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A-J Marine, Inc v. Corfu Contractors

September 13, 2011

A-J MARINE, INC., PLAINTIFF,
v.
CORFU CONTRACTORS, INC., ET AL., DEFENDANTS.



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

MEMORANDUM OPINION

A-J Marine, Inc., sued Corfu Contractors, Inc., and Corfu's surety, The Ohio Casualty Insurance Company, for breach of a construction contract and a payment bond, respectively. Corfu responded with a counterclaim against A-J Marine for breach of contract and impleaded Peter Kalos, owner of Brickwood Contractors, Inc., as third party defendant. All defendants have been trying to get out of this lawsuit since its early days and now refile their motions for summary judgment.

The source of dispute is a subcontract executed by A-J Marine and Mr. Kalos, the latter in Corfu's name. Corfu argues that Mr. Kalos had no authority to sign a subcontract on its behalf, that A-J Marine itself doubted Mr. Kalos's authority, and that it cannot be liable to A-J Marine for lost profits in any event. Because the legal rights of the parties depend upon the subcontract, the Court addressed that issue first, most recently by directing the parties to supplement their discovery with expert testimony on the applicable standard of care under which A-J Marine could have legitimately believed that Mr. Kalos had apparent authority to contract in Corfu's name and whether Corfu so positioned Mr. Kalos that, despite his lack of authority, Corfu should be estopped from denying the subcontract.

We are now at round two of summary judgment motions. The Court reiterates its prior finding that Mr. Kalos lacked actual authority to subcontract Brickwood work as a Corfu agent. Although discussed below, the Court avoids a decision on whether Mr. Kalos had apparent authority to contract in Corfu's name and whether Corfu should be estopped from denying liability under the subcontract. The parties' factual presentations and briefs are just too muddled for decision. Moreover, the question of whether Corfu ratified the subcontract cannot be decided without presentation to a factfinder as there are material contested facts concerning the role (and presence) of Christos Kollas of Corfu in the fall of 2006 and the summer/early fall of 2007. Happily, the Court need not resolve these questions to enter summary judgment for Corfu because the Court finds that A-J Marine breached the subcontract by not obtaining required insurance. Partial summary judgment must be entered for Ohio Casualty on the scope of its potential liability. Inasmuch as Corfu's potential liability rests, if it exists at all, on Mr. Kollas's own actions or inactions, the Court will also dismiss the counterclaims against Peter Kalos.

I. FACTS

The Court repeats the summary of the facts from its 2009 Opinion in A-J Marine, Inc. v. Corfu Contrs., Inc., 660 F. Supp. 2d 84 (D.D.C. 2009): - - - - -

On January 10, 2006 the Washington Metropolitan Area Transit Authority ("WMATA") awarded to Corfu a contract to perform work described as "Scour Countermeasure Installation for Potomac River Memorial Bridge." The project involved the dredging and placement of stone in certain bridge piers for the Potomac River Memorial Bridge. On January 24, 2006, Ohio Casualty issued performance and payment bonds on behalf of Corfu for the project.

Prior to being awarded the WMATA contract, Corfu had subcontracted with Brickwood Contractors, Inc. ("Brickwood") to perform the work. See [Dkt. # 88], Ex. M (March 8, 2005 subcontract between Corfu and Brickwood). The subcontract provided that "[n]o assignment of this subcontract agreement is permitted without prior written permission from the Contractor." Id. at Art. 4.

Mr. Kalos is president of Brickwood. His wife, Veron Lee Kalos, is Brickwood's secretary and treasurer. According to Mr. Christos Kollas, Corfu's president and Rule 30(b)(6) representative,*fn1 Corfu's agreement with Brickwood "was that if we get the job [with WMATA] . . . he [Mr. Kalos] will perform everything on the job, paperwork, and all of the actual work on it, because he was familiar with this kind of work." [Dkt. # 80], Ex. D (Dep. of Christos Kollas ("Kollas Dep.")) at 21. Mr. Kollas testified that Mr. Kalos and his wife were the only persons managing the project on behalf of Corfu:

Q. What, if any, role did Corfu - any of your - any of the individuals who participated in managing Corfu, have in the scour countermeasure project? Did you supervise the work or keep track of it or attend meetings with WMATA or have any other role in that project -

A. No.

Q. - as a practical matter?

A. No.

Q. Okay. You personally did not. Your brother did not. Your nephew did not. Is that correct?

A. Right. Nobody.

Id. at 30.

On October 16, 2006, Mr. Kollas executed a document on behalf of Corfu, apparently requested by WMATA, entitled "power of execution." See id., Ex. E. Pursuant to the power of execution, Corfu: nominates, constitutes, and appoints Peter Kalos, Project Supervisor with full power to act alone on behalf of Corfu Contractors, Inc. to make, execute, seal and deliver on its behalf as contractor and as its act and deed, any and all contracts, change orders, monthly and final payment certificates and other like instruments.

Id. The power of execution was delivered to WMATA by cover letter dated July 24, 2007. Id. The July 24, 2007 cover letter appears to be from Mr. Kollas.*fn2 Corfu also submitted to WMATA a list of its personnel, on which Mrs. Kalos was listed as "project manager" who [could] be contacted at "CorfuContractors@aol.com" and Mr. Kalos was listed as "superintendent." Id., Ex. F Mrs. Kalos testified on behalf of Brickwood that she maintained a supply of Corfu letterhead at her office. Id., Ex. G (Dep. of Veron Lee Kalos ("L. Kalos Dep.")) at 30. She testified that she sent letters to third parties on Corfu letterhead because "Corfu and Brickwood were working together, and we were working under Corfu's name." Id. at 29. She also testified that she issued checks on behalf of Corfu to pay Corfu's vendors:

A. Somebody would give me a signed check. I didn't take it somewhere to get it signed. I was given a signed check.

Q. Before it was filled out?

A. Yes.

Q. And then you would fill it out?

A. Yes.

Q. When Mr. Kollas left for Greece, did he leave you with a stack of signed checks for you to fill out?

A. Yes. I always had a check.

Q. So the signatures preceded the information about payee?

A. Right.

On October 24, 2006, Mr. Kalos, purportedly acting on behalf of Corfu, subcontracted with Mr. James D. Nicholas, president of A-J Marine, in apparent disregard of Brickwood's contract with Corfu that disallowed subcontracts without Corfu's prior consent.*fn3 The subcontract was for A-J Marine to perform mechanical dredging and stone placement for $85,371 per month, plus a mobilization fee of $5,000 and a demobilization fee of $5,000. See id., Ex. B. Thereafter, A-J Marine immediately mobilized its crew and equipment, as the subcontract required it to do. However, Corfu did not deliver the dredge material barges and stone material barges loaded with stone, as it had promised.

On December 8, 2006, Mr. Kalos sent Mr. Nicholas a letter on Corfu letterhead stating:

We do not accept your equipment until we receive confirmation your equipment is without defects and your vessels are seaworthy. In addition, A-J Marine, Inc. and your employees are not allowed on-site until you have all required insurance ...


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