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United States for Use and Benefit of Richardson v. Mack Mechanichal, Inc.

United States District Court, M.D. Tennessee, Nashville Division

March 30, 2017

UNITED STATES FOR THE USE AND BENEFIT OF TERRY RICHARDSON, individual D/B/A TERRY RICHARDSON CONCRETE, LLC, Plaintiff,
v.
MACK MECHANICAL, INC., and AMERICAN SAFETY CASUALTY INSURANCE COMPANY, Defendants.

          Holmes Magistrate Judge

          MEMORANDUM

          KEVIN H. SHARP UNITED STATES DISTRICT JUDGE.

         Pending before the Court is the issue of damages in regards to Plaintiff Terry Richardson d/b/a Terry Richardson Concrete, LLC's (“Richardson”) claim for payment under a Miller Act bond pursuant to 40 U.S.C. § 3133(b) against both Defendant Mack Mechanical (“Mack”) and Defendant American Safety Casualty Insurance Company (“American Safety”). In an October 21, 2016 Order (“October 21 Order”), the Court granted summary judgment to Plaintiff Richardson on his Miller Act claim. (Docket No. 147). On March 20, 2017 and March 21, 2017, the Court held a hearing to decide if Plaintiff Richardson is entitled to damages. For the reasons set forth below, the Court will award Plaintiff Richardson $39, 489.12 in damages.

         BACKGROUND

         In its October 21 Order, the Court provided the general background to this litigation. (Docket No. 147). In order to frame the issue of damages, the Court briefly summarizes the main facts and parties' positions.

         After Defendant Mack contracted with the United States Army Corps of Engineers (“the Corps”) to be the prime contractor in the construction of a reinforced bunker at Range 38 in Ft. Leonard Wood, Missouri, Plaintiff Richardson entered into a turnkey subcontract with Defendant Mack to perform the concrete construction. Defendant American Safety posted a payment bond for Defendant Mack on the construction project. At the end of the construction project, the Corps accepted the work on the reinforced bunker and fully paid Defendant Mack under the prime contract. Nevertheless, Defendant Mack did not pay Plaintiff Richardson the full amount under the subcontract, and Plaintiff Richardson's claim for payment for work performed under the subcontract was unpaid.

         In defending itself at the summary judgment stage, Defendant Mack conceded that the work Plaintiff Richardson performed was part of a federal contract for the construction of a public work; that Defendants Mack and American Safety executed a bond to ensure payment; and that Plaintiff Richardson remained unpaid. However, Defendant Mack argued that Plaintiff Richardson breached the subcontract in such a way to bar recovery of damages under the subcontract and payment under the bond. Plaintiff Richardson disagreed.

         ANALYSIS

         I. Threshold Issues

         In order to determine the amount of damages Plaintiff Richardson may recover under the subcontract, the Court must first address threshold issues. Those issues are the agreed upon date of completion for the concrete work, the provisions of the prime contract incorporated into the subcontract, and whether Plaintiff Richardson materially breached the subcontract. The Court addresses each of them in turn.

         A. Parties agreed to a February 17, 2012 completion date for the concrete work

         As an initial matter, this suit is before the Court under the Miller Act and, thus, pursuant to federal question jurisdiction. However, in addressing matters related to the subcontract executed between Plaintiff Richardson and Defendant Mack, the Court will apply state law. See United States use of Kasler Electric Co. v. Insurance Co. of North America, 1992 U.S. App. LEXIS 13286, *9 (6th Cir. May 28, 1992) (citation omitted) (“‘[S]tate law controls the interpretation of Miller Act subcontracts to which the United States is not a party.'”). While Plaintiff Richardson contends that Missouri law applies, Defendant Mack argues that Tennessee law applies. Because application of either yields the same outcome, the Court need not definitively decide which state law applies and analyzes the issues under both Missouri and Tennessee law.

         Plaintiff Richardson argues that he and Defendant Mack never agreed on a date for completion of the concrete work under the subcontract. It is undisputed that when Plaintiff Richardson received the subcontract Defendant Mack had prepared, he signed it on December 23, 2011 on the understanding that Defendant Mack would not hold him to the January 5, 2012 completion date initially stated in the subcontract. The subcontract Plaintiff Richardson returned to Defendant Mack contained a handwritten notation to that effect. Plaintiff Richardson acknowledges that the subcontract he later received back from Defendant Mack contained a notation written and initialed by Amanda Brantley (“Brantley”), Chief Financial Officer of Defendant Mack, stating that the revised completion date would be February 17, 2012. However, Plaintiff Richardson argues that there is ambiguity regarding that date because he did not agree to it, the revised completion date does not contain his initials, and the conduct of the parties does not suggest agreement.

         Based on testimony given at the damages hearing, February 17, 2012 was the date on which Plaintiff Richardson was to complete the concrete work because the Court finds that Plaintiff Richardson and Defendant Mack mutually assented to that date. See Doe v. HCA Health Servs. of Tennessee, Inc., 46 S.W.3d 191, 196 (Tenn. 2001) (internal quotation marks and citations omitted) (“A contract must result from a meeting of the minds of the parties in mutual assent to the terms . . . to be enforced.”); Don King Equip. Co. v. Double D Tractor Parts, Inc., 115 S.W.3d 363, 368 (Mo.Ct.App. 2003) (internal quotation marks and citation omitted) (“A meeting of the minds, or mutual assent of all parties is essential to the formation of a contract.”). Plaintiff Richardson testified at the damages hearing that he did not propose the February 17, 2012 date to Defendant Mack and that he was not concerned with the February 17, 2012 date being a hard deadline because he never received a schedule informing him of the completion date. (Mar. 20 Rough Transcript (“RT”) 39, 48-49). He also testified that it was his understanding that the completion date set out in the schedule change that Defendant Mack and the Corps executed on January 10, 2012 (“January 10 schedule change”) would be the controlling date. (Mar. 20 RT 41-42).

         However, Arthur Ferraro (“Ferraro”), Defendant Mack's Project Manager on the construction of the reinforced bunker, and Brantley offered contradictory testimony. Ferraro testified that after Defendant Mack received the signed contract back from Plaintiff Richardson, he, Brantley, and Plaintiff Richardson had a telephone conference to discuss the completion date for the concrete work. (Mar. 20 RT 137-138). Ferraro testified that, on that call, Plaintiff Richardson both indicated the number of weeks he thought he would need to complete the job and offered February 17, 2012 as the completion date. (Mar. 20 RT 138-139). Brantley testified that she, Ferraro, and Plaintiff Richardson “jointly arrived” at the February 17, 2012 completion date, having discussed it on the call. (Mar. 21 RT 33). She further testified that when she wrote February 17, 2012 into the contract, she was only confirming a date to which the parties had already verbally agreed. (Mar. 21 RT 33). Brantley also repeatedly testified that the Corps did not extend the period of performance for Defendant Mack, which would have required a formal modification to the contract, but simply allowed Defendant Mack to continue to work based on the revised January 10 schedule change while paying liquidated damages to the Corps. (Mar. 21 RT 63, 69-70). Accordingly, she testified that the schedule change did not extend Plaintiff Richardson's performance time. (Mar. 21 RT 69-70).

         Because Brantley and Ferraro were more credible than Plaintiff Richardson, the Court finds that Plaintiff Richardson and Defendant Mack mutually assented to the February 17, 2012 completion date. That is to say, the Court believes Brantley's and Ferraro's testimony that they had discussed and agreed upon the February 17, 2012 date with Plaintiff Richardson. The Court finds it significant that Plaintiff Richardson, per his testimony, never objected to the February 17, 2012 date as he had to the January 5, 2012 date. (Mar. 20 RT 63, 92). Furthermore, Plaintiff Richardson testified that he understood February 17, 2012 to be the date by which Defendant Mack wanted him to complete the concrete work. (Mar. 20 RT 90). He testified that although his subcontract with Defendant Mack was for that date, February 17, 2012 had no meaning if Defendant Mack had a different arrangement with the Corps. (Mar. 20 RT 94). That date did have meaning, and Plaintiff Richardson agreed to it.

         B. Provisions of the prime contract are incorporated into the subcontract

         The parties also disagree over whether portions of Defendant Mack's contract with the Corps were incorporated into the subcontract between Defendant Mack and Plaintiff Richardson and, if so, their implications. Section VII of the subcontract states, in pertinent part, that:

If the Subcontractor persistently or repeatedly fails to carry out the work in accordance with the subcontract documents, including specification and drawings, the Contractor may elect to send a cure notice. If the Subcontractor fails to correct such deficiencies within the time period outlined in the cure notice, the Contractor may make good such deficiencies and deduct the reasonable cost thereof from payments then or thereafter due the Subcontractor. If no work has been performed by the Subcontractor, the Contractor reserves its right to pursue all legal means available to procure another subcontractor or self-perform the work and seek remedy from the Subcontractor for any costs incurred as a result of the subcontractor's failure to perform. If the Subcontractor so chooses, it may terminate the subcontract after the time period outlined in the cure notice has elapsed.

(Pl.'s Ex. 7). Plaintiff Richardson argues that Section VII is the sole remedy clause in the subcontract. He contends that because Defendant Mack never sent him a cure notice, Defendant Mack may not assess certain chargebacks against him, namely a pro rata portion of liquidated damages, the cost of Defendant Mack's Site Superintendent Willie Ferguson, and the cost of hiring another subcontractor MS Construction to tie rebar. With respect to the first two chargebacks, Brantley testified that she believed Defendant Mack's right to assess them against Plaintiff Richardson stems from Section I.7 of the subcontract, which provides, “To the extent included in the prime contract, all contract clauses are hereby incorporated by reference into the subcontract. A copy[1] of the prime contract or original solicitation will be provided to subcontractor.” (Id.; Mar. 21 RT 50-51, 72-73). Brantley testified that the following Federal Acquisition Regulation (FAR) clauses are included in the prime contract and, therefore, incorporated into the subcontract:

If the Contractor fails to complete the work within the time specified in the contract, the Contractor shall pay liquidated damages to the Government in the amount of $62.00 for each calendar day of delay until the work is completed or accepted.

(Pl.'s Ex. 10, FAR 52.211-12(a)).

At all times during performance of this contract and until the work is completed and accepted, the Contractor shall directly superintend the work or assign and have on the work a competent superintendent who is satisfactory to the ...

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