United States District Court, District of Columbia
E. BOASBERG, United States District Judge
of construction suretyships is a subject that aspiring
lawyers might happen across in studying for the bar exam but
then quickly forget. This case against three surety companies
has been more enduring. It involves Plaintiff Paige
International, Inc.'s suit against Defendants XL
Specialty Insurance Company and its related entities for
unpaid sums incurred in completing construction work at
Washington's Marriott Marquis Hotel. After longstanding
litigation and a multi-day bench trial, the Court held that
Defendants were liable pursuant to a Payment Bond and awarded
Plaintiff $463, 092.50 in proven damages.
satisfied with this recovery, Paige now seeks to revisit the
damages calculation, tack on pre-judgment interest, and add
an award of attorney fees. It finds success on only the
addressing the substance of Paige's Motions, the Court
offers an overview of its suit against the three surety
companies. In doing so, the Court primarily relies on its own
oral findings of fact, supplemented where necessary with the
parties' post-trial briefing and trial exhibits.
See April 27, 2017, Hearing Transcript; ECF Nos. 57
(Plaintiff's Post-Trial Memorandum), 58 (Defendants'
Post-Trial Memorandum). This section first synopsizes the
overarching contracting scheme before discussing the outcome
of the recent bench trial.
present lawsuit involves a Russian-nesting-doll setup of
construction contractors. Occupying the outermost layer is HQ
Hotel, LLC, which owns the Marriott Marquis Hotel connected
to the D.C. Convention Center. See Pl. Mem. at 1;
Def. Mem. at 3. In October 2010, HQ Hotel and Hensel Phelps
Construction Company entered into a Prime Contract worth
around $400 million to build that hotel. See Tr. at
3:4-8; Pl. Exh. 1.1 (Hensel Phelps Prime Contract). Hensel
Phelps then divvied up individual components of that task
among various entities and, as relevant here, entered into a
Subcontract with Truland Systems Corporation to set up
different electrical systems. See Tr. at 3:12-14;
Pl. Exh. 1.2 (Truland Subcontract). Truland, in turn, further
split up its portion of the project by executing additional
contracts, including a Sub-subcontract with Plaintiff for
telecommunications and security-systems work. See
Tr. at 3:19-4:10; Pl. Mem. at 1; Def. Mem. at 5; Pl. Exh. 1.7
this setup involved some risk for Hensel Phelps. Its Prime
Contract with HQ Hotel provided that the Marriott was to open
on May 1, 2014, and that it would incur substantial monetary
penalties for delay. See Tr. at 4:11-13; Pl. Mem. at
3. More specifically, if any of Hensel Phelps's various
subordinate companies faltered and if construction halted,
then it would be on the hook for upward of $100, 000 per day
and $13 million in total liquidated delay damages.
See Pl. Mem. at 3; Prime Contract, arts. 6.15(i),
6.16(c), 6.17(c). Mishap might come in many forms, but
relevant here was the possibility that subcontractors might
fail to pay their own laborers and suppliers, thus throwing a
wrench into the project. To insulate itself from this risk,
Hensel Phelps required that Truland guarantee its downstream
payment obligations by furnishing a payment bond, executed by
a surety company. See Truland Subcontract, § D,
art. 34(a). As Hensel Phelps was the protected party, the
Subcontract specified that that the Bond “shall be
drawn in favor of the [Prime] Contractor” “for
the full amount of this Subcontract, ” roughly $40
million. Id., § C.
indeed obtained such a Payment Bond from Defendants XL and
two related surety companies (Greenwich Insurance Company and
XL Reinsurance America, Inc.). See Pl. Exh. 1.4
(Payment Bond). The Court will need to delve into the details
of this Bond later. For now, it suffices to say that the
instrument came into effect if Truland did not
“promptly make payment” to its sub-subcontractors
(e.g., Paige), in which case those lower-tier
companies could file claims with XL to be paid “amounts
due for labor, material or equipment used or reasonably
required for use in the performance of the [Truland]
Subcontract.” Id., pmbl. & ¶ 5. As a
result, Hensel Phelps could rest assured that the project
would continue apace and that it would not itself need make
further payments to Truland's sub-subcontractors.
pessimist would anticipate, all did not proceed as planned.
To begin, in June 2013, Tropical Storm Andrea hit Washington,
requiring Paige to rack up expenditures associated with
remediating water damage from the squall. See Tr. at
4:14-20. If that were not enough, the hotel project also
suffered other delays, and so Plaintiff bore costs from
accelerating its work to fit a tighter timetable.
Id. at 4:21-24. To top it off, Truland went
bankrupt, leaving Paige (and others) in the lurch, as several
of Paige's proposed change orders for additional work to
the defunct Subcontractor were left pending, unsigned and
unpaid. Id. at 5:1-4, 7:20-21.
Truland out of the picture, Paige filed a claim under the
Payment Bond and then immediately brought the present lawsuit
against XL to recover those amounts left due and owing. XL,
conversely, believed that Paige's claims were
insufficiently documented and not necessarily in excess of
the already-paid contract price. The case thus proceeded to a
bench trial, after which the Court ruled that Defendants were
indeed liable for sums related to Plaintiff's storm
remediation, acceleration of work, and pending change orders.
Id. at 8:12-15. Paige claimed around $1.3 million in
damages, but because it could not adequately show that all
those dollars went to performing duties over and above the
base Sub-subcontract and because its recordkeeping was so
shoddy, the Court discounted the award by 50% and also
deducted other amounts that XL had already paid Paige or its
own subcontractors. Id. at 15:3-14. In total, the
Court determined that Defendants owed Plaintiff $463, 092.50
in damages. Id.
now raises three separate issues with the award. It first
seeks to amend two aspects of the damages calculation, and it
also demands pre-judgment interest as well as attorney fees.
See ECF Nos. 59 (Motion for Attorney Fees &
Motion for Pre-judgment Interest), 60 (Motion to Amend
Damages). The Court analyzes each question in turn.
Calculation of Damages
initial effort to increase its recovery, Paige takes issue
with two features of the Court's $463, 092.50 award.
First, it assails the Court's 50% reduction of certain
claimed charges. While “Paige accepts [the 50%]
discount as reasonable as to its breach of duty claim,
” it contends that such discount “was erroneously
applied . . . to the pending PCOs and Storm Andrea damage
claim.” Damages Mot. at 3. Second, Plaintiff believes
that the Court improperly credited XL with money saved from
the insurance company's direct settlement with SPL, a
Paige subcontractor. Id. at 9-12.
Court held a six-day bench trial, heard from multiple
witnesses, and considered hundreds of exhibits. It also
reviewed lengthy post-trial submissions from each side on
both factual and legal questions in dispute. As explained in
its ultimate oral verdict, determining the appropriate
measure of damages was no easy feat. Paige's lack of
records was the principal culprit in the Court's struggle
to fashion a just award. In settling on the 50% discount
figure, the Court, as the finder of fact, selected what it
considered the fairest figure. In seeking to limit that
percentage reduction, Paige raises no new issues not already
contemplated by the Court and incorporated in the verdict.
For example, Plaintiff has not demonstrated that more than
50% of its additional PCO and storm-remediation work was
performed over and above what would have been required under
the base contract. Similarly, the Court sees no basis to
revisit its determination on the SPL credit and believes that
its prior damages finding on that issue remains valid.
factfinders could well have come to different conclusions on
these and myriad other disagreements between the parties, but
this Court's determination on the final sum represents
its best effort under the facts and law presented.
Court turns next to the issue of pre-judgment interest, to
which Plaintiff claims it is entitled. As a general matter,
there are two forms of interest to compensate a plaintiff for
losses from a breach of contract: pre-judgment and
post-judgment. The former runs “from the time the claim
accrues until judgment is entered, ” West Virginia
v. United States, 479 U.S. 305, 310-11 n.2 (1987), while
the latter “runs from the date of the entry of
judgment” until payment by the defendant. Kaiser
Aluminum & Chemical Corp. v. Bonjorno, 494 U.S. 827,
835-36 (1990). Only pre-judgment interest is at issue here.
While Paige believes that it is owed such interest on the
Court's full damages award, XL retorts that pre-judgment