Graybar Electric Company, Inc. v. Team Construction, LLC et al

Filing 57

ORDER granting in part and denying in part 48 Motion for Summary Judgment; granting 53 Motion to Set Aside. Cline shall respond to TEAM's request for admissions, interrogatories, and request for production of documents not later than Octo ber 13, 2017. The parties each may conduct two additional depositions. All such depositions shall be completed by October 31, 2017. Finally, the parties shall confer and submit not later than October 31, 2017, proposed trial dates for December 2017 or January 2018, and the submission shall estimate the number of trial days needed. Signed by Chief Judge James C. Dever III on 9/21/2017. (Briggeman, N.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:14-CV-806-D

THE.UNITED STATES OF AMERICA,
for the use of GRAYBAR ELECTRIC
COMPANY, INC.,
Plaintiff,

v.
TEAM CONSTRUCTION, LLC,
JARROD CLINE, individually and
,d/b/a CLINE ELECTRIC, and
WESTERN SURETY COMPANY,
Defendants.

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ORDER

Defendants TEAM Construction, LLC ("TEAM'') and Western Surety Company's
("Western") moved for partial summary judgment [D.E. 48], and plaintiff Jarrod Cline's ("Cline")
moved to withdraw admissions under Rule 36(b) of the Federal Rules of Civil Procedure [D.E. 53].

As explained below, the court grants Cline's motion to withdraw his admissions and grants in part
and denies in part TEAM and Western's motion for partial summary judgment.
I.

TEAM is a general contractor in Jacksonville, North Carolina. TEAM's Stmt. Material Facts
[D.E. 50], 1; Cline's Stmt. Material Facts [D.E. 54], 1. The Department of the Navy contracted
with TEAM to serve as the general contractor to perform renovatio_J.l.S• ·. construction, and
improvements on a project. TEAM's Stmt. Material Facts,, 5-6; Cline's Stmt. Material Facts,,

5-6. In tum, TEAM contracted with Jarrod Cline ("Cline") to act as a subcontractor for TEAM.
TEAM's Stmt. Material Facts,, 7-8; Cline's Stmt. Material Facts ,, 7-8. Cline conducts business
under the name of Cline Electric and provides electrical-related services as an electrical contractor.
TEAM's Stmt. Material Facts,, 3-4; Cline's Stmt. Material Facts,, 3-4. For the electrical

supplies, TEAM and Cline contracted with Graybar Electric Company, Inc. ("Graybar"). Compl.
[D.E. 1]

~~

8, 10, 20; Cline's Ans. [D.E. 14]

~~

8, 10, 20; TEAM's Ans. [D.E. 16]

~~

8, 10, 20.

Western Surety Company ("Western") issued a bond ensuring payment by TEAM and its
subcontractors of claims by persons furnishlng labor and materials for the project. Compl.
Cline's Ans. ~ 7; TEAM's Ans.

~

~

7;

7.

On November 12, 2014, Graybar sued TEAM, Western, and Cline to recover money owed
for electrical-related materials it provided for the project. See [D.E. 1]. TEAM answered the
complaint and asserted crossclaims against Cline for breach of contract, fraud, breach of express
warranty, breach of implied warranty, and contractual indemnification. See [D.E. 14] 12-26. Cline
answered the complaint, [D.E. 12], answered TEAM's crossclaim, and asserted his own crossclaims
against TEAM for breach of contract, fraud, and quantum meruit and against both TEAM and
Western for violations of the Miller Act. See [D.E. 16].
On August 28, 2015, Graybar, TEAM, and Western jointly moved to dismiss Graybar's
claims against TEAM, Western, and Cline [D.E. 27]. On September 3, 2015, the court granted the
motion, leaving just TEAM's and Cline's crossclaims. See [D.E. 29].
On March 31, 2015, the court entered a scheduling order requiring the parties to complete
discovery by December 30, 2015, and file dispositive motions by January 29,2016 [D.E. 21]. On
July21, 2015, Cline's attorney moved to withdraw [D.E. 24]. OnAugust24, 2015, the court granted
the motion [D.E. 26]. In the order, the court stated:
All pleadings and correspondence for Defendant Jarrod Cline, individually and d/b/a
Cline Electric shall be addressed as 214 Cedar Lane, Newport, NC 28570, unless
another address is provided by Defendant Jarrod Cline, individually and d/b/a Cline
Electric.
Id. at2.
On November 25, 2015-with a little more than a month remaining in the discovery
period-TEAM served interrogatories and requests for production of documents on Cline at the
address listed in the court's order. See 2d Stanfield A:ff. [D.E. 55-1] ~ 3. On November 30,2015,
2

TEAM served request for admissions on Cline at the address listed in the court's order. See id.;
TEAM'sReqs. for Admis. [D.E. 51-2]. The request for admissions stated, in part, "The Admissions
are to be fully answered, under oath, in writing within thirty (30) days afer service in accordance with
Ru1es 26 and 36 of the Federal Ru1es of Civil Procedure." TEAM's Reqs. for Admis. at 2.
On December 8, 2015, TEAM's attorney received a voicemail from JeffreyS. Jonap, an
attorney who said Cline had contacted him and that he intended to represent Cline in this action. 2d
Stanfield A:ff. ~ 4. Although TEAM does not elaborate on the voicemail, TEAM does say that Jonap
did not inquire about any written discovery requests sent to Cline. ld.
On December 30, 2015, TEAM's counsel and Jonap-who had not yet filed a notice of
appearance as Cline's attorney-discussed changes to a consent order. See id.

~

6. Among the

changes, Jonap inserted an address for Cline in Kentucky. ld. Upon seeing the change, TEAM's
counsel called J onap and informed him that Cline's address of record with the court listed a mailing
address in Newport, North Carolina. Id. TEAM's counsel also told Jonap that the court's earlier
order required all filings to be served on Cline at the Newport, North Carolina address. Id. Neither
Cline nor Jonap contacted the court to change Cline's address. Id. Moreover, TEAM's attorney did
not mention that TEAM had sent discovery requests to Cline's North Carolina address.
Cline did not timely respond to the interrogatories, requests for documents, or the request for
admissions. TEAM never moved to compel responses. On January 29, 2016, TEAM and Western
moved for partial summary judgment based largely on the facts deemed admitted due to Cline's
failure to respond to the request for admissions. See [D.E. 37].
On April27, 2016, the parties attended a court-ordered mediation. See Stanfield A:ff. ~ 9.
Jonap and another attorney, neither of whom had filed a notice of appearance, accompanied Cline
and presented his case. Id. The attorneys did not discuss any outstanding discovery requests. See
id.
On May 9, 2016, the court docketed a letter from Jonap dated May 5, 2016, ''to serve as an

3

address change" for Cline. [D.E. 42]. The letter changed Cline's address to one in Kentucky. Id.
On June 2, 2016, attorney Davies filed a notice of appearance for Cline [D.E. 43]. That
same day, Cline (through Davies) moved for leave to file an opposition to TEAM and Western's
motion for summary judgment and to withdraw Cline's deemed admissions under Federal Rule of
Civil Procedure 36(b) [D.E. 44]. TEAM had sent the summary-judgment motion to Cline's North
Carolina address, as required by the court's earlier order, but Cline had moved and not updated his
address with the court. See id.

~

4. Although other items sent from TEAM to Cline had been

forwarded to Cline's new address, the summary-judgment motion and request for admissions were
not. See id. ~ 5. Cline was unaware of the existence of the summary-judgment motion and request
for admissions until approximately May 12, 2016. See id. ~~ 5, 7. 1 TEAM and Western would not
consent to Cline filing a response to the motion. See id. ~ 6. Cline requested leave to file a response
to the summary-judgment motion and for 14 days within which to respond to the request for
admissions. See id. ~~ 6-7.
On September 20, 2016, the court dismissed TEAM and Western's motion for summary
judgment without prejudice for failure to conform with Local Civil Rule 56.1 [D.E. 47]. The court
denied as moot Cline's motion for leave to file a response in opposition, but did not separately
address his request to withdraw his admissions. ld.
On October 3, 2016, TEAM and Western refiled their motion for summary judgment [D.E.
48], along with a supporting memorandum [D.E. 49], a statement of material facts [D.E. 50], and
an appendix [D.E. 51]. On October 27, 2016, Cline moved under Rule 36(b) to withdraw his
admissions [D.E. 53]. Cline asks the court to allow him withdraw his admissions and to give him
14 days to respond to TEAM's request for admissions. Cline's motion also responds in opposition
to TEAM and Western's summary-judgment motion. See id.

1

Cline does not say how he learned that TEAM had mailed these documents to his old North
Carolina address.

4

II.
Because Cline's admissions feature prominently in TEAM and Western's summary-judgment
motion, the court first considers Cline's motion to withdraw his admissions. When a party receives
a request for admissions, a matter is admitted ''unless, within 30 days after being served," that party
"serves on the requesting party a written answer or objection addressed to the matter and signed by
the party or its attorney." Fed. R. Civ. P. 36(a)(3). "The purpose of such admissions is to narrow
the array of issues before the court, and thus expedite both the discovery process and the resolution
ofthe litigation." Adventis. Inc. v. Consol. Prop. Holdings. Inc., 124 F. App'x 169, 172 (4th Cir.
2005) (unpublished).
Once admitted under Ru1e 36(a), the matter "is conclusively established unless the court, on
motion, permits the admission to be withdrawn or amended" under Ru1e 36(b). Fed. R. Civ. P.
36(b). Ru1e 36(b) contains a two-part test concerning the withdrawal or amendment ofan admission.
It states:
[T]he court may permit withdrawal or amendment if it wou1d promote the
presentation of the merits of the action and if the court is not persuaded that it wou1d
prejudice the requesting party in maintaining or defending the action on the merits.
Id.; see Adventis. Inc., 124 F. App'x at 173; In re Carney, 258 F.3d 415, 419 (5th Cir. 2001).
"[M]ore than a failure to meet deadlines is required to deny a party relief from an admission." Raiser
v. UtahCty., 409 F.3d 1243, 1247 (lOthCir. 2005). Rather, the"court'sfocusmustbeon the 'effect
upon the litigation and prejudice to the resisting party rather than on the moving party's excuses for
an erroneous omission."' In re Durability Inc., 212 F.3d 551, 556 (lOth Cir. 2000) (quoting Fed.
Deposit Ins. Corp. v.

Prusi~

18 F.3d 637, 640 (8th Cir. 1994)).

Ru1e 36(b) does not require a district court to grant relief when the two-part test is satisfied.
See Conlon v. United States, 474 F.3d 616,624-25 (9th Cir. 2007) (collecting cases); Inre Carney,
258 F.3d at 419. Instead, that decision is left to the district court's discretion.

5

A.
"The first half of the test in Rule 36(b) is satisfied when upholding the admissions would
practically eliminate any presentation ofthe merits ofthe case." Conlon, 4 74 F .3d at 622 (quotation
omitted); see Perez v. Miami-Dade Cty., 297 F.3d 1255, 1266 (11th Cir. 2002); Prusi~ 18 F.3d at
640. Here, the facts admitted effectively ended the litigation. Several of Cline's admissions
conclusively establish Cline's liability for TEAM's breach-of-contract claim. See, ~. TEAM's
Reqs. for Admis. [D.E. 51-2]

~~

6--19. Other admissions conclusively established TEAM's

nonliability for Cline's crossclaims. See,

~.

id.

~~

22-23, 29-54. These admissions "are

conclusive for purposes of the litigation," and ''the conclusive effect of admissions applies even if
the matters admitted relate to material facts that defeat a party's claim." Adventis. Inc., 124 F.
App'x at 173. Admitting these facts ''took the wind out of [Cline's] sails and effectively ended the
litigation." Perez, 297 F.3d at 1266. Because upholding the deemed admissions would eliminate
any need for a presentation on the merits, Cline satisfies the first prong of Rule 36(b). See Conlo!!,
474 F.3d at 622; Perez, 297 F.3d at 1266; Prusi~ 18 F.3d at 640.

B.
"The party relying on the deemed admission has the burden of proving prejudice." Conlon,
474 F.3d at 622; see Prusi~ 18 F.3d at 640. As several courts of appeals have said,
The prejudice contemplated by Rule 36(b) is not simply that the party who obtained
the admission will now have to convince the factfinder of its truth. Rather, it relates
to the difficulty a party may face in proving its case, e.g., caused by the unavailability
of key witnesses, because of the sudden need to obtain evidence with respect to the
questions previously deemed admitted.
Conlo!!,474 F.3d at 622 (quotation omitted); see Raiser, 409 F.3d at 1246; Perez, 297 F.3d at 1266
Prusi~

18 F .3d at 640. Without more, "reliance on a deemed admission in preparing a summary

judgment motion does not constitute prejudice." Conlo!!,474 F.3d at 624; see Raiser, 409 F.3d at
1246; Prusi~ 18 F.3d at 640.

6

TEAM and Western argue that withdrawing Cline's admissions would require TEAM and
Western to obtain new evidence. In support, TEAM and Western note that they did not obtain other
evidence from Cline during the discovery period, and Cline never responded to TEAM's
interrogatories or requests for documents. According to TEAM, TEAM did not move to compel a
response to the unanswered discovery because doing so was unnecessary. TEAM believed it could
rely on Cline's admissions. Thus, withdrawing the admissions would force TEAM and Western to
"abruptly need to obtain new evidence from Cline to prove their case wi,th respect to the matters
previously answered by the Admissions." [D.E. 55] 12. TEAM and Western also argue that they
cannot depose Cline or others, or compel responses to the unanswered interrogatories and document
requests, because the discovery period closed 11 (now 19) months ago.
The Ninth Circuit has addressed this. argument, stating that although the party opposing
withdrawal had
relied on the deemed admissions in choosing not to engage in any other discovery,
we are reluctant to conclude that a lack of discovery, without more, constitutes
prejudice. The district court could have reopened the discovery period, and prejudice
must relate to the difficulty a party may face in proving its case at trial.
Conlon, 474 F.3d at 624 (citations omitted). The Eleventh Circuit used similar reasoning, holding
that
at the time the defendants requested the withdrawal, a trial on the merits had not yet
begun; the district court could have simply extended the discovery deadlines-as it
previously had done-to enable [the party relying on the admissions] to prove his
case. The only prejudice [the party relying on the admissions] would have likely
suffered would have been the inconvenience in having to gather evidence, and this
does not rise to a level of prejudice that justifies a denial of the withdrawal motion.
Perez, 297 F.3d at 1268 (quotation and alterations omitted); see Gwynn v. City ofPhiladelphi~ 719
F.3d 295, 299 (3d Cir. 2013) (the party relying on the admissions "argued that counsel had not
moved to compel discovery of certain documents in reliance on the admissions-a concern that was
adequately addressed by the extension of the discovery deadline"); Taylor v. McGill Envtl. Sys. of
N.C .. Inc., No. 7:13-CV-00270-D,2015 WL 1125108,at*3 (E.D.N.C.Mar.12,2015)(unpublished)

7

("Further, the fact that Defendant may need to conduct discovery on the matter is not sufficient to
show prejudice.").

In Perez, the Eleventh Circuit concluded that the district court abused its discretion in
denying the motion to withdraw. In Conlo!l, the Ninth Circuit held otherwise because the "case
involve[d] more than a mere failure to comply with the deadlines" and included an impending trial
date, although ''the issue [was] close." Conlo!l, 474 F.3d at 624. TEAM and Western rely on
Conlo!l, and note that the party in Conlon "relied on the admissions for a total of two and a half
months, through the discovery and dispositive motion cut-off dates, with no indication that [the party
seeking withdrawal] intended to file a motion to withdraw his admissions." Conlo!l, 474 F.3d at
624. As in Conlo!l, TEAM and Western argue that they relied on the admissions through the close
of discovery on December 30, 2015, and the cut-off date for filing dispositive motions on January
29, 2016, when they filed their first motion for summary judgment. TEAM and Western also note
that they first learned of Cline's intention to seek to withdraw the admissions on June 2, 2016, when
he filed his motion under Ru1e 36(b).
Conlon does not help TEAM and Western. First, unlike in Conlo!l, throughout the relevant
time period Cline proceeded pro se. Second, unlike in Conlo!l, Cline was unaware that the requests
had been sent. Third, unlike in Conlo!l, no trial date has been set. Thus, TEAM and Western's
argument that they did not engage in other discovery because they relied on the admissions does not
demonstrate prejudice.

c.
Withdrawal under Ru1e 36(b) is permissive. Although the Ru1e' s requirements are satisfied,
Ru1e 36(b) does not require the court to grant the motion to withdraw. See Conlon, 474 F.3d at
624--25.
As for Cline, he cou1d have avoided this situation by promptly notifying the court ofhis new
address. Had he done so, TEAM wou1d have sent the requests to the new address, preventing the

8

risk that Cline's mail would not get forwarded from Cline's old address to his new one.
Nonetheless, the current situation appears to be the result of Cline's good-faith mistake in failing to
update his mailing address. Moreover, once Cline and his counsel learned ofthe unanswered request
for admissions, they moved to withdraw the admissions.
As for TEAM and Western, the record reveals a discovery strategy to take advantage of
Cline's pro se status. On March 31, 2015, the court entered its scheduling order directing the parties
to complete discovery by December 30, 2015. On August 24, 2015, the court granted Cline's
attorney's motion to withdraw, putting TEAM on notice that Cline was proceeding prose. Although
TEAM had nine months to do so, it waited until November 25, 2015-roughly one month before the
discovery period closed-before serving its discovery requests on Cline, a pro se litigant. TEAM
waited another five days before serving the request for admissions. Thus, Cline's discovery
responses essentially were due at the expiration of the discovery period and during the holiday
season. Moreover, in his answer to TEAM's crossclaims against him-an answer drafted with the
benefit of counsel-Cline denied the same essential facts TEAM belatedly asked Cline to admit.
Compare TEAM's Crossclaim [D.E. 14] 17 (~~ 26-31,39-40, 45-48), and Cline's Ans. [D.E. 16]
~~

26-31, 39-40, 45-48, with TEAM's Reqs. for Admis. [D.E. 51-2] ~~ 5-18. The request for

admissions also asked Cline to disavow the factual bases for his own crossclaims. Compare Cline's
Crossclaims [D.E. 16] 20 (~~28, 31,36-38,44-46, 48-51), with TEAM's Reqs. for. Admis. [D.E.
51-2] ~~ 20-21,23, 32-54.
Courts are "reluctant to use Rule 36 procedures as a snare for [an] unwary prose [litigant]."
United States v. Turk, 139 F.R.D. 615, 618 (D. Md. 1991); see United States v. Renfrow, 612 F.
Supp. 2d 677, 682 (E.D.N.C. 2009) ("Federal Rule of Civil Procedure 36 was not intended to be
used as a technical weapon to defeat the rights of pro se litigants to have their cases fairly judged on
the merits." (quotation omitted)). Compounding the effect of Cline's prose status is the timing of
TEAM's discovery requests. TEAM served its discovery requests after Cline was appearing pro se

9

and near the very end of the discovery period. ~ Schendzielos v. Borenstei!l, No. 15-CV-00564RBJ, 2016 WL 614473, at *5 (D. Colo. Feb. 16, 2016) (unpublished) ("It is worth noting that
plaintiff served the RFAs on defendants just over a month before the discovery cut-off date of
October 2, 2015. This left only a matter of days to complete discovery following the expiration of
the 30-day window for defendants to file their response.").
This court declines to permit TEAM and Western to rely on Cline's admissions. First, the
admissions directly contradict Cline's contentions in his crossclaims and answer, which he filed with
the benefit of counsel. As the Eleventh Circuit stated,
We conclude with a comment on Ru1e 36 and Perez's use of requests for admissions
in this case. Essentially, Ru1e 36 is a time-saver, designed ''to expedite the trial and
-to relieve the parties of the cost of proving facts that will not be disputed at trial." 8A
Charles Alan Wright, Arthur R. Miller, & Richard L. Marcus, Federal Practice and
Procedure§ 2252 (2d ed.1994) (emphasis added). That is, when a party uses the ru1e
to establish uncontested facts and to narrow the issues for trial, then the ru1e
functions properly. When a party like Perez, however, uses the ru1e to harass the
other side or, as in this case, with the wild-eyed hope that the other side will fail to
answer and therefore admit essential elements (that the party has already denied in
its answer), the ru1e's time-saving function ceases; the ruie instead becomes a
weapon, dragging out the litigation and wasting valuable resources.
Perez, 297 F.3d at 1268 (emphasis added and omitted); see id. at 1268-69; Bergemann v. United
States, 820 F .2d 1117, 1121 (1Oth Cir. 1987); Schendzielos, 2016 WL 6144 73, at *5 ("As the
admissions in question go to the central elements of the claim, this is not the type of situation where
a plaintiff cou1d be surprised to suddenly encounter significant difficu1ty in proving his case at
trial."); McClanahan v. Aetna Life Ins. Co., 144 F.R.D. 316, 320 (W.D. Va. 1992). Moreover,
TEAM never moved to compel responses to its discovery requests, including the request for
admissions. See Schendzielos, 2016 WL 614473, at *5 ("[Plaintiff] also had the option of moving
to reopen discovery or seeking the involvement ofthe Court in resolving these discovery disputes.");
Jonesv. JackHenry&Assocs .. Inc., No. 3:06CV428, 2007 WL4226083, at *2 (W.D.N.C. Nov. 30,
2007) (unpublished) ("Further, the Defendant never moved to compel the Plaintiff's response or to
have these matters deemed admitted prior to filing this summary judgment motion."). Had TEAM

10

done so, this court could have addressed the discovery issues shortly after the close of discovery.
Cline's pro se status, TEAM's eleventh-hour request for admissions, TEAM's request to
Cline to admit matters CLINE already explicitly denied in his answer, and TEAM's failure to seek
responses to its discovery requests, support granting Cline's motion. Thus, the court grants Cline's
motion to withdraw his admissions. Cline shall respond to TEAM's request for admissions,
interrogatories, and requests for production of documents not later than October 13, 2017. In order
to mitigate any potential prejudice, the parties each may conduct two additional depositions. All
such depositions shall be completed by October 31, 2017.

m.
The court now addresses TEAM and Western's motion for partial summary judgment
without considering Cline's withdrawn admissions. See, M,.., Kress v. Food Emps. Labor Relations
Ass'!!,285 F. Supp. 2d 678, 681 (D. Md. 2003) (ruling on the summary-judgment motion as if the
withdrawn admissions were never made), aff'd, 391 F.3d 563 (4th Cir. 2004). TEAM moves for
summary judgment on its crossclaim for breach of contract and on Cline's crossclaims for breach-ofcontract, fraud, and quantum meruit. Western joins TEAM in moving for summary judgment on
Cline's Miller Act crossclaim.
Summary judgment is appropriate ifthe moving party demonstrates ''that there is no genuine
dispute as to any material fact" and the moving party "is entitled to judgment as a matter of law."
Fed. R. Civ. P. 56(a). The party seeking summary judgment must initially show an absence of a
genuine dispute of material fact or the absence of evidence to support the nonmoving party's case.
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If a moving party meets its burden, the
nonmoving party must "come forward with specific facts showing that there is a genuine issue for
trial." MatsushitaElec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,587 (1986) (quotation and
emphasis omitted). A genuine issue for trial exists if there is sufficient evidence favoring the
nonmoving party for a jury to return a verdict for that party. Anderson v. Libeey Lobby. Inc., 477

11

U.S. 242, 249 (1986). "The mere existence of a scintilla of evidence in support of the plaintiff's
position [is] insufficient ...." Id. at 252; see Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985)
("The nonmoving party, however, cannot create a genuine issue of material fact through mere
speculation or the building of one inference upon another."). Only factual disputes that affect the
outcome under substantive law preclude summary judgment. Anderso!l, 477 U.S. at 248. In
reviewing the factual record, the court views the facts in the light most favorable to the nonmoving
party and draws reasonable inferences in that party's favor. Matsushim, 475 U.S. at 587-88.

A.
TEAM and Cline entered into a written contract (the "subcontract") for Cline to act as a
subcontractor for TEAM on the project. TEAM's Stmt. Material

Facts~~

7-8; Cline's Stmt.

Material Facts~~ 7-8. Under the subcontract's General Provisions, Cline agreed to promptly correct
all latent defects, [D .E. 14-1] ~ 2. 74, size his workforce to meet the work schedule, id. ~ 3.2, proceed
with the work in an uninterrupted manner, id., complete 100 percent of invoiced work before
submitting the invoice, id.

~

5.2, personally supervise the work done on the jobsite, or have a

foreman or superintendent do so, id. ~ 2.4, and warrant his work against all deficiencies and defects
in materials and/or workmanship, id. ~ 2. 7. The subcontract's Special Provisions required Cline to
furnish all material, labor, equipment, tools, supplies, and supervision associated with the electrical,
fire alarm, and communications for the project, id. at 13 ~ l.a., complete his work to meet TEAM's
schedule, id. at 14 ~ 1.1, complete his work as directed by TEAM, id. ~ 3 .a., and complete his work
on or before the work schedule provided by TEAM, id. at 5 ~ 4.a.
TEAM contends that Cline breached the subcontract and caused delays on the project. Cline
allegedly used improper workmanship, improperly supervised his employees and subcontractors, did
not have a sufficiently sized workforce to accomplish his tasks, failed to detect errors and defects
in his work, and did not timely or properly perform his work. See Leifheit Aff.

~

8. After TEAM

notified Cline ofthese deficiencies, "Cline did not correct the deficiencies with his work, he refused

12

to increase the size of his crews, and he did not correct his supervision ofhis crews on the Project."
'

ld. ~ 12. Cline also submitted invoices "for work that Cline performed incorrectly or for work and
materials that Cline did not perform at all," "did not fully pay his subcontractors and materials
suppliers," and "abandoned his work and walked off the Project, without cause." Id. ~~ 12, 14.
In its statement of material facts, TEAM asserts that these facts are undisputed by citing
admissions of Cline's that accord with Leifheit's affidavit testimony. See TEAM's Stm.t. Material
Facts~~

14, 20, 24--25, 28-30. In his responsive statement of material facts, Cline denies these

assertions. Without Cline's admissions, TEAM cannot carry its burden of showing the absence of
a genuine dispute of material fact and that it is entitled to judgment as a matter oflaw as to Cline's
alleged breach of the subcontract. Thus, the court denies summary judgment on this crossclaim.

B.
Cline asserts his own crossclaim against TEAM for breaching the subcontract. TEAM
allegedly breached the subcontract by failing to pay one of Cline's invoices, wrongfully and
fraudulently terminating the subcontract, and converting Cline's and his employees' equipment and
supplies. See Cline's Crossclaim [D.E. 16] ~~ 19.a, 28a.-c. TEAM seeks summary judgment on
this crossclaim and relies exclusively on Cline's admissions to establish that no genuine dispute of
material fact exists concerning TEAM's alleged breach. See TEAM's Reqs. for. Admis. [D.E. 51-2]
~~ 22,29-42,

47; TEAM's Stmt. Material Facts~ 38. Without Cline's admissions, TEAM cannot

carry its burden. See [D.E. 49] 18-19. Thus, the court denies summary judgment on this crossclaim.

c.
Cline contends that TEAM committed fraud in several ways: maliciously barring Cline from
the jobsite, maliciously terminating the subcontract with Cline, making false representations that
Cline was behind schedule in completing of his contractual obligations, and making false
representations that Cline failed to have sufficient staffing to complete required work on the
subcontract. See [D.E. 16]

~~

32-40. However, even if TEAM took these actions, they do not

13

support Cline's fraud crossclaim. "Ordinarily, an action in tort must be grounded on a violation of
a duty imposed by operation oflaw, and the right invaded must be one that the law provides without
regard to the contractual relationship of the parties, rather than one based on an agreement between
the parties." Asheville Contracting Co. v. City of Wilson, 62 N.C. App. 329, 342, 303 S.E.2d 365,
373 (1983). 2 To the extent TEAM owed Cline duties not to take these actions, those duties arose
under the subcontract, "not by operation oflaw independent of the contract, and the asserted breach
of such duty by [TEAM] does not give rise to an action in tort." Id. Thus, the fraud crossclaim fails.
Alternatively, Cline abandoned these actions as sources of his fraud crossclaim, asserting
instead that he premises his fraud claims on alleged misrepresentations TEAM's project and
operation managers made to the effect that Cline was behind schedule and failed to provide adequate
staffing. See [D.E. 53] 10.3 To succeed on a fraud claim, the plaintiff must prove "(1) [a] [f]alse
representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with
intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party," where
"any reliance on the allegedly false representations must be reasonable." Forbis v. Neal, 361 N.C.
519, 526-27, 649 S.E.2d 382, 387 (2007). Other than emails demonstrating that TEAM made
statements about being disappointed in Cline's performance, Cline cites no evidence creating a
genuine issue of material fact as to fraud. Cline's "[c]onclusory or speculative allegations do not
suffice to oppose a properly supported motion for summary judgment." Matherly v. Andrews, 859

2

In exercising supplemental jurisdiction over TEAM's state-law claims, the court applies
NorthCarolinasubstantivelaw. See Johnson v. Hugo's Skateway, 974F.2d 1408, 1416n.7 (4thCir.
1992); Soliman v. Worldwide Language Res .. Inc., No. 5:16-CV-748-D, 2016 WL 7494858, at *4
(E.D.N.C. Dec. 29, 2016) (unpublished).
3

In his opposition brief, Cline also asserts that he bases his fraud crossclaim on statements
to the effect that Cline ''was closing his doors and was bankrupt, and that he walked off the project."
[D.E. 53] 10. Cline did not assert these theories of fraud when pleading his crossclaim. See [D.E.
16] ~~ 32-40. Cline cannot amend his complaint via summary-judgment briefing. See,~' Gilbert
v. Deutsche Bank Tr. Co. Americas, No. 4:09-CV-181-D, 2017 WL 1012981, at *2 n.2 (E.D.N.C.
Mar.14,2017)(unpublished);HexionSpecialtyChems.• Inc. v. Oak-Bark Corp., No. 7:09-CV-105D, 2011 WL 4527382, at *7 (E.D.N.C. Sept. 28, 2011) (unpublished).
14

F.3d 264, 280 (4th Cir. 2017) (quotation omitted). Thus, even without the admissions, the court
grants TEAM summary judgment on Cline's fraud crossclaim.

D.
Cline asserts a Miller Act crossclaim. The Miller Act gives "every person that has furnished
labor or material in carrying out· work provided for in a contract for which a payment bond is
furnished" the right to "bring a civil action on the payment bond for the amount unpaid at the time
the civil action is brought." 40 U.S.C. § 3133(b)(l). To prevail on a Miller Act claim, the supplier
must prove that: "(1) the materials were supplied in prosecution of the work provided for in the
contract; (2) the supplier has not been paid; (3) the supplier had a good faith belief that the materials
were intended for the specified work; and (4) the jurisdictional requisites were met." U.S. for Use
& Benefit ofHawaiian Rock Prod. Corp. v. A.E. Lopez Enterprises. Ltd., 74 F .3d 972, 975 (9th Cir.

1996); see U.S. for Use & Ben. of E. Gulf. Inc. v. Metzger Towing. Inc., 910 F.2d 775, 783 (11th
Cir. 1990).
TEAM and Western contend that Cline cannot prove the second element of his Miller Act
crossclaim. In support, they rely on Cline's admissions that TEAM paid him in full and that he
waived and released any rights, demands, and claims against TEAM and Western. See TEAM's
Reqs. for Admis. ~~ 20-23. TEAM's Stmt. Material Facts~ 38.c--e.; [D.E. 49] 22-23. In his
responsive statement of material facts, Cline denied these assertions. See Cline's Stmt. Material
Facts ~ 38.

Without Cline's admissions, TEAM and Western do not carry their burden of

demonstrating the absence of a genuine dispute of a material fact. Thus, the court denies summary
judgment on Cline's Miller Act crossclaim.

E.
Cline's final crossclaim alleges he has not been paid for services and goods provided to
TEAM and that failure to compensate him will unjustly enrich TEAM. See [D.E. 16]

~~

48-51.

Absent "an express con~act, a plaintiffmay recover in quantum meruit on an implied contract theory

15

for the reasonable value of services and materials rendered to and accepted by a defendant." Catoe
v. HelmsConst. &Concrete Co., 91 N.C.App. 492,497,372 S.E.2d331, 335 (1988). Under North
Carolina law, ''there can be no recovery for breach of implied contract when an express contract
covers the same subject matter." Id. at 497, 372 S.E.2d at 335. The parties entered into the
subcontract, agree it governed their relationship, and do not dispute its enforceability. See TEAM's
Stmt. Material Facts~~ 7-13; Cline's Stmt. Material Facts~~ 7-13. Cline admits he pleaded his
quantum meruit claim as an alternative to his breach-of-contract crossclaim in case the court
concluded that the subcontract was unenforceable. ·See [D.E. 53] 11-12. Thus, even without the
admissions, the court grants TEAM summary judgment on this crossclaim.
IV.
In sum, the court GRANTS Cline's motion to withdraw his admissions [D.E. 53] and

GRANTS IN PART and DENIES IN PART TEAM and Western's motion for partial summary
judgmen~

[D.E. 48]. Cline shall respond to TEAM's request for admissions, interrogatories, and

request for production of documents not later than October 13, 2017. The parties each may conduct
two additional depositions. All such depositions shall be completed by October 31, 2017. Finally,
the parties shall confer and submit not later than October 31, 2017, proposed trial dates for
December 2017 or January 2018, and the submission shall estimate the number of trial days needed.
SO ORDERED. This _g_ day of September 2017.

J

SC.DEVERill
Chief United States District Judge

16