ThyssenKrupp Steele USA, LLC v. United Forming, Inc.
Order on Certification of Questions of Law to the Supreme Court of Alabama re: 109 Order. Signed by Magistrate Judge William E. Cassady on 4/22/2013. (Attachments: # 1 Certificate to the Supreme Court of Alabama) (eec)
TO THE SUPREME COURT OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
THYSSENKRUPP STEEL USA,
Pursuant to Rule 18, Alabama Rules of Appellate Procedure, the United States
District Court for the Southern District of Alabama requests the Supreme Court of
Alabama to answer two questions of law which are deemed determinative of a claim
before this Court to which there is no clear controlling precedent in the decisions of the
Supreme Court of Alabama.
In support of this certificate, the following facts are shown:
The style of the case:
ThyssenKrupp Steel USA, LLC, Plaintiff, v. United Forming, Inc., Defendant.
Civif Action No. 1:12-00297-C
Statement of facts:
ThyssenKrupp Steel USA, LLC ('TKS") and United Forming, Inc. ("UFl") entered
into a written Construction Agreement on July 8, 2008 for the Hot Strip Mill ("HSM')
Project, a portion of the steel mill TKS was having constructed near Calvert, Alabama.
Pursuant to this HSM Contract, UFI agreed to provide labor, materials, equipment, and
services to construct the reinforced concrete building foundation and the equipment
foundation for the HSM Project. UFI's scope of work included formwork erection;
furnishing and placement of reinforcing steel (or rebar); furnishing, placing and finishing
concrete; and installing various "embeds" used to attach or support the work of other
trades and the equipment that would be placed in the
HSM. TKS is the owner of the
HSM Project and UFI served as one of its general contractors. UFI was properly
licensed in the State of Alabama, and the HSM Contract between TKS and UFI is "legal."
The original HSM Contract Sum was $37,000,000.00. TKS and UFI agreed to a
total of 53 Change Orders that increased the HSM Contract Sum to $109,695,132.00.
Between 2008 and May 2010, TKS has paid UFI the sum of $97,949 ,132.00 for work on
the HSM Contract. UFI seeks to recover from TKS the sum of $11,746,430.25 as the
Contract Balance on the HSM Project. TKS did not pay the alleged remaining Contract
Balance because of damages in that amount that it attributes to UFI's defective work.
UFI entered into a written subcontract with Liberty Reinforcing Steel,
("Liberty") to provide labor and services to install the rebar on a portion of the HSM
Project. The totalamount
of the UF|/Liberty Subcontractwas $3,426,178.63. UFI paid
Liberty $3,101 ,271.12 and the unpaid subcontract balance is $324,907.51. TKS was
not a party to the UFI/Liberty Subcontract. The total value of Liberty's work on the HSM
Project of $3,426,178.63 is approximately 3.12 percent of the total HSM Contract Sum.
During the time it provided labor and services for construction of the HSM Project,
Liberty was not licensed with the Alabama Licensing Board for General Contractors.
Liberty should have been licensed to perform the rebar installation for the HSM Project.
The Subcontract between Liberty and UFI was "illegal" pursuant to the Alabama General
Contractor's Practice Act (the 'AGCPA"), Are. CopB S 34-8-1, ef seq., as construed by
the Alabama courts.
Many of the Contractors and Subcontractors on the HSM Project, including UFI
and Liberty, were enrolled in an insurance plan, referred to as an "OClp'
(Owner-Controlled lnsurance Program), through which TKS purchased insurance
coverage for the Contractors and Subcontractors, including Liberty and UFl, and then
deducted the pro-rata costs of this insurance program from the contract price of the
various Contractors, including
These Contractors, including UFl, would then
typically allocate their respective subcontractors' shares of the OCIP premium to the
subcontractors, including Liberty. As TKS required
of UFl, UFI required Liberty
complete a "ThyssenKrupp OCIP Enrollment Form" that identified the work Liberty would
be performing and estimated the insurance premiums to cover Liberty, and this form was
then forurarded to TKS, as was UFI's own OCIP enrollment form.
UFI substantially completed its work on the HSM Project on or about February 28,
2010. TKS filed its Complaint against UFI in the United States District Court for
Southern District of Alabama on May 1, 2012 seeking a declaration of its duties and
liabifities of the
parties. UFI filed a Counterclaim against TKS on May 25,2012
in part, upon the unpaid HSM Contract Balance of $11,746,430.25. Of that balance
claimed in UFI's Counterclaim, UFI sought to recover $11,421,522.74 for on its own
account and $324,907.51 for money due to Liberty.
On August 15,2012, TKS filed a motion for summary judgment based, in part, on
the unlicensed status of Liberty. UFI opposed the motion. The District Court granted
in part TKS's motion for summary judgment by Order dated January 29, 2013. The
questions certified by the District Court arise from that Order.
Questions of law to be answered:
Under the Alabama General Contractor's Practice Act (the "AGCPA"), Are.
Copr S 34-8-1 , et seq., where an owner and a general contractor enter into
an agreement, does a general contractor's reliance in any part on work
performed pursuant to a separate agreement with a subcontractor not
licensed under the AGCPA (an "illegal subcontract") prevent the general
contractor from recovering the entire contract balance on the agreement
between it and the owner?
lf the answer to question (1) is in the negative, should the contract balance
owed to the general contractor be adjusted on account of the illegal
subcontract? And, if so, what is the proper adjustment, i.e., should the full
illegal subcontract amount be deducted from the contract balance owed by
the owner to the general contractor, or only so much of the full illegal
subcontract amount, if any, as the general contractor owes to the
subcontractor and has included in its claim against the owner?
This certificate was prepared by the United States District Court for the Southern
District of Alabama.
CHARLES R. DIARD,JR.,
United States District Court
113 St. Joseph Street
Mobile, Alabama 36602
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?