United States District Court, D. Maryland
DC MASON BUILDERS, INC.
BANCROFT CONSTRUCTION CO. and LIBERTY MUTUAL INSURANCE CO. BANCROFT CONSTRUCTION CO.
JLN CONSTRUCTION SERVICES, LLC
Richard D. Bennett United States District Judge
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”). 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
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.
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.
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).
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.
Performance of the Contract
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).
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.
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).
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.”
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 where required.
(ECF No. 74, Ex. 22). Second, JLN failed to complete on time
its masonry mockup panels 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).
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). 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.,
JLN's Termination of DC Mason
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.
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).
Bancroft's Reassignment of JLN's Masonry
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).
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
Base Contract Work
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.
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
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.
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. ...