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Signal Perfection, Ltd. v. McPhee Electric, Ltd.

United States District Court, D. Maryland

January 6, 2015

SIGNAL PERFECTION, LTD. Plaintiff/Counter Defendant,
MCPHEE ELECTRIC, LTD., Defendant/Counter Plaintiff.


WILLIAM CONNELLY, Magistrate Judge.

Plaintiff, Signal Perfection, Ltd. ("SPL") filed a four count complaint against McPhee Electric, Ltd. ("McPhee") arising out of SPL's contract to perform the audio-visual work during the construction of the Gaylord National Resort and Convention Center in Oxon Hill, Maryland. (ECF No. 1). The four counts are breach of contract, violation of the Maryland Prompt Payment Act (Md. Code Ann. Real Prop. ยง 9-301 et. seq. ), unjust enrichment, and quantum meruit. McPhee filed a one count counterclaim against SPL alleging breach of contract. (ECF No. 6).

Following summary judgment proceedings, the parties consented to have a magistrate judge hear and decide the case (ECF No. 55) and the matter was referred to the undersigned for all further proceedings and the entry of judgment on June 21, 2012. (ECF No. 56). Trial was held on January 14, 15, 16, 17 and 18, 2013. At the conclusion of all the evidence, the court entered judgment in favor of McPhee and against SPL as to counts III (unjust enrichment) and IV (quantum meruit). (ECF No. 114). The matter was taken under advisement and the parties filed proposed findings of fact on April 25, 2013 (ECF Nos. 122 and 123). The court has reviewed the pleadings, five days of trial transcripts, admitted exhibits, and the proposed findings of fact and now rules.


1) SPL is a Maryland limited liability company with its principal place of business in Columbia, Maryland. It is a "parts and smarts" company performing all the design and engineering work of audio-visual systems and the fabrication of racks, while subcontracting to others the wiring, installation, and final terminations for the audio-visual systems on a given project. SPL is a sophisticated international audio-visual contractor focusing on large scale, high-end audio-visual projects. It has completed audio-visual work at various sports stadiums including Camden Yards and M&T Bank Stadium in Baltimore, FedEx Field in Landover, Soldier Field in Chicago, Lambreau Field in Green Bay, and Yankee Stadium in New York. SPL has performed major audio-visual work in hotels and casinos in Las Vegas including the Mandalay Bay Hotel and Convention Center, the Bellagio, the Venetian, the Paris, and the Aladdin.

2) McPhee is a Connecticut corporation with its principal place of business in Farmington, Connecticut. It is a prime electrical construction company licensed to perform services in Connecticut, Massachusetts, Maryland, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia.

3) MTR Electrical Construction, LLC ("MTR") is a Maryland limited liability company and a tri-venture whose members are McPhee, Truland Systems Corporation ("Truland"), and J.E. Richards Electric, Inc. ("J.E. Richards").

4) Gaylord National, LLC ("Gaylord") is the owner and developer of the Gaylord National Resort and Convention Center in Oxon Hill, Maryland. As originally planned, the Project consisted of the construction of a 1, 500 guest room hotel, significant structural parking, and 470, 000 square foot convention center. In 2006, Gaylord expanded the hotel with an additional 500 guest rooms.

5) Perini/Tompkins Joint Venture ("PTJV") is a joint venture of the Perini Corporation of Framingham, Massachusetts and Tompkins Builders, Inc. of Washington, D.C. Both Perini Corporation and Tompkins Builders, a wholly-owned subsidiary of Turner Construction Company, are leading construction services companies in both the private and public sectors.

6) On or about May 9, 2005, Gaylord contracted with PTJV to serve as the Project's prime contractor and to provide all construction management services for and to coordinate construction of the Project.

7) On or about January 18, 2006, PTJV subcontracted with MTR on a "Cost Plus Fee" basis to perform the electrical, telecommunications, security and audio-visual work on the Project (the "MTR Subcontract"). The MTR Subcontract contained no completion date for the Project or MTR's work under the MTR Subcontract. At the time of the MTR Subcontract, the target completion date for the Convention Center was November 2007 and the target completion date for the Hotel was December 2007. As part of McPhee's responsibilities, McPhee agreed to manage all MTR work and to enter into and administer all of MTR's subcontracts related to the Project. McPhee did not have a contract with either Gaylord or PTJV, and received payments for its work on the Project through MTR.

8) On August 17, 2006, Gaylord, PTJV and MTR held a pre-bid meeting for potential audio-visual bidders to describe the audio-visual scope of the work and the constraints ( e.g., out-of-sequence work) so bidders could prepare comprehensive bids. George Douglas, SPL's Senior Vice President, attended the pre-bid meeting, as did representatives from Nelson White Systems, Inc., a local minority-owned subcontractor.

9) Also present at the pre-bid meeting on August 17, 2006 were Chess McKinney from Gaylord, Dick Schuler from PTJV, and Ron Stawecki from MTR.

10) During the pre-bid meeting, PTJV reviewed the Project and the scope of the audio-visual work. The fact that Gaylord had recently approved the addition of approximately 500 hotel rooms to the Project (Phase II) and its impact on the anticipated hotel completion date was discussed.

11) By August 2006, PTJV had already poured the foundations for the Phase II addition and was telling bidders and subcontractors to anticipate a revised target completion date for the end of January 2008 for the Convention Center and March 2008 for the Hotel.

12) At the pre-bid meeting, SPL was advised that, like all work at the Project, the audio-visual ("A/V") subcontractor should expect significant "out-of-sequence" work, meaning that the A/V subcontractor should not expect to work in its preferred order and manner. SPL was advised to account for the cost of the out-of-sequence work in its bid.

13) On September 19, 2006, SPL submitted its initial proposal for the audio-visual bid package to PTJV. The total bid price was $6, 786, 586 and included 1, 000 hours of overtime for out-of-sequence work.

14) Following submission of its bid, SPL was selected by Gaylord as the audio-visual subcontractor to McPhee on the Project.

15) Following its selection, SPL attended a meeting at which the parties discussed the addition of Phase II to the Project, which added more meeting rooms to SPL's scope, as well as some other potential scope changes and value-engineering alternates. On October 18, 2006, SPL sent an email to MTR with revisions to SPL's bid price. These revisions included an additional 2, 000 man hours in overtime work which were subsequently removed. The final bid price, not including the 2, 000 overtime hours (estimated at $173, 000) was $7, 240, 293.

16) In mid-December 2006, McPhee, on behalf of MTR, entered into a lump sum subcontract for all the A/V work for the Project (the "Subcontract"). SPL executed the Subcontract on December 18, 2006 and McPhee executed the Subcontract on December 19, 2006. The subcontract price was $7, 240, 293. The Subcontract incorporated SPL's revised bid price and equipment list as SPL's Scope of Work for the Project.

17) The Subcontract contains a provision that states the Subcontract supersedes all prior negotiations. Article 14.9 provides

This Subcontract is solely for the benefit of the signatories hereto and represents the entire and integrated Agreement between the parties hereto and supersedes all prior negotiations, representations, or agreements, either written or verbal.

18) The Subcontract does not contain a date certain to start the work, to finish the work, nor is there a guaranteed duration to perform the work. Article 3.1 provides

Time is of the essence of this Subcontract. Whenever this Subcontract refers to days, the reference shall be calendar days. The Subcontractor shall perform the Work in strict accordance with the schedule published by the Construction Manager and/or the Contractor for the Project (the "Project Schedule"). The Subcontractor shall provide the Contractor with any requested scheduling information for the Work, and attend all scheduling meetings as requested by the Contractor.

19) The scope of work of SPL is set forth in Article 2.1 which provides

The Subcontractor shall provide and pay for all labor, materials, equipment, supplies, facilities, sales tax, supervision and administration necessary for the proper and complete performance and acceptance of the work as described in Schedule A "Scope of Work", attached hereto and made a part hereof, all of which is referred to as the "Work" or the "Subcontractor's Work". Schedule A is a 27 page listing of specific equipment which SPL was required to install. The total material cost was $3, 750, 761 and the total labor cost was $2, 879, 114. Shipping and handling, equipment rental, and payment and performance bonds brought the total subcontract price to $7, 240, 293.

20) The Subcontract also provides for changes in the schedule of work as well as work interruptions. Articles 3.2 and 3.3 provide

The Subcontractor recognizes that changes may be made in the Schedule of Work and agrees to comply with such changes. Subcontractor recognizes that scheduling of the Work is the exclusive right of the Contractor and Subcontractor agrees to adhere to schedule changes without any additional compensation.
The Subcontractor shall commence the Work as instructed by the Contractor. If the Work is interrupted for any reason, the Subcontractor shall resume such Work within three days from the Contractor's notice to do so.

21) The Subcontract specifically provides that SPL may be required to increase its workforce and accelerate its performance without additional compensation. Article 8.9 provides in pertinent part

The Subcontractor shall promptly increase its work force, accelerate its performance, work overtime, work Saturdays, Sundays and holidays, all without additional compensation, if, in the opinion of the Contractor, such Work is necessary to maintain progress in accord with the Schedule of Work. The Subcontractor shall conform to the Contractor's hours of work. No premium time will be acknowledged or paid unless pursuant to a written agreement to do so by the Contractor.

22) Additional provisions of the Subcontract cover changes and claims. Articles 6.1, 6.2.1 and 6.2.2 provide

The Subcontractor shall not be entitled to, nor shall it receive, any increase in the Subcontract price or increase in the time for performance of the Work except upon the written Change Order from the Contractor.
The Contractor may order changes, additions, or deletions in the Work by written Change Order. Any change or adjustment in the Contract price by virtue of such Change Order shall be specifically stated in said Change Order. Prior to the issuance of any Change Order, the Subcontractor if requested by the Contractor shall furnish within seven days or sooner if required by the Contract Documents, a detailed breakdown showing the difference in value of work, labor, services, and materials altered, added, omitted or changed by the proposed Change Order. If an agreement as to monetary allowance or other terms in the Change Order cannot be reached, the Contractor[] may direct in writing the Subcontractor to perform the Work with the final adjustment reserved until completion of the Subcontract and General Contract. The failure of the Subcontractor to immediately commence performance of any Change Order, when so directed in writing by the Contractor, whether or not all terms have been agreed upon, may be deemed a material breach and the Subcontractor held in default of this Subcontract. Any extension of time needed as a result of a proposed Change Order shall be requested by the Subcontractor in writing prior to the issuance of the Change Order and shall be incorporated therein to the extent required by the change.
Adjustment in the Contract Price or Contract time, if any, resulting from Owner initiated Change Orders shall be determined pursuant to the Contract Documents. Notwithstanding any other provision of this Agreement to the contrary, in no event shall Subcontractor be entitled to price or time adjustments for Owner initiated change orders in an amount greater than Contractor receives from the Owner.

23) The issue of delays in the Subcontractor's Work is covered in the Subcontract. The Subcontract contains a "no damages for delays" clause that limits SPL's recovery for an excusable delay to an extension of time. Article 6.6 provides

If the progress of the Subcontractor's Work is substantially delayed without the fault or responsibility of the Subcontractor, then the time for the Subcontractor's Work shall be extended by Change Order only to the extent such extensions are ...

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