United States District Court, District of Columbia
UNITED STATES OF AMERICA, for the use and benefit of AMERICAN CONSTRUCTION, LLC, Plaintiff,
HIRANI ENGINEERING & LAND SURVEYING, P.C., et al, Defendants.
P. Mehta United States District Judge.
American Civil Construction, LLC, has filed suit against
Defendants Hirani Engineering & Land Surveying, PC
(“Hirani”), and Colonial Surety Company
(“Colonial”) in connection with its work as a
subcontractor on a federal government project. Plaintiff
brings a state law claim against Hirani for breach of
contract and, separately, seeks relief in the name of the
United States against Colonial under the terms of the Miller
Act, 40 U.S.C. § 3133, for Hirani's failure to pay
Plaintiff. Plaintiff alleges that it is entitled to recover
more than $2 million in damages. Colonial has filed multiple
counterclaims in response. Now before the court are
Defendants' motions for summary judgment and to strike
Plaintiff's jury demand.
thorough review of the record, the court denies
Defendants' Motion for Summary Judgment but grants
Defendants' Motion to Strike Plaintiff's Jury Demand.
The Prime Contract and Subcontract
about September 16, 2010, Defendant Hirani Engineering &
Land Surveying, PC (“Hirani”), entered into
Contract No. W912DR-10-C-0093 (the “Prime
Contract”) with the United States of America, through
the United States Army Corps of Engineers (“the
USACE”), to construct the “Washington D.C. Local
Flood Protection Project, 17th Street Closure Structure,
Washington D.C.” (“the Project”).
See Defs.' Mot. for Summ. J., ECF No. 44
[hereinafter Defs.' Mot. for Summ. J.], Defs.' Stmt.
of Material Facts, ECF No. 44-1 [hereinafter Defs.' Stmt.
of Facts], ¶ 1 (citing Pl.'s Second Am. Compl., ECF
No. 26 [hereinafter Second Am. Compl.], ¶ 5). To fulfill
its obligations under the Prime Contract, Hirani entered into
a written contract on April 4, 2011, (“the
Subcontract”) with Plaintiff American Civil
Construction, LLC, under which Plaintiff would perform
specified work (“the Work”) on the Project.
See Defs.' Mot. for Summ. J., Attach. 3, ECF No.
44-3 [hereinafter Moldovan Decl.], at 7-17 (Ex. B)
[hereinafter Subcontract]. Consistent with the requirements of the
Miller Act, Hirani obtained a payment bond from Defendant
Colonial Surety Company (“Colonial”) to secure
payment to Plaintiff under the Subcontract. See 40
U.S.C. § 3131(b)(2); Moldovan Decl. at 4-6 (Ex. A).
Subcontract outlines each party's obligations under the
agreement, including, but not limited to, a description of
the Work; when the Work should begin; and the amount owed
Plaintiff for completing the Work. The first clause of the
Subcontract states that Plaintiff
shall provide the entire scope of work to construct and
manage the 17th Street closure structure except
for the Project Manager and the misc. metal structures/panels
as required by Hirani under the base bid to the USACE and
related work required (hereinafter the “Work”)
for the Local Flood Protection Project @ 17th
Street Closure Structure (hereinafter the
“Project”) located at 17th Street
(hereinafter the “Premises”).
at 1 (Art. I, § 1.1). Schedules A and B of the
Subcontract define the Work more specifically. See
Id. (Art. I, §§ 1.2, 1.3). For example,
Schedule B states that Plaintiff must “[p]rovide
project supervision (Superintendent, Site Safety Officer,
Traffic Control Officer) except for a project manager to act
on behalf of [Hirani]”; “[p]rovide an on-site
field office as per the specifications for the USACE”;
and “remove, store[, ] and reinstall pedestrian light
poles throughout construction.” Id. at 9 (Sch.
B, Pts. 2, 6, 16). Hirani retained the right to change, add,
or eliminate portions of the Work “at any time
whatsoever, whether the Work or any part thereof shall or
shall not have been completed, ” by written order
submitted to Plaintiff, and Plaintiff agreed not to seek
“extra or additional compensation on account of any
such work, unless same [sic] shall have been done pursuant to
a written order signed by” a designated Hirani
representative. Id. at 2 (Art. IV, § 4.1). The
Subcontract also specifies that:
The scheduling of all construction operations at the Project,
including the Schedule, shall be as mutually agreed with
[Hirani], and [Plaintiff] shall, if requested, furnish all
scheduling information in such form and detail as required by
[Hirani], to the satisfaction [Hirani] [sic], and [Plaintiff]
shall furnish such information within seven (7) days of
request. [Plaintiff] shall also update and/or revise such
information as requested by [Hirani] at any time, either
prior to or during the performance of its Work.
Id. at 1-2 (Art. II, § 2.2). Additionally, of
relevance here, the Subcontract requires Plaintiff, at
Plaintiff's own expense, to clean up the worksite.
Plaintiff agreed to
[o]n a daily basis or less frequently, and at
[Plaintiff's] own cost and expense, (1) keep the area of
the premises in which the Work is being performed free at all
times from all waste materials, packaging materials[, ] and
other rubbish accumulated in connection with the execution of
the Work by collecting and depositing daily said material and
rubbish into dumpsters provided on grade by [Hirani], (2)
clean and remove from its own work and from all contiguous
work of others any soiling, staining, mortar, plaster,
concrete or dirt caused by the execution of the Work and make
good all defects resulting therefrom, (3) at the completion
of its work in each area, perform such cleaning as may be
required to leave the area “broom clean” and (4)
upon the completion of the Work, remove all of its tools,
equipment, scaffolds, shanties, trailers, and surplus
Id. at 3 (Art. VII, § 7.1).
and Plaintiff's agreement also set out explicit terms for
payment and what to do in the event of a dispute concerning
the agreement. The Subcontract states Plaintiff will be paid
a fixed sum of $2, 845, 600.00 for “all labor services,
materials, equipment or other items acquired, performed,
furnished or used with respect to the Work, ” which
includes all applicable federal, state, and local taxes.
Id. at 2 (Art. III, § 3.1). Additionally,
Plaintiff agreed not to stop or delay performance of the Work
or delivery of labor or materials simply because a
“dispute, controversy[, ] or question” arose in
the interpretation of the Subcontract, but rather, to
continue working “pending the determination of such
dispute or controversy.” Id. at 6 (Art. XIV,
the parties contemplated the grounds for contract
termination. The Subcontract calls for a different outcome
when the agreement is terminated for default than when it is
terminated for convenience.
Termination for Default: Should [Plaintiff] fail to timely
provide labor, services, and/or materials for the Project in
accordance with the terms of this Subcontract, then Hirani
shall have the right at any time upon 7 days written cure
notice to [Plaintiff] to terminate this Subcontract and
require [Plaintiff] to cease work hereunder.
Termination for Convenience: Should the [Government] choose
to terminate Hirani for the convenience of the [Government],
then [Plaintiff] shall be similarly terminated, and the
obligations and rights of the parties shall be in accordance
with the provisions of the prime contract for such
termination for convenience.
Id. at 6 (Art. XV, § 15.1).
Events Arising in the Course of Plaintiff's
Project was plagued with delays and disputes, the timeline
and substance of which underlie the present litigation. The
record begins, for all intents and purposes, when the USACE,
by letter dated February 12, 2013, first gave Hirani notice
of its intent to terminate the Prime Contract in light of
Hirani's purported failure to perform in the agreed upon
timeframe and required Hirani to show cause why the Prime
Contract should not be terminated. See Defs.'
Stmt. of Facts ¶ 7; Moldovan Decl. at 18-19 (Ex. C).
receiving the Show Cause Notice, Hirani wrote to
Plaintiff. By letter dated February 18, 2013, Hirani
informed Plaintiff of the USACE's intent to terminate the
Prime Contract, requested Plaintiff submit any facts
assisting Hirani in demonstrating why the Prime Contract
should not be terminated, and stated that “[t]he
USACE['s] contention is that [Plaintiff] has delayed or
simultaneously delayed this project and if you believe other
wise [sic] you should have been submitting delay schedules
and information showing the delay.” Moldovan Decl. at
23-26 (Ex. E), at 1 [hereinafter Defs.' Ex. E]. The
letter identified several perceived deficiencies in the
timeliness and substance of the Work Plaintiff owed under the
Subcontract, including that Plaintiff had failed to send
Hirani project scheduling information. Id. at 2.
Hirani demanded Plaintiff provide a detailed schedule on or
before February 22, 2013; cure its deficient performance; and
identify any material facts regarding those deficiencies by
close of business that day. Id.
responded to Hirani's letter on February 22, 2013, and
disputed that the Work was behind schedule. Plaintiff noted
that there is “no contractually required completion
date for this project” and “there is not and
never has been any mutually agreed upon schedule for any work
to be done regarding [Caisson 12] or any other work at the
project.” Moldovan Decl. at 27-36 (Ex. F), at 1.
Additionally, Plaintiff provided an itemized list of 27
causes for the Project's delay that were outside
Plaintiff's control. See Id. at 3-9. Amongst
these, Plaintiff cited the Government's failure to obtain
necessary permits and coordinate neighboring projects;
weather delays; “change order work . . . in excess of
$500, 000 . . . increasing the project scope by more than
20%”; Hirani and the USACE's failure to provide
field management on site; and Hirani and the USACE's
failure to “timely process Payment Requisitions for the
project and make complete and proper payments to [Plaintiff],
from which necessary cash flow to [Plaintiff] could be
properly maintained.” Id. As part of its
response to the USACE's Show Cause Notice, by letter
dated February 25, 2013, Hirani parroted Plaintiff's
reasons for delay attributable to the Government and outlined
a plan for future progress. See Moldovan Decl. at
37-46 (Ex. G) [hereinafter Defs.' Ex. G].
progress on the Project remained elusive, however, and the
record reflects that Plaintiff and Hirani's relationship
fractured in spring 2013. By letter dated March 12, 2013,
Plaintiff informed Hirani that it would be out of productive
work on the Project within the following three days due to
Plaintiff and Hirani's inability to agree on the scope
and price of additional work Hirani had demanded,
Hirani's failure to provide written direction on other
aspects of the Project in light of changed or unanticipated
circumstances, and outstanding engineering and architectural
layout problems with the original plans for certain portions
of the Project. See Moldovan Decl. at 47-54 (Ex. H).
As a result, Plaintiff explained, it would be “forced
to significantly reduce [its] work force at the project site
. . . . [and its] heavy and light equipment complement at the
work site, ” and would be “demobilizing specific
or all pieces of heavy equipment accordingly, ” as well
as “other tools and equipment during the upcoming
period” so as “to mitigate damages and costs
associated with the temporary shutdown of field operations
due to no fault of [Plaintiff].” Id. at 6.
On-site supervision also posed a problem. The record
indicates that there was “no on-site supervision from
September 29, 2012 through February 18, 2013.”
See Pl.'s Opp'n to Defs.' Mot. for Summ.
J., ECF No. 46 [hereinafter Pl.'s Opp'n to Summ. J.],
Attach. 3, ECF No. 46-3 [hereinafter Pls.' Opp'n
Attach. 3], at 1-10 [hereinafter Stephen Decl.], ¶ 9.
Although a new supervisor began work on February 19, 2013, he
quit on April 10, 2013. Id. ¶ 10.
USACE informed Hirani on March 15, 2013, that it had failed
to satisfy the Show Cause Notice, see Moldovan Decl.
at 55-61 (Ex. I), at 1, exacerbating tensions between the
USACE and Hirani, as well as between Hirani and Plaintiff.
The USACE rejected each of the 24 reasons Hirani had outlined
as cause for the Project's delay and set forth 11
“key milestone dates” that Hirani had to meet in
order to avoid termination of the Prime Contract. See
Id. at 1-5. This led Hirani, in turn, to write Plaintiff
and state that “[Plaintiff's] show cause response
was not acceptable.” See Moldovan Decl. at
64-71 (Ex. K), at 1. The letter rejected Plaintiff's
prior statement that there “has never been a mutually
agreed schedule” because “[Plaintiff] was always
responsible for providing the scheduling information required
to complete the . . . [Work].” Id.
Additionally, Hirani stated it “always timely processed
pay requisitions and made proper payments to [Plaintiff],
” but Plaintiff “refused to provide proper
invoices or a schedule of values which sums to their contract
total.” Id. at 6. The invoices that had been
submitted, Hirani claimed, were “inflated and
intentionally attempt[ed] to exceed [Plaintiff's]
subcontract value.” Id. At its close,
Hirani's letter laid out the 11 “key milestone
dates” Hirani had received from the USACE and stated
that Plaintiff had to meet those deadlines to avoid
termination of the Subcontract. Id. at 7. Hirani
noted that because certain deadlines had already passed,
Plaintiff needed to provide a revised schedule for completing
the Work. Id.
this period, Plaintiff kept Colonial and the USACE informed
of Hirani's failure to pay Plaintiff amounts it believed
were owed under the Subcontract. On March 18, 2013-prior to
receiving Hirani's rejection of its efforts to show
cause-Plaintiff e-mailed Colonial to give notice that it
would be out of work as of the following day, March 19, 2013,
and to seek help in securing payment for its performance thus
far. See Moldovan Decl. at 62-63 (Ex. J). Plaintiff
claimed that Hirani had “flatly refused to honor their
payment commitments and chosen to commit payment fraud,
” causing Plaintiff to be “about out of operating
money.” Id. Plaintiff's e-mail further
stated that it had conferred with the USACE, which had told
Plaintiff that if it is “not able to continue work for
those two specific reasons . . . . i.e. non-payment and not
able to proceed due to Hirani's not authorizing the CO
work properly ..... then Hirani will probably be terminated
at once ...... ” Id. (alterations in
original). Plaintiff sent another e-mail to Colonial on March
26, 2013-after receiving Hirani's rejection of its
efforts to show cause-stating that Hirani had not paid
Plaintiff, Plaintiff was “out of money, and the crews
ha[d] been off since Friday afternoon...... Without money and
mutually agreed change orders to the subcontract, [Plaintiff
is] not able to proceed with any work at site [sic].”
Moldovan Decl. at 72-74 (Ex. L) [hereinafter Defs.' Ex.
L], at 1 (alterations in original). Plaintiff estimated that
it was owed approximately $221, 000 for the pay period that
ended on March 24, 2013. Id. Plaintiff's letter
stated that Plaintiff had conveyed this information to the
USACE, see Id. at 2, and Plaintiff followed up with
another email to Colonial two days later, on which the USACE
was copied, repeating that Plaintiff remained out of
productive work due to Hirani's failure to pay,
see Moldovan Decl. at 75-76 (Ex. M).
urged Plaintiff not to stop its work in light of the
disagreement over payment. By letter dated March 28, 2013,
Hirani disputed that it owed Plaintiff for costs incurred as
a result of the delay, as Hirani attributed those costs to
Plaintiff's own fault, and that Hirani had not fully paid
Plaintiff, as Hirani believed it had not received “a
proper invoice[, ] as required by the subcontract
agreement.” Moldovan Decl. at 77-79 (Ex. N)
[hereinafter Defs.' Ex. N], at 1. Hirani noted that if
Plaintiff thought it had not been paid in full, then
Plaintiff should “specifically detail what [it has] not
been paid and provide a full and detailed schedule of values
that sums to [Plaintiff's] contract total.”
Id. In the interim, Hirani directed Plaintiff to
continue working because “[t]he USACE was clear . . .
that they will terminate Hirani's contract if work does
not continue, which will result in [Plaintiff]'s
termination as per the subcontract agreement and be directly
due to [Plaintiff]'s failure to continue work on the
project.” Id. Plaintiff replied with an e-mail
the following day, in which it continued to dispute that the
delays were its fault and stated it was continuing to perform
work on the Project but had “simply run out of
productive work to perform” in light of nonpayment.
Moldovan Decl. at 80-84 (Ex. O), at 1-2. Plaintiff urged
Hirani to make the payments owed and provide change orders so
productive work could continue. See Id. at 2-3.
point, Plaintiff believed Hirani owed it more than half a
million dollars. In a more formal letter to Hirani, Plaintiff
clarified that the last payment it had received on or
“about December 5, 2012 was for work completed through
November 20, 2012, ” and Plaintiff had not been paid
since, despite the USACE continuing to pay Hirani.
See Pls.' Opp'n Attach. 3 at 28-45 (Ex. A)
[hereinafter Pl.'s Ex. A], at 1-2. With its letter,
Plaintiff included an itemized list of the total payments the
USACE had made to Hirani through February 20, 2013, and the
total payments that “SHOULD HAVE BEEN MADE to
[Plaintiff]” through February 20, 2013, then compared
the difference to determine that Hirani owed Plaintiff $373,
189.93. Id. at 3-4. This figure, according to
Plaintiff, did not account for (1) “specific extra work
directed and other field charges invoiced by [Plaintiff] to
Hirani, ” which exceeded the scope of the Work under
the Subcontract; (2) legal indemnification fees; or (3)
“base contract ad [sic] change order monies for work
completed between February 13, 2013 and March 24,
2013.” Id. at 4. Adding in those costs and
making the bill current to March 29, 2013, Plaintiff
calculated that Hirani owed it $524, 907.19 and demanded
immediate payment. Id. at 4-5.
USACE subsequently issued Hirani a second notice of its
intent to terminate the Prime Contract. See Moldovan
Decl. at 85-87 (Ex. P). The notice stated that Hirani was now
549 days behind the Project's anticipated schedule, with
369 of those days due to “contractor-only or
inexcusable delays[, ] and the remaining 180 days [due to] .
. . non-compensable concurrent or weather delays.”
Id. at 1. To avoid termination of the Prime
Contract, the USACE directed Hirani to meet a new schedule of
13 “milestone dates, ” under which construction
would be completed and all requisite documents submitted by
June 30, 2013. Id. The USACE also warned that Hirani
had “placed completion of this project in jeopardy by
disregarding” its obligations to promptly pay its
subcontractor. See Id. at 2. Lastly, the USACE
stated that, “in order to protect the interests of the
Government and due to the fact that the contractor is
severely behind schedule, ” it would withhold $125, 000
in payment until the Project was “substantial[ly]
Hirani's on-site supervisor quit on April 10, 2013, the
USACE warned Hirani that it was in breach of the Prime
Contract and directed Hirani to temporarily shut down
Plaintiff's operations, as of April 15, 2013, in light of
Hirani's failure to provide field supervision.
See Stephen Decl. ¶¶ 10-12; Pls.'
Opp'n Attach. 3 at 50-51 (Ex. D), at 1. Plaintiff
received verbal notice from Hirani of the need to temporarily
suspend its operations on the afternoon of April 12, 2013,
and wrote to Hirani on April 14, 2013, to provide written
confirmation of the reasons for stopping its performance.
See Moldovan Decl. at 91-93 (Ex. R).
Hirani hired a new site supervisor and Plaintiff resumed
working on the Project on April 23, 2013, see
Stephen Decl. ¶ 13, Plaintiff's performance shortly
came to a halt once more. The USACE sent Hirani a letter on
Friday, April 26, 2013, notifying Hirani of its final
decision to terminate the Prime Contract, effective
immediately. See Moldovan Decl. at 97-100 (Ex. T)
[hereinafter Defs.' Ex. T]. The USACE explained that it
was terminating the contract due to Hirani's
“failure to (1) complete the contract by the extended
contract completion date; (2) respond to the Government's
repeated requests to correct performance deficiencies; and
(3) provide adequate assurances that the contract will be
completed in the near future.” Id. at 1. The
letter specifically noted that “critical work onsite
has ceased since 22 March 2013 due to subcontractor
management and non-payment issues, ” and Hirani had
“not submitted periodic progress schedules.”
Id. Heavy rains prevented Plaintiff from performing
any Work on Monday, April 29, or Tuesday, April 30, 2013.
See Pls.' Opp'n Attach. 3 at 81-159 (Ex. J)
[hereinafter Pl.'s Ex. J]. Plaintiff learned of the
USACE's decision to terminate the Prime Contractor on
April 30, 2013, but Hirani told Plaintiff on May 1, 2013,
that Plaintiff was “not to stop working” because
Hirani intended to fight the termination. See Id.
Plaintiff's Quality Control Reports reflect that
Plaintiff was on site and working on May 1, 2013, but on May
2, 2013, no Work was performed in light of the USACE's
termination of the Prime Contract. See id.
performance did not resume. Hirani replied to the USACE's
final notice of termination on April 30, 2013, by rejecting
the purported termination for default as defective on the
grounds that Hirani never received an opportunity to cure and
the USACE had caused the delays in construction. See
Pl.'s Opp'n to Summ. J., Attach. 4, ECF No. 46-4, at
145-48 (Ex. T). At some point thereafter, Hirani terminated
the Subcontract. Cf. Second Am. Compl. ¶ 28.
Colonial purportedly approached Plaintiff in June 2013 and
asked Plaintiff to complete the Project. See Id.
¶ 20. Plaintiff requested that “its unpaid
progress payments on the unchanged base contract work [be]
brought up to date, ” but Colonial declined to pay
these amounts, and Plaintiff's work on the Project ended.