Hope's Architectural Products, Inc. v. Lundy's Construction, Inc.

762 F. Supp. 1430, 1991 U.S. Dist. LEXIS 6058, 1991 WL 73680
CourtDistrict Court, D. Kansas
DecidedApril 1, 1991
DocketCiv. A. 89-2137-V
StatusPublished
Cited by2 cases

This text of 762 F. Supp. 1430 (Hope's Architectural Products, Inc. v. Lundy's Construction, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hope's Architectural Products, Inc. v. Lundy's Construction, Inc., 762 F. Supp. 1430, 1991 U.S. Dist. LEXIS 6058, 1991 WL 73680 (D. Kan. 1991).

Opinion

MEMORANDUM AND ORDER

VAN BEBBER, District Judge.

Plaintiff Hope’s Architectural Products, Inc., brought this action to recover damages for an alleged default of defendant Lundy’s Construction, Inc., (Lundy’s) under a contract to provide construction materials, and to recover against the statutory bond secured through defendant Bank IV Olathe, N.A. (Bank IV). Defendant Bank IV now moves the court (Doc. 21) for summary judgment pursuant to Fed.R.Civ.P. 56(b) on plaintiff’s claim against the bond. Plaintiff has responded (Doc. 31) and opposes defendant Bank IV’s motion. For the reasons stated below, the motion is granted in part and denied in part.

A moving party is entitled to summary judgment “if the pleadings, depositions, answers to interrogatories, and admission on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact; This burden may be discharged by “showing,” that is, pointing out to the district court, that there is an absence of evidence to support the nonmoving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). Once the moving party has properly supported its motion for summary judgment, “a party opposing ... may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). Thus, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id.

For the purposes of this motion the following facts have been established as un-controverted. Plaintiff is a New York corporation that manufactures windows. Defendant Lundy’s is a Kansas corporation engaged in the construction business. Defendant Bank IV is a national banking association having its principal place of business in Kansas.

On June 13, 1988, defendant Lundy’s and Shawnee Mission School District' # 512 (School District) entered into a contract for the construction of an addition to the Rush-ton Elementary School. On July 6, 1988, defendant Bank IV issued a letter of credit denominated Irrevocable Letter of Credit No. 357 (Letter of Credit) in favor of the School District for the account of defendant Lundy’s. By'the terms of the Letter of Credit, the School District was required to submit appropriate and timely notices of claims against defendant Lundy’s to defendant Bank IV in order to draw upon the Letter of Credit.

*1432 As required by law, defendant Lundy’s put up a public works bond in connection with the project. K.S.A. 60-1111. The purpose of the bond was to ensure the payment of any outstanding indebtedness incurred by defendant Lundy’s in the construction of the project. Defendant Lun-dy’s statutory bond, executed July 27, 1987, was secured through defendant Bank IV. Purportedly, the bond incorporated by reference, and was limited in its terms by, the Letter of Credit.

On June 29, 1988, defendant Lundy’s entered into a contract with plaintiff whereby plaintiff would custom manufacture ninety-three windows for the Rushton Elementary improvement project. The agreed upon price was $55,000. Plaintiff expected to complete fabrication of the windows during the week of October 24, 1988. The completed windows were shipped from plaintiffs factory in New York to Kansas on October 28, 1988.

On or about November 1, 1988, defendant Lundy’s informed plaintiff that it was going to backcharge plaintiff $11,000 for late delivery of the windows. Pursuant to a provision of the contract, plaintiff transmitted a letter to defendant Lundy’s advising defendant Lundy’s that it would not deliver the windows until it was assured in writing that there would be no backcharge on account of any alleged late delivery of the windows. Defendant Lundy’s did not respond to plaintiff’s request. Plaintiff declined to deliver the windows to the Rush-ton Elementary site.

On November 7, 1988, defendant Lun-dy’s, through its attorney, notified plaintiff that it was declaring plaintiff in default and was obtaining an alternate supplier of windows. On November 15, 1988, plaintiff, without ever delivering the windows to the improvement site, returned the windows to New York. Defendant Lundy’s thereafter obtained replacement windows. By December 20, 1988, defendant Lundy’s substantially completed the improvement project. On February 13, 1989, the Letter of Credit expired by its own terms. Two days later, plaintiff submitted its claim for the value of the windows to the School District. On March 29, 1989, plaintiff filed the present lawsuit.

In its motion for summary judgment, defendant Bank IV contends that it is entitled to judgment as a matter of law on two grounds. First, defendant Bank IV contends that plaintiff’s claim against the bond was untimely. Defendant Bank IV argues that the Letter of Credit expressly limited the terms of the bond and that plaintiff’s claim was not submitted until after the Letter of Credit, and thus the bond, had expired. Second, Defendant Bank IV claims that plaintiff cannot assert a claim against the bond for the windows because they were not actually “used or consumed” in the improvement project.

In opposition to defendant Bank IV’s motion, plaintiff states, first, that the Letter of Credit could not, as a matter of law, limit terms of the bond that were statutorily mandated. See K.S.A. 60-1111. It contends that because its claim was timely under the statute that its claim against the bond was timely. Next, plaintiff contends that it may reach the bond for the windows because the windows were custom built and thus “constructively” used or consumed in the improvement project. Finally, plaintiff claims that it may also reach the bond because it furnished labor to the improvement site. We will deal with the issues as raised by the parties.

The Timeliness of Plaintiff s Claim

K.S.A. 60 — 1111(b) states that “[a]ny person to whom there is due any sum for labor or material furnished ... may bring an action on such bond for the recovery of such indebtedness but no action shall be brought on such bond after six months from the completion of said public improvements or public building.” Id. (emphasis supplied).

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Attorney General Opinion No.
Kansas Attorney General Reports, 2008

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Bluebook (online)
762 F. Supp. 1430, 1991 U.S. Dist. LEXIS 6058, 1991 WL 73680, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hopes-architectural-products-inc-v-lundys-construction-inc-ksd-1991.