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DC Mason Builders, Inc. v. Bancroft Construction Co.

United States District Court, D. Maryland

November 27, 2018

DC MASON BUILDERS, INC.
v.
BANCROFT CONSTRUCTION CO. and LIBERTY MUTUAL INSURANCE CO. BANCROFT CONSTRUCTION CO.
v.
JLN CONSTRUCTION SERVICES, LLC

          MEMORANDUM

          Richard D. Bennett United States District Judge

         This case was originally instituted by DC Mason Builders, Inc. (“DC Mason”), a subcontractor on a school construction project, against the prime contractor, Bancroft Construction Company (“Bancroft”), and its surety, Liberty Mutual Insurance Company (“Liberty Mutual”).[1] Bancroft has settled that claim, (ECF No. 52), and as a third-party plaintiff/counter-defendant seeks damages and a declaratory judgment against third-party defendant/counter-plaintiff/cross-plaintiff JLN Construction Services, LLC (“JLN”) for contract claims related to that construction project. JLN counter-claims and cross-claims against Bancroft and third-party counter-defendant Liberty Mutual for claims related to the same project. Now pending are JLN's motion for partial summary judgment (ECF No. 73) and Bancroft's and Liberty Mutual's motion for summary judgment (ECF No. 74). The parties have fully briefed the motions, and no oral argument is necessary. See Local R. 105.6. For the reasons set forth below, JLN's motion for partial summary judgment is DENIED. Bancroft's and Liberty Mutual's motion for summary judgment is GRANTED IN PART and DENIED IN PART. Specifically, it is granted with respect to JLN's discrimination claim and its claim for any actual damages. It is denied with respect to JLN's claim as to any nominal damages.

         BACKGROUND

         This dispute concerns cross-claims arising under a construction subcontract between the prime contractor and the subcontractor. On February 3, 2014, the Queen Anne's County Public School District (the “County” or “Owner”) awarded Bancroft a contract for renovations to the Stevensville Middle School (the “Project”). Pursuant to the requirements of the Maryland “Little Miller Act, ” Md. Code Ann., State Fin. & Proc. § 17-101 et. seq., Bancroft obtained a payment bond on the project from Liberty Mutual, naming Liberty Mutual as a surety on the Project. Bancroft entered into subcontracts with different contractors for the various areas of work, including hiring JLN, a Minority Business Enterprise (“MBE”), for two subcontracts: (1) sitework and (2) masonry work. The masonry work was divided into Phases I and II. (ECF No. 55, & 20). The claims between the parties focus on the masonry work rather than the sitework.

         I. The Contract

         Bancroft and JLN formed their contract in March 2014. Three documents are relevant to this contract: (1) a master set of General Conditions (“General Conditions”) (ECF No. 74, Ex. 3); (2) a Summary of Work Agreement for sitework (ECF No. 73, Ex. 2); and (3) a Summary of Work Agreement for masonry work (ECF No. 74, Ex. 1). Both Summary of Work Agreements were signed by JLN and counter-signed by Bancroft, and the parties do not dispute these agreements form binding contract documents for the Project. (ECF No. 76, Ex. 1; ECF No. 73, Ex. 2). JLN, however, claims the General Conditions are not part of the parties' binding contract because Bancroft did not sign this document. (ECF No. 73-1, p. 2). The enforceability of this document is relevant because the document contains an indemnification clause stating,

To the fullest extent permitted by law, Subcontractor agrees to indemnify, defend and hold harmless Bancroft, its officers, agents, employees, and the Owner from and against any and all liabilities, losses, damages, demands, claims, suits, taxes, costs and expenses including reasonable legal fees and other expenses of litigation for…any penalty or fine incurred by or assessed against Bancroft or its client…or any breach of this agreement arising out of or in connection with the active or passive negligence, errors, omissions, or willful misconduct of Subcontractor, its agents, employees, or Subcontractors, arising out of related to the performance of the work hereunder.

(ECF No. 74, Ex. 3, p. 9, & 13). Bancroft claims JLN breached the Subcontract because JLN failed to indemnify Bancroft pursuant to this clause when Bancroft settled this lawsuit with JLN's subcontractor, DC Mason Builders, Inc. (“DC Mason”).

         Before signing the General Conditions document, JLN made some amendments and corrections to the version it received from Bancroft. JLN's president, Namdi Iwuoha (“Iwuoha”), initialed each page of the amended General Conditions and signed the amended document on March 3, 2014. (ECF No. 74, Ex. 3). JLN sent the document back to Bancroft, but Bancroft did not sign it. Id. JLN now contends Bancroft's failure to sign the amended version of the General Conditions renders this document unenforceable. (ECF No. 73-1, p. 2). Iwuoha, however, testified in deposition that the General Conditions “[were] one of the contract documents that [JLN] signed and were subject to in conducting [its] work.” (ECF No. 76, Ex. 3, Iwuoha Tr. 53:12-17). Additionally, in its interrogatory answers, JLN identified the General Conditions as one of the documents “form[ing] the contract between JLN and Bancroft relating to the Project.” (ECF No. 76, Ex. 5, Interr. No. 8).

         Bancroft's claims arise out of the suit brought against it by DC Mason. JLN contracted with DC Mason for the masonry scope of JLN's work on or about March 28, 2014. (ECF No. 74, Ex. 4). Under JLN's contract with Bancroft, JLN was responsible for the acts of DC Mason as its subcontractor. (ECF No. 74, Ex. 3, p. 8, ¶ 15). Specifically, the contract specifies JLN is “fully responsible for the acts or omissions of its Subcontractor, ” and all “subcontracted work must be in conformance with the terms and conditions of this Agreement.” Id. Ultimately, JLN terminated its subcontract with DC Mason, and DC Mason filed suit against Bancroft alleging payment bond claims, intentional interference, and discrimination. JLN did not defend or indemnify Bancroft in this action.

         II. Performance of the Contract

         In the early summer of 2014, JLN and DC Mason began the masonry work on the Project. (ECF No. 74, Ex. 5, Betz Tr., 13:6-8; 33:12-16; ECF No. 74, Ex. 2, Iwuoha Tr. 65:7-18). After Phase I of the masonry work was complete, Bancroft provided some positive feedback to JLN on its performance. (ECF No. 78, Ex. 5, p. 4-5). JLN's and DC Mason's performance, however, was also deficient in numerous ways, including delays, safety violations, and defective work. (ECF No. 74-1, p. 10; ECF No. 78, Ex. 5, p. 5-7).

         A. Delays

         JLN fell behind schedule in its work early on in the project. While winter weather conditions were the cause of JLN's sitework delays, insufficient manpower and supervision appear to have been the causes of JLN's masonry work delays. (ECF No. 78, Ex. 14). JLN's manpower and supervision problems are evidenced by multiple directives from Bancroft to JLN instructing JLN to provide adequate manpower and to provide a fulltime masonry foreman for the work site.

         Bancroft repeatedly notified JLN of its insufficient manpower on the Project site. (ECF No. 74, Ex. 5, Betz Tr. 32:19-22, 33:1-3). Bancroft issued its first Notice to Comply for Insufficient Manpower to JLN on June 19, 2014, explaining JLN's current manpower was inadequate because there was only one site and one masonry crew. (ECF No. 74, Ex. 16). Bancroft directed JLN “to provide sufficient manpower to meet schedule and contract.” Id. On June 26, 2014, Bancroft's Project Manager, Holly Tarr (“Tarr”), issued another directive to JLN regarding this problem, informing JLN its “inability to provide additional manpower is causing delays to numerous tasks.” (ECF No. 74, Ex. 17). Tarr informed JLN that failing to increase its manpower would force Bancroft to “examine [its] options to complete [JLN's work] on schedule per the terms of [the] contract.” Id. On September 25, 2014, Bancroft again communicated to JLN regarding the inadequate manpower problem, stating “We cannot continue to lose time on the schedule due to your mason's lack of performance. As a result, we will take whatever measures necessary to get your work completed as quickly as possible; and you will be responsible for that cost….” (ECF No. 74, Ex. 18).

         Bancroft also communicated with JLN about supervision problems, requesting JLN provide a fulltime masonry foreman for the site. Jeff Zimmerman served as JLN's foreman for both the sitework and the masonry work, which was unacceptable to Bancroft. (ECF No. 74, Ex. 5, Betz Tr. 34:18). Bancroft notified JLN multiple times that JLN needed a separate masonry superintendent. Id. at 33:4-11. In June 2014, Bancroft directed JLN to provide a full-time masonry foreman immediately, explaining “The sitework that is happening is more than enough to keep [Zimmerman] busy….Piling the masonry oversight on him is far too much for him to handle by his own admission.” (ECF No. 74, Ex 19). JLN claimed the masonry superintendent role was performed by Les Cummings, the owner of DC Mason; however, Bancroft informed JLN this arrangement was unacceptable because Bancroft's contract was with JLN, not DC Mason. (ECF No. 74, Ex. 12). Bancroft attributed delays to JLN's failure to have a dedicated masonry foreman, telling JLN, “[N]ot having a knowledgeable, full-time JLN foreman on site has resulted in huge amounts of wasted time.” Id.

         B. Defects

         JLN's work also suffered from defects, most notably the failure to install factory bullnose corners on walls and the failure to provide timely masonry mock up panels. First, DC Mason, as JLN's masonry subcontractor, improperly installed walls by failing to install factory bullnose corners[2] where required. (ECF No. 74, Ex. 22). Second, JLN failed to complete on time its masonry mockup panels[3] and samples for the Architect's approval. The deadline was pushed back at least once from May 2014 to June 2014 to accommodate JLN, but JLN failed to meet the extended deadline. (ECF No. 74, Exs. 25, 26). In July 2014, Bancroft informed JLN it was “months late in completing [its] masonry mockups, ” leading the Architect to make “several wasted trips down to the jobsite to review [its] mockup panels and samples only to find that they were incomplete.” (ECF No. 74, Ex. 12).

         C. Safety Violations

         JLN's and its subcontractor's work were also marred by safety violations. (ECF No. 74, Exs. 6, 7). Occupational Safety and Health Administration (“OSHA”) safety regulations governed the Project, and all subcontractors and sub-subcontractors were required to comply with these regulations. (ECF No. 74, Ex. 3, ¶ 2 at 2). Under JLN's contract with Bancroft, Bancroft was entitled to stop JLN's work if JLN or its subcontractor failed to comply with safety regulations. Id. JLN admits it had multiple conversations about D.C. Mason's failure to comply with the safety regulations, and it notified DC Mason that continued safety violations would force JLN to remove DC Mason from the site. (ECF No. 74, Ex. 5, Betz Tr. 154:9-21, 156:4-16).[4] In fact, the safety violations led to the removal of a DC Mason employee from the jobsite for failing to wear proper safety equipment while cutting concrete masonry units with a power saw. (ECF No. 74, Ex., 8).[5]

         D. JLN's Termination of DC Mason

         Bancroft addressed these issues of delays, work defects, and safety violations in a meeting with JLN in October of 2014 before beginning Phase II of the masonry work. (ECF No. 74, Ex. 27). The meeting resulted in a Letter Agreement between Bancroft and JLN stating, among other things, that JLN would remove DC Mason from all interior masonry work because of the deficiencies in DC Mason's performance. (ECF No. 74, Ex. 28). Removing DC Mason from interior work, however, did not solve the problems. On October 15, 2014, Bancroft again notified JLN of problems with DC Mason's work. This email informed JLN that DC Mason performed work deficiently and failed to correct the work properly. (ECF No. 74, Ex. 24). Bancroft also informed JLN that Cummings, “spent the last several mornings on site attempting to stop [Bancroft's] Mason from correcting [DC Mason's] deficiencies and generally being disruptive to other trades and Bancroft.” Id.

         After receiving Bancroft's email, JLN placed DC Mason on immediate suspension. (ECF No. 74, Ex. 30, p. 3). Two weeks later, JLN terminated its contract with DC Mason altogether because JLN had concluded DC Mason, “[had] neither intention nor the ability to follow simple directives, drawings, and specifications, ” and DC Mason “continued to cause harm and delay [the Project] by the following actions: poor workmanship, lack of ability to man the project…; failure to perform services…; lack of responsiveness…; safety violations.” (ECF No. 74, Ex. 31).[6]

         E. Bancroft's Reassignment of JLN's Masonry Work

          After the Phase I masonry work was completed, Bancroft reassigned part of JLN's Phase II masonry work to DW Masonry, another masonry company. (ECF No. 78, Ex. 4, Nave Tr. 23:9-14). JLN was notified of the reassignment on October 6, 2014 at the latest. (ECF No. 74, Ex. 27). Bancroft attributes the reassignment decision to the performance deficiencies in JLN's work on Phase I. JLN, however, contends the reassignment was discriminatory. Robert Betz, JLN's Project Manager, testified a Bancroft site superintendent, Scot Adams, used a racial slur during a phone call with JLN and DC Mason in August 2014. (ECF No. 78, Ex. 2, Betz Tr. 80:13-21, 81:1-8). JLN claims the racial slur is evidence of Bancroft's discriminatory motives in reassigning part of JLN's work. Shortly after the alleged slur, DC Mason sent a complaint, in which JLN did not join, to the County and the Governor's Office of Small, Minority, and Women Business Affairs (“GOMA”) alleging racial discrimination by Bancroft. Bancroft conducted an internal interview investigation following the complaint. When JLN was interviewed for the investigation, JLN admitted, contrary to what it now alleges regarding discrimination, that it had experienced no problems or issues with Bancroft. (ECF No. 74, Ex. 33, p. 6).

         III. Contract Balance

         The remaining contract balance is also at issue. JLN counter-claims against Bancroft and Liberty Mutual for $843, 749.52 in construction damages, alleging Bancroft has not paid JLN for certain base contract work and ten change orders.

         A. Base Contract Work

         JLN claims Bancroft has not yet paid JLN for all of the work completed on the project. Iwuoha testified through affidavit that JLN “submitted its last billing to Bancroft through Bancroft's Textura system, ” but “Bancroft refused to approve the billing or generate the final pay application for both the site work and the masonry work.” (ECF No. 78, Ex. 3, & 51). JLN, however, failed to submit any evidence establishing how much it is owed under the Subcontract.

         B. Change Orders

         JLN also alleges there are ten outstanding change orders at issue: Sitework Change Orders 1S, 2S, 16, 17, 23 and 24 and Masonry Change Orders 1, 5, 9, and 10. Bancroft's explanations as to why these Change Orders were not paid or were not submitted to the Owner fall into three categories: (1) the change order was for base contract work, (2) the change order was for work that was never performed, and (3) the change order was untimely and/or unsubstantiated.[7]

         First, Sitework Change Order 2S and Masonry Change Order 9 were rejected because they sought adjustment for work included in the scope of the Subcontract. (ECF No. 74, Ex. 48, p. 2; ECF No. 74, Ex. 49, p. 2). JLN admitted in an email that Change Order 2S was included in JLN's original scope of work, stating “JLN has accepted ownership of [this order], as this is the footprint of the parking lot that we accepted in our scope of work agreement.” (ECF No. 74, Ex. 49, p. 2).

         Second, Sitework Change Orders 16, 17, 23, and 24 and Masonry Change Orders 1 and 5 were cancelled because the work claimed in these change orders was never performed. ...


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