United States District Court, E.D. Pennsylvania
E.K. PRATTER, UNITED STATES DISTRICT JUDGE.
the course of a Commonwealth prison facility construction
project, a subcontractor executed a series of contracts,
styled as releases and change orders, that purported to waive
claims against the general contractor. Subsequently, the
subcontractor sued the general contractor, claiming that it
lost money on the project due to the general contractor's
bench trial focused on two issues:
1. Whether the subcontractor waived any potential claims
against the general contractor by signing the periodic
releases and change orders; and
2. Even if so, whether statements made by the general
contractor's employees waived the general
contractor's claim to rely on the releases and change
Court concludes that the general contractor never waived its
right to rely on the releases and change orders, which
themselves bar the subcontractor from asserting certain
claims against the general contractor.
introducing the parties, the project, and the subcontract at
issue, the Court summarizes the series of releases and change
orders signed by the subcontractor. Last, the Court explains
the courses of conduct of both the general contractor and the
subcontractor as they relate to the question of waiver.
Heery Joint Venture (“WHJV”) is a joint venture
comprised of Walsh Construction Company and Heery
International. Compl. ¶ 2; Ans. ¶ 2.
Casualty and Surety Company of America, Travelers Casualty
and Surety Company, Fidelity and Deposit Company of Maryland,
and Liberty Mutual Insurance Company are WHJV's sureties.
Compl. ¶ 30; Ans. ¶ 30.
Construction Corporation (“CCC”) is a masonry
contractor that has been in the business of public masonry
construction work since 1982. Tr. Day 1 (Connelly) at
20:19-21:3. CCC is a woman-owned business
enterprise in Pennsylvania and has held that
certification since 2008/2009. Id. at 62:1-6. CCC
had previously completed jobs on which it was required to
submit monthly waivers. Stip. of Uncontested Facts ¶ 7.
Connelly is the President and 75% owner of CCC. Tr. Day 1
(Connelly) at 20:16- 18. She handles contracts, bonding,
insurance, accounts payable, and payroll for CCC.
Id. at 61:21-25. She is the senior person within CCC
responsible for knowing what was in CCC's subcontract for
this project. Id. at 147:4-10.
Pico is a 25% owner of CCC. Tr. Day 2 (Pico) at 2:23-3:5.
case arises out of the construction of a prison facility
known as “SCI Phoenix” for the Commonwealth of
Pennsylvania at the site of the Graterford prison in
Montgomery County (the “Project”). Stip. of
Uncontested Facts ¶ 1.
February 6, 2012, WHJV entered into a written contract with
the Department of General Services (“DGS”), an
executive agency of the Commonwealth, to provide construction
services in connection with the Project. Id. ¶
2. Construction has been underway since 2013 at a contracted
cost of approximately $350 million. Id. ¶ 3.
The original construction completion date was extended by DGS
to November 2, 2015. Tr. Day 3 (Swain) at 33:25-34:5.
WHJV's masonry subcontractor on the Project. Stip. of
Uncontested Facts ¶ 4. CCC had previously completed
contracts of equivalent size and dollar value as compared to
the Project. Id. ¶ 6. CCC began working on the
Project in August 2013. Tr. Day 1 (Connelly) at 21:22-24. CCC
completed its work in May 2015. Id. at 21:25-22:2.
The Subcontract Between WHJV and CCC
received a written subcontract agreement from WHJV for the
Project in February or March 2012. Tr. Day 1 (Connelly) at
70:9-10. Upon receipt, Ms. Connelly made a number of
handwritten modifications to the subcontract form and sent
the revised, or “marked up, ” copy back to WHJV.
Id. at 71:4-74:11; DX-9.
did not agree to CCC's proposed changes. Compare
DX-9, with DX-8; Tr. Day 1 (Connelly) at 27:24-28:1.
Ms. Connelly read the final execution copy of the subcontract
and was aware that her requested modifications were not
incorporated into the final version of the subcontract before
she signed it. Id. at 146:19-147:3.
to Ms. Connelly, WHJV Project Manager Patrick Delaney assured
her that her exclusions and revisions were still a part of
the final subcontract and that they did not appear on the
subcontract simply because WHJV was not allowed to mark up
the watermarked document. Id. at 27:15-22; 75:14-18;
76:7-9. According to Ms. Connelly, Mr. Delaney further stated
that Ms. Connelly should trust him and sign the subcontract
as-is because WHJV was “not out to hurt” CCC.
Id. at 76:9-10. In contrast, Mr. Delaney testified
that he had no recollection of any meeting in which Ms.
Connelly questioned why her revisions to the subcontract were
not made. Tr. Day 1 (Delaney) at 164:24-165:3.
Connelly signed the written subcontract between WHJV and CCC
on behalf of CCC. Stip. of Uncontested Facts ¶ 5; DX-8.
CCC had an opportunity to consult with legal counsel prior to
executing the subcontract. DX-8.
other provisions, the subcontract required CCC to provide
monthly lien waivers and releases (the
“releases”) to WHJV as a condition for receiving
payment. Stip. of Uncontested Facts ¶ 10. The specific
monthly waiver and release forms required by WHJV, titled
“Partial Waiver and Release of Claims for Payment -
Conditional - Joint Venture” and “Partial Waiver
and Release of Claims for Payment - Unconditional - Joint
Venture, ” were attached as Exhibit 1 to the
subcontract. Id. ¶ 11.
subcontract itself provides that
[t]he failure of either party hereto to insist, in any one or
more instances, upon the performance of any of the terms,
covenants or conditions of this Agreement, or to exercise any
right herein, shall not be construed as a waiver or
relinquishment of such term, covenant, condition or right as
respects further performance.
DX-8 at Section 13.2.
subcontract also provides specific requirements by which CCC
must provide notice to WHJV of any claim. DX-8 at Section
4.3. It states:
4.3 Claims. A “Claim” is a
Subcontractor's demand or assertion seeking, as a matter
of right, an increase in Subcontract Amount, an extension in
the time for performance of Subcontractor's Work,
coverage under an insurance policy related to the Project, or
relief with respect to the terms of the Contract Documents.
All Claims must be made by written notice to the Contractor
at least one (1) week prior to the beginning of the
Subcontractor's affected or additional work, or the date
by which Contractor is obligated to give notice to the Owner
with respect to such claim, or within one (1) week of the
Subcontractor's first knowledge of the event, whichever
shall first occur, otherwise, such claims shall be deemed
waived. With respect to written notice required for a Claim,
Subcontractor's written notice must be via letter, email
or fax is not sufficient notice. Subcontractor expressly
acknowledges and agrees that the preceding notice
requirements are a material term of this Subcontract, and are
necessary for the Contractor to mitigate adverse consequences
arising out of or related to the Subcontractor's Claim,
and that the Contractor would be prejudiced if the notice
requirements are not followed by the
Subcontractor. . . . (Emphasis added)
not request any modifications to the provisions of the
subcontract addressing the monthly release requirement or the
notice of claim provision. Tr. Day 1 (Connelly) at 28:2-16.
previously worked on projects for which it was required to
submit monthly waiver forms. Stip. of Uncontested Facts
¶ 7. It is not unusual for monthly waiver forms to be
required on construction projects. Id. ¶ 8.
Connelly did not consult with anyone at CCC, neither did she
consult with any attorney, about the legal meaning of the
releases before signing the subcontract, nor on the multiple
occasions that CCC executed the releases. Tr. Day 1
(Connelly) at 46:16-18.
after signing the subcontract, Ms. Connelly received an email
from WHJV's office manager containing copies of the same
release forms included with the subcontract, and advising CCC
what steps needed to be taken on a monthly basis, including
executing the release forms, to receive payment. PX-13; Tr.
Day 1 (Connelly) at 126:22-127:23. Ms. Connelly did not raise
any contemporaneous concerns about the releases. Id.
Connelly had several conversations, by email and phone, with
WHJV Project Engineers Pierre Bick and Sean Taylor,
concerning the proper way to fill out the waivers.
Id. at 36:19-37:20; PX-23; PX-24; PX-25. Ms.
Connelly did not discuss the releases with anyone else at
WHJV, including Patrick Delaney. Tr. Day 1 (Connelly) at
on July 16, 2013 and regularly thereafter, Ms. Connelly,
signed the releases, secured a notary's acknowledgment,
and delivered them to WHJV. DX-10; Tr. Day 1 (Connelly) at
28:21-25. Each release expressly stated that CCC was
“waiving and releasing” WHJV, its sureties, and
from any and all suits, debts, demands, torts,
charges, causes of action, and claims for
payment including claims under the laws of the
municipality, state or federal government relating to payment
bonds . . . on account of, arising out of or
relating in any way to the labor, services, material,
fixtures, equipment, apparatus or machinery furnished by
[CCC] on the above described Project from the
beginning of time until the date [on which the document was
signed] including extras.
DX-13-19; DX-21; DX-23-24; DX-26; DX-28; DX-30-31 (emphasis
added). At the time of the July 16 release, CCC's start
date had been delayed by almost nine months. Tr. Day 1
(Connelly) at 23:3-6; id. at 23:19-23. This
nine-month delay is a significant component of CCC's
claim in this case. Id. at 135:9-23.
submitted no fewer than eighteen written releases. They were
submitted on the following dates:
July 16, 2013 (DX-10)
February 4, 2014 (DX-13)
February 18, 2014 (DX-14)
April 14, 2014 (DX-15)
May 5, 2014 (DX-16)
June 11, 2014 ...