Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

UNITED STATES EX REL. MODERN ELEC., INC. v. IDEAL

November 15, 1994

UNITED STATES OF AMERICA for the use of MODERN ELECTRIC, INC., Plaintiff,
v.
IDEAL ELECTRONIC SECURITY COMPANY, INC., et al., Defendants.



The opinion of the court was delivered by: PAUL L. FRIEDMAN

 This matter is before the Court on the motion of Defendant International Fidelity Insurance Company ("IFIC") for summary judgment against Plaintiff Modern Electric, Inc. ("Modern"). Modern filed an opposition to the motion, and the Court heard argument. Following a subsequent status conference held primarily to discuss other aspects of the case, Modern filed a supplemental response to IFIC's motion. The Court is persuaded that Defendant IFIC's motion for summary judgment should be granted.

 I. FACTS

 The contract underlying this dispute is between the United States Army and Ideal Electronic Security Co., Inc. ("Ideal"), the government's prime contractor, for work to be performed at Walter Reed Army Hospital (the "Walter Reed Contract"). The Walter Reed Contract is a multi-year contract with provisions for a base year and the option to extend the contract for two additional years upon the execution of a contract modification.

 The Walter Reed Contract is governed by the Miller Act, 40 U.S.C. §§ 270a, et seq., which requires government contractors to obtain payment and performance bonds in order to ensure payment by the contractor to subcontractors for work performed. 40 U.S.C. § 270a(a). As originally written, the contract specifications required the contractor awarded the contract by the Department of the Army to obtain a payment bond and a performance bond covering the base year and each possible option year. That requirement would have required Ideal to purchase a payment bond with a penal sum sufficient to cover all possible work over the potential three-year period of the contract. On May 30, 1991, however, the Army issued an Amendment of Solicitation for the Walter Reed Contract. The Amendment, which is a part of the Contract, provided that "the Performance and Payment Bonds will be separate for the base year and each option year. If option is exercised, the Contractor shall be required to provide the appropriate Performance and Payment Bonds at that time." Def. Ex. A-9. Modern, Ideal's subcontractor, says it was not aware of the modified bond requirements incorporated into the Contract.

 The Walter Reed Contract, as modified, was ratified by Ideal, the Small Business Administration and the Walter Reed Army Medical Center on July 29, 1991. IFIC executed a surety payment bond on behalf of Ideal on September 5, 1991. Payment Bond No. 873427-91 ("the Bond"). The Payment Bond obligated IFIC to make payments to the United States for the benefit of subcontractors, including Modern, in the event that Ideal failed to meet its obligations under the Contract. Although the Bond was not executed until September 5, 1991, it states that it covers the July 29, 1991, Walter Reed Contract. Def. Ex. A-9. The penal sum of the Bond is $ 206,495.60. On July 21, 1992, the Army exercised its option and extended the Walter Reed Contract for an additional year. Def. Ex. G-1.

 Pursuant to the Miller Act, 40 U.S.C. § 270b, Modern seeks payment from IFIC under the Bond to recover amounts allegedly due for services performed by Modem as Ideal's subcontractor. IFIC seeks summary judgment against Modem on several grounds, including the fact that the Bond only covered work performed during the base year of the Walter Reed Contract and that IFIC therefore only guaranteed payment for work performed during that year. Modern has admitted that its claims against IFIC under the Bond relate solely to work performed after the first year of the contract, but it argues that the Bond covers all work performed by Modern. *fn1"

 II. ANALYSIS

 Under Rule 56, Fed. R. Civ. P., summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions on file and affidavits show that there is no genuine issue of material fact in dispute and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Disputed material facts are those "that 'night affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). "In cases in which the dispositive issue involves the construction of a contract, summary judgment may be appropriate if the provisions of the contract are unambiguous." Davis v. Chevy Chase Financial Ltd., 215 U.S. App. D.C. 117, 667 F.2d 160, 169 (D.C. Cir. 1981); see America First Inv. Corp. v. Goland, 288 U.S. App. D.C. 298, 925 F.2d 1518, 1520 (D.C. Cir. 1991); Farmland Industries, Inc. v. Grain Bd. of Iraq, 284 U.S. App. D.C. 276, 904 F.2d 732, 736 (D.C. Cir. 1990). Furthermore, it is settled that whether a contract term is ambiguous is a question to be determined by the court. Carey Canada, Inc. v. California Union Ins. Co., 708 F. Supp. 1, 4 (D.D.C. 1989). *fn2"

 The Bond issued by IFIC lists Ideal Electronic Security Company as Principal and IFIC as Surety. It expressly refers to the Walter Reed Contract with Modern, Contract No. DADA15-91-D-0029, and recites a penal sum of $ 206,495.60. The Bond further states that "the Principal and Surety(ies), are firmly bound to the United States of America . . . in the above penal sum. . . ." The Bond then goes on to state:

 
The above obligation is void if the Principal promptly makes payment to all persons having a direct relationship with the Principal or a subcontractor of the Principal for furnishing labor, material or both in the prosecution of the work provided for in the contract identified above, and any authorized modifications of the contract that subsequently are made. Notice of those modifications to the Surety(ies) are waived.

 Def. Ex. A-9 (emphasis added).

 Solicitation DADA15-91-R0-0014, a part of the Contract which contains the bonding specifications for the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.