Sheet Metal Workers Local 100 (Baltimore Area) Health and Welfare Fund et al v. Warren-Ehret Company of Maryland, Inc.

Filing 37

MEMORANDUM AND ORDER Denying 31 Motion to Compel Release of Contract Funds Subject to Prior Perfected Security Interest. Signed by Judge William M Nickerson on 12/2/2014. (nd2s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

SHEET METAL WORKERS LOCAL
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100 (BALTIMORE AREA)
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HEALTH AND WELFARE FUND et al.*
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v.
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WARREN-EHRET COMPANY OF
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MARYLAND, INC.
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Civil Action No. WMN-11-3716

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MEMORANDUM AND ORDER
This action has been closed for over two years.

What

started out as an action to collect unpaid contributions under
various collective bargaining agreements has now evolved into a
dispute between two new parties over amounts allegedly owed
under a particular construction contract and bonding agreement.
Plaintiffs, who filed this action in December of 2011, were the
trustees of various union benefit plans.

The suit was filed

against Defendant Warren-Ehret Company of Maryland, Inc.
(Warren-Ehret), a construction company that allegedly failed to
make certain deductions and contributions under those benefit
plans.

After Warren-Ehret failed to answer the Complaint, a

default judgment was entered against it on July 24, 2012, in the
amount of $14,189.32.
On October 2, 2012, a writ of garnishment was issued to the
Baltimore City Public Schools (BCPS) for any property of Warren-

Ehret that BCPS might have in its possession.

On June 11, 2013,

BCPS answered the writ and acknowledged that it was indebted to
Warren-Ehret in the amount of $101,763.87 for work performed
under one or more contracts between Warren-Ehret and BCPS.
No. 15.

ECF

Also on June 11, 2013, Plaintiffs filed a motion

seeking a judgment of $11,773.621 against BCPS, ECF No. 16, which
the Court granted the next day.

ECF No. 17.

On or about June 24, 2013, Westfield Insurance Company
(Westfield) moved to intervene in this action, asserting that it
had a prior perfected security interest in the funds held by
BCPS and owed to Warren-Ehret.

This security interest arose out

of an indemnity agreement entered into in June of 2008 and
associated with a contract between Warren-Ehret and BCPS under
which Warren-Ehret was to replace the roof on BCPS’s Harlem Park
Middle School #35 (the Harlem Park Project).

Warren-Ehret

defaulted on the Harlem Park Project and, as a result, Westfield
maintains that it incurred payment bond losses exceeding
$100,000.

The Court granted Westfield’s motion to intervene,

and subsequently vacated the Order granting default judgment in
favor of Plaintiffs and against Warren-Ehret for the $11,773.62
in delinquent contributions.

ECF No. 29.

1

Subsequent to the issuance of the garnishment, Plaintiffs had
received some payments from Warren-Ehret, thus reducing the
amount for which the judgment was requested.
2

After this Court vacated the default judgment, Westfield
attempted to persuade BCPS to release the full $101,763.87 that,
in the answer to the writ of garnishment, BCPS acknowledged that
it owed Warren-Ehret.

When those efforts proved unsuccessful,

Westfield filed a Motion to Compel Release of Contract Funds
Subject to Prior Perfected Security Interest.

ECF No. 31.

BCPS

has opposed that motion, noting that it has a suit pending in
the Circuit Court for Baltimore City against Warren-Ehret and
Westfield for its own claims arising out of the Harlem Park
Project.

Baltimore City Bd. of Sch. Comm’rs v. Warren-Ehret Co.

of Md., Inc., Civ. No. 24-C-14-002142.2

In that suit, BCPS

asserts that Warren-Ehret owes it an amount in excess of
$900,000 for performance failures on the Harlem Park Project,
and that Westfield is bound to pay that amount to BCPS under the
terms of a performance and payment bond.

BCPS suggests that it

is the state court suit and not this present proceeding that is
the appropriate forum to litigate Westfield’s entitlement to the
funds it seeks here through its motion to compel.
The Court agrees.

There is no dispute that Westfield can

assert the claim it advances here in the state court action as
either a defensive claim or a counterclaim.
2

The state court

That case was removed to this Court on July 18, 2014, but Judge
Ellen Hollander recently remanded the case to the State court
for lack of jurisdiction. Baltimore City Bd. of Sch. Comm’rs v.
Warren-Ehret Co. of Md., Inc., Civ. No. ELH-14-2306 (D. Md. Nov.
12, 2014).
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action involves all the same parties and much of the same
evidence.

Furthermore, it is doubtful that this Court has

jurisdiction over Westfield’s full claim.

While Westfield

argues in its reply memorandum that “this Court has already
reviewed, and ruled on, competing priorities with respect to the
very same Contract Funds now at issue,” ECF No. 36 at 3, this
Court, in vacating the default judgment, addressed only the
relative priority in a portion of those funds as between
Westfield’s security interest and Plaintiff’s judgment lien.
This Court has made no ruling as between Westfield and BCPS.
Accordingly, it is this 2nd day of December, 2014, by the
United States District Court for the District of Maryland,
ORDERED:
(1) That Westfield’s Motion to Compel Release of Contract
Funds Subject to Prior Perfected Security Interest, ECF No. 31,
is DENIED; and
(2) That the Clerk of Court shall transmit a copy of this
Memorandum and Order to all counsel of record.

________/s/____________________
William M. Nickerson
Senior United States District Judge

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