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United States v. Hartford Accident & Indemnity Co.

United States District Court, D. Maryland

September 13, 2013

UNITED STATES OF AMERICA for the use and benefit of CHASNEY AND COMPANY, INC., Plaintiff
v.
HARTFORD ACCIDENT & INDEMNITY CO., et al., Defendants

MEMORANDUM

JAMES K. BREDAR, UNITED STATES DISTRICT JUDGE

Chasney and Company, Inc. (“Chasney”) brought a claim under the Miller Act, 40 U.S.C. § 3133, against Hartford Accident & Indemnity Co. (“Hartford”). Thereafter, James W. Ancel, Inc. (“JWA”) secured leave of court to intervene pursuant to Rule 24 of the Federal Rules of Civil Procedure. (ECF No. 8.) Now pending before the Court are two Motions filed by Hartford and JWA (“Defendants”): a Motion for Partial Summary Judgment (ECF No. 27) and a Supplemental Motion for Partial Summary Judgment (ECF No. 51).[1] The issues have been briefed, and no hearing is required, see Local Rule 105.6 (D. Md. 2014). For the reasons explained below, Defendants’ First Motion will be GRANTED, but Defendants’ Second Motion will be DENIED.

I. Background[2]

This dispute arises from a massive government construction project fraught with disruption and delay. JWA, as general contractor, executed contract number W912QR-10-C-0029 with the United States of America, by and through the United States Army Corps of Engineers (“USACE” or “the Government”), for the construction of an Army Reserve Center in Baltimore, Maryland (“the Project”). (ECF No. 1 ¶ 5.) In relation to this contract and pursuant to the Miller Act, [3] JWA executed a payment bond with a penal sum of $9, 704, 231 for the protection of its subcontractors (“the Bond”), with Hartford acting as surety. (ECF No. 1-1.) Thereafter, in August 2010, JWA entered into a subcontract agreement (“the Subcontract”) with Chasney, pursuant to which Chasney agreed to perform HVAC and plumbing services for the Project in exchange for $1, 500, 000. (ECF No. 1-2 at 1-2.)

Two provisions of the Subcontract are particularly apposite to the Court’s analysis of the pending Motions. Article 5, the “Price and Payment” article, provides that Chasney “shall furnish guarantees and all other documents required by the Prime Contract for [Chasney’s] work, including releases of all claims and liens as a condition precedent for final payment, ” and that “[p]artial releases may be required at [JWA’s] option as a condition precedent to any partial payments for work completed.” (Id. at 2.)[4] Article 11, the “Damages for Delay” article, provides that JWA “shall not be liable to [Chasney] for delays caused by the [Government] or other subcontractors or suppliers” but that Chasney “shall be entitled to reimbursement only for damages for delays recovered from the [Government]” and that Chasney “shall have the right, at its expense, to exercise against the [Government] all provisions of the Prime Contract to recover said damages.” (Id. at 3.)[5]

Beginning in November 2010 and continuing through November 2013, the parties executed a series of twenty-four instruments titled “Subcontractor’s Partial Release, Waiver of Lien and Affidavit” (“Partial Release”). (ECF No. 27-5.) By signing each Partial Release, “in consideration of the payments previously made and payment for the period covered by the current payment due, ” Chasney agreed to

waive[] and release[] all . . . liens . . . and claims and demands against [JWA] and/or its sureties . . . in any manner arising out of [Chasney’s] work, labor, services, equipment or materials . . . performed or furnished . . . in connection with the project, through the period covered by the current payment and all previous payments.

(ECF No. 27-6 at 2.) The waiver language did not apply to “extra work which ha[d] been authorized in writing by [JWA], but for which the payment ha[d] not been made.” (Id.) By signing, Chasney affirmed that it was “aware of no claims nor any circumstances that could give rise to any future claims” against JWA, Hartford, or others involved on the Project. (Id.) Each form included a space for Chasney to list claim exceptions; no such exceptions appear on any of the twenty-four signed forms. The last such form, dated November 15, 2013, applies to claims arising on or before October 31, 2013. (Id.)

During the course of performance on the Project, Chasney and JWA encountered numerous design defects and other deficiencies attributable to the Government. These defects resulted in extended delays and unexpected costs. JWA submitted over two dozen claims to the USACE; these claims eventually ripened into appeals before the Armed Services Board of Contract Appeals (“ASBCA”). (ECF No. 28-2.) In July 2013, while the appeals were pending, JWA entered into settlement negotiations with the USACE. (ECF No. 28-6 at 3.) Chasney apparently learned of these negotiations, and-with some drafting assistance from JWA[6]- Chasney submitted a $380, 687.65 delay claim through JWA for further transmission to the Government. JWA’s president, James W. Ancel., Sr., forwarded Chasney’s delay claim to the USACE on August 8, 2013. (ECF No. 28-8.) According to Ancel, however, “Government officials were dismissive of Chasney’s claim and stated that it lacked any merit. No value was assigned by the Government to Chasney’s claim.” (ECF No. 35-1 at 5.)[7]

On September 10, 2013, JWA and the USACE reached a global settlement (“Settlement Agreement”), which purported to resolve all appeals then pending before the ASBCA as well as “all outstanding disputes and claims relating to the Contract.” (ECF No. 56 at 3.)[8] The USACE agreed to pay JWA a settlement sum of $3, 300, 000; the parties “did not assign any particular value to individual elements in reaching the settlement sum.” (Id. at 3-4.)[9] In exchange for the compromise payment, JWA released the Government “from any and all manner of action or actions . . . with respect to any and all claims of any nature arising out of or relating to the Contract . . . as of August 20, 2013.” (Id. at 5.) JWA signed the agreement on September 12, 2013; the USACE; and the first $3, 000, 000 payment was invoiced on October 23, 2013. (ECF Nos. 56 at 8 & 28-11 at 1.) JWA received this payment on November 4, 2013. (ECF No. 35-1 at 5.)

In an e-mail dated April 25, 2014, Peter Chasney (Chasney’s president) advised James Ancel that (1) he understood that Chasney’s delay claim had been paid as part of the Settlement Agreement and (2) he therefore requested reimbursement of $380, 687.65. (ECF No. 55 at 29.) In a May 12, 2014, e-mail, Ancel informed Peter Chasney that his understanding was “simply not correct”; that the “settlement with the government was a lump sum amount”; and that the “parties did not assign any particular value to individual elements in reaching the settlement sum.” (Id. at 33.) To date, JWA has refused to pay Chasney’s claim.[10]

Chasney filed suit on July 2, 2014, naming Hartford as Defendant and claiming against the Bond. (ECF No. 1.) Chasney demanded $380, 687.65 for its delay damages as well as $79, 882.45 for labor-and-material expenses allegedly due and owing, for a total claim of $460, 570.10.[11] JWA intervened in the action on September 15, 2014. (ECF No. 8.) Defendants filed their First Motion for Partial Summary Judgment on August 21, 2015 (ECF No. 27); Chasney filed a response in opposition (ECF No. 28), and Defendants replied (ECF No. 35). On January 14, 2016, the case was transferred from Judge William D. Quarles, Jr., to the undersigned. Thereafter, Defendants filed their Second Motion for Partial Summary Judgment. (ECF No. 51.) Chasney responded (ECF No. 53), and Defendants replied (ECF No. 60). Both motions are ripe for decision.

II. Standard of Review

“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to current Rule 56(a)). No genuine issue of material fact exists if the opposing party fails to make a sufficient showing on an essential element of its case as to which it would have the burden of proof. Celotex Corp., 477 U.S. at 322-23. Moreover, the “mere existence of a scintilla of evidence in support of the [opposing party’s] position” is insufficient to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). The United States Court of Appeals for the Fourth Circuit has emphasized the “affirmative obligation of the trial judge to prevent ‘factually unsupported claims [or] defenses’ from proceeding to trial.” Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir. 1987) (quoting Celotex Corp., 477 U.S. at 323-24).

The facts themselves, and the inferences to be drawn therefrom, must be viewed in the light most favorable to the party opposing summary judgment. Scott v. Harris, 550 U.S. 372, 378 (2007); Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008). Even so, the opponent may not rest upon the mere allegations or denials of its pleading but must instead, by affidavit or other evidentiary showing, set out specific facts showing a genuine dispute for trial. Fed.R.Civ.P. 56(c)(1). Supporting and opposing affidavits must be made on personal knowledge with such facts as would be ...


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