may not be held individually liable, JE Dunn may not satisfy any judgment against them without first exhausting the assets of SRP." (...