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United States v. Hirani Engineering & Land Surveying, P.C.

United States District Court, District of Columbia

June 27, 2017

UNITED STATES OF AMERICA, for the use and benefit of AMERICAN CONSTRUCTION, LLC, Plaintiff,


          Amit P. Mehta United States District Judge.

         Plaintiff 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.

         After thorough review of the record, the court denies Defendants' Motion for Summary Judgment but grants Defendants' Motion to Strike Plaintiff's Jury Demand.

         I. BACKGROUND

         A. The Prime Contract and Subcontract

         On or 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].[1] 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).

         The 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”).

         Subcontract 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 materials.

Id. at 3 (Art. VII, § 7.1).

         Hirani 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, § 14.1).

         Lastly, 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).

         B. Events Arising in the Course of Plaintiff's Performance

         The 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).

         After receiving the Show Cause Notice, Hirani wrote to Plaintiff.[2] 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.

         Plaintiff 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].

         Substantial 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.

         The 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.

         Throughout 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).

         Hirani 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.

         By this 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.[3] 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.

         The 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] complet[e].” Id.

         When 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).

         Although 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.

         Plaintiff's 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. See id.

         C. The ...

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