Opinion
Civil No. 99cv0671-L(RBB).
January 20, 2000
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT [Docket No. 14]
This matter comes before the Court on the motion for summary judgment filed by Plaintiff United States for the use of Sierra Craft, Inc. dba Pacific Fire Safety ("Sierra Craft"). The Court finds this matter suitable for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1).
BACKGROUND
In January 1997, Defendant R.P. Richards, Inc. ("R.P. Richards") was awarded a contract by the Department of the Navy to perform construction work described as the Hangar Rescue Additions at Marine Corps Air Station, Camp Pendleton, California, Contract No. N688711-95-C-7578 ("the Job"). (First Amended Complaint ("FAC") ¶ 3; Answer ¶ 3.) R.P. Richards, as principal, and Defendant Hartford Fire Insurance Co. ("Hartford") as surety, executed and delivered Payment Bond #431278 (the "Bond"), guaranteeing payment to all persons supplying labor and materials in the prosecution of the Job. (FAC ¶ 4; Answer ¶ 3.) The Bond was executed and delivered in accordance with the provisions of the Miller Act, codified in 40 U.S.C. §§ 270a-270e.
R.P. Richards then entered into a subcontract agreement with Pacific Rim Fire Protection, Inc. ("Pacific Rim") whereby Pacific Rim would perform fire sprinkler work at the Job. (FAC ¶ 3; Answer ¶ 3.) Between December 11, 1998 and December 22, 1998, at Pacific Rim's request, Sierra Craft provided fire sprinkler materials to be used on the Job. (Grob Decl. ¶ 8 and Exh. B.) These materials are worth $4,680.68 and Sierra Craft has not been paid for them. (Grob Decl. ¶ 8 and Exh. B.)
On April 5, 1999, Sierra Craft filed this action against R.P. Richards and Hartford on the Miller Act Bond pursuant to 11 U.S.C. § 270b(a). On May 11, 1999, Defendants answered and R.P. Richards filed a Third Party Complaint against Pacific Rim. Sierra Craft now moves for summary judgment on its sole cause of action in its First Amended Complaint.
DISCUSSION
I. Legal Standard
Federal Rule of Civil Procedure 56 empowers the Court to enter summary judgment on factually unsupported claims or defenses, and thereby "secure the just, speedy and inexpensive determination of every action." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 327 (1986). Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A fact is material when it affects the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997).
The party moving for summary judgment bears the initial burden of establishing an absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. Where the party moving for summary judgment bears the burden of proof at trial, it cannot obtain summary judgment unless it presents evidence so compelling that no rational jury would fail to award judgment for the moving party. See, e.g., Torres Vargas v. Santiago Cummings, 149 F.3d 29, 35 (1st Cir. 1998). If the moving party fails to discharge this initial burden, summary judgment must be denied and the court need not consider the non-moving party's evidence. Adickes v. S.H. Kress Co., 398 U.S. 144, 159-60 (1970).
Once the moving party meets the requirements of Rule 56, the burden shifts to the party resisting the motion, who "must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256. The non-moving party does not meet this burden by showing "some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The United States Supreme Court has held that "[t]he mere existence of a scintilla of evidence in support of the non-moving party's position is not sufficient." Anderson, 477 U.S. at 252. Accordingly, the non-moving party cannot oppose a properly supported summary judgment motion by "rest[ing] on mere allegations or denials of his pleadings." Id. at 256. Genuine factual issues must exist that "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250. If the non-moving party fails to make a sufficient showing of an element of its case, the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 325.
When ruling on a summary judgment motion, the Court must examine all the evidence in the light most favorable to the nonmoving party. Id. The Court cannot engage in credibility determinations, weighing of evidence, or drawing of legitimate inferences from the facts; these functions are for the jury. Anderson, 477 U.S. at 255.
II. Analysis
Sierra Craft argues it is entitled to summary judgment in the amount of $4,680.68 pursuant to the Miller Act. The Miller Act "requires a Government contractor to post a surety bond `for the protection of all persons supplying labor and material in the prosecution of the work provided for' in the contract." F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 118 (1974). Any person who has furnished labor or material and who has not been paid in full within 90 days after performing the last labor or supplying materials may bring suit on the payment bond for the unpaid balance. 40 U.S.C. § 270b(a); F.D. Rich, 417 U.S. at 118. The Miller Act is to be liberally construed to effect its remedial purpose. United States ex rel. Sherman v. Carter, 353 U.S. 210, 216 (1957).
To state a Miller Act claim under 11 U.S.C. § 270b, the plaintiff must show: (1) it supplied materials in prosecution of the work provided for in the contract; (2) it has not been paid; (3) it had a good faith belief that the materials were intended for the specified work; and (4) the jurisdictional requisites are met. United States ex rel. Martin Steel Constructors, Inc. v. Avanti Constructors, Inc., 750 F.2d 759, 761 (9th Cir. 1984). Sierra Craft argues it has met each of these requirements. Defendants do not "dispute that Sierra Craft has not been paid for the materials it sold to Pacific Rim and does not dispute that the jurisdictional requisites for complaint with the Miller Act were met." (Opp. at 3.) Rather, Defendants oppose this motion on the grounds there are triable issues of material fact regarding the first and third elements of Sierra Craft's § 270b claim. Id. at 2-3.
Defendants argue there is a triable issue of material fact regarding whether the fire sprinkler materials were to be used in prosecution of the work provided for in the Job. To support this argument, Defendants reference Sierra Craft's invoices and packing slips which show that the fire sprinkler materials were delivered to Pacific Rim in Ventura, California rather than the Job site at Camp Pendleton. Because of the delivery location, Defendants further argue that Sierra Craft cannot establish a good faith belief that the materials were intended for the Job.
Sierra Craft replies that a claimant need not show that the materials it provided were actually used on the job. Rather, Sierra Craft only needs to show that it provided the materials in a reasonable and good faith belief that the materials were to be used on the job. The Court agrees.
One well-established principle regarding Miller Act claims is that "[i]t is immaterial to [the supplier's] right of recovery that [it] deliver the materials to the jobsite or that such materials actually be used in the prosecution of the work." United States ex rel. Carlson v. Continental Cas. Co., 414 F.2d 431, 433 (5th Cir. 1969). Thus, one district court noted that the Miller Act does not require a use plaintiff to show that the materials it supplied were actually incorporated into the contracted work. United States ex rel. Purity Paint Products Corp. v. Aetna Cas. Co., 56 F. Supp. 431, 433 (D. Conn. 1944).
In United States ex rel. Krupp Steel Products, Inc. v. Aetna Ins. Co., 831 F.2d 978 (11th Cir. 1987), the use plaintiff supplied steel for the construction of a post office. The district court granted the use plaintiff's motion for summary judgment on its complaint against the surety for the project. Aetna, 831 F.2d at 980. The Eleventh Circuit reversed, but rejected Defendant's argument that the use plaintiff has the burden of presenting affirmative proof that the materials were used to build the contracted work. Id. The court noted that as long as there is good faith, delivery to the job site or actual use is immaterial to a right of recovery. Id. The court then found that the record established the use plaintiff's good faith. Id. In so holding, the court found that each invoice and delivery ticket designated the contract work as the reason for the purchase and that the use plaintiff's credit manager testified that the steel was intended for the post office project. Id.
Here, Sierra Craft has presented testimonial and documentary evidence showing its good faith belief the materials were to be used for the Job. Sierra Craft's Credit Manager, Gayle Grob, has submitted a declaration stating that when the company "sells materials to a customer for use on a particular job, it requires the customer to provide Sierra Craft with the name and location of the job." (Grob Decl. ¶ 4.) "Whenever the customer orders materials for that job, a notation to that effect is put on an invoice." Id. Sierra Craft's invoices and packing slips all contain a notation showing that the materials were to be used for the Job at Camp Pendleton. ( See Grob Decl. Exh. B.)
The facts before the Court therefore establish that Sierra Craft's good faith exists. In light of this finding, it is immaterial that the materials were delivered to Pacific Rim in Ventura rather than at the Job site in Camp Pendleton. Aetna, 831 F.2d at 980. The location of delivery alone does not raise a triable issue of material fact regarding whether the sprinklers were used for the contracted work. Accordingly, Sierra Craft has presented sufficient evidence so that a rational jury would not fail to award judgment in its favor and it is entitled to summary judgment on its complaint in the amount of $4,680.68.
III. Sierra Craft's Request for Interest
Sierra Craft argues it is entitled to accrued services charges in the amount of $70.21 and interest on the amount owed at a rate of 18% per annum starting form February 26, 1999. (Memo in Support at 8.) Sierra Craft supports this request by reference the terms and conditions on the back of its invoices which provide for a 1.5% service charge per month (equal to 18% per annum) for delinquent accounts. (Grob Decl. Exh. C.) Defendants oppose this request, arguing that there is no contract between Sierra Craft and R.P. Richards providing for interest to be awarded in the event of nonpayment. (Opp. at 5.)
Defendants, however, have not cited any authority to suggest that interest is not recoverable in this case. One Circuit has noted that "[i]t is undisputed that prejudgment interest falls within the `scope of the remedy' available to a Miller Act claimant." United States ex rel. Varco Pruden Buildings v. Reid Gary Strickland, Co., 161 F.3d 915, 922 (5th Cir. 1998). Generally, allowance of prejudgment interest is an issue of federal law. See United States ex rel. Bartec Ind. v. United Pacific Co., 976 F.2d 1274, 1279 (9th Cir. 1992), as amended by United States ex rel. Bartec Ind. v. United Pacific Co., 15 F.3d 855 (9th Cir. 1994). But because the Miller Act is silent regarding interest, the Court must look at state law. Id. In California, prejudgment interest is available if the damages awarded are "certain, or capable of being made certain by calculation." Cal. Civ. Code § 3287(a). "Certainty in this context requires that `(1) . . . the debtor knows the amount owed or (2) . . . the debtor would be able to compute the damages.'" Bartec, 15 F.3d at 856 ( quoting Fireman's Fund Ins. v. Allstate Ins., 234 Cal. App. 3d 1154, 1173 (1991)). Here, the damages owed meet the certainty requirement; they equal the $4,680.68 in fire sprinkler materials supplied by Sierra Craft.
In addition, as argued by Sierra Craft, the rate of interest charged is proper under California law. In Southwest Concrete Products v. Gosh Construction Corp., 51 Cal. 3d 701, 709 (1990), the California Supreme Court held that a late charge of 1.5% per month which a supplier charged when the customer failed to make timely payment on an invoice is not subject to California's usury law. Accordingly, Sierra Craft is entitled to the accrued service charge of $72.01 in addition to 18% per annum from February 26, 1999.
IV. Sierra Craft's Request for Attorneys' Fees
Sierra Craft argues it is entitled to attorneys fees because its subcontract with Pacific Rim provides that in the event of a default in payment Sierra Craft is entitled to reasonable attorneys fees. (Memo in Support at 8.) Defendants respond that the case upon which Sierra Craft relies, Travelers Indemnity Co. v. United States ex rel. Western Steel Co., 362 F.3d 896 (9th Cir. 1966), has been superseded by F.D. Rich Co. which holds that the Miller Act does not provide for an award of attorneys fees to the prevailing party. F.D. Rich Co., 417 U.S. 127-28. The Court disagrees. F.D. Rich simply held that the Miller Act does not provide for attorneys fees but recognized that the "American Rule" governing awards of attorneys fees in litigation gives way where a statute or enforceable contract provides for such an award. F.D. Rich Co., 417 U.S. at 127-31.
Defendants also contend that because the only contract was between Sierra Craft and Pacific Rim, that they cannot be held liable for recovery of attorneys' fees. Defendants' argument is not well-taken. Several courts have held that "a general contractor and its surety must pay attorneys fees when there is an agreement between a subcontractor and the claimant providing for such fees." United States ex rel. Trustee of the Colorado Laborers Health and Welfare Trust Fund v. Expert Environmental Control, Inc., 785 F. Supp. 895, 897-98 (D. Col. 1992); United States ex rel. Southeastern Mun. Supply Co. v. National Union Fire Ins. Co. of Pittsburg, 876 F.2d 92, 93 (11th Cir. 1989); United States ex rel. Carter Equipment Co. v. H.R. Morgan, Inc., 554 F.2d 164, 166 (5th Cir. 1977). Here, paragraph 4 of the terms and conditions on the invoices provide that in the event of a default in payment by Pacific Rim, Sierra Craft shall be entitled to reasonable attorneys fees. (Grob Decl. Exh. C.) In addition, Pacific Rim submitted a credit application to Sierra Craft which included an attorneys' fees provision. (Grob Decl. Exh. A.) Accordingly, Pacific Rim liable for attorneys' fees by virtue of its contract with Sierra Craft, and therefore under the authority cited above, these fees are a recoverable item under the Miller Act bond.
Sierra Craft, however, has not submitted any documentation regarding the amount of its attorneys fees to allow the Court to determine whether its fees are reasonable. Accordingly, on or before February 14, 2000, Sierra Craft shall submit its counsel's billing records, total number of hours spent in prosecuting this case, counsel's hourly rate, and any other factual support regarding the amount of attorneys' fees is seeks to be awarded. Defendants shall file an opposition, if any, on or before February 28, 2000. Sierra Craft can file a reply, if any, on or before March 6, 2000.
CONCLUSION
For the foregoing reasons, IT IS HEREBY ORDERED:1. Sierra Craft's motion for summary judgment on its complaint is GRANTED in the amount of $4,680.68 plus accrued service charges of $72.01 and service charges in the amount of 1.5% per month from February 26, 1999.
2. Sierra Craft's request for attorneys' fees is GRANTED, however, the Court desires the following additional briefing to determine the reasonableness of the amount of attorneys' fees:
a. On or before February 14, 2000, Sierra Craft shall file and serve a brief which discusses (i) the amount of its attorneys' fees; (ii) the total number of hours spent in prosecuting the case; (iii) counsel's hourly rate; (iv) any other factual support regarding the amount of attorneys' fees it seeks to be awarded. This brief should also include a copy of counsel's billing records which can be redacted to protect attorney-client privileged information.
b. On or before February 28, 2000, Defendants shall file and serve an opposition, if any, to Sierra Craft's brief regarding its amount of attorneys' fees.
c. On or before March 6, 2000, Sierra Craft shall file and serve a reply, if any, to Defendants' opposition.
d. The Court will decide the matter on these submissions without oral argument.