A-J Marine, Inc. v. Corfu Contractors, Inc.

• Decision Date: 13 September 2011
• Docket Number: Civil Action No. 07–1642 (RMC).
• Citation: 810 F.Supp.2d 168
• Parties: A–J MARINE, INC., Plaintiff, v. CORFU CONTRACTORS, INC., et al., Defendants.
• Court: U.S. District Court — District of Columbia

810 F.Supp.2d 168

A–J MARINE, INC., Plaintiff,

v.CORFU CONTRACTORS, INC., et al., Defendants.

Civil Action No. 07–1642 (RMC).

United States District Court, District of Columbia.

Sept. 13, 2011.

Christopher L. Grant, Christopher L. Grant, Attorney at Law, Washington, DC, for Plaintiff.

Stephen J. Annino, Michael Joseph Pierce, Kasimer & Annino, P.C., Falls Church, VA, Cynthia E. Rodgers–Waire, Wright, Constable & Skeen, Baltimore, MD, Sean Patrick Roche, Cameron/McEvoy, PLLC, Fairfax, VA, for Defendants.

MEMORANDUM OPINION

ROSEMARY M. COLLYER, District Judge.

A–J Marine, Inc., sued Corfu Contractors, Inc., and Corfu's surety, The Ohio Casualty Insurance Company, for breach of a construction contract and a payment bond, respectively. Corfu responded with a counterclaim against A–J Marine for breach of contract and impleaded Peter Kalos, owner of Brickwood Contractors, Inc., as third party defendant. All defendants have been trying to get out of this lawsuit since its early days and now refile their motions for summary judgment.

The source of dispute is a subcontract executed by A–J Marine and Mr. Kalos, the latter in Corfu's name. Corfu argues that Mr. Kalos had no authority to sign a subcontract on its behalf, that A–J Marine itself doubted Mr. Kalos's authority, and that it cannot be liable to A–J Marine for lost profits in any event. Because the legal rights of the parties depend upon the subcontract, the Court addressed that issue first, most recently by directing the parties to supplement their discovery with expert testimony on the applicable standard of care under which A–J Marine could have legitimately believed that Mr. Kalos had apparent authority to contract in Corfu's name and whether Corfu so positioned Mr. Kalos that, despite his lack of authority, Corfu should be estopped from denying the subcontract.

We are now at round two of summary judgment motions. The Court reiterates its prior finding that Mr. Kalos lacked actual authority to subcontract Brickwood work as a Corfu agent. Although discussed below, the Court avoids a decision on whether Mr. Kalos had apparent authority to contract in Corfu's name and whether Corfu should be estopped from denying liability under the subcontract. The parties' factual presentations and briefs are just too muddled for decision. Moreover, the question of whether Corfu ratified the subcontract cannot be decided without presentation to a factfinder as there are material contested facts concerning the role (and presence) of Christos Kollas of Corfu in the fall of 2006 and the summer/early fall of 2007. Happily, the Court need not resolve these questions to enter summary judgment for Corfu because the Court finds that A–J Marine breached the subcontract by not obtaining required insurance. Partial summary judgment must be entered for Ohio Casualty on the scope of its potential liability. Inasmuch as Corfu's potential liability rests, if it exists at all, on Mr. Kollas's own actions or inactions, the Court will also dismiss the counterclaims against Peter Kalos.

I. FACTS

The Court repeats the summary of the facts from its 2009 Opinion in A–J Marine, Inc. v. Corfu Contrs., Inc., 660 F.Supp.2d 84 (D.D.C.2009):

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On January 10, 2006 the Washington Metropolitan Area Transit Authority (“WMATA”) awarded to Corfu a contract to perform work described as “Scour Countermeasure Installation for Potomac River Memorial Bridge.” The project involved the dredging and placement of stone in certain bridge piers for the Potomac River Memorial Bridge. On January 24, 2006, Ohio Casualty issued performance and payment bonds on behalf of Corfu for the project.

Prior to being awarded the WMATA contract, Corfu had subcontracted with Brickwood Contractors, Inc. (“Brickwood”) to perform the work. See [Dkt. # 88], Ex. M (March 8, 2005 subcontract between Corfu and Brickwood). The subcontract provided that “[n]o assignment of this subcontract agreement is permitted without prior written permission from the Contractor.” Id. at Art. 4.

Mr. Kalos is president of Brickwood. His wife, Veron Lee Kalos, is Brickwood's secretary and treasurer. According to Mr. Christos Kollas, Corfu's president and Rule 30(b)(6) representative,¹ Corfu's agreement with Brickwood “was that if we get the job [with WMATA] ... he [Mr. Kalos] will perform everything on the job, paperwork, and all of the actual work on it, because he was familiar with this kind of work.” [Dkt. # 80], Ex. D (Dep. of Christos Kollas (“Kollas Dep.”)) at 21. Mr. Kollas testified that Mr. Kalos and his wife were the only persons managing the project on behalf of Corfu:

Q. What, if any, role did Corfu—any of your—any of the individuals who participated in managing Corfu, have in the scour countermeasure project? Did you supervise the work or keep track of it or attend meetings with WMATA or have any other role in that project—

A. No.

Q.—as a practical matter?

A. No.

Q. Okay. You personally did not. Your brother did not. Your nephew did not. Is that correct?

A. Right. Nobody.

Id. at 30.

On October 16, 2006, Mr. Kollas executed a document on behalf of Corfu, apparently requested by WMATA, entitled “power of execution.” See id., Ex. E. Pursuant to the power of execution, Corfu:

nominates, constitutes, and appoints Peter Kalos, Project Supervisor with full power to act alone on behalf of Corfu Contractors, Inc. to make, execute, seal and deliver on its behalf as contractor and as its act and deed, any and all contracts, change orders, monthly and final payment certificates and other like instruments.

Id. The power of execution was delivered to WMATA by cover letter dated July 24, 2007. Id. The July 24, 2007 cover letter appears to be from Mr. Kollas.² Corfu also submitted to WMATA a list of its personnel, on which Mrs. Kalos was listed as “project manager” who [could] be contacted at “Corfu Contractors@ aol. com” and Mr. Kalos was listed as “superintendent.” Id., Ex. F

Mrs. Kalos testified on behalf of Brickwood that she maintained a supply of Corfu letterhead at her office. Id., Ex. G (Dep. of Veron Lee Kalos (“L. Kalos Dep.”)) at 30. She testified that she sent letters to third parties on Corfu letterhead because “Corfu and Brickwood were working together, and we were working under Corfu's name.” Id. at 29. She also testified that she issued checks on behalf of Corfu to pay Corfu's vendors:

A. Somebody would give me a signed check. I didn't take it somewhere to get it signed. I was given a signed check.

Q. Before it was filled out?

A. Yes.

Q. And then you would fill it out?

A. Yes.

Q. When Mr. Kollas left for Greece, did he leave you with a stack of signed checks for you to fill out?

A. Yes. I always had a check.

Q. So the signatures preceded the information about payee?

A. Right.

On October 24, 2006, Mr. Kalos, purportedly acting on behalf of Corfu, subcontracted with Mr. James D. Nicholas, president of A–J Marine, in apparent disregard of Brickwood's contract with Corfu that disallowed subcontracts without Corfu's prior consent.³ The subcontract was for A–J Marine to perform mechanical dredging and stone placement for $85,371 per month, plus a mobilization fee of $5,000 and a demobilization fee of $5,000. See id., Ex. B. Thereafter, A–J Marine immediately mobilized its crew and equipment, as the subcontract required it to do. However, Corfu did not deliver the dredge material barges and stone material barges loaded with stone, as it had promised.

On December 8, 2006, Mr. Kalos sent Mr. Nicholas a letter on Corfu letterhead stating:

We do not accept your equipment until we receive confirmation your equipment is without defects and your vessels are seaworthy. In addition, A–J Marine, Inc. and your employees are not allowed on-site until you have all required insurance coverage, and an acceptable insurance certificate is required.

Your request for payment for mobilization and rental is disapproved. Corfu does not accept mobilization by A–J Marine, Inc., until the above deficiencies are fully and completely cured.

[Dkt. # 81], Ex. E.⁴

On December 22, 2006, A–J Marine obtained a quote from its insurance agent for the additional coverage that Corfu had requested. By letter dated January 10, 2007, A–J Marine demanded that Corfu pay the cost of the additional insurance, having been advised by its attorney that the subcontract require[d] Corfu to pay for such additional insurance. See id., Ex. G. Corfu refused. By letter dated February 6, 2007, Corfu advised A–J Marine that “your failure upon receipt of a cure notice is a substantial and material breach of your contract. We have made arrangements to complete your work with other companies.” [Dkt. # 80], Ex. Q. A–J Marine did no work on the project. This lawsuit ensued.

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A–J Marine, 660 F.Supp.2d at 86–88 (internal citations altered).

Following fact discovery, the Court denied the first round of motions for summary judgment without prejudice and ordered expert discovery on industry standards on agency. See id. at 93. Expert discovery is now complete and the parties' renewed motions for summary judgment are now ripe.

II. LEGAL STANDARD

A court's subject-matter jurisdiction is determined based on the facts as they existed at the time the case was filed. Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 570–71, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004); see also St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 291–92, 58 S.Ct. 586, 82 L.Ed. 845 (1938) (noting that in a removal case, subject-matter jurisdiction is determined as of the time the petition for removal was filed). A court has diversity jurisdiction if there is complete diversity among the parties; i.e., there are no litigants from the same state on the same side of the controversy, and the amount in dispute is more than $75,000. 28 U.S.C. § 1332(a)(1); see also Prakash v. Am. Univ., 727 F.2d 1174, 1178 n. 25 (D.C.Cir.1984). The parties do not dispute that A–J Marine is a Maryland corporation, Ohio Casualty is...