United States ex rel. Duncan Pipeline, Inc. v. Walbridge Aldinger Co.

• Decision Date: 29 March 2013
• Docket Number: CASE NO. CV411-092
• Citation: United States ex rel. Duncan Pipeline, Inc. v. Walbridge Aldinger Co., CASE NO. CV411-092 (S.D. Ga. Mar 29, 2013)
• Parties: UNITED STATES OF AMERICA for the use and benefit of DUNCAN PIPELINE, INC., a Georgia corporation, and DUNCAN PIPELINE, INC., Plaintiffs, v. WALBRIDGE ALDINGER COMPANY, a Michigan corporation; TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, a Connecticut corporation; and LIBERTY MUTUAL INSURANCE COMPANY, a Massachusetts corporation, Defendants.
• Court: U.S. District Court — Southern District of Georgia

UNITED STATES OF AMERICA for the use and benefit of DUNCAN PIPELINE, INC. a Georgia corporation, and DUNCAN PIPELINE, INC., Plaintiffs, v. WALBRIDGE ALDINGER COMPANY, a Michigan corporation; TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, a Connecticut corporation and LIBERTY MUTUAL INSURANCE COMPANY, a Massachusetts corporation, Defendants.

CASE NO. CV411-092

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEORGIA SAVANNAH DIVISION

SO ORDERED: March 29, 2013

ORDER

Before the Court are Defendants' Partial Motion for Summary Judgment (Doc. 43) and an accompanying Daubert evidentiary motion (Doc. 46). Also before the Court is Plaintiffs' Motion to Strike Answer to Complaint and Affirmative Defense. (Doc. 54.) For the reasons that follow, Defendants' Motion for Partial Summary Judgment (Doc. 43) is GRANTED IN PART and DENIED IN PART. There exist genuine issues of material fact as to the interpretation of "claims arising from the improvement" in the partial unconditional waivers, a possible equitableadjustment as a damages measure, and the subcontract's exculpatory clause as it relates to the forseeability of project conditions. However, Defendants motion as to Plaintiffs' claims for conversion, punitive damages, and Prompt Pay Act is GRANTED and these claims are DISMISSED.

Defendants' request to exclude portions of Plaintiffs' expert (Doc. 46) is GRANTED IN PART and DENIED IN PART. The Court finds Mr. Rindt qualified. He may testify to the industry standards and practice pertaining to bell restraints and stored materials, but may not offer opinion as to his interpretation of the subcontract. In addition, Mr. Rindt may not testify as to any of the other remaining opinions challenged by Defendants.

Finally, Plaintiffs' Motion to Strike (Doc. 54) is DENIED. Duncan Pipeline knowingly and voluntarily signed a subcontract that contained a provision waiving any right to a jury trial. Such a waiver was conspicuous, fairly entered into by sophisticated parties with the ability to reject the subcontract.

BACKGROUND

The following undisputed facts form the basis of this action.¹ In 2009, Defendant Walbridge Aldinger Company("Walbridge"), entered into a contract with the United States Army Corps of Engineers ("Corps") and agreed to serve as the general contractor for a construction project ("Project") at Fort Stewart, Georgia. (Doc. 45 ¶ 1.) Pursuant to the requirements of the Miller Act, 40 U.S.C. § 3131(b), Walbridge, as principal, and Defendants Travelers Casualty and Surety Company of America ("Travelers") and Liberty Mutual Insurance Company ("Liberty Mutual") issued a payment bond to the Corps. (Id. ¶ 2.) On July 22, 2009, Walbridge entered into a subcontract with Duncan Pipeline, Inc. ("Duncan Pipeline") to supply labor and material for the Project's water distribution system. (Id. ¶ 3.) Duncan Pipeline's work included excavating trenches, installing water pipes, manholes, valves, fire hydrants as well as backfilling trenches. (Id. ¶ 4.)

The subcontract provides that "[Duncan Pipeline] shall not be entitled to receive any amount for overhead or profit or for any inefficiencies of loss of productivity and shall not assert any claim for overhead or profit or damages due to loss of productivity or inefficiency." (Doc. 1, Ex. A, Art. V.) Further, the subcontract allows Walbridge, as the contractor, to "order extra [or] additional work, deletions,or other modifications to the Work, such changes to be effective only upon written order of [Walbridge]." (Id., Art. VII ¶ 1.) Duncan Pipeline, if directed to do so, shall "proceed in accordance with the order, and the subcontract price shall be adjusted as reasonably determined by [Walbridge] with any dispute to be resolved after the completion of the work." (Id.) The subcontract continues that Duncan Pipeline "shall not receive payment for additional work or work that deviates from the Drawings and Specifications performed without a written authorization from [Walbridge]." (Id.)

In order for Duncan Pipeline to be compensated for changed work, it must, "within fourteen days of receipt of direction to perform changed work, and in any event within the time permitted by the Agreement between [the Corps] and [Walbridge] for submission of quotations to [the Corps]" a written quotation for the changed work. (Doc. 1, Ex. A, Art. VII ¶ 2.) The subcontract further provides:

In the event that [Duncan Pipeline] fails to submit a quotation within the time limits set forth in the Article VII, [Walbridge] shall prepare a quotation with respect to the changed work proposing an estimated amount for the increase or decrease in the subcontract price for the changed work, and [Duncan Pipeline] shall be bound by such estimate and shall be deemed to have waived any right to propose a different amount.

(Id. ¶ 3.) Critically, "[Duncan Pipeline] shall promptly give written notice of any claim for adjustment of the subcontract price under this Article within the time limits provided in this Subcontract and within such time to permit [Walbridge] to comply with the requirements of the Agreement between [the Corps] and [Walbridge]." (Id., Art. II ¶¶ 2-3.)

Finally, the subcontract "waive[s] trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this Agreement, the relationship of [Walbridge] and [Duncan Pipeline], and/or any claim or injury or damage." (Doc. 1, Ex. A, Art. XIX ¶ 3.) The choice-of-law provision states "the subcontract shall be governed by the laws of the State of Michigan." (Id., Art. XXVIII(k).)

Under these relevant subcontract terms, Duncan Pipeline began its subcontractor work in August 2009. Shortly after work began, Duncan Pipeline contends Walbridge ordered work done that Duncan Pipeline considered outside the subcontract's scope—namely, installing bell restraints,²performing additional excavation work, and remobilizing crews because of interferences it encountered during excavation. (Id. ¶ 7.) Duncan Pipeline began installing the additional bell restraints in August or September 2009. (Id. ¶ 8.) Duncan Pipeline submitted a written bond claim in May 2010 for the additional bell restraints, which Walbridge denied. The additional excavation work and remobilization of crews also began in August or September 2009. Duncan Pipeline submitted a written "Loss of Production and Excessive Excavation Depth" bond claim to Walbridge in June 2010 for these claims, which was also denied. It is undisputed the work was completed in June 2010. (Id. ¶ 12.)

It is also undisputed that Duncan Pipeline signed and submitted to Walbridge nine partial unconditional waivers between August 20, 2009 and April 20, 2010. (Id. ¶ 16.) Each of these waivers provided that Duncan Pipeline "waive[s] [its] construction lien rights, rights against any payment bonds, and claims arising from the improvement" and "together with all previous waivers, if any, does cover all amounts due to [it] for the contract improvements provided through the date as above." (Doc. 44, Ex. H at 2-10.)

Duncan Pipeline submitted a claim for $1,214,838.90 against Walbridge and its sureties to recover for the additional work it performed beyond the scope of the subcontract. Walbridge and the sureties refused payment. As a result of the refusal, Duncan Pipeline brought this suit in April 2011. In its complaint, Duncan Pipeline alleges eleven counts against Defendants: (1) breach of contract of the original subcontract price (Doc. 1 ¶¶ 14-19); (2) breach of contract of the subcontract price as amended (id. ¶¶ 20-26); (3) breach of contract when Walbridge orally ordered Duncan Pipeline to perform work beyond the original scope of the subcontract (id. ¶¶ 27-33); (4) quantum meruit (id. ¶¶ 34-38); (5) unjust enrichment (id. ¶¶ 39-42); (6) Miller Act claim on unpaid payment bonds (id. ¶¶ 43-51); (7) attorney's fees under O.C.G.A. § 13-6-11 (id. ¶¶ 52-54); (8) attorney's fees under O.C.G.A. § 13-11-8 (id. ¶¶ 55-57); (9) violation of the Federal Prompt Pay Act, 31 U.S.C. § 3905(b) (id. ¶¶ 58-61); (10) conversion for Walbridge's unauthorized use of Duncan Pipeline's construction equipment (id. ¶¶ 62-66); and (11) punitive damages (id. ¶¶ 67-69).

Defendants have filed a partial motion for summary judgment, seeking dismissal of Plaintiffs' claims for additional compensation, conversion, punitive damages, andviolations of the Prompt Pay Act. (Doc. 44 at 4-5.) According to Defendants, Duncan Pipeline waived any potential claims through April 20, 2010 by signing the partial unconditional waivers, failed to provide timely notice of its claims for additional work and loss of production, and expressly waived its excessive excavation and loss of production claims by the terms of the subcontract. (Id.) Moreover, Defendants assert that Plaintiffs' conversion and punitive damages claims lack the necessary elements under Georgia law and that the Prompt Pay Act does not provide a private right of action. (Id. at 16-19.) In response, Plaintiffs contend that the waivers are unenforceable under Georgia law, were entered into for the direct benefit of the Corps and not Defendants, and are unclear and ambiguous. (Doc. 55 at 3-11.) Plaintiffs also argue that it complied with the subcontract's notice obligations (id. at 12-16) and that Walbridge waived any written notice requirement by its conduct (id. at 19-20). Finally, Plaintiffs suggest that Duncan Pipeline's claims for extra excavation and equitable adjustment should not be barred because they were based on circumstances not contemplated at the time of the subcontract's execution. (Id. at 20-23.)

Defendants have also moved to exclude testimony from Plaintiff's expert, Mr. Brian Rindt. (Doc. 46.) Defendants argue that Mr. Rindt's opinion should be excluded because it is "merely his interpretation of contract terms or conclusory statements without any analysis" and that he is not...