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United States v. International Fidelity Insurance Co.

United States District Court, C.D. California

September 4, 2019

UNITED STATES OF AMERICA, for the use and benefit of NASATKA BARRIER, INCORPORATED d/b/a NASATKA SECURITY, Plaintiff,
v.
INTERNATIONAL FIDELITY INSURANCE COMPANY, et al., Defendants. and RELATED CLAIMS.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW AS TO DEFENDANTS' COUNTERCLAIM, THIRD-PARTY COUNTERCLAIM, AND AFFIRMATIVE DEFENSES

          HONORABLE DALE S. FISCHER UNITED STATES DISTRICT JUDGE.

         This action involves a dispute between Plaintiff United States of America, for the use and benefit of Nasatka Barrier, Inc., d/b/a Nasatka Security (Nasatka), and Third-Party Defendant North American Specialty Insurance Company (NAS) on one hand, and Defendants and Cross-claimants International Fidelity Insurance Company, Insight Environmental Engineering & Construction, Inc. (IFIC), Cesight Joint Venture, and Everest Re-Insurance Company (Defendants) on the other hand. The dispute arises from work performed by Nasatka for U.S. Army Corps of Engineers (USACE) contract Number: W912DW-13-C- 0024, Project Name: FY2012 Access Control Point (ACP) Infrastructure Phase I, PN 66206, a federal construction project at Joint Base Lewis-McChord, WA (the Project).[1] Nasatka filed suit for breach of contract, recovery under the Miller Act, and quantum meruit on February 19, 2016. Dkt 1. (Compl.) Defendants asserted a counterclaim against Nasatka for breach of contract, a third-party claim regarding Nasatka's performance bond, and affirmative defenses relating to offset. Dkts. 34, 36 (Answers). This action was tried before the Court from October 16, 2018 to October 18, 2018.

         Having heard and reviewed the evidence and having considered the parties' post-trial briefs, the Court makes the following findings of fact and conclusions of law.[2]

         FINDINGS OF FACT

         1. Nasatka entered into a subcontract with InSight to provide labor and materials to complete Active (wedge) and Passive (cable) Vehicle barriers with full controls and automation and Chain Link fencing (the Nasatka Contract) on the Project for the total amount of $1, 121, 539.30. Tr. Ex. 39 (Nasatka Contract).

         2. IFIC and Everest, together with CeSight, as principal, furnished a Payment Bond according to 40 U.S.C. § 3131, to ensure prompt payment to subcontractors and suppliers furnishing labor, materials, or both in the prosecution of the work on the Project.[3] Tr. Ex. 141 (Payment Bond).

         3. NAS furnished a Performance Bond to Nasatka for the Project.[4]

         4. Section 23.4 of the Nasatka Contract specifically provides for the offset of claims in the event Nasatka owes Insight any amount relating to Nasatka's work on the Project. Tr. Ex. 39, Bates NASATKA 0004047 (Nasatka Contract).

         5. Section 23.8 of the Nasatka Contract provides: “[S]hould any legal court action be required to enforce any part of this Subcontract and/or the Subcontract Documents, or to recover damages for breach thereof, the prevailing party shall be entitled to recover as reimbursement the attorneys' fees and costs of litigation actually incurred in said legal court action.”). Id. at Bates NASATKA 0004048.

         6. Defendants did not introduce evidence of damages at trial. See Dkt. 142 (Second Amended Exhibit List identifying exhibits admitted into evidence); Dkt. 158 (Partial Judgment Order); Dkt. 171 (Order Denying Defendants' Motion for Reconsideration).

         CONCLUSIONS OF LAW

         A. Breach of Contract Counterclaim

         7. In order to prevail on a breach of contract claim, the plaintiff must prove: “(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” Oasis West Realty, LLC v. Goldman, 51 Cal.4th 811, 821 (2011). Insight and Cesight therefore had the burden to prove damages to support their breach of contract counterclaim.

         8. Cesight and Insight have not proven damages. See Ingenco Holdings, LLC, v. Ace Am. Ins. Co., 921 F.3d 803, 821-22 (9th Cir. 2019) (upholding district court's sanction ...


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