Groveland Mun. Light Dep't v. Phila. Indem. Ins. Co.

496 F.Supp.3d 582

GROVELAND MUNICIPAL LIGHT DEPARTMENT, Plaintiff,

v.PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant.

C.A. No. 18-12003-MLW

United States District Court, D. Massachusetts.

Filed October 26, 2020

Diedre T. Lawrence, Duncan & Allen, NE, LLC, Braintree, MA, Richard M. McLeod, McLeod Law Group, LLC, Hingham, MA, for Plaintiff.

Bradford R. Carver, CharCretia V. DiBartolo, Watt, Tieder, Hoffar & Fitzgerald, L.L.P., Boston, MA, for Defendant.

MEMORANDUM AND ORDER

WOLF, D.J.

Plaintiff Groveland Municipal Light Department ("GELD") alleges that defendant Philadelphia Indemnity Insurance Company ("PIIC") wrongfully refused GELD's claim for payment under bonds issued by PIIC in connection with a municipal construction contract. GELD seeks a declaratory judgment that it is a proper claimant under the bonds, and has a valid and enforceable claim against PIIC (Count 1). GELD also seeks damages for breach of contract (Count 2), breach of the implied covenant of good faith and fair dealing (Count 3), violation of M.G.L. c.93A, § 11 (Count 4), and violation of M.G.L. c.176D, § 3 (Count 5). The parties have filed cross motions for summary judgment.

For the reasons explained below, the court is granting PIIC's motion for summary judgment.

I. BACKGROUND

The following facts are not disputed. Plaintiff Groveland Municipal Light Department is the sole supplier of electricity to the town of Groveland, Massachusetts. Complaint (Docket No. 4) at ¶¶1, 3. Defendant Philadelphia Indemnity Insurance Company is a Pennsylvania Corporation with its principal place of business in Pennsylvania. Notice of Removal at ¶6.

On March 30, 2016, GELD issued an invitation for bids in accordance with M.G.L. c. 149, § 44A et seq. for a public building project (the "Project"). Following the bidding process, GELD selected general contractor GTC Construction Management ("GTC") as the lowest eligible bidder. Compl. at ¶8; PIIC Statement of Facts ("PIIC SOF") (Docket No. 13) at ¶2. GTC agreed to complete the Project for $1,202,210, later raised to $1,235,764 as a result of approved change orders, in a general construction contract entered into with GELD on May 12, 2016 (the "Contract"). Complaint at ¶¶9-10; PIIC SOF at ¶5.

GTC provided GELD with a Performance Bond and Payment Bond issued by PIIC, each in the amount of $1,202,210. Compl. at ¶10; PIIC SOF at ¶4. The Payment Bond was provided as security for all persons working or providing materials in connection with the Project, while the Performance Bond was provided as security for the faithful performance of the Contract by GTC. See Complaint at ¶¶11-12.

GTC submitted applications for payment in the total amount of $1,010,134.63 to GELD over the course of the Project. Complaint at ¶14; PIIC SOF at ¶6. GTC certified that all amounts due to subcontractors had been paid in each application for payment. GELD Statement of Facts ("GELD SOF") (Docket No. 14-1) ¶10. However, it appears GTC did not actually pay some of them. Complaint at ¶¶15-16. GELD later received demands for payment directly from subcontractors that had not been paid by GTC in the total amount of $306,967.90, and paid them. Id. at ¶17; PIIC SOF at ¶10. GELD believed that satisfaction of these demands was required by M.G.L. c.30, § 39F, which allows subcontractors that have not been paid by a general contractor to demand payment from the awarding authority directly. See PIIC SOF, Ex. 7; GELD SOF at ¶2. In combination with the $1,010,134.63 already paid to GTC, GELD paid a total of $1,317,102.83, $81,338.83 more than the Contract amount, including approved change orders, of $1,235,764.00. Complaint at ¶18.

GELD made a demand for payment by defendant of the extra $81,338.83 under the Payment Bond to PIIC on May 9, 2017.¹ See PIIC SOF at ¶10, Ex. 4. It told PIIC that it was not requesting payment under the Performance Bond. See Docket No. 13-12. PIIC denied the claim on the grounds the GELD was not a proper claimant under the Payment Bond and had acted as a volunteer in satisfying the subcontractors’ demands in excess of the contract amount. See PIIC SOF at ¶18, Ex. 8. GELD then made a demand for payment to PIIC pursuant to M.G.L. c.93 on November 3, 2017, which PIIC also denied. See PIIC SOF at ¶¶19-23, Exs. 9-10. This litigation followed.

II. PROCEDURAL HISTORY

GELD brought this action in Massachusetts Superior Court on August 2, 2018. See Docket No. 4. PIIC was served with the complaint on September 17, 2018, and filed a Notice of Removal on September 24, 2018. See Notice of Removal (Docket No. 1) at ¶2.

GELD did not contest removal. In any event, removal was permissible. PIIC timely filed a Notice of Removal and the requirements of diversity jurisdiction are met. There is complete diversity between the parties, and the Complaint seeks damages of at least $81,338.83, in excess of the statutory required minimum of $75,000. See 28 U.S.C. § 1332(a) ; Complaint at ¶19.

Both parties have since filed motions for summary judgment on all counts.

III. LEGAL STANDARDS

a. The Summary Judgment Standard

Federal Rule of Civil Procedure 56(a) provides that the court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." A factual dispute, therefore, precludes summary judgment if it is "material" and "genuine." See Anderson v. Liberty Lobby, 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

A fact is "material" if, in light of the relevant substantive law, "it has the potential of determining the outcome of the litigation." Maymi v. Puerto Rico Ports Auth., 515 F.3d 20, 25 (1st Cir. 2008) ; Martinez-Rodriguez v. Guevara, 597 F.3d 414, 419 (1st Cir. 2010). "Only disputes over facts that might affect the outcome of the suit under the governing law properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

"Cross motions for summary judgment neither alter the basic Rule 56 standard, nor warrant the grant of summary judgment per se." Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir. 1996) (internal citations omitted). "Cross motions simply require [the court] to determine whether either of the parties deserves judgment as a matter of law on facts that are not disputed." Id.

IV. DISCUSSION

GELD alleges that PIIC's denial of its claims under the "Bonds" constitutes a breach of contract (Count 2) and of the implied covenant of good faith and fair dealing (Count 3), and a violation of M. G. L. c.93A, § 11 (Count 4) and M. G. L. c.176D, § 3 (Count 5). GELD also seeks a declaratory judgment that it is a proper claimant and has a valid claim under the "Bonds" (Count 1).

Although the Complaint indicates that these claims arise under the "Bonds" generally, the parties’ briefing almost exclusively addresses the Payment Bond. This is understandable because GELD told PIIC that it was not seeking payment under the Performance Bond and, therefore, may not recover under it in this case. See Docket No. 13-12. Moreover, the court need not consider any argument raised in only a perfunctory manner. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) ("[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived."); Brown v. Trustees of Boston Univ., 891 F.2d 337, 353 (1st Cir. 1989) (accord). Therefore, to the extent, if any, that GELD is seeking relief based on the Performance Bond its claims are waived as well as unmeritorious.

a. Payment Bond

The Payment Bond binds PIIC and GTC to GELD "in the penal sum [of $1,202,210]" obligated to GELD as security in the event that GTC defaults on its obligation to pay "all persons, firms, subcontractors, and corporations furnishing materials for or performing labor" on the Project. See Payment Bond (Docket No. 13-2) at H-1; Contract (Docket No. 14-3) § 7.5.1.

PIIC contends that it properly denied GELD's request for reimbursement under the Payment Bond because GELD is not an authorized claimant under the it. According to PIIC, the terms of the Payment Bond, the Contract, and M.G.L. c.149, § 29 provide that only subcontractors or suppliers of materials may assert a claim under the Payment Bond. See PIIC Mot. Summary Judg. (Docket No. 12) at 7-10. As GELD is an owner and obligee under the contract, rather than a subcontractor or materialman, PIIC argues it is not a proper claimant.

The court agrees that GELD is not a proper claimant under the Payment Bond. Therefore, it is granting PIIC's motion for summary judgment as to all claims arising from PIIC's obligations under it.

Neither the Contract nor the Payment Bond expressly addresses who is a proper claimant under it. Nevertheless, the court finds that the Payment Bond, when read in conjunction with the Contract and statutory payment bond scheme, M.G.L. c. 149, § 29, limits claimants to subcontractors and materialmen.

The Contract requires that Contractor, GTC, furnish a Payment Bond "as a security for the payment of all persons performing labor on the project under this Contract or furnishing materials in connection with this contract." Contract (Docket No. 14-3) § 7.5.1. It references a form payment bond, which was used by the parties in this case. The Payment Bond similarly provides that PIIC's suretyship obligation will continue until the principal, GTC, "shall promptly make payment to all persons, firms, subcontractors, and corporations furnishing materials for or performing labor in the prosecution of the work provided for in such contract ...." Payment Bond (Docket No. 13-2) at H-1.

The statutory payment bond scheme clarifies who may assert a claim under the Payment Bond. The instant Payment Bond was issued pursuant to M.G.L. c. 149, §§ 29 and 44E(2), which require that a general contractor selected for a public construction contract with a value in excess of $25,000 furnish payment and performance bonds to the awarding authority. See M.G.L. c....