Surety v. Archer W. Contractors, LLC
Decision Date | 07 May 2018 |
Docket Number | Case No: 6:16-cv-1875-Orl-40KRS |
Parties | DEVELOPERS SURETY AND INDEMNITY COMPANY, Plaintiff, v. ARCHER WESTERN CONTRACTORS, LLC, Defendant. |
Court | U.S. District Court — Middle District of Florida |
This cause is before the Court on the following:
On April 13, 2018, the Court requested supplemental briefing regarding the application of Paragraph 6 of the Performance Bond. (Doc. 125). The parties both briefed the issue. (Docs. 126, 127). With briefing complete, the Court is fully advised on the premises. Upon consideration and review of the record as cited by the parties in their respective briefs, Plaintiff Developers Surety Insurance Company's motion is due to be denied, and Defendant Archer Western Contractors, LLC's motion is due to be granted.
This case arises out of a subcontract agreement gone wrong. In February 2012, Archer Western Contractors, LLC ("Archer") entered into a contract with the Florida Department of Transportation to work on the Central Florida Commuter Rail Transit Station Finishes Project (the "Sunrail Project"). (Doc. 82-5, p. 2).
In May 2012, Archer entered into a Subcontract Agreement (the "Subcontract") with Prince Land Services, Inc. ("Prince"), which required Prince, as subcontractor, to perform landscaping and irrigation work on the Sunrail Project. (Doc. 82-8, p. 2). On September 7, 2012, Developers Surety and Indemnity Company ("DSIC"), as surety, issued Subcontractor Performance Bond No. 504957P (the "Bond"). (Doc. 82-11). The Bond listed Prince as subcontractor, DSIC as surety, and Archer as obligee. (Id.). This case centers on the parties' rights and obligations vis-à-vis the Subcontract and Bond.
By May 2014, disputes arose relating to Prince's performance under the Subcontract, eventually leading to Archer defaulting Prince. (Docs. 120, 121). Archer thereafter engaged a third party to make up for Prince's alleged shortcomings. After obtaining a June 19, 2014, proposal from LaFleur Nurseries & Garden Center ("LaFleur"), Archer retained LaFleur to perform limited landscaping services at the Sanford, Florida,Sunrail station on June 28, 2014.1 (Docs. 82-17, 82-18). After Prince defaulted, LaFleur and Archer entered into a replacement subcontract (the "LaFleur Subcontract"), whereby LaFleur was hired to complete the work originally subcontracted to Prince. (Doc. 82-10). LaFleur and Archer exchanged communications regarding drafts of the proposed subcontract and pricing between July 14, 2014, and July 22, 2014. (Docs. 82-26, through 82-30). LaFleur signed the LaFleur Subcontract on July 25, 2014; Archer signed on July 29, 2014. (Doc. 82-10).
In the weeks before the LaFleur Subcontract was executed, Archer notified Prince and DSIC of its default. On July 3, 2014, Archer emailed Prince a "Notice of Default" letter, notifying Prince of numerous alleged failures of performance, which put Prince in default on the Subcontract. (Doc. 82-21). The Notice further instructed that if Prince did not cure the default within seventy-two hours, Archer would "take whatever steps it deems necessary to mitigate the damages caused by Prince's default." (Id. at p. 3).
On July 9, 2014, Archer sent DSIC a letter making a claim on the Bond ("Bond Claim") after Archer's default. (Doc. 82-24). DSIC received the Bond Claim on July 10, 2014. (Doc. 120, ¶ 16). In response, DSIC sent Archer a July 14, 2014, letter stating that the Bond Claim lacked sufficient documentation of Prince's alleged deficiencies and requesting more information. (Doc. 82-31). DSIC's July 14, 2014, letter also indicated that DSIC had "commenced a preliminary investigation," and advised that DSIC would formally respond to Archer's claim "within fifteen (15) calendar days of receipt of the[requested] documents." (Id.). Thereafter, Archer and DSIC did not communicate for months.
After learning of the LaFleur Subcontract, DSIC sent Archer a letter dated October 16, 2014, stating that the Bond was null and void due to Archer's (1) failure to provide the documentation requested by DSIC's July 14, 2014, letter, and (2) unauthorized, unilateral decision to replace much of the work performed by Prince under the Subcontract. (Doc. 83-32). The letter also avers that Archer's actions to replace Prince's Subcontract performance interfered with DSIC's rights under the Bond to mitigate damages caused by default. (Id.). Accordingly, DSIC formally denied Archer's Bond Claim. (Id.).
Upon completing its work on the Sunrail Project, Archer sent DSIC a letter dated August 29, 2016, demanding DSIC reimburse Archer $631,148.65—the cost to replace Prince's work—pursuant to the Bond. (Doc. 83-33).
The interplay between the Bond and Subcontract is critical to the question of whether either party breached their contractual obligations. The Subcontract set forth the following default protocol:
(Doc. 10-1, ¶¶ 8.1-8.2). The Bond outlines four alternative responses DSIC was authorized to undertake upon notice of Price's default:
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