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Hunt Construction Group, Inc. v. National Wrecking Corp.

April 8, 2008

HUNT CONSTRUCTION GROUP, INC., PLAINTIFF AND COUNTER-DEFENDANT,
v.
NATIONAL WRECKING CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION

Hunt Construction Group, Inc. ("Hunt") and National Wrecking Corporation ("NWC") entered into a construction subcontract whereby NWC agreed to provide certain excavation services at a project located in downtown Washington, D.C. The United States Surety Company ("USSC") and XL Reinsurance America, Inc. ("XL") (collectively the "Sureties") provided a performance bond with Hunt as the obligee and NWC as the principal/obligor. NWC allegedly caused delays in the project, so that, months after it had completed its work, Hunt "terminated" its subcontract with NWC and then sought to hold the Sureties liable under the performance bond for costs and expenses allegedly caused by NWC's tardy performance. This litigation ensued and the Sureties now ask for summary judgment.

I. BACKGROUND FACTS

NWC agreed to a subcontract ("Subcontract") with Hunt on or about October 6, 2003, to perform excavation and certain other work on the construction of an Embassy Suites Hotel in D.C. (the "Project"). NWC began the work in the same month and completed the mass excavation on April 6, 2004. Hunt alleges that NWC was required to complete the mass excavation no later than February 12, 2004. Hunt contends that NWC never properly staffed the Project and, from the beginning, failed to keep pace with the construction schedule. In an effort to keep on schedule, Hunt accelerated the performance of Rapid Response Construction, Inc. ("Rapid") when it first started concrete work on the footings on January 22, 2004, and kept the accelerated pace in place all the way through to the top of the building. According to Hunt, it incurred costs of $803,264 due to late mass excavation work by NWC.

Although the Subcontract called for NWC to give Hunt a "detailed plan and schedule for performing and coordinating its Work" within five days of signing the subcontract, Sureties' Mem. Ex. 1 § 9.3, NWC did not actually submit a schedule until sometime in December 2003. That schedule indicated that NWC would complete the mass excavation by February 25, 2004. Hunt says that it did not realize that there would be a substantial delay until early February 2004, when it confronted NWC. On February 5 and 6, 2004, Mr. Page, Hunt's Project Manager, sent letters to NWC complaining about the delay and warning that NWC might be liable for Hunt's increased costs.

On July 13, 2004, more than three months after NWC completed the mass excavation work for the Project and was no longer on site, Hunt sent NWC a letter captioned "Default Notice," indicating that it constituted "formal notice that National Wrecking Corporation is in default of its subcontract with Hunt Construction Group" ("the NWC Default Notice"). See Sureties' Mem. Ex. 6. The NWC Default Notice stated, in part:

National Wrecking's refusal to perform its subcontract obligation to perform the Work promptly and diligently, its failure to meet the Project Schedule, and its causing of delay to Hunt constitute material breach of the subcontract terms. During the Project, National Wrecking consistently failed to supply sufficient labor and supervision. National Wrecking also failed to perform its Work promptly and diligently, and to meet the Project Schedule. This resulted -- and continues to result -- in delay and interference with the work of other trades.

Therefore, Hunt declares National Wrecking in default pursuant to Section 30.1 of the subcontract. This letter is to provide National Wrecking with three days notice that it intends to exercise the remedies for default provided in subcontract sections 30.[1](2), 30.1(3), 30.1(4), 30.1(5) and the other Subcontract provisions providing rights and remedies to Hunt.

Id. On that same day, Hunt also wrote to the sureties to give "formal notice" that NWC was declared to be in default ("USSC Notice of Default"). In part the USSC Notice of Default informed the Sureties:

Among other breaches, National Wrecking Corporation has refused to perform its work and has delayed the project.

Hunt hereby demands that United States Surety Company and XL Reinsurance America, Inc. arrange for performance of National Wrecking's obligations under the subcontract. Hunt looks to United States Surety Company and XL Reinsurance America, Inc. to remedy National Wrecking's failures to perform.

Sureties' Mem. Ex. 7. Of course, as Hunt acknowledges, the Sureties could not arrange for the performance of NWC's mass excavation work because the USSC Notice of Default was sent after NWC had completed the excavation. Sureties' Mem. Ex. 3, Deposition of Robert Decker ("Decker Dep.") at 145-147.*fn1

The Sureties immediately engaged Robert Beers of Beers Construction Consultants, Inc., to investigate Hunt's claim. However, Mr. Beers had a very hard time getting Tom Page, Hunt's project manager and the ostensible author of the default notices, to respond to his calls and messages. When they finally did talk, on July 21, 2004, Mr. Page refused to speak to Mr. Beers without advice of Hunt's lawyers. The Sureties wrote to Mr. Page on August 10, 2004, seeking information but Mr. Page did not respond. On August 17, 2004, the Sureties sent a Status Inquiry to Mr. Page, asking about the progress of NWC's work. Mr. Page did not respond.

After months of silence, Hunt sent a "Notice of Termination" to NWC and copied the Sureties on October 14, 2004. The Sureties again asked Mr. Beers to investigate, Mr. Beers again attempted to contact Mr. Page (who had signed the Notice of Termination), and Hunt again failed to respond. The Sureties wrote to Hunt on November 30, 2004, asking that Hunt and Mr. Page cooperate with Mr. Beers's investigation and provide requested information immediately. Hunt did not respond.

However, Hunt did initiate this suit against NWC on January 25, 2005. Hunt added the Sureties as defendants on October 5, 2006, when it filed its Second Amended Complaint. Hunt alleges that the Sureties ...


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