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United States ex rel. Stuart C. Irby Co. v. Pro Construction, Inc.

United States District Court, M.D. Georgia, Columbus Division

June 15, 2015

UNITED STATES OF AMERICA ex rel. STUART C. IRBY CO., Plaintiff,
v.
PRO CONSTRUCTION, INC., and WESTERN SURETY CO., Defendants.

ORDER

CLAY D. LAND, Chief District Judge.

Defendant Pro Construction, Inc. was awarded a federal contract to build a gas station on Fort Benning, Georgia. Pro Construction subcontracted the electrical work to Defendant Eastway Electric, L.L.C. Eastway failed to pay its materialman, Plaintiff Stuart C. Irby Company ("Irby"). The United States for the use and benefit of Irby brought suit against Eastway for breach of contract and against Defendants Pro Construction and Western Surety Co. for payment under the Miller Act, 40 U.S.C. § 3131 et seq. Default judgment was entered against Eastway.

Irby has now filed a motion for summary judgment (ECF No. 28) on its claims against Pro Construction and Western Surety Co., arguing that it is entitled to recover on its Miller Act claim as a matter of law. Pro Construction and Western Surety Co. respond with a summary judgment motion of their own (ECF No. 29), contending that the undisputed evidence establishes that Irby did not timely notify Pro Construction of its claim and did not have a good faith belief that the materials it supplied were for the work specified in the applicable contract, and thus Irby cannot prevail on its Miller Act claim. For the reasons set forth below, Irby's motion for summary judgment is granted and Defendants' motion is denied.

SUMMARY JUDGMENT STANDARD

Summary judgment may be granted only "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." Fed.R.Civ.P. 56(a). In determining whether a genuine dispute of material fact exists to defeat a motion for summary judgment, the evidence is viewed in the light most favorable to the party opposing summary judgment, drawing all justifiable inferences in the opposing party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A fact is material if it is relevant or necessary to the outcome of the suit. Id. at 248. A factual dispute is genuine if the evidence would allow a reasonable jury to return a verdict for the nonmoving party. Id. The Court will consider each party's motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration. Am. Bankers Ins. Gr. v. United States, 408 F.3d 1328, 1331 (11th Cir. 2005).

FACTUAL BACKGROUND

In 2012, the United States Army and Air Force Exchange Service awarded Defendant Pro Construction a contract to construct a gas station/convenience store on Fort Benning ("the Project"). Pro Construction furnished a payment bond in connection with the Project, which identified Pro Construction as the principal and Defendant Western Surety as the surety. Pro Construction entered a subcontract with Defendant Eastway Electric, under which Eastway was to provide all labor, material, and equipment for electrical work on the Project. Plaintiff Irby sells electrical materials. Eastway established an open account with Irby in August 2012, allowing Eastway to purchase materials from Irby on credit. Eastway did not fully pay Irby for the materials. Irby is owed an outstanding principal amount of $39, 594.08 on sixteen invoices it issued to Eastway pursuant to the open account. The agreement between Eastway and Irby imposed a 1.5% per month service charge on outstanding amounts of any invoice not paid by its due date.

Eastway ordered materials from Irby from approximately March 2013 through June 2013. Each of Irby's invoices indicated that the materials Eastway ordered were to be shipped to "Job Patton Village, " the name by which the Project was designated in Irby's accounting system. Irby last furnished materials to Eastway on June 13, 2013. On or about August 28, 2013, Irby served a "Claim Against Payment or Lien Bond" whereby Irby claimed that it is owed $39, 545.50 on the Project. Defendants received the Notice of the Claim on September 6, 2013. The Notice (i) identifies the Project, (ii) states that Eastway failed to pay Irby for materials Irby supplied for the Project, (iii) states the principal amount owed to Irby with sufficient specificity, (iv) identifies Pro as the general contractor and Western as the surety, (v) demands payment, and (vi) states that Irby will file suit to recover the amount owed if it is not paid. Irby initiated this action on February 24, 2014 asserting its claims under the bond against Defendants.

Of the sixteen invoices at issue, three cover materials supplied to Eastway after May 19, 2013, the date Defendants allege Eastway certified to Pro Construction that it completed its work on the Project. Irby argues that Eastway's work on the Project continued well after that date. Two invoices cover materials supplied to Eastway on or after June 10, 2013, the date the Project was turned over to its owner. Irby argues that work continued on the Project after that date. The materials Irby supplied to Eastway were shipped to five different addresses. For the invoices dated June 1, June 10, and June 11, 2013, Eastway instructed Irby to deliver the products to Eastway's corporate offices instead of the Project site. While Eastway was working on the Project, it was working on two other projects including one at Fort Benning, and Irby supplied Eastway with products for those projects while it supplied products to Eastway for the Project. The parties agree that Eastway failed to pay Irby for materials for the Project and that Irby is owed an outstanding balance. The parties disagree, however, on whether Irby satisfied each element of its Miller Act claim such that Defendants are responsible under the payment bond for the amount Eastway owed Irby.

DISCUSSION

The Miller Act requires a general contractor that is awarded a federal construction contract to furnish a payment bond to protect persons supplying labor and material for the project. 40 U.S.C. § 3131(b)(2); United States ex rel. Krupp Steel Prods., Inc. v. Aetna Ins. Co., 831 F.2d 978, 980 (11th Cir. 1987). "A person having a direct contractual relationship with a subcontractor... may bring a civil action on the payment bond on giving written notice to the contractor within 90 days from the date on which the person... supplied the last of the material for which the claim is made." 40 U.S.C. § 3133(b)(2). Irby argues that Pro Construction and Western Surety are liable under the payment bond's terms and the Miller Act for the outstanding principal balance Irby is owed by Eastway.

I. Irby's Motion for Summary Judgment

For Irby to recover under the Miller Act, it must prove "1) that materials were supplied for work in the particular contract at issue; 2) that [it] is unpaid; 3) that [it] had a good faith belief that the materials were for the specified work; and 4) that jurisdictional requisites are met." Krupp, 831 F.2d at 980. Irby argues that the current record establishes each of these elements. Defendants respond that the present record demonstrates that Irby did not have a good faith belief that all of the materials for which it seeks payment were provided for the Fort Benning job and that Irby ...


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