Allan Spear Construction LLC v. Caddell Construction Co (DE) LLC et al

Filing 25

ORDER AND OPINION granting 16 Defendants Travelers Casualty and Surety Company of America, Fidelity and Deposit Company of Maryland, and Zurich American Insurance Company's Motion for Summary Judgment Signed by Honorable Richard M Gergel on 2/28/2018.(sshe, )

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
ALLAN SPEAR CONSTRUCTION, LLC,
Plaintiff,
v.
CADDELL CONSTRUCTION CO. (DE),
LLC ; TRAVELERS CASUALTY AND
SURETY COMPANY OF AMERICA;
FIDELITY AND DEPOSIT COMPANY
OF MARYLAND; AND ZURICH
AMERICAN INSURANCE COMPANY,
Defendants.

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Case No. 2: 17-cv-01423-RMG

ORDER AND OPINION

This matter is before the Court on Defendants Travelers Casualty and Surety Company of
America, Fidelity and Deposit Company of Maryland, and Zurich American Insurance
Company' s (collectively, the "Moving Defendants") Motion for Summary Judgment (Dkt. No.
16). For the reasons set forth below, the Motion for Summary Judgment is granted.

I.

Background
The Court construes the facts in the light most favorable to the non-moving party. This

contract dispute case arises out of the construction of the Goose Creek Nuclear Power Facility
(the "Facility") located near Charleston, South Carolina. (Dkt. No. 1-1.)

The United States

Department of the Navy hired Defendant Caddell Construction Co. (DE), LLC ("Caddell") as
general contractor to construct the Facility.

In connection with construction of the Facility,

Caddell obtained surety bonds, as required by statute, from the Moving Defendants to ensure
payment of vendors, suppliers, and subcontractors. (Dkt. No . 1-1 iJ 58 .) Subsequently, in or
about June 2016, Caddell entered into a contract with Plaintiff Allan Spear Construction, LLC
("ASC") under which ASC would provide supplemental concrete for the Facility. The instant

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litigation concerns a provision of this contract, which states, " [ASC] will have a minimum of 12
consecutive weeks to provide a minimum of 20 workers over the 12 weeks period." (Dkt. No.
16-1.) ASC interprets this provision to mean that Caddell would pay ASC for a minimum of
twenty laborers for a period of at least twelve weeks regardless of whether Caddell actually used
the laborers. (Dkt. No. 1-1

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17.) Furthermore, ASC asserts that this provision was included so

that ASC would be compensated for training, credentialing, lodging, transporting, and insuring
its concrete workforce to be on hand for the Facility. (Dkt. No.

1-1~14 . )

Caddell denies that it

had any contractual obligation to compensate ASC for a minimum number of laborers if Caddell
did not actually use them. (Dkt. No. 5 ~~ 17- 18.)
During construction, Caddell initially used at least twenty ASC laborers and fully paid
ASC for them; however, as Caddell began to meet its deadlines, it reduced its usage of ASC
laborers but continued to compensate ASC for the minimum number. (Dkt. No. 1-1

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18-20.)

Caddell then requested ASC to allow Caddell to buy out the remainder of their contract. In
response, ASC asked for a proposed buy-out figure but received no response from Caddell.
(Dkt. No. 1-1

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21.) Subsequently, Caddell continued to use a reduced number of ASC laborers

and paid for laborers actually used, refusing to pay for the twenty-worker minimum. (Dkt. No.
1-1

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22.) As a result, ASC demanded $595,060.00 from Caddell for money allegedly owed for

the minimum labor provision. (Dkt. No.

1-1~23.)

On April 24, 2017, ASC filed suit in the Charleston County Court of Common Pleas,
Civil Action No. 2017-CP-10-2017, bringing causes of action against Caddell for breach of
contract, breach of contract accompanied by a fraudulent act, fraud and misrepresentation, and
negligent misrepresentation, and a cause of action against all Defendants for suit on a bond.
(Dkt. No. 1-1 at 5- 10.) On May 31 , 2017, the Defendants timely removed the case on the

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grounds of federal question and diversity jurisdiction.

(Dkt. No. 1.)

On June 1, 2017, the

Moving Defendants and Caddell filed Answers respectively. (Dkt. Nos. 4, 5.) On January 29,
2018 , the Moving Defendants filed the pending Motion for Summary Judgment. On February
12, 2018, ASC filed an Affidavit of Allan Spear in response to the motion (Dkt. No. 22-1), and
on February 21 , 2018, the Moving Defendants filed a reply thereto (Dkt. No. 24.) The matter is
now ripe for the Court' s consideration.

II.

Standard
Summary judgment "should be rendered if the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2); see

Celotex Corp. v. Catrett, 4 77 U.S. 317, 322- 23 (1986); see also Anderson v. Liberty Lobby, Inc.,
4 77 U.S. 242, 250 (1986). The moving party has the burden of showing-"that is, pointing out
to the district court-that there is an absence of evidence to support the nonmoving party's case."

Celotex, 477 U.S. at 325. Once the moving party makes this showing, the opposing party must
"go beyond the pleadings" to evince "specific facts showing ... a genuine issue for trial. " Id. at
324. A genuine issue of material fact-one "that might affect the outcome of the suit under the
governing law"-exists if, in viewing the record and all reasonable inferences drawn therefrom
in a light most favorable to the non-moving party, a reasonable fact-finder could return a verdict
for the non-movant. Anderson, 477 U.S. at 248. The nonmoving party is required to submit
evidence of specific facts by way of affidavits, depositions, interrogatories, or admissions to
demonstrate the existence of a genuine and material factual issue for trial. Celotex, 477 U.S. at
322. However, "the mere existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment; the requirement is that
there be no genuine issue of material fact. " Anderson, 477 U.S . at 247-48 .
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III.

Discussion
In support of their Motion for Summary Judgment, the Moving Defendants contend that

ASC ' s only cause of action against them-suit on a bond-cannot be maintained because it does
not fall within the parameters of the Miller Act, 40 U.S.C. §§ 3131-3134, which provides a
remedy only to parties who actually furnish labor and materials rather than contract damages for
unused labor. In opposition, ASC does not provide substantive arguments, claiming that it is
unable to justify its opposition because the Defendants have not responded to ASC ' s discovery
responses. In reply, the Moving Defendants attach responses to ASC's discovery requests and
maintain that this is a breach of contract case between ASC and Caddell since the' Miller Act
does not apply.
The Miller Act applies to contracts exceeding $100,000 "for the construction, alteration,
or repair of any public building or public work of the Federal Government," requiring, in
pertinent part, the contractor to furnish the Government with 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) (emphasis added) . A civil action on the payment bond may be brought by a "person
that has furnish ed labor or material in carrying out work provided for in a contract for which
[the] payment bond is furnished . . . and that has not been paid in full[.]" 40 U.S.C. § 3133(b)(l)
(emphasis added) . The rationale of the Miller Act is "to give those supplying labor and materials
for government contracts protection comparable to that furnished by mechanics ' . .. liens where
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private construction is involved."

U S. for Use of Pittsburgh-Des Moines Steel Co. v.

MacDonald Constr. Co. , 281 F. Supp. 1010, 1013 (E.D. Mo. 1968) (citing Arthur N Olive Co. v.
United States, 297 F.2d 70 (1st Cir. 1961)).

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As the Moving Defendants point out, courts have consistently held that the surety of a
bond furnished by the Miller Act may not be held liable for claims which a subcontractor may
have against the prime contractor not based on labor or materials furnished. See id. (holding that
subcontractor was not entitled to recover on surety bond for "credit extended" rather than "labor
performed" or "materials furnished" because the former is not within the scope of the Miller
Act); see also US., to Use of Watsabaugh & Co. v. Seaboard Sur. Co., 26 F. Supp. 681 , 688 (D.
Mont. 193 8) (holding that statutory predecessor to Miller Act "does not include a guarantee of
profits which a contractor or subcontractor may expect to make, or a promise to make good any
loss that either of them may suffer" because purpose of the payment bond is to protect persons
furnishing labor and materials), aff'd 106 F.2d 355 (9th Cir. 1939). Here, by

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own

allegations, Caddell paid for the laborers actually used but breached their contract by refusing to
meet the twenty-laborer-minimum provision. Because ASC seeks damages arising out of an
agreement to pay for twenty laborers not actually used-rather than "labor performed" or
"materials furnished"-the Miller Act does not provide the remedy.

Accordingly, the Court

finds that ASC's only cause of action against the Moving Defendants fails as a matter of law.
Therefore, the Court grants the Moving Defendants' Motion for Summary Judgment.
IV.

Conclusion

For the reasons set forth above, the Motion for Summary Judgment (Dkt_
No. 16) is
GRANTED.

The only cause of action against Travelers Casualty and Surety Company of

America, Fidelity and Deposit Company of Maryland, and Zurich American Insurance Company
is dismissed.
AND IT IS SO ORDERED.

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Richard Mark Gergel
United States District Court Judge
February 2'8, 2018
Charleston, South Carolina

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