Baistar Mechanical, Inc. v. Continental Insurance Company ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
BAISTAR MECHANICAL, INC., )
Plaintiff, §
v. § Civil Case No. 13-01325 (RJL)
CONTINENTAL INSURANCE §
COMPANY, ) F I L E D
Defendant. § MAY 2 2 2014
MEMORANDUM OPINION C°JSTS'§’.f'zh“i'§l§lfl§§?'鑧l‘f,‘€f.l,la
(MayZ_?/,zoi¢i) [Dkt. #7]
Plaintiff Baistar Mechanical, Inc. ("Baistar" or "plaintiff") filed this action against
Continental Insurance Company ("Continental" or "defendant") in the Superior Court of
the District of Columbia on July 15, 2013, seeking damages for breach of contract. See
Compl. [Dkt. #l-l]. On Septernber 9, 2013, Continental removed the case to this Court.
See Not. of Removal [Dkt. #l]. Now before the Court is defendant’s Motion for
Summary Judgment. See Mot. Summ. J. [Dkt. #7]. Upon consideration ofthe parties’
pleadings, the entire record in this case, and relevant laW, the Court GRANTS
defendant’s Motions for Summary Judgment.
BACKGROUND
This case involves a dispute arising out of a construction project at the Brazilian
Ernbassy in Washington, D.C. (the "Project"``). The Project involved renovations and
refurbishing of the Chancery Building of the Brazilian Embassy. See Compl. at jl 9. On
November 5, 20()5, the Federative Republic of Brazil hired Grunley Construction
Company, Inc. ("Grunley"), pursuant to a prime contract (the "Prime Contract"), to act as
the general contractor for the Project. See z'a’. In connection with the Prime Contract,
Grunley was required to obtain performance and payment bonds. See z``a’. at 11 10. On
November ll, 2008, defendant issued a payment bond (the "Bond"), as surety, on behalf
of Grunley, as principal. See ia’. Paragraph ll of the Bond contains limitations for
when a suit may be filed pursuant to the Bond, specifically requiring that:
No suit or action shall be commenced by a Claimant
under this bond other than in a court of competent
jurisdiction in the location in which the work or part of
the work is located or after the expiration of one year
from the date (l) on which the Claimant gave the
notice required by Subparagraph 4.1 or Clause 4.2.3, or
(2) on which the last labor or service was performed by
anyone or the last materials or equipment was
furnished by anyone under the [Prime Contract],
whichever of(l) or (2) first occurs.
Declaration of James Milos, Ex. A to Def.’s Mot. Summ. J. ("Def.’s Mot.") at il 3 [Dkt.
#7-2]; Payment Bond, EX. A-1 to Def.’s Mot. at ‘|l ll.
In early 2009, plaintiff entered into a subcontract (the "‘Subcontract") with Grunley
to perform certain work on the Project. See Compl. at 1 ll. By September 30, 201 l,
"Grunley completed performing the labor and services and furnishing the material and
equipment required by the Prime Contract," when plaintiff completed equipment training
at the Project site. See Declaration of Eric Snyder ("Snyder Decl.") at jl 4 [Dkt. #7-3].
As early as February 23, 201 l, Baistar invoiced Grunley for a total amount of
$2,991,801 for the work it performed pursuant to the Subcontract and approved change
orders. See Compl. at ll 15. On August 31, 2012, Baistar, through counsel, submitted a
claim to Continental pursuant to subparagraph 4.1 of the Bond. See z``d. at ll 22. On
February 8, 2013, Baistar again demanded payment from Grunley for the work it
performed on the Project. See z'a’. at ll 2l.
Baistar has been paid a total of $2,623,875.89 ofthe $2,991,801.00 owed to it for
its performance on the Project. See id. at llll 15-l6. On June 22, 2013, Baistar submitted
revised cost documentation to Continental, demanding the remaining $367,925.1 l it
claims it is owed. See z``a’. at ll 26. Neither Continental nor Grunley have paid Baistar
any portion ofthe disputed amount. See z'd. at ll 27. On July 15, 2013, Baistar filed a
one-count complaint against Continental, seeking to recover $367,925.11 against the
Bond.
STANDARD OF REVIEW
Defendant moves for summary judgment pursuant to Federal Rule of Civil
Procedure 56. Summary judgment is proper where the pleadings, stipulations, affidavits,
and admissions in a case show that there is no genuine issue as to any material fact. FED.
R. CIV. P. 56(0); Celolex Corp, v. Catrelt, 477 U.S. 317, 322 (1986). The court must
accept as true the evidence of, and draw "all justifiable inferences" in favor of, the party
opposing summary judgment. Ancz’erson v. Lz``berly Lobby, Inc., 477 U.S. 242, 255
(1986). A genuine issue exists where "the evidence is such that a reasonable jury could
return a verdict for the nonmoving party." Ia’. at 248.
ANALYSIS
This case requires a determination as to whether plaintff``s action was timely filed.
as a matter of law, under the contractual terms of the Bond.' Courts in this jurisdiction
generally recognize the validity of contractual limitations periods like the one-year
liinitations period contained in the Bond. See Vigz``lantlns. C0. v. Am. Mech. Servs. of
Ma’., LLC, 816 F. Supp. 2d 114, 118-19 (D.D.C. 201 1) ("Contractual provisions limiting
the period within which insurance policy holders may validly initiate a lawsuit are
generally enforceable under District of Columbia law.") (quoting Nkpaa’o v. Standara’
Fi)'e [ns. Co., 697 F. Supp. 2d 94, 98 (D.D.C. 2010)); see also General Ins. C0. c)fAm. v.
Interslate Serv. Co., I)ic., 701 A.2d 1213, 1221 (l\/Id. Ct. Spec. App. l997) (applying
District of Columbia law and holding that subcontractor’s claim was barred based on
materially identical one-year limitation period contained in bond).
The plain language of the Bond precludes any suit brought more than one year
after "the last labor or service was performed or the last materials or equipment was
furnished," or more than one year after providing notice of a claim under the Bond to thc
1 Plaintiff argues that its claim should not be barred because it entered into a tolling agreement
("Tolling Agreement") with Grunley on December 2l, 201 l. See Pl.’s Opp’n at llll 12-13. The
Tolling Agreement tolled all applicable statues of limitations between the parties and prevented
Baistar from entering into any litigation with Grunley for a period of one year. See z``d.
Unfortunately for the plaintiff, Continental was neither a party to, nor subject to the terms of the
Tolling Agreement, and thus cannot be prevented from raising a timeliness defense to this suit.
4
defendant, whichever occurs first. See Payment Bond, Ex. A-l to Def.’s Mot. at “,, l.
Continental argues that the work under Prime Contract was completed no later than
September 30, 2011. See Snyder Decl. at ll 4. Plaintiff, however, argues that its work
on the Project did not conclude until October 2, 2012, when it provided "consulting on
issues with the Heating, Ventilation, and Air Conditioning system that Grunley, and the
Plaintiff, installed at the project location.” Pl.’s Opp’n at l 3.
The determinative question, therefore, is whether the work performed in October
2012 was done pursuant to the Prime Contract, or simply for warranty purposes. See
U.S. for Use and Benejfzt of Lank Wooa’n)ork Co., Inc. v. CSH Corztractorsj, ]nc., 452 1``~ .
Supp. 922, 924 (D.D.C. 1978) ("[t]he determinative question" is whether the work was
"part of the original contract’ or furnished merely for the purpose oi``correcting defects, or
making repairs following inspection of the project.") (internal quotations and citation
omitted.). On this point, the sworn declaration of Eric Snyder, a Project Manager at
Grunley, is instructive. 1ndeed, l\/Ir. Snyder stated that "Grunley completed performing
the labor and services and furnishing the material and equipment required by the Prime
Contract by September 30, 2011 when Baistar Mechanical, Inc. completed equipment
training at the Project site." See Snyder Decl. at ll 4 (emphasis added). Because the
remedial consulting Baistar provided in October 2012 was not done pursuant to the Prime
Contract, I find that the work on the Prime Contract was completed no later than
September 30, 2011.
Notice of plaintiffs claim, however, was not sent to the defendant until August 31,
2012. See Compl. at ll 22. Thus, because the completion of the performance was the
first occurring event under Paragraph ll of the Bond, Baistar was required to coinmence
any action brought pursuant to the Bond within one year of Septe1nber 30, 201 1.
Unfortunately for the plaintiff, it did not file this suit until nearly a full year after the
expiration of the limitations period, and therefore its claim must be barred.
CONCLUSION
F or all the foregoing reasons, defendant’s Motion for Summary Judgment is
GRANTED. An Order consistent with this decision accompanies this l\/lemorandum
Opinion.
(/"' l
RICHARD J_\is\i§``o_i\i
United States District Judge