Opinion
Civil Action No. 00-0106-P-L
August 25, 2000
AMENDED REPORT AND RECOMMENDATION
This matter is before the court on Defendants' motion to dismiss (Docs. 6, 7), Plaintiff's response (Doc. 10), Defendants' Supplement to their motion to dismiss (Docs. 27, 28), Plaintiff's response (Docs. 37, 38) and Defendants' reply (Doc. 42). The motion has been referred to the undesigned Magistrate Judge for report and recommendation pursuant to 28 U.S.C. § 636 (b)(1)(B).
I. PROCEDURAL BACKGROUND
On February 23, 2000, Defendants filed a motion to dismiss alleging lack of subject matter jurisdiction and improper venue. On March 23, 2000, the undersigned entered a report and recommendation of transfer based on improper venue. Thereafter, the defendant withdrew their objection to improper venue, and on April 17, 2000, the District Court vacated the recommendation and referred the matter back to the undersigned to consider the motion to dismiss for lack of subject matter jurisdiction. On May 5, 2000, the undersigned issued an order converting the Defendants' motion to dismiss (based on the expiration of the statute of limitations) to a motion for summary judgment. (Doc. 25). Thereafter the Defendants and the Plaintiff filed supplemental briefs.
Defendants had also argued in their motion that the claims were due to be dismissed because pursuant to the contract the plaintiff was limited to bringing his claim under the disputes clause, which requires administrative claims to be exhausted and designates the Court of Federal Claims as the proper forum. However, at the May 4, 2000 hearing, the defendants conceded that the plaintiff had not waived his right to sue under the Miller Act and therefore the plaintiff was not required to proceed under the disputes clause. See, H. W. Caldwell Sons v. John H. Moon Sons, Inc., 407 F.2d 21, 23 (5th Cir. 1969) (Provisions in general contract do not bind the subcontractor unless there has been a waiver of the right to sue under the Miller Act.)
The Plaintiff, All-Gulf Contractors, Inc., has brought suit pursuant to 40 U.S.C. § 270, commonly known as the Miller Act, against Jimenez, Inc., Fireman's Insurance of Newark, New Jersey, and CNA Surety. The question before the court is whether the Plaintiff's Miller Act claim has expired.
The plaintiff is required pursuant to 40 U.S.C. § 270b(b), to bring suit "in the name of the United States for the use of the person suing".
The Miller Act requires contractors for the construction or repair of public buildings of the United States, to provide payment bonds with a surety for the protection of persons who supply labor and material to the contractor. The Act further provides for the right of persons who furnish labor or materials to bring suit against the bond.
II. FACTUAL BACKGROUND
On April 22, 1997, Jimenez, the contractor with the United States, entered into two subcontracts with All-Gulf for the abatement of asbestos and lead-based paint in buildings located at Eglin Air Force Base, Florida. Firemen's Insurance, issued a payment bond on the project and CNA administers the claims on the payment bond on behalf of Firemen's Insurance.
While performing the contract, All Gulf was required to perform work in excess of that described in the subcontract. It is undisputed that All Gulf did not provide labor or materials to the project after July 14, 1997.
On September 1, 1997, Jimenez submitted its request for equitable adjustment to the Contracting Officer which included All Gulf's claims for the additional work it was required to perform. On January 22, 1998, All Gulf notified Firemen's Insurance that it was making a claim against the payment bond for the additional work for which Jimenez had failed to compensate. On February 2, 1998, CNA responded to All Gulf and requested additional information from All Gulf. The letter from CNA included a statement reserving "all rights and defenses whether by statute, at law, or in equity". On April 10, 1998, All Gulf responded to CNA's request for additional information. Between April 10, 1998, and July 14, 1998, there was no communication between All Gulf and CNA.
On July 17, 1998, CNA sent All Gulf a brief letter requesting an additional response from All Gulf. CNA did not mention that the statute of limitations had run on the claim against the payment bond. On August 5, 1998, All Gulf responded reasserting its claim and requesting immediate payment "to keep legal matters from escalating".
The letter stated, "Enclosed is a copy of the response from Jimenez to your claim documentation. Kindly review the enclosed and let me know whether you agree our principal's position on this matter. In the event you disagree, kindly supply information and documentation which reflects your position."
On October 8, 1998, CNA responded to All Gulf indicating that any amounts due for extra work would be determined in accordance with procedures described in the general contract and that All Gulf would be bound by that determination which had yet to be made. CNA further stated that "the claim presented is premature and cannot be honored at this time."
The general contract provides for the contractor to submit an administrative claim for equitable adjustment.
The Contracting Officer issued a final decision on April 24, 2000, which appears to have awarded only a very minimal amount of All Gulfs request.
On February 7, 2000. All Gulf filed in federal court suit against the payment bond.
III. DISCUSSION
The defendants argue that All Gulf's Miller Act claim is due to be dismissed because the statute of limitations expired on July 14, 1998, one year after the last work was performed by the plaintiff, and this suit was not brought until February 7, 2000. The plaintiff acknowledges that the complaint was filed more than a year after the last work was performed but claims that the defendants are equitably estopped from asserting the statute of limitations because plaintiff detrimentally relied on the defendants' representations that the claim would be paid at the appropriate time. In response, the defendants have submitted documents to show that the communications, which the plaintiff says he detrimentally relied upon, were made after the statute of limitations had expired and thus can not be the basis of estoppel.
The defendants also argue that even the communications with the plaintiff after the expiration of the statute of limitations would not constitute representations which the plaintiff could reasonably rely upon to establish equitable estoppel.
The plaintiff replies with three arguments. First, the plaintiff admits that the representations which he allegedly relied upon did not occur until after the statute of limitations had expired. However, the plaintiff argues that since the defendants withheld a definitive response to his request for payment until after the statute of limitations had expired, equitable estoppel requires that the defendants not be allowed to assert the statute of limitations. Next, the plaintiff argues that the defendants have waived their right to assert the statute of limitations because "after July 14, 1997, the Surety in no way claimed any reservation of defenses or rights". (Doc. 38, p. 9). The plaintiff argues in the alternative, that the court should retain jurisdiction over the state law claims even if the Miller Act claim is dismissed.
A. STANDARD FOR SUMMARY JUDGMENT
A district court shall grant summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is (1) no genuine issue as to any material fact and (2) the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the burden of meeting this standard. Adickes v. S.H. Kress Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). The burden then shifts to the non-movant, who must go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact exists. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986). The court should view the evidence and any inferences that may be drawn in the light most favorable to the non-movant.Adickes at 158-159. The trial judge should not weigh the evidence to determine the truth of the matter but should only determine whether there is a genuine issue for trial. Id at 251.
The summary judgment standard mirrors the standard for a directed verdict under Federal Rules of Civil Procedure 50(a), which is that the trial judge must direct a verdict if, under the governing law, there can be but one reasonable conclusion as to the verdict. Brady v. Southern R. Co., 320 U.S. 476, 479-80, 64 S.Ct. 232, 88 L.Ed. 239 (1943); Anderson at 242. The Court in Anderson further acknowledged that "[t]he mere existence of a scintilla of evidence in support of the position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]." Id. at 243. If the non-movant in a summary judgment action fails to adduce evidence which would be sufficient, when viewed in a light most favorable to the non-movant, to support a jury finding in his favor, summary judgment may be granted. Id. at 254-55. The Supreme Court also held that a non-moving party's failure to prove an essential element of its claim renders all factual disputes as to that claim immaterial and requires the granting of summary judgment:
In our view, the plain language of Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.
The moving party is "entitled to judgment as a matter of law" because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.Celotex Corp. v. Catrett, 477 U.S. 317, 322-33, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
B. EQUITABLE ESTOPPEL
The Miller Act requires that claims brought under it be made within one year "after the day on which the last of the labor was performed or material was supplied . . ." under the contract. 40 U.S.C. § 270b(b). There is no dispute as to the fact that the claim was not brought within the one year statute. The issue is whether the defendant is equitably estopped from asserting this defense. The doctrine of equitable estoppel "precludes a litigant from asserting a claim or defense that might otherwise be available to him against another party who has detrimentally altered his position in reliance on the former's misrepresentation or failure to disclose some material fact."FDIC v. Harrison, 735 F.2d 408, 410 (11th Cir. 1984). Estoppel requires the presence of three elements: "(1) words, acts, conduct or acquiescence causing another to believe in the existence of a certain state of things; (2) wilfulness or negligence with regard to the acts, conduct or acquiescence; and (3) detrimental reliance by the other party upon the state of things so indicated." Id. at 413 (citing Matter of Garfinkle, 672 F.2d 1340, 1347 (11th Cir. 1982)). "Under the Miller Act, the party claiming an estoppel, however, must show he has been misled to his detriment." Trane Company v. Whitehurst-Lassen Construction, 881 F.2d 996, 1004 (11th Cir. 1989) (citing U.S. ex rel. Aurora Painting, Inc. v. Fireman's Fund Ins. Co., 832 F.2d 1150, 1154 (9th Cir. 1987) (finding no detriment)). "To successfully invoke the doctrine [of equitable estoppel], the late arriving plaintiff must show that she was misled by defendant or its agents so that [s]he delayed suit because of (a) an affirmative statement that the statutory period to bring the action was longer than it actually was, or (b) promises to make a better settlement of the claim if plaintiff did not bring suit or (c) comparable representations and conduct." Keefe v. Bahama Cruise Line, Inc., 867 F.2d 1318, 1324 (11th Cir. 1989). In this case the plaintiff admits that the acts which they relied upon in forbearing suit occurred after the expiration of the statute of limitations. In Cook v. Deltona Corporation, 753 F.2d 1552, 1563 (11th Cir. 1985), the Court stated that equitable estoppel was unavailable where the representations and acts that are relied upon to form the basis of an estoppel claim occurred after the statute of limitations had expired. Therefore, the Defendants as a matter of law are not estopped from asserting the statute of limitations.
C. WAIVER
The Plaintiff also argues that the Defendants have waived or abandoned the statute of limitations by continuing to correspond with the Plaintiff, after the statute had expired, as though the claim on the bond was still being considered. The Defendants have failed to specifically respond to whether they have waived the statute of limitations. However, the Defendants have properly and timely asserted, pursuant to Fed. Rule Civ.P. 8(c), the affirmative defense of statute of limitations in their first pleading to the complaint (Doc. 3). Therefore, in order for the Plaintiff to prevail at trial he must prove that a waiver of the statute of limitations is implied from the conduct of the Defendants.
A waiver occurs when there is an intentional relinquishment of a known right. Matter of Garfinkle, 672 F.2d 1340, 1347 (11th Cir. 1982). "Waiver requires (1) the existence at the time of the waiver a right, privilege, advantage, or benefit which may be waived; (2) the actual or constructive knowledge thereof, and (3) an intention to relinquish such right, privilege, advantage, or benefit. Waiver may be express, or, as in this case, implied from conduct. . . . When waiver is implied from conduct, the acts, conduct, or circumstances relied upon to show waiver must make out a clear case." Id. (citations and quotes omitted). Furthermore, there is an implied waiver of a defense or a right only where a party's conduct is so consistent with and indicative of an intention to relinquish [the right] and so clear and unequivocal that no other reasonable explanation of the conduct is possible. G. Garfield v. J.C. Nicols Real Estate 57 F.3d 662, 667 (8th Cir. 1995) (quoted source omitted).
The Plaintiff relies on the fact that CNA, the surety on the bond, continued to correspond with the All Gulf even after the claim on the bond had expired. In support of their claim of waiver, the Plaintiff submits the testimony of William Saelinger, a representative of CNA who handled the claim after the expiration of the statute of limitations. Mr. Saelinger states that he considered the claim at that point to be a "pass through" claim against the government and Jiminez and not a claim against the surety although this was never stated in the correspondence. Defendants give no explanation as to why CNA continued to correspond on behalf of Jiminez when the bond had expired. Plaintiff argues that the only plausible explanation is that CNA had waived the statute of limitations and in essence had extended the bond. Plaintiff points specifically to the October 8, 1998, correspondence in which CNA states that the "the claim presented is premature and cannot be honored at this time". [emphasis added]. Plaintiff argues that the claim presented was against the surety.
Since this matter is before the court on a motion for summary judgment, the court must consider whether there are any genuine issues of material fact that should be resolved by trial. The Defendants have alleged (and it is not in dispute) that the statute of limitations expired on July 14, 1998, and that this suit was not filed until February 2000. Since the Defendants have shown by undisputed evidence that the statute of limitations has expired, it is the Plaintiff's burden to establish that there is a genuine issue of material fact as to whether the Defendants waived the statute of limitations defense. Plaintiff relies on the correspondence to establish that a reasonable factfinder could infer that the Defendants intended to waive the statute of limitations pending the Contracting Officer's decision. Defendant makes no argument to the contrary.
"Summary judgment may be inappropriate even where the parties agree on the basic facts, but disagree about the factual inferences that should be drawn from these facts. If reasonable minds might differ on the inferences arising from undisputed facts, then the court should deny summary judgment." Impossible Electronics Techniques, Inc. v. Wackenhut Protective Systems, 669 F.2d 1026, 1031 (5th Cir. Unit B 1982). After carefully reviewing the correspondence the undersigned concludes that a genuine issue of fact remains as to whether the Defendants impliedly waived the statute of limitations and therefore summary judgment is inappropriate.
IV. CONCLUSION
It is recommended that Defendants motion to dismiss or in the alternative the motion for summary judgment is due to DENIED.
The attached sheet contains important information about this report and recommendation.