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Wickersham Construction and Engineering, Inc. v. Town of Sudlersville

United States District Court, D. Maryland

August 23, 2019



          Catherine C. Blake United States District Judge.

         Pending before the court is the plaintiffs motion for partial summary judgment. On June 6, 2019, the court heard oral argument in this matter. For the reasons stated below, the court will deny the motion.


         This case involves, a prolonged contractual dispute between plaintiff Wickersham Construction and Engineering ("Wickersham") and defendant the Town of Sudlersville, Maryland ("Sudlersville"). The parties have been engaged in a years-long disagreement regarding Wickersham's construction of an updated wastewater treatment system for Sudlersville, and the court will recite only the relevant portions of the parties' history here.

         Sudlersville is a town located on the Eastern Shore of Maryland. Populated by approximately 560 residents, Sudlersville is a small, quiet community with two town employees and an annual budget under $400, 000.00. Ex. 8, ECF 42-8 at ¶¶ 2-3. Elizabeth Manning, Sudlersville's town administrator, manages much of the town's affairs by working two days a week from 9:30 a.m. until 5:00 p.m. and another partial day each week from 1:00 p.m. until 5:00 p.m. Ex. 1, ECF 63-2 at p. 3.

         By virtue of its proximity to the Chesapeake Bay, Sudlersville was required to update its wastewater treatment system. Unable to afford the approximately $8, 000, 000.00 update on its own, the town received significant grant funding from the federal and state government to enable Sudlersville to finance the project. The sources of the grant funding included the U.S. Department of Agriculture ("USDA") and the Maryland Department of the Environment ("MDE"). Ex. 1, ECF 63-2 at p. 4.

         On July 18, 2014, the parties entered into a contract for the installation and construction of the updated wastewater treatment system. The contract is comprised of three separate documents: the form of agreement, Ex. 2, ECF 56-4, the standard general conditions, Ex. 3, ECF 56-5, and the supplementary conditions, Ex. 4, ECF 56-6. The supplementary conditions note that the USDA financed the project in whole or in part, and that the USDA had to approve all payment applications prior to payment being made. Ex. 4, ECF 56-6 at ¶¶ SC-101.A.2, SC-101.A.3.

         The contract was based on a form contract that USDA provided to the parties, but a boilerplate paragraph requiring interest for late payments was excluded from the final agreement. See Ex. 2, ECF 56-4 at p. 4; Angela Tilghman Dep., Ex. 2, ECF 63-3 at p. 3. The USDA and the MDE were not parties to the contract and were not involved in its drafting, although the contract acknowledged explicitly that the USDA funded the project. Ex. 4, ECF 56-6 at ¶ SC-1.01.A.2. The contract specified that it is to be governed by Maryland law. Ex. 3, ECF 56-5 at ¶ 17.05. The parties do not dispute that this contract is valid and enforceable.

         The contract obligated Sudlersville to pay Wickersham for its construction services, and payments essentially were due twenty days after Wickersham submitted the request for payment, referred to as the "payment application."[1] Ex. 3, ECF 56-5 at ¶ 14.02. The contract provided for twenty such payment applications. At the time of oral argument, all of the payment applications except payments nineteen and twenty, totaling approximately $125, 000.00, had been satisfied, and the outstanding payments form the center of the parties' dispute, [2]

         Neither party disputed that every submitted payment application was paid after the 20-day period. Ms. Manning claimed that, due to the grant funding of the project, she would complete payment requests immediately after receiving approval of the requests and the related funds from MDE or USDA, with KCI's certification. Ex. 1, ECF 63-2 at p. 12. Despite the payment schedule outlined in the contract, no payments were satisfied on time, and most were paid significantly after the expiration of the 20-day period. Ex. 7, ECF 56-9 at pp, 1-2.

         After the first eight payments were paid late, and with payments nine and ten past due, Wickersham notified Sudlersville on or about September 9, 2015, that it was considering suspending work on the project. Ex. 8, ECF 56-10. On September 22, 2015, Wickersham suspended work. Ex. 9, ECF 56-11. In an attempt to rectify the problems regarding its payments, Sudlersville then obtained separate financing from Shore National Bank to serve as an intermediary source of funds while the USDA reviewed payment applications. In addition to the notices regarding suspension, Wickersham sent Sudlersville at least one letter regarding the delayed payments. Ex. 4; ECF 63-5. On March 7, 2016, Wickersham resumed work on the project following assurances from Sudlersville that it would make payments on time due to its separate financing through Shore National Bank. Ex. 1, ECF 56-2 at ¶¶ 8-9.

         Wickersham claimed that it reached substantial completion on the project no later than November 3, 2016, Ex. 5, ECF 56-7 at p. 3, and that it therefore terminated the project on September 19, 2017, Ex. 13, ECF 56-15 at p. 1. During the June 6 hearing, Wickersham asserted that the plant's upgrades have operated in compliance with the project's terms for three years. As a result, Wickersham claimed that it has long been owed payments nineteen and twenty, and that Sudlersville's failure to complete these payments constituted breach of contract.

         Sudlersville disputed Wickersham's claim, asserting that, while the plant was operational throughout the project's construction, the project remains open under the terms of the contract due to Wickersham's failure to satisfy certain conditions precedent to termination of the contract. This, Sudlersville claimed, insulated it from liability for failure to complete the final two payment applications, as its payment obligation could not be triggered absent completion of those conditions precedent. Additionally, Sudlersville noted that it had not, at the time of the June 6 hearing, received approval of those payment applications from either USDA or KCI, precluding it from completing the payment applications pursuant to the contract's terms.

         Wickersham initiated suit on December 23, 2016, and filed its amended complaint on January 1, 2018, after the parties were unable to reach an agreement in mediation. Following oral argument in this matter on June 6, 2019, the court now will deny the ...

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