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United States v. Thr Enterprises, Inc.

United States District Court, E.D. Virginia, Norfolk Division

March 31, 2015

UNITED STATES OF AMERICA, for the use of SPRINKLE MASONRY, INC., Plaintiff,
v.
THR ENTERPRISES, INC., and HANOVER INSURANCE CO., Defendants.

MEMORANDUM OPINION AND ORDER

LAWRENCE R. LEONARD, Magistrate Judge.

Sprinkle Masonry, Inc., ("Sprinkle"), a masonry contractor, initiated two separate actions against THR Enterprises, Inc., ("THR"), and its surety, Hanover Insurance Company, ("Hanover"), filing both Case No. 2:14cv251 ("Case 251"), and Case No. 2:14cv252 ("Case 252"), on May 30, 2014. Although the cases alleged identical counts-Count I for Breach of Contract, Count II for Unjust Enrichment/Quantum Meruit, and Count III for a Miller Act Claim-the factual allegations differed slightly. Case 251 involved Sprinkle's provision of labor and materials furnished for renovations on Building 584 on Langley Air Force Base. Inclusive of all change orders executed between Sprinkle and THR for Building 584, Sprinkle agreed to provide labor and materials in exchange for $218, 635. Sprinkle initiated Case 251 to recover $42, 546.40, plus prejudgment interest, that Sprinkle alleged was unpaid and due under the subcontract. Sprinkle claimed that THR had received payment from the government for this work but had failed to pay Sprinkle.

Case 252 involved Sprinkle's subcontract for labor and materials furnished in relation to Building 586 on Langley Air Force Base. After several change orders increased the value of the subcontract, Sprinkle agreed to provide labor and materials for the renovations in exchange for $408, 066. Sprinkle initiated Case 252 to recover $71, 869, plus prejudgment interest, that Sprinkle alleged was unpaid and due under the subcontract. Identical to Case 251, Sprinkle claimed that THR had been paid by the government for the work but had failed to pay Sprinkle. In response, THR filed a counterclaim on the grounds that Sprinkle had failed to sufficiently account for credits from change orders in its calculation of the final bill; THR claimed that Sprinkle owed THR for overbilling in the amount of $18, 000.00.

The parties consented to the jurisdiction of a United States Magistrate Judge, the cases were consolidated, and they subsequently proceeded to trial. The Court now issues the following findings of fact and conclusions of law as required by Federal Rule of Civil Procedure 52(a). See Fed.R.Civ.P. 52(a).

I. FINDINGS OF FACT

A. General Findings of Fact

THR is the prime contractor for the renovation of certain buildings at Langley Air Force Base in Hampton, Virginia. Sprinkle and THR entered into two subcontract agreements for Sprinkle to perform masonry work on Buildings 584 and 586, respectively. The value of original subcontract for Building 584, dated January 23, 2012, was $163, 753. The value of the original subcontract for Building 586, dated January 3, 2012, was $167, 303. Over the course of the projects, change orders were issued for both buildings changing the scope of Sprinkle's work and increasing the value of the subcontracts. In addition, modifications to the prime contract between THR and the government were also issued, which reflected changes in the scope of work for the overall project.

Per the subcontract, Sprinkle submitted monthly payment applications to THR on the 25th of the month as work progressed. Then, THR would submit monthly pay applications to government on the 20th of the month, reflecting all work done by its subcontractors. THR was obligated to pay its subcontractors within fifteen days of when THR received payment from government.

Defendant Hanover issued payment and performance bonds for both buildings in the project. Sprinkle is an obligee under the payment bonds and timely filed its claims against the bonds.

B. Findings of Fact Related to Building 584

Sprinkle's scope of work generally required it to repair defects in the brick mortar joints, which is referred to as "pointing" or "tuck pointing, " perform brick-work to the new addition on the west elevation, and wash the exterior of the building upon completion. Also included in the original scope of work was a requirement to install through-wall flashing at the windows. Inclusive of four change orders, the subcontract for Building 584 totaled $218, 635.

Sprinkle began work on the building in 2012, but before completion, the government issued a stop work order on July 25, 2013. At that time, Sprinkle had not yet completed all of the tuck pointing work on the building, nor had it performed brick-work to the new addition, or washed the building, as required by the subcontract. In addition, after determining that through-wall flashing was not practical given construction of the brick exterior, this aspect of the scope of work was eventually deleted.[1]

Although the parties' evidence conflicted as to the amount of the work that remained to be completed before the stop work order was issued, the greater weight of the evidence, including the testimony of Sprinkle owner Robert Hedrick, government construction project manager John Rippy, and Sprinkle's masonry and contracting expert Joseph Zeigler, established that 80-85% of the total work required to be performed by Sprinkle was, in fact, performed at the time the government issued its stop work order. Subsequently in September 2014, the government lifted the stop work order. Since then, Sprinkle has offered to return to the job to complete the work on Building 584, but has requested that THR to arrange for the provision of concrete footers so it can perform the brick-work to the new addition at the same time it completes the tuck pointing and washing.

Sprinkle submitted 7 pay applications[2] during the course of work, not all of which have been paid by THR. ...


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