U.S. for the United Statese & Benefit of Nw. Cascade Inc. v. Colamette Constr. Co.
| Decision Date | 08 October 2014 |
| Docket Number | Case No. 3:13-CV-01498-AA |
| Court | U.S. District Court — District of Oregon |
| Parties | UNITED STATES FOR THE USE AND BENEFIT OF NORTHWEST CASCADE INC., a Washington Corporation as assignee of DEWITT CONSTRUCTION, INC., a Washington Corporation, Plaintiff, v. COLAMETTE CONSTRUCTION COMPANY, an Oregon Corporation, and SAFECO INSURANCE COMPANY OF AMERICA, a New Hampshire Corporation, Defendants. |
Michael P. Grace
Michael J. Murphy
Meredith L. Thielbahr
Groff Murphy, PLLC
300 E. Pine Street
Seattle, Washington 98122
Attorneys for plaintiff
D. Gary Christensen
Michael 0. Mohr
Pursuant to Fed. R. Civ. P. 56(a), defendants Colamette Construction Company ("Colamette") and Safeco Insurance Company ("Safeco") move for summary judgment on plaintiff the United States for the Use and Benefit of Northwest Cascade Inc.'s ("NWC") claims.1 For the reasons set forth below, defendants' motion is granted and this case is dismissed.
On September 29, 2010, after a competitive bidding process, the Department of Veterans Affairs ("VA") selected Colamette as prime contractor for a new parking structure at a Federal facility ("Project"). On October 1, 2010, Colamette obtained a Miller Act payment bond with Safeco, in the amount of $7,313,371, as required under its contract with the VA ("Bond"). On April 7, 2011, Colamette subcontracted with DeWitt Construction, Inc. ("DeWitt") to furnish the labor, materials, and equipment necessary to drill shafts and install nail shoring for the Project's ground support system. DeWitt subsequently hired NWC, pursuant to a second-tier subcontractor agreement, to construct and install the Project's soil nail wall.
Once construction commenced, the parties discovered that the Project's site conditions differed from the VA's geotechnicalreport on which Colamette based its bid. Significantly, the site contained softer soils, requiring Colamette to change its design for the Project from a soil nail wall support system to a soldier pile wall support system. On August 29, 2011, Colamette began meeting with the VA to discuss design changes and upward adjustments to the prime contract price. The parties' negotiations were based, in part, on information regarding cost increases provided by Colamette's subcontractors. In other words, Colamette was relying on DeWitt to contribute complete cost-increase information for itself and NWC. Colamette repeatedly informed DeWitt and NWC that they would need to provide detailed documentation and support for any increased costs associated with design changes in accordance with particular format and deadlines provided by the VA.
On December 15, 2011, NWC presented two pricing proposals, the first pertaining to the installation of permanent tiebacks ("Installation Costs") and the second relating to an equitable adjustment for differing soil conditions ("Impact Costs"). On December 19, 2011, the VA's initial deadline, Colamette accepted NWC's Installation Costs but rejected the Impact Costs because NWC did not provide sufficient detail or credits for materials/labor that were deleted from the scope of work. On December 29, 2011, NWC furnished a revised proposal regarding its Impact Costs. On March 2, 2012, Colamette sent NWC a letter explaining that the December 29, 2011, revised Impact Costs were denied because they wererelayed too late and in an improper format.
On April 30, 2012, Colamette gave DeWitt and NWC a second chance to adequately support any delay or impact damages before furnishing a certified claim against the VA. Colamette therefore solicited "a new complete claim which will need to include everything . . . the same type of information as the original one and include any new ones." Hirte Decl. Ex. 5, at 1. Colamette expressly cautioned NWC that information for its late-filed Impact Costs must be resubmitted in order to be part of the agreed-upon settlement with the VA. DeWitt did not include any new documentation concerning NWC's Impact Costs in its adjusted calculations; however, NWC sent an amended request concerning its Installation Costs, which were included in Colamette's certified claim to the VA. Ultimately, the VA settled with Colamette for $2,027,174, an amount equal to approximately 91% of the initial total contract adjustment.
On May 4, 2012, DeWitt accepted a change order from Colamette for the redesign work associated with the Project's differing site conditions. The total contract price that Colamette agreed to pay DeWitt was adjusted upward by $998,461.62. On May 16, 2012, DeWitt executed a corresponding change order to NWC for the new tieback work in the sum of $382,335.39.
On August 29, 2012, NWC finished its portion of the Project. On January 8, 2013, DeWitt completed all required Project work. On January 24, 2013, DeWitt filed a $585,364.70 claim under the MillerAct with defendants against the Bond. On August 2, 2013, DeWitt submitted an amended notice regarding its Bond claim, requesting $372,163.48 and indicating for the first time that its claim was premised on the unpaid work of its subcontractors. On August 22, 2013, DeWitt and NWC executed a Memorandum of Understanding, which assigned NWC the exclusive rights to any monies received by DeWitt from defendants for Project work performed by NWC.
On August 26, 2013, NWC filed a complaint in this Court, alleging claims for: (1) Bond payment under the Miller Act; (2) quantum meruit; and (3) breach of contract. NWC seeks judgment against defendants in the amount of $372,163.48, plus costs, attorney fees, and prejudgment interest, for unpaid work performed on the Project. In February 2014, DeWitt and NWC entered into a Restated Memorandum of Understanding ("RMOU"), pursuant to which Dewitt purported to grant NWC an Article 9 Uniform Commercial Code ("UCC") security interest in any sums collected by DeWitt from defendants. On July 14, 2014, defendants filed the present motion for summary judgment.
Summary judgment is appropriate if the pleadings, depositions, affidavits, answers to interrogatories, and admissions on file, if any, show "that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Substantive law on an issue determines themateriality of a fact. T.W. Elec. Servs., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of a dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts that demonstrate a genuine issue for trial. Id. at 324.
Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec., 809 F.2d at 630.
Defendants argue that summary judgment is warranted because NWC did not independently furnish notice, timely or otherwise, of its Bond claim in accordance with the Miller Act. Defendants also assert that where, as here, a valid contract exists, allegations concerning quantum meruit are not cognizable. Moreover, defendants contend that DeWitt never effectuated a valid assignment to NWCbut, even assuming that it did, DeWitt waived its right to further payments for work performed through October 31, 2012.
NWC opposes defendants' motion because "NWC can stand in the shoes of DeWitt on its Miller Act Bond Claim" or, in the alternative, "recover against Colamette under quantum meruit." Pl.'s Resp. to Mot. Summ. J. 9-12. In addition, NWC argues that the RMOU "created an effective Article 9 security interest to NWC in all money due from Colamette and Safeco." Id. at 14. According to NWC, the progress payment waivers do "not limit [its] claim for [I]mpact [C]osts" because they included "pro tanto language." Id. at 17.
The Miller Act creates a cause of action for "[e]very person that has furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished under section 3131 of this title and that has not been paid in full." 40 U.S.C. § 3133(b)(1). It "represents a congressional effort to protect persons supplying labor and material for the construction of federal public buildings in lieu of the protections they might receive under state statutes with respect to the construction of nonfederal buildings." Ramona Equip. Rental, Inc. ex rel. U.S. v. Carolina Cas. Ins. Co., 755 F.3d 1063, 1067 (9th Cir. 2014) (citation and internal quotations omitted).
The Miller Act requires "[a] person having a directcontractual relationship with a subcontractor but no contractual relationship, express or implied, with the contractor" to furnish notice of a claim against the bond "within 90 days from the date on which the person did or performed the last of the labor or furnished or supplied the last of the material for which the claim is made." 40 U.S.C. § 3133(b) (2). "This notice requirement serves an important purpose: it establishes a firm date after which the general contractor may pay its subcontractors without fear of further liability to the materialmen or suppliers of those contractors." Ramona, 755 F.3d at 1067 (citation and internal quotations omitted). The notice requirement is strictly enforced, such that failure to comply therewith "is fatal to a Miller Act claim."...
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