United States District Court, C.D. California
UNITED STATES OF AMERICA for the use and benefit of NASATKA BARRIER INCORPORATED d/b/a NASATKA SECURITY, Plaintiff,
INTERNATIONAL FIDELITY INSURANCE COMPANY, et al., Defendants. and RELATED CLAIMS.
FINDINGS OF FACT AND CONCLUSIONS OF LAW AS TO
S. FISCHER, UNITED STATES DISTRICT JUDGE
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 on the one hand,
and Defendants and Cross-claimants International Fidelity
Insurance Company, Insight Environmental Engineering &
Construction, Inc. (IFIC), Cesight Joint Venture (Cesight),
and Everest Re-Insurance Company (Defendants) on the other
hand. Nasatka filed suit for breach of contract, recovery
under the Miller Act, and quantum meruit on February 19,
2016. This action was tried before the Court from October 16,
2018 to October 18, 2018.
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.
CeSight entered into contract Number W912DW-13-C-0024 (the
Prime Contract) with the United States Army Corps of
Engineers (USACE-Seattle) under Project Name FY2012 Access
Control Point Infrastructure Phase I, PN 66206, as the prime
contractor for construction at Joint Base Lewis-McChord, WA
(the Project). Tr. Ex. 74 (Prime Contract); Tr. Ex. 39
(defining contract as Prime Contract).
USACE-Seattle was the Prime Contract holder for the Project.
Tr. Ex. 74, Bates NASATKA 0000295 (Contract No.
W912DW-13-C-0024 issued by Seattle District, Corps of
Engineers); Tr. Ex. 39 (Subcontract), Bates NASATKA 0004037
(defining USACE-Seattle as the Client); 3. The contracting
authority for the Project was the contracting officer (KO) at
the Lewis Resident Office under the USACE, Seattle District.
TT at 422:12-424:12; 436:17-25.
and Everest, together with CeSight, as principal, furnished a
Miller Act Payment Bond according to 40 U.S.C. § 3131,
to ensure payment to subcontractors and suppliers furnishing
labor, materials, or both in the prosecution of the work on
the Project. Tr. Ex. 141.
CeSight subcontracted with co-defendant Insight Environmental
Engineering & Construction, Inc. (Insight) to provide
steel decking, electrical and exterior improvements,
including the Active Vehicle Barrier (AVB) and Passive
Vehicle Barrier (PVB) systems. Tr. Ex. 39, Bates NASATKA
0004037; Dk. 117-1 at 3.
Insight entered into a $1, 121, 539.30 subcontract
(Subcontract) with Nasatka to provide all labor, material,
transportation, equipment, and other facility barriers with
full controls, automation and chain link fencing, including
the installation of the specified AVB and PVB systems in
compliance with USACE-Seattle's Prime Contract
specifications. Tr. Ex. 39 (Subcontract).
furnished a Performance Bond to Nasatka for the
dispute arose regarding Nasatka's performance on the
Project and on February 19, 2016, Nasatka filed suit for
breach of contract, recovery under the Miller Act, and
quantum meruit, seeking $1, 280, 423.69 plus attorney's
fees, interest, and penalties for alleged late payment.
Nasatka seeks payment of (1) the unpaid contract balance
under the Subcontract, (2) costs associated with work
performed after it completed the cinch-rampart controller,
and (3) unpaid service call invoices. In the alternative,
Nasatka seeks equitable relief under quantum meruit.
Nasatka's Subcontract Requirements
Subcontract incorporates provisions of the Prime Contract
that relate in any way to Nasatka's work under the
Subcontract, including provisions of the Prime Contract
required by law and referenced within the Subcontract. Tr.
Ex. 39, Bates NASATKA 004037 (Recitals); id. at
Bates NASATKA 0004038, §§ 2.1-2.6 (Incorporation of
the Prime Contract).
Section 14 of the Subcontract provides, “If any claim
or dispute shall arise between [Insight] and [Nasatka]
regarding performance of the Work, or any alleged change in
the Work, [Nasatka] shall timely perform the disputed Work
and shall give written notice of a request or claim for
additional compensation for the disputed Work within ten (10)
days after commencement of the disputed Work. [Nasatka's]
failure to give written notice within the ten (10) day period
constitutes an agreement by [Nasatka] that it will receive no
extra compensation for the disputed Work.” Id.
at Bates NASATKA 0004044.
Under Section 15 of the Subcontract, “[Nasatka] shall
perform all warranty obligations and responsibilities assumed
by [Insight] under the Prime Contract with respect to the
Work. All Work not conforming to these requirements may be
considered defective. [Nasatka] shall promptly correct any
Work rejected by [Insight] as defective or as failing to
conform to the Subcontract Documents, whether observed before
or after completion, and shall correct any Work found to be
defective or nonconforming within a period of one (1) year
from the date of completion of the Project. Should [Nasatka]
fail to correct any defective Work, [Insight] may perform or
cause to be performed the same at [Nasatka's] expense. .
. .”. Id. at Bates NASATKA 0004045.
Insight retained the right to reject Nasatka's Work after
completion of the Work if it did not conform to the Prime
Contract. See id.
Section 23.4 of the Subcontract permits Insight to offset any
claims for any amount due to Insight, including without
limitation, an amount resulting from the expense of
completing the Work, together with a reasonable charge for
awarding and administering any subcontract, any damages
caused by delays in completing the Work, and any amounts
resulting from Insight repairing or causing to be repaired
any deficiency in the Work attributable to Nasatka.
Exhibit B to the Subcontract sets forth the Statement of
Work, which obligated Nasatka to comply with all General
Requirements and the Project Specifications, including
without limitation: Specifications 01 32 01, governing
Project Schedule; 01 33 00, governing Submittal Procedures;
01 45 01, governing Contractor Quality Control; 01 45 01.10,
governing Quality Control System; 01 78 00, governing
Closeout Submittals; 01 78 23, governing Operation and
Maintenance Data; and 34 41 26.00 10, governing Access
Control Point Control System (ACPCS). Id., Ex. B, at
Bates NASATKA 0004051.
Pursuant to Exhibit B of the Subcontract, Nasatka's work
included the installation of the Access Control Point Control
System (ACPCS) as identified in the Prime Contract's
Projection Specifications under Division 34, Transportation,
Section 34 41 26.00 10, Part 1:
Furnish and install a complete, integrated, and functional
ACPCS for the Access Control Point including active vehicle
barriers, active vehicle barrier controls, traffic signals,
traffic signal controls, traffic warning signals, traffic
signs and pavement markings, wrong-way detectors, vehicle
presence detectors, Sequence of Events Recorder, data
transmission, and all interconnecting conduit and wiring.
Id. at Bates NASATKA 0004051 (listing Division 34,
Transportation, Section 34 41 26.00 ...