Kinetic Sys. v. IPS-Integrated Project Servs.

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Kinetic Systems, Inc. v. IPS-Integrated Project Services, LLC and Lonza Biologics, Inc.

No. 20-cv-1125-SM

Opinion No. 2024 DNH 07

United States District Court, D. New Hampshire

September 3, 2024

ORDER

In this dispute between a project contractor and its subcontractor defendant IPS-Integrated Project Services, LLC (“IPS”) moves for summary judgment on Kinetic Systems, Inc.'s (“Kinetics”) reinstated quantum meruit claim. Kinetics objects. For the following reasons, the court grants the motion for summary judgment.

Standard of Review

Summary judgment is appropriate when the moving party shows 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 genuine dispute is one that would permit a rational factfinder to resolve the issue in favor of either party, and a material fact is one that has the “potential to affect the outcome of the suit under the applicable law.” Gattineri v. Wynn MA, LLC, 63 F.4th 71, 84-85 (1st Cir. 2023) (internal quotation marks omitted). When resolving a motion for summary judgment, the court views the record in the light most favorable to the nonmoving party and draws reasonable inferences in that party's favor.^[1]Deaton v. Town of Barrington, 100 F.4th 348, 355 (1st Cir. 2024).

Background

A. Procedural Background

Kinetics's quantum meruit claim arises out of a commercial construction project in Portsmouth, New Hampshire. Kinetics brought claims against IPS for breach of contract and quantum meruit/unjust enrichment, seeking nearly $14 million for work it did on that project as a subcontractor. The court previously dismissed the quantum meruit/unjust enrichment claim. Doc. no. 15. Later, the court granted summary judgment in favor of IPS on Kinetics's breach of contract claim to the extent it was based on amounts not paid on change proposals that were rejected as untimely. Doc. no. 89.

Kinetics then moved to reinstate part of its previously-dismissed quantum meruit claim, on the ground that in the absence of a viable breach of contract claim for amounts not paid in response to the untimely change proposals, it was entitled to pursue an equitable remedy for those amounts. The court allowed reinstatement over IPS's objection. Doc no. 95. IPS moved for reconsideration, raising defenses and challenging the quantum meruit claim on the merits. The court directed IPS to move for summary judgment, which it has done. Kinetics objects to summary judgment and filed a supplemental objection, as directed by the court. IPS filed a response to the supplemental objection.

B. Factual Background

Kinetics's work on the project was governed by two contracts: the Early Mechanical Subcontract and the Process Piping Subcontract. Each Subcontract required IPS to pay Kinetics a lump sum for the work specified.^[2]The Subcontracts also included provisions for changing the scope of work, increasing the time allowed and the amount to be paid, and resolving disputes about changes and payments.

During its work on the project, Kinetics sought payment from IPS under the Subcontracts through applications for progress payments. It also sought payment for extra work not covered by the Subcontracts through change proposals that were governed by certain terms in the parties' Subcontracts. The amounts sought in change proposals that remain in dispute were included in proposals not submitted within the time allowed under the Subcontracts, and IPS rejected them.

To receive a progress payment, Kinetics submitted an application that included a “Subcontractor Partial Waiver and Release.”^[3]Doc. no. 98-3, at 1. The release clause provided that it “shall constitute a partial release of all debts, rights, claims, damages and demands of Releasor against Contractor, Owner and any surety, in law or in equity, arising out of or pertaining to the above referenced Project through the date of this Release and to the extent of the amount(s) paid to date heretofore and hereunder.” Id. The release clause also provided: “The release is given to the extent of, and for and in consideration for, a progress payment for the Project in the amount of $ __ and other good and valuable consideration.” . The release was further limited as follows:

This Release shall not otherwise affect rights or claims between Contractor and Releasor based upon a rescission, abandonment, breach of any Contract, or the right of Releasor to recover compensation for any Work and Services for the Project if Releasor has not been compensated therefor. In addition, notwithstanding anything to the contrary herein, Releasor does not release any legal or equitable remedy available to it which may arise out of any disputed claim(s) identified on any attached Exhibit “1” to this Attachment “C-1”, if any such claim(s) exist. If there is no such Exhibit “A” attached hereto then the absence thereof shall be any acknowledgement and warranty by Releasor that no such claims exist.

Id. Kinetics applied for progress payments from IPS, signed releases, and accepted the payments. IPS did not pay other amounts, submitted in untimely change proposals, and Kinetics seeks to recover those amounts through its quantum meruit claim.

Discussion

IPS moves for summary judgment on Kinetics's quantum meruit claim on the grounds that the releases that Kinetics signed bar a claim for quantum meruit, and, Kinetics cannot prove the elements of a quantum meruit claim.^[4]Kinetics objects to summary judgment, contending that that the releases do not bar its quantum meruit claim or are ambiguous in that regard and that it has provided sufficient evidence to demonstrate a triable factual dispute. For the reasons that follow, the court grants summary judgment on the merits of the quantum meruit claim.

A. Releases

IPS contends that the partial release and waiver forms Kinetic signed with each progress payment bar it from bringing the quantum meruit claim.^[5]Kinetics does not dispute that it signed the release forms for purposes of receiving progress payments and does not dispute that it did not list any disputed claims for payment in an attachment to any of the releases. Kinetics contends, however, that the language of the releases allows its claim for payment under quantum meruit or, alternatively, that the language is ambiguous. Kinetics also contends that the parties agreed to waive the requirement that it list disputed claims to preserve those claims. Because IPS raises the effect of the releases as an affirmative defense against the quantum meruit claim, it bears the burden of showing, for purposes of summary judgment, that the evidence conclusively establishes that the releases bar Kinetics's claim. Ouellette, 977 F.3d at 135.

Principles of contract law govern agreements to release liability. See Mentis Sciences, Inc. v. Pittsburgh Networks, LLC, 173 N.H. 584, 591-92 (2020) (construing limitation of liability provision under New Hampshire contract law). “Parties to a contract are generally bound by the terms of an agreement freely and openly entered into.” Id. Specifically, releases signed by subcontractors in consideration for progress payments made during a construction project may foreclose a claim seeking payment for work or supplies that occurred or existed before the release was signed. See, e.g., Connelly Constr. Corp. v. Travelers Casualty & Surety Co. of Am., 788 Fed.Appx. 122, 124-25 (3d Cir. 2019); MAFCO Elec. Contractors, Inc. v. Turner Constr. Co., 357 Fed.Appx. 395, 397 (2d Cir. 2009). A quantum meruit claim may be waived only when there is “some explicit understanding between the parties that quantum meruit for extras would be barred.” R.J. Berke & Co., Inc. v. J.P. Griffin, Inc., 116 N.H. 760, 765 (1976).

IPS submitted partial waiver and release forms dated between March 19, 2019, and July 20, 2020, with the provisions described above in the background section.^[6]Although IPS does not explicitly address the issue, the releases appear to cover the period of the extra work claimed in Change Proposal (“CP”) 10 and CP-24. IPS contends that through those releases, which did not include any exempted claims, Kinetics released and waived its quantum meruit claim.

Under New Hampshire law, courts interpret a contract by reading the document as a whole. Birch Broad., Inc. v. Capitol Broad. Inc., 161 N.H. 192, 196 (2010). Reading all of the provisions in the release or waiver forms as a whole, they appear to apply to claims in law or in equity brought by the Releasor, Kinetics, under either of the Subcontracts for work, labor, materials, and other services and supplies, up to the amount of the progress payment made for each release. The forms include broad language as to the claims released or waived but do not explicitly name quantum meruit as a released or waived claim. Importantly, the forms also appear not to apply to claims to the extent they exceed the amount of the progress payment, to claims in which the Releasor seeks to recover compensation for work or services provided on the Lonza project that have not been compensated, and to claims listed as disputed on an attachment.

Based on that interpretation, IPS has not provided conclusive evidence that the release or waiver forms would bar Kinetics's entire quantum meruit claim, or even part of it, despite Kinetics's failure to list the quantum meruit claim on the required attachments for disputed claims. For that reason, IPS has not shown on the present record that the forms signed by Kinetics bar the quantum meruit claim.

B. Merits

IPS contends that the quantum meruit claim should not have been reinstated because Kinetics did not materially breach the Subcontracts, which IPS contends is a requirement of a quantum meruit claim under ...