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Martik Brothers, Inc. v. Huntington National Bank

January 14, 2009


The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

Electronically Filed


I. Introduction

Plaintiff Martik Brothers, Inc. ("Martik"), a Pennsylvania corporation, filed its Complaint in this case against Defendant Huntington National Bank ("HNB"), a national banking corporation with its principal place of business in Ohio, setting forth common law claims sounding in contract and tort. Count I alleges that Martik is a third party beneficiary under a construction loan agreement entered into between HNB and Kiebler Slippery Rock, L.L.C., and that, under the terms of the loan agreement, Martik is owed money for services it performed for Kiebler; Count II, that HNB made certain misrepresentations to Martik regarding the funding available in the loan agreement and payment for Martik's services under its contract with Kiebler; Count III, that Martik detrimentally relied on HNB's misrepresentations; and Count IV, that HNB has been unjustly enriched.*fn1 More specifically, the Complaint avers the following facts in support of Martik's several theories.

Martik avers that on or about August 29, 2006, it entered into two separate contracts with Kiebler whereby it agreed to provide general contracting services to Kiebler, the owner or developer of a project known as the "Slippery Rock Quadrangle" located in Slippery Rock Township, Butler County, Pennsylvania which consist of (a) a contract for site work related to the construction of nineteen (19) buildings and a clubhouse and (b) a contract for the construction of fourteen (14) buildings. Complaint, ¶¶ 5,6. According to the Complaint, Kiebler obtained funding for the Slippery Rock Quadrangle through HNB pursuant to the terms of a construction loan agreement (the "Loan Agreement"). Martik was not and does not claim to have been a party to the Loan Agreement or in privity with the parties to the Loan Agreement.

On or about October 18, 2006, Martik and Kiebler entered into a No Lien Agreement relating to the work performed for the Slippery Rock Quadrangle, which Martik avers was required by HNB in order for Kiebler to obtain financing under the Loan Agreement. Complaint, ¶¶ 8,9. Martik further asserts that the terms of the Loan Agreement required the proceeds to be used for the specific purpose of paying the contractors, subcontractors and materialmen for the Slippery Rock Quadrangle project, required the amount of each advance to be determined by the actual cost of labor and materials expended, and required Kiebler to produce a release of any liens which would indicate to the Bank that payment had been made for all labor and materials. Complaint, ¶¶ 10-12.

Martik claims that during the course of the performance of the contracts, it contacted HNB in order to confirm that it had sufficient funds to pay Martik for its performance, that HNB expressly represented to Martik that there were sufficient funds to pay Martik for its work at the Slippery Rock Quadrangle, and that HNB "encouraged" Martik to continue its work despite knowing that Kiebler had failed to pay the invoices in full. Complaint, ¶¶ 13-14. "While representing to Martik . . . that there were sufficient loan proceeds to pay . . . for its work on the Project," Martik asserts, HNB "knowingly and intentionally disbursed loan proceeds to Kiebler based on disbursement requisitions for work that had not been completed. In addition, after disbursing such proceeds to Kiebler, [HNB] made further disbursements to Kiebler despite [HNB's] previous knowledge that Kiebler had not paid the contractors the amounts disbursed in prior requisitions. . . ." and that by "disbursing loan proceeds to Kiebler despite [HNB's] knowledge that Kiebler was not using those loan proceeds to pay the contractors, including Martik . . ., [HNB] intentionally and/or recklessly depleted the loan proceeds available to pay Martik . . . for its work on the project." Complaint, ¶¶ 15-16.

Martik states that it completed the scope of all work called for under both contracts in a workmanlike and timely manner and is entitled to full payment for same, that it invoiced Kiebler over $14 million for its work on the project, but that, with HNB's knowledge, Kiebler only made partial payments and still owes Martik a balance of over $2 million which remains unpaid despite repeated demands. Complaint, ¶¶ 18-22. This lawsuit attempts to collect the unpaid invoices from HNB under a third party beneficiary contract theory or, in the alternative, because of HNB's alleged misrepresentations or unjust enrichment, or Martik's detrimental reliance.

On May 5, 2008, HNB filed a third party complaint (doc. no. 19) against Kiebler seeking indemnification from Kiebler, in the event Martik prevails on its claims.

Subsequent to filing the Complaint, on November 7, 2008 Martik won an American Arbitration Association award against Kiebler in the amount of $2,687,781.38 plus interest and penalty in the amount of $1,103.56 per day, commencing on October 20, 2008 and $26,907.07 in AAA fees and expenses, according to papers filed in the summary judgment briefing in this case, and in a related case filed in this Court at Civil Action No. 08-1756, Martik Brothers, Inc. v. Kiebler Slippery Rock, LLC. The related case commenced in the Court of Common Pleas of Washington County, Pennsylvania with a Petition for Confirmation of Arbitration Award under the Pennsylvania Arbitration Act, 42 Pa.C.S. §7342(b), but was removed to this Court by Kiebler pursuant to 28 U.S.C. § 1441 and the Federal Arbitration Act, 9 U.S.C. § 1 et seq.*fn2

II. Motions for Summary Judgment

HNB has filed motions for summary judgment against plaintiff Martik (doc. no. 39) and as third party plaintiff against third party defendant Kiebler (doc. no. 42). With regard to the motion for summary judgment against Martik, HNB maintains that it has fulfilled all of its obligations to Kiebler under the Loan Agreement, paid out all of the proceeds to Kiebler pursuant to the terms of the Loan Agreement, and has no obligation to pay Martik under the Loan Agreement or any other agreement. Further, HNB asserts that the record does not support an inference that it committed any acts that would create a duty to pay Martik or otherwise entitle Martik to recover from HNB. Therefore, HNB contends, this Court should grant its motion for summary judgment and dismiss the claims against HNB as a matter of law. Martik disputes HNB's legal arguments, offers evidence to support its claims, and argues that there are genuine disputes of material fact that should proceed to the fact finder. After careful consideration of HNB's motion for summary judgment, Martik's response, the respective briefs and concise statements of material facts and the supporting documentation, the Court agrees with HNB that there is insufficient record evidence offered as to essential elements of each of Martik's claims, and that summary judgment in its favor is appropriate.

As to third party plaintiff HNB's motion for summary judgment against third party defendant Kiebler on its claim for indemnification, Kiebler did not file a response to the motion for summary judgment. Given the Court's ruling on the motion for summary judgment against Martik, HNB is not liable to Martik and the third party complaint and the motion for summary judgment against Kiebler are rendered moot. However, on January 13, 2009, Kiebler and HNB filed a joint stipulation (doc. no. 56) indicating that this Court should enter judgment in favor of HNB against Kiebler, and the Court will enter judgment by consent via the attached proposed Order of Court, pursuant to said stipulation.

III. Summary Judgment Standards

Fed.R.Civ.P. 56(c) now provides that on a motion for summary judgment, the "judgment sought should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." "Rule 56 of the Federal Rules of Civil Procedure 'mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'"

Marten v. Godwin, 499 F.3d 290, 295 (3d Cir. 2007), citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Summary judgment is appropriate "'if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Woodside v. Sch. Dist. of Philadelphia Bd. of Educ., 248 F.3d 129, 130 (3d Cir. 2001), quoting Foehl v. United States, 238 F.3d 474, 477 (3d Cir. 2001) (citations omitted).

An issue of material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also Doe v. Abington Friends Sch., 480 F.3d 252, 256 (3d Cir. 2007) ("A genuine issue is present when a reasonable trier of fact, viewing all of the record evidence, could rationally find in favor of the non-moving party in light of his burden of proof."), citing Anderson and Celotex Corp. Recently, the United States Supreme Court "emphasized, [w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts . . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." Scott v. Harris, 550 U.S. 372 (2007) (internal quotations omitted), quoting Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-587 (1986).

In deciding a summary judgment motion, a court must view the facts in the light most favorable to, draw all reasonable inferences, and resolve all doubts, in favor of the nonmoving party. Doe v. County of Centre, PA, 242 F.3d 437, 446 (3d Cir. 2001); Woodside, 248 F.3d at 130; Heller v. Shaw Indus., Inc., 167 F.3d 146, 151 (3d Cir. 1999). Further, the court must not engage in credibility determinations at the summary judgment stage. Simpson v. Kay Jewelers, Div. of ...

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