Military & Fed. Constr. Co. v. Ace Elec., Inc.
| Decision Date | 26 June 2015 |
| Docket Number | No. 7:14-CV-23-D,7:14-CV-23-D |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | MILITARY & FEDERAL CONSTRUCTION COMPANY, INC., Plaintiff, v. ACE ELECTRIC, INC., Defendant. |
On December 20, 2013, Military & Federal Construction Company, Inc. ("MFCC" or "plaintiff") filed a complaint in Onslow County Superior Court asking for a declaratory judgment that numerous waivers that Ace Electric, Inc. ("Ace" or "defendant") signed now bar Ace's demands for additional compensation stemming from a government contract. MFCC Compl. [D.E. 1-1] 4, 11-13. On January 29, 2014, Ace timely removed the action to this court. See [D.E. 1] 2. On February 4, 2014, Ace answered the complaint and asserted three counterclaims [D.E. 10]. On February 28, 2014, Ace amended its counterclaims, adding a Miller Act claim against MFCC and Fidelity and Deposit Company of Maryland ("FDCM"), the surety for MFCC's Miller Act bond [D.E. 15]. On March 13, 2014, Ace filed a corrected counterclaim [D.E. 16]. On April 6, 2015, Ace moved for partial summary judgment on MFCC's claim for declaratory judgment [D.E. 32]. On April 6, 2015, MFCC and FDCM jointly moved for partial summary judgment on MFCC's claim and Ace's counterclaims for delay damages and quantum meruit [D.E. 33]. Thereafter, the parties responded and replied. See [D.E. 35, 36, 37, 38]. As explained below, the court grants in part and denies in part MFCC's and FDCM's motion and denies Ace's motion.
In 2011, MFCC entered into a contract with the United States Air Force ("Air Force") for the construction and improvements to a youth center at Moody Air Force Base in Valdosta, Georgia. [D.E. 33-1] 3. On October 13, 2011, MFCC entered into a subcontract with Ace, wherein Ace agreed to furnish and install several electrical systems for the construction project. Id. The subcontract required Ace to submit to MFCC payment applications and "Partial Waivers and Releases of Liens" before MFCC issued interim payments to Ace. Id. 3, 11-12 (subcontract paragraphs 5.2, 5.8.1). Ace submitted the following payment applications and "partial waivers of claims":
Period Start Period End Waiver Through Source 12/25/2011 12/25/2011
[D.E. 33-1] 23-24 12/25/2011 02/25/2012 02/25/2012
[D.E. 33-1] 26-27 02/25/2012 03/25/2012 03/25/2012
[D.E. 33-1] 29-30 03/25/2012 04/25/2012 04/17/2012
[D.E. 33-1] 32-33 04/25/2012 05/25/2012 05/16/2012
[D.E. 33-1] 35-36 05/25/2012 06/25/2012 06/19/2012
[D.E. 33-1] 38-39 06/25/2012 07/25/2012 07/19/2012
[D.E. 33-1] 41-42 07/25/2012 08/25/2012 08/17/2012
[D.E. 33-1] 44-45 08/25/2012 09/25/2012 09/19/2012
[D.E. 33-1] 47-48 09/25/2012 10/25/2012 10/15/2012
[D.E. 33-1] 50-51 10/25/2012 11/25/2012 11/19/2012
[D.E. 33-1] 53-54 11/25/2012 12/25/2012 12/18/2012
[D.E. 33-1] 56-57 12/25/2012 01/25/2013 01/17/2013
[D.E. 33-1] 59-60 01/25/2013 02/28/2013 02/15/2013
[D.E. 33-1] 62-63 03/01/2013 03/31/2013 02/15/2013
[D.E. 33-1] 65-66
| 04/01/2013 |
| 04/30/2013 |
| 04/16/2013 |
| [D.E. 33-1] 68-69 |
| 05/01/2013 |
| 05/31/2013 |
| 05/2013 |
| [D.E. 33-1] 71-72 |
In the partial waivers of claims, Ace agreed to "waive and release any and all rights, demands, and claims, including delay and impact claims, (including any right to a materialman's or mechanic's lien or any Miller Act claim) against [MFCC], its surety, the project owner, the owner's property, and any construction lender." Id. 24.
On October 17, 2011, the Air Force modified the project. Due to the modification, the Air Force gave MFCC a 21-day extension. [D.E. 36-1] 6 (GOVT 12). On November 9, 2011, MFCC held a preconstruction meeting with subcontractors. Id. 2. On January 23, 2012, Ace sent MFCC a letter noting the existence of delays on the project and asking for an approved project schedule. Id. 9-10 (MFCC 226-27). On April 16, 2012, MFCC provided its first project schedule. Id. 2. On April 30, 2012, Ace sent MFCC another letter in which Ace detailed its concerns with "the delays and numerous outstanding issues" on the project. [D.E. 36-1] 12 (MFCC 219). Ace alleged that it had incurred extra costs of more than $85,000 because of delays and asked MFCC to explain "how Ace will be compensated for this loss of labor." Id.
On May 1, 2012, the Air Force sent MFCC a "letter of concern" in which it noted the government's concern with, among other issues, the "[i]nability of effective project management to include superintendent and quality control," "[s]tructural concerns," and the "[s]chedule/[p]rogress" of the project. Id. 14 (MFCC 942-43). On May 14, 2012, MFCC responded to the Air Force's concerns. Id. 16-20 (MFCC 10787-91).
On July 27, 2012, the Air Force granted MFCC an extension for the period of performance, this time by 128 days, "due to government delays." Id. 21, 54 (GOVT 24, MFCC 3068).
On December 13, 2012, the Air Force sent MFCC an unofficial CCASS performance report.Id. at 33 (MFCC 971). The report noted generally "satisfactory" ratings, but the report gave "marginal" ratings for "[a]dherence to approved schedule" and "resolution of delays," among other factors. Id. at 34 (MFCC 972). The reviewing officer wrote that the Id.
On December 14, 2012, the Air Force wrote a memo concerning the project in which it discussed several issues with the project and noted that the project was "12% behind schedule as of 6 December 2012." Id. 27-28 (MFCC 964-65). Despite its concerns, the government decided "not to issue a Stop Work Order." Id. 28 (MFCC 965). On December 20, 2012, MFCC responded to the CCASS report. Id. 29-32 (MFCC 967-70).
On January 27, 2013, MFCC held its first project coordination meeting. Id. 2.
On February 1, 2013, Ace submitted cost information to MFCC and claimed $155,785.45 in additional costs from delayed work. Id. 38-39 (ACE 2888-89). On February 11, 2013, MFCC received its third and final extension of 101 days to complete the project. Id. 49 (GOVT 32). On February 27, 2013, Ace met with MFCC personnel to "discuss recovery of Ace's delay and impact costs." Id. 2. On March 27, 2013, Ace sent information on its labor and other costs it incurred on the project, starting October 13, 2012, the day after the project was originally scheduled to be complete. Id. 55 (MFCC 7251).
On June 15, 2013, the project at Moody Air Force base was substantially complete. [D.E. 33-1] 5, 74. Ace received from MFCC payments totaling approximately $918,121. Id. 5. This sum covers the total amount that Ace requested through May 20, 2013, for the period from the beginning of the project through May 31, 2013. Id. 71.1
On September 20, 2013, Ace informed MFCC that it had incurred damages of approximately $154,008 and demanded payment from MFCC. Id. 77-78. On November 4, 2013, MFCC responded and argued that Ace waived any right to damages by signing and submitting the partial waivers of claims with its payment applications. Id. 80-81. On November 21, 2013, Ace responded and asserted that the waivers of claims were invalid because they exceeded the scope of the subcontract or, alternatively, were subject to equitable estoppel and other defenses. Id. 85-89. On December 20, 2013, MFCC filed suit [D.E. 1-1] 4.
Summary judgment is appropriate if the moving party demonstrates that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The party seeking summary judgment must initially show an absence of genuine dispute of material facts or the absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If a moving party meets its burden, the nonmoving party must "come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quotation and emphasis omitted). A genuine issue for trial exists if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). "The mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient." Id. at 252; see Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985) (). Only factual disputes that might affect the outcome under substantive law properly preclude summary judgment. Anderson, 477 U.S. at 248. In reviewing the factual record, the court views the facts in the light most favorable to the nonmoving party and draws reasonableinferences in that parry's favor. Matsushita, 475 U.S. at 587. "When cross-motions for summary judgment are before a court, the court examines each motion separately, employing the familiar standard under Rule 56 of the Federal Rules of Civil Procedure." Desmond v. PNGI Charles Town Gaming, L.L.C., 630 F.3d 351, 354 (4th Cir. 2011).
The parties agree, and the record supports, that North Carolina law governs the dispute (other than Ace's federal claim under the Miller Act). See, e.g., [D.E. 33-1] 16 ( that the "Agreement will be governed by, construed, and enforced in accordance with the laws of the States of North Carolina"); [D.E. 34] 8-10; [D.E. 37] 1-2. In construing North Carolina law, the court must attempt to predict what the Supreme Court of North Carolina would do if it "were faced with this [case]." Teague v. Bakker, 35 F.3d 978, 991 (4th Cir. 1994). If the Supreme Court of North Carolina has not addressed the issue, this court may consider cases from the North Carolina Court of Appeals, treatises, and the practices of other states. See, e.g., Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C., 433 F.3d 365, 369 (4th Cir. 2005).
Ace's first counterclaim alleges a breach of contract by MFCC. Specifically, Ace asserts that Ace incurred delay damages of at least $206,577.92, caused by MFCC's alleged breach of the subcontract....
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