POLY-FLEX v. CAPE MAY COUNTY MUN. UTILITIES AUTH.
| Decision Date | 20 September 1993 |
| Docket Number | Civ. A. No. 91-3199 (SSB). |
| Citation | 832 F. Supp. 889 |
| Parties | POLY-FLEX, INC. and Tensar Corporation, Plaintiffs, v. CAPE MAY COUNTY MUNICIPAL UTILITIES AUTHORITY, D. Kemenash and Associates, Inc., J.H. Water Systems Inc., Earthwork Associates, Custom Structures Corp., Daley's Pit, Comstock Corporation, and First Indemnity of America Insurance Company, Defendants. |
| Court | U.S. District Court — District of New Jersey |
John J. Petriello, Levy, Ehrlich & Kronenberg, Newark, NJ, Hal A. Emalfarb, Emalfarb, Swan & Bain, Highland Park, IL, for plaintiff.
James D. Ferrucci, Wolff & Samson, P.A., Roseland, NJ, for defendants.
Presently before this court in this diversity action are plaintiff's motion for summary judgment and defendants' cross-motion for summary judgment. Underlying these motions is a question of first impression relating to the requirements that need be met in order for a supplier in a public works construction project to collect funds from a surety on a statutory bond under the New Jersey Bond Act, N.J.S.A. 2A:44-143 et seq. For the reasons addressed below, the motions of both plaintiff and defendants are denied.
Defendant, Cape May County Municipal Utilities Authority ("MUA"), is a municipal corporation of the state of New Jersey, organized pursuant to N.J.S.A. 40:14B-1, et seq. After public advertisement for bids, the MUA contracted on June 6, 1990 with D. Kemenash & Associates, Inc. ("Kemenash"), for the construction of a project known as Contract SLF-28-89, Cell 1C, Secure Sanitary Landfill (hereinafter the "Project"). Kemenash supplied a Performance and Payment Bond dated May 4, 1990, issued by the defendant, First Indemnity of America Insurance Company ("FIA"), to the MUA covering the project, up to the contract price.
Kemenash entered into a subcontract with J.H. Water Systems, Inc. ("J.H. Water") in which J.H. Water agreed to provide all labor and materials necessary to install the liner systems required by Kemenash's contract with the MUA for the construction of the landfill project. J.H. Water subsequently entered into a subcontract with plaintiff Poly-Flex, Inc. (then known as Poly-America, Inc.) (hereinafter "Poly-Flex") in which Poly-Flex agreed to furnish and J.H. Water agreed to purchase certain materials known as Poly-Flex High Density Polyethylene 60 mil. liner material (hereinafter "HDP liner").
Under the terms of the J.H. Water/Poly-Flex contract, the parties agreed to a sales price of $0.24 per square foot. Poly-Flex claims to have shipped to J.H. Water 1,586,117 square feet of HDP liner for a value of $380,668.08. As verification of this amount, Poly-Flex offers the affidavit of its president, William Neill, various invoices, and bills of lading.
Defendants, on the other hand, claim receipt of only 1,527,422 square feet of HDP liner, constituting a value of only $366,581.28 under the contract. As verification for this amount, defendants contend that (1) "as built" liner placement panel drawings prepared by the MUA's construction manager show that the total amount of all liner material installed at the Project was 1,834,122 square feet, (2) the Liner Company, hired to complete installation of all liner material after the MUA declared Kemenash in default, exhausted all HDP liner and was subsequently forced to purchase an additional 306,700 square feet of liner material from a third party in order to complete installation, and (3) subtracting the amount of liner material purchased by Liner Company from the total amount utilized (as revealed by the as-built drawings) indicates that defendants possessed only 1,527,422 square feet of HDP liner.
3. Conclusion of Project and Aftermath
By February, 1991, Poly-Flex had received no payments for the materials it provided to J.H. Water. On February 8, 1991, Poly-Flex filed with the MUA a Municipal Mechanic's Lien Claim Notice pursuant to N.J.S.A. 2A:44-125, wherein Poly-Flex asserted a lien in the amount of $390,245.04. Poly-Flex subsequently reduced the amount of its lien to $384,981.60.
Subsequent to the filing of Poly-Flex's lien claim notices, Kemenash ceased all work on the Project. MUA demanded that Kemenash reman the job, and notified Kemenash of its intention to declare a default. Kemenash did not reman the job, the MUA declared Kemenash in default, and further demanded that the FIA, as surety, complete the contract pursuant to the obligations of the Performance and Payment Bond. The FIA agreed to discharge its obligations to the MUA under its performance bond to complete the Project. A "Takeover Agreement" between the MUA and FIA was executed on June 6, 1991. The FIA contracted with additional contractors, including the aforementioned Liner Company, to complete the Project. The FIA completed the Project and it was accepted by the MUA by resolution dated October 7, 1992.
Poly-Flex filed the instant action on July 29, 1991, jurisdiction vesting in this court pursuant to 28 U.S.C. § 1332. Subsequently, defendant FIA paid to Poly-Flex $376,193.04. Of that amount, $366,581.28 represented payment in principal and $9,611.76 payment in interest. Poly-Flex has since readjusted the total amount it claims due under the contract with J.H. Water, arriving at $380,668.08. As such, the amount in principal currently in dispute is $14,086.80.
Disagreements over both law and fact arise in this controversy. First, the parties disagree over the factual showing that need be made under the New Jersey Bond Act, N.J.S.A. 2A:44-143 et seq., in order for Poly-Flex to collect funds on the statutory bond held by FIA. Second, the parties disagree over whether Poly-Flex is able to make such a showing. Clearly the former issue requires resolution before the latter can be addressed. As such, these issues are respectively addressed below.
It is initially necessary to lay out the standards governing motions for summary judgment. A court may grant summary judgment only when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir.1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir.1983). In deciding whether there is a disputed issue of material fact the court must view all doubt in favor of the non-moving party. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n. 2 (3d Cir.1983), cert. denied, 465 U.S. 1091, 104 S.Ct. 2144, 79 L.Ed.2d 910 (1984); Smith v. Pittsburgh Gage & Supply Co., 464 F.2d 870, 874 (3d Cir.1972). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).
Supreme Court decisions mandate that "a motion for summary judgment must be granted unless the party opposing the motion can produce evidence which, when considered in light of that party's burden of proof at trial, could be the basis for a jury finding in that party's favor." J.E. Mamiye & Sons, Inc. v. Fidelity Bank, 813 F.2d 610, 618 (3d Cir.1987) (Becker, J., concurring) (citing Anderson, 477 U.S. 242, 106 S.Ct. 2505 and Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Moreover, once the moving party has carried its burden of establishing the absence of a genuine issue of material fact, "its opponent must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Thus, if the nonmovant's evidence is merely "colorable" or is "not significantly probative," the court may grant summary judgment. Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2511.
Prerequisite to addressing the factual dispute in this matter is the resolution of the parties competing interpretations of the New Jersey Bond Act, codified at N.J.S.A. 2A:44-143 et seq. (hereinafter the "Act"). Two sections of the Act underlie the instant dispute. Section 44-143, entitled "Additional bond for payment of claims for labor, materials and supplies; waiver," provides in relevant part:
Plaintiffs argue that these sections, read together, extend bond coverage to any subcontractor who supplies materials under a public contract, whether or not such materials are physically incorporated into the project. Defendants counter that the code sections extend coverage only to the extent that supplied materials are physically incorporated into the project. While this issue has been addressed by courts in other jurisdictions within the context of similar statutes, under...
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Annual survey of fidelity and surety law, 1993.
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