Lighting Retrofit Int'l, LLC v. Constellation Newenergy, Inc.

• Decision Date: 23 February 2022
• Docket Number: Civil Case No. 19-cv-02751-SAG
• Citation: 586 F.Supp.3d 452
• Parties: LIGHTING RETROFIT INTERNATIONAL, LLC, Plaintiff/Counter-Defendant, v. CONSTELLATION NEWENERGY, INC., et al., Defendant/Counter-Plaintiff.
• Court: U.S. District Court — District of Maryland

586 F.Supp.3d 452

LIGHTING RETROFIT INTERNATIONAL, LLC, Plaintiff/Counter-Defendant,

v.CONSTELLATION NEWENERGY, INC., et al., Defendant/Counter-Plaintiff.

Civil Case No. 19-cv-02751-SAG

United States District Court, D. Maryland.

Signed February 23, 2022

John Paul Lynch, Matthew Garrett Sawyer, Aaron Drew Neal, McNamee, Hosea, Jernigan, Kim, Greenan & Lynch, P.A., Greenbelt, MD, for Plaintiff/Counter-Defendant.

Craig Robert Haughton, McGuireWoods LLP, New York, NY, Abram J. Pafford, Pro Hac Vice, McGuirewoods LLP, Washington, DC, Brooks H. Spears, John David Wilburn, McGuireWoods LLP, Tysons, VA, Edward M. Nogay, Pro Hac Vice, McGuireWoods LLP, Charlotte, NC, for Defendant/Counter-Plaintiff Constellation Newenergy, Inc.

Michael Alden Stover, Wright, Constable & Skeen, Baltimore, MD, for Defendant/Counter-Plaintiff Liberty Mutual Insurance Comapny.

MEMORANDUM OPINION

Stephanie A. Gallagher, United States District Judge

Plaintiff Lighting Retrofit International, LLC ("Plaintiff" or "LRI") was subcontracted by Defendant Constellation NewEnergy, Inc. ("Defendant" or "Constellation") to provide lighting and plumbing system upgrades for the Federal Bureau of Prisons ("BOP") at the Coleman Federal Correctional Complex ("FCC Coleman") in Coleman, Florida. LRI has sued Constellation for various claims related to Constellation's alleged breach of the parties' subcontract. ECF 1. In addition to disclaiming its liability to LRI, Constellation has countersued, alleging that LRI breached the subcontract. ECF 53. The parties' plumbing-related claims have been stayed. ECF 49. With respect to the lighting-related claims, however, Constellation has filed a motion for summary judgment on LRI's claims and on Constellation's own counterclaim. ECF 66. Liberty Mutual, Constellation's surety, has also filed a motion for summary judgment on Counts I and II of LRI's Complaint. ECF 65. LRI has opposed the motions, ECF 77, and Constellation and Liberty Mutual have filed replies. ECF 84, 85. This Court has reviewed these filings and the exhibits attached to them. No hearing is necessary. See Loc. R. 105.6 (D. Md. 2021). For the reasons set forth below, Constellation's motion will be granted in part and denied in part, and Liberty Mutual's motion will be denied.

I. FACTUAL BACKGROUND

The following facts are construed in the light most favorable to LRI, as the non-moving party.

In mid-2012 through early 2013, Constellation began pursuing an opportunity to serve as the contractor on an energy savings performance contract for the BOP. ECF 64 ¶ 1 (Stipulation of Facts). The contract involved several energy conservation measures ("ECMs") at FCC Coleman. Id. The two ECMs relevant here are ECM-1, which involved various upgrades to the interior and exterior lighting systems designed to lower electricity costs, and ECM-2, which involved similar plumbing upgrades. Id. ¶ 2.

As Constellation pursued the opportunity, it began to identify potential subcontractors. Id. ¶ 3. Constellation performed an initial audit of the prison complex to determine "the number and types of lamps, ballasts, and lighting fixtures that would need to be replaced[,]" ECF 66-1 at 14, and it sent instructions to potential subcontractors regarding ECM-1. ECF 64 ¶ 4. Those instructions listed the "Global Tech Solstice GTSOL5498-4X LED" retrofit kits among the fixtures for which prospective subcontractors were to provide pricing. Id. ¶ 6. These retrofit kits were manufactured by Global Tech LED, LLC ("Global Tech"), and they were to be used in the "high mast" light fixtures for exterior lights at FCC Coleman that are mounted on poles approximately either 100 or 87 feet tall. Id. ¶¶ 5-6.

After circulating the bid packages, Constellation allowed prospective subcontractors to submit written questions, and Constellation provided written answers. Id. ¶ 10. One question submitted asked whether subcontractors could provide pricing for alternative parts and fixtures, other than those listed in the bid package. ECF 66-13. Constellation initially responded that pricing needed to be based "on specified equipment only[,]" but it later changed its response to allow potential subcontractors to provide pricing on specified "or equal" (i.e. alternative) products. ECF 66-17. Notably, LRI argues that this permission was illusory because "there were no other retrofit kits on the market." ECF 77-1 at 3.

In April or May, 2013, Constellation told LRI that it wanted to begin negotiations with LRI with the hope of reaching a subcontract agreement. ECF 64 ¶ 11. During the negotiation period, LRI participated in an "Investment Grade Audit" ("IGA") at the FCC Coleman site, which involved several site visits. ECF 66-1 at 17; ECF 64 ¶ 12. According to Constellation, the purpose of the audit process "was to allow Constellation and LRI to observe the facilities, evaluate the operating environment, and develop a comprehensive design concerning the fixtures, systems, components, and upgrades that would be implemented in order to achieve the desired energy savings in relation to the prison lighting system." ECF 66-1 at 18. According to LRI, however, the IGA process "was nothing more than a counting exercise to match up the products that [Constellation] had specified with the quantities that would be required." ECF 77-1 at 4.

As part of the IGA process, LRI apparently spoke with Global Tech to determine the pricing for the retrofit kits that were to be used for the project. ECF 77-1 at 4. Global Tech allegedly made unusual demands for up front payments from LRI. Id. These demands caused LRI to be concerned about Global Tech's financial status, and LRI communicated these concerns to Constellation, along with its more general concerns about Global Tech's "lack of time in the industry." Id. LRI also argues that it proposed several alternative non-retrofit options during the pre-contract phase, all of which Constellation rejected in favor of the less-expensive Global Tech retrofit kits. Id.

On or about December 9, 2014, LRI and Constellation executed a subcontract for the FCC Coleman project (the "Subcontract").

ECF 66-1 at 19. Subsection 6.8 of the Subcontract contains the following warranty provisions:

6.8 Warranties. Subcontractor warrants that (a) all services will be provided by qualified, competent and professional persons in a timely, good and workmanlike manner and with a degree of skill and care in conformity with industry standards, (b) all equipment will be free from defects and installed in accordance with manufacturer's specifications, and (c) all services and equipment shall be in compliance with all applicable laws, licenses, and permits. Subcontractor will obtain vendor/manufacturer/supplier warranties and pass through all such warranties to both Constellation and Constellation's Customers. Subcontractor shall, if available, with the prior written approval of Constellation, obtain extended warranties, and pass through all such extended warranties to both Constellation and Constellation's Customers. The Subcontractor shall, at its sole expense interface, and act as liaison with Subcontractor-purchased materials manufacturers, vendors, and suppliers to resolve problems and pursue warranty claims on behalf of Constellation and Constellation's Customers. In the event a manufacturer, vendor, or supplier of such materials ceases operations or is otherwise unable to meet its warranty obligations to Constellation or Constellation's Customers, Subcontractor agrees to provide or secure, at its sole expense, for Constellation and Constellation's Customers, all such warranties including but not limited to any required spare parts.

The warranties set forth herein shall continue for a period of one (1) year after the date of Constellation's final acceptance of the work or Customer's beneficial use, whichever is later, unless a longer period is set forth in the Contract Documents. Unless otherwise provided on the Scope of Work, if the services and materials provided by Subcontractor hereunder do not conform to the warranties included herein, then Subcontractor will (at its sole cost and expense) do any of the following upon Constellation's request: (a) re-perform the services, or repair or replace the equipment, in a satisfactory manner that conforms to the terms of this Subcontract, (b) pay Constellation any money damages that Constellation owes as a result of nonconformance and refund the portion of the cost hereunder which is attributable to such nonconformance, (c) if Constellation chooses to correct the breach by re-performing the services or repairing or replacing the equipment, (by itself or through another subcontractor), pay Constellation any expenses Constellation incurs itself or pays a third party. This warranty shall not in any way limit any standard warranties provided by Subcontractor to its customers generally.

ECF 66-19.

On March 24, 2015, LRI and Constellation executed a scope of work (the "SOW"). ECF 66-20. The SOW provided that LRI would provide "final design and all labor, materials, material coordination, permits, shipping cost, storage cost, trash disposal taxes, tools, specialized equipment and full-time onsite supervision necessary to implement a full functional project." Id. The SOW also specified that Global Tech's Solstice retrofit kits would be used in the project. Id.

The following day, LRI executed a purchase order with Global Tech for the Solstice retrofit kits to be used in the ECM-1 phase of the project. ECF 64 ¶ 17; ECF 66-22 (Purchase Order). The purchase order also included a $50,000 extended warranty. ECF 64 ¶ 17; ECF 66-22.

LRI began installing the Global Tech high mast retrofit kits at FCC Coleman in 2015. ECF 64 ¶ 18. In August, 2015, the high mast retrofit LED lights began failing at a greater than expected rate. Id. ¶ 19. An investigation revealed that the cause of these failures was likely heat related. Id. ¶ 20. According to LRI, as the retrofits started to fail, "they were sent back to...