Safe Environment, Amer. v. Employers Ins., Wausau

• Decision Date: 26 August 2003
• Docket Number: No. CIV.A. 02-30167-KPN.,CIV.A. 02-30167-KPN.
• Citation: 278 F.Supp.2d 121
• Parties: SAFE ENVIRONMENT OF AMERICA, INC., Plaintiff v. EMPLOYERS INSURANCE OF WAUSAU, A Mutual Company, Defendant
• Court: U.S. District Court — District of Massachusetts

278 F.Supp.2d 121

SAFE ENVIRONMENT OF AMERICA, INC., Plaintiff v. EMPLOYERS INSURANCE OF WAUSAU, A Mutual Company, Defendant

No. CIV.A. 02-30167-KPN.

United States District Court, D. Massachusetts.

August 26, 2003.

Michael K Callan, Doherty, Wallace, Pillsbury & Murphy, Springfield, for Safe Environment of America, Inc., Plaintiff.

Mark E. Draper, Annino, Draper & Moore, P.C., Springfield, for Employers Insurance of Wausau, Defendant.

Jerry B. Plumb, Jr., O'Connell & Plumb, P.C., Springfield, for Safe Environment of America, Inc., Plaintiff.

MEMORANDUM AND ORDER WITH REGARD TO DEFENDANT'S MOTION TO DISMISS, OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT (Document No. 5)

NEIMAN, United States Magistrate Judge.

Safe Environment of America, Inc. ("Plaintiff") brings this action against Employers Insurance of Wausau, A Mutual Company ("Defendant"), to recover on a payment bond executed by Eastern General Contractors ("Eastern") to the United States pursuant to the Miller Act, 40 U.S.C. §§ 270a to 270d (2001) (recently recodified at 40 U.S.C. §§ 3131, 3133 (2003)). A payment bond is meant to protect all persons supplying labor and material for work on a public building where the contract is for more than $100,000. See 40 U.S.C. § 3131(b)(2). Defendant has filed a motion to dismiss the action pursuant to Fed.R.Civ.P. Rule 12(b)(6) or, in the alternative, for summary judgment pursuant to Fed.R.Civ.P. Rule 56(c). For the reasons which follow, Defendant's motion will be allowed.¹

I. BACKGROUND

At some point prior to June 5, 2000, Eastern was awarded a contract with the Department of the Navy to perform certain work for a revitalization project at the Groton Submarine Base in Connecticut. (Document No. 4 ("Complaint") ¶ 6.) In connection with the contract, Eastern was required to post a Labor/Materials Payment Bond (hereinafter "the bond") to secure payment to all persons supplying labor and materials for the work provided under the contract. (Id. ¶ 8.) Defendant issued the bond, by which Eastern and Defendant bound themselves jointly and severally. (Id.) On June 5, 2000, Eastern entered into a subcontract with Plaintiff wherein Plaintiff agreed to provide all labor and materials relating to the abatement of asbestos and lead-containing materials at the project site. (Id. ¶ 10; Defendant's Facts (attached to Document No. 5) ¶ 5.).

By September of 2000, substantial changes to the project instituted by the Navy caused significant disruptions and delays. (Document No. 9 ("Plaintiff's Affidavit") ¶¶ 9-10). As a result, on February 16, 2001, Eastern and Plaintiff entered into a written agreement (hereinafter "the agreement") wherein Eastern promised to sponsor and prosecute a Request for Equitable Adjustment ("REA") to the Navy on Plaintiff's behalf. (Id., Exhibit C.)² The agreement also provided that payment or disallowance of the REA would extinguish all further obligations for adjustments and would operate as a full and complete release for all adjustments relating to Eastern's subcontract with Plaintiff. (See id. ¶ 14 and Exhibit C.) Finally, the agreement required Eastern to pay Plaintiff its portion of the REA within ten days of Eastern's receipt of an adjustment from the Navy. (See id. ¶ 15 and Exhibit C.)

In February of 2001, Plaintiff submitted information to Eastern substantiating an REA of approximately $1.1 million. (Id. ¶ 20.) In June of 2001, however, Eastern suspended Plaintiff's work and shortly thereafter, in July, hired two subcontractors to replace Plaintiff. (Id. ¶ 18.) One of the replacements used Plaintiff's asbestos and lead abatement plan until January of 2002. (Id. ¶ 19.)

On March 27, 2002, Eastern submitted an REA to the Navy—with respect to Plaintiff and other subcontractors—for approximately $2 million, $1.1 million of which was Plaintiff's portion. (Id. ¶ 33 and Exhibit H.) In early May, the Navy paid Eastern a settlement of approximately $1.5 million. (Id. ¶ 35, Exhibit H.) It appears that the $1.5 million applied both to the March 27th REA and a second REA also for approximately $2 million. (See id.)

At about the same time, on May 6, 2002, Plaintiff, evidently unaware of Eastern's efforts, sent a letter to Eastern demanding prosecution of its REA. (See id., Exhibit D.) On May 10, 2002, Eastern told Plaintiff that the REA had been submitted, that the Navy had disallowed Plaintiff's portion, and that Plaintiff's $1.1 million claim exceeded Plaintiff's actual costs for its work and was therefore false and fraudulent. (Id. ¶¶ 28, 35 and Exhibits E and F.) Shortly thereafter, on May 14, 2002, Plaintiff notified Defendant that it might file a claim on Eastern's bond. (Defendant's Facts ¶ 17 and Exhibit 2(B).) On June 6, 2002, Defendant requested documentation to support Plaintiff's threatened claim. (Id. ¶ 8 and Exhibit 2(C).)

On July 26, 2002, Plaintiff filed a civil action in the Hampden County Superior Court (C.A. No. 02-786) seeking damages from Eastern for money allegedly owed Plaintiff under the subcontract. It was not until September 11, 2002, however, during the discovery phase of that suit, that Plaintiff learned that Eastern had not only pursued the REA, but had received $1.5 million from the Navy. (Plaintiff's Affidavit ¶ 30 and Exhibit G.) Plaintiff now alleges that its $1.1 million claim was included in that settlement. (Document No. 8 ("Plaintiff's Facts") ¶¶ 28 and 29; Plaintiff's Affidavit ¶¶ 30 and 31 Exhibit G at 38.)

On October 18, 2002, about one month after learning that Eastern had received $1.5 million from the Navy, Plaintiff filed the instant Miller Act suit against Defendant in this court to recover on the bond. In due course, Defendant submitted the present motion to dismiss or for summary judgment, Plaintiff tendered an opposition, and the court heard oral argument.

II. STANDARDS OF REVIEW

In ruling on a Rule 12(b)(6) motion to dismiss, the court must accept as true all factual allegations in the plaintiff's complaint and construe all reasonable inferences in favor of the plaintiffs. See Gorski v. New Hampshire Dep't of Corrections, 290 F.3d 466, 473 (1st Cir.2002); Estate of Soler v. Rodriguez, 63 F.3d 45, 53 (1st Cir.1995). A dismissal for failure to state a claim is appropriate if it appears, according to the facts alleged, that the plaintiff cannot recover on any viable theory. Rumford Pharmacy, Inc. v. City of East Providence, 970 F.2d 996, 998 (1st Cir. 1992).

Pursuant to Rule 56(c), summary judgment is proper where the record reveals "that there is no sufficient issue as to any material fact and the moving party is entitled to judgment as a matter of law." The facts, and all reasonable inferences that may be drawn from them, must be viewed in a light most favorable to the non-moving party. Cooperman v. Individual, Inc., 171 F.3d 43 (1st Cir.1999). An issue is genuine where "the evidence is such that a reasonable party could return a verdict for the nonmoving party," and a fact is material where it "might affect the outcome of the suit under the governing law." Hayes v. Douglas Dynamics, Inc., 8 F.3d 88, 90 (1st Cir.1993). Absent any genuine issue of material fact, questions of law are appropriate for resolution on summary judgment. Jimenez v. Peninsular & Oriental Steam Nav. Co., 974 F.2d 221, 223 (1st Cir.1992).

III. DISCUSSION

Defendant's motion makes two essential arguments: (1) that the complaint, standing alone, fails to state a claim upon which relief may be granted and, therefore, should be dismissed pursuant to Rule 12(b)(6); and (2) that, in any event, summary judgment pursuant to Rule 56(c) is appropriate. Both arguments are grounded in the Miller Act's statute of limitations which states that "no such suit shall be commenced after the expiration of one year after the day on which the last of the labor was performed or the material was supplied." 40 U.S.C. § 3133(b)(4). The court will address each argument separately.

A. Rule 12(b)(6)

Defendant first argues that Plaintiff's complaint should be dismissed outright under Rule 12(b)(6) because of Plaintiff's failure to even allege that the suit on the bond was commenced within the limitations period specified in the Miller Act—"one year after the day on which the last of the labor was performed or the material was supplied"—a provision the First Circuit has described as being unambiguous. See GE Supply v. C & G Enters., Inc., 212 F.3d 14, 18 (1st Cir.2000). As Defendant points out, Plaintiff's complaint erroneously uses the statute's former language, i.e., that the claim was brought within one year of "the date of final settlement of the contract." (Complaint ¶ 15.)³ For its part, Plaintiff argues that, as directed by the Supreme Court, the Miller Act "must be construed liberally" for the purpose of "provid[ing] security for the payment of all persons who provide labor and material on public work," Illinois Sur. Co. v. John Davis Co., 244 U.S. 376, 380, 37 S.Ct. 614, 61 L.Ed. 1206 (1917), and that the complaint could easily be amended.

In the court's view, any time used in amending the complaint will not be well spent; the amendment will only result in the court having to confront Defendant's fully-briefed summary judgment argument. Accordingly, the court will proceed with its analysis as if the complaint has been amended so as to properly allege that suit was brought within "one year after the day on which the last of the labor was performed or the material was supplied." With this in mind, the court turns to that part of Defendant's motion which seeks summary judgment.

B. Rule 56(c)

In support of its summary judgment argument, Defendant contends that: the day Plaintiff last performed labor or supplied materials was June 29, 2001; Plaintiff did not commence this action until October 18, 2002, more than one year later; and, therefore, the action is barred by the Miller Act's one year statute of limitations. For the reasons which follow, the court agrees. The court also finds...