U.S. v. Allegheny Jefferson Millwork, LLC

• Decision Date: 31 March 2008
• Docket Number: Civil Action No. 06-875(RCL).
• Citation: 540 F.Supp.2d 165
• Parties: UNITED STATES of America, for the use and benefit of D.L.I. INC., Plaintiff, v. ALLEGHENY JEFFERSON MILLWORK, LLC, et al., Defendants.
• Court: U.S. District Court — District of Columbia

Page 165

540 F.Supp.2d 165

UNITED STATES of America, for the use and benefit of D.L.I. INC., Plaintiff,

v.

ALLEGHENY JEFFERSON MILLWORK, LLC, et al., Defendants.

Civil Action No. 06-875(RCL).

United States District Court, District of Columbia.

March 31, 2008.

Shawn C. Whittaker, Law Office of Shawn C. Whittaker, PC, Rockville, MD, for Plaintiff.

Geoffrey S. Gavett, Gavett & Datt, PC, Rockville, MD, for Defendants.

MEMORANDUM OPINION

ROYCE C. LAMBERTH, District Judge.

This matter comes before the Court on the parties' cross-motions for partial summary judgment. The Court has considered defendants' motion [25], plaintiff's consolidated opposition and motion [28, 29], defendants' consolidated reply and opposition [30, 31, 33], plaintiff's consolidated surreply and reply [32, 34], the entire record herein, and the applicable law. For the reasons set forth below, defendants' motion [25] will be GRANTED in part and DENIED in part; plaintiff's motion [28] will be DENIED.

BACKGROUND

This contract dispute arises from the recently-completed construction of an annex to the E. Barrett Prettyman Courthouse on Constitution Avenue in Washington, D.C. — in which, incidentally, this Court now sits. After securing the principal contract from the General Services Administration ("GSA"), Centex Construction Company ("Centex") engaged subcontractors to complete the project's various elements.¹ (Compl. ¶¶ 8, 10.) On October 17, 2004, Centex selected Allegheny Jefferson Millwork, LLC ("Allegheny"), a joint venture formed by two Pennsylvania corporations, to fabricate and install architectural millwork and casework.² (Def. Statement of Undisputed Mat. Facts ¶¶ 1, 2.) Allegheny turned to plaintiff D.L.I. Incorporated ("DLI") to supply labor for its portion of the project, and DLI then contracted (sub-sub-subcontracted) with Craftsmanship Unlimited ("Craftsmanship") and Shalom Carpentry ("Shalom"). (Id. ¶¶ 4, 5.)

Except where expressly indicated, the following facts are not in dispute.

1. Lump — Sum & Time and Materials Contracts

Allegheny subcontracted two groups of tasks to DLI: installation of materials fabricated by Allegheny on the first, fifth, and sixth floors, under a lump-sum contract, and installation of materials fabricated by another company on the second, third, and fourth floors, on a time and materials ("T & M") basis. (Corrigan Dep. 8-9; Lacy Dep. 13-14.) Initially, the parties verbally agreed to a price of $1,175,000 for the lump-sum contract work and to specific per hour rates for the T & M portion. (Compl. ¶ 12; Corrigan Dep. 24; Def. Statement of Undisputed Mat. Facts ¶ 8; Pl. Second Consol. Mem. 4.) DLI commenced performance on approximately December 5, 2004. (Id. at 20.) Allegheny emailed DLI a "scope of work" document four days later (Lacy Dep. 77-78.)

One of the joint venturers, Jefferson Millwork & Design, Inc. ("Jefferson"), had previously collaborated with DLI on construction of the Smithsonian's National Museum of the American Indian, and as of early 2005, Jefferson still owed DLI some amount of money for its services on that project. (See Corrigan Dep. 24, 27; Pl. Ex. 1.) In an email on December 22, 2004, Michael Corrigan — Jefferson's general manager and a manager of Allegheny — proposed that if Jefferson failed to remit the balance to DLI by January 9, 2005 (which it did not do), the Allegheny-DLI lump-sum contract price would rise to $1,250,000. (Corrigan Dep. 5, 6, 27, 29; Def. Ex. 11; Pl. Ex. 1.)

On February 12, 2005, Allegheny sent DLI a nine-page, unsigned, standard form subcontract. (Compl. ¶ 14; Def. Ex. 5.) DLI's president, Dale Lacy, signed and returned the contract, with extensive mark-ups and revisions, on April 5, 2005. (See Def. Ex. 5 at 1; Def. Ex. 6; Compl. ¶ 14.) Corrigan testified he signed the altered version on Allegheny's behalf "when we received it or thereafter" and filed it for accounting purposes. (Corrigan Dep. 37.) Allegheny did not return a signed copy to DLI until after DLI filed its complaint in this case, but Lacy apparently assumed his changes had been accepted in April. (Lacy Dep. 76; Def. Ex. 6.) DLI nonetheless asserts the parties have no valid written contract because it never received a signed copy back from Allegheny. (Lacy Dep. 76; Pl. First Consol. Mem. 13.)

To date, Allegheny has paid DLI $1,163,250 on the lump-sum contract. (See Def. Statement of Undisputed Facts ¶ 2; Pl. First Consol. Mem. 3.) Allegheny contends only $11,750 remains due. (Def. Statement of Undisputed Mat. Facts ¶ 11.) DLI, however, insists the true contract price is $1,250,000, and thus Allegheny still owes it $86,750. (Pl. Second Consol. Mem. 5.) DLI now seeks summary judgment on this issue. (Pl. First Consol. Mem. 2.)

2. Davis-Bacon Issues

The Davis-Bacon Act ("Davis-Bacon"), 40 U.S.C. section 3141 et seq., requires that workers on most District of Columbia or federally-assisted construction contracts be paid no less than the prevailing wage and fringe benefit rates in their project's geographic area. 40 U.S.C. § 3142 (2008). See also 29 C.F.R. § 5.5 (2008) (implementing regulations).

At their first meeting on October 5, 2004, Centex informed Allegheny that Davis-Bacon rates would apply to the courthouse project. (Corrigan Dep. 39-40.) Allegheny, in turn, notified DLI, faxing the appropriate wage tables on October 5, 2004 and again on January 5, 2005. (Def. Statement of Undisputed Mat. Facts ¶¶ 15, 16; Pl. First Consol. Mem. 2.) Lacy, however, claims he first learned Davis-Bacon applied to the courthouse project in February 2005. (Lacy Dep. 29-30, 39-40.) Around that time, two laborers employed by one of DLI's subcontractors complained of underpayment to a GSA representative. (Lacy Dep. 30-32; Corrigan Dep. 48.)

Many of DLI's own laborers and its subcontractors' laborers had traveled from outside the Washington, D.C. area to work on the courthouse project. (Lacy Dep. 52-53.) Thus, they received per diem in addition to their wages and other fringe benefits. (See id.) Allegheny and DLI initially assumed that this per diem could count toward the Davis-Bacon minimum fringe benefit figure, but first GSA, and later the Department of Labor ("DOL"), disagreed. (Pl. First Consol. Mem. 4; Def. Resp. to Pl.'s Statement of Undisputed Mat. Facts 6.) Over the next few months, the parties discussed the Davis-Bacon issue repeatedly, (Lacy Dep. 35-37; Corrigan Dep. 50-52), and Lacy claims he informed Corrigan verbally, though never in writing, that if DOL's position was correct, DLI would need to stop work and renegotiate the entire project, (Lacy Dep. 35-37). Throughout this period, Corrigan represented to Lacy that Allegheny would continue to advocate the parties' joint position to DOL and suggested that it might shoulder some portion of any ultimate liability.³ (Corrigan Dep. 55-56.) To assist with its advocacy efforts, Allegheny retained counsel who produced two documents — an "advocacy letter" marshaling legal authority for the parties' position and a client opinion letter acknowledging the issue was, legally, an open one — both of which Allegheny provided to DLI. (Corrigan Dep. 59-60.)

On September 2, 2005, Centex notified Allegheny that due to its potential Davis-Bacon claim liability, it would withhold further payments to Allegheny pending resolution of DOL's investigation. (Def. Ex. 11.) Thereafter, Corrigan offered to contribute to any finalized DOL claim against DLI, provided the parties signed mutual releases. (Corrigan Dep. 54-55.) No such releases were signed. (Id. at 55.) In January 2006, Corrigan emailed Lacy a settlement proposal. (Pl. Ex. 4.) Indicating this was a "conditional concept," he sketched out a sequence of events that would include Allegheny's indemnifying DLI against the Davis-Bacon claims. (Id.) The following day, Lacy firmly rejected this proposal by email.⁴ (Def. Ex. 20.) At some point afterward, the two men met in person and resumed negotiations. (Lacy Dep. 44.) Although he made notes of their discussion, Corrigan maintains they did not reach an agreement, (Corrigan Dep. 106), and the deal Lacy describes was expressly conditioned on Corrigan's obtaining approval from Jefferson's joint venture partner. (Lacy Dep. 48).⁵ DLI now insists the parties formed a "contract" under which Allegheny would pay DLI $300,000 and assume all liability to DOL on the Davis-Bacon claim. (Pl. First Consol. Mem. 5, 9.)

On March 29, 2006, DOL investigator Bruce Dory emailed Allegheny a preliminary total of $191,727.46 for the Davis-Bacon claims against DLI and its subcontractors. (Def. Ex. 12.) Coincidentally, on February 9, 2006, DLI submitted an invoice to Allegheny for $191,909.41. (Def. Ex. 7 at 14.) The "job name" on that invoice is "Prettyman Restitution," and the description references only "millwork installation." (Id.) Allegheny contends — and DLI evidently concedes — that DLI issued this invoice based on its prospective Davis-Bacon liability. (See Def. Statement of Undisputed Mat. Facts ¶ 12 (describing basis of invoice number 4592 as "Davis Bacon charges by DOL — Listed as `Millwork Installation in invoice'"); Pl. Second Consol. Mem. 7 (responding that "DLI H disputes the amount of the DOL claim").)

Soon afterward, on May 9, 2006, DLI sued Allegheny and various sureties⁶ in this Court. Its complaint alleged breach of contract and quantum meruit, and it also, sought to collect against Centex and Allegheny's surety bonds. All defendants answered on June 1.

As the case proceeded through discovery, the underlying factual scenario continued to develop. On March 20, 2007, DOL served a due process letter on Centex stating that its investigation had identified $196,509.99 in unpaid Davis-Bacon fringe benefits. (Def. Ex. 14.) In April, to prevent the government's continued withholding of payments on the courthouse project, Allegheny and Centex notified DOL that they intended to pay the $196,509.99 into an escrow account pending final resolution. (See Def. Ex. 15.) On May...