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United States ex rel Pioneer Construction Co. Inc. v. Pride Enterprises

November 25, 2009

UNITED STATES OF AMERICA FOR THE USE OF PIONEER CONSTRUCTION CO. INC. PLAINTIFF
v.
PRIDE ENTERPRISES, INC., GREAT AMERICAN INSURANCE CO. DEFENDANTS



The opinion of the court was delivered by: (judge Vanaskie)

MEMORANDUM

This action was brought pursuant to the Miller Act in the name of the United States of America for the use of Pioneer Construction Company, Inc. ("Pioneer"), against Pride Enterprises, Inc. ("Pride"), Jeffrey M. Brown Associates, Inc. ("Brown"), and Pride's surety, Great American Insurance Company ("Great American"). Pioneer seeks monies owed pursuant to a subcontract entered into between Pioneer and Defendants for construction and improvement of a National Park site, including damages for Defendants' failure to pay for work performed, failure to pay equitable adjustments to the subcontract, and failure to pay additional costs incurred as a result of delays in work. Currently pending before the Court are Defendants' Motion for Summary Judgment (Dkt. 38), and Motion to Deem Certain Request for Admission as Admitted (Dkt. 35).*fn1 Because, contrary to Defendants' argument, Pioneer's claim is not barred by partial releases and Miller Act sureties may be held liable for delay damages, Defendants' Motion for Summary Judgment will be denied. Furthermore, as Plaintiff has admitted that the events causing delay occurred before December 5, 2005, Defendants' Motion to Deem Certain Request for Admission as Admitted will be granted.

I. BACKGROUND

Defendant Pride is a "Small Business Administration 8(a)-certified general contractor." (Defendants' Statement of Undisputed Material Facts ("DSUMF"), Dkt. 39, at ¶ 1.) "In 2003, Pride was awarded a prime contract by the U.S. National Park Services ("NPS") for construction and site improvements at the Grey Towers National Historic Landmark in Pike County, Pennsylvania ("the Project")." (Id. at ¶ 2.) Pride and Defendant Brown entered into a "Teaming Agreement" on August 1, 2003, to "provide the necessary resources and expertise, as required by [Pride], to enable [Pride] to perform [the Project]." (Teaming Agreement, Dkt. 38-15, at 17.) Defendant Great American acted as surety, providing "a payment bond to Pride in connection with the Project." (DSUMF, Dkt. 39, at ¶ 4.) Pursuant to a February 11, 2004 Subcontract (the "Subcontract"), Pride contracted with Pioneer to perform specific work on the Project. (Subcontract, Dkt. 38-8, at 1.)

Article 2.3 of the Subcontract provided:

The Subcontractor, as a condition precedent to the Contractor making any partial or final payment hereunder, shall furnish to the Contractor a full and complete release and discharge, on the forms attached hereto as Schedules D and E, of all liens, claims and demands arising out of or relating to the Subcontract Work and any and all materials furnished, work done and equipment used in connection therewith. (Id. at 3.) Plaintiff claims that when it executed the Subcontract, Schedules D and E were not attached.*fn2 (Plaintiff's Statement of Undisputed Material Fact ("PSUMF"), Dkt. 42, at ¶ 6.)

"Pioneer submitted periodic Applications and Certificates for Payment ("Payment Applications" or "Requisitions") to Pride during the Project . . . ." (DSUMF, Dkt. 39, at ¶ 8.) The first Payment Application covered the period from the start of the project until February 29, 2004 (Pay. App. #1, Dkt. 38-9, at 1), and the final Payment Application covered the work period ending April 29, 2006. (PSUMF, Dkt. 42, at ¶ 8.)

There is a dispute as to how the parties administered Article 2.3 of the Subcontract. Pioneer claims that it was paid pursuant to the first three Payment Applications without submitting a release of claims as required by Article 2.3 of the Subcontract. (PSUMF, Dkt. 42, at ¶ 9.) Pioneer avers that

Prior to July 12, 2004, neither Pride nor Brown had provided Pioneer with the form 'partial release' which is referred to in Article 2.3 of the form Subcontract as 'Exhibit D', and neither Pride nor Brown ever provided Pioneer with the form which is referred to in article 2.3 as 'Exhibit E', which form is believed to be a 'final release'. Pioneer never signed any form of 'final release'. (Id.)

Pioneer, however, did sign at least fifteen (15) partial releases during the course of the Project. (Subcontractor Partial Release, Dkt. 38-10, at 1-15.) The earliest release was signed by Michael Cavage, Vice President of Pioneer, on July 13, 2004, and the last partial release provided to the Court was signed on December 5, 2005 by Robert Jenkins, Project Manager at Pioneer. (Id. at 1, 15.) Each of the releases included the following terms:

1. The undersigned does hereby release all Mechanic's Liens Rights, Miller Act Claim (40 USCA 270), Stop Notice, Equitable Liens and Labor and Material Bond Rights resulting from labor and/or materials, subcontract work, equipment or other work, rents, services or supplies heretofore, furnished in, and, for the construction, design, improvement, alteration, additions to or repair of the above described project.

2. This release is given for and in consideration upon receipt of the _________ requisition. (Subcontractor to insert month ending date (month, day and year) on line above for current payment period) . . . .

4. It is acknowledged that this release is for the benefit of and may be relied upon by the owner, the contractor, and construction lender and the principal and surety on any labor and material bond for the project.

5. In addition to the foregoing this instrument shall constitute a partial release of all rights, claims and demands of the undersigned against the contractor arising out of or pertaining to the above referenced project. If partial, all rights and claims on the project are released up to and including the ________ requisition. (Subcontractor to insert month ending date (month, day and year) on line above for current payment period) (Id. at 1-15.)

Pioneer did not insert any language limiting the scope of, or otherwise exempting any delay claims, from the language of release that it submitted. (Id. at 1-15.) Furthermore, there is no specific section in the release for limiting the extent of the release. (Id.) Nor does the form provide any advice for excepting or "carving out" any delay claim.

As noted above, the last partial release was signed on December 5, 2005. In the blank space for the applicable requisition, Jenkins wrote "17." (Id. at 15.) Pioneer's last requisition was paid in March, 2006. (PSUMF, Dkt. 42, at ¶ 14.)

The NPS extended the Project's completion date on several occasions. (Williams Dec., Dkt. 38-5, at ¶ 11.) Defendants assert:

Pioneer was aware of each extension of the completion date, as well as the circumstances leading up to each extension, as they occurred, and was aware that Pioneer's own work would be impacted. NPS compensated Pride for the effect of these delays, and Pride in turn negotiated numerous change orders -- formal amendments to Pioneer's Subcontract -- with Pioneer by which Pioneer was compensated for the effect of any delays suffered by Pioneer. (Id. at ¶ 11.) Pioneer, however, contends that it was not aware of the extensions and that the extensions were "without Pioneer being so informed by Pride or Brown." (PSUMF, Dkt. 42, at ¶ 15.) Moreover, Pioneer denies being compensated by Defendants for any additional expenses relating to each of the delays. (Id. at ¶ 16.) In this regard, although the "Change to Subcontract" documents identify the amount by which the contract will be increased, there is no indication of any additional compensation for delays. (Change to Subcontract, Dkt. 38-11, at 1-22.)

The actual date of substantial completion of the project was April 30, 2006, 520 days after the planned completion date of November 26, 2004. (Equit. Adjust. Claim, Dkt. 38-13, at 7.) Pioneer's work, however, essentially was completed by December 2, 2005. (Id.) Pioneer admits that "the acts or omissions by Pride, Brown ...


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