York Excavating v. Employers Ins. of Wausau
Decision Date | 21 October 1993 |
Docket Number | No. CV-91-1037.,CV-91-1037. |
Citation | 834 F. Supp. 733 |
Parties | YORK EXCAVATING COMPANY, INC., Plaintiff, v. EMPLOYERS INSURANCE OF WAUSAU, Defendant v. EASTERN CONSOLIDATED UTILITIES, INC., et al., Defendants. |
Court | U.S. District Court — Middle District of Pennsylvania |
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Audrey E. Woloshin, York, PA, for plaintiff.
K. Gerard Amadio, Venzie Phillips & Warshawer, Philadelphia, PA, Donald G. Douglass, Scranton, PA, for defendant Employers Ins. of Wausau.
Mitchell R. Leiderman, Media, PA, for third-party defendants Eastern Consol. Utilities, Inc., et al.
Plaintiff York Excavating Company, Inc. (York) filed this action to recover on a labor and material payment bond purportedly issued by Employers Insurance of Wausau (Wausau) in connection with an apartment complex construction project known as the Green Hill Project and located in Susquehanna Township, Dauphin County, Pennsylvania.1 Green Hill Associates (GHA) was the project developer and the original owner.
When problems arose on the Green Hill Project between the developer and the general contractor, Susquehanna Construction Company (Susquehanna), Susquehanna defaulted on its contract with the developer prior to completion of the project. Eastern Consolidated Utilities (Eastern) was then hired to replace Susquehanna and complete the project. Pursuant to a contract with GHA signed July 20, 1987, Eastern agreed to complete the site work (the installation of interior roadways, parking areas and driveways, among other things) and agreed to perform all of the work and furnish all materials, labor, and equipment necessary to complete such work.
To secure payment of its subcontractors, Eastern obtained a labor and material payment bond (Bond # XXXX-XX-XXXXXX) in the amount of $3 million from Wausau as surety naming GHA as owner.2 The bond was signed and purportedly issued under the authority of Wausau's agent, Daniel Culnen as attorney-in-fact. It bore the co-signature of "Adams". Subsequent events revealed that Culnen had issued the bond without authority. Although he was an agent of Wausau, he had no authority to issue the bond shown to York.
York entered into two written contracts with GHA/Tudor Development Corporation on October 15, 1987 to perform site work at the project. It is suing to recover in this action for work performed under the two written contracts with GHA and under the terms of an alleged oral agreement with GHA and Eastern entered into in August, 1987 to perform repair work and general contractor work on the project on a time and material basis. )(See also: Record document no. 39, exhibit "F", Wausau's Statement of Undisputed Facts, paras. 5-10, and Record document no. 44.)
York alleges that it is owed $8,480.70 for work performed on the interior road ways of the project (under the first written agreement with GHA); $1,980.00 for work performed on the interior parking area (under the second written agreement with GHA); and $131,424.50 for repair work and general contractor work performed under the alleged oral contracts with Eastern and GHA. (Plaintiff's amended complaint, paras. 18-21 and 26-28). It also seeks to recover lost profits and overhead expenses incurred under the two written agreements with GHA in the amount of $76,440.00.
York bases its claim that an oral agreement existed on the following. Eastern actively participated in negotiations with GHA and approved York as a subcontractor for the project. It also supervised York's work on the project, both directly through its employees and indirectly through the management company, Construction Management Corporation (CMC), which it retained, to serve as construction manager until Eastern was in a position to manage the project itself, and issued work orders and change orders directed to York. York also cites the method of payment as proof that a contractual relationship existed between it and Eastern. On one occasion, a check drawn on GHA's accounts made payable to Eastern was endorsed in blank by Eastern and turned over to York as payment for its work on the project. Finally, when York requested proof that it would be paid for the work performed, it was shown the payment bond purportedly issued by Wausau under which it now sues.
On April 14, 1988, York submitted a claim to Wausau under the labor and material payment bond issued for the project. Wausau refused payment on the ground that no valid or authorized bond existed for the Green Hill project.3 In a letter dated April 26, 1988, Wausau denied York's claim under the bond on the ground that no valid or authorized bond existed for the Green Hill project. Based on that denial, York made no further effort to recover against Wausau until approximately June, 1991, when it learned that a bond for the project had, in fact, been issued over Culnen's signature.
York was not paid for all work performed on the project. This action is one of several filed by York to recover for all work performed on the Green Hill Project. York filed this action against Wausau on August 12, 1991 seeking to recover sums allegedly still owed by Eastern for work performed on the project — totalling $141,887.20, as well as $76,440.00 for lost profits and overhead expenses, a total of $218,327.20. York also seeks punitive damages from Wausau for its alleged gross negligence and willful misconduct in denying York's claim under the bond.
Wausau filed a third party complaint containing five counts on January 29, 1992.4 Counts I and II allege claims for indemnification against a number of individuals and corporations whom Wausau alleges have a contractual and common law obligation to indemnify it for any loss or expense it incurs as a result of this action (Counts I and II). Counts III and IV allege claims of indemnification and fraud against Culnen and the firm of Culnen & Hamilton based on their alleged complicity in issuing an unauthorized bond in Wausau's name. Count V alleges an indemnification claim against Sidney Cohen, Dorothy Cohen, Marc Cohen, and Tudor and GHA on the basis of alleged fraudulent and/or negligent misrepresentations made in connection with issuance of the bond.
Named as third party defendants are: Eastern Consolidated Utilities, Inc. (Eastern); Mid-Atlantic Pipeline, Inc. (Mid-Atlantic); Eastern Excavating, Inc. (Eastern Excavating); John L. Daddona, Sr.; Judy A. Daddona; Eva Daddona; Daniel J. Culnen (Culnen); Culnen & Hamilton, Inc., (Culnen & Hamilton); Green Hill Associates (GHA); Tudor Development Group, Inc., (Tudor).
The case is before the court on motions for summary judgment filed by the defendant and all third-party defendants. The parties' motions were filed to: 1) Record Document No. 37, by Wausau; 2) Record Document No. 49, by Eastern and other third party defendants; and 3) Record Document No. 43, by third party defendants Culnen and Culnen & Hamilton, who join in Wausau's motion for summary judgment.
For the reasons discussed below, we will enter an order: 1) granting in part the motion for summary judgment filed by Wausau; and 2) denying as moot the motion for summary judgment filed by Eastern and other third party defendants. Summary judgment will be granted in favor of Wausau and against York on York's claim for sums allegedly owed for work performed and expenses incurred under the two written agreements with GHA and under the alleged oral contract with Eastern and GHA. Defendants' motion is denied in all other respects. York's claim against Wausau for fraud and Wausau's indemnification claims against Culnen and Culnen & Hamilton remain.
Summary judgment standard
Celotex v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).
The moving party bears the initial responsibility of stating the basis for its motions and identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. He or she can discharge that burden by "showing ... that there is an absence of evidence to support the nonmoving party's case." Celotex, supra, 477 U.S. at 323 and 325, 106 S.Ct. at 2548 and 2554.
Issues of fact are "`genuine' only if a reasonable jury, considering the evidence presented, could find for the non-moving party." Childers v. Joseph, 842 F.2d 689, 693-94 (3rd Cir.1988), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Material facts are those which will affect the outcome of the trial under governing law. Anderson, supra, 477 U.S. at 248, 106 S.Ct. at 2510. In determining whether an issue of material fact exists, the court must consider all evidence in the light most favorable to the non-moving party. White v. Westinghouse Electric Company, 862 F.2d 56, 59 (3rd Cir.1988).
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