2016 U.S. Dist. LEXIS 28180
D. Md.2016Background
- JWA was prime contractor on a federal Army Reserve Center project and furnished a Miller Act payment bond with Hartford as surety; JWA subcontracted HVAC/plumbing work to Chasney for $1.5M.
- The subcontract required subcontractor releases as a condition for payment and contained an Article 11 delay-damages clause entitling Chasney to reimbursement only for delay damages recovered from the Government.
- Chasney executed 24 partial releases during performance; the final release (signed November 15, 2013) covered work through October 31, 2013 and contained broad waiver language and a space for claim exceptions (left blank).
- JWA negotiated and executed a lump-sum settlement with the USACE in September 2013; JWA received initial settlement funds in early November 2013; Chasney had earlier submitted a delay claim (≈$380,687) through JWA, which JWA says the Government rejected as meritless.
- Chasney sued Hartford on the Miller Act payment bond for unpaid amounts (delay damages and some labor/materials). JWA intervened. Defendants moved for partial summary judgment to bar claims through Oct. 31, 2013 (First Motion) and to bar all delay damages (Second Motion).
- The court granted the First Motion (precluding recovery for claims through Oct. 31, 2013 based on the partial releases) and denied the Second Motion (declining to dispose of post–Oct. 31, 2013 delay-damage issues on summary judgment).
Issues
| Issue | Chasney's Argument | Defendants' Argument | Held |
|---|---|---|---|
| Are the partial releases valid and enforceable? | Releases were involuntary or lacked consideration; Chasney lacked intent to waive delay claim. | Releases were contractually authorized, knowingly executed by a sophisticated subcontractor, and supported by consideration in the subcontract. | Valid and enforceable under Maryland contract law. |
| Do the partial releases bar Chasney’s delay claim through Oct. 31, 2013? | October 31 release could not waive delay claim because JWA had not yet received Government payment; Chasney’s claim was not then payable. | Release language waived all claims through the covered period, including future or unliquidated claims; Chasney knew of the claim and failed to except it. | Waived — the October 31 release bars claims through that date. |
| Does Article 11 of the subcontract preclude Chasney from recovering unless JWA recovered amounts specifically attributable to Chasney? | Chasney contends it is entitled to reimbursement only if JWA received payment specifically for Chasney’s claim. | JWA argues that recovery requires a Government payment tied to Chasney’s claim. | Court reads Article 11 to entitle Chasney to reimbursement for delay damages recovered from the Government (no requirement that recovery be separately allocated to Chasney); lack of specific allocation does not bar Miller Act suit. |
| Are Chasney’s asserted delay damages (total-cost method) too speculative for trial? | (Implicit) Chasney offers expert total-cost calculations to prove damages. | Defendants assert total-cost method requires proof of several elements (per AACE guidance) and that Chasney’s expert did not satisfy them, so damages are legally insufficient. | Denied as to whole-of-claim: factual issues about damages remain; record contains enough evidence to survive summary judgment though Chasney may face challenges at trial. |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (standard for genuine dispute at summary judgment)
- Felty v. Graves-Humphreys Co., 818 F.2d 1126 (trial judge’s duty to prevent factually unsupported claims from proceeding)
- Owens-Illinois, Inc. v. Cook, 386 Md. 468 (Md. law: releases construed as contracts reflecting parties’ intent)
- Taylor v. NationsBank, N.A., 365 Md. 166 (Md. objective theory of contract interpretation)
- Bernstein v. Kapneck, 290 Md. 452 (Md. enforcement of general releases of known and unknown claims)
- Youngdale & Sons Constr. Co. v. United States, 27 Fed. Cl. 516 (description and cautionary treatment of the total-cost damages method)