United States ex rel. Tusco, Inc. v. Clark Construction Group, LLC

235 F. Supp. 3d 745, 2016 U.S. Dist. LEXIS 107571, 2016 WL 4269078
CourtDistrict Court, D. Maryland
DecidedAugust 15, 2016
DocketCivil No. PJM 15-2885
StatusPublished
Cited by31 cases

This text of 235 F. Supp. 3d 745 (United States ex rel. Tusco, Inc. v. Clark Construction Group, LLC) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Tusco, Inc. v. Clark Construction Group, LLC, 235 F. Supp. 3d 745, 2016 U.S. Dist. LEXIS 107571, 2016 WL 4269078 (D. Md. 2016).

Opinion

MEMORANDUM OPINION

' PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE

The United States of America, for the use and benefit of Tusco, Inc., and Tusco, Inc. in its own capacity (collectively “Tus-co”) have sued Clark Construction Group, LLC (“Clark”) and Travelers Casualty and Surety Company of America (“Travelers”) (collectively “Defendants”) based on a dispute over work Tusco performed on a federal construction project. Tusco, a subcontractor on the project, alleges that Clark, the prime contractor, failed to timely pay it for certain change order work performed by Tusco at Clark’s request. Tus-co’s claims include breach of contract against Clark (Count I); quantum meruit against Clark (Count II); and breach of payment bond in violation of the Miller Act, 40 U.S.C. § 3133, against Travelers. Clark has moved to dismiss Counts I and II, and Travelers has moved to stay Count III.1 For the reasons that follow, the Court will DENY Clark’s Motion to Dismiss (ECF No. 7) and DENY Travelers’ Motion to Stay (ECF No. 7).

I. FACTS AND PROCEDURAL HISTORY2

On or about September 27, 2011, Clark contracted with the United States (the “Prime Contract”) to provide construction services with respect to a federal project located in Bethesda, Maryland, known as the Intelligence Community Campus-B (ICC-B) North Campus (the “Project”). Compl. ¶ 7, ECF No. 1. On September 28, 2011, Clark secured a payment bond (the “Bond”) from Travelers Casualty and Surety Company with a penal sum of $39,912,000.00. Id. ¶ 8. Under the terms of the Bond, Travelers agreed to be bound jointly and severally with Clark to make payment to all persons having a direct contractual relationship with Clark or to any of Clark’s subcontractors who furnished labor, material, or both in performing the work for the Prime Contract in the event Clark failed to make prompt payment. Id.) Compl, Ex. A, ECF No. 1-1.

A. The Subcontract

On or about January 16, 2012, Clark entered into a subcontract with Tusco3 (the “Subcontract”) to furnish labor, materials, equipment, and all other items necessary to complete Tusco’s work for the Project. Compl. ¶ 9; Compl, Ex. B, ECF No. 1-2. Under the Subcontract, Clark agreed to pay Tusco $615,000.00 for the work. Compl. ¶ 10; Compl, Ex. B, Art. 4(a). The Subcontract contained a provision making payment to Clark by the Government (referred to in the Subcontract as the “Owner”) a condition precedent to Clark’s payment to Tusco. Specifically, Article 4(j) of the Subcontract provided, in part:

Subcontractor agrees that payment by the Owner to Clark for work performed by the Subcontractor... is a condition precedent to any payment obligation of Clark to Subcontractor. Subcontractor agrees that the liability of Clark’s sure[749]*749ties on any bond for payment to Subcontractor is subject to the same conditions precedent as are applicable to Clark’s liability to Subcontractor.

Compl., Ex. B, Art. 4(j).

In addition to setting forth these payment procedures, the Subcontract contained several clauses governing “changes” in the scope of Tusco’s work under the Project. In general, the Subcontract permitted Clark to order such changes unilaterally and without notice, provided that it notified Tusco of the changes in writing.4 Id., Art. 9(a). If Tusco claimed entitlement to additional compensation for such work (beyond the $615,000.00 Subcontract price), it had to submit any requests or claims for adjustment in the Subcontract price to Clark. Id., Art. 9(b). Under the terms of the Subcontract, the manner and timing of Tusco’s compensation for such work depended upon whether, on the one hand, the Government ordered the changes or, on the other hand, Clark independently ordered the changes. For changes “made by the Owner,” Article 9(c) stated:

Clark’s receipt of payment from the Owner on account of pending changes made by the Owner shall be a condition precedent to Clark’s obligation to make payment for changed work to Subcontractor.

Id., Art. 9(c). For changes made by Clark autonomously, Article 9(d) directed:

For changes ordered by Clark independent of the Owner of the Contract Documents, Subcontractor shall be entitled to equitable adjustment in the Subcontract price.

Id., Art. 9(d).

Finally, in the event Clark and the Subcontractor disputed payment, the Subcontract contained several provisions governing settlement of these disputes. For disputes involving the Government, Article 11(b) of the Subcontract stated:

In any case of any dispute between Clark and the Subcontractor, in any way relating to or arising from any act or mission of the Owner or involving the Contract Documents, Subcontractor agrees to be bound to Clark to the same extent that Clark is bound to the Owner, by the terms of the Contract Documents, and by any and all preliminary and final decisions or determinations made thereunder by the party... whether or not Subcontractor is a party to such proceedings. In case of such dispute, Subcontractor will comply with all provisions of the Contract Documents allowing a reasonable time for Clark to analyze and forward to the Owner any required communications or documentation. Clark will, at its option, (1) present to the Owner, in Clark’s name, or (2) authorize Subcontractor to present to the Owner, in Clark’s name, all of Subcontractor’s claims and answer the Owner’s claims involving Subcontractor’s work, whenever Clark is permitted to do so by the terms of the Contract Documents .... The Subcontractor price shall be adjusted by Subcontractor’s allocable share determined in accordance with Article 9, hereof.

Id., Art. 11(b).

B. Tusco’s Work on the Project

Tusco alleges that it performed all the work it agreed to perform under the original scope of the Project, which it says was [750]*750authorized and accepted by Clark. Compl. ¶¶ 11,13. During the course of the Project, however, Tusco says that Clark requested additional work from Tusco,5 Tusco further alleges that it submitted change orders and performed the additional work, which Clark accepted. Id. ¶ 11.

Tusco’s last day of work on the Project was on or about August 18, 2014. Id. ¶ 12. Although Clark has paid Tusco for the work performed under the original scope of the Project,6 Tusco avers that Clark has not, to date, paid Tusco the amount it claims it is owed for the change-order work and extra work authorized by Clark, a total of $100,852.69. Id. ¶ 14.

Soon thereafter, Tusco submitted a claim to Travelers for payment. Id. ¶ 15. Although Travelers did not deny the claim, it has failed to provide Tusco with a substantive response or pay it the $100,852.69 Tusco says it is owed. Id: ¶ 16.

C. The Complaint

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Bluebook (online)
235 F. Supp. 3d 745, 2016 U.S. Dist. LEXIS 107571, 2016 WL 4269078, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-tusco-inc-v-clark-construction-group-llc-mdd-2016.