Coltin Electric, Inc. v. Continental Casualty Company
Order entered [Doc. 135] Continental Casualty Company's motion for partial summary judgment as to the effect of the February 28, 2011 release is granted as set forth in the Order. Signed by Judge Kristi K. DuBose on 7/13/2014. (khc)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
KAREN WELDIN STEWART, CIR-MI,
INSURANCE COMMISSIONER OF THE )
STATE OF DELAWARE,
COLTIN ELECTRIC, INC.,
CIVIL ACTION NO. 12-0532-KD-B
This action is before the Court on the motion for partial summary judgment filed by
defendant Continental Casualty Company (Continental) and documents in support (doc. 135), the
response in opposition filed by plaintiff Karen Weldin Stewart, CIR-MI, Insurance
Commissioner of the State of Delaware (the Commissioner) (docs. 137, 138) Continental’s reply
(doc. 146), the supplemental brief filed by Continental (doc. 171) and the supplemental brief
filed by the Commissioner (doc. 176). Upon consideration and for the reasons set forth herein
the motion is GRANTED as follows:
The issue before the Court is whether Coltin Electric, Inc. (Coltin) released its claims for
additional compensation for work performed prior to March 1, 2011. The facts were previously
set forth in detail in the Court’s June 25, 2014, order on Continental Casualty Company’s
(Continental) motion for partial summary judgment. (Doc. 169) In sum, Elkins Constructors,
Inc., (Elkins) required Coltin to release any liens and claims against the project funds and project
bonds in return for monthly progress payments. The requirement for this release was pursuant to
the Subcontract Agreement between Elkins and Coltin. Specifically the subcontract provides:
SUBCONTRACTOR shall provide, in a form satisfactory to CONTRACTOR, partial lien or
claim waivers…. Such waivers shall be a strict condition precedent to payment.” (Doc. 1-2, p.
Prior to February 28, 2011, Coltin submitted six payment applications along with four
releases. Both the payment applications and releases were on forms provided by Elkins to
Coltin. Elkins issued payments for the first five applications.
The seventh payment application and release were submitted for work completed through
February 28, 2011. Again, the submissions were on the Elkins’ forms. However, prior to paying
the sixth (January) and seventh (February) payment applications, Elkins re-sent two release
forms for the January and February application.
Instead of signing the Elkins release again, Coltin revised the release form and returned it
for the sixth and seventh payment application. The altered release waived liens but did not
waive Coltin’s right to claims against the project funds and project bonds. There is no evidence
that Elkins was aware that Coltin had unilaterally altered the acceptable release. Rather, the
evidence, in the form of emails between Coltin and its lawyer, indicates that the slight alteration
was made in such a manner as to hopefully get it past Elkins without notice. The plan worked
and Elkins paid the sixth and seventh payment applications. However, when Coltin sent the
altered release for the eighth payment, Elkins noticed the change and refused to issue payment
since the release was not in a form acceptable to Elkins.
There are no mitigating facts to support any finding other than the altered Coltin release
is ineffective for lack of mutual assent by Elkins.1 The subcontract between Elkins and Coltin
clearly states that the release will be in a form acceptable to Elkins. Elkins presented the
acceptable release and indicated that Coltin needed to sign that release in order to receive
payment. Coltin did not sign the acceptable release. Elkins paid the applications on the
reasonable belief that Coltin had signed the release it sent. Coltin prompted this belief by
submitting a form that appeared to be the one Elkins had sent.
The Court finds distinguishable the line of cases that would hold Elkins responsible for
the consequences of failing to read the altered release before making payment. Specifically, this
is not a situation where Elkins signed a contract without reading its terms. Elkins authored the
acceptable release, and pursuant to the subcontract, Coltin was required to sign that release in
order to get the progress payment. Moreover, Coltin had signed the acceptable release on four
previous occasions. Coltin’s altered releases for the sixth and seventh payments are ineffective
since there is no evidence that Elkins consented to the alteration.
This leaves the February Hirmer release. As there was no valid amendment to this
release (or novation), the release, according to its terms, became effective upon payment of the
January and February 2011 payment applications. Accordingly, partial summary judgment is
GRANTED for any claim for additional compensation for work completed before March 1,
DONE and ORDERED this the 13th day of July 2014.
/s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE
There are no facts to support Rodgers’ conclusory statement in his affidavit that Elkins rejected
Hirmer’s February release because Elkins wanted Rodgers’ signature.
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