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Western Surety Co. v. U.S. Engineering Co.

United States District Court, District of Columbia

March 20, 2019

WESTERN SURETY COMPANY, Plaintiff,
v.
U.S. ENGINEERING COMPANY, Defendant.

          MEMORANDUM OPINION

          TANYA S. CHUTKAN UNITED STATES DISTRICT JUDGE.

         Plaintiff Western Surety Company ("Western Surety") sued for declaratory and injunctive relief to enjoin Defendant U.S. Engineering Company ("U.S. Engineering") from compelling arbitration proceedings against Plaintiff and making a claim on a surety bond issued by Plaintiff. Western Surety has moved for an order (1) awarding summary judgment on the sole claim, [1] (2) declaring that it has no obligation to U.S. Engineering, and (3) dismissing U.S. Engineering's counterclaim with prejudice. (ECF No. 29.) U.S. Engineering has filed a Motion and an Amended Motion for Reconsideration of the Court's August 31, 2017 Order granting Western Surety's motion to strike U.S. Engineering's supplemental authority. (ECF Nos. 45 & 46.) For the reasons stated herein, U.S. Engineering's motions will be GRANTED, and Western Surety's motion will be GRANTED

         I. UNDISPUTED FACTS[2]

         On January 25, 2012, Turner Construction and U.S. Engineering entered into a contract, under the terms of which U.S. Engineering was to perform renovation and construction work at the South African Embassy in Washington, D.C. (ECF No. 35 ("7(H)(1) Statement") at ¶ 1.) U.S. Engineering awarded a subcontract to United Sheet Metal, Inc. ("Sheet Metal") to furnish labor and materials relating to the installation of sheet metal at the embassy. (Id. ¶ 2.) At Sheet Metal's request, Western Surety issued a $585, 000.00 performance bond (the "Bond") identifying U.S. Engineering as "Owner," Sheet Metal as "Contractor," and Western Surety as "Surety." (Id. ¶¶ 3, 4.)

         Section 3 of the Bond provided that Western Surety's obligation would arise after: (1) U.S. Engineering provided notice to Sheet Metal and Western Surety that it was considering a declaration of default; (2) U.S. Engineering declared a default, terminated the contract, and notified Western Surety; and (3) U.S. Engineering agreed to pay the balance of the contract price to Western Surety or to a contractor selected to perform the contract. (Id. ¶ 5.) With respect to the first requirement, Section 4 of the Bond explicitly stated that U.S. Engineering's failure to comply with the notice requirement would neither constitute a failure to comply with a condition precedent to Western Surety's obligation nor release Western Surety from its obligation unless Western Surety demonstrated prejudice. (Id.) The Bond was silent as to whether the second two requirements constituted a condition precedent.

         Section 5 of the Bond detailed the four options that Western Surety was permitted to take to fulfill its obligation after U.S. Engineering had satisfied the conditions of Section 3. (Id.) First, Western Surety could, with U.S. Engineering's consent, arrange for Sheet Metal to complete the contract. (Id.) Second, Western Surety could complete the contract itself, through its agents, or through its independent contractors. (Id.) Third, Western Surety could solicit bids from qualified contractors, arrange for a contractor acceptable to U.S. Engineering to complete the contract, and pay damages to U.S. Engineering. (Id.) Fourth, Western Surety could waive its rights to facilitate completion of the project and either compensate U.S. Engineering in the amount for which Western Surety was liable or deny liability entirely. (Id.)

         In February 2013, issues regarding Sheet Metal's performance began to arise, and continued through the spring and summer of 2013, culminating in U.S. Engineering formally terminating the subcontract on September 9, 2013. (Id. ¶¶ 8, 9.) U.S. Engineering then arranged for completion of Sheet Metal's work by U.S. Engineering and four other companies, without the knowledge of Western Surety. (Id. ¶ 11.) On June 12, 2014, Western Surety received a notice of claim from U.S. Engineering advising Western Surety that: (1) Sheet Metal had been terminated as a subcontractor, and (2) U.S. Engineering had incurred expenses to complete and correct Sheet Metal's work. (Id. ¶ 8.)

         II. STANDARD OF REVIEW

         Summary judgment is appropriate where there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Waterhouse v. Dist. of Columbia, 298 F.3d 989, 991 (D.C. Cir. 2002). The moving party bears the "initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits . . . which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp., 477 U.S. at 323 (internal quotation marks omitted). The nonmoving party, in response, must present its own evidence beyond the pleadings to demonstrate specific facts showing that there is a genuine issue for trial. Id. at 324.

         In determining whether a genuine issue of material fact exists, the court must view all facts in the light most favorable to the non-moving party. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A fact is material if "a dispute over it might affect the outcome of a suit under governing law; factual disputes that are 'irrelevant or unnecessary' do not affect the summary judgment determination." Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). An issue is genuine if '"the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Id. (quoting Anderson, 477 U.S. at 248).

         III. ANALYSIS

         A. U.S. Engineering's Motion for Reconsideration

         U.S. Engineering asks this court to reconsider its August 31, 2017 order striking from the record its notice of supplemental authority-an Arbitration Award in favor of U.S. Engineering and against Sheet Metal. (ECF No. 46-2.) The court sua sponte struck the authority from the record because U.S. Engineering's opposition to the motion to strike was untimely. In its motion for reconsideration, U.S. Engineering explains that it obtained Western Surety's consent for an extension of time to respond but neglected to inform the court of the agreement. (ECF No. 46-1 at 1.) Because U.S. Engineering received Western Surety's consent before expiration of the deadline, the court will reconsider its decision to grant Western Surety's motion to strike.

         B. Western ...


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