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United States ex rel Tennessee Valley Marble Holding Co. v. Grunley Construction

May 17, 2006

UNITED STATES OF AMERICA EX REL. TENNESSEE VALLEY MARBLE HOLDING COMPANY, PLAINTIFF,
v.
GRUNLEY CONSTRUCTION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Royce C. Lamberth, United States District Judge

MEMORANDUM OPINION

This matter comes before the Court on four motions. First, defendant Atlantic filed a Motion [44] for Partial Summary Judgment with respect to plaintiff's claim for "delay damages" arguing that such damages are prohibited under the contract between TVM and Atlantic. Second, plaintiff responded with a Motion [48] to Strike defendant Atlantic's summary judgment motion, arguing that the delay damages clause is not applicable because plaintiff is claiming "impact" damages rather than "delay" damages. Third, plaintiff filed a Motion [45] for Discovery Sanctions against defendant Atlantic for allegedly failing to comply with discovery requests and motions to compel. Finally, plaintiff filed a Motion [51] for Partial Summary Judgment asking the Court to grant summary judgment on Count I against defendant Grunley and its payment bond sureties, NFIC and Continental, Count II against defendant Atlantic and its payment bond surety, Old Republic, and Count IV against Grunley.

Upon consideration of each party's filings, the applicable law, and the entire record herein, the Court concludes that defendant Atlantic's Motion for Partial Summary Judgment will be GRANTED, plaintiff's Motion for Discovery Sanctions and Motion to Strike will be DENIED, and plaintiff's Motion for Partial Summary Judgment will be GRANTED as to Count IV and DENIED as to Counts I and II.

I. BACKGROUND

Before its asset sale and bankruptcy, TVM owned and operated the marble quarry in Tennessee that was the source of the marble used in the original construction of the National Archives building in Washington, D.C. (Compl. 5.) In 1999, plans to renovate the National Archives building commenced. (Id.) The General Services Administration ("GSA") contacted TVM regarding the availability of marble that would match the existing building. (Id.) In May 2001, defendant Grunley received the primary contract to renovate the National Archives building. (Id.) In turn, Grunley awarded the stonework contract to Atlantic. (Id.) Atlantic subsequently contacted TVM regarding the marble needed for the stonework, and in June 2002, Atlantic and TVM entered into a written agreement concerning this specific project. (Id. at 5-6.) Eventually, disputes arose between TVM and Atlantic regarding TVM's alleged shipments of defective materials and Atlantic's nonpayment for some the alleged defective materials. (Id. at 6-8.) Consequently, TVM filed the instant action, seeking payment for work performed under the contract and "to vindicate its rights under the Miller Act payment bond issued on behalf of Grunley and the payment bond issued on behalf of Atlantic." (Pl.'s Mot. Sanctions 5.)

In its complaint, TVM asserts four claims. First, it alleges that Atlantic breached the written contract by failing to timely provide "accurate field measurements needed to fabricate certain pieces." (Compl. 9.) Defendant Atlantic, however, argues that plaintiff's claims are barred by the "damages for delay" clause in the parties' written contract. (Defs.' Mot. Partial Summ. J. 5-10.) Defendant has moved for summary judgment on this issue. Plaintiff counters that the delay damages clause is inapplicable because plaintiff is claiming "impact damages" rather than "delay damages." (Pl.'s Mot. Strike 5-7.)

TVM's second claim is a breach of contract action against Grunley. (Compl. 10-11.) In August 2003, Grunley wrote a letter to TVM, agreeing to advance Atlantic a payment of $182,000, even though the payment was not yet due, so that Atlantic could in turn transfer this money to TVM. (Pl.'s Ex. 13.) Grunley arranged for this accelerated payment in order to ensure that TVM would not become insolvent before supplying the remainder of the marble, thereby securing Grunley's timely completion of the National Archives project. (Id.) Because TVM expressed concern that Atlantic would not forward the money as described, Grunley stated that it would pay TVM if Atlantic failed to do so. (Id.) Plaintiff alleges that Atlantic failed to pay and Grunley has only paid $75,000 to TVM and has therefore breached its agreement to pay $182,000 upon Atlantic's default. (Compl. 10-12.) Grunley contends that the agreement was not a binding contract and is therefore unenforceable. (Defs.' Summ. J. Opp'n 2-4.)

Third, plaintiff asserts a common law payment bond claim against Atlantic and its payment bond surety, Old Republic, alleging that Grunley's letter to TVM provided TVM with a cause of action against Atlantic if Atlantic failed to pay. (Compl. 9.) Atlantic and Old Republic respond by arguing that any alleged contract between TVM and Grunley did not bind Atlantic and therefore did not provide TVM with a cause of action against Atlantic for its failure to transfer Grunley's payment to TVM. (Defs.' Summ. J. Opp'n 2-4.)

Finally, plaintiff's fourth claim is under the Miller Act, 40 U.S.C.A §§ 3131-3134 (West 2006), which requires a general contractor on a federal construction project to furnish a payment bond to protect suppliers and provides a cause of action for suppliers against the payment bond sureties for funds owed by the general contractor. 40 U.S.C.A §§ 3131(b)(2), 3133(b). Plaintiff has sued the general contractor, defendant Grunley, as well as defendant Grunley's payment bond sureties, NFIC and Continental under the Miller Act because Atlantic allegedly failed to pay TVM for materials it provided. (Compl. 8-9.) In response, all defendants counterclaimed against TVM and filed a third party complaint against TVM's payment bond surety, F&D, alleging that TVM breached its contract with Atlantic, resulting in damages and overpayment in excess of $100,000. (Answer 10.) Grunley's third party complaint against F&D was subsequently dismissed because Grunley is not an entity that falls within the scope of F&D's contract bond. (Jan. 31, 2005 Order 1.) All defendants' counterclaims against TVM were dismissed upon defendants' motion because of the automatic stay that was imposed as a result of TVM's Chapter 11 petition for bankruptcy. (Defs.' Mot. Dismiss Countercl. against TVM 1-2; Nov. 29, 2004 Order, 1.)

In response to plaintiff's Miller Act claims, defendants respond that TVM breached its contract with Atlantic, thereby causing injury to Grunley, and therefore TVM cannot be granted summary judgment on its Miller Act claims. (Defs.' Summ. J. Opp'n 4-6.) Defendants further assert that Grunley's sureties may assert the defenses of its principal, Grunley, and therefore the sureties may also argue that plaintiff's breach of contract bars TVM from achieving summary judgment on its Miller Act claim. (Id. at 8-10.).

After plaintiff filed its complaint, defendant Atlantic subsequently filed a motion for summary judgment on Count III of plaintiff's complaint, arguing that the delay damages clause prevents plaintiff's claim. Plaintiff then filed a motion to strike defendant Atlantic's motion for summary judgment, arguing that the delay damages clause is not applicable because plaintiff claims "impact" damages rather than "delay" damages. (Pl.'s Mot. Strike 5-7.) Plaintiff also filed a motion for discovery sanctions against Atlantic. Plaintiff's motion alleged that Atlantic had repeatedly failed to produce requested documents for discovery, despite two orders to compel issued by this Court. (Pl.'s Mot. Sanctions 6-7.) Plaintiff further alleged that defendant Atlantic had failed to adequately respond to interrogatories and produce documents related to Atlantic's counterclaim for backcharges against plaintiff for an alleged breach of contract. (Id. at 6-7.) Defendant Atlantic claims that plaintiff's request for sanctions is not ripe and even if it were, Atlantic has since produced most of the requested documents. (Def.'s Sanctions Opp'n. 1-4.) Plaintiff finally filed its own motion asking the Court for summary judgment on Counts I, II, and IV of the plaintiff's complaint.

II. DISCUSSION

A. Legal Standard

Under Federal Rule of Civil Procedure 56(c), a court must grant summary judgment when the evidence in the record demonstrates that there are no disputed issues of material fact and that the moving party is entitled to judgment on the undisputed facts as a matter of law. FED R. CIV. P. 56(c). A genuine issue of material fact exists if the evidence, when viewed in the light most favorable to the non-moving party, "is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). However, a party must provide more than "a scintilla of evidence" in support of its position; the quantum of evidence must be such that a jury could reasonably find for the moving party. Id. at 252. The burden is on the movant to make the initial showing of the absence of a genuine issue of material fact in dispute. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party is then entitled to judgment as a matter of law if the non-moving party "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." Id. at 322. Additionally, when both parties move for summary judgment, a court must consider each motion separately, independent of the other party's motion. See Nuzzo v. FBI, 1996 WL 741587, * 1 (D.D.C. 1996) ("When both parties in a cause of action move for summary judgment, each party must carry its own burden.").

B. Defendant Atlantic's Motion for Partial Summary Judgment

Defendant Atlantic requests summary judgment against TVM or, alternatively, dismissal with respect to Count III of TVM's complaint because the $144,000 in damages claimed constitute "delay damages" and are therefore barred by the written contract between TVM and Atlantic. (Defs.' Mot. Partial Summ. J. 1.) Defendant further argue that the application of the delay damages clause should be governed by Maryland law because the written contract between TVM and Atlantic contained a provision designating Maryland law as the governing law for the purposes of the contract. (Defs.' Ex. 1 ΒΆ 25.) Plaintiff responds that the $144,000 claim constitutes "impact damages" rather than "delay damages" because TVM is not claiming damages for delay but rather is claiming a loss of productivity as a result of Atlantic's breach of the contract. (Pl.'s Mot. Strike 5-7.) Plaintiff further argues that the law of the District of ...


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