Accurate Controls, Inc. v. Cerro Gordo County Bd.

627 F.Supp.2d 976

ACCURATE CONTROLS, INC., Plaintiff and Counterclaim Defendant, v. CERRO GORDO COUNTY BOARD OF SUPERVISORS, Dean Snyder Construction Co., and Merchants Bonding Company (Mutual), Defendants and Counterclaimants, and Kevin Pals, in his capacity as Sheriff of Cerro Gordo County, Intervenor, v. Accurate Controls, Inc., Plaintiff and Counterclaim Defendant.

No. C 08-3021-MWB.

No. C 08-3035-MWB.

No. C 09-3001-MWB.

United States District Court, N.D. Iowa, Central Division.

June 18, 2009.

COPYRIGHT MATERIAL OMITTED

Jeffrey Alan Stone, Kerry A. Finley, Roger W. Stone, Simmons, Perrine, Albright & Ellwood, PLC, Cedar Rapids, LA, for Plaintiff and Counterclaim Defendant.

Stephen D. Marso, Whitfield & Eddy, PLC, West Des Moines, IA, for Defendants and Counterclaimants/Intervenor.

MEMORANDUM OPINION AND ORDER REGARDING THE PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT

MARK W. BENNETT, District Judge.

TABLE OF CONTENTS
I. INTRODUCTION .......................................................... 979

A. Factual Background ................................................. 979
        1. The parties, the project, and the bids .......................... 980
        2. Payment applications ............................................ 980
        3. Certifications of acceptance of the project ..................... 981
     B. Procedural Background .............................................. 981
        1. Accurate's first lawsuit ........................................ 981
        2. Accurate's second lawsuit ....................................... 981
        3. Accurate's third lawsuit ........................................ 981
        4. The cross-motions for summary judgment .......................... 982
        5. The proposal to certify questions ............................... 984
 II. LEGAL ANALYSIS ........................................................ 984
     A. Standards For Summary Judgment ..................................... 984
     B. The Cross-Motions For Summary Judgment ............................. 985
        1. Subject matter jurisdiction ..................................... 985
           a. Arguments of the parties ..................................... 985
           b. Analysis ..................................................... 986
        2. Timeliness ...................................................... 989
           a. Arguments of the parties ..................................... 989
           b. Analysis ..................................................... 989
        3. Section 573.15's requirements ................................... 990
           a. Applicability ................................................ 990
              i. Arguments of the parties .................................. 990
             ii. Analysis .................................................. 992
           b. Satisfaction of § 573.15's requirements ..................... 1000
              i. Arguments of the parties ................................. 1000
             ii. Analysis ................................................. 1001
        4. Accurate's permissible recovery ................................ 1006
           a. Arguments of the parties .................................... 1006
           b. Analysis .................................................... 1006
        5. Continued viability of a Chapter 573 claim against the County
Board ........................................................ 1007
           a. Arguments of the parties .................................... 1007
           b. Analysis .................................................... 1007
III. CONCLUSION ........................................................... 1008

A sub-subcontractor for electronic security systems for a new county jail has brought three actions, now consolidated, pursuant to IOWA CODE CH. 573 to recover payment from the general contractor, the contractor's surety, and the county board of supervisors after the electrical subcontractor that directly employed the sub-subcontractor walked off the job and closed its doors without paying the sub-subcontractor. The county sheriff intervened and joined with the county board of supervisors to assert various fraud and other claims against the sub-subcontractor and to seek a temporary restraining order and preliminary injunction to compel the sub-subcontractor to provide and install the permanent operating licenses for the jail's electronic security system. Presently before the court are the original parties' cross-motions for summary judgment on various aspects of the sub-subcontractor's Chapter 573 claim.

I. INTRODUCTION

A. Factual Background

The court will not attempt here an exhaustive dissertation on the undisputed and disputed facts in this case, despite the extensive Statements of Facts submitted by the parties in support of and resistance to the cross-motions for summary judgment. Rather, the court will set forth sufficient of the facts, both undisputed and disputed, to put in context the parties' arguments concerning their cross-motions for summary judgment. Indeed, the facts necessary to explain the context of the parties' cross-motions for summary judgment in this case are a relatively small subset of the facts that might otherwise be relevant to the disposition of all of the parties' claims and defenses, where the issues presented in the cross-motions are primarily legal issues. Additional factual allegations—and the extent to which they are or are not disputed or material—will be discussed, if necessary, in the court's legal analysis.

1. The parties, the project, and the bids

In 2006, the defendant Cerro Gordo County Board of Supervisors (the County Board) let for public bids a public improvement project identified as the Cerro Gordo County Law Enforcement Center Project (the Jail Project), for construction of a new county jail located in Cerro Gordo County, Iowa. The Jail Project was let as a design-bid-build delivery system using a single prime contractor. The successful bidder for the Jail Project was defendant Dean Snyder Construction (DSC). As required by law, DSC furnished a bond for the Jail Project through defendant Merchants Bonding Company (Merchants).

Prior to DSC's bid on the Jail Project, DSC received a lump-sum bid for electrical subcontractor work from Wubbens Electric, and prior to that, Wubbens Electric had received a lump-sum bid on electronic security systems from plaintiff Accurate Controls, Inc. (Accurate). Accurate had also submitted its bid to other electrical subcontractors who were bidding on the Jail Project. Accurate was one of the approved controls contractors listed in the contract specifications for the Jail Project from the County Board. After the County Board accepted DSC's bid, DSC entered into a subcontract for electrical work with Wubbens Electric. The parties agree that, before DSC accepted Wubbens Electric's bid, Wubbens Electric had informed DSC that it was going to use Accurate for the work under Division 17 of the specifications, which pertained to the electronic security systems. Indeed, the subcontract between DSC and Wubbens expressly provided "Accurate controls [sic] to be subcontracted for all Division 17 work by Wubbens and included in this contract." Defendants' Appendix at 171. Wubbens Electric, in turn, entered into a Purchase Order contract with Accurate for the security systems part of the Jail Project for the lump-sum amount of $525,950.00, which included labor and materials for the electronic security systems for the Jail Project.

2. Payment applications

DSC, Wubbens Electric, and Accurate all engaged in work on the Jail Project. Accurate submitted payment applications to Wubbens Electric, inter alia, in December 2007 for $242,587.15, which, with a 5% retainage, resulted in a current payment due of $230,457.78, and in January 2008 for $64,333.55, with a current amount due of $61,116.86. Wubbens Electric, itself, submitted monthly payment applications to DSC in those same months. DSC used information from Wubbens Electric and its other subcontractors and suppliers to prepare DSC's pay applications to the County Board. DSC verified the accuracy of the mathematical calculations and the percentage of work claimed as completed in Wubbens Electric's pay applications. However, Accurate contends that it was never paid for either the December 2007 or January 2008 pay applications, even though the parties agree that its work on the Jail Project was complete and satisfactory. The parties also agree that Wubbens Electric ceased operations in 2008 and is now defunct.

3. Certifications of acceptance of the project

On March 11, 2008, the Chairman of the County Board signed a "Certificate Of Substantial Completion," which stated, in pertinent part, "The Owner accepts the Work or designated portion thereof as substantially complete and will assume full possession thereof at 8:00 AM February 14, 2008." Plaintiff's Appendix at 270. The parties agree that this Certificate accepted the Jail Project except for mechanical systems. The parties also agree that, on May 6, 2008, the County Board approved the final change order submitted by DSC. Furthermore, the parties agree that the County Board released the retainage except for an amount related to the mechanical systems on May 27, 2008. Finally, on November 3, 2008, the County Board passed a resolution entitled "a resolution accepting the law enforcement center project and releasing final retainage."

B. Procedural Background

1. Accurate's first lawsuit

On April 18, 2008, thirty-eight days after the Chairman of the County Board signed the "Certificate Of Substantial Completion" on March 11, 2008, Accurate filed the first Complaint in these actions initiating Case No. C 08-3021-MWB. That Complaint invoked this federal court's diversity jurisdiction, named the County Board, DSC, and Merchants as defendants, and asserted a claim for...