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United States v. Kisaq RQ 8A 2JV

United States District Court, S.D. California

April 10, 2017

UNITED STATES OF AMERICA, FOR THE USE AND BENEFIT OF HELIX ELECTRIC, INC., a California corporation, Plaintiff,
v.
KISAQ RQ 8A 2JV, a joint venture; FEDERAL INSURANCE COMPANY, a New Jersey corporation; and WESTERN SURETY COMPANY, a South Dakota corporation, Defendants KISAQ RQ 8A 2JV, a joint venture, Counter Claimant,
v.
UNITED STATES OF AMERICA FOR THE USE AND BENEFIT OF HELIX ELECTRIC, INC., a California corporation; TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA; and ROES 1 through 10, inclusive, Counter Defendants.

          ORDER

          WILLIAM Q. HAYES UNITED STATES DISTRICT JUDGE

         The matter before the Court is the motion for summary judgment and partial summary judgment filed by Defendant and Counter Claimant KISAQ RQ 2JV (“the JV”), Defendant Federal Insurance Company (“Federal Insurance”), and Defendant Western Surety Company (“Western Surety”). (ECF No. 25).

         I. Background

         On May 7, 2015, the United States of America for the Use and Benefit of Helix Electric, Inc. (“Helix”) initiated this action by filing a complaint with a jury demand against the JV, Federal Insurance, and Western Surety. (ECF No. 1). The complaint alleges the following claims for relief: (1) breach of subcontract against the JV, (2) recovery under the Miller Act Payment Bond against Federal Insurance and Western Surety, and (3) quantum meruit against the JV. Id. At the hearing on this motion for summary judgment, the Court dismissed the complaint with prejudice.

         On August 10, 2015, the JV, Federal Insurance, and Western Surety collectively filed an answer to the complaint. (ECF No. 8 at 1-8). The JV brings a counterclaim with a jury demand against Helix and Travelers Casualty & Surety Company of America (“Travelers”), and doe counter defendants. (ECF No. 8 at 9-18). The JV alleges breach of subcontract against Helix and recovery under performance and payment bond against Travelers. Id. On September 9, 2015, Helix and Travelers filed an answer to the counterclaim. (ECF No. 13).

         On October 31, 2016, Federal Insurance, the JV, and Western Surety filed a motion for partial summary judgment and summary judgment. (ECF No. 25). The JV, Federal Insurance and Western Surety move for summary judgment as to the three causes of action alleged by Helix in the complaint and the JV moves for partial summary judgment as to liability on the JV's counterclaim for breach of subcontract arising from the Helix's alleged (1) failure to adequately staff the project, (2) abandonment of the project, and (3) defective work.[1] Id. On November 21, 2016, Helix filed a response in opposition to the motion for partial summary judgment and a response to the motion for summary judgment as to Helix's complaint. (ECF No. 28). On November 28, 2016, the JV, Federal Insurance, and Western Surety filed a reply.[2](ECF No. 29).

         On February 24, 2017, the Court heard oral argument on the motion for summary judgment and partial summary judgment.

         II. Statement of Fact

         “On or about June 2, 2011, the JV entered into a written contract with the United States of America . . . for a work of improvement known as P136 Bachelor Enlisted Quarters, MCAS Cherry Point, NC (‘Project'), Contract No. N40085-11-C-4026 (‘Prime Contract').” (SUMF, ECF No. 29-1 at ¶ 1). “The Project involved the new construction of a Bachelor Enlisted Quarters building (‘BEQ'), and the replacement of medium voltage ‘offsite' work at electrical substations, duct banks, and manholes, at the Marine Corps Air Station in Cherry Point, North Carolina.” Id. at ¶ 2. “On or about November 3, 2011, the JV entered into a written subcontract with Helix to complete all of the low voltage, communications, fire alarm systems, exterior lighting, and related electrical work for the BEQ, as well as the ‘offsite' medium voltage replacement work.” Id. at ¶ 3. “The original Subcontract amount was $6, 150, 000, which was subsequently increased by $85, 466.54 in authorized change orders, resulting in a revised contract value of $6, 235, 466.54.” Id. at 4.

         The General Conditions of the Subcontract contains in part the following provisions:

[13] B. Disputes Relating to CONTRACTOR
(i) Duty to Proceed:
SUBCONTRACTOR shall proceed diligently with performance of the Work pending final resolution of any request for relief, claim, appeal, or action arising out of disputes relating to CONTRACTOR. ...
14. GUARANTEE
SUBCONTRACTOR guarantees and warrants its work against all deficiencies and defects in materials and/or workmanship. SUBCONTRACTOR agrees to replace or repair, at CONTRACTOR's discretion, at SUBCONTRACTOR's sole cost and expense, and to the satisfaction of OWNER and CONTRACTOR, any and all materials or work adjudged by OWNER or CONTRACTOR to be defective or improperly installed. This guarantee shall continue for one (1) year following final acceptance and payment under the Subcontract, or for any lengthier period required by the Contract Documents. ...
22. PERFORMANCE and PROGRESS of the WORK
A. Time is of the essence in this Subcontract . . . . The Work shall be carried on promptly, with dispatch, coordinated with other work on the Project, all to the satisfaction of CONTRACTOR and OWNER. If necessary, upon instruction from CONTRACTOR, certain parts of the Work shall be prosecuted by preference to others.
...
25. RECOURSE BY ...

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