26 F. Supp. 3d 52
D.D.C.2014Background
- IIU was prime contractor on a Fort McNair renovation; Forney was a subcontractor to IIU; Window Specialists, Inc. (WSI) was a sub-subcontractor to Forney to supply/install windows and doors.
- The Army issued a 10-day cure notice identifying widespread deficiencies in window/door work; IIU terminated Forney, and Forney later terminated WSI; IIU alleged WSI’s work was defective and reprocured and reinstalled windows/doors.
- IIU withheld payment applications to WSI totaling about $936,967 (later reduced by supplier payments); WSI sued Forney (breach of contract) and Hanover (payment bond) and dismissed other defendants/claims; Forney counterclaimed for breach and indemnification.
- WSI moved for partial summary judgment seeking (inter alia) dismissal of Forney’s indemnity claim as unripe, dismissal/limitation of Forney’s breach damages, and recovery of $61,342.36 for supplier funds.
- Court found genuine disputes about causation/quality of work precluding summary judgment on breach liability, but: (1) Forney’s indemnification counterclaim is unripe and dismissed; (2) Forney’s recoverable breach damages are limited to lost profits; (3) WSI’s $61,342.36 recovery was denied on summary judgment.
Issues
| Issue | Plaintiff's Argument (WSI) | Defendant's Argument (Forney) | Held |
|---|---|---|---|
| Ripeness of indemnification claim | Indemnity claim is premature because Forney has not been held liable or paid; must be dismissed as unripe | Forney says its right to indemnity accrued because it settled with IIU | Indemnification counterclaim is unripe and dismissed; settlement did not fix Forney’s liability or produce actual payment |
| Causation for breach damages | Forney’s damages stem from IIU’s termination, not WSI’s acts; genuine dispute as to whether WSI caused deficiencies | Forney says WSI’s workmanship caused the defects and resulting reprocurement costs | Court denied summary judgment on causation; factual disputes remain about whether WSI caused the defects |
| Standing / scope of damages | Forney lacks standing to recover amounts that are IIU’s loss; Forney’s recoverable damages should be limited to its own lost profits | Forney contends its damages include cost to cure defective work and are not speculative | Forney lacks an injury-in-fact for cure costs given the settlement terms; recoverable breach damages are limited to lost profits |
| Claim for $61,342.36 (remaining supplier funds) | WSI seeks judgment that Forney is liable for the leftover balance paid by Army to IIU then not paid to WSI’s suppliers | Forney contends it was not party to the Army–IIU–supplier transactions and is not liable | Summary judgment denied for WSI on this amount; WSI did not show undisputed facts making Forney liable |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (movant may prevail when nonmovant lacks evidence on an essential element)
- Honig v. Doe, 484 U.S. 305 (federal courts limited to actual, ongoing controversies)
- Abbott Laboratories v. Gardner, 387 U.S. 136 (ripeness factors: fitness and hardship)
- Texas v. United States, 523 U.S. 296 (ripeness: claims resting on contingent future events are not ripe)
- Casanova v. Marathon Corp., 256 F.R.D. 11 (indemnity claim accrues when indemnitee is held liable and makes payment)
- Pardee v. Consumer Portfolio Servs., Inc., 344 F. Supp. 2d 823 (indemnity claims unripe until liability is fixed)
- Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167 (Article III standing framework)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requirements: injury in fact, causation, redressability)