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FMD Restoration, Inc. v. Baistar Mechanical, Inc.

United States District Court, District of Columbia

June 21, 2016

FMD RESTORATION, INC., Plaintiff,
v.
BAISTAR MECHANICAL, INC., et al., Defendants. BAISTAR MECHANICAL, INC., et al., Counterclaim Plaintiff,
v.
FMD RESTORATION, INC., Counterclaim Defendant.

          MEMORANDUM OPINION

          DEBORAH A. ROBINSON JUDGE

         Plaintiff and Counterclaim Defendant, FMD Restoration, Inc. (“FMD”), is a Virginia corporation engaged in the business of providing construction services, including plumbing, electrical, heating/ventilation/air-conditioning, site concrete and other related construction services. Complaint, ECF No. 1, ¶¶ 1-2. Defendant and Counterclaim Plaintiff, Baistar Mechanical, Inc. (“Baistar”), is a Virginia general contractor and government services corporation. See Counter-Complaint, ECF No. 5-1, ¶¶ 1-2. Baistar was the prime contractor for three renovation projects at the Armed Forces Retirement Home (“AFRH”) in Washington, District of Columbia. See Baistar’s Amended Pretrial Statement, ECF No. 22 at 1. Baistar entered into three subcontracts with FMD which required FMD to perform construction and landscaping services at the AFRH. See Counter-Complaint ¶¶ 4 - 11.

         FMD alleged that Baistar breached the three subcontracts and refused to pay for work which FMD performed. See Complaint ¶¶ 11-50. Baistar alleged that FMD ceased to work on the projects and that consequently, Baistar missed its own deadlines. See Counter-Complaint ¶¶ 8-11.

         Procedural History

         On May 7, 2013, FMD filed a Complaint against Baistar and the sureties which provided payment bonds in accordance with the Miller Act, alleging three counts of breach of contract with respect to the Sheridan Assisted Living Project (“Sheridan Project”) (Count I), the Eagle Gate Renovation Project (Count II) and the Quarter 40 Smoking Shelter Project (Count III). See generally Complaint ¶¶ 11 -49. FMD sought judgment against Baistar in the amount of $60, 000, plus interest and costs, and for such other and further relief as this court may deem just and proper. Id. at 10.

         Baistar denied FMD’s claims and filed a counterclaim alleging breaches of contract for the Sheridan Project (Count I) and the Eagle Gate Project (Count II), and tortious interference with Baistar’s business expectations of more construction work at the AFRH facility (Count III). Baistar’s Counter-Complaint ¶¶ 12 - 54. Baistar asked that the court enter judgment against FMD for compensatory damages in the amount of $340, 000, plus lost profit “or an amount to be determined at trial”; (Count I); compensatory damages in the amount of $50, 000, plus lost expectation profit “or an amount to be determined at trial[, ]” (Count II); and compensatory damages in the amount of $250, 000 and punitive damages (Count III). Id.; see also id. at 8-9 (explaining “lost expectation/profit damages” in the amount of $250, 000 as to Counts I and II).

         On December 5, 2013, the parties consented to proceed before the undersigned United States Magistrate Judge for all purposes. See Notice, Consent, and Reference of a Civil Action to a Magistrate Judge, ECF No. 18; see also Referral, ECF No. 19.

         The Bench Trial

         The bench trial commenced on May 20, 2014 and concluded on May 23, 2014. 05/20/2014; 05/21/2014; 05/22/2014; 05/23/2014 Minute Entries. During the bench trial, the court heard testimony from (1) Franki Gaspar, owner of FMD; (2) Andrew Gaspar, president of FMD; (3) Hung Ku Jun, owner of Baistar, and (4) Israel Cruz, a replacement subcontractor for Baistar and former subcontractor for FMD, who uses the company name Delmy General Construction, LLC. See Trial Tr. vol. 1, ECF No. 35, 13, 90, 136 (Franki Gaspar), 150, 183 (Andrew Gaspar); Trial Tr. vol. 2, ECF No. 34, 61, 140 (Hong Ko Jun), 110, 121, 137 (Israel Cruz); Trial Tr. vol. 3, ECF No. 36, 3, 45, 152, 162, 165 (Hong Ko Jun), 84, 114 (Franki Gaspar), 120, 145 (Andrew Gaspar).

         On May 21, 2014, at the close of FMD’s case-in-chief, the court heard Baistar’s oral Rule 52(c) Motion for Judgment as a Matter of Law, and granted the motion based upon the finding that FMD failed to offer evidence sufficient for the court to find that FMD is entitled to recover with respect to its claims. See 05/21/2014 Minute Entry; see also Trial Tr. vol. 2, ECF No. 34, 53-55. The court confined its findings to issues regarding the sufficiency of the evidence. Trial Tr. vol. 2, ECF No. 34, 53. In that respect, the court found that the only reasonable inference to be drawn from the evidence offered by FMD is that FMD acknowledged that it did not complete the work on the projects, thereby admitting a breach of the contract. Id. The court declined to excuse FMD’s breach on the basis of wrongful termination, or other circumstances which allegedly may have prevented FMD from performing, because FMD made no such allegations in its complaint.[1] Id. at 53-54. The court also found that FMD, through the testimony of two witnesses, Mr. Franki Gaspar and Mr. Andrew Gaspar, conceded that their calculation of damages did not account for Baistar’s payments made directly to FMD or Baistar’s payments to others to complete the work that FMD did not complete. Id. at 54-55.

         Additionally, the court heard and granted Baistar’s oral motion to voluntarily dismiss Counts II and III of the Counter-Complaint, pursuant to Rule 41(c) of the Federal Rules of Civil Procedure, without objection. Id. at 59-60.

         The court then resumed the bench trial with respect to Count I of the Counter-Complaint, the Sheridan Project. Id. In Count I of the Counter-Complaint, Baistar alleged, inter alia, that after it paid FMD to work on the Sheridan Project, FMD failed to perform work, including “demolition, framing, ceiling and drywall, installations of fire doors, painting, flooring, kitchen installation (design/build), plumbing (labor only) electrical (labor only), piping insulation (labor only), wall insulation, bedroom/closets door installations (labor only), installation of hand rail(s) (handicap), and construction of two spa rooms.” Counter-Complaint, ¶ 29; see generally, id. ¶¶ 12-32. Baistar alleges that it either performed these tasks at Baistar’s expense or retained subcontractors at an expense of approximately $340, 000. Id. at 30.

         At the close of Baistar’s case-in-chief, the court heard FMD’s oral Rule 52(c) Motion for Judgment as Matter of Law, and denied the motion because the court found that FMD had not carried its burden to show that no evidence had been offered from which a trier of fact could find in favor of Baistar. Trial Tr. vol. 3, 79:12-25, 80:1-2. On May 23, 2014, the court heard closing arguments and the bench trial concluded. 5/23/2014 Minute Entry; see generally Trial Tr. vol. 4, ECF No. 37. The parties filed proposed findings of fact and conclusions of law in accordance with the court’s scheduling orders.[2]

         Upon consideration of the evidence offered at the trial; the parties’ proposed findings of fact and conclusions of law, and the entire record herein, the court finds that FMD breached the subcontract with Baistar for the Sheridan Project by failing to meet the milestone deadlines. However, on the basis of the findings and conclusions set forth in detail herein, the undersigned finds that Baistar failed to prove actual damages.

         I. FINDINGS OF FACT[3]

         A. The Miller Act

         The court finds that it has jurisdiction over this action pursuant to the Miller Act., 40 U.S.C. § 3131, et seq. “The Miller Act requires a payment and performance bond on all federal government construction projects costing over $100, 000.” Window Specialists, Inc. v. Forney Enterprises, Inc., 106 F.Supp. 3d 64, 69 (D.D.C. 2015). The Miller Act provides, in pertinent part, that “a general contractor on a federal construction project must furnish a payment bond to protect the labor and materials suppliers.” U.S. ex rel. Tennessee Valley Marble Holding Co. v. Grunley Const., 433 F.Supp.2d 104, 114 (D.D.C. 2006) (citing 40 U.S.C. § 3131(b)(2)). “To state a valid Miller Act claim, a plaintiff must prove essentially two elements: (1) it has ‘furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished under section 3131’; and (2) it ‘has not been paid in full within 90 days.’” Id. (citing 40 U.S.C. § 3133(b)(1)). The court finds that FMD stated a valid Miller Act claim and thus retains supplemental jurisdiction over the claims in Baistar’s Counter-Complaint. Fed.R.Civ.P. 13(a).[4]

         B. Scope of Contract for Work on the Sheridan Project

         1. Baistar was a party to a construction contract with the United States Department of Treasury, Bureau of Public Debt, for Grounds Maintenance and Snow Removal Services at the AFRH in the District of Columbia. Counter-Complaint ¶ 3; see generally HK Jun Test., Trial Tr. vol. 2, 61- 64, 67; Baistar Ex. 28.

         2. Between 2008 and 2012, Baistar and FMD entered into various subcontracts requiring FMD to perform construction. Jun Test., Trial Tr. vol. 2, 65: 6 -13.

         3. One of the subcontracts was a 2012 subcontract for FMD to perform construction work for the Sheridan Project at the AFRH. Stipulated Contract Proposal, FMD Ex. 58; Trial Tr. vol. 4, 39:11-25.

         4. Mr. Jun testified that he provided detailed specifications for the Sheridan Project to FMD. Jun Test., Trial Tr. vol. 2, 68: 14-25; Def.’s Ex. 28; 29. Mr. Jun also testified that he provided detailed drawings for the Sheridan Project to FMD. Id. at 73: 16-25; Baistar Ex. 31; Baistar Ex. 44.

         5. The proposal included (1) the scope of FMD’s work on the Sheridan Project, as “demolition[, ]” “new work[, ]” “flooring & tile[, ]” and “paint[, ]” for “2 level” and “3 level[, ]” “mechanical & P” and “electrical [, ]” and (2) provided that Baistar would pay FMD $331, 360.00 for its performance. FMD Ex. 58.

         6. “Demolition” refers to “remov[al] of objects that are . . . not necessary anymore in order to [create] space to do new work.” Franki Gaspar Test., Tr. vol. 1, 118: 7-11.

         7. Mr. Franki Gaspar testified that “New work” means “installation of new work according to drawings.” Franki Gaspar Test., Tr. vol. 1, 118:15. He explained that “New work” refers to the “redesign [of] rooms, hallway, and bathroom.” Franki Gaspar Test., Tr. vol. 1, 118: 18.

         8. “New work” also includes “rebuild[ing] and redo[ing] new work.” It depends on the “state on the drawing.” Franki Gaspar Test., Tr. vol. 1, 118: 21-23.

         9. The subcontract provided that FMD would “furnish material and labor - complete in accordance with above specifications, ” for the sum of $331, 360. FMD Ex. 58; Franki Gaspar Test., Tr. vol. 1, 118: 4-6.

         10. The subcontract included three options: (1) “Hallway 3032 New Acc. Ceiling, $4, 350”; (2) “Floor NewTile $4, 800”; and (3) “handrail Hallway per level $ 5, 450.00.” Id.

         11. Baistar concedes that the cost of installing option (3), “[H]andrail Hallway per level $ 5, 450.00, ” was not within the scope of the contract. Trial Tr. vol. 4, 95: 19-25, 96:1-4.

         12. The parties increased the scope of FMD’s work on the Sheridan Project to include “core drilling” of “21 holes at various sizes[.]” FMD Ex. 59.

         13. Baistar agreed to pay FMD $4, 300 for the core drilling work. Id.; see also F. Gaspar Test., Trial Tr. vol. 1, 119: 21-25, 120: 1-2.

         14. The price for core drilling included all material, labor, equipment, supervision, and cleanup. FMD Ex. 59.

         15. The parties disagree with respect to whether FMD was required to provide kitchen cabinets as part of its responsibilities under the Sheridan Project subcontract and offered conflicting testimony.

         16. Mr. Franki Gaspar testified that millwork included “handrailing, ” benches, “the kitchen area, ” and “all ...


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