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United States v. PAT USA, Inc.

United States District Court, W.D. Virginia, Harrisonburg Division

July 14, 2017

THE UNITED STATES OF AMERICA For the use and benefit of VT MILCOM, INC., Plaintiff,
v.
PAT USA, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER REGARDING SUMMARY JUDGMENT

          Elizabeth K. Dillon, United States District Judge

         This case arises from a subcontract between PAT USA, Inc., and VT Milcom, Inc., whereby VT Milcom was to provide labor and materials for the installation of telecommunications systems in Qatar for a United States Army Corps of Engineers project. VT Milcom brings its action under the Miller Act and asserts three claims: a breach of contract claim against PAT USA, a claim for breach of a surety obligation contract against PAT USA, Gerald Dinkins, Sr., and First Mountain Bancorp (FMB), [1] and a claim for quantum meruit against all three defendants.

         The case was initially filed in the Eastern District of Virginia but was transferred to this court. VT Milcom timely moved for summary judgment with many of the facts stipulated by the parties.[2] PAT USA and FMB filed a brief in opposition, [3] and Dinkins filed no response.[4] Before addressing the summary judgment motion, though, the court turns to a preliminary issue- whether it has personal jurisdiction over the defendants.

         In their opposition brief, PAT USA and FMB argued that this court lacked personal jurisdiction over them. All defendants filed a 12(b)(2) motion challenging personal jurisdiction when they first responded to the complaint, but they never requested a hearing in this court or submitted the issue to the court without a hearing. Instead, defendants PAT USA and FMB engaged in discovery, amended the scheduling order, entered into stipulations, and only mentioned the issue again in their memorandum in opposition to VT Milcom's motion for summary judgment. Local Rule 11(b) requires a party to set a hearing or advise the court that a hearing is not needed within 60 days after the motion is filed; otherwise, the motion is deemed withdrawn. W.D. Va. Civ. Rule 11(b). Here, defendants' motion is deemed withdrawn, and in any event defendants have waived any challenge to personal jurisdiction. See, e.g., Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 704-05 (1982) (“The actions of the defendant may amount to a legal submission to the jurisdiction of the court, whether voluntary or not.”); United States ex rel. Combustion Sys. Sales, 112 F.R.D. 685, 687 (M.D. N.C. 1986) (noting that waiver of a personal jurisdiction defense “has been inferred in a wide variety of situations, even when the defense has been formally raised in an answer, by conduct and inaction, such as . . . participating in . . . discovery”).

         I. BACKGROUND

         A. The Prime Contract and Subcontract

         In October 2013, the United States Army Corps of Engineers (USACE) awarded PAT USA a contract (the Prime Contract) for minor military construction projects on United States facilities in Qatar. As a requirement of that contract, PAT USA provided a payment bond that identified defendant Gerald Dinkins, Sr. as the surety. PAT USA also provided an Irrevocable Trust Receipt issued by defendant FMB. On February 22, 2014, PAT USA entered into a subcontract with VT Milcom (the Subcontract, Compl. Ex. C, Dkt. No. 1), under which VT Milcom agreed to provide labor and materials for the installation of telecommunications systems on the project site in Qatar.[5] After one change order, the total Subcontract fixed-price amount was $485, 684.73. VT Milcom subsequently performed work and furnished materials for the project as directed by PAT USA, including shipping materials to Qatar.

         On January 29, 2015, PAT USA informed VT Milcom that the Prime Contract was on hold and that USACE was not allowing work on the project. (Compl. ¶ 28; Answer ¶ 28, Dkt. No. 15.) Unbeknownst to VT Milcom and by letter dated January 30, USACE terminated PAT USA for default and for reasons not involving VT Milcom. (Stipulation ¶ 6, Dkt. No. 45.) By email dated January 31, PAT USA arranged for delivery of the balance of the materials by VT Milcom to Qatar.[6] (Pl.'s Br. Ex. A, at 20; Req. for Adm. No. 70, Dkt. No. 43-1; Order, Dkt. No. 72.) Then, by letter dated February 2, PAT USA informed VT Milcom of the Prime Contract termination and terminated the Subcontract, wrongly claiming that VT Milcom had defaulted upon its performance obligations.[7] VT Milcom invoiced PAT USA a total of $208, 727.48 for work performed and materials furnished; however, PAT USA only paid VT Milcom $91, 617.16. The amount paid constituted 20% of the fixed price. According to PAT USA, that amount is all it owes because Schedule D of the Subcontract lists the payment milestone for material purchase as 20%. VT Milcom subsequently filed this suit, seeking to recover the remaining $117, 110.32 invoiced to PAT USA. After discovery and a stipulation by the parties to the majority of the above-stated facts, VT Milcom moved for summary judgment. (Pl.'s Mot. Summ. J., Dkt. No. 51.)

         B. Subcontract Provisions

         The parties rely upon the following provisions of the Subcontract.

SECTION SIX - SUBCONTRACT AMOUNT

a. The fixed-price of U.S. Dollars Four hundred Eighty two thousand and One Hundred Ninety five and 60/100 only ($ 482, 195.60) subject to additions as provided for in the Subcontract Documents.

b. Time and material rates and prices in accordance with the attached Schedule of Labor and Material Costs which is incorporated by reference and identified as Schedule C.

The fixed-price, unit prices and/or time and material rates and prices are referred to as the Subcontract Amount.

. . . .

         SECTION EIGHT - PAYMENT

         . . . .

         The Subcontractor shall submit progress payment applications . . . to Contractor no later than the 20th day of each payment period for the value of the Subcontract Work performed up to and including the last day of the payment period indicating work completed and, to the extent allowed under this Agreement, materials suitably stored during the preceding payment period. Payments will be made to the Subcontractor no later than 3 business days after receipt of payment from the owner for each application period. All payments to the Subcontractor are to be made only equivalent to payments the Contractor receives from the Owner. The Contractor's receipt of payment from the Owner is a condition precedent to the Contractor's obligation to pay the Subcontractor. Contractor and subcontractor share risk of owner payment. Subcontractor's preferred terms for receipt of payment is [sic] Net 30.

         SECTION 10 - CONTRACTOR'S RIGHT TO PERFORM SUBCONTRACTOR'S RESPONSIBILITIES AND TERMINATION OF AGREEMENT

         TERMINATION BY OWNER

         TERMINATION OF SUBCONTRACTOR

         . . . .

SCHEDULE C - Price Schedule (Assigned at a later time)
Price schedule Pricing listed is for the providing and installing materials for the projects communications systems as outlined within this proposal:

         VTM's Base Bid Firm Fixed ...


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