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Trustees of the Plumbers v. Milestone Construction Services, Inc.

United States District Court, Fourth Circuit

January 13, 2014

TRUSTEES OF THE PLUMBERS AND GASFITTERS LOCAL 5 RETIREMENT SAVINGS FUND, Plaintiffs
v.
MILESTONE CONSTRUCTION SERVICES, INC., Defendants

MEMORANDUM

James K. Bredar United States District Judge

The trustees of the Plumbers and Gasfitters Local 5 Retirement Savings Fund, the trustees of the Plumbers and Pipefitters Apprenticeship Fund, the trustees of the Plumbers and Pipefitters Vacation Fund, the trustees of the Plumbers and Pipefitters Medical Fund, the trustees of the Plumbers and Pipefitters National Pension Fund, the trustees of the International Training Fund, the trustees of the Communication and Productivity Fund, the trustees of the Industry Promotion Fund, and Plumbers Local Union No. 5 (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 (ECF No. 16) is DENIED, F&D’s cross-motion for summary judgment (ECF No. 19) is GRANTED, and Milestone’s cross-motion for summary judgment (ECF No. 20) 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 plumbing and related construction work. (Id. at 5.) In turn, T.K. turned to the Union to obtain skilled labor pursuant to a Collective Bargaining Agreement (“CBA”). (Id.)

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 plumber. (Id. at 5-6.) For example, T.K. was required to pay the Medical Fund $6.95 for each hour worked by a member of the Union. (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 plumber. (Id. at 6-7.) These reports were not itemized by job or project, however. (Id.) From August 2011 through March 2012, T.K. provided these reports. (Id. at 8.) However, T.K. failed to remit the required contributions from August 2011 through October 2011 and from December 2011 through March 2012. (Id. at 8-9.)

T.K. also submitted weekly Certified Payroll Reports to Milestone as required. (Id. at 7-8.) Milestone then forwarded these reports to the government. (ECF No. 19-1 at 5.) 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.)[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 8.) 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 105, 115, 124.) 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):

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, the Local 5 Funds, and the National 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 301 [sic] 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 5 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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