United States District Court, D. Maryland
K. Bredar. Chief Judge
filed in New Jersey state court, this lawsuit was brought by
Plaintiff Hagen Construction, Inc. (“Hagen”),
against Defendant Whiting-Turner Contracting Co.
(“W-T”) after Hagen had served as a subcontractor
on the construction of Nemours - Alfred I. DuPont Hospital
for Children Outpatient Center (the “Project”) in
Deptford, New Jersey. (Compl., ECF No. 1-1.) The case was
removed to the United States District Court for the District
of New Jersey which granted a change of venue to this Court
based on a forum selection clause in the subcontract. (Notice
of Removal, ECF No. 1; Order, Apr. 24, 2018, ECF No. 32.)
complaint contains three counts: Count I, breach of contract;
Count II, violation of New Jersey's Prompt Pay Act; and
Count III, unjust enrichment. The case has proceeded through
discovery and the filing of W-T's motion for partial
summary judgment as to Hagen's labor inefficiency claim,
which is part of Count I. (W-T's Mot. Partial Summ. J.
(“W-T's Mot.”), ECF No. 55.) The motion has
been briefed (ECF Nos. 62, 64) and is ready for decision.
Hagen has also filed a motion for leave to file a surreply
(ECF No. 66), and that, too, has been briefed (ECF No. 67)
and is ripe. No. hearing is required. Local Rule 105.6 (D.
Md. 2018). W-T's motion will be granted, and Hagen's
motion will be denied.
Standard for Summary Judgment
court shall grant summary judgment 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); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986) (citing predecessor to current Rule
56(a)). The burden is on the moving party to demonstrate the
absence of any genuine dispute of material fact. Adickes
v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). If
sufficient evidence exists for a reasonable jury to render a
verdict in favor of the party opposing the motion, then a
genuine dispute of material fact is presented and summary
judgment should be denied. See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). However, the “mere
existence of a scintilla of evidence in support of the
[opposing party's] position” is insufficient to
defeat a motion for summary judgment. Id. at 252.
The facts themselves, and the inferences to be drawn from the
underlying facts, must be viewed in the light most favorable
to the opposing party, Scott v. Harris, 550 U.S.
372, 378 (2007); Iko v. Shreve, 535 F.3d 225, 230
(4th Cir. 2008), who may not rest upon the mere allegations
or denials of his pleading but instead must, by affidavit or
other evidentiary showing, set out specific facts showing a
genuine dispute for trial, Fed.R.Civ.P. 56(c)(1). Supporting
and opposing affidavits are to be made on personal knowledge,
contain such facts as would be admissible in evidence, and
show affirmatively the competence of the affiant to testify
to the matters stated in the affidavit. Fed.R.Civ.P.
documents govern the Court's analysis of W-T's
motion. The first is the Subcontract signed by both parties.
(W-T's Mot. Ex. 2, ECF No. 55-6.) The second is the
Subcontractor's Partial Release Waiver of Lien and
Affidavit, attached as Exhibit I to the Subcontract and made
a part thereof. (ECF No. 55-6 at p. 49 (for this document,
the Court utilizes the pagination generated by CM/ECF).)
Subcontract are several pertinent provisions:
• ARTICLE 5. PAYMENT- . . .
(b) . . . As a condition precedent to the payment of any
application, the Subcontractor shall (1) produce waivers of
mechanics lien rights and claim releases in the form required
by Contractor by Subcontractor and all persons supplying
labor or materials to the Subcontractor on the Project
through the period covered by the application, or (2) exhibit
such other evidence as the Contractor may require that
charges for all labor and material have been paid.
. . .
• ARTICLE 6. ADDITIONAL OR OMITTED
(a) In the event that the Contractor directs Subcontractor to
perform additional work, Subcontractor agrees that it will
promptly perform and diligently complete such work whether or
not Contractor and Subcontractor have agreed on the cost of
such work. Subcontractor shall submit to Contractor a lump
sum proposal for such work, which proposal shall include a
detailed cost breakdown for each component of the work,
indicating both quantities and unit prices, and such proposal
shall be submitted to Contractor not later than 7 days after
Contractor directs Subcontractor to perform extra or
additional work or such lesser period if required by the
Contract between Owner and Contractor. If a lump sum price or
unit price for the additional work cannot be agreed upon, or
Subcontractor fails to submit such proposal within 7 days
after Contractor directs Subcontractor to perform extra or
additional work, Subcontractor agrees to do the work on the
basis of its actual cost plus percentage fees for overhead
and profit as set forth in Article 10. The Contractor shall
not be liable for payment for any additional work performed
by the Subcontractor unless such work is first expressly
authorized by the Contractor in writing and payment is made
by the Owner to the Contractor for such extra work, payment
by Owner to Contractor being a condition precedent for
Contractor to pay Subcontractor for such work. Both
authorization in writing by the Contractor and actual payment
by the Owner to the Contractor for such extra work shall be
conditions precedent to Contractor's obligation to pay
Subcontractor for such additional work. Any additional
compensation or time to be given to Subcontractor shall be
set forth in a Subcontract supplement and shall constitute a
full and final equitable adjustment of compensation, time or
any other alleged entitlement, known or unknown, arising in
connection with the facts and circumstances described in and
which gave rise to such contract supplement and Subcontractor
waives all damages, direct, indirect and consequential,
relating to such facts and circumstances, including, but not
limited to, impact, reduced productivity, interference by
other trades, lack of coordination of the work by Contractor,
inefficiencies, acceleration, delays, extended overhead,
diminished bonding capacity or lost profits.
. . .
(d) In the event of any dispute, controversy, or claim for
additional compensation or time extensions, except for
payment for extra or additional work expressly directed by
Contractor in accordance with Section 6 (a) of this
Subcontract, the compensation for which shall be fully and
finally governed by Section 6 (a) of this Subcontract and for
which no further claim can or shall be made, notice in
writing shall be given to the Contractor no later than seven
(7) days following the occurrence on which such claim is
based, unless the notice provision in the General Contract
between the Owner and Contractor is less than seven (7) days,
in which case, Subcontractor shall give notice to Contractor
within 2 days less than the time required for Contractor to
give notice to the Owner according to the notice provision in
the General Contract. Such notice shall describe the dispute,
controversy or claim in detail so as to allow Contractor to
review its merits. Such notice shall also provide detailed
information to substantiate such claim including supporting
documentation and calculations, and including any information
requested by Contractor. Any claim not presented within such
time period shall be deemed waived by Subcontractor.
. . .
• ARTICLE 8. RELEASES OF CLAIMS AND WAIVER OF
Subcontractor agrees to provide to Contractor, and to provide
and obtain from its subcontractors and suppliers of all
tiers, executed releases of claims and/or waivers of liens
and lien rights in the form required by Contractor and at
such times as may be requested by Contractor.
Subcontractor's Partial Release Waiver of Lien and
Affidavit provided in pertinent part:
The undersigned Subcontractor, in consideration of the
payments previously made and payment for the period covered
by the current invoice set forth above, hereby waives and
releases all mechanic's, materialman's or other liens
and, to the fullest extent permitted by law, all rights to
file any such liens in the future, and all claims and demands
against Contractor, Owner, their sureties and the real
property on which the project is located, in any manner
arising out of work, labor, services, equipment or materials,
performed or furnished by Subcontractor, its subcontractors,
and suppliers, in connection with the Project and
subcontract, through the period covered by the current
invoice and all previous invoices. The release does not apply
to retention, nor to extra work which Subcontractor has been
authorized to proceed with by the Contractor, but for which
payment has not yet been approved.
Except as noted below, Subcontractor acknowledges and
represents that for the period and work covered by all
previous invoices for which Subcontractor has received
1. Subcontractor has paid in full all amounts for
subcontract, labor, materials and rented equipment.
2. Subcontractor has properly applied previous payments to
pay all outstanding invoices related to the Project.
3. Subcontractor is aware of no claims nor any circumstances
that could give rise to any future claims against Contractor,
Owner, Architect or other Subcontractor on the Project.
4. All payroll, withholding, sales and other taxes, union
benefits, insurance premiums and any other amount required by
law, regulation or agreement to be paid in connection with
labor, materials, and equipment for the Project have been
paid in full.
List exceptions, if any:
. . .
I hereby certify, under penalties of perjury, that the facts,
information and representations set forth above are true and
accurate to the best of my knowledge, information and belief.
(Name of Subcontractor) BY:
(Signature, Printed Name and Title), Duly Authorized
Agent of Subcontractor
Subcontract under which Hagen agreed to provide the labor and
materials required to complete the drywall and rough
carpentry for the Project was executed on or about July 29,
2015. (Subcontract 9.) (Although Hagen and W-T also executed
another agreement in January 2016 for Hagen to complete
millwork and casework installation on the Project, only the
drywall subcontract is at issue in this case.) The amount to
be paid to Hagen under the Subcontract was $2, 400, 000; in
addition, pursuant to Article 10 of the Subcontract, W-T
agreed to pay Hagen its actual costs and certain percentage
fees for overhead and profit for extra work authorized in
writing under Article 6. (Subcontract 8.)
to Rebecca Reeves, W-T's project manager for the Project,
Hagen began work under the Subcontract in September 2015 and
achieved substantial completion of its work by June 30,
2016. (Reeves Decl. ¶ 13, W-T's Mot.
Ex. 1, ECF No. 55-5.) For each progress payment application
on the Subcontract, Hagen submitted a signed Partial Release
Waiver of Lien and Affidavit (“Partial Release”).
(Id. ¶¶ 14-16.) Hagen submitted a total
number of 16 payment applications and Partial
Releases. (Id.) On none of the Partial
Releases did Hagen list any exceptions. (Id. ¶
18.) In the first payment application numbered “14,
” which covers the time period after May 31, 2016, and
up to August 31, 2016, Hagen certified it was 100% complete
with its original work under the Subcontract. (Id.
¶ 20; Payment App'n 14, W-T's Mot. Ex. 4, ECF
No. 55-8 at pp. 95-101 (using CM/ECF pagination).) Four
additional payment applications were submitted after that
one, with dates of October 31, 2016 (the second application
numbered “14”), November 30, 2016 (application
numbered “15), November 30, 2016 (application numbered
“16”), and February 28, 2017 (application
numbered “17”). (Id. Ex. 4, ECF No. 55-8
at pp. 102-29.) Reeves states the latter four payment
applications “requested payment for additional work
subject to bilaterally executed contract supplements and the
release of retention.” (Reeves Decl. ¶ 22.) Reeves
states W-T paid Hagen in full for applications numbered 1-17.
(Id. ¶ 19.)
states, “Throughout the summer of 2017, W-T and Hagen
were negotiating close-out of the several open Hagen change
order requests which totaled $123, 499 and did not include
any labor inefficiency claims and several W-T backcharges
against Hagen (the ‘Open Items').”
(Id. ¶ 24.) The Court interprets this statement
as indicating W-T and Hagen were negotiating during the
Summer of 2017 the settlement of several open Hagen change
order requests and several W-T backcharges against Hagen;
further, the Court interprets Reeves's statement to mean
the open Hagen change order requests did not include any
labor inefficiency claims.
12, 2017, Reeves emailed George Jackson, who was Hagen's
project manager on the Project, and attached a copy of
W-T's “logs showing all open items at this
time.” (W-T's Mot. Ex. 7, ECF No. 55-11.) She also
With regards to the “Rejected” log, the majority
of these items are items that were submitted to Nemours
through the change order process and returned “not
approved”. We will need to review each item in detail
to resolve how they will be addressed. Additionally, the
Pending log is a list of open/pending backcharges. I will
compile the back-up for the miscellaneous issues and send
that to you in a separate email. . . .
. . .
At this point, I'd like to get through everything that we
can to issue a contract supplement early next week, even if
there are still a few items, including the HSJ charges that
are not yet finalized.
Please review and let me know your availability to discuss
next week. . . .
Jackson responded the next day,
Rebecca there is a lot of rejected and partial payments that
we need time to go through and identify what is happening and
where. I would like some time to review and then perhaps a
meeting to try and resolve? There is a lot to go through over
the phone. Let me know what you think. Thank you.
On May 17, 2017, Reeves responded,
I will likely put a supplement together of the approved items
to get those cleaned up. Please let me know some dates that
you may be available to review-I want to get something on our
calendars before we both get booked up.
On June 1, 2017, Jackson emailed Reeves and said,
Rebecca please review the attached response from Hagen
Construction. At this point Rebecca we are looking to get a
final change order and simply move on with some recognition
of our efforts. We can meet to discuss if you would like but
we believe the attached is fair for what we have been through
on this project. Anything falling short of this mark will
need to be resolved at a different level. Please contact us
to discuss further. Thank you.
(Id.) Attached to Jackson's email message was a
log entitled “Change Order Resolution” in which
he provided comments to Reeves's proposed resolution of
change order requests and backcharges, noting those with
which Hagen either agreed, agreed after modification, or
disagreed. (Id.) In his deposition, Jackson was
asked about this log; specifically, W-T's counsel posed
the question, “Now, in these logs is there any
inefficiency claim identified being asserted by Hagen
Construction?” (Jackson Dep. 129:3-4, W-T's Mot.
Ex. 5, ECF No. 55-9.) Jackson responded, “No, there is
nothing on here for the COR on that.” (Id.
was asked in his deposition, “Were there any delays or
impacts to Hagen, it bases its inefficiency claim on, after
June 30, 2016?” (Id. 74:5-6.) He answered,
“Not that I can remember or that I am aware of.”
(Id. 74:7.) He was also asked, “So as of June,
say the end of June 2016, Hagen would have been aware of
those events that would have given rise to impact to their
performance relating to these items that you identify. Is
that correct?” (Id. 80:6-9.) He answered,
“Yes.” (Id. 80:10.) In response to the
question, “Did Hagen submit a Change Order Request
relating to those items?, ” Jackson said, “Not at
that time. No.” (Id. 80:11-13.) A few moments
later, W-T's counsel asked him, “My question is
specific though, whether Hagen submitted a change order
request for those items?, ” and Jackson responded,
“No, we did not.” (Id. 80:22-24.)
Ford, Hagen's accounts receivables manager, signed
payment applications 10 through 17 and their accompanying
Partial Releases. (W-T's Mot. Ex. 4.) In her deposition,
she acknowledged no exceptions had been noted on the Partial
Releases she had signed. (Ford Dep. 19:13-30:9, W-T's
Mot. Ex. 6, ECF No. 55-10.) When asked if she had been aware
of an inefficiency claim that Hagen was asserting on the
Project, she responded in the negative. (Id.
26:21-23.) She testified that neither Jackson nor Hagen's
president, Alfred Hagen, had communications with her about
claims Hagen was asserting against W-T on the Project.
August 14, 2017, Reeves sent an email message to Jackson
proposing resolution of outstanding amounts:
As discussed, we have resolved the outstanding items with
Nemours which now allows us to work toward a final resolution
of your Subcontract change orders and amount.
Based on our discussion this morning, below is