Morgan Buildings & Spas Inc et al v. Iowa Tribe of Oklahoma et al
Filing
104
ORDER denying 98 defendant Employers Mutual Casualty Company's Motion for Summary Judgment (as more fully set out in order). Signed by Honorable Vicki Miles-LaGrange on 7/20/2012. (ks)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
UNITED STATES OF AMERICA FOR
THE USE AND BENEFIT OF MORGAN
BUILDINGS & SPAS, INC.; and
MORGAN BUILDINGS & SPAS, INC.,
Plaintiffs,
vs.
BKJ SOLUTIONS, INC.,
THE ROSS GROUP LLC, an Oklahoma
limited liability company, and
EMPLOYERS MUTUAL CASUALTY
COMPANY, an Iowa corporation,
Defendants.
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Case No. CIV-09-730-M
ORDER
Before the Court is defendant Employers Mutual Casualty Company’s (“EMCC”) Motion
for Summary Judgment, filed March 19, 2012. On April 9, 2012, plaintiff the United States of
America for the Use and Benefit of Morgan Buildings & Spas, Inc. (“Morgan”) filed its response,
and on April 16, 2012, EMCC filed its reply. Based upon the parties’ submissions, the Court makes
its determination.
I.
Introduction
In early January 2008, defendant BKJ Solutions, Inc.’s (“BKJ”) contract proposal to perform
a project for the United States in Fort Sill, Oklahoma, designated as FY08 Traps Relocatables (the
“Project”), was accepted by the United States Army Corps of Engineers (the “USACE”). On or
about January 30, 2008, BKJ entered into a contract with the United States, Contract No. W912BV08-C-2000 (the “Prime Contract”), through USACE, whereby BKJ, as general contractor, agreed
to perform labor and furnish materials for the Project. In addition to “site work”,1 the Prime
Contract called for three sites of modular, relocatable buildings to be furnished for use as barracks,
company operations facilities, and battalion headquarters. On or about January 30, 2008, in
connection with the Project, BKJ furnished to USACE Miller Act Payment Bond No. S368816 (the
“Payment Bond”) in the penal sum of $2,241,364.00, upon which BKJ is the principal and EMCC
is the surety.
On or about March 26, 2008, Morgan executed a Subcontract Agreement (“Subcontract”)
with BKJ by which Morgan was to furnish certain supervision, labor, materials, equipment,
transportation, and supplies related to the modular building scope of work for the Project. Under
the Subcontract, Morgan did not perform any “site work” on the Project. Morgan has not been paid
in full for the work it performed under the Subcontract.
On July 15, 2009, Morgan filed the instant action. One of the claims Morgan is asserting is
a claim against the Payment Bond. EMCC now moves for summary judgment as to that claim.
II.
Discussion
EMCC contends that Morgan’s claim against the Payment Bond fails as a matter of law
because BKJ was only required to post a Miller Act payment bond for the “construction” work on
the Project, and the only “construction” work on the Project was the “site work”, which Morgan did
not perform. Morgan, on the other hand, contends that the Payment Bond covers its work on the
Project.
1
“Site work” is defined in the Prime Contract’s Proposal Schedule Notes as “all earthwork,
foundations, paving, sidewalks, curbs and gutter to the building line” and “utilities” brought to
within five feet of the relocatable buildings. See Prime Contract at p. 00010-6, attached as Exhibit
C to EMCC’s Motion for Summary Judgment.
2
The Miller Act provides, in pertinent part:
Before any contract of more than $100,000 is awarded for the
construction, alteration, or repair of any public building or public
work of the Federal Government, a person must furnish the
Government the following bonds, which become binding when the
contract is awarded:
*
*
*
(2) Payment bond. A payment bond with a surety satisfactory
to the officer for the protection of all persons supplying labor
and material in carrying out the work provided for in the
contract for the use of each person. . . .
40 U.S.C. § 3131(b)(2). “Congress enacted the Miller Act to protect persons who supply labor and
materials for the construction of federal buildings. Due to its remedial nature, it is afforded a liberal
construction.” United States for the Use of B & D Mech. Contractors, Inc. v. St. Paul Mercury Ins.
Co., 70 F.3d 1115, 1117 (10th Cir. 1995).
The Miller Act clearly limits its bond requirements to contracts awarded for the construction,
alteration, or repair of any public building or public work of the Federal Government; however, it
does not limit those persons protected under the payment bond to those who specifically perform
the construction, alteration or repair work. Rather, the Miller Act clearly and specifically states that
the payment bond is “for the protection of all persons supplying labor and material in carrying out
the work provided for in the contract”. 40 U.S.C. § 3131(b)(2).2 Thus, in the case at bar, the Court
2
In its motion, EMCC asserts that USACE’s determination that the Miller Act did not require
a payment bond from BKJ in connection with the relocatable buildings to be furnished by Morgan
under the Prime Contract is entitled to great weight, citing United States v. Kimrey, 489 F.2d 339,
342 (8th Cir. 1974). However, in Kimrey, the Eighth Circuit stated: “If any ambiguity exists in §
[3131(b)], the practical construction of the statute by the Government agency in charge of the
transaction is entitled to great weight.” Id. (emphasis added). Because the Court finds that no
ambiguity exists in § 3131(b) in relation to the issue involved in the instant case, the Court finds
USACE’s determination is not entitled to any particular weight.
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finds the Payment Bond is for the protection of all persons supplying labor and material in carrying
out the work provided for in the Prime Contract.
Having carefully reviewed the parties’
submissions, the Court finds that Morgan clearly supplied labor and materials used in carrying out
the work provided for in the Prime Contract and, thus, the Payment Bond covers the labor and
materials supplied by Morgan.
The language of the Payment Bond itself further supports a finding that the labor and
materials supplied by Morgan fall within the protection of the Payment Bond. The Payment Bond
states that it is “for the protection of persons supplying labor and materials.” Payment Bond at 2,
attached as Exhibit D to EMCC’s Motion for Summary Judgment. Further, the Payment Bond states
as a condition that “[t]he above obligation is void if the Principal promptly makes payment to all
persons having a direct relationship with the Principal or a subcontractor of the Principal for
furnishing labor, material or both in the prosecution of the work provided for in the contract
identified above . . . .”3 Id. at 1 (emphasis added). Additionally, there is no language contained in
the Payment Bond that indicates in any way that the Payment Bond covers only the “site work”, or
any other specific portion of the work, of the Prime Contract or specifically precludes Morgan’s
scope of work.
Further, even if the Payment Bond only applies to “construction” work to be performed on
the Project, the Court finds Morgan has presented sufficient evidence to show that portions of its
work could be considered “construction” work, as that term is used in the Miller Act. The
3
The “contract identified above” is the Prime Contract.
4
regulations implementing the Davis-Bacon Act4, an act which provides for minimum wage
protection on federal construction contracts, defines “construction” or “repair” as follows:
all types of work done on a particular building or work at the site
thereof . . . , all work done in the construction or development of the
project, including without limitation, altering, remodeling,
installation (where appropriate) on the site of the work of items
fabricated off-site, painting and decorating, the transporting of
materials and supplies to or from the building or work . . . , and the
manufacturing or furnishing of materials, articles, supplies or
equipment on the site of the building or work. . . .
Brock v. Cardinal Indus., Inc., 828 F.2d 373, 377 (6th Cir. 1987) (emphasis in original), overruled
on other grounds in Martin v. Occupational Safety & Health Review Comm’n, 499 U.S. 144, 150
(1991).5 Morgan has submitted evidence that after fabricating the shells of the modular units offsite, it constructed the modular buildings at the actual work site, per BKJ’s request, and after the
construction of the buildings, Morgan installed interior floors, roofs, drop ceilings, sprinkler
systems, air ducts, interior doors, plumbing in the west units, gas lines in the laundry units, exterior
lights, exterior a/c drain lines, underpinning, dryer vents, interior lights, and vents for the make up
air system. The Court finds this work performed at the actual work site clearly would meet the
definition of “construction”.
Accordingly, the Court finds that the Payment Bond covers some, if not all, of the work
performed by Morgan and that EMCC, therefore, is not entitled to summary judgment.
4
40 U.S.C. §§ 3141-3148.
5
Because identical terms are used in both the Miller Act and the Davis-Bacon Act, the Court
finds that these terms should be interpreted consistently.
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III.
Conclusion
For the reasons set forth above, the Court DENIES EMCC’s Motion for Summary Judgment
[docket no. 98].
IT IS SO ORDERED this 20th day of July, 2012.
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