United States of America for the use of Sprinkle Masonry, Inc. v. THR Enterprises, Inc. et al
Filing
21
OPINION AND ORDER that the Court GRANTS Sprinkle's 13 Motion to Consolidate. It is ORDERED that Civil Action No. 2:14-cv-252 be consolidated with Civil Action No. 2:14-cv-251, and Civil Action No. 2:14-cv-251 shall be identified as the lead case. Signed by Magistrate Judge Lawrence R. Leonard and filed on 9/23/2014. (rsim, )
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division
UNITED STATES OF AMERICA, for the
use of SPRINKLE MASONRY, INC.,
Plaintiff,
CaseNo.:2:14cv251
THR ENTERPRISES, INC.,
and
HANOVER INSURANCE CO.,
Defendants.
UNITED STATES OF AMERICA, for the
use of SPRINKLE MASONRY, INC.,
Plaintiff,
CaseNo.:2:14cv252
THR ENTERPRISES, INC.,
and
HANOVER INSURANCE CO.,
Defendants.
OPINION AND ORDER
This matter is before the Court on Plaintiff Sprinkle Masonry, Inc.'s ("Sprinkle") Motion
to Consolidate, ECF No. 13,1 filedon August 21, 2014. Therein, Sprinkle argued that this Court
1All electronic filing numbers, unless otherwise indicated, are taken from Civil Action 2:14-cv-25l. The Motion to
Consolidate was filed in both civil actions; however, in Civil Action No. 2:14-cv-252, only the Motion to
Consolidate, ECF No. 11, and Memorandum in Support of the Motion to Consolidate, ECF No. 12, were filed. In
Civil Action No. 2:14-cv-251, all relevant pleadings were filed including the Motion to Consolidate, ECF No. 13,
should consolidate its two pending actions, Civil Action No. 2:14-cv-251 ("Case 251") and Civil
Action No. 2:14-cv-252 ("Case 252"), on the grounds, inter alia, that both actions involve
common questions of law and fact. ECF No. 14 at 2. Defendants THR Enterprises, Inc. and
Hanover Insurance Co. ("THR" collectively) opposed Sprinkle's Motion to Consolidate on
August 28, 2014, ECF No. 15, and Sprinkle replied on September 2, 2014, ECF No. 16. The
Court conducted a hearing on September 17, 2014. Mr. John Norris, Jr. appeared on behalf of
Sprinkle, and Mr. David Hearne appeared as counsel for THR. Accordingly, the motion is ripe
for disposition.
I. FACTUAL AND PROCEDURAL BACKGROUND
Sprinkle initiated two separate actions against THR, filing both Case 251 and Case 252
on May 30, 2014. Although the cases alleged identical counts—Count I for Breach of Contract,
Count II for Unjust Enrichment/Quantum Meruit, and Count III for a Miller Act Claim—the
factual allegations differed slightly.
Case 251 involved Sprinkle's provision of labor and
materials furnished for renovations on Building 584 on Langley Air Force Base. ECF No. 1 at 2,
H7. According to the subcontract between Sprinkle and THR for Building 584, Sprinkle agreed
to provide labor and materials in exchange for $163,753.00. Id. at 3, H 10. Sprinkle initiated
Case 251 to recover $42,546.40 that Sprinkle alleged was unpaid and due under the subcontract.
Id., U 13. Sprinkle claimed that THR had received payment from the government for this work,
but had failed to pay Sprinkle. Id. at 4, Iffl 16-18. The parties consented to jurisdiction by a
United States Magistrate Judge on August 6,2014. ECF No. 10.
Case 252 involved Sprinkle's subcontract for labor and materials furnished in relation to
the Memorandum in Support of the Motion to Consolidate, ECF No. 14, the Memorandum in Opposition to the
Motion to Consolidate, ECF No. 15, and the Reply in Response to the Motion to Consolidate, ECF No. 16.
2
Building 586 on Langley Air Force Base. ECF No. 1 at 2, %7 (Case 252). Sprinkle agreed to
provide labor and materials for the renovations in exchange for $167,303.00, id. at 3, f 10, and
Sprinkle initiated Case 252 to recover $71,869.00 that Sprinkle alleged was unpaid and due
under the subcontract, id, ^ 12. Identical to Case 251, Sprinkle claimed that THR had been paid
by the government for the work, but had failed to pay Sprinkle. Id. at 4, fflf 16-18. In response,
THR filed a counterclaim on the grounds that Sprinkle had failed to account for credits from
change orders in its calculation of the final bill. ECF No. 6, at 7-8, ^ 5-6 (Case 252). Moreover,
THR claimed that Sprinkle owed THR for overbilling in the amount of $18,000.00. Id. at 8, f 67. The parties consented to the jurisdiction of a United States Magistrate Judge in this case on
August 25,2014. ECF No. 13 (Case 252).
In its Motion to Consolidate Cases 251 and 252, Sprinkle asserted that both actions
involve common questions of law and fact. ECF No. 13 (Case 251). Specifically, Sprinkle
argued that both seek to recover under breach of contract, unjust enrichment/quantum meruit,
and Miller Act claims. ECF No. 14 at 2. Moreover, Sprinkle alleged that both cases involve
similar factual circumstances since both cases deal with construction renovation at Langley Air
Force Base, and all the individuals involved in the subcontracts were identical. Id. THR and
Sprinkle are represented by the same counsel in both actions. Id. THR opposed consolidation on
the theory that Case 251 presented a pass-through claim and as such should not be consolidated
with Case 252's claim for failure to pay. ECF No. 15 at 2.
II. ANALYSIS
As a preliminary matter, at the hearing, it was apparent that THR's original opposition to
consolidation based on the alleged presence of a pass-through claim in Case 251 was no longer at
issue. A pass-through claim is a claim: "(1) by a party who has suffered damages; (2) against a
responsible party with whom it has no contract; (3) presented through an intermediary who has a
contractual relationship with both." Brenton T. Wheatley and Jessica Neufeld, The Universal
Applicability ofPass-Through Claims to all Parties to a Construction Project, 32 WTR Constr.
Law 12 (Am. Bar Ass'n 2012). Most often, pass-through claims arise in construction contracts
because "the subcontractor releases all claims it may have against the contractor in exchange for
the contractor's promise to pursue those claims against the owner and remit any recovery to the
subcontractor." Interstate Contracting Corp. v. CityofDall., 135 S.W.3d 605, 610 (Tex. 2004)
(citation omitted) (responding to the Fifth Circuit's certified question on whether Texas law
recognized pass-through claims). Conversely, a Miller Act claim allows a subcontractor to sue
on the payment bond when he "has not been paid in full within 90 days after the day on which
the person did or performed the last of the labor." 40 U.S.C. § 3133(b)(1). Moreover, the
federal government is not liable under the Miller Act for a subcontractor's suit on the payment
bond. Mat§3133(b)(3)(5).
At the hearing, counsel for Sprinkle explained that THR and Sprinkle are currently
negotiating a pass-through claim that is unrelated to the damages sought in Case 251. Based on
that representation, THR stated that it had wrongly assumed when drafting its opposition that the
damages sought in Case 251 were the same as those being negotiated between the parties in the
independent pass-through claim. However, upon confirmation by Sprinkle's counsel at the
hearing that Case 251's damages claims were indeed distinct from the pass-through claim
presently under negotiation, THR agreed that Case 251 did not contain a pass-through claim.
Pursuant to Federal Rule of Civil Procedure 42(a) ("Rule 42(a)"), a court may consolidate
actions if they involve a "common question of law or fact." Fed. R. Civ. P. 42(a). "[A] motion
to consolidate must meet the threshold requirement of involving a common question of law or
fact,. . . then whether to grant the motion becomes an issue of judicial discretion." Pariseau v.
Anodyne Healthcare Mgmt., Inc., No. 3:04-cv-630, 2006 WL 325379, at *2 (W.D.N.C. Feb. 9,
2006). Indeed, "courts have broad discretion" to consolidate cases under Rule 42(a). A/S J.
Ludwig Mowinckles Rederi v. Tidewater Constr. Co., 559 F.2d 928, 933 (4th Cir. 1977). When
determining the appropriateness of consolidation, the Fourth Circuit has directed that the court
consider the following factors:
[T]he risk of inconsistent adjudications of common factual and legal issues, the burden
on the parties, witnesses and available judicial resources posed by multiple lawsuits, the
length of time required to conclude multiple suits as against a single one, and the
relative expense to all concerned of the single-trial, multiple-trial alternatives.
Arnold v. E. Air Lines, Inc., 681 F.2d 186, 193 (4th Cir. 1982). These factors can be broken
down into two categories: those that favor consolidation, including risk of inconsistent
adjudications, burden on the parties, judicial economy, and time and expense saved by
consolidation; and those factors that weigh against consolidation, including prejudice, jury
confusion, and time and expense created by consolidation. See Pariseau, 2006 WL 325379, at
*2. Although a court must consider all of these factors, "judicial economy generally favors
consolidation." Switzenbaum v. Orbital Science Corp., 187 F.R.D. 246,248 (E.D. Va. 1999)
Turning first to whether the cases involve a common question of fact and law, the Court
FINDS that Cases 251 and 252 have common questions of fact and law.
Factually, the
subcontracts are similar because the construction projects both involved masonry renovations,
the projects were both performed on Langley Air Force Base only a few blocks apart, and the
parties and individuals involved in the subcontracts were identical. Legally, both cases involve
5
the same claims including breach of contract, unjust enrichment/quantum meruit, and Miller Act
claims.
Although Case 252 does contain a counterclaim not included in Case 251, the
counterclaim still arises out of the same facts surrounding the renovations Sprinkle performed at
Langley Air Force Base. Accordingly, the cases involve common questions of law and fact.
Next, considering the factors outlined by the Fourth Circuit, the Court FINDS that
consolidation is clearly appropriate in this case. Regarding the factors that favor consolidation,
first, the risk of inconsistent adjudication if the cases remain separate is substantial as both cases
involve similar factual situations involving nearly identical legal claims. Second, it would be
more burdensome for the parties to continue the cases separately because discovery and trial
would be duplicative. Here, the parties, potential witnesses, and counsel are identical in both
cases.
Accordingly, not consolidating would have the effect of substantially increasing the
amount of discovery and trial preparation. Third, judicial economy favors consolidation as the
court can dispense with the similar legal issues in one adjudication. Finally, the parties will save
time and expense through consolidation by having one trial and one discovery process, rather
than two.
The factors that weigh against consolidation—prejudice, jury confusion, and time and
expense created by consolidation—are not substantial in this case. THR's only allegation of
prejudice related to the presence of the alleged pass-through claim; specifically, that
"[c]onsolidation will prejudice THR since Civil Action No. 2:14cv251 cannot proceed unless
and until the suspension of work is lifted and Sprinkle submits a properly certified [pass-through]
claim." ECF No. 15 at 4. Having established at the hearing that there is no pass-through claim
in Case 251, THR no longer faces any prejudice on these grounds. Moreover, there does not
appear to be a threat of jury confusion as the two buildings involved can be identified by their
building numbers when presenting argument, evidence, and jury instructions. Finally, neither
party should incur any additional expense through consolidation, rather, the parties will save
time and expense by litigating the cases together.
III. CONCLUSION
For the foregoing reasons, the Court GRANTS Sprinkle's Motion to Consolidate, ECF
No. 13. It is ORDERED that Civil Action No. 2:14-cv-252 be consolidated with Civil Action
No. 2:14-cv-251, and Civil Action No. 2:14-cv-251 shall be identified as the lead case.
Lawrence R. Leonard
United States Magistrate Judge
Norfolk, Virginia
September 22, 2014
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?