U.S.A For The Use And Benefit Of Wfi Ga. Inc v. The Gray Ins. Co.

Decision Date24 March 2010
Docket NumberCivil Action No. 107-cv-02445-JOF.
PartiesUNITED STATES of America FOR the USE AND BENEFIT OF WFI GEORGIA, INC. and Capital Computer Group, LLC Plaintiffs,v.The GRAY INSURANCE COMPANY, et al., Defendants.
CourtU.S. District Court — Northern District of Georgia

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Deborah S. Butera, Edward A. Stone, Shapiro Fussell Wedge Smotherman Martin & Price, Patrice Russell Walker, J. Marbury Rainer, Parker Hudson Rainer & Dobbs, Atlanta, GA, Joseph J. Cassioppi, Fredrikson & Byron, P.A., Minneapolis, MN, for Plaintiffs.

Aldos L. Vance, Starnes & Atchison, Birmingham, AL, Steven Bradley Shipe, Wagner Johnston & Rosenthal, Atlanta, GA, for Defendants.

OPINION & ORDER

J. OWEN FORRESTER, Senior District Judge.

This matter is before the court on Plaintiff Kratos Southeast Inc.'s 1 motion for summary judgment [113]; Defendant Gray Insurance Co.'s motion for summary judgment [117]; Plaintiff Capital Computer Group, LLC's motion for summary judgment [126]; Plaintiff Capital Computer Group, LLC's motion to strike or disregard [130]; Defendant Gray Insurance Co.'s motion to vacate [135]; Defendant Gray Insurance Co.'s motion to supplement [152]; Defendant Gray Insurance Co.'s second motion to supplement [154]; Third-Party Defendant Joseph Terry's motion to dismiss [162]; and Third-Party Defendants Aaron and Tammie Terry's motion to dismiss [167].

I. Factual and Procedural Background

The instant action is a surety matter under the Miller Act, 40 U.S.C. § 3133. In September of 2005, the Centers for Disease Control and Prevention (CDC) entered into a contract with Defendant Government Technical Services, LLC (GTS'), under which GTS was to furnish labor and materials and perform the work required for construction of a BAS/LAN Fire Alarm System on the CDC's Atlanta campus. Under the Miller Act, a contractor working on government property is required to execute a payment bond, and Defendant Gray Insurance Co. (Gray) acted as GTS' surety on the project. GTS, as the general contractor, hired Plaintiff Kratos Southeast, Inc. (Kratos) as a subcontractor to perform part of the necessary work on the fire alarm system. At the end of 2007, the Kratos and GTS relationship ended. Subsequently Plaintiff Capital Computer Group, LLC (CCG) and Code 4 Systems, Inc. (Code 4), a nonparty, became involved in finishing the work started by Kratos.2 CCG and Code 4 stopped any involvement with the CDC project after non-payment by GTS. GTS was terminated by the CDC on February 27, 2009. D.E. [113], Ex. E, at 28.

On October 3, 2007, Kratos sued both GTS and Gray under the Miller Act, alleging that Kratos had performed under its contract with GTS but was not compensated. Defendants Gray and GTS counterclaimed, alleging that Kratos failed to timely complete cable installations in a workmanlike manner and, therefore, breached the agreement. On July 16, 2008, CCG also sued GTS and Gray, alleging that it had not been paid for the work it performed on the alarm system after Kratos was terminated. This court consolidated Kratos and CCG's cases against GTS and Gray on October 14, 2008. In December of 2008, Kratos and GTS arbitrated Kratos' claim against GTS, and Kratos received a favorable arbitration award. GTS filed a third-party complaint against Joseph, Aaron, and Tammie Terry.3 Kratos filed a motion for summary judgment against Gray on March 19, 2009.4 Gray filed a motion for summary judgment against CCG on March 19, 2009, and CCG filed a cross-motion for summary judgment against both Gray and GTS on April 2, 2009.5 A few days later, CCG also filed a motion to strike or to disregard some of the exhibits relied upon by Gray in its motion for summary judgment. On April 13, 2009, Gray moved to vacate the arbitration award received by Kratos. Finally, Joseph, Aaron, and Tammie Terry filed motions to dismiss for lack of personal jurisdiction in June and July of 2009 respectively.

II. Motion for Summary Judgment [113] and Motion to Supplement [154]

This court must first consider Gray's motion to supplement its response brief [154] before addressing the relevant facts and merits of Kratos' motion for summary judgment [113]. Under this court's Local Rules, a party moving for summary judgment must include a statement of material facts with its motion. L.R. N.D. Ga. 56.1.B(1). The respondent, along with its responsive brief, needs to file a response to the movant's statement of undisputed facts. L.R. N.D. Ga. 56.1.B(2)a. That response “shall contain individually numbered, concise, non-argumentative responses corresponding to each of the movant's numbered undisputed material facts.” L.R. N.D. Ga. 56.1.B(2)a(1). If this is not done, the court deems each of the movant's facts admitted. L.R. N.D. Ga. 56.1.B(2)a(2). Kratos provided the court with its required statement of material, undisputed facts. While the respondent, Gray, offered its own statement of additional facts which it contends are material and present a genuine issue for trial, it did not respond to Kratos' material statement of facts.

In its reply brief filed on April 27, 2009, Kratos noted that Gray failed to comply with the Local Rules. Gray subsequently filed this June 3, 2009 motion to supplement its response brief, contending that its response brief and attached statement of material facts and exhibits directly and sufficiently refute Kratos' factual allegations. [I]n an abundance of caution,” however, Gray desires to supplement the record to include its response to Kratos' statement of material facts. Kratos argues that Gray should not be allowed to supplement and should be deemed to have admitted the facts in Kratos' statement of material facts because (1) Gray has not provided evidence of “excusable neglect” and (2) Gray did not attempt to supplement until well after the summary judgment period closed-over a month after Kratos pointed out Gray's failure to comply with L.R. 56.1.

Under L.R. 56.1.A, parties shall not be permitted to file supplemental briefs and materials ... except upon order of the court.” Local Rule 56.1 exists to allow courts to determine quickly whether there are any facts upon which both parties agree, and, if so, whether judgment as a matter of law is appropriate. While Gray has offered no reason for its failure to comply with the local rules, Gray is correct that its own statement of material facts, which cites to evidence as required by the rules, disputes many of Kratos' fact statements. Additionally, even “after deeming the movant's statement of undisputed facts to be admitted pursuant to Local Rule 56.1, the district court must [still] review the movant's citations to the record to determine if there is, indeed, no genuine issue of material fact.” Reese v. Herbert, 527 F.3d 1253, 1269 (11th Cir.2008) (internal quotations omitted). Accordingly, the court finds that it would be advantageous to the decision-making process if the court permits Gray to supplement. Further, Kratos does not contend that it would be prejudiced if Gray is allowed to supplement. Therefore, Gray's motion to supplement is GRANTED [154].

GTS and the CDC entered into a written contract in September of 2005, whereby GTS would act as the general contractor in charge of installing a BAS/LAN Fire Alarm System Integration at the CDC's Atlanta campus. In order for GTS to comply with the Miller Act, Gray issued a payment bond for the amount of $1,640,275.00. Kratos Complaint, Ex. A; Gray Answer, at ¶ 7. GTS hired Kratos as a subcontractor in December of 2005 to work on parts of the fire alarm system, including installation of a fiber optic network. D.E. [113], Ex. A. Kratos and GTS ended their relationship in 2007. GTS was later terminated by the CDC. D.E. [113], Ex. E, at 28. Kratos filed suit against GTS and Gray on October 3, 2007, alleging that it was owed money under its agreement with GTS, and that Gray was liable as GTS' surety.

The contract between GTS and Kratos contained an arbitration clause, requiring GTS and Kratos to arbitrate any controversy or claim relating to the subcontract. D.E. [113], Ex. A, at 12, ¶ 6.1. As early as 2008, Gray's former attorney, Ramsey Duck, was aware of Kratos' intent or desire to arbitrate. D.E. [133-8], at 2-3. In March of 2008, Gray's current attorney, Aldos Vance, sent an email to Kratos' attorney, Deborah Butera, with a revised discovery plan attached. D.E. [113], Ex. E, at 27. The unrevised edition indicated that Gray, Kratos, and GTS would be participating in arbitration. See id. at 20. The plan, as revised by Gray, stated that only Kratos and GTS would participate. Id. Ms. Butera responded that she was under the impression Gray would also take part, based on a prior conversation she had with Ramsey Duck. Id. at 12. In reply, Mr. Vance said that he would get back to her at a later date regarding Gray's participation in the arbitration. Id. On May 8, 2008, Kratos filed a Demand for Arbitration between it and GTS with the American Arbitration Association (“AAA”). See D.E. [113], Ex. E, at 9. A copy of the demand was sent to Gray, although the demand was filed against GTS only. Id.

The AAA issued a notice of arbitration on May 22, 2008, and on June 5, 2008, GTS filed a motion to stay the pending arbitration proceedings.6 D.E. [45]. Both Gray and Kratos filed responses opposing GTS' motion to stay. D.E. [47], [50]. In September of 2008, Kratos' attorney sent an email to Gray reminding Gray that its participation in the arbitration was desired. D.E. [113], Ex. E, at 10. The email stated the following:

As you are aware, I have repeatedly invited and encouraged Gray to participate in the arbitration of Kratos' claims. Gray has consistently declined to participate. ... Gray is welcome to participate in the arbitration. The process to do so is very easy and straightforward. Gray must simply consent to the arbitration in writing and agree to be bound by its outcome. The arbitrator was
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