FREDERICK P. STAMP, Jr., District Judge.
The plaintiff, United States of America f/u/b/o Kogok Corporation ("Kogok") filed this action against the defendants pursuant to the Miller Act, 40 U.S.C. § 3133, to recover payment for labor and materials it rendered to the FBI Biometric Technology Center, New Office Building and Central Utilities Plant Expansion (the "project") located in Clarksburg, West Virginia. Specifically, the complaint seeks a declaratory judgment from this Court finding that each defendant is liable to Kogok in the amount of $1,920,177.02.
After the defendants filed an answer and this Court entered a scheduling order in this matter, the defendants filed a motion for partial summary judgment and to stay all proceedings. The defendants seek summary judgment against Kogok with respect to: (1) all claims that arose on or before October 31, 2013; (2) Kogok's claims for damages for delay; and (3) Kogok's claim for damages allegedly resulting from labor inefficiency. In support of their motion for partial summary judgment, the defendants argue that: (1) Kogok executed sworn releases and waivers where it expressly released all claims for damages arising from labor and materials relating to the project up to and including October 31, 2013; (2) Kogok expressly waived all claims for damages arising from delay to its performance; and (3) because Kogok admits that it is still both performing labor on the project and incurring labor inefficiency damages, it fails to comply with the Miller Act, which requires Kogok to provide notice of its labor inefficiency within ninety days after the last date it performed services. In addition to seeking partial summary judgment, the defendants also seek a stay of all proceedings until Kogok completes the work that underlies its claims and complies with its contractual obligations to support its claims.
Kogok filed a response in opposition arguing that: (1) the releases are invalid to release claims and proposed change orders submitted under the contract; (2) the "no damages for delay" clause should not be enforced against Kogok, especially when both Turner Construction Company ("Turner") and Bell Constructors, LLC ("Bell") caused the delays and the government will compensate Turner for delays on the project; (3) Kogok's claim for labor inefficiencies is not premature; and (4) this case should not be stayed. The defendants filed a timely reply wherein they reasserted their arguments and countered Kogok's arguments.
For the reasons stated below, this Court grants the defendants' motion for partial summary judgment and denies the defendants' motion to stay proceedings.
Turner Construction Company and the United States entered into a construction contract, in which Turner agreed to construct the project. Under the construction contract and Miller Act, Turner executed a labor and material payment bond with the defendants as joint and several sureties, which Turner delivered to the United States. After entering into the contract with the United States, Turner subcontracted the mechanical work on the project to Bell. Bell then entered into a subcontract agreement with Kogok, in which Kogok agreed to provide sheet metal, duct work, and related HVAC services for the project. Kogok was to provide such material and services for the price of $3.22 million.
The subcontract has several provisions at issue. First, Bell required Kogok to submit a "[o]n a monthly basis, [Kogok] shall submit to Bell its payment applications." ECF No. 29 Ex. 1, B. These payment applications, called "Release and Waiver Forms," provided the following:
Undersigned [Kogok] does fully and finally release and waive any and all claims, causes of action, and/or lien rights against the Contractor [Bell] . . . for all costs, expenses, or losses of any nature or description which have arisen or are in any manner related to any aspect of the Work items from the date the Work items originally commenced to the date payment is made hereunder. This Release and Waiver applies to all claims, disputes, and other matters through the date this payment is made, including all claims for direct and indirect costs, productivity losses, delays, accelerations, ripple effects, field and home office overhead, equipment costs, and all other consequential and incidental costs, losses, and/or damages.
ECF No. 29-5 Ex. 1, D1. This language was contained in every Release and Waiver form Kogok filed monthly for payment. It consecutively filed these waivers twenty-six times, with the above language appearing in all of them.
Second, in addition to the payment provision, the contract also contained a Change Order provision and Disputes provision. The Change Order provision provided for if either party sought to amend the contract or project specifications. The Change Order provision states in relevant part that if Kogok and Bell are unable to agree on adjustments to the contract by change orders, "Kogok shall proceed with the change as directed by Bell and preserve its right to an equitable adjustment hereto pursuant to the Disputes provision set forth herein. The Subcontractor shall be bound by Bell's adjustments if the Subcontractor fails to strictly comply with the Disputes provision." ECF No. 29 Ex. 1, B. Third, as referenced in the Change Order provision, the contract also maintains a Disputes provision that states, "[Kogok] shall give Bell written notice of all claims involving Bell for time extensions and additional costs within seven (7) days of the event giving rise to the claim; otherwise, such claim(s) shall be deemed forever waived."
Finally, the contract contained a "no damages for delay" clause, which states
The clause states in relevant part:
ECF No. 29 Ex. 1, B. Bell and Kogok agreed to the contract with the above terms and conditions. No accusations or facts indicating foul play exist regarding the parties' agreement.
However, as the project progressed and Kogok rendered its services, the government unilaterally extended the project deadline to February 27, 2015, citing issues with Turner's production of information and paperwork.
As a result of the delay, Kogok asserts that it is currently in the process of rendering the labor and materials for the project required under the subcontract, but it has received no payment for such work. Specifically, Kogok asserts that unpaid amounts for labor and materials exist for November 2012, December 2012, February 2013, and May 2013. Further, Kogok asserts that Bell has not paid it for additional labor and materials rendered for the project outside of the contract's scope of work that it had submitted requests for change orders. In total, Kogok is seeking recovery from the defendants in the amount of $1,920,177.02, asserting that it is entitled to payment of this sum under the payment bond and the Miller Act.
The defendants argue that summary judgment should be granted on three of Kogok's claims. Specifically, they seek partial summary judgment against Kogok with respect to: (1) all Kogok's claims that arose on or before October 31, 2013; (2) Kogok's claim for damages for delay; and (3) Kogok's claim for labor inefficiency.
Under Rule 56(c) of the Federal Rules of Civil Procedure,
Fed. R. Civ. P. 56(c). The party seeking summary judgment bears the initial burden of showing the absence of any genuine issues of material fact.
In
In their motion for summary judgment, the defendants first argue that Kogok's sworn releases and waivers equate to a waiver of all Kogok's claims arising on or before October 31, 2013. Specifically, the defendants claim that Kogok executed twenty-six sworn waivers and releases that applied to all claims. This was an explicit requirement of the agreement between the parties. Thus, because Kogok waived its claims, the defendants argue that the claims arising on or before October 31, 2013 are waived.
In response, Kogok contends that adopting the defendants' interpretation of the contract creates ambiguities between the "Change Orders"
When reading and interpreting contract provisions, the court's purpose is to give full force and effect to the expressed or implied intentions of the contracting parties, if such can be discerned.
Under the facts of this case, Kogok's argument falls short of convincing this Court to deny defendants' motion. The terms of the subcontractor agreement between Bell and Kogok requires Kogok to provide Bell a "Release and Waiver" as part of its payment application for services rendered. In this Release and Waiver form, it explicitly states the following:
ECF No. 29-5 Ex. 1, D1 (emphasis added). As seen in this language from the Release and Waiver form, it explicitly provides a full and final waiver of all claims up to the date of the respective payment. Further, Kogok filed twenty-six consecutive waivers under oath from June 15, 2011 through October 31, 2013.
As clear as these above provisions appear, Kogok asserts that they are both ambiguous and conflict with Change Order and Disputes provisions. Kogok refers to the Dispute provisions and Change Order provisions, claiming that the Release and Waiver requirement renders those provisions useless because all claims are waived by filing the Release and Waiver requirement. However, this argument seems to ignore the fact that Kogok could dispute the charges rather than waive them. Or, it could have modified the Releases and Waivers for what claims would or would not be waived, as it did later.
This civil action mirrors the situation in
Similar to
The defendants next argue that this Court should grant their motion for summary judgment because the subcontractor agreement contained a "no damages for delay" clause. The clause states in relevant part:
ECF No. 29 Ex. 1, B. As provided in the facts of this case, the government unilaterally extended the project deadline, setting February 27, 2015, as the new deadline for the project. However, because the agreement contained this clause, defendants argue that Kogok cannot recover damages for added construction and labor costs that resulted from delays in the project.
In response, Kogok argues that language in its agreement provides that it is entitled to receive damages for the delays if Bell also recovers delay damages from the contractor. Here, Kogok claims that Bell will recover delay damages, and because of this, Kogok is now entitled to such damages. Further, Kogok asserts that the no damages for the delay clause is unconscionable, and that Kogok did not contemplate this clause in the contract.
Under the Miller Act, contractors for government projects must furnish payment bonds when the contract exceeds $100,000 in value. 40 U.S.C. § 3131(b). The bonds protect subcontractors and suppliers that contribute to the federal project because federally owned lands and buildings are exempt from liens that may normally be used under state law.
As stated above, Kogok asserts that the no damages for delay clause is unconscionable and thus unforeceable, but not because of the Miller Act. Rather, Kogok argues that West Virginia law has not determined the enforceability of such clauses, and that other jurisdictions have found them invalid. Further, Kogok claims that West Virginia contract law would generally view such clauses as unenforceable or unconscionable.
It is true that West Virginia has not determined the enforceability of no damages for delay clauses. However, many states hold that such clauses are valid and enforceable, so long as they meet ordinary rules governing validity of contracts.
Under the law provided above, this Court disagrees with Kogok's argument. First, it appears that many jurisdictions do enforce no damages for delay causes like the one in dispute here. Second, no indications exist that West Virginia law would substantially oppose the enforcement or validity of a no damages for delay clause. Rather, West Virginia law gives contracts their full effect based on their plain meaning. Finally, no indications of unconscionability exist here. The parties are both commercially sophisticated and members of the same industry. Looking at the facts present, no hint of foul play or inequities exists. Indeed, the language of the clause explicitly provides that Kogok can recover damages for delay if the damages are both recovered from the government and directly allocable to Kogok. The language of their contract is clear, and the clause appears valid and enforceable. Thus, this Court grants defendant's motion for partial summary judgment on this claim.
Finally, defendants assert that Kogok's claim regarding labor impacts and inefficiencies is premature under the Miller Act. Specifically, defendants argue that Kogok has yet to show its "last date" for labor provided, as required under the statute. Because of this, defendants claims that Kogok cannot file a notice of claim for labor inefficiency costs until ninety days after the last date of labor furnished, which it claims has yet to be declared. In response, Kogoks argue that it filed a notice of claim within ninety days, and that Kogok is complying with the Miller Act's requirements. Further, Kogok points to case law that it claims justifies its filing a notice of claim.
Under the Miller Act, a right to civil action exists if a person who furnishes materials or labor under a contract where a § 3131 payment bond is furnished
40 U.S.C. § 3133(b)(1) (2012). Further, the statute also provides that a person who has a direct contractual relationship with a subcontractor but not contractor may bring a civil action on the payment bond by giving the contractor notice within ninety days after the date when the last of the labor or materials were provided.
The issue here is whether a last date exists regarding Kogok's labor and services furnished so as to render its notice of claim for labor inefficiencies and costs timely. Under the facts here, that date does not exist. Documents in the record show that Kogok's notice was premature. Specifically, in a letter dated March 24, 2014, where Kogok responded to Bell's inquiries regarding Kogok's notice for claim, Kogok referred to its work on the project as "ongoing," that it is "continuing to suffer labor costs," and that it was supposed to be "on the project" until at least June 17, 2014. Despite this, Kogok filed its notice of claim on October 16, 2013. Based on the record before this Court, it appears no "final date" has been provided yet that would justify filing a notice of claim.
However, Kogok does cite to case law that it claims refutes this interpretation of the Miller Act. Kogok looks to
Although persuasive, this Court finds several distinctions between this civil action and the
ECF No. 29 Ex. 1, H. As seen in the quote, Kogok is referring to the impact and inefficiencies claim. It even admits that the impact and inefficiencies claims are premature in the sense that the total amount for this claim is yet to be determined. The services are still being rendered.
This contrasts with the situation in
In addition to seeking partial summary judgment, the defendants request that this Court stay all proceedings until such time that Kogok has completed the work underlying its claims and complies with its contractual obligations. In support of this argument, the defendants assert that the largest element of Kogok's claim arises from alleged labor inefficiency damages, which Kogok claims it is still incurring. Accordingly, the defendants argue that because Kogok cannot provide any valid or meaningful information as to this claim until it completes its labor activities, the defendants request that the action be stayed.
It is well settled law that federal district courts possess the ability to, under their discretion, stay proceedings before them when the interests of equity so require.
In this instance, the defendants' proffered reason for this Court to grant a stay of the proceedings is no longer a valid justification for a stay based on the findings above concerning the defendants' motion for partial summary judgment. The defendants request the stay based on Kogok's claim for labor inefficiency. As stated above, however, this Court granted the defendants' motion for summary judgment as to Kogok's claim for labor inefficiency. Accordingly, no clear and convincing justification for a stay of proceedings remains, and thus, this Court must deny defendants' motion to stay the proceedings.
For the reasons stated above, the defendants' motion for partial summary judgment is GRANTED, and the defendants' motion to stay all proceedings is DENIED.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum opinion and order to counsel of record herein.