Mountainland Supply v. Ram Constructors et al
Filing
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MEMORANDUM DECISION AND ORDER granting 37 Motion to Strike; granting 22 Motion for Summary Judgment. Signed by Judge Dale A. Kimball on 6/7/11 (alt)
______________________________________________________________________________
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
UNITED STATES OF AMERICA for the
use and benefit of MOUNTAINLAND
SUPPLY COMPANY LLC,
MEMORANDUM DECISION
AND ORDER
Plaintiff,
v.
Case No. 2:09CV915DAK
RAM CONSTRUCTORS, INC., and
WESTERN SURETY COMPANY
Defendant.
This matter is before the court on Plaintiff Mountainland Supply Company LLC’s Motion
for Summary Judgment and Motion to Strike. The court held a hearing on the motion on May
19, 2011. Plaintiff was represented by Stanford P. Fitts, and Defendant was represented by Jack
W. Reed. Having fully considered the motion, memoranda, affidavits, and exhibits submitted by
the parties and the law and facts relevant to this motion, the court enters the following
Memorandum Decision and Order.
BACKGROUND
Plaintiff Mountainland Supply Company LLC supplied Defendant RAM Constructors,
Inc. with materials for a federal highway construction project, known as the Seven MileGooseberry Road, Phase 2 Project (“Gooseberry Project”), from August 8, 2008, until
approximately April 30, 2009. Mountainland has submitted documentary evidence
demonstrating that the value of the materials supplied during that time period was $140,706.82.
There is no evidence that RAM has made any payment for the materials.
Because the United States is the owner of the Gooseberry Project, a bond of the
contractors is required under 40 U.S.C. § 3133. Defendant Western Surety is the surety of the
bond for the Gooseberry Project. Mountainland alleges that under the terms of the bond
agreement, Western Surety is liable when RAM fails to pay. Western Surety has not paid on the
bond despite RAM’s failure to pay for the materials provided.
Mountainland has submitted an open account agreement it entered into with RAM.
Under that agreement, RAM agreed to pay cash within thirty days of receipt of materials from
Mountainland. RAM claims that Mountainland overbilled it $2,057.60 on some of the materials
for the Gooseberry project and that it should have been given credit in the amount of $38,260.80
for materials not used on the Project. To support its statement that it was overbilled, RAM
asserts that it entered into a fixed-price bid with Plaintiff. Mountainland denies that there was a
fixed-price agreement and contends that the sole agreement is the open account agreement.
RAM does not attach a fixed-price agreement. The only agreement between the parties in
evidence, therefore, is the open account agreement.
On June 6, 2008, Mountainland provided bid prices for materials for the Gooseberry
Project which specifically stated that the pricing expired on June 13, 2008. Plaintiff issued
several subsequent bid prices which also expired after seven days.
RAM states that it relied on Mountainland’s initial bid pricing in providing its bid
amounts to the government. However, Mountainland’s bid prices stated that they would expire,
and RAM entered the Gooseberry Prime Contract with the government on January 14, 2008,
nearly six months before Mountainland provided RAM with bid prices. Mountainland did not
provide RAM with bid prices for Gooseberry until June 6, 2008.
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To support its allegation that it should have been given credit for materials not used on
the project, RAM asserts that it returned 240 feet of ADS pipe for a credit of approximately
$13,874.40, but Mountainland refused to issue the credit. RAM also alleges that it attempted to
return 1,440 feet of ADS pipe for an additional credit of $24,386.40, but Mountainland also
denied credit for those materials. RAM does not provide facts to support its allegations
regarding attempted returns. RAM does not identify when the materials were returned or
attempted to be returned, who for Ram did the return, or who for Mountainland received or
rejected the materials. Mountainland asserts that it has no record of any such material actually
being returned. Mountainland also points out that there are no facts to support any obligation on
the part of Mountainland to accept return of materials.
RAM takes issue with errors on Mountainland’s invoices. RAM questions whether the
location that the material was sent to is correct, whether the delivery date is correct, and whether
the signature is of a RAM employee because many are illegible. Despite any alleged clerical
issues, the invoices clearly show what materials were provided to RAM and that they were
provided for the Gooseberry Project. The only requirements under the Miller Act, is that the
invoice show the amount of materials that were furnished for the project. Moreover, RAM’s
own documents confirm approval of the invoices by RAM at the time of the project and indicate
that the materials were for the Gooseberry Project. Mountainland’s invoices were stamped
approved by RAM and initialed by Gordon Erickson, Cory Crompton, and Dennis Nielsen of
RAM.
RAM also points out that the invoices state C.O.D., which it states is inconsistent with
Mountainland’s argument that it has not been paid. However, only invoices re-printed from
Mountainland’s computer system during the course of the litigation state C.O.D. These newly
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printed invoices reflect RAM’s current status with Mountainland. The invoices produced by
RAM, which are the invoices that were sent during the time of the project, do not state C.O.D.
The controlling invoices are the ones actually sent and received by RAM, which do not state
C.O.D.
Mountainland alleges that demand for payment has been repeatedly made to RAM for the
$140,706.82 that is due and owing, but no payment has been made. Mountainland has also
demanded payment for the amount from Western Surety and no payment has been made.
Mountainland has incurred $15,682.02 in legal fees and costs in its attempt to collect the account
balance. The open account agreement between Mountainland and RAM contains a provision for
attorneys fees and costs incurred in attempting to collect on an outstanding balance. The open
account agreement also provides for 18% per annum interest on balances more than thirty days
overdue.
DISCUSSION
Mountainland’s Motion for Summary Judgment
Mountainland seeks summary judgment against Defendants under the Miller Act, arguing
that the undisputed evidence demonstrates that it provided materials to RAM for the Gooseberry
Project and RAM failed to pay for those materials. It is well settled that “the purpose of the
Miller Act is to provide security for those who furnish labor and material in the performance of
government contracts, and a liberal construction should be given the Act to accomplish this
purpose.” Fanderlik-Locke Co. v. United States, 285 F.2d 939, 942 (10th Cir. 1960). Under the
Miller Act, Mountainland is entitled to recover from Western Surety and RAM where (1)
Mountainland furnished materials to RAM, (2) has not been paid for those materials, and (3)
reasonably believed and intended that the materials be used on the Goosberry Project. Fourt v.
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United States, 235 F.2d 433, 435 (10th Cir. 1956).
RAM asserts that Mountainland has failed to meet its burden and disputed issues of
material fact preclude summary judgment. RAM argues that the invoices and proof of delivery
documents contain inconsistencies and errors, many of the signatures are illegible, and signatures
of purported recipients are either unrecognizable or not the signatures of RAM personnel.
However, Mountainland’s business records, kept contemporaneously with the project and
in the ordinary course of its business, establish that Mountainland provided materials to RAM for
the Gooseberry Project and that RAM has not paid for these materials. RAM’s own business
records reflect approval of the invoices from Mountainland. These invoices have been stamped
and initialed as approved by Gordon Erickson, Cory Crompton, and Dennis Nielsen of RAM.
RAM’s stamp also indicates that the invoice was for the Gooseberry Project. Each of
Mountainland’s unpaid invoices were mailed to RAM within a week of the date of each invoice.
Gordon Erickson of RAM spoke regularly with Cindy Keetch, Mountainland’s credit manager.
Erickson never objected to or disputed any of these invoices until two years had passed and this
lawsuit had been filed. RAM had every opportunity to object or dispute the invoices at the time
of the project, but did not raise an objection until now.
The Miller Act only requires a showing that the materials were furnished with a good
faith belief that they were used for the federal project. The Miller Act does not concern itself
with where the delivery took place, if the signature is legible, or if the date on the invoice
matches the actual date of the delivery. RAM does not contest the material points necessary
under the Miller Act. In any event, RAM approved all of the invoices in its regular course of
business.
In addition, RAM asserts that Mountainland’s calculation of the amount owed is disputed
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because Mountainland failed to account for overbillings and refused to accept materials RAM
either returned or attempted to return for credit. RAM claims that it had a firm, fixed bid with
Mountainland and the invoices do not reflect the firm, fixed price. RAM also asserts that it used
Mountainland’s firm bid price to enter into its contract with the government.
None of the evidence presented to the court supports RAM’s theory that a firm, fixedprice bid existed. The documents in evidence demonstrate that Mountainland’s bid prices were
only good for approximately one week. The documents expressly give an expiration date for the
listed prices. Erickson’s Affidavit, which is RAM’s first assertion of being overbilled, states
only that he “believes” that RAM was overbilled. And, he does not rely on or produce any
supporting documentation.
Moreover, RAM entered into its contract with the government months before
Mountainland gave RAM a bid on materials for the Gooseberry Project. The dates do not
support RAM’s theory that it relied on Mountainland’s bid in submitting its own bid to the
government. Therefore, there is no evidence to support RAM’s contention that it was overbilled.
Similarly, RAM’s claim that it returned or attempted to return materials is not supported
by any documents or evidence. RAM does not provide any document giving it the ability to
return materials at a later date, no document in relation to the return or attempted return, no letter
contemporaneous to the alleged dispute over returns, no employee testifying to being involved in
such a return or attempted return, no factual details surrounding the alleged return and attempted
return, and no document requesting payment or credit for the return. The lack of evidence in
support of RAM’s allegation cannot create a disputed fact.
Significantly, RAM does not point to anything that would obligate Mountainland to allow
returns. Under the Miller Act, Mountainland is entitled to recover for excess materials that RAM
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ordered. Courts have held that the Miller Act does not require proof that the material was
actually used in the project. A party who orders material for a project must make payment for
those materials even if it is ultimately not used. See Fourt v. United States, 235 F.2d 433, 435
(10th Cir. 1956) (Miller Act does not require use in project); United States ex rel. Ardmore
Concrete Material Co. v. Williams, 240 F.2d 561, 564 (10th Cir. 1957) (Miller Act covers extra
materials provided due to mistake of contractor). One court has recognized that it would be an
impossible burden and would defeat the purpose of the Miller Act to require the one furnishing
the materials to show that the materials were used on the project. United States ex rel. Tom P.
McDermott, Inc. v. Woods Constr. Co., 224 F. Supp. 406, 409 (N.D. Okla. 1963).
To the extent that RAM attempts to raise offsets from several other unrelated projects,
those projects are unrelated to the Gooseberry Project and Mountainland’s claim under that
project. Moreover, the other projects are all closed out. RAM cannot attempt to reopen those
projects to get offsets for the current project. There is also no evidence to substantiate RAM’s
claims regarding these unrelated projects.
The court concludes that Mountainland has met its burden under the Miller Act. The
documents in evidence support its request for payment. The documents demonstrate that RAM
ordered the materials from Mountainland for the Gooseberry Project, the materials were
provided, and RAM did not pay for the materials. RAM’s focus on place of delivery, dates, and
signatures is not material to recovery under the Miller Act. Moreover, the time to take issue with
those matters would have been before RAM approved the invoice. Furthermore, RAM has no
document or evidence to support its contention that there was a firm, fixed-price bid, that it was
overbilled, or that Mountainland was obligated to accept returned materials. Because
Mountainland has met it burden under the Miller Act, the court concludes that Mountainland is
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entitled to payment for the materials it furnished in the principle amount due of $140,706.82.
Mountainland also seeks interest on the principle amount due and attorneys’ fees under its
open account agreement with RAM. Under the Miller Act, attorneys’ fees are recoverable
against RAM and Western Surety where the contract between Mountainland and RAM provides
for attorneys’ fees. F.D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116 (1974); United States
ex rel. Rent It Co. v. Aetna Casualty & Surety Co., 988 F.2d 88, 91 (10th Cir. 1993). The open
account agreement in this case provides for interest on outstanding balances and the payment of
attorneys fees incurred in collecting outstanding balances. Accordingly, Mountainland is entitled
to payment of the principle amount due plus interest and attorneys’ fees.
Within ten days of the date of this Order. Mountainland shall submit to the court an
updated calculation for accrued interest and attorneys’ fees. Mountainland’s request for
attorneys’ fees must be detailed and supported by a declaration and billing records.
Mountainland’s Motion to Strike
Mountainland also seeks to strike the Affidavit of Gordon Erickson submitted by RAM in
opposition to Mountainland’s Motion for Summary Judgment. Mountainland argues that several
portions of the Affidavit contain impermissible summaries of business records and facts about
which Erickson is incompetent to testify. For a summary of business records to be admissible,
the party must produce the documents summarized. United States v. Samaniego, 187 F.3d 1222,
1223-24 (10th Cir. 1999). To the extent that the Affidavit summarizes records and does not
provide the underlying documents that are summarized, those portions of the Affidavit are
stricken. Statements, such as “RAM believes,” can be assessed with respect to other
documentary evidence and do not demonstrate that the affiant has the requisite knowledge to
competently testify on the subject. Many other portions of the Affidavit, such as those regarding
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other closed accounts and invoice inconsistencies, are irrelevant to the present case under the
Miller Act. Accordingly, the court grants Mountainland’s Motion to Strike these portions of the
Affidavit.
CONCLUSION
Based on the above reasoning, Plaintiff’s Motion for Summary Judgment is GRANTED
against both Defendants. Plaintiff’s Motion to Strike is GRANTED. Because this ruling
disposes of all the claims in this action, the Clerk of Court is directed to the close the case.
DATED this 7th day of June, 2011.
BY THE COURT:
DALE A. KIMBALL
United States District Judge
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