Transamerica Premier Ins. Co. v. Ober

• Decision Date: 19 July 1995
• Docket Number: Civ. No. 93-342-P-C.
• Citation: 894 F. Supp. 471
• Parties: TRANSAMERICA PREMIER INSURANCE COMPANY, Plaintiff, v. Thomas J. OBER, et al., Defendants.
• Court: U.S. District Court — District of Maine

894 F. Supp. 471

TRANSAMERICA PREMIER INSURANCE COMPANY, Plaintiff, v. Thomas J. OBER, et al., Defendants.

Civ. No. 93-342-P-C.

United States District Court, D. Maine.

July 19, 1995.

James D. Poliquin, Anne M. Carney, Norman, Hanson & Detroy, Portland, ME, John V. Church, Robert F. Carney, Whiteford, Taylor & Preston, Baltimore, MD, for plaintiff.

Thomas J. Ober, Kennebunk, ME, pro se.

Thomas A. Dennison, East Orleans, MA, pro se.

Gerald F. Petruccelli, Petruccelli & Martin, Portland, ME, David H. Fromm, Chalos & Brown, New York City, for defendant Henry Marinet.

William H. Welte, Welte & Welte, Camden, ME, for defendant Local Towing Corp. Michael X. Savasuk, Bradley & Savasuk, Portland, ME, Dante Mattioni, Stephen M. Martin, Mattioni, Mattioni & Mattioni, Philadelphia, PA, for defendant C & G Excavating Inc.

MEMORANDUM AND ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

GENE CARTER, Chief Judge.

Plaintiff Transamerica Premier Insurance Company ("Transamerica") brings this interpleader action asking the Court to determine the proper distribution of the penal sum of a payment bond issued by Transamerica to East Coast Marine ("ECM") as a requirement of ECM's contract with the United States for a dredging project on the Saco River. Now before this Court is Transamerica's Motion for Partial Summary Judgment (Docket No. 115) which asks this Court to enter judgment as a matter of law on three matters: (1) whether Defendants Henry Marine Services ("Henry Marine") and C & G Excavating, Inc. ("C & G") are entitled to recover under the performance bond issued by Transamerica for the dredging project;¹ (2) whether Defendant C & G is entitled to recover a sum from the payment bond to cover the loss of a tender boat, a pipeline barge, and an amount of pipeline; and (3) whether any of the claimants are entitled to recover attorneys' fees from Transamerica.

The Court of Appeals for the First Circuit has recently explained once again the workings and purposes of the summary judgment procedure:

Summary judgment has a special niche in civil litigation. Its "role is to pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required." Wynne v. Tufts Univ. Sch. of Med., 976 F.2d 791, 794 (1st Cir.1992), cert. denied ___ U.S. ___, 113 S.Ct. 1845, 123 L.Ed.2d 470 (1993). The device allows courts and litigants to avoid full-blown trials in unwinnable cases, thus conserving the parties' time and money, and permitting courts to husband scarce judicial resources.

A court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c)....

Once a properly documented motion has engaged the gears of Rule 56, the party to whom the motion is directed can shut down the machinery only by showing that a trialworthy issue exists. See National Amusements v., 43 F.3d 731, 735 (1st Cir. 1995). As to issues on which the summary judgment target bears the ultimate burden of proof, she cannot rely on an absence of competent evidence, but must affirmatively point to specific facts that demonstrate the existence of an authentic dispute. See Garside v. Osco Drug. Inc., 895 F.2d 46, 48 (1st Cir.1990). Not every factual dispute is sufficient to thwart summary judgment; the contested fact must be "material" and the dispute over it must be "genuine." In this regard, "material" means that a contested fact has the potential to change the outcome of the suit under the governing law if the dispute over it is resolved favorably to the nonmovant. See United States v. One Parcel of Real Property with Buildings, 960 F.2d 200, 204 (1st Cir.1992). By like token, "genuine" means that "the evidence about the fact is such that a reasonable jury could resolve the point in favor of the nonmoving party...." Id.

When all is said and done, the trial court must "view the entire record in the light most hospitable to the party opposing summary judgment, indulging all reasonable inferences in that party's favor," Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.1990), but paying no heed to "conclusory allegations, improbable inferences, or unsupported speculation," Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990). If no genuine issue of material fact emerges, then the motion for summary judgment may be granted.

... The summary judgment standard requires the trial court to make an essentially legal determination rather than to engage in differential factfinding....

McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 314-15 (1st Cir.1995). Accordingly, this Court will review the facts in a light most favorable to Defendants, who are the nonmoving parties here. A statement of the material facts, as presented to this Court on this motion, follows.

I. MATERIAL FACTS

In 1992, the United States awarded a contract to ECM under which ECM would dredge certain parts of the Saco River in Maine. As required by the Miller Act, 40 U.S.C. §§ 270a-270d, ECM obtained two bonds, which were issued by Transamerica, to secure the project. The "payment bond" issued by Transamerica on behalf of ECM was issued for a penal sum of $324,794.50 and the "performance bond" was issued for a penal sum of $649,589.00.

C & G entered into a Bareboat Charter Party Agreement ("Charter Agreement") under which ECM would lease from C & G the dredge AMBER II, the tender boat LITTLE GEORGE, and, it is alleged, a pipeline barge, pipeline, and certain other equipment to be used on the project. ECM entered into a towage agreement with Defendants Henry Marine and EL/CAP Towing and Transportation ("EL/CAP") to tow the equipment leased from C & G from Delaware to Saco, Maine. As a result of two separate incidents, the pipeline barge, the tender boat, approximately 5500 feet of pipeline, and other equipment on these boats were lost at sea.² In addition, ECM defaulted on its agreement with C & G not only by failing to return the leased property in the condition in which it was delivered, but also by failing to pay for the charter hire and failure to repair the damage to the leased barge.

ECM failed to complete the dredging project³ and did not fully pay its subcontractors and suppliers. Many of these subcontractors filed claims with Transamerica on the payment bond; the total amount of the claims exceeds the penal sum on the payment bond.⁴ Transamerica brought this interpleader action, naming the claimants as defendants and seeking to deposit the penal sum of the payment bond, as it is presently calculated, with the Court to be distributed to the claimants and to be discharged from any further liability on the payment bond.

II. DISCUSSION

In opposition to Transamerica's Motion to Fix the Amount of the Bond (Docket No. 3), C & G and Henry Marine claimed that they are entitled to recover, not only under the payment bond but under the performance bond as well. Although this Court granted, in part, Transamerica's Motion to Fix the Amount of the Bond by establishing the amount as the remaining penal sum on the payment bond (Docket No. 60), the Court also permitted C & G and Henry Marine to pursue their performance bond claims through counterclaims. Transamerica now seeks partial summary judgment on the counterclaims. Transamerica also seeks summary judgment against C & G on its claim for recovery for the loss of the tender boat, pipeline, and barge, arguing that such equipment constitutes "capital equipment" rather than "material" and, accordingly, that C & G cannot seek recovery for their loss under a Miller Act payment bond. Finally, Transamerica seeks summary judgment on the issue of whether C & G or any other party to the interpleader is entitled to attorneys' fees.

A. The Performance Bond

Transamerica asserts that C & G, Henry Marine, and the other subcontractors and suppliers not paid by ECM are not entitled to any recovery on the performance bond and that any recovery they may have is restricted to the penal sum of the payment bond. The Miller Act, 40 U.S.C. §§ 270a-270d, specifies two different types of bonds that all prime contractors in certain government construction contracts must obtain:

(1) A performance bond with a surety or sureties satisfactory to the officer awarding such contract, and in an amount as he shall deem adequate, for the protection of the United States.

(2) A payment bond with a surety or sureties satisfactory to such officer for the protection of all persons supplying labor and material in the prosecution of the work provided for in said contract for the use of each such person.⁵

40 U.S.C. § 270a(a).⁶ The purpose of requiring payment bonds is to protect suppliers of material and labor who are unable to acquire a "mechanics' lien" against any government property at issue in the contract. U.S. v. Munsey Trust Co., 332 U.S. 234, 241, 67 S.Ct. 1599, 1602-03, 91 L.Ed. 2022 (1947). The Miller Act replaced the Heard Act which had required prime contractors to obtain only one bond, which would secure both the payment of subcontractors and suppliers and the prime contractor's performance.

The small amount of case law in the district courts on the ability of a subcontractor or supplier to recover on a performance bond is essentially divided on the issue; two cases support recovery, and three reject it. In addition the Court of Appeals for the Eight Circuit has, on two occasions, held that subcontractors and suppliers may not recover under a Miller Act performance bond. The earliest case on this question, U.S. ex rel. Hines Lumber Company v. Kalady Construction Co., 227 F.Supp. 1017 (N.D.Ill. 1964), concluded that the plaintiff there could recover the salaries of four laborers under the performance bond. Noting that courts have always applied a liberal...