United States of America v. Penn Construction Group Inc et al

Filing 78

ORDER denying 44 Plaintiff ABC's Motion for Summary Judgment and granting 47 Defendants Penn and Old Republic's Motion for Partial Summary Judgment as to Penn and Summary Judgment as to Old Republic (as more fully set out in order). Signed by Judge Patrick R Wyrick on 10/24/2024. (ks)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

THE UNITED STATES OF AMERICA for
the Use and Benefit of AMERICAN
BUILDERS & CONTRACTORS SUPPLY
COMPANY, INC. d/b/a ABC Supply
Company,
Plaintiff,

v.

PENN CONSTRUCTION GROUP, INC.;
KORTE CONSTRUCTION COMPANY
d/b/a The Korte Company;
TRAVELERS CASUALTY AND
SURETY COMPANY OF AMERICA;
and OLD REPUBLIC SURETY
COMPANY,
Defendants.

Case No. CIV-23-273-PRW

ORDER
Before the Court are Plaintiff American Builders & Contractors Supply Company,
Inc.’s (“ABC”) Motion for Summary Judgement (Dkt. 44), and Defendants Penn
Construction Group, Inc. (“Penn”) and Old Republic Surety Company’s (“Old Republic”)
Motion for Partial Summary Judgement as to Penn and Summary Judgment as to Old
Republic (Dkt. 47). For the reasons discussed below, Plaintiff ABC’s Motion for Summary
Judgment (Dkt. 44) is DENIED; and Defendants Penn and Old Republic’s Motion for
Partial Summary Judgment as to Penn and Summary Judgment as to Old Republic (Dkt.
47) is GRANTED.
1

Background 1
Defendant Korte Construction Company (“Korte”) is a general contractor for two
government contracts for Tinker Air Force Base, one contract for a hangar referred to as
the “Fuels Hangar” and one contract for a hangar referred to as the “Depot Maintenance
Hangar.” Korte hired Defendant Penn as a subcontractor for work on each contract. As
required by the Miller Act, 2 Korte obtained surety bonds for the contracts. Penn also
obtained a non-Miller Act bond specifically referencing the Depot Maintenance Hangar in
the amount of $4,329,978.84, furnished by Defendant Old Republic.
Plaintiff ABC is a materials supply company. Penn opened a single account with
ABC to obtain materials for its work on both hangars. Penn purchased the materials on
credit with ABC. Throughout the duration of the projects, a total of $821,520.52 worth of
materials was delivered from ABC to Penn and charged onto the single account.
Four payments towards the account balance were made to ABC. As ABC received
the payments, it either credited them towards a specific invoice if specified with remittance
of the payment, or if none was specified, towards the oldest outstanding invoice. Upon
receipt of the final payment received by ABC from Korte and Penn—a check for
$254,302.68 dated March 10, 2022—ABC’s agent, Paula Gartner, executed a document
titled Partial Waiver of Lien and Release of Claims. 3 At the time of the execution of the
Partial Waiver of Lien and Release of Claims, there was an outstanding balance of
1

This section is based on the undisputed facts as described in the parties’ briefs.

2

See 40 U.S.C. § 3131.

3

Ex. 10 (Dkt. 44-10).
2

$333,250.47 on Penn’s account with ABC. ABC attempted to further collect payment on
the account, and Penn refused to remit any additional payment.
This lawsuit followed. Plaintiff’s causes of action are: (1) default under an open
account against Penn; (2) a claim for payment against the Travelers Payment Bond; and
(3) a claim for payment against the Old Republic Payment Bond. Plaintiff ABC and
Defendants Korte and Travelers have settled their claims, leaving only ABC’s claims
against Penn and Old Republic. Plaintiff ABC filed a Motion for Summary Judgment (Dkt.
44), and Defendants Penn and Old Republic filed a Motion for Partial Summary Judgment
as to Penn and a Motion for Summary Judgment as to Old Republic (Dkt. 47). The crossmotions are fully briefed and ripe for adjudication.
Legal Standard
Summary judgment is proper “if 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.” 4 A
genuine dispute exists if a reasonable juror could return a verdict for either party. 5 A fact
is material if it “might affect the outcome of the suit under the governing law.” 6 In
considering a motion for summary judgment, a court must view all facts and reasonable
inferences in the light most favorable to the nonmovant. 7 Summary judgment is appropriate

4

Fed. R. Civ. P. 56(a).

5

See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

6

Id.

7

Id.
3

when a party “fails to make a showing sufficient to establish the existence of an element
essential to that party’s case, and on which that party will bear the burden of proof at trial.” 8
Analysis
The resolution of both Motions ultimately turns on the interpretation of the Partial
Waiver of Lien and Release of Claims (the “Partial Waiver”) executed by ABC’s agent,
Paula Gartner. ABC argues in its Motion that the Partial Waiver only waived its claims for
the invoices that ABC credited using the check given in consideration of the Partial Waiver,
so none of its claims as to the outstanding invoices for the remaining balance of
$333,250.47 have been waived. Thus, Penn is in default for this amount and Old Republic
is also liable as Penn’s bond provider, entitling ABC to summary judgement on these
claims. 9 Alternatively, Penn and Old Republic argue in their cross-motion for summary
judgment that the Partial Waiver bars all of ABC’s claims relating to the Depot
Maintenance Hangar, so ABC’s claim against Penn has been waived to the extent that it
rests on invoices associated with the Depot Maintenance Hangar, and ABC’s claim against
Old Republic has been waived in its entirety as Old Republic only provided the bond for
the Depot Maintenance Hangar contract. 10 Thus, Penn and Old Republic are entitled to
partial summary judgment and summary judgement, respectively.

8

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

9

Pl.’s Mot. Summ. J. (Dkt. 44), at 8–13.

10

Defs.’ Mot. Summ. J. (Dkt. 47), at 7.
4

Because “release provisions are contractual,” rules of contract interpretation apply
to discern their meaning. 11 Under Oklahoma law, 12 “[t]he primary goal of contract
interpretation is to determine and give effect to the intention of the parties at the time the
contract was made.” 13 In making this determination, “[t]he language of a contract is to
govern its interpretation” so long as “the language is clear and explicit, and does not involve
an absurdity.” 14 Whether a contract is ambiguous is a question of law for the Court. 15
A contract is ambiguous under Oklahoma law if “reasonably susceptible of more
than one interpretation.” 16 “The dispositive factor in our analysis is not whether the parties
disagree or inequity results, but whether an examination of the entire agreement reveals
more than one reasonable interpretation.” 17 If a contract is ambiguous, then a court can

Kay Pharmacal Co. v. Dalious Const. Co., 276 P.2d 756, 758 (Okla. 1954); Corbett v.
Combined Commc’ns Corp. of Okla., Inc., 654 P.2d 616, 617 (Okla. 1982) (citing Van
Horn Drug Co. v. Noland, 323 P.2d 366 (Okla. 1958)).
11

See Barrett v. Tallon, 30 F.3d 1296, 1300 (10th Cir. 1994) (“A federal court sitting in
diversity applies the substantive law . . . of the forum state.”); Gamble, Simmons & Co. v.
Kerr-McGee Corp., 175 F.3d 762, 767 (10th Cir. 1999) (citing Bohannan v. Allstate Ins.
Co., 820 P.2d 787, 793 (Okla. 1991) and Okla Stat. tit. 15, § 162).

12

Bank of Wichitas v. Ledford, 151 P.3d 103, 111 (Okla. 2006) (citing Oxley v. Gen. Atl.
Res., Inc., 936 P.2d 943, 945 (Okla. 1997) and Amoco Prod. Co. v. Lindley, 609 P.2d 733,
741 (Okla. 1980)).
13

14

Okla. Stat. tit. 15, § 154.

Corbett, 654 P.2d at 617 (citing Panhandle Co-op. Royalty Co. v. Cunningham, 495 P.2d
108 (Okla. 1971)).
15

Gamble, Simmons & Co., 175 F.3d at 767 (quoting Williams v. Shearson Lehman Bros.,
Inc., 917 P.2d 998, 1004 (Okla. Ct. App. 1996)).
16

17

Id. (citing Bartmann v. Maverick Tube Corp., 853 F.2d 1540, 1545 (10th Cir. 1988)).
5

“resort to extrinsic evidence . . . to construe the agreement.” 18 If a contract is unambiguous,
however, “its language is the only legitimate evidence of what the parties intended,” 19 and
“that which stands expressed within its four corners must be given effect.” 20 An
unambiguous contract’s interpretation is a matter of law for the Court. 21
Both parties argue that the Partial Waiver is unambiguous, but each advance a
different interpretation. ABC argues that the Partial Waiver clearly only applies to some of
its claims, namely the ones that were paid for with the check remitted in consideration of
the waiver. 22 Penn and Old Republic, on the other hand, argue that the Partial Waiver
clearly waived all of ABC’s claims for payment owed for materials supplied in connection
with the Depot Maintenance Hangar. 23
In determining whether the release is ambiguous, the Court must look to the
document as a whole and give the language used its ordinary meaning. 24 The release at
issue is titled “Partial Waiver of Lien and Release of Claims.” 25 It lists the job number as
Id. (citing Pierce Couch Hendrickson Baysinger & Greene v. Freede, 936 P.2d 906, 912
(Okla. 1997)).

18

Bank of Oklahoma, N.A. v. Red Arrow Marina Sales & Serv., Inc., 224 P.3d 685, 699
(Okla. 2009) (citations omitted); Okla. Stat. tit. 15, § 155.

19

May v. Mid-Century Ins. Co., 151 P.3d 132, 140 (Okla. 2006) (citing Littlefield v. State
Farm Fire & Cas. Co., 857 P.2d 65, 69 (Okla. 1993) and Penley v. Gulf Ins. Co., 414 P.2d
305, 308 (Okla. 1966)).

20

Corbett, 654 P.2d at 617 (citing Van Horn Drug. Co. v. Noland, 323 P.2d 366 (Okla.
1958)).
21

22

Pl.’s Mot. Summ. J. (Dkt. 44), at 12–13; Pl.’s Resp. (Dkt. 59), at 10–12.

23

Defs.’ Mot. Summ. J. (Dkt. 47), at 8–9

24

Okla. Stat. tit. 15, §§ 157, 160. See Gamble, Simmons & Co., 175 F.3d at 767–68.

25

Ex. 10 (Dkt. 44-10).
6

“#30303 COE KC-46A Depot Maintenance Hangar.” It further states that ABC “has been
employed by Penn Construction Group for Labor, Erection Labor, Supplies, Materials, or
equipment,” “[f]or the premises known as: COE KC-46A Depot Maintenance Hangar,”
“[l]ocated on the real property at Tinker AFB, OK.” And as relevant here, the text of the
document states:
The undersigned, for and in consideration of the dollar amount shown below
and other good and valuable consideration do(es) hereby waive and release
under the mechanics’ lien statutes where the project premises are located,
and under all other applicable state and federal laws . . . any and all demands,
claims and rights for unjust enrichment or against any payment bond or other
bond, if any, provided in connection with the project, on account of the
above-mentioned labor, services, materials, fixtures, equipment, apparatus,
and work . . . furnished by or on behalf of the undersigned for or in
connection with the above-described project.
The document lists a check number, date, and amount. And finally, it was signed by Paula
Gartner and notarized on April 19, 2022.
The Court finds that the Partial Waiver is unambiguous, and its clear meaning is the
interpretation advanced by Defendants. The Partial Waiver clearly and unambiguously
states that it applies to “any and all” claims stemming from the “above-mentioned labor,
services, materials, fixtures, equipment, apparatus, and work,” which is described as
“labor, erection labor, supplies, materials, or equipment,” associated with the abovedescribed project, listed as the COE KC-46A Depot Maintenance Hangar. Because the
Partial Waiver is unambiguous on its face, extrinsic evidence cannot be considered. 26

26

See Gamble, Simmons & Co., 175 F.3d at 767.
7

In response to Penn and Old Republic’s suggested interpretation of the Partial
Waiver, ABC argues that the word “partial” in the title of the document requires a different
interpretation. 27 But the inclusion of the word “partial” in the title of the document is
entirely consistent with the language of the remainder of the document and does not result
in an absurdity. 28 It clearly states that any and all claims related to the “above-mentioned
labor, services, materials, fixtures, equipment, apparatus, and work” for the “abovementioned project” are waived. Claims for anything not listed or for any other project have
not been waived. And even if the language of the release and the title of the document
could be construed as contradictory, this interpretation gives effect to both provisions in a
manner that makes them consistent with one another. 29
ABC’s suggested interpretation that the release clearly only applies to the invoices
that it used the check provided in consideration of the Partial Waiver to credit is
inconsistent with the clear language included in the Partial Waiver. The Partial Waiver
specifically notes that it waives “any and all demands, claims and rights for unjust
enrichment[.]” This language cannot be read to have intended to only release some of the

27

Pl.’s Resp. (Dkt. 59), at 12; Pl.’s Mot. Summ. J. (Dkt. 44), at 12–13.

See Okla. Stat. tit. 15, § 157 (“The whole of a contract is to be taken together, so as to
give effect to every part, if reasonably practicable, each clause helping to interpret the
others.”); Okla. Stat. tit. 15, § 154.
28

See Husky Ventures, Inc. v. B55 Invs., Ltd., 911 F.3d 1000, 1015 (10th Cir. 2018)
(quoting Sullivan v. Gray, 78 P.2d 688, 690 (1938) and citing Okla. Stat. tit. 15, § 157);
Walker v. Telex Corp., 583 P.2d 482, 485 (Okla. 1978) (“If an ambiguity arises by reason
of the language used and not because of extrinsic facts, construction of the contract remains
a question of law for the court.” (citing Paclawski v. Bristol Lab’ys, Inc., 425 P.2d 452,
456 (1976))).

29

8

claims for materials supplied in connection with the Depot Maintenance Hangar pre-dating
the check and release’s execution, nor can it be read to have intended to specifically limit
which invoices or materials it applied to. ABC failed to include limiting language within
the terms of the release, and the Court cannot read such terms into the release now. 30 Per
the Partial Waiver’s clear and unambiguous terms, it was executed in consideration for the
check totaling $254,302.68 and waived any and all claims predating its execution for the
enumerated categories in connection with the Depot Maintenance Hangar project. 31
Applying the release here, ABC’s claim for payment against the Old Republic bond
has been waived entirely. It is undisputed that Old Republic solely furnished a bond for the
Depot Maintenance Hangar project. It is also undisputed that ABC is seeking payment for
materials. Because Old Republic could only be liable for payment of materials associated
with the Depot Maintenance Hangar, and ABC has waived its claims stemming from
materials associated with the Depot Maintenance Hangar, Old Republic is entitled to

Husky Ventures, Inc., 911 F.3d at 1015 (citing Dismuke v. Cseh, 830 P.2d 188, 190 (Okla.
1992)).
30

See Galin Corp. v. MCI Telecomms. Corp., 12 F.3d 465, 468–69 (5th Cir. 1994)
(interpreting similar releases under New York law); Addicks Servs., Inc. v. GGPBridgeland, LP, 596 F.3d 286, 294–97 (5th Cir. 2010) (interpreting a similar release under
Texas law); Artistic Stone Crafters v. Safeco Ins. Co., 726 F. Supp. 2d 595, 601–02 (E.D.
Va. 2010) (interpreting a similar release under Virginia law); United States v. Hartford
Accident & Indem. Co., 168 F. Supp. 3d 824, 832–34 (D. Md. 2016) (interpreting a similar
release under Maryland law). See also Cleveland v. Dyn-A-Mite Pest Control, Inc., 57 P.3d
119, 128 (Okla. Civ. App. 2002) (explaining that a release “is a present abandonment of a
known right,” and will not be construed to waive claims not known by the parties at the
time of its execution (citations omitted)).
31

9

summary judgment on this claim. Accordingly, ABC’s Motion for Summary Judgment on
this claim must be denied.
As to ABC’s open account claim against Penn, ABC is seeking payment from Penn
for an unpaid balance for materials and other associated costs stemming from both the
Depot Maintenance Hangar and the Fuels Hangar. To the extent that ABC seeks payment
for materials and associated costs stemming from the Depot Maintenance Hangar, that
claim has been waived as explained above. Thus, Penn is entitled to partial summary
judgment on ABC’s open account claim. As such, ABC’s Motion for Summary Judgment
on this claim must be denied. All that remains of ABC’s open account claim is the balance
attributable to the Fuels Hangar. But there is a genuine dispute of material fact as to how
much of the balance is attributable to each hangar. For this reason, summary judgment for
ABC on the remainder of the claim is not appropriate.
Conclusion
For the reasons discussed above, Plaintiff ABC’s Motion for Summary Judgment
(Dkt. 44) is DENIED; and Defendants Penn and Old Republic’s Motion for Partial
Summary Judgment as to Penn and Summary Judgment as to Old Republic (Dkt. 47) is
GRANTED.
IT IS SO ORDERED this 24th day of October 2024.

10