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Trustees of The Heating, Piping and Refrigeration Pension Fund v. Milestone Construction Services, Inc.

United States District Court, Fourth Circuit

January 10, 2014

TRUSTEES OF THE HEATING, PIPING AND REFRIGERATION PENSION FUND, et al., Plaintiffs,
v.
MILESTONE CONSTRUCTION SERVICES, INC., et al., Defendants.

MEMORANDUM

JAMES K. BREDAR, District Judge.

The trustees of the Heating, Piping and Refrigeration Pension Fund, the trustees of the Heating, Piping and Refrigeration Medical Fund, the trustees of the Heating, Piping and Refrigeration Training Fund, the trustees of the Heating, Piping and Refrigeration Industry Promotion Fund, the trustees of the Heating, Piping and Refrigeration Communications and Productivity Fund, the Steamfitters Local 602 Retirement Savings Fund, and Steamfitters Local Union No. 602 (the "Union") (collectively "Plaintiffs")[1] brought this suit against Milestone Construction Services, Inc. ("Milestone") and Fidelity and Deposit Company of Maryland ("F&D") (collectively "Defendants") to recover amounts owed for labor performed at a construction site from a Miller Act payment bond, pursuant to 40 U.S.C. § 3133. Now pending before the Court are (1) Plaintiffs' motion for summary judgment (ECF No. 16), (2) F&D's cross-motion for summary judgment (ECF No. 19), and (3) Milestone's cross-motion for summary judgment (ECF No. 20). The issues have been briefed and no hearing is required. Local Rule 105.6. For the reasons set forth below Plaintiffs' motion for summary judgment is DENIED, F&D's cross-motion for summary judgment is GRANTED, and Milestone's cross-motion for summary judgment is GRANTED.

I. BACKGROUND

This action stems from three contracts that Milestone entered into with the United States Government to perform construction work on three buildings of the National Institute of Standards and Technology ("NIST") - NIST Buildings 202, 301, and 318. (ECF No. 16-1 at 4.) As required by the Miller Act, Milestone obtained a payment bond for each of these three projects from F&D. 40 U.S.C. § 3131; (ECF No. 19-1 at 4.) On each of these three projects, Milestone subcontracted with T.K. Mechanical, Inc. ("T.K.") to perform pipefitting and related construction work. (ECF No. 19-1 at 4.) In turn, T.K. turned to the Union to obtain skilled labor pursuant to a Collective Bargaining Agreement ("CBA"). (ECF No. 16-1 at 5.)

Under the terms of the CBA, T.K. was required to make payments, referred to as "contributions, " to Plaintiffs for each hour worked by a pipefitter. (ECF 19-1 at 4-5.) For example, T.K. was required to pay the Pension Fund $1.16 for each hour worked by a first-through fourth-year apprentice pipefitter and $7.74 per hour worked by a fifth-year apprentice or journeyman pipefitter. ( Id. ) In order to calculate the total amount owed by T.K., Plaintiffs relied on Contribution Reports, in which T.K. self-reported the number of hours worked by each individual pipefitter. (ECF Nos. 16-1 at 5-6; 19-1 at 5.) These reports were not itemized by job or project, however. (ECF No. 17 at 71 ¶ 4.) From January 2012 through March 2012, T.K. provided these reports but failed to make the required contributions. ( Id. )

T.K. also submitted weekly Certified Payroll Reports to Milestone as required. (ECF No. 19-1 at 5.) Milestone then forwarded these reports to the government. ( Id. ) For each project, these reports listed each employee, their applicable wage rate, and the number of hours they worked on the given project. ( Id. ) However, these reports did not list an employee's union affiliation. ( Id. ) Further, the last Certified Payroll Report provided to Milestone by T.K. was for the week ending on March 17, 2012. ( Id. ; See, e.g., ECF No. 17 at 265.)[2]

Milestone also received "daily work reports" from T.K. (ECF No. 17 at 462, 585-587.) However, like the Certified Payroll Reports, the "daily work reports" did not list an employee's union affiliation. (ECF No. 17 at 585-587; ECF No. 20-1 at 7.)

On March 23, 2012, T.K abandoned the three NIST projects at issue in this case and instructed its workforce, including Local 602 members, that it would no longer be operating. (ECF No. 16-1 at 10.) On April 3, 2012, T.K. filed for bankruptcy. ( Id. )

On June 14, 2012, Plaintiffs sent letters via certified mail to Milestone and F&D as notice of a claim on the payment bond for each project. (ECF No. 17 at 95, 107, 119.) Defendants received these letters on June 19, 2012. (ECF No. 19-1 at 8.) These letters provided, in relevant part (and with reference to the appropriate project):

Please accept this letter as notice of a claim on the above-referenced bond on behalf of the Union and the Local 602 Funds as T.K. Mechanical, Inc. has failed to adhere to its contractual obligation and has not paid its employees in full for the labor supplied for work on the NIST Building 318, Gaithersburg, Maryland project.
T.K. Mechanical, Inc. is a signatory to a collective bargaining agreement ("CBA") with the Union under which it is obligated to make contributions to the above Funds and to the Union for dues checkoff, and other assessments. A copy of the applicable CBA with the most current wage and fringe benefit wage sheet is attached hereto as Exhibit A.... T.K. Mechanical, Inc. has failed to make the required contributions to the above Union and Funds for dues checkoff, and other assessments.
T.K. Mechanical, Inc. is required to pay to the Union and Local 602 Funds the applicable rates specified in Exhibit A for each hour worked by its employees on the NIST Building 318, Gaithersburg, Maryland project. T.K. Mechanical, Inc. also owes contractual assessments and interest for not filing the required reports and making payments in full on time as required under the CBA. T.K. Mechanical, Inc. has not made those required payments.
This letter serves as written notice of a claim on the bond furnished for the NIST Building 318 project under the Miller Act, 40 U.S.C. § 270b and 40 U.S.C. § 3131, or any other applicable law and notice of a claim on any and all other applicable bonds furnished on this job for the benefit of Local 602 workers performing on this project.
Please advise what, if any, additional information is needed for you to make full payment of all amounts due on the bond once we have ascertained the total number of hours worked by T.K. Mechanical, Inc. employees on ...

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