U.S. ex rel. Metric Elec. v. Enviroserve, Inc.

• Decision Date: 24 November 2003
• Docket Number: No. CIV.A.01-10616-GAO.,CIV.A.01-10616-GAO.
• Citation: 301 F.Supp.2d 56
• Parties: UNITED STATES for the use and benefit of METRIC ELECTRIC, INC., Plaintiff, v. ENVIROSERVE, INC. and National Union Fire Insurance Company of Pittsburgh, Defendants.
• Court: U.S. District Court — District of Massachusetts

301 F.Supp.2d 56

UNITED STATES for the use and benefit of METRIC ELECTRIC, INC., Plaintiff, v. ENVIROSERVE, INC. and National Union Fire Insurance Company of Pittsburgh, Defendants.

No. CIV.A.01-10616-GAO.

United States District Court, D. Massachusetts.

November 24, 2003.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

John P. Connelly, Peabody & Arnold LLP, Boston, MA, for Enviroserve, Inc., National Union Fire Insurance Co., Pittsburgh, Defendants.

Anthony M. Metaxas, Joel Rosen, Metaxas, Norman & Pidgeon, Beverly, MA, Christian H. Pedersen, Beverly, MA, for Metric Electric, Inc, United States for the use and benefit of Metric Electric, Inc., Plaintiffs.

MEMORANDUM OF DECISION

TIMOTHY BELCHER DYK, Circuit Judge.¹

The plaintiff in this case, Metric Electric, Inc. ("Metric") asserts claims under the Miller Act (40 U.S.C. § 3133)² and Massachusetts Unfair and Deceptive Trade Practices Law (M.G.L. c. 93a, §§ 2, 11) against the defendant surety, National Union Fire Insurance Company of Pittsburgh ("National Union"). The plaintiff has abandoned its claims against the defendant general contractor, EnviroServe, Inc. ("EnviroServe"). The parties agreed to trial without a jury. I make the following findings of fact and rulings of law pursuant to Rule 52 of the Federal Rules of Civil Procedure.

FINDINGS OF FACT

I. The Parties and the Subcontract

1. The plaintiff, Metric, is a corporation organized under the laws of Massachusetts with a principal place of business in Georgetown, Massachusetts. (Pretrial Order, Agreed Facts p. 6.)

2. The defendant, National Union, is a corporation organized under the laws of Pennsylvania with a principal place of business in New York, New York. (Pretrial Order, Agreed Facts p. 6.)

3. AIG Technical Services, Inc. ("AIG") is the parent company of National Union. (Tr. 1, p. 3, ll. 7-8.)

4. The defendant, EnviroServe, was a corporation organized under the laws of Maryland with a principal place of business in Sykesville, Maryland. (Pretrial Order, Agreed Facts p. 6.)

5. EnviroServe is no longer in business, and Metric does not seek to recover from EnviroServe on any of the claims brought in this action. (Tr. 1, p. 56, ll. 3-12.)

6. On August 24, 1999, the Army Corps of Engineers ("the ACOE") entered into a contract with EnviroServe to renovate a barracks known as Building 15 located at the United States Army Soldier Systems Center in Natick, Massachusetts ("the Project"). (Pretrial Order, Agreed Facts p. 6; Pl.Ex. 1).

7. On August 24, 1999, National Union agreed to serve as surety for the Project and issued a Miller Act bond ("the bond") in accordance with 40 U.S.C. § 270a (since amended and moved to 40 U.S.C. § 3131) for the sum of $837,946.80. (Pretrial Order, Agreed Facts p. 6; Pl.Ex. 22). The bond stated that the "Surety [National Union] binds itself, jointly and severally with the Principal [EnviroServe], for payment" up to the "full amount of the penal sum." (Pl.Ex. 22.) The bond further provided that it was "for the protection of persons supplying labor and material ... [as] required under the Act ... (40 U.S.C. 270a-270e)." Id. at 2.

8. On October 5, 1999, Metric entered into a contract ("the subcontract") for $293,406.00 with EnviroServe under which Metric agreed to perform electrical work on the Project. A subsequent change order, executed on March 8, 2000, increased the value of the subcontract to $305,000.00. (Pretrial Order, Agreed Facts p 6.)

9. The subcontract provided in relevant part that:

a. "The Contractor [EnviroServe] shall pay the Subcontractor [Metric] each progress payment within seven (7) working days after the Contractor receives payment from the Owner [the ACOE]." (Pl.Ex. 1, Art. 11.3.)

b. "If the Subcontractor persistently or repeatedly fails or neglects to carry out the Work ... or otherwise to perform in accordance with this Agreement and fails within seven (7) days after receipt of written notice to commence and continue correction of such default or neglect ... the Contractor may, after seven (7) days following receipt by the Subcontractor of an additional written notice ... terminate the Subcontract and finish the Subcontractor's Work .... If the unpaid balance of the Subcontract Sum exceeds the expense of finishing the Subcontractor's Work, such excess shall be paid to the Subcontractor, but if such expense exceeds such unpaid balance, the Sub contractor [sic] shall pay the difference to the Contractor." (Pl.Ex. 1, Art. 7.2.1.)

c. "Based upon applications for payment submitted to the Contractor by the Subcontractor, corresponding to Applications for Payment submitted by the Contractor to the Architect, and Certificates for Payment issued by the Architect, the Contractor shall make progress payments on account of the Subcontract Sum to the Subcontractor ...." (Pl.Ex. 1, Art. 11.1.)

d. "Provided an application for payment is received by the Contractor not later than the 23rd day of a month, the Contractor shall include the Subcontractor's Work covered by that application in the next Application for Payment which the Contractor is entitled to submit to the Architect. The Contractor shall pay the Subcontractor each progress payment within seven (7) working days after the Contractor receives payment from the Owner [the ACOE]." (Pl.Ex. 1, Art. 11.3.)

1. The subcontract did not contain any provision for attorneys' fees in the event of litigation between EnviroServe and Metric. (Pl.Ex. 1.) The bond also did not provide for attorneys' fees in the event of litigation between Metric and National Union. (Pl.Ex. 22.)

II. Metric's Work on the Project

2. Metric's work on the Project consisted primarily of performing temporary wiring, electrical demolition and repairs and installing conduit. (Pl.Ex. 4, 5 and 6; Tr. 1, p. 81, ll. 21-23; p. 124, ll. 11-12; p. 134, ll. 8-16).

3. On December 13, 1999, Metric began work on the Project. Metric had workers at the site on December 13-15, 21, 23, 27, 29 and 30; January 7 and 24-27; February 14, 16, 17, 24 and 25; March 1, 10, 17, 20-22 and 29; April 3-5, 11, 12, 14, 17-21 and 24-28; May 1-5, 8-12 and 15-18. (Pl.Ex. 16.) Metric's last day working on the project was May 18, 2000. Id.

4. When Metric began work on the Project, the Project was already behind schedule. (Tr. 1, p. 199, ll.6-11.) Asbestos abatement and the construction of certain steel-stud wall frames, both necessary predicates to some of Metric's work, had not been completed before Metric's arrival on the worksite. (Tr. 1, p. 23, ll. 11-20; Id. at p. 200, l.6 — p. 201, l. 11). Moreover, the building being renovated was not sufficiently weatherproof and its interior often became wet when it rained. (Tr. 1, p. 23, ll.11-23.) These factors combined were the major cause of delay in Metric's work under the subcontract. (Tr. 1, p. 23 ll. 17-20; Id. at p. 201, ll. 12-13).

5. Metric's president, Brian Sampson, decided that the building transformer was unsafe because of standing water in the transformer room. (Tr. 1, p. 23, l.21 — p.24, l.9.) Sampson discussed this concern with EnviroServe's project manager, John Adey, who agreed that the building transformer should be removed and that an alternate power source was required. (Tr. 1, p. 24, l.18 — p.25, l.3.) Metric acquired a weatherproof transformer from Boston Edison Company (now NSTAR Electric).

6. The ACOE issued two letters dated April 14 and 20, 2000 that complained of specific aspects of Metric's performance. (Def. Exs. 7 and 8). The ACOE issued a third letter on April 21, 2000, complaining of problems with EnviroServe's performance in general on the Project. (Def.Ex. 14.)

7. The April 14th letter from the ACOE to EnviroServe concerned only minor inconsistencies and technical defects in the submission of Metric's payrolls. It did not complain of any material defects in the quality of Metric's work. (Def.Ex. 8.)

8. The April 20th letter from the ACOE to EnviroServe addressed several small deficiencies in Metric's work. (Def.Ex. 7.) The ACOE project engineer on the Project, Steven Chase, concluded that the items listed in that letter were all "minor items." (Tr. 2, p. 98, ll.23-25.) These deficiencies were not material defects in Metric's work. Moreover, National Union did not introduce any evidence that additional costs were incurred to fix these deficiencies, or the amount of any such costs.

9. The April 21st letter from the ACOE to EnviroServe complained of a number of delays on specific aspects of the Project, including delays on work Metric was to perform under the subcontract. Specifically, the letter stated that installation of "electrical ceiling conduit" was several weeks behind schedule. (Def.Ex. 14.) Metric did not cause this delay.

10. Overall, Metric's work substantially complied with specifications, and Metric promptly addressed any deficiencies pointed out by either EnviroServe or the ACOE. (Tr. 1, p. 204, l.3 — p.205, l.2.)

III. Metric's Termination from the Project

1. As of May 18, 2000, the ACOE had approved and released $21,740.00 to EnviroServe for payment of work performed by Metric. (Def. Ex. 6; Tr. 2 at p. 27, ll. 9-23).

2. However, as of May 18, 2000, Metric had not received payment for any of the work it performed on the Project. (Tr. 1, p. 45, l.11 — p.46, l.17.)

3. On May 19, 2000, EnviroServe sent Metric a letter explaining that EnviroServe had "experienced a financial setback ... due to a non-payment issue with" another construction project on which it was working. (Pl.Ex. 14.) This letter stated that in lieu of payment from EnviroServe, "the Army has stepped forward and will be issuing a check to you on the 25th of this month in the amount of $20,000 in an effort to keep our job moving." Id.

4. On May 24, 2000, EnviroServe faxed information regarding a meeting scheduled for May 25, 2000, at which Mr. Sampson could pick up the $20,000 check issued by the ACOE. (Def.Ex. 3.)

5. Sampson did not attend this meeting and never received the $20,000. (Tr. 1,...