D&D Underground Utilities, Inc. v. Walter Martin Excavating, Inc. et al
Filing
75
MEMORANDUM OPINION & ORDER: For all the aforementioned reasons, WMEs Motion for Partial Summary Judgment [R. 37 shall be GRANTED in PART and DENIED in PART. Furthermore, D&D's Motion to Strike [R. 47 will be DENIED. Signed by Judge Gregory F. VanTatenhove on 5/7/15.(MRS)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION
LONDON
D&D UNDERGROUND UTILITIES INC.,
Plaintiff,
v.
WALTER MARTIN EXCAVATING INC.,
et al.
Defendant.
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Civil No. 12-241-GFVT
MEMORANDUM OPINION
&
ORDER
*** *** *** ***
On August 18, 2010, the City of Somerset Gas Department (“Somerset”) contracted with
Defendant Walter Martin Excavating (“WME”) to install a gas line beneath the Rockcastle
River. [R. 1 at ¶ 8.] Defendant International Fidelity Insurance Company (“IFIC”) issued a
payment bond on the project for the benefit of WME. [Id. at ¶ 9.] WME contracted with
Plaintiff D&D Underground Utilities, Inc., (“D&D”) to bore beneath the river and install a 12
inch casing to accommodate the gas line. [Id. at ¶ 10.] The circumstances surrounding the
performance of this subcontract give rise to the present litigation. Both parties agree that the
work was not completed in a timely fashion but disagree as to who is to blame, who is to bear the
cost for those delays, and whether delays in payment have been in good faith. The matter is now
before the Court on WME’s motion for partial summary judgment and D&D’s related motion to
strike portions of Scott Adam’s affidavit. For the reasons that follow, the Partial Motion for
Summary Judgment will be GRANTED in part and DENIED in part and D&D’s Motion to
Strike will be DENIED.
I
The contract between Somerset and WME provided that the project was to be completed
by November 27, 2010 and that WME would be assessed damages of $400 per day if the project
was not completed on time. [R. 37-2 at ¶ 5-6 (Adams Aff.); R. 37-3 (Contract).] After receiving
bids, and attempting to do the work themselves, WME entered into a non-written contract with
D&D to bore beneath the river and install a 12 inch casing to accommodate the gas line. [R. 1 at
¶ 10; R. 37-2 at ¶ 8 (Adams Aff.); R. 42-1 at ¶¶ 9-10 (Burr Aff.)]
According to Don Burr, the President and Owner of D&D, he discussed the liquidated
damages clauses with Shawn Martin, former Vice-President of WME, in advance of agreeing to
the project and made it clear that D&D would likely not even get to the project site before the
project deadline had passed. [R. 42-1 at ¶ 9 (Burr Aff.)] According to Burr, “Shawn Martin
understood that D&D Underground would not be responsible for any liquidated damages.”1 [Id.
at ¶ 9-10 (Burr Aff.)] The parties agree that the work was to be done for $168,000.2
D&D arrived at the site in the third week of November and began work on the project
1
WME agreed to perform additional work for Somerset “in exchange for the Owner’s agreement not to
assess liquidated damages against WME.” [R. 37-2 at ¶ 8 (Adams Aff)] The parties disagree, however, about
whether those liquidated damages were to be assessed because of delays caused by D&D on the project. [Id.;
R. 42-1 at ¶ 10 (Burr Aff.)] D&D contends that WME’s agreement to remove the existing gas line under the
river in lieu of Somerset levying liquidated damages was separate and apart from delays caused by D&D. [R.
42 at 4-5; R. 42-1 at ¶ 10 (Burr Aff.)] Arguments about who is to blame for these liquidated damages will
become more relevant if, at a later point in this litigation, WME argues that additional offsets be levied against
D&D. At this juncture, however, arguments on this point are not directly relevant to the resolution of the
pending motions.
2
The parties disagree about how $168,000 came to be the contract price. According to WME, the
agreement was to perform the work for $168,000 in accordance with the underlying contract. [R. 1 at 10; R.
37-2 at ¶ 8 (Adams Aff.)] D&D disagrees, arguing the agreement was $210 per foot. WME initially
estimated the length of the bore at 700 feet (which would have cost $147,000), but the actual footage of the
bore was 800 feet ($168,000). [R. 42 at 3; R. 42-1 at ¶ 2 (Burr Aff.)] Ultimately, however, the parties agree
that $168,000 is the value of the contract.
2
soon thereafter. [R. 1 at ¶ 10; R. 37-2 at ¶ 9 (Adams Aff.); R. 42-1 at ¶ 10 (Burr Aff.)] In March
2011, D&D hit a snag when a “reemer head” broke off and became lodged in the bore. [R. 1 at ¶
12; R. 37-2 at ¶ 10 (Adams Aff.); R. 37-4 at ¶ 9 (Williams Aff.); R. 42-1 at ¶ 14 (Burr Aff.)] The
parties disagree about what then ensued. WME contends that D&D tried to retrieve its
equipment, but failed and left WME to figure out how to proceed. [R. 37-1 at 3; R. 37-2 at ¶ 10
(Adams Aff.)] According to WME, D&D would not return unless WME retrieved its equipment
from beneath the river, but did agree that they (D&D) would be responsible for additional costs
incurred in retrieving the equipment. [R. 37-1 at 3; R. 37-2 at ¶ 12 (Adams Aff.); R. 42-1 at ¶ 17
(Burr Aff.)]
D&D admits that WME assisted in trying to recover the equipment but notes that it was
very involved in the process too, even breaking a second reemer head in the process of retrieving
the first. [R. 42 at 6.] After breaking two reemer heads, D&D concluded that they would have
to dig the reemer heads out to recover them, which D&D was prepared to do, but the project was
shut down when Somerset’s engineer, Vaughn Williams, advised the parties that an
environmental assessment was necessary. [R. 1 at ¶ 13; R. 37-1 at 3-4; R. 37-4 at ¶ 11 (Williams
Aff.); R. 42 at 6; R. 42-1 at ¶ 17 (Burr Aff.)] The environmental assessment was necessary for
two reasons: the removal of existing pipeline by WME and the retrieval of D&D’s equipment.
[R. 42 at 7; R. 37-4 at ¶ 11 (Williams Aff.)]
The environmental assessment cost WME $17,693.34 and was not completed until late
2011. [R. 37-1 at 4; R. 37-4 at ¶ 14 (Williams Aff.); R. 42 at 7.] D&D returned to the project on
December 29, 2011 and completed work in January, 2012. [R. 37-1 at 4; R. 37-4 at ¶¶ 11-12
(Williams Aff.); R. 42-1 at ¶ 18 (Burr Aff.)]
3
In February 2012, WME was partially paid by the City of Somerset and that payment
included compensation for D&D’s work on the project. [R. 42 at 9; R. 42-2.] Burr spoke with
Shawn Martin, the former Vice-President of WME who worked on the Rockcastle River Project,
about payment for D&D’s work. [R. 42 at 7; R. 42-1 at ¶ 19 (Burr Aff.)] Burr agreed to two
offsets ($5,143.12 for costs incurred in renting a DriPrime pump and $17,693.34 for the
environmental assessment) based on Shawn Martin’s promise that D&D would be immediately
paid. [R. 42 at 8; R. 42-1 at ¶ 19 (Burr Aff.)] The parties exchanged invoices for offsets and
payments, and, at the request of WME, D&D provided its banking information to WME but
WME did not pay D&D. [R. 42 at 9; R. 42-1 at ¶ 19-21 (Burr Aff.); R. 42-3; R. 42-4.]
On March 30, D&D sent WME a demand letter, demanding payment of $150,788.44. [R.
42 at 9; R. 42-1 at ¶ 22 (Burr Aff.); R. 42-5.] D&D then retained counsel and submitted a claim
on the payment bond that WME posted through IFIC. [R. 42 at 9.] While waiting to hear back
from IFIC, on July 6, WME sent D&D a letter requesting an additional $130,244.30 in offsets,
and offering to pay $45,000 for the work that D&D performed. [R. 37-1 at 4; R. 37-5; R. 42 at
10.] D&D contends this letter and the offsets contained in it were sent in bad faith. [Id.] They
argue that many of the costs in the letter were not attributable to the delay or else were expenses
that WME was required to bear under its contract with Somerset. [R. 42 at 10.] After rejecting
the $45,000 offer, D&D elected to file this suit on December 11, 2012.
On December 20, 2013, Somerset issued a joint check to WME and D&D for $37,755.70
and also a $12,875.96 check made solely to WME. [R. 37-1 at 5; R. 37-7.] On December 26,
2013, more than a year after this lawsuit was filed, and almost two years after D&D had
submitted its invoice, WME tendered a check for $43,380.70 to D&D in compensation for the
4
“undisputed amount owed to D&D for its work on the Project and an additional $5,625 for
amounts claimed with respect to the Weddle Project.” [R. 37-1 at 5; R. 42 at 10-11.]
Despite the somewhat complicated, and very much disputed, factual predicates laid out
by both parties, the issues raised in the partial motion for summary judgment are narrow and well
defined. First, WME argues that D&D’s damages under counts one (Breach of Contract) and
three (Unjust Enrichment) are limited to $107,407.74. [R. 37-1 at 6-7.] Second, WME argues
that count two, which alleges a violation of the Kentucky Fairness in Construction Act (“FICA”),
must be dismissed as a matter of law because there is a good faith dispute regarding D&D’s
claim. [R. 37-1 at 7.]
Both parties have submitted affidavits to support their motions. WME has produced
affidavits from Scott Adams, Senior Manager of WME, and Vaughn Williams, President of
Kenvirons, Inc., the engineering firm responsible for preparing the biological assessment and
plan for removing D&D’s boring equipment and the existing gas pipeline.3 [R. 37-2; R. 37-4.]
D&D has presented the affidavit of its President and Owner, Don Burr. [R. 42-1.]
II
A
Before considering the partial motion for summary judgment, the Court must confront
D&D’s motion to strike portions of Scott Adams November 14, 2014 affidavit, which D&D
contends is not based on his personal knowledge, but is instead inadmissible hearsay. [R. 47.]
According to D&D, Adams “has no personal knowledge of these facts because he was never on
3
As will be addressed in more detail, infra, D&D objects to the Court considering the affidavit of Scott
Adams on the grounds that affidavit contains hearsay. In support of their motion to strike, D&D also supplied
the Court with the deposition testimony of Shawn Martin. See R. 48.
5
site and never interacted with anyone from D&D during the project.” [R. 42 at 6.] Adams, who
is the Senior Manager of WME, attests that his personal knowledge is based on “a detailed
review of WME’s records kept in the ordinary course of business and discussions with current or
former WME employees that were involved in the project.” [R. 37-2 at ¶ 2.] In a subsequent
deposition, Adams explained that he was not involved in the project and the only “current or
former WME employee[]” that he spoke with was Shawn Martin. [R. 47-1 at 2-3.]
D&D argues that Adams’ affidavit is not based on personal knowledge, and is hearsay, in
violation of Rule 56, which requires that “[a]n affidavit or declaration used to support or oppose
a motion must be made on personal knowledge, set out facts that would be admissible in
evidence, and show that the affiant or declarant is competent to testify on the matters stated.”
Fed. R. Civ. P. 56(c)(4). In conjunction with their motion to strike, D&D has provided the Court
with the sworn statement of Shawn Martin which they offer to refute statements made in Adams’
affidavit. D&D identifies five “hearsay statements” that they argue are contradicted by Martin
and should be stricken. See R. 47 at 3-7.
As a corporate representative of WME, Adams is “considered to have personal
knowledge of the acts of [WME] and an affidavit setting forth those facts is sufficient for
summary judgment.” AGI Realty Serv. Grp., Inc. v. Red Robin Int'l, Inc., 81 F.3d 160 (6th Cir.
1996) (citing Catawba Indian Tribe v. South Carolina, 978 F.2d 1334, 1342 (4th Cir.1992), cert.
denied, 113 S.Ct. 1415 (1993)). As noted by WME, and not addressed by D&D, Adams’
knowledge was based not only on conversations with Martin, but also on “a detailed review of
WME’s records kept in the ordinary course of business.” [R. 37-2 at ¶ 2.] The fact that Martin
disagrees with many of Adams statements does not render Adams affidavit inadmissible, but
6
serves as contrary evidence for the Court to consider in opposition to WME’s motion.
Accordingly, D&D’s motion to strike is DENIED.
B
Rule 56 provides that a party may move for summary judgment on either an entire claim
or defense or a “part of each claim or defense.” Fed. R. Civ. P. 56(a). Summary judgment is
appropriate where “the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); Celotex Corp. v.
Catrett, 477 U.S. 317, 323-25 (1986). “A genuine dispute exists on a material fact, and thus
summary judgment is improper, if the evidence shows ‘that a reasonable jury could return a
verdict for the nonmoving party.’ ” Olinger v. Corp. of the President of the Church, 521 F.
Supp. 2d 577, 582 (E.D. Ky. 2007) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986)).
In deciding a motion for summary judgment, the Court must review the facts and draw all
reasonable inferences in favor of the non-moving party. Logan v. Denny’s, Inc., 259 F.3d 558,
566 (6th Cir. 2001) (citing Liberty Lobby, 477 U.S. at 255). In terms of burden shifting, the
moving party has the initial burden of demonstrating the basis for its motion and identifying
those parts of the record that establish the absence of a genuine issue of material fact. Chao v.
Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir. 2002). The movant may satisfy its burden by
showing “that there is an absence of evidence to support the non-moving party’s case.” Celotex.,
477 U.S. at 325. Once the movant has satisfied this burden, the non-moving party must go
beyond the pleadings and come forward with specific facts to demonstrate there is a genuine
issue. Hall Holding, 285 F.3d at 424 (citing Celotex, 477 U.S. at 324.) Moreover, “the
7
nonmoving party must do more than show there is some metaphysical doubt as to the material
fact. It must present significant probative evidence in support of its opposition to the motion for
summary judgment.” Id. (internal citations omitted).
The trial court is under no duty to “search the entire record to establish that it is bereft of
a genuine issue of material fact.” In re Morris, 260 F.3d 654, 655 (6th Cir. 2001) (citing Street
v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir. 1989)). Instead, “the nonmoving party
has an affirmative duty to direct the court’s attention to those specific portions of the record upon
which it seeks to rely to create a genuine issue of material fact.” In re Morris, 260 F.3d at 655.
1
Under Kentucky law, “damages for breach of a contract are normally that sum which
would put an injured party into the same position it would have been had the contract been
performed.” Hogan v. Long, 922 S.W.2d 368, 371 (Ky.1995) (quoting Perkins Motors, Inc. v.
Autotruck Federal Credit Union, 607 S.W.2d 429, 430 (Ky.Ct.App.1980)); see also MW
Universal, Inc. v. G5 Capital Partners, LLC, No. CIV.A. 08-495-KSF, 2012 WL 588743, at *8
(E.D. Ky. Feb. 21, 2012). WME now asks this Court to hold, as a matter of law, that D&D can
seek no more than $107,407.74 in damages for its breach of contract and unjust enrichment
claims. [R. 37-1 at 6-7.]
The parties agree on the majority of the damage amounts. They agree that the contract
was worth $168,000. [R. 1 at ¶ 10; R. 37-2 at ¶ 8 (Adams Aff.); R. 42-1 at ¶ 8 (Burr Aff.)] The
parties further agree that WME owed an additional $5,625 for work on the Weddle Project. [R.
23 at 4 (computation of damages); R. 37-8.] Finally, there is no dispute that WME has
subsequently paid D&D $43,380.70 ($33,755.70 for the undisputed work performed on the
8
Somerset project and $5,625 for labor and materials supplied to the Weddle project). [R. 37-1 at
5; R. 37-8; R. 42 at 10]. The only question that must be resolved here is whether D&D has
agreed to $22,836.56 in offsets (for the cost of pump rental and the cost of the biological
assessment). If D&D’s earlier agreement to this offset is to be enforced, then WME’s maximum
potential liability under counts one and three is $107,407.74
According to D&D, its agreement to these offsets was contingent on WME immediately
paying D&D its invoice amount in March 2012. [R. 42 at 12-13; R. 42-1 at ¶ 19 (Burr Aff.)] It
was Don Burr’s understanding that “the environmental assessment was required regardless of
[D&D’s] work to retrieve the broken reemer heads” so he only agreed to “these offsets based
upon Shawn Martin’s representation that the WME would immediately pay D&D Underground
for its work on this project.” [R. 42-1 at ¶ 19 (Burr Aff.)] Because WME did not immediately
pay its invoice, D&D maintains that it should not be forced to honor its agreement to these
offsets. [Id.; R. 42-1 at ¶ 19 (Burr Aff.)] In an effort to prove that this has been its longstanding
position, D&D refers to paragraphs 16 and 17 of its complaint. In paragraph 16, D&D asserts
that “Shawn Martin of Walter Martin informed Don Burr of D&D that if D&D agreed to the two
offsets of $5,143.22 from Allied Technology and $17,693.34 for the survey assessment that
Walter Martin would pay D&D immediately upon D&D's submittal of its invoice.” [R. 1 at ¶ 16
(emphasis added).] In paragraph 17, “Relying upon the promise of immediate payment, D&D
agreed to the two offsets of $5,143.22 and $17,693.34.” [R. 1 at ¶ 17 (emphasis added).]
WME argues that D&D’s position regarding the conditional payment of offsets is new
and points out that D&D’s August 2013 computation of damages, prepared nearly eighteen
months after WME failed to immediately pay, conceded that the offsets were owed. That
9
computation of damages is reprinted below:
[R. 23.] 4 Similar admissions were made in D&D’s responses to interrogatories:
4
There was a mathematical error in D&D’s computation of damages. See R. 23 at 3. According to the
itemized amounts in its computation of damages, the actual balance for “Somerset Project Damages” should be
$145,173.44, rather than $145,163.56. Id.
10
[R. 46-1 at 8-9.] In its reply brief, WME argues that D&D should be bound by its discovery
responses. [R. 46 at 5.] The Court agrees. Because D&D conceded the offsets in its discovery
responses, it cannot now argue that the offsets are void.
Rule 26 provides that a party must provide “a computation of each category of damages
claimed by the disclosing party.” Fed. R. Civ. P. 26(a)(1)(A)(iii). That rule further requires that
a party who has made a disclosure under Rule 26(a)--or who has responded to an
interrogatory, …--must supplement or correct its disclosure or response…in a timely
manner if the party learns that in some material respect the disclosure or response is
incomplete or incorrect, and if the additional or corrective information has not otherwise
been made known to the other parties during the discovery process…
Fed. R. Civ. P. 26(e). If “a party fails to provide information … as required by Rule 26(a) or (e),
the party is not allowed to use that information … unless the failure was substantially justified or
is harmless.” Fed. R. Civ. P. 37(c)(1).
A similar situation was addressed in Big Lots Stores, Inc. v. Luv N' Care, Ltd., where the
11
Sixth Circuit found that the district court acted within its discretion when it held that that Big
Lots could not recover damages that “it should have, but did not, disclose that it was seeking
during discovery.” 302 F. App'x 423, 429 (6th Cir. 2008). The Defendant in that case “had
ample reason, after a lengthy discovery period, to be surprised that Big Lots sought additional
damages after Big Lots answered interrogatories in a way that indicated that it was not seeking
such damages.” Id. The same logic applies here.
Throughout discovery D&D has consistently conceded the $22,836.56 in offsets. Rule
37 “requires absolute compliance with Rule 26(a), that is, it mandates that a trial court punish a
party for discovery violations in connection with Rule 26 unless the violation was harmless or is
substantially justified.” Big Lots Stores, Inc., 302 F. App'x at 430 (quoting Roberts ex rel.
Johnson v. Galen of Virginia, Inc., 325 F.3d 776, 782 (6th Cir. 2003) (citation omitted)). The
error is not harmless and D&D has provided no justification for changing their position on
damages. Accordingly, WME’s motion for summary judgment is GRANTED to the extent that
it seeks to limit damages to $107,407.74 for counts one and three.
2
WME also moves for summary judgment on count two of the complaint, which charges a
violation of the Kentucky Fairness in Construction Act, KRS 371.400 et. seq. Amongst other
things, the act requires that contractors “pay [their] subcontractors any undisputed amounts
within fifteen (15) business days of receipt of payment from the contracting entity.” KRS
371.405(8). The parties disagree, first, what “receipt of payment” means, and second, whether or
not the amount WME owed was disputed or undisputed. The Act is relatively new and the body
of law defining its provisions is sparse.
12
First, the Court considers whether the term “payment” is meant to refer to partial
payments received throughout the course of the project or only to the final payment, received at
the completion of the project. D&D contends that WME was obligated to pay within 15-days of
when WME received payment from Somerset, in February 2012, for the work that D&D had
performed on the bore. [R. 42 at 14-15; R. 42-2.] WME disagrees, arguing that the 15-day
payment window did not open until after they received final payment from Somerset for the
entire project, on December 20, 2013. [R. 37-1 at 8.]
The Act does not define “receipt of payment,” but the Court is convinced that the
legislature intended that WME make payment of any undisputed amounts to D&D within 15
days of when they actually received payment for D&D’s work in February 2012. As articulated
in D&D’s response, “[t]he essence of statutory construction is to ascertain and give effect to the
intent of the legislature.” Peter Garrett Gunsmith, Inc. v. City of Dayton, 98 S.W.3d 517, 520
(Ky. Ct. App. 2002) (quoting Hale v. Combs, Ky., 30 S.W.3d 146, 151 (2000)). “To ascertain
the intent of the legislature, courts should view the statute as a whole, considering not only its
language but also its spirit.” Id. (citing Combs v. Hubb Coal Corp., Ky., 934 S.W.2d 250, 252
(1996). Finally, Kentucky’s statutes “shall be liberally construed with a view to promote their
objects and carry out the intent of the legislature…” and “all words and phrases shall be
construed according to the common and approved usage of language” unless they are given a
technical or specific meaning. KRS 446.080 (1) & (4); see also Peter Garrett Gunsmith, Inc., 98
S.W.3d at 520.
An application of the aforementioned principles leads the Court to conclude that WME
should have paid undisputed amounts to D&D within 15 days of receiving payment for D&D’s
13
work from Somerset in February 2012. The section of the Kentucky Fairness in Construction
Act that is at issue here puts protections in place to ensure that subcontractors receive timely
payment from contractors. KRS 371.400 (8) and (9). If, as WME argues, a contractor was not
obligated to make payment of undisputed amounts until after they received final payment for an
entire project then subcontractors would be put in the position of extending credit to contractors
in a way that would be both financially burdensome for subcontractors and inconsistent with the
spirit of the Fairness in Construction Act. For instance, in this case, D&D would have been
expected to wait over eighteen-months to be paid over one-hundred thousand dollars even if the
amount was undisputed. In light of the statute’s clear intent to protect subcontractors by
ensuring that they are paid in a timely manner, the Court is obligated to construe this provision
liberally to achieve this end. See KRS 446.080 (1). Accordingly, the Court finds that, as used in
KRS 371.405(8), and as applied in this case, “receipt of payment” refers to when WME received
payment from Somerset for D&D’s work in February 2012.
Second, the parties disagree about whether or not the amount owed to D&D was disputed
or undisputed. These are both terms of art defined within the Act. The term undisputed amount
“means a good faith, valid, accurate, timely request for payment which has been submitted to any
entity owing money, that the recipient of the request for payment has reviewed and agrees that
the money is due and owing.” KRS 371.400(11) (emphasis added). In contrast, a disputed
amount “means to question in good faith the validity, either in whole or part, of a request for
payment asserted by any party.” KRS 371.400(5) (emphasis added).
According to Don Burr, he negotiated a settlement with Shawn Martin and D&D issued
an invoice for payment on March 8, 2012, expecting payment soon thereafter. D&D believes
14
that at the time the amount was undisputed, triggering WME’s obligation to pay within fifteen
(15) days of that date or, at the very least, if the amount was disputed, to state its objections to
paying that sum. [R. 42 at 15.] WME disagrees, arguing that because the amounts were
disputed, there was no FICA violation. In their motion, WME outlines the questions they had
about offsets and damages and point out that Somerset actually withheld full payment from
WME beyond the time this lawsuit was filed because of the ongoing dispute with D&D. [R. 371 at 8; R. 37-4 at Para 15 (Williams Aff.)] Only when Somerset paid in full, in December 2013,
did WME pay D&D what they determined to be the then undisputed amount of $43,380.70. [R.
37-1 at 8.] WME asks the Court to conclude that before making this payment that they did, in
good faith, dispute the amount owed to D&D.
Because genuine issues of material fact exist, the Court cannot grant summary judgment
on this count. The question of whether an amount is “disputed” or “undisputed” under FICA
requires deciding whether the request for payment or the objections to the request for payment
were made in good faith. KRS 371.400(5), (11). While it is clear that WME now contests what
it owes to D&D, it does not necessarily follow that the amounts were disputed in March 2012, or
if they were disputed, that the dispute was in good faith.
WME’s argument that the amounts were disputed as of March 2012 is undercut
significantly by the fact that Don Burr cut a deal with Shawn Adams in March 2012. Under that
arrangement, Burr agreed to the two offsets totaling $22,836.46. WME was paid by the City of
Somerset, and D&D provided an invoice, but WME did not pay D&D. [R. 42 at 9; R. 42-3
(invoice).] Not until July 2012 did WME send a letter outlining additional offsets that WME
sought and, even at that time, D&D contends the letter was sent in bad faith. If WME had
15
disputed the amount owed as of March 2012 why would a deal have ever been negotiated? Why
not issue the July 2012 letter in March of that year if the billing was in fact disputed at that time?
“A genuine dispute exists on a material fact, and thus summary judgment is improper, if
the evidence shows ‘that a reasonable jury could return a verdict for the nonmoving party.’ ”
Olinger v. Corp. of the President of the Church, 521 F. Supp. 2d 577, 582 (E.D. Ky. 2007)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). In deciding a motion for
summary judgment, the Court must review the facts and draw all reasonable inferences in favor
of the non-moving party. Logan v. Denny’s, Inc., 259 F.3d 558, 566 (6th Cir. 2001) (citing
Liberty Lobby, 477 U.S. at 255). If one accepts D&D’s version of events, then it is possible that
a jury could reasonably conclude that either there was no dispute, or if there was a dispute that it
was not in good faith, as of March 2012. For this reason, WME’s motion for summary judgment
must be DENIED as to count two.
III
For all the aforementioned reasons, WME’s Motion for Partial Summary Judgment [R.
37] shall be GRANTED in PART and DENIED in PART. Furthermore, D&D’s Motion to
Strike [R. 47.] will be DENIED
This the 7th day of May, 2015.
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