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Motir Services, Inc. v. Ekwuno

United States District Court, District of Columbia

June 10, 2016

MOTIR SERVICES, INC. Plaintiff,
v.
GEORGE EKWUNO, et al., Defendants.

          MEMORANDUM OPINION

          BERYL A. HOWELL Chief Judge

         The plaintiff, Motir Services, Inc. (“Motir”), brings this lawsuit against its former contractor, the defendants Noble House, LLC (“Noble House”) and its sole owner, George Ekwuno, for breach of contract and fraud arising out of the defendants’ conduct during construction renovations at the plaintiff’s headquarters, a building in Washington, D.C. See generally Compl., ECF No. 1. In response, the defendants, represented by counsel, first filed a Motion to Dismiss for Lack of Diversity Jurisdiction, ECF No. 8, which the Court denied based on the undisputed facts that the defendants are citizens of Maryland and the plaintiff is a citizen of D.C., Minute Order (Oct. 23, 2016). The defendants then filed an Answer, ECF No. 11, and Ekwuno filed a second motion to dismiss, moving to dismiss the claims asserted against him in his personal capacity for failure to state a claim upon which relief can be granted, Def.’s Mot. Dismiss Compl. Against Him Individually (“Def.’s Mot.”), ECF No. 12. After the filing of the second motion to dismiss, the defendants’ counsel was granted leave to withdraw from the case and, despite cautions from the Court regarding the necessity for a corporation to be represented by counsel, see Minute Order (Dec. 2, 2015), no other counsel has entered an appearance for either defendant. Consequently, pending before the Court, in addition to Ekwuno’s motion to dismiss, is the plaintiff’s Motion for Entry of Default and Default Judgment, Pl.’s Mot. Default & Default J. (“Pl.’s Mot.”), ECF No. 17, against both defendants. For the reasons discussed below, the Ekwuno’s motion will be granted, and the Clerk will be directed to enter default and default judgment for the plaintiff against the remaining corporate defendant, pursuant to Federal Rule of Civil Procedure 55.

         I.BACKGROUND

         A. Factual Allegations

         The plaintiff’s corporate headquarters, which is located at 1508 E. Capitol Street, N.E., Washington, D.C., was damaged by a fire in 2011, requiring renovation of the building and relocation of personnel to another building. Compl. ¶¶ 10-11. The defendants submitted a bid “to supply all labor and material for the reconstruction” of the plaintiff’s headquarters “at a fixed price of $450, 000, to be performed per Motir-approved plans and specifications, ” with an “expected completion date ‘within 6 (six) months of commencement, ’” barring any “extenuating weather or environmental/governmental situations beyond [the defendants’] control.” Id. ¶¶ 14, 16; Answer ¶¶ 27, 29 (admitting allegations). Ekwuno supplemented the bid, on December 12, 2012, with a cost breakdown for the quoted $450, 000 renovation cost, as well as a preliminary schedule for the project. Compl. 17; Answer ¶ 30 (admitting allegations). Based on the bid and price quote, the plaintiff hired defendant Noble House, in a written contract, dated December 13, 2012, signed and executed by its “sole owner, ” Ekwuno, to perform the building renovations. Compl. at 1 & ¶ 18; Answer ¶ 31 (admitting allegations); see also Pl.’s Mot., Ex. L-1, Contractor Agreement (“Contract”) at 1, 12, ECF No. 17-12.[1]

         1.Contract Terms

         The Contract, which is governed by District of Columbia law, Compl. ¶ 25; Contract at 9, § 10.A, “includes a number of provisions emphasizing the importance of timely completion and strict performance” of the building renovation work “for the amount of $450, 000, as detailed in the quote presented by Defendant Ekwuno, ” Compl. 18; Answer ¶ 31 (admitting allegations). The “Time of Performance” provision provides that “[t]ime is of the essence” and requires “the work under the Contract [to] be substantially complete[] no later than six months after commencement, or by June 13, 2013.” Compl. ¶ 19 (emphasis in original); see Contract at 3, § 4. It further provides that “there shall be no extension of time for Contractor to perform the work without written consent from Owner indicating precise nature and length of time allowance other adjustments to the Contractor’s Schedule of Work made in accordance with the Contract Documents.” Compl. ¶ 19; see Contract at 3, § 4.

         Another contract provision, titled “Contractor Warranties, ” governing the quality of the work and materials, provides that “all Work shall be performed in the most sound and workmanlike manner, and will adhere to established construction industry standards and applicable trade codes.” Compl. ¶ 20; Contract at 3, § 5.A. This provision further provides that “[n]on-conforming work, which includes unauthorized work modifications and material substitutions, shall be considered defective;” the “materials and equipment furnished, installed, or otherwise provided . . . will be of good quality;” and “the work performed [will] be free of defects related to the requirements contained in the Contract Documents for a period of at least one year from the date of completion and acceptance of the project by” the plaintiff. Compl. ¶¶ 20-21 (emphasis in original; quotations omitted); see Contract at 3, § 5.A-B.

         Timely performance of and adequate workmanship under the Contract are further stressed by a provision providing “that in the event of a default by Noble House in the proper performance of work under the Contract, thereby causing delay or damages to Motir or other subcontractors working on the project, Noble House [will] be liable to Motir for any and all loss and damages so sustained.” Compl. ¶ 22; see Contract at 5, § 6.D(7).

         Regarding payment, the Contract required the submission of monthly invoices in order to receive progress payments from the plaintiff, and “obligate[s] Defendant Noble House, in submitting contract invoices, to guarantee and certify that all labor and materials used on the project ha[ve] been paid for through the period covered by all Progress Payments issued up to that time, and to provide assurances to Motir to evidence this guarantee.” Compl. 22; see Contract at 5, § 6.D(4). A schedule for payment “draws, ” based on the completion of particular steps in the renovation, is outlined as follows: “$50, 000 at the signing of the contract, $100, 000 at the start of new construction, $70, 000 at completion and inspection of electrical/plumbing rough-in and HVAC, $80, 000 at completion and inspection of elevator installation, $70, 000 at completion of drywall/trimming/painting, and $80, 000 at final inspection and certificate of occupancy.” Compl. ¶ 23; see Contract at 4-5, § 6.D(1). The Contract permits the plaintiff “to reject any Requests for Adjustments sought by Defendants, and, . . . require[] the Defendants to continue to perform the work under the Contract in accordance with the Contract Documents.” Compl. ¶ 24; see Contract at 8-9, § 8.F.

         Notwithstanding the requirements of the Contract and the oral representations made to the plaintiff by Ekwuno, the plaintiff alleges that the defendants (1) performed substandard work on various aspects of the renovation, some of which required further construction to correct, Compl. ¶¶ 27-28, and (2) mismanaged project funds, id. ¶¶ 30-38, as detailed below.

         2. Substandard Work Performance

         According to the plaintiff, the defendants performed substandard work, including incorrect installation of electric wiring, roofing, flooring, windows, water heater, furnace, “sump pump, ” doors, HVAC, insulation, elevator shaft, elevator pit, and gutters. Id. ¶¶ 27-28. This substandard work performance resulted in HVAC water leaks presenting a fire hazard, failure of the doors to meet industry standards, necessary replacement of approximately 72% of the electrical system to pass D.C. electrical inspections, uneven floors on three stories of the building, persistent roof leaks, and “significant damage” to the plaintiffs Information Technology system wiring. Id.

         3. Mismanagement of Project Funds

         The plaintiff alleges that, on approximately four occasions, Ekwuno requested additional funds in advance of the payment schedule established in the Contract, and beyond the agreed-upon price. See Compl. ¶¶ 30-31, 35-36. On three of those occasions, between June 2013 and December 2013, when requesting additional funds, Ekwuno allegedly misrepresented that the project was nearing completion. Id. ¶¶ 31, 33, 36.

         Specifically, on March 19, 2013, Ekwuno requested half of the remaining renovation funds, claiming the money “was needed for materials for the project” and “to keep the project moving forward, ” even though “the Contract called for the final draw to be paid at the end of the project.” Id. ¶ 30. The plaintiff allegedly “paid Defendant Ekwuno the requested amount because of its eagerness to see the project completed in a timely manner.” Id.

         On the second occasion, three months later, on June 18, 2013, Ekwuno allegedly requested “the balance of the final draw, ” stating in an email to the plaintiff that “he would not be able to move forward with the project” without those funds, which were “needed for materials for the project.” Id. . ¶ 31. Ekwuno also allegedly stated in the email that “the project was ‘exactly 6 weeks away from completion’ and that if ‘we have to stop and restart we will be set back at least a month or more from the original completion target of end of July.’” Id. The Complaint does not indicate whether the plaintiff complied with Ekwuno’s request.

         The third occasion occurred a month later, on July 24, 2013, when Ekwuno again requested additional funds, at which point the plaintiff “began paying vendors directly for outstanding bills, specifically the HVAC, sprinkler & fire alarm, and steel vendors, ” which Ekwuno previously “claimed . . . to have paid.” Id. ¶ 33. Ekwuno allegedly had not paid vendors “despite having already received 76% of the total contract price, or $344, 100, ” and “a status report from Defendant Ekwuno, ” received by the plaintiff on July 26, 2013, allegedly “stat[ed] (again) that the renovation was six to eight weeks from completion.” Id. ¶¶ 33-34.

         Still, approximately five months later, on December 16, 2013, “Defendant Ekwuno emailed Motir [falsely] stating that the project was 95% complete” and requesting an additional $67, 300 for the construction. Id. ¶ 36. The plaintiff responded the next day, on December 17, 2013, “voicing its concern with the accounting discrepancies, change orders paid for and left uncompleted, and the incredible delay in the project schedule.” Id. ¶ 37. Ekwuno replied the same day, “objecting to Motir’s concerns and admitting that he grossly underbid the original project fee.” Id. ¶ 38; see also Pl.’s Mot., Ex. L-3 (correspondence between the parties, Dec. 16-18, 2013), ECF No. 17-12.

         Also, on December 16, 2013, Ekwuno “requested an additional $35, 000 for the elevator, which Motir refused to pay, ” since the plaintiff had already delivered, by August 22, 2013, four payments, totaling $88, 300 “for an elevator that cost $62, 671.” Compl. ¶ 35. Thereafter, on January 8, 2014, Ekwuno “emailed Motir with a copy of the invoice for [the elevator supplier] showing a balance of $41, 914, which Defendant Ekwuno [allegedly] failed to pay in clear violation of the Contract.” Id. Since Ekwuno had allegedly “paid only $17, 622” to the elevator supplier, the plaintiff was forced to pay the $41, 914 balance “in order to achieve installation of the elevator, ” as well as an additional $12, 489 for the cost of storing the original elevator. Id.

         4.Abandonment of Renovation Prior to Completion

         The defendants “never returned to the project site after December 2013.” Id. ¶ 40. In order to complete the building renovations, on January 6, 2014, the plaintiff assigned one of its own employees “to oversee the completion of the renovation, on a full-time basis, ” which renovation was, at that time, “a far cry from the level of completion represented by Defendant Ekwuno.” Id. ¶ 39. The plaintiff claims it was not able to complete the renovations and move its office personnel back into the building until April 2014, at which time “numerous project deficiencies, ...


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