Nature-Tech, LLC v. Hartford Fire Insurance Company et al

Filing 58

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 11/21/2022. (sat, Chambers)

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 1 of 16

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:

NATURE-TECH, LLC

:

v.

:

Civil Action No. DKC 19-2053

:

HARTFORD FIRE INSURANCE
COMPANY, ET AL.

:
MEMORANDUM OPINION

On July 12, 2019, Plaintiff Nature-Tech, LLC (“Nature-Tech”)
commenced

this

action,

which

stems

from

a

heavily

litigated

construction project, asserting a single breach of payment bond
claim against Defendants Capitol Woodwork, LLC (“Capitol”) and
Hartford Fire Insurance Company (“Hartford”).
held on September 28 and September 29, 2022.

A bench trial was
After carefully

considering the parties’ exhibits, the testimony of the witnesses,
the

pretrial

submissions

and

post-trial briefs,

and

the

oral

arguments of counsel, this court now issues findings of fact and
conclusions of law pursuant to Fed.R.Civ.P. 52(a). For the reasons
articulated below, judgment will be entered in favor of Defendants
Capitol and Hartford.
I.

Background
This case involves work done as part of the construction of

a hotel and transition space at the Maryland Live! Casino in

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 2 of 16

Hanover, Maryland (“the Project”). 1

The casino owner, PPE Casino

Resorts Maryland LLC (“the Owner”), hired Tutor Perini Building
Corporation (“Tutor Perini”) as the general contractor for the
Project—neither
lawsuit.

the

Owner

nor

Tutor

(PTX 1 at 1; ECF No. 1). 2

Perini

is

party

to

this

Tutor Perini hired Capitol,

also known as Mortensen Woodwork, to furnish and install millwork
for the Project.

(PTX 1).

Capitol and Hartford executed a payment

bond to guarantee payment for Capitol’s labor and materials.
2).

(PTX

The payment bond states that Capitol and Hartford
jointly and severally, bind themselves . . . to the
Contractor [Tutor Perini] . . . to pay for labor,
materials[,] and equipment used or reasonably required
and furnished for use in the performance of the
Subcontract [between Tutor Perini and Capitol], which is
incorporated in this bond by reference and pursuant to
which this bond is issued.
Capitol

hired

Nature-Tech

to

fabricate

millwork

for

the

Project, and the two companies entered into a Master Subcontract
Agreement (“the Agreement”).

(PTX 3).

Article 12.5 of the

Agreement provides that Nature-Tech, as the Subcontractor, would
submit applications for payment to Capitol, the Contractor, and
the “Contractor shall pay ninety (90%) percent of the amount of

A detailed factual background is also set out in a prior
opinion.
(ECF No. 33); Nature-Tech, LLC v. Hartford Fire Ins.
Co., No. 19-cv-2053-DKC, 2022 WL 899417, at *1-4 (D.Md. Mar. 28,
2022).
1

“PTX” refers to exhibits offered by Nature-Tech at trial,
and “DTX” refers to exhibits offered by Capitol and Hartford.
2

2

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 3 of 16

the Application, withholding ten (10%) percent retainage (the
‘Retainage’) from each Application.”

(PTX 3 at ¶ 12.5).

Article

12.8, titled “Conditions Precedent,” provides:
Retainage and/or the Final Application payment shall be
paid to Subcontractor only after; (a) the Work
(including
any
punch-list
work)
is
completed
satisfactorily and accepted by Owner and Contractor;
. . . and (e) all disputes, claims, liens, causes of
action, and/or lawsuits which are related in any way to
this Agreement or to Subcontractor’s performance of the
Work are resolved.
(PTX 3 at ¶ 12.8).
While construction on the Project was underway, a dispute
arose between Capitol and Tutor Perini related to delays in the
construction schedule.

This dispute, among other issues, is being

litigated as part of a lawsuit that is presently pending in
Maryland state court. See PPE Casino Resorts Maryland LLC v. Tutor
Perini Building Corp., No. C-02-CV-19-002049 (Anne Arundel Cnty.
Circuit Court 2019).

Capitol, Hartford, Tutor Perini, and the

Owner are among the parties involved in that litigation, but
Nature-Tech is not.
On July 31, 2018, Capitol advised Nature-Tech that it was
“demobilizing the installation team” at the construction site
while it tried to work out its dispute with Tutor Perini and that
“[n]o deliveries [were] to be scheduled to the jobsite” unless
specifically

requested

by

Capitol.

(PTX

47).

Nature-Tech

continued to fabricate millwork but did not ship it, per Capitol’s
3

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 4 of 16

request.

(PTX 50).

On August 23, 2018, Tutor Perini issued to

Capitol a 48-hour “Notice to Cure,” and on August 30, 2018, Tutor
Perini declared Capitol in default and terminated it for failure
to cure.

(PTX 8, 51).

At the time of Capitol’s termination, Nature-Tech had not yet
completed all outstanding purchase orders with Capitol.

Tutor

Perini notified Nature-Tech of its intent for Nature-Tech to
complete that work through new contracts with Tutor Perini.
53).

(PTX

It later issued Nature-Tech purchase orders for shipments

and millwork.

(DTX 49-52).

However, Tutor Perini advised Nature-

Tech to seek payment from Hartford for certain items that were
included in purchase orders from Capitol prior to the termination.
(DTX 22).
Nature-Tech
completed

and

requested

shipped,

payment

millwork

retainage, and Capitol refused.

from

in

Capitol

progress,

for

and

millwork

outstanding

Nature-Tech submitted a claim

against the payment bond for $473,961.70 in unpaid billings.
23).

(DTX

Hartford reviewed Nature-Tech’s claim and analyzed thirty-

two items that Tutor Perini and Nature-Tech had identified as
outstanding

as

of

Capitol’s contract.

August

30,

2018,

the

termination

date

of

Hartford determined that Capitol was not

responsible for twelve of the items, so it deducted $140,629.13
from the claim amount.

It also determined that Capitol was

entitled to keep $135,603.18 as retainage.
4

The remaining amount

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 5 of 16

that Hartford determined was due to Nature-Tech was $197,729.39.
$157,280.56 had already been paid, and Hartford released the
remaining $40,448.83 to Nature-Tech.

(DTX 24).

Nature-Tech has conceded that Capitol was not responsible for
some of the twelve items, but it has maintained that it is entitled
to payment from the payment bond for five items, worth $66,827.25,
as well as $127,855.46 of the retainage. 3

The five items are:

1)

“Foot rail for main bar,” shipped 2/5/19: $7,350.00

2)

“Series #104 Prefunction entrance
shipped 1/16/19: $25,364.00

3)

“Series #9 Coat Check and surrounding wood veneer wall
panels,” shipped 2/5/19: $18,936.00

4)

“Taller Base molding for in Ballroom,” shipped 9/1/18:
$6,342.25

5)

“Ballroom Doors 180 A, B, C, D, E, G, & H,” shipped
9/24/18: $8,835.00 4

(DTX 46).

door

surrounds,”

In a May 9, 2019, email to a Vice President of Tutor

Perini, a Nature-Tech Senior Project Manager listed those items
and described them as “items that were shipped to the job site
AFTER Capitol was terminated from the project,” adding that they
were “all items that were ordered by Capitol, but we were told to
At trial, Nature-Tech provided a revised retainage amount,
which excluded retainage that had been drawn from items for which
Nature-Tech had billed but not completed.
3

Hartford’s report lists the amount it withheld for the
Ballroom Doors as $8,335.00. (DTX 23 at 9, 11). It is unclear
whether the difference in digits is a typographical error or
reflective of a disagreement in calculations.
4

5

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 6 of 16

ship by Tutor Perini so that the project could continue to move
towards completion.” 5

The Nature-Tech employee went on to state

that “these items need to be added to you[r] claim against Capitol
and the[n] we would receive compensation from Tutor Perini.”

The

Vice President of Tutor Perini responded that he understood that
Hartford refused to pay for those items and said, “We are including
[them] in our claim.”

(DTX 46).

Nature-Tech filed the instant lawsuit to recover the portion
of its claim against the payment bond for which it argues Hartford
improperly

denied

payment.

Capitol

asserted

a

counterclaim

against Nature-Tech for breach of contract, 6 but Capitol declined
to pursue its counterclaim at trial.
Nature-Tech on that claim.
are

whether

Nature-Tech

Judgment will be entered for

The only issues that remain unresolved
is

entitled

to

payment

for

the

five

outstanding items and whether Nature-Tech is entitled to immediate
payment of the retainage.

This court took the matter under

advisement after the trial concluded, and the parties submitted
The email listed a sixth item, but Nature-Tech has since
conceded that it does not have evidence that it is entitled to
payment for that item.
5

Capitol also initially asserted a counterclaim for tortious
interference. This court granted Nature-Tech’s motion for summary
judgment on both counterclaims but subsequently granted Capitol’s
motion to reconsider as to the breach of contract counterclaim.
See Nature-Tech, LLC v. Hartford Fire Ins. Co., No. 19-cv-2053DKC, 2022 WL 899417 (D.Md. Mar. 28, 2022); Nature-Tech, LLC v.
Hartford Fire Ins. Co., No. 19-cv-2053-DKC, 2022 WL 2065875 (D.Md.
June 8, 2022).
6

6

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 7 of 16

post-trial briefs.

(ECF Nos. 55-57).

For the reasons set forth

below, this court concludes that Nature-Tech has not met its burden
to prove by a preponderance of the evidence that it is presently
entitled to any additional payment from Hartford and Capitol.
II.

Findings of Fact and Conclusions of Law
A.

Five Outstanding Items

Nature-Tech’s claim is for breach of a payment bond, brought
against Capitol as principal and Hartford as surety of the payment
bond.

Nature-Tech has the burden to prove that it is entitled to

payment under the payment bond for the disputed items.

In a

suretyship, “[t]he bond is the measure of the surety’s obligation,”
Atl. Contracting & Material Co. v. Ulico Cas. Co., 380 Md. 285,
300 (2004), and it “is to be construed in connection with the
contract whose performance it secures[] in determining the right
of laborers or materialmen to recover thereon.”

Lange v. Bd. of

Educ. ex rel. I.B.M. Corp., 183 Md. 255, 261 (1944); see also Gen.
Builders Supply Co. v. MacArthur, 228 Md. 320, 326 (1962)(“[I]t is
clear that the liability of the surety is measured by the contract
of the principal.”). Surety bonds “must be construed in accordance
with our traditional rules of objective contract interpretation.” 7
Atl. Contracting & Material Co., 380 Md. at 300.

The terms of the

As noted in a previous opinion, Maryland law applies to the
payment bond claim. See Nature-Tech, LLC v. Hartford Fire Ins.
Co., No. 19-cv-2053-DKC, 2022 WL 899417, at *5 (D.Md. Mar. 28,
2022).
7

7

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 8 of 16

bond “must be interpreted in context[] and given their ordinary
and

usual

meaning,”

but

when

“a

coverage

issue

depends

upon

language of the policy which is ambiguous, we will resolve that
ambiguity in favor of the insured.” Id. at 301 (internal quotation
marks omitted).
Hartford denied payment for four of the five items because
the items were not fully fabricated before the termination of
Capitol’s contract with Tutor Perini.

(DTX 23 at 6-7, 9-10).

It

is Hartford and Capitol’s position that anything fabricated after
Capitol’s termination was not covered by the payment bond because
the payment bond only covered work performed under Capitol’s
contract with Tutor Perini.
should

pay

for

any

items

Nature-Tech contends that Capitol
Nature-Tech

fabricated

pursuant

purchase orders that Capitol issued prior to termination.
payment

bond’s

terms

better

support

Hartford

and

to
The

Capitol’s

position.
The payment bond was issued “pursuant to” the contract between
Capitol and Tutor Perini and binds Capitol and Hartford to pay for
items “used or reasonably required and furnished for use in the
performance of” that contract.

(PTX 2).

The bond’s purpose was

to indemnify Tutor Perini from claims under its contract with
Capitol.

(PTX 1 at 6).

Anything fabricated after the termination

of the contract between Tutor Perini and Capitol was not “for use

8

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 9 of 16

in the performance of” that contract because that contract was no
longer in effect.
Evidence suggesting that Tutor Perini arranged for NatureTech to fabricate items directly for Tutor Perini after Capitol’s
termination supports this conclusion and undermines Nature-Tech’s
position that the items were fabricated for Capitol’s contract.
In an August 31, 2018, email to the CEO of Nature-Tech advising
him that Capitol’s contract had been terminated, Tutor Perini’s
Executive Vice President stated that Tutor Perini’s contract with
Capitol

“permits

[Tutor

Perini]

to

complete

[Capitol’s]

work

through others if they are found in default and/or are terminated.”
The

email

advised

Nature-Tech

that

Tutor

Perini

would

be

“contacting [Nature-Tech] shortly to arrange for immediate jobsite
delivery of completed millwork items[,] including those currently
in fabrication upon completion,” and that it would be “issuing
[Nature-Tech] a purchase order for all remaining items needed to
complete the work currently under [Capitol’s] contract.”

(PTX

53).
Capitol and Hartford introduced into evidence a document on
Tutor

Perini

letterhead,

dated

“As-of

08/30/18”

and

titled

“Balance of Millwork Items for NT [Nature-Tech] to Fabricate &
TPBC [Tutor Perini] to Install After [Capitol’s] Termination,”
that appears to include each of the five disputed items.
15).

(DTX

The Executive Vice President of Nature-Tech testified at
9

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 10 of 16

trial that this document was generated as part of the process in
which

Nature-Tech

worked

with

Tutor

outstanding millwork for the project.

Perini

to

complete

the

There was also an email

exchange, dated January 10, 2019, between employees of Tutor Perini
and Nature-Tech regarding outstanding millwork items that were
received or would soon be received by Tutor Perini’s “millwork
installation crew and carpenter foreman”; the email specifically
mentioned the foot rail as having been fabricated and in transit
to the job site. (PTX 55).

Nature-Tech has not presented evidence

that contradicts a reading of these documents as indicative that
at least some of the items were fabricated under the direction of
Tutor Perini, not Capitol.
The record does not support a conclusion that the items
shipped

several

months

after

Capitol’s

August

30,

2018,

termination were fabricated for use in the performance of the
Capitol-Tutor Perini contract.

The parties have represented that

the foot rail was not shipped until February 2019, the “Series
#104 Prefunction entrance door surrounds” were not shipped until
January 2019, and the “Series #9 Coat Check and surrounding wood
veneer wall panels” were not shipped until February 2019. (DTX
23).

At trial, Capitol’s corporate representative testified that

items that were delivered four or five months after the termination
date were clearly fabricated outside the purview of Capitol’s
contract.

Nature-Tech did not present any alternative explanation
10

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 11 of 16

for the several-month delay in shipment for items supposedly
fabricated in the performance of Capitol’s terminated contract.
Nature-Tech has not met its burden to prove that it is entitled to
payment for those three items from the payment bond.
The ballroom doors were shipped on September 24, 2018, which
is closer to the termination date.
that

Nature-Tech

completed

However, Hartford determined

fabrication

for

this

termination per the request from [Tutor Perini].”

item

“after

(DTX 23 at 9).

At trial, Capitol’s corporate representative testified that there
were no drawings or field dimensions approved as of August 30,
2018, for the ballroom doors, which he said indicated that NatureTech could not have fabricated them until after the termination.
A

document

sent

from

a

Tutor

Perini

employee

to

Nature-Tech

employees, dated August 27, 2018, and titled “Items-Status Log,”
lists the ballroom doors with a note: “Need updated drawings.”
(DTX 20). Nature-Tech has not contradicted that version of events,
nor

has

it

presented

evidence

that

the

fabricated before Capitol’s termination.

ballroom

doors

were

Nature-Tech has not met

its burden to prove that the ballroom doors were covered by the
payment bond.
The fifth item—the “Taller Base molding for in Ballroom”—
requires a different analysis because the parties have agreed that
it was shipped on September 1, 2018, and Capitol has conceded that
this item was probably fabricated before the termination. However,
11

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 12 of 16

Hartford only denied payment for some of the amount Nature-Tech
requested for this item.

(DTX 23 at 10).

Hartford determined

that this item was billed at $25,369 for 1,600 linear feet of
molding, but the delivery ticket showed that only 1,200 linear
feet of molding was delivered.

Therefore, Hartford reduced the

contract value by one quarter and paid all but $6,342.25 for that
item.
has

Nature-Tech now requests the remaining $6,342.25, but it

produced

no

evidence

that

the

full

1,600

was

delivered.

Therefore, Nature-Tech has not met its burden to prove that it is
entitled to additional payment for this item.
B.

Retainage

Nature-Tech

also

seeks

withheld as retainage.

immediate

payment

of

the

amount

Pursuant to its contract with Nature-Tech,

Capitol withheld 10% of each payment to Nature-Tech as retainage.
This money is covered by the payment bond because the work to which
it pertains was done “for use in the performance of” the CapitolTutor Perini contract.

The question is whether Nature-Tech is

presently entitled to payment of that retainage.
The answer turns on the terms of the Agreement between Capitol
and Nature-Tech, which provides that retainage shall be paid to
Nature-Tech “only after” certain conditions are met, including
that

“all

disputes,

claims,

liens,

causes

of

action,

and/or

lawsuits which are related in any way to this Agreement or to
[Nature-Tech’s] performance of the Work are resolved.”
12

(PTX 3 at

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 13 of 16

¶

12.8).

Under

this

provision,

which

is

titled

“Conditions

Precedent,” each condition must be met before Nature-Tech is
entitled to payment.

See Duff v. Trenton Beverage Co., 73 A.2d

578, 604 (N.J. 1950) (“Generally, no liability can arise on a
promise subject to a condition precedent until the condition is
met.”); 8 see also Assoc. Mech. Corp., Inc. v. Martin K. Eby Constr.
Co., 67 F.Supp.2d 1375, 1379 (M.D.Ga. 1999) (determining that
language identical to the clause at issue in the present case was
a “condition precedent” for payment to a subcontractor).

Nature-

Tech bears the burden of proving that the conditions precedent
have been satisfied.

See Thomas Orr Trucking & Forwarding Co. v.

Metro. Sur. Co., 73 A. 541, 543 (N.J. 1909) (“It cannot be doubted
that,

where

there

is

an

allegation

by

the

defendant

of

nonperformance of the special conditions precedent, the general
performance of which has been asserted by the plaintiff . . . ,
the burden of proof remains with the plaintiff to show performance
as at common law.”); see also 5A Wright & Miller, Fed. Prac. &
Proc. Civ. § 1304 (4th ed.). 9
Pursuant to Article 16.1 of the Agreement, the Agreement is
subject to New Jersey law. (PTX 3 at ¶ 16.1).
8

Although the parties dispute who bears the burden of proving
the satisfaction of the condition precedent at issue here, neither
party questions whether the satisfaction or lack thereof was
properly pleaded in the complaint and answers. See 5A Wright &
Miller, Fed. Prac. & Proc. Civ. § 1304 (4th ed.). However, even
assuming the burden of proof is on the Defendants here, they have
met that burden for the same reasons discussed.
9

13

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 14 of 16

Capitol and Hartford contend that a condition precedent to
payment

of

the

retainage

has

not

been

satisfied

because

the

litigation presently pending in Maryland state court is related to
Nature-Tech’s
thereunder.

contract

with

Capitol

and

the

work

performed

Nature-Tech argues that because Nature-Tech is not a

party to the lawsuit, and Capitol has not proven that deficiencies
in Nature-Tech’s work are the basis for the claims against it, the
lawsuit is not “related in any way” to Nature-Tech or its work.
Nature-Tech’s reading of this provision is too narrow.

A

plain reading of “related in any way” is that it has a broad reach,
including disputes or lawsuits that involve the Agreement or
Nature-Tech’s work on the Project in any way.

Cf. United States

v. Gonzales, 520 U.S. 1, 5 (1997) (“Read naturally, the word ‘any’
has an expansive meaning[.]”); E. Coast Repair & Fabrication, LLC
v. United States ex rel. Dep’t of Navy, 16 F.4th 87, 89, 91 (4th
Cir. 2021) (interpreting a release from liability for “any and all
[claims] arising out of or in any way relating to” a contract as
“broad”).

Nature-Tech argues that the lawsuit could be unrelated

to its work because “Capitol’s contractual scope of work on the
Maryland Live! Project far exceeded simply supplying the millwork;
it involved preparing shop drawings and the labor to install all
of the millwork.”

(ECF No. 56).

But the shop drawings Nature-

Tech used to fabricate the millwork and the labor used to install

14

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 15 of 16

the

millwork

Nature-Tech

fabricated

are

clearly

“related”

to

Nature-Tech’s work.
Capitol has provided a list of the backcharges that Tutor
Perini has asserted against Capitol, (DTX 8), and it identified at
trial through the testimony of its corporate representative that
$629,576 relate to the Agreement and Nature-Tech’s performance of
work under the Agreement.

Nature-Tech responds that Capitol and

Hartford have not proven that the backcharges are “valid” or
“establish[ed]
vaguely

any

alleged

Nature-Tech.”

causal

connection

backcharges

and

any

(ECF No. 56 at 5).

between
specific

Tutor

Perini’s

deficiencies

by

But the Agreement does not

require that claims be valid in order to justify withholding of
retainage—it merely requires that claims exist and that they be
unresolved.

And a causal connection is not required—the claims in

the lawsuit must merely be “related” to Nature-Tech’s work “in any
way,” and that is clearly the case.
Even if, as Nature-Tech asserts, all of Tutor-Perini’s claims
against

Capitol

pertain

solely

to

Capitol’s

deficiencies

in

performing its obligations under its contract with Tutor Perini,
it is inconceivable that they could all be completely unrelated to
Nature-Tech’s

performance

under

the

Agreement.

Nature-Tech

attempts to give examples of Capitol’s failures that are unrelated
to Nature-Tech’s performance, such as “prepar[ing] shop drawings
containing errors and missing information, delaying the start of
15

Case 1:19-cv-02053-DKC Document 58 Filed 11/21/22 Page 16 of 16

fabrication[, and] fail[ing] to prepare shop drawings for a large
portion of its contracted scope of work.”

(ECF No. 56 at 5).

But

those are all related in some way to Nature-Tech’s performance—
they all impacted Nature-Tech’s ability to fabricate the millwork
in a timely way as required by Tutor Perini, regardless of who was
at fault for those delays.

Therefore, until the litigation is

resolved, Capitol is entitled under the Agreement to continue
withholding retainage.
III. Conclusion
For the foregoing reasons, judgment will be entered in favor
of Defendants Capitol and Hartford. A separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

16