Graphic Builders LLC v. RCM Modular, Inc.

646 F.Supp.3d 303

The GRAPHIC BUILDERS LLC, Plaintiff, v. RCM MODULAR, INC., Defendant.

Civil Action No. 19-12495-NMG

United States District Court, D. Massachusetts

Signed December 20, 2022

Eric G. Penley, Richard E. Briansky, Peckar & Abramson, P.C., Boston, MA, for Plaintiff.

James M. Donovan, Brown & Brown, PC, Bedford, MA, Richard A. Davidson, Jr., Davidson Law Offices, Bedford, MA, for Defendant.

MEMORANDUM & ORDER

GORTON, United States District Judge

This case arises out of a commercial construction dispute between a general contractor and its subcontractor. Pending before the Court are two motions: 1) a motion for summary judgment submitted by the subcontractor, RCM Modular, Inc. ("RCM" or "defendant"), in July, 2022 (Docket No. 31) and 2) a motion for leave to file an amended complaint filed by the general contractor, The Graphic Builders LLC ("TGB" or "plaintiff"), in August, 2022 (Docket No. 34). For the reasons that follow, the Court will allow RCM's motion for summary judgment and deny TGB's motion for leave to file an amended complaint.

I. Background

A. Factual Background

The underlying facts are familiar to the parties and have been discussed by this Court previously. See Arch Ins. Co. v. Graphic Builders LLC, 519 F. Supp. 3d 54 (D. Mass. 2021), aff'd, 36 F.4th 12 (1st Cir. 2022); Docket No. 23. In brief, the parties' dispute emerges out of the construction of a four-story apartment building in Charlestown, Massachusetts begun in May, 2017 ("the Project"). TGB contracted with the property owner, 32 Cambridge Street LLC ("the Property Owner"), to construct the new building using a modular method and then subcontracted with RCM to fabricate and assemble certain modular components for the Project ("the Subcontract").

The Subcontract required, inter alia, that RCM procure a manufacturer's warranty for the windows that it installed. In May, 2018, TGB alerted RCM that windows in the modular units were leaking and modular exteriors were misaligned. TGB arranged for a third-party contractor to remediate the issues. Meanwhile, RCM was unable to produce a warranty to TGB from the window manufacturer, InLine FiberGlass Doors and Windows ("InLine"). TGB and RCM communicated as to the ongoing issues and continued to attempt to produce a manufacturer's warranty for the defective windows. Those efforts ultimately were unsuccessful and arbitration and litigation proceedings commenced in the fall of 2019.

Before reviewing the procedural history of this matter, the Court notes the existence of an additional warranty about which the parties dispute relevance. In April, 2020, a company related to TGB, Tocci Building Corp. ("Tocci"), provided the Property Owner with a $2,000,000 limited warranty as to the Project which covered certain aspects of RCM's performance under the Subcontract ("the Tocci Limited Warranty"). Neither TGB nor RCM was a party to the Tocci Limited Warranty.

B. Procedural Background

TGB brought suit against RCM in Suffolk Superior Court in September, 2019, and amended its complaint shortly thereafter to add a defendant surety, Arch Insurance Company ("Arch"). Arch removed the lawsuit to federal court in December, 2019. It had already brought its own suit against TCG and RCM in the District of Massachusetts earlier that month. After the state court action was removed, this Court consolidated the two actions and, in March, 2020, entered a stay of the proceedings between TGB and RCM pending the resolution of their ongoing arbitration.

A panel of arbitrators from the American Arbitration Association ("the AAA") issued an Award of Arbitration ("the Arbitral Award") to TGB on May 7, 2021. RCM remitted the full amount due to TGB later that month. Following the issuance of the Arbitral Award, RCM moved to dismiss this action and lift the stay of proceedings (Docket No. 14). In January, 2022, this Court denied RCM's motion to dismiss, as well as a motion to dismiss filed prior to the entry of the stay, but lifted the stay of proceedings (Docket No. 23).

RCM answered TGB's complaint in April, 2022, and filed the pending motion for summary judgment in July, 2022 (Docket No. 31). TGB filed the pending motion for leave to file an amended complaint and add a new defendant in August, 2022 (Docket No. 34). Both motions are ripe for consideration by this Court. The proposed claims in TGB's amended complaint are dependent upon resolution of issues raised by the motion for summary judgment of RCM. Thus, the Court will first resolve the motion for summary judgment before turning to the motion to amend the complaint.

II. Defendant's Motion for Summary Judgment

A. Legal Standard

The role of summary judgment is "to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991) (quoting Garside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir. 1990)). The burden is on the moving party to show, through the pleadings, discovery and affidavits, "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).

A fact is material if it "might affect the outcome of the suit under the governing law . . . ." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact exists where the evidence with respect to the material fact in dispute "is such that a reasonable jury could return a verdict for the nonmoving party." Id.

If the moving party satisfies its burden, the burden shifts to the nonmoving party to set forth specific facts showing that there is a genuine, triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court must view the entire record in the light most favorable to the non-moving party and make all reasonable inferences in that party's favor. O'Connor v. Steeves, 994 F.2d 905, 907 (1st Cir. 1993). Summary judgment is appropriate if, after viewing the record in the non-moving party's favor, the Court determines that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. 2548.

B. Application

RCM seeks summary judgment on grounds that TGB opted to arbitrate the claims raised in this litigation and accepted an Arbitral Award deciding those claims. TGB responds that the doctrine of res judicata does not preclude it from maintaining its suit in this Court.

1. Res Judicata Effect of Arbitral Awards

The doctrine of res judicata precludes a plaintiff from pursuing claims that were litigated to a valid and final judgment in an earlier action, as well as those claims that were not previously litigated but could have been. See, e.g., Blanchette v. Sch. Comm., 427 Mass. 176, 179 n.3, 692 N.E.2d 21, 24 n.3 (1998) (describing the form of res judicata known as claim preclusion). In the context of claim preclusion resulting from prior arbitration proceedings, an arbitral award has a preclusive res judicata effect "as to all claims heard by the arbitrators." FleetBoston Fin. Corp. v. Alt, 638 F.3d 70, 79 (1st Cir. 2011) (quoting Apparel Art Int'l, Inc. v. Amertex Enters. Ltd., 48 F.3d 576, 585 (1st Cir. 1995)).

An earlier judgment, or arbitral award, is entitled to such a preclusive effect if 1) the prior action resulted in a final judgment on the merits, 2) the causes of action alleged in the subject actions are sufficiently identical and 3) the parties are likewise sufficiently identical or closely related. Id. (citation omitted); see also DaLuz v. Dep't of Corr., 434 Mass. 40, 45, 746 N.E.2d 501, 505 (2001). Res judicata does not apply to claims which were submitted to arbitration but then found to be outside the remit of the arbitrator or otherwise "not properly arbitrable." Acciavatti v. Pro. Servs. Grp., Inc., 982 F. Supp. 69, 80 (D. Mass. 1997).

2. The Arbitration Proceedings

Although arbitration proceedings and arbitral awards may be difficult to assess for res judicata purposes if the arbitrator fails to provide a full explanation for its decision, see, e.g., FleetBoston, 638 F.3d at 80, the underlying proceedings and the reasoning of the Arbitral Award are set out with sufficient detail here. The proceedings concerned "TGB and RCM" and resolved disputes arising "solely from the Subcontract". With respect to the performance of RCM under the Subcontract, the AAA panel found that RCM breached several of its obligations to TGB

by fabricating modular units which were defective and not code compliant in many respects, including, but not limited to, electrical, plumbing, finishing and window defects.

The AAA panel focused on the improper installation of InLine windows by RCM and concluded that issues with the windows were

caused by both manufacturing and installation defects all of which were the contractual responsibility of RCM.

As a result of those and other breaches, the AAA panel ultimately awarded TGB about $1,800,000 in damages for RCM's failure to perform its obligations under the Subcontract. The Arbitral Award was described as a "full and final resolution of all claims and counterclaims" submitted in the arbitration proceedings. TGB accepted the award and RCM remitted the full amount of damages due to TGB.

In another section of the Arbitral Award, the AAA panel addressed claims brought with respect to the Tocci Limited Warranty (referred to as the "TBC Warranty" in the Arbitral Award). The panel denied TGB's claim because it found that any obligation owed to the Property Owner under the Tocci Limited Warranty was "borne solely by [Tocci] not TGB." It noted that it would have denied the claim on the merits in any event because TGB failed to produce sufficient evidence of the costs it purportedly incurred under the Tocci Limited Warranty.

Among other findings in the section pertaining to window warranties, the AAA panel recognized that "TGB was...