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U.S. EX REL. CORBETT v. SAFECO INS. CO. OF AMERICA

December 12, 2002

UNITED STATES OF AMERICA FOR THE USE AND BENEFIT OF CORBETT TECHNOLOGY SOLUTIONS, INC., PLAINTIFF,
V.
SAFECO INSURANCE COMPANY OF AMERICA, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Reggie B. Walton, United States District Judge

MEMORANDUM OPINION

Currently before the Court is plaintiff's motion for summary judgment. Because the Court concludes that there are material issues of fact pertinent to the resolution of this matter, it will deny the plaintiff's motion and permit the parties to conduct limited discovery.

I. Background

The events leading to the present controversy in this case, brought pursuant to the Miller Act, 40 U.S.C. § 270(a) — 270(f) (2000), are somewhat contorted but the Court will attempt to state them as succinctly as possible. The present dispute centers around a construction contract that the United States, through the Department of the Army, awarded to the Twigg Corporation ("Twigg"). The contract required Twigg to complete renovations to Building 61, at Fort McNair, Washington DC ("the Project"). Compl. ¶ 2.*fn1 Twigg and Safeco Insurance Company ("Safeco"), its surety, "executed a standard government form of payment bond to the United States of America, whereby they bound themselves jointly and severally in the amount of the contract . . ." Id. ¶ 3. The United States accepted the bond and awarded the construction contract to Twigg. Id. ¶ 4.

Twigg then hired Jenkins Electric Contracting Inc. ("Jenkins") as a subcontractor on the project. Thereafter, at some point in this series of events, the plaintiff, Corbett Technology Solutions, Inc., ("CTSI"), entered into a subcontract with Jenkins to provide materials and labor for the project. Id. ¶ 5. Jenkins, however, became unable or unwilling to perform its obligations as a subcontractor for Twigg and "CTSI (then known as Panurgy, DC Metro) entered into a verbal agreement on or about July 28, 1999, with Twigg to become a subcontractor, complete the project and be paid directly by Twigg." Plaintiff's Memorandum of Law in Support of Motion for Summary Judgment ("Pl.'s Mem."), Exhibit ("Ex.") A, Affidavit of Christopher R. Corbett, President of Corbett Technology Solutions, Inc., ("Corbett Aff.") ¶ 7.*fn2 Thereafter, in 1998, 1999, and 2000, CTSI supplied labor and materials to Twigg, at Twigg's request, for the project. Compl. ¶ 8. Twigg made direct payments to CTSI (which at the time was still known as Panurgy) for materials and labor provided for the project on July 28, July 29, and November 19, 1999. Corbett Aff., Ex. 1.

On or about December 1, 1999, RWKS Construction Inc. purchased Twigg, and changed Twigg's name to RWKS Construction, Inc. Pl.'s Mem, Statement of Genuine Facts to Which There Exists No Genuine Issue ¶ 20. CTSI last performed work on or supplied materials for the project on June 16, 2000. Corbett Aff. ¶ 9. However, as of June 8, 2000, CTSI was still allegedly owed a balance of $130,854.98 for labor and material provided for the project. Corbett Aff., Ex. 3, Recap of Jenkins Electrical/Twigg Corporation Account dated 6-08-00 ("Recap").

On June 19, 2000, CTSI informed Safeco, RWKS' surety, of RWKS' failure to pay CTSI for the labor and materials CTSI provided for the project. Compl. ¶ 11. On June 6, 2001, CTSI filed the present action pursuant to the Miller Act, 40 U.S.C. § 270(b), seeking $130,854.98 in damages, the amount it claims it was still entitled to receive from RWKS. CTSI filed its action seeking repayment against both RWKS and Safeco jointly and severally.*fn3 In the alternative, CTSI, "in its own right" demanded judgment against RWKS in the full "amount of $130,854.98 with interest from July 1, 2000, and the costs of this action." Id. ¶ 3, at 4.*fn4 RWKS filed a motion to dismiss the complaint on July 2, 2001, to which CTSI filed an opposition on July 3, 2001.

On October 1, 2001, RWKS filed a petition for bankruptcy pursuant to Chapter 11 of the bankruptcy code, 11 U.S.C. § 362(a)(1) (2000), in the United States Bankruptcy Court for the District of Maryland. Thereafter, on March 20, 2002, RWKS filed a Motion to Stay All Proceedings in this Court, which CTSI opposed. This Court held a hearing on this motion on April 3, 2002, at which time the Court orally granted RWKS's motion to stay the proceedings. At this hearing, Safeco made an oral motion requesting that the stay be extended to the proceedings against it. In a Memorandum Opinion dated April 30, 2002, this Court denied Safeco's oral motion for the extension of the stay. United States of America v. Safeco Insurance Company, No. 01-1239, slip op. at 10 (D.D.C. Apr. 30, 2002) (Walton, J.).

II. The Parties' Arguments

On March 26, 2002, plaintiff filed the instant motion for summary judgment, arguing that there are no material facts in dispute and that Safeco, as RWKS' surety, is obliged to pay plaintiff the $130,854.98 it is owed by RWKS. Plaintiff's Motion for Summary Judgment ("Pl.'s Mot.") at 1. On May 10, 2002, Safeco filed an opposition to plaintiff's motion for summary judgment, arguing that there are several issues of material fact that preclude this Court from granting plaintiff's motion. Specifically, Safeco argues that there are material issues of fact in dispute concerning whether the Court has subject matter jurisdiction over this Miller Act claim because "CTSI has not established that it had a direct contractual relationship with the bond principal, Twigg, that would obviate the need for providing statutory notice to Twigg or RWKS within ninety days after it last provided work, labor or material on the bonded Project." Safeco Insurance Company of America's Memorandum of Points and Authorities in Support of Its Opposition to Plaintiff's Motion for Summary Judgment ("Safeco's Opp'n") at 3.

Second, Safeco argues that documentation pertaining to this matter demonstrates that there is a genuine issue of fact in dispute regarding whether CTSI "filed suit within one year of its last work, labor or material on the Project . . ." Id. at 4. Finally, Safeco contends that even if CTSI actually timely filed suit, there is a disputed fact as to whether the work performed was of the type needed for the purpose of extending the statute of limitations under the Miller Act beyond the otherwise one year limitations period. Id.*fn5

III. Analysis

A. Standard of Review

Rule 56 of the Federal Rules of Civil Procedure sets forth the standard for deciding a motion for summary judgment: "When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but . . . by affidavits or otherwise provided in this rule, must set forth specific facts showing there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The Court must grant the motion for summary judgment "forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment is mandated after there has been "adequate time for discovery . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Summary judgment, nonetheless, is a "drastic remedy, [and therefore] courts should grant it with caution so that no person will be deprived of his or her day in court to prove a disputed material factual ...


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