Kinetic Systems, Inc. v. Integrated Project Services, LLC and Lonza Biologics, Inc.

2025 DNH 002

• Court: District Court, D. New Hampshire
• Decided: January 14, 2025
• Docket: 20-cv-1125-SM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Kinetic Systems, Inc. Case No. 20-cv-1125-SM v. Opinion No. 2025 DNH 002

Integrated Project Services, LLC and Lonza Biologics, Inc.

O R D E R

Kinetic Systems, Inc. renews its motion for judgment

against Integrated Project Services, LLC (“IPS”) for the entire

amount back charged, notwithstanding the jury’s verdict

(awarding only part of the back charged amount). See Fed. R.

Civ. P. 50(b). IPS objects. For the reasons that follow, the

motion is denied.

Standard of Review

“If the court does not grant a motion for judgment as a

matter of law made under Rule 50(a), . . . the movant may file a

renewed motion for judgment as a matter of law.” Fed. R. Civ.

P. 50(b). To succeed on a motion under Rule 50(b), the movant

must establish that “the jury failed to reach the only result

permitted by the evidence.” Lestage v. Coloplast Corp., 982

F.3d 37, 47 (1st Cir. 2020). For purposes of a Rule 50(b)

motion, the court construes the “facts in the light most

favorable to the jury verdict, draw[s] any inferences in favor

of the non-movant and abstain[s] from evaluating the credibility of the witnesses or the weight of the evidence.” Suero-Algarín

v. CMT Hosp. Hima San Pablo Caguas, 957 F.3d 30, 37 (1st Cir.

2020) (citation omitted).

Background

IPS engaged Kinetics as a subcontractor to do piping and

mechanical work on a commercial construction project. From the

beginning, Kinetics fell behind the agreed upon schedule and was

unable to meet important deadlines. Kinetics also did not pay

many of its subcontractors in a timely manner, all of which led

to delays and unexpected additional project costs. At the end

of the project, IPS and Kinetics negotiated certain change

orders aimed at resolving outstanding claims and disputes. IPS,

however, withheld amounts from the change order payment as back

charges to cover extracontractual costs that Kinetics allegedly

caused and IPS incurred.

Kinetics brought suit against IPS and Lonza Biologics, Inc.

(the project owner), seeking recovery of the amounts withheld.

Before trial, Kinetics and IPS entered a stipulation of fact,

establishing that the parties had agreed to two change orders --

one for $1,255,587 and the other for $1,874,762, which totaled

$3,130,349. Of that agreed amount, IPS paid Kinetics only

$1,024,034.75, withholding the remainder as back charges in the

amount of $2,106,314.75. Kinetics disputed IPS’s right to

2 withhold back charges as well as the amount of the back charges

withheld.

IPS asserted that it properly withheld $2,106,314.75 under

the withholding provision in the Subcontracts, § 7.16. The

issue at trial was whether, or to what extent, IPS properly

withheld the back charged amounts from the agreed payment due

for the change orders. IPS bore the burden of proving that the

amount withheld was allowed under § 7.16. IPS introduced

testimony and other evidence regarding Kinetics’s deficient work

performance and the negative impact of that work. IPS claimed

that some $2,569,221 in additional costs caused by Kinetics were

incurred. To cover those costs (i.e. to pay third parties and

cover its own costs), IPS sought funds from Lonza in a “Capital

Project Change Request,” which Lonza approved. One of IPS’s

employees, Anthony Malvone, testified that Lonza provided the

funds to cover the extra costs that IPS incurred due to

Kinetics’s failure to perform as contractually required.

Evidence presented also supported IPS’s claim that it was

obligated to, and Lonza fully expected it to, recover those

costs through back charges against Kinetics.

The jury returned a verdict in favor of Kinetics on the

breach of contract claim as to some, but not all, of the amount

withheld from the agreed back charge amount. The jury found

that $444,875.53 of the $2,106,314.75 back charged was not

3 proper under the Subcontracts. IPS owes that amount to

Kinetics.

Discussion

Kinetics argued at trial, and argues in support of this

Rule 50(b) motion, that IPS could not, as a matter of law,

withhold any of the amount owed under the change orders,

because, among other things, § 7.16 allowed withholding only “to

such extent as IPS reasonably deems necessary to protect it from

loss as a result of [eight listed circumstances].” Doc. no. 57-

8, at 24-25 (emphasis added). Kinetics also argued at trial and

argues in this motion that IPS did not need protection from

loss, within the meaning of § 7.16, because Lonza had already

funded the additional costs IPS claimed to have incurred due to

Kinetics’s alleged failures to fully perform, when it approved

and paid IPS’s change order request. Kinetics further argues

that because Lonza paid IPS’s change order seeking reimbursement

for the extra costs, IPS would receive a windfall to the extent

it is permitted to withhold any amount from the Kinetics change

orders.

Kinetics’s theory, however, ignores the commercial reality

of the parties’ dealings, and it lacks contractual context. The

evidence at trial established that Kinetics did not perform its

work under the Subcontracts, and did not pay all of its

subcontractors, in a timely manner, which led to problems and

4 additional unanticipated costs on the project. As a result, IPS

had to provide some additional supervision and perform

additional tasks to obtain adequate performance. That extra

work was costly, but it was also necessary to keep the project

moving toward completion. Those additional incurred costs were

“covered” or “funded” by amounts provided to IPS by Lonza,

again, to keep the project going, as the jury could well have

found.

The additional costs that IPS incurred due to Kinetics’s

performance failures on the project, as found by the jury, were

not amounts owed to Kinetics, but amounts Kinetics owed to IPS,

or, in the end, to Lonza. Those additional costs were in the

nature of damages, or “losses”, incurred by IPS initially, and

by Lonza ultimately. Kinetics has not pointed to any evidence

that IPS and Lonza intended, understood, or agreed that Kinetics

would be relieved of all liability for the extra costs IPS (and

Lonza) incurred because of Kinetics’s own performance failures.

The evidence shows that IPS (and Lonza) fully intended to

recover the additional costs from Kinetics through back charges

under the Subcontracts’ provisions. The arrangement between IPS

and Lonza as to how the amounts back charged may be allocated

between them is irrelevant to IPS’s right to withhold payment

under § 7.16. To the extent IPS might now be over paid, with

respect to Lonza, as a result of the verdict, does not affect

5 Kinetics’s obligation to reimburse IPS for the additional costs

the jury found Kinetics to have caused and IPS to have incurred.

Kinetics presented its theory to the jury–that under § 7.16

of the Subcontracts IPS could not withhold payment from the

change orders on grounds that Lonza had “paid” IPS for those

extra costs. The jury properly rejected that theory and found

that IPS was within its contractual rights to withhold proper

back charges under § 7.16. Kinetics has not shown that “the

jury failed to reach the only result permitted by the evidence.”

Lestage, 982 F.3d at 47. To the contrary, the jury’s verdict is

fully consistent with the evidence before it, and the

Subcontracts between and among the parties.

Conclusion

For the foregoing reasons, the court denies Kinetics’s

motion for judgment under Rule 50(b) (doc. no. 149).

The court grants Kinetics’s motion for an extension of time

to file its motion for an award of attorneys’ fees (doc. no

155), and that motion shall be due 14 days from the date of this

order.

SO ORDERED.

______________________________ Steven J. McAuliffe United States District Judge

January 14, 2025

cc: Counsel of record