United States v. Premier Contractors, Inc.

• Decision Date: 25 March 1968
• Docket Number: Civ. No. 1597.
• Parties: UNITED STATES of America for the Use and Benefit of ARLMONT AIR CONDITION CORPORATION, Plaintiff, v. PREMIER CONTRACTORS, INC., and Agricultural Insurance Company, Defendants. AGRICULTURAL INSURANCE COMPANY, Defendant and Cross-Claim Plaintiff, v. PREMIER CONTRACTORS, INC., Duncan Contracting Co., Inc., John F. Kane, Hugh R. McAfee and J. F. Kane Contracting Co., Inc., a/k/a John F. Kane Co., Inc., Cross-Claim Defendants.
• Court: U.S. District Court — District of Maine

283 F. Supp. 343

UNITED STATES of America for the Use and Benefit of ARLMONT AIR CONDITION CORPORATION, Plaintiff, v. PREMIER CONTRACTORS, INC., and Agricultural Insurance Company, Defendants.

AGRICULTURAL INSURANCE COMPANY, Defendant and Cross-Claim Plaintiff, v. PREMIER CONTRACTORS, INC., Duncan Contracting Co., Inc., John F. Kane, Hugh R. McAfee and J. F. Kane Contracting Co., Inc., a/k/a John F. Kane Co., Inc., Cross-Claim Defendants.

Civ. No. 1597.

United States District Court D. Maine, N. D.

March 25, 1968.

Gerald E. Rudman, Gene Carter, Bangor, Me., Jacob J. Locke, Max S. Ficksman, Boston, Mass., for plaintiffs.

Charles P. Barnes, II, Portland, Me., Solomon Romanow, Boston, Mass., for defendants.

FINDINGS OF FACT, CONCLUSIONS OF LAW AND DIRECTION FOR ENTRY OF JUDGMENT

GIGNOUX, District Judge.

This is an action under the Miller Act, 40 U.S.C. § 270b (1964), to recover money claimed to be due the use-plaintiff, Arlmont Air Condition Corporation, for labor and materials furnished by Arlmont under subcontract with the defendant Premier Contractors, Inc. in connection with the construction by Premier of a United States Border Station at Van Buren, Maine for the General Services Administration, United States Government. The defendant Agricultural Insurance Company is the surety on the payment bond furnished by Premier as required by the Miller Act, 40 U.S.C. § 270a (1964). Agricultural's answer includes a counterclaim asserting the right to set-off against any recovery by Arlmont, the expenses incurred by Agricultural in completing the work required by the subcontract and in paying Arlmont's suppliers.¹ Agricultural has also asserted in its answer a cross-claim for indemnity against Premier and against Duncan Contracting Co., Inc., John F. Kane, Hugh R. McAfee and J. F. Kane Contracting Co., Inc.

No appearance or answer having been filed on behalf of Premier or the crossclaim defendants, their default was entered by the Court on January 12 and February 15, 1967, Fed.R.Civ.P. 55(a),² and the action has been tried solely on Arlmont's claim against Agricultural as surety on the Miller Act bond.³

The dispute between the parties concerns the amount due Arlmont for labor and materials furnished under its subcontract prior to the termination of the subcontract by Premier. Arlmont contends that the subcontract was terminated by Premier without cause and that it is entitled to recover under the subcontract the full contract price plus the fair and reasonable value of an extra allegedly performed by it, less the payments received by it and the expense incurred by Premier and Agricultural in completing the work unfinished by Arlmont because of the termination. Alternatively, Arlmont claims that it is entitled to recover in quantum meruit the fair value of the labor and materials furnished by it pursuant to the subcontract. Agricultural maintains that the subcontract was terminated by Premier because of Arlmont's breach in failing to pay its suppliers as required by the terms of the subcontract; that Arlmont did not completely or substantially perform its subcontract; and that Arlmont is entitled to no recovery either under its subcontract or in quantum meruit.

At pre-trial conferences held at Bangor on October 4, 1966 and at Portland on June 1 and December 28, 1967, and at trial had before the Court, without jury, at Portland on March 6 and 7, 1968, the parties stipulated as to various matters relevant to the action and presented oral and documentary evidence as to those matters on which they could not agree. Having considered the stipulations and evidence thus presented by the parties and the written and oral arguments of counsel, the Court now makes its findings of fact and conclusions of law and directs entry of its judgment as follows:

FINDINGS OF FACT

The Court's findings of fact are:

1. On or about August 6, 1964 the United States of America, General Services Administration, entered into Contract #GS-01B-0185 with the defendant Premier Contractors, Inc. for the construction of a United States Border Station at Van Buren, Maine. A copy of this contract is attached to the complaint as Exhibit "A". A copy of the specifications of the contract is in evidence as plaintiff's Exhibit No. 2.

2. On or about August 6, 1964 and in connection with the aforesaid contract, Premier, as principal, and the defendant Agricultural Insurance Company, as surety, executed and delivered a payment bond guaranteeing payment to all persons supplying labor and material in the prosecution of the work provided for in said contract and any and all duly authorized modifications thereof. A copy of this payment bond is attached to the complaint as Exhibit "B".

3. Following the execution of the aforesaid contract, Premier entered into a subcontract dated September 9, 1964 with the use-plaintiff, Arlmont Air Condition Corporation, under the terms of which Arlmont agreed to furnish certain materials and to perform certain labor involving the installation of plumbing, heating and snow melting equipment and certain other mechanical work covered by Contract #GS-01B-0185, and Premier agreed to pay Arlmont the sum of $23,500 therefor. A copy of this subcontract is in evidence as plaintiff's Exhibit No. 1 4. Commencing on about September 9, 1964 and continuing until on or about May 11, 1965 Arlmont furnished labor and materials under its subcontract having a total fair and reasonable value of $14,719.05, as follows:⁴

                   Plaintiff's
                   Exhibit Nos
                   17, 18         Labor furnished by Arlmont                   $ 2,651.75
                                  Materials and labor furnished by suppliers    12,067.30
                                                                                _________
                                         Supplier                   Amount
                   4              The Powers Regulator Co
                                  Skokie, Illinois                $ 1,554.76
                   6              Vent-Fab, Inc
                                  Malden, Massachusetts             1,400.00
                   7              The John Bonner Co
                                  Cambridge, Massachusetts          1,041.32
                   8              Gagnon's
                                  Van Buren, Maine                    257.21
                   9              The Trane Company
                                  La Crosse, Wisconsin              1,550.00
                   10             Romeo J. Roy, Inc.
                                  Upper Frenchville, Maine          3,281.87
                   11             Riverside Pipe and Supply Co.
                                  Medford, Massachusetts            1,267.77
                   12             Weymouth Engineering Co.
                                  East Weymouth, Massachusetts        513.00
                   13             Richard Belyea
                                  Caribou, Maine                      108.00
                   14             Arlington Pipe and Supply Co.
                                  Arlington, Massachusetts            818.27
                   15             O. J. Holt Co., Inc.
                                  Cambridge, Massachusetts            275.10
                                                                      ______
                                                                  $12,067.30
                                                                         Total  $14,719.05
                

5. Premier has paid Arlmont for labor and materials furnished under the sub-contract the total amount of $5,690.00 as follows:

                          By check: Oct. 30, 1964 - $2,500.00 (Stip. - Int. No. 45)
                               "         Dec. 31, 1964 -  1,000.00        "
                               "         Feb.  2, 1965 -    330.00        "
                               "         Feb. 28, 1965 -    310.00        "
                               "         Mar.  4, 1965 -  1,000.00*  "
                               "         Apr. 21, 1965 -    550.00        "
                                                         _________
                                                 Total   $5,690.00
                

6. Premier and Agricultural have paid the total amount of $5,122.03 to Arlmont's suppliers in payment of Arlmont's obligations to them for materials and labor furnished for the work provided for in the subcontract, as follows:

                                Supplier               Amount
                     The Powers Regulator Co.
                     Skokie, Illinois               $1,554.56       (Stip.)
                     The John Bonner Co.
                     Cambridge, Massachusetts        1,041.32          "
                     Gagnon's
                     Van Buren, Maine                  244.28          "
                     Romeo J. Roy, Inc.
                     Upper Frenchville, Maine        2,281.87          "
                                                    _________
                                          Total     $5,122.035
                

7. The subcontract was terminated by Premier by telegram dated May 11, 1965 because of Arlmont's alleged breach of contract. (Plaintiff's Exhibit No. 3). As of that date, Arlmont had completed approximately 80% of the work provided for in its subcontract. As of that date, Arlmont had failed to pay any of its suppliers listed in paragraph 4, supra, for the materials and labor furnished by them, with the exception of a payment of $1,000 to Romeo J. Roy, Inc., and a payment of $108 to Richard Belyea. Arlmont has not yet paid these suppliers.⁶

DISCUSSION

First of all, Arlmont contends that it is entitled to recover under its subcontract the full contract price, less the payments it has received and the expense incurred by Premier and Agricultural in completing the work. Such a recovery would necessarily have to be based upon a showing that Premier wrongfully terminated the subcontract. See Arthur N. Olive Co. v. United States, 297 F.2d 70 (1st Cir. 1961). But under the terms of the subcontract Arlmont was required to pay its suppliers in full for the materials and labor furnished by them to the job. It is conceded that as of May 11, 1965, when the contract was terminated by Premier, Arlmont had failed to pay most of these suppliers. This failure constituted a material breach by Arlmont which clearly justified Premier in terminating the subcontract. See Nevins v. Ward, 320 Mass. 70, 67 N.E.2d 673 (1947); cf. Houston Fire and Casualty Ins. Co. v. E. E. Cloer, General Contractor, 217 F.2d 906 (5th Cir. 1954); St. Paul Mercury Indemnity Co. v. Wright Contracting Co., 250 F.2d 758 (4th...