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United States ex rel. Atlas Copco Compressors LLC v. RWT LLC

United States District Court, D. Hawaii

May 17, 2017



          Alan C. Kay United States District Judge

         For the reasons set forth below, the Court DENIES Defendants' Motion for Summary Judgment and Plaintiff's Motion for Summary Judgment.


         On May 4, 2016, Plaintiff Atlas Copco Compressors LLC (“Plaintiff”) filed a Complaint against RWT LLC (“RWT”) and Arch Insurance Company (“Arch, ” and together with RWT, “Defendants”). Plaintiff alleged that Defendants violated the Miller Act, 40 U.S.C. §§ 3131, 3133.

         Both parties have moved for summary judgment and have filed memorandum, concise statements of fact, responses, and replies in support of their position.[1] The Court held a hearing on both motions on May 15, 2017.


         On February 24, 2014, RWT was awarded a contract by the United States Department of Defense (the “Contract”). Def. CSF, Ex. 1; Pl. Opp. CSF, Ex. C. The Contract required RWT to “provide all labor, materials, supervision, tools, equipment, supplies and transportation necessary to Construct P-089 LPA Satellite Compressor Plant” for a project at the Pearl Harbor Navy Shipyard (the “Project”). Id.

         On February 25, 2014, RWT provided a payment bond issued by Arch. Def. CSF, Ex. 2; Pl. Opp. CSF, Ex. D. RWT was the principal and Arch was the surety on the bond. Id. The bond provided, inter alia, that both RWT and Arch were bound “jointly and severally . . . for the payment or the sum shown opposite the name of the Surety.” Id.

         On March 11, 2014, RWT notified Plaintiff that it would be receiving the subcontract for the four air compressors and two air dryers (“compressors and air dryers” or “equipment”) that were specified for the Project. Pl. Opp. CSF, Ex. E. On March 13, 2014, Plaintiff provided RWT with a proposal (the “Proposal”), which included a price quotation for the specified equipment and Plaintiff's standard conditions of sale. Def. CSF, Ex. 4; Pl. Opp. CSF, Ex. F. On July 29, 2014, RWT issued a purchase order (the “Purchase Order”), which included general terms and conditions of sale, to Plaintiff to supply compressors and air dryers for the Project in accordance with the Proposal. Def. CSF, Ex. 3.

         On August 28, 2014, Plaintiff's Vice President initialed the bottom of each page of the Proposal. Def. Opp. CSF, Ex. 3; Pl. CSF, Kiser Decl. ¶ 6; Pl. CSF, Ex. F. In September 2014, RWT's Project Manager initialed the bottom of each page of the Proposal. Id. Plaintiff then began manufacturing the compressors and air dryers at their facility in Belgium to meet RWT's purchase order. Pl. CSF, Callow Decl. ¶ 5.

         In early March 2015, Plaintiff made arrangements for the shipment of the compressors and air dryers from Belgium to Honolulu, Hawaii. Id. ¶ 6. On April 23, 2015, the compressors and air dryers were discharged from the shipment vessel in Honolulu, Hawaii and were ready for pickup on April 24, 2015. Def. CSF, Ex. 5. When the equipment arrived in Honolulu, RWT arranged and paid for its delivery from the port to Pearl Harbor. Def. CSF, Raas Decl. ¶¶ 9-10. On May 11, 2015, RWT's trucking company, Island Movers, took delivery of the compressors and air dryers. Pl. CSF, Callow Decl. ¶ 6.

         On May 12, 2015, Plaintiff issued invoices totaling $2, 030, 794.52. Pl. CSF, Ex. G. On October 30, 2015, RWT tendered a check to Plaintiff for $1, 749, 009.00, leaving an unpaid principal balance of $281, 785.52. Pl. CSF, Gogic Decl. ¶ 3.

         On November 23, 2015, the U.S. Department of Defense suspended work on the Project until February 2016. Def. Opp. CSF, Ex. 4. On March 20, 2017, the work was further suspended until July 2017. Def. Opp. CSF, Ex. 5.

         In Defendants' Opposition, Defendants state that they cannot pay the remaining balance until the equipment has been inspected, and consequently accepted, by RWT pursuant to the terms of the Purchase Order. Def. Opp. at 8 n.2. Defendants state that RWT will install the equipment and conduct a test to verify that it operates in conformity with the contract specifications as soon as the government lifts the suspension of work. Id. Defendants state that if the equipment passes inspection, they will accept it and issue the remaining balance due under the contract. Id.


         Summary judgment is proper where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Rule 56(a) mandates summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Broussard v. Univ. of Cal. at Berkeley, 192 F.3d 1252, 1258 (9th Cir. 1999).

         “A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007) (citing Celotex, 477 U.S. at 323); see also Jespersen v. Harrah's Operating Co., 392 F.3d 1076, 1079 (9th Cir. 2004). “When the moving party has carried its burden under Rule 56 [(a)] its opponent must do more than simply show that there is some metaphysical doubt as to the material facts [and] come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586-87 (1986) (citation and internal quotation marks omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (stating that a party cannot “rest upon the mere allegations or denials of his pleading” in opposing summary judgment).

         “An issue is ‘genuine' only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party, and a dispute is ‘material' only if it could affect the outcome of the suit under the governing law.” In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing Anderson, 477 U.S. at 248). When considering the evidence on a motion for summary judgment, the court must draw all reasonable inferences on behalf of the nonmoving party. Matsushita Elec. Indus. Co., 475 U.S. at 587; see also Posey v. Lake Pend Oreille Sch. Dist. No. 84, 546 F.3d 1121, 1126 (9th Cir. 2008) (stating that “the evidence of [the nonmovant] is to be believed, and all justifiable inferences are to be drawn in his favor”).


         I. The Miller Act

         The Miller Act, 40 U.S.C. §§ 3131 et seq., requires that before a contract in excess of $100, 000 for the construction of a federal project is awarded, the contractor must provide a payment bond “for the protection of all persons supplying labor and material in carrying out the work provided in the contract . . .” 40 U.S.C. § 3131(b). The Miller Act further provides:

[e]very person that has furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished . . . and that has not been paid in full within 90 days after the day on which the person did or performed the last of the labor or furnished or supplied the material for which the claim ...

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