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Sloan & Co. v. Liberty Mutual Insurance Co.

December 3, 2009

SLOAN & CO., PLAINTIFF,
v.
LIBERTY MUTUAL INSURANCE CO., DEFENDANT.



The opinion of the court was delivered by: Schiller, J.

MEMORANDUM

This dispute arises out of the failure of Liberty Mutual Insurance Co. ("Liberty Mutual" or "Defendant") to pay Sloan & Co. ("Sloan" or "Plaintiff") for $1,074,260.09 worth of labor and materials that Sloan claims it is owed under a surety bond that Liberty Mutual executed with Shoemaker Construction Company ("Shoemaker"). The Court previously granted partial summary judgment to Sloan in the amount of $785,067. Presently before the Court is Plaintiff's Second Motion for Partial Summary Judgment and Defendant's Second Cross-Motion for Partial Summary Judgment. For the reasons stated below, Sloan's Motion is granted in part and denied in part; and Liberty Mutual's Motion is denied.

I. BACKGROUND

On May 7, 2004, Shoemaker, a general contractor, entered into a contract with Isle of Capri Associates, LP ("IOC"), a developer, for a $90.7 million construction project known as Waterfront Square Condominiums & Spa, at Piers 36-39 North, Philadelphia, Pennsylvania (the "Project"). (Mem. of Law in Supp. of Mot. by Pl. to Lift Stay and Enter Summ. J. against Def. [Pl.'s First Summ. J. Mem.] at 1; Mem. of Law in Supp. of Def.'s Cross-Mot. for Summ. J. and in Opp'n to Pl.'s Mot. for Summ. J. [Def.'s First Summ. J. Mem.] at 3.) Liberty Mutual issued a payment bond (the "Surety Bond") on September 9, 2004 to Shoemaker for the construction of the Project. (Pl.'s First Summ. J. Mem. at 1; Def.'s First Summ. J. Mem. at 4.)

On November 12, 2004, Shoemaker subcontracted with Sloan for drywall and carpentry work for the Project. (Pl.'s First Summ. J. Mem. at 2 & Ex. A-1 [Subcontract]; Def.'s First Summ. J. Mem. at 3.) The subcontract rendered Sloan a potential claimant under the Surety Bond, which defines claimant to include any entity that has a direct contract with the contractor "to furnish labor, materials or equipment for use in the performance of the Contract." (Pl.'s First Summ. J. Mem. Ex. A-2 [Surety Bond] ¶ 15.1.)

Shoemaker filed an action on May 31, 2007 against IOC in the Court of Common Pleas of Philadelphia County ("Shoemaker case"), alleging that it had substantially completed the work on the Project and that IOC had failed to pay in violation of the parties' contract. (Pl.'s First Summ. J. Mem. Ex. B [Contractor's Compl.].) Shortly after Shoemaker sued IOC, Sloan provided Liberty Mutual with notice of its claims for outstanding amounts due and owing by Shoemaker and requested payment under the Surety Bond. (Pl.'s First Summ. J. Mem. Ex. A-3 [Notice of Claim]; Def.'s First Summ. J. Mem. at 5.)

By letter dated July 12, 2007, Liberty Mutual denied Sloan's claim in its entirety, alleging that it owed Sloan no money until IOC made payment to Shoemaker, which had not yet occurred. (Pl.'s First Summ. J. Mem. at 3 & Ex. A-4 [Surety's Resp. to Claim]; Def.'s First Summ. J. Mem. at 5.)

Sloan filed its Complaint on December 18, 2007 and moved for summary judgment on October 22, 2008 after being informed that Shoemaker's case against IOC was settled. Liberty Mutual filed a cross-motion for summary judgment on December 10, 2008.

On August 25, 2009, this Court entered partial summary judgment in Sloan's favor, finding that Sloan was entitled to payment under the Surety Bond. The parties disputed the amount owed under the Surety Bond, however, the Court entered partial summary judgment for Sloan on the undisputed amount of $785,067 and provided the parties until October 26, 2009 to conduct discovery on the additional amount, if any, due to Sloan, plus the amount of any interest and costs.

Sloan's initial claim against Liberty Mutual can be broken down as follows:

Summary Judgment Order (8/25/09)$785,067 Subcontractor Specific Legal Fees$16,579 Allocation of Repairs$40,370 Becht Deficiency Report$24,600 Time & Materials Provided$66,324 Lump Sum Proposals Performed$141,320 Subtotal:$289,193 Total:$1,074,260

(Stip. Regarding Attorney's Fees, Costs and Expenses ¶ 2.) Now, Sloan claims that the issue of legal fees, repair costs, deficiencies, and prejudgment interest can be decided in its favor on summary judgment. Liberty Mutual responds that it is entitled to summary judgment on the issue of attorney's fees (though it now maintains that the fees are much greater than $16,579), deficiencies, and prejudgment interest. Liberty Mutual also argues that summary judgment should be denied on the issue of repairs.

II. STANDARD OF REVIEW

Summary judgment is appropriate when the admissible evidence fails to demonstrate a dispute of material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247--48 (1986). When the moving party does not bear the burden of persuasion at trial, the moving party may meet its burden on summary judgment by showing that the nonmoving party's evidence is insufficient to carry its burden of persuasion at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323--24 (1986). Thereafter, the nonmoving party demonstrates a genuine issue of material fact if sufficient evidence is provided to allow a reasonable jury to find for it at trial. Anderson, 477 U.S. at 248. In reviewing the record, "a court must view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor." Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994). ...


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