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Pritchett Controls, Inc. v. Hartford Accident and Indemnity Co.

United States District Court, D. Maryland

January 10, 2019

PRITCHETT CONTROL, INC.
v.
HARTFORD ACCIDENT AND INDEMNITY COMPANY

          MEMORANDUM

          Catherine C. Blake United States District Judge.

         Phase One of the Kirk Bus Modernization project in Baltimore, Maryland, required the procurement and installation of heating, ventilation, and air conditioning automatic temperature controls equipment ("HVAC controls"). This case is about the Maryland Transit Administration's ("MTA") contract ("the general contract") with James W. Ancel, Inc. ("JWA") to complete the modernization project and a subcontract ("the subcontract") between JWA and : Pritchett Control, Inc. ("Pritchett"), to carry out the HVAC controls component of the general contract. Pritchett has moved for summary judgment on its only claim, which is a payment bond action under the Maryland Little Miller Act. (Compl. ¶¶ 22-30.) Hartford Accident and Indemnity Company, the defendant in the instant matter and the supplier of the payment bond for the government contract at issue, contends that Pritchett tortiously interfered with the general contract between MTA and JWA, and procured the subcontract between JWA and itself through illegal means.[1] For the reasons explained below, including the lack of sufficient evidence in the voluminous record to indicate that Pritchett interfered with the general contract or procured the subcontract by illegal means, Hartford is liable under the payment bond, and summary judgment will be granted in Pritchett's favor.

         BACKGROUND

         The preamble here is short. MTA drew up highly-detailed design plans for a construction project called Kirk Bus Modernization-Phase 1. (Def s Mem. Opp'n Mot. Summ. J. at p. 3, ECF No. 36.)[2] MTA then solicited fixed-price bids based on its design plans and specifications. One such specification, Section 15900-"HVAC Instrumentation and Controls," specified, among other directives, that "[t]he [HVAC] system shall be an extension of an existing Schneider I/A Series Network 8000 and Enterprise Network Controller system furnished and installed by Pritchett Controls." (Def s Mem. Opp'n Mot. Summ. J., Ex. A, ECF No. 36-1 at p. 3.) It further specified that "[a]ll work described in this section shall be installed, wired, circuit tested and calibrated by factory certified technicians qualified for this work and in the regular employment of the Pritchett Controls - no exceptions." (Id. at p. 8.) JWA's bid won and on August 21, 2013, MTA awarded JWA a $41, 154, 270.00 contract to complete the project. (ECF No. 36 at p. 4.)

         As the project got underway, JWA contacted Pritchett to negotiate a price for its work under Section 15900. It is undisputed that Pritchett's price ($820, 000) was almost three times the cost of the HVAC estimate provided by the MTA Engineer's Estimate. (James W. Ancel, Sr. Aff. ("Ancel Aff"), Ex. 2, ECF No. 36-3, at p. 12, (Entry 15900)) JWA proceeded to solicit HVAC bids from other subcontractors, who responded with bids that were in the vicinity of the MTA engineer's estimate. (Defs Mem. Opp'n Mot. Summ. J. at p. 5, ECF No. 36.) While the other subcontractors warranted that their HVAC controls system would be compatible with the existing Schneider I/A Series, none of the competing bids were for another Schneider I/A Series system-one, for example, was for an Honeywell System, another for a Johnson Controls system.[3] (See, e.g., Ancel Aff., Ex. 4, ECF 36-3, at p. 16.) JWA further asserts that there were other vendors of Schneider equipment in the Baltimore area at the time, contending that Pritchett misrepresented itself to MTA as the only Schneider supplier. (See, e.g., id. at ¶ 13; see also Def s Mem. Opp'n Mot. Summ. J. at pp. 13-14, ECF No. 36.) It is unclear from the papers, however, whether Pritchett was the only supplier of Schneider I/A Series.[4]And regardless, this court is in no position to pass on the availability of Schneider I/A Series systems, nor on the merits of the interoperability concerns voiced repeatedly by MTA throughout the record. Suffice it to say there were real or feigned interoperability concerns that led MTA to list Pritchett as the only acceptable supplier of the HVAC controls system.[5]

         In the ensuing months, JWA submitted three proposals to MTA for alternative HVAC control systems, all of which were denied. (See Def s Mem. Opp'n Mot. Summ. J., Ex. B, ECF No. 36-1 at pp. 35-36.) The thrust of Hartford's collusion, tortious interference, and illegality defenses to paying the bond stem from communications that transpired between Pritchett and MTA during the two-year period between August 21, 2013, when MTA and JWA entered into the general contract, and November 16, 2015, when JWA signed the Pritchett subcontract. Hartford argues that "Pritchett contacted the MTA and worked with the MTA to deny [JWA's] contract right to propose a different product and installer in violation of both State of Maryland procurement law and [JWA's] contract rights." (Def s Mem. Opp'n Mot. Summ. J. at p. 5, ECF No. 36.) To support this allegation, it submits a series of e-mails, chief among them being repeated messages between Ba Kalita of Pritchett Controls and Arthur Ives of MTA from the interim period between the general contract and the subcontract in which Mr. Ives assures Pritchett that it will reject competing subcontractor bids, Mr. Ives and MTA employees express frustration with TWA to Pritchett, and Pritchett asks for repeated updates. These communications do not appear free of all impropriety. Indeed, at one point Mr. Ives tells Kalita: "Jimmy is up to something! ... Keep all of this Very Confidential so I don't get into the 'MUD.'"[6] (Def s Mem. Opp'n Mot. Summ. J., Ex. H, ECF No. 36-1 at p. 100.) Hartford infers from this lengthy communication chain that "Pritchett was clearly communicating with MTA to ensure submittals by [JWA], other than a Pritchett submittal. . . would be rejected", and that "Pritchett misrepresented the facts in order to create a sole source environment." (Def s Mem. Opp'n Mot. Summ. J. at pp. 12, 14, ECF No. 36.)

         JWA then, perhaps despite itself, entered into a subcontract with Pritchett for the HVAC controls work. Pritchett performed the work and submitted periodic requests for progress payments. (See Pl.'s Mem. Mot. Summ. J. at pp. 12-14, ECF No. 31.) Moreover, JWA requested that Pritchett perform additional work to that enumerated in the subcontract, and numerous change orders were executed to that effect. (Pl.'s Mem. Mot. Summ. J. at pp. 14-16, ECF No. 31; Affidavit of Peter Ewart ("Ewart Aff.") Ex. 7-11, ECF No. 32-7 - ECF No. 32-11.) One change order entailed a small deduction in the total subcontract price for work completed by a different subcontractor. (Ewart Aff. ¶ 22, ECF No. 32; Ewart Aff., Ex. 9, ECF No. 32-9.) All told, the subcontract value, with the various additions and deduction(s), totaled $750, 397.00. (Pl.'s Mem. Mot. Summ. J. at pp. 30-31, ECF No. 31.)

         Pritchett filed the instant motion for summary judgment on March 30, 2018, seeking payment of the outstanding $750, 397.00 balance with interest at $123.35 per day. (ECF No. 30.) On April 10, 2018, Hartford raised for the first time, in an amended answer, allegations of tortious wrongdoing by Pritchett and related affirmative defenses to summary judgment. (ECF No. 35.)[7] Hartford filed its response to Pritchett's motion for summary judgment on April 13, 2018. (ECF No. 36.) Pritchett filed its Reply on April 27, 2018. Pritchett's motion for summary judgment is thus ripe for disposition and no hearing is necessary. See Local Rule 105.6.

         ANALYSIS

         I. Standard of Review

          Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a) (emphases added). "A dispute is genuine if 'a reasonable jury could return a verdict for the nonmoving party.'" Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013) (quoting Dulaney v. Packaging Corp. of Am., 673 F.3d 323, 330 (4th Cir. 2012)). "A fact is material if it 'might affect the outcome of the suit under the governing law."' Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Accordingly, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment[.]" Anderson, 477 U.S. at 247-48. The court must view the evidence in the light most favorable to the nonmoving party, Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014) (per curiam), and draw all reasonable inferences in that party's favor, Scott v. Harris, 550 U.S. 372, 378 (2007) (citations omitted); see also Jacobs v. N.C. Admin. Office of the Courts, 780 F.3d 562, 568-69 (4th Cir. 2015). At the same time, the court must "prevent factually unsupported claims and defenses from proceeding to trial." Bouchat v. Bait. Ravens Football Club, Inc., 346 F.3d 514, 526 (4th Cir. 2003) (quoting Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993)).

         II. Discussion

         A. Prima Facie Case for Payment Pursuant to Maryland's Little Miller Act

         Pritchett has made a prima facie case for payment under the Hartford surety bond. This is not in dispute.[8] The Maryland Little Miller Act, Md. Code Ann., State Fin. & Proc. §§ 17-101, et seq., requires construction contractors working on behalf of Maryland public agencies to secure a payment bond when the public construction contract exceeds $100, 000. Md. Code Ann., State Fin. & Proc. § 17-104(a). The state analog to the federal Miller Act, the statute protects suppliers who furnish material and labor on public construction projects who, but for sovereign immunity, could secure payment using a mechanics lien. See F. D. Rich Co. v. U.S. for Use of Indus. Lumber Co., 417 U.S. 116, 122 (1974); Allied Bldg. Prod. Corp. v. United Pac. Ins. Co., 77 Md.App. 220, 226 (1988). Maryland courts often look to federal court decisions construing the Miller Act when interpreting the Little Miller Act. Allied Bldg. Prod. Corp., 77 Md.App. at 226-27. "The Miller Act is highly remedial (and) entitled to a liberal construction and application in order properly to effectuate the Congressional intent to protect those whose labor and materials go into public projects[.]" F. D. Rich Co., 417 U.S. at 124. Under the Little Miller Act, a subcontractor is entitled to payment from the surety when it "(1) supplied labor or materials for a contract subject to [the Act]... (2) has not been paid in full for the labor or materials within 90 days after the day that the person last supplied labor or materials for which the claim is made . .. [3] [an] action ... [is] filed within one year after the public body finally accepts the work performed under the contract." Md. Code Ann., State Fin. & Proc. §§ 17-108(a)(1)-(2), 17-109(b); see also U.S. for Use of Honeywell, Inc. v. A &L Mech. Contractors, Inc., 677F.2d 383, 386 (4th Cir. 1982); United States ex rel. Warren Painting Co. v. J.C. Boespflug Constr. Co., 325 F.2d 54, 62 (9th Cir. 1963) ("[a]U that is required [to establish a Miller Act Claim] is proof that the labor or material was furnished in the prosecution of the work provided for in the prime contract, and that the subcontractor has not been paid therefor").

         Here, the uncontested facts demonstrate that Pritchett's claim meets the requisite test for payment of a surety bond under the Maryland Little Miller Act. First, the parties do not dispute that Pritchett supplied labor and materials for the subcontract and that the subcontract was subject to the Maryland Little Miller Act. Second, it is uncontested that Pritchett has not been paid for the labor and materials it furnished. Third, MTA accepted Pritchett's work on March 15, 2017, and Pritchett's bond payment action was filed on July 25, 2017, well within the one-year deadline. Pritchett has thus, made out a viable prima facie claim for payment.

         B. Hartford's ...


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