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September 11, 1991


The opinion of the court was delivered by: William C. Conner, District Judge.


This action arises out of a construction project known as "O.S.H.A. Deficiencies Project" located at Fort Devens, Massachusetts. The Department of the Army awarded a contract to John's Insulation Inc. ("John's") to perform the work. John's then entered into a written subcontract agreement with Siska Construction Company, Inc. ("Siska") to perform most of the general contract work at the Fort Devens site. In April 1986, John's allegedly was directed by the Army to terminate Siska's subcontract. Affidavit of John Fenn ("Fenn Aff.") at ¶ 3. In that same month John's terminated the contract. The action is presently before the Court on Siska's motion for summary judgment. Also before the Court is John's cross-motion to dismiss the second, eleventh, twelfth, fourteenth, fifteenth, sixteenth, seventeenth, eighteenth, nineteenth and twentieth counts of Defendants' Amended Counterclaim on the ground that said counts fail to state claims against John's for which relief can be granted. In the alternative, John's moves for summary judgment dismissing said counts of the counterclaim on the grounds that there are no genuine issues of material fact.


John's filed suit against Siska in the Supreme Court of the State of New York, New York County in December 1986 for breach of contract. In January 1987 Siska removed the action to this Court on the basis of diversity of citizenship. Subsequent to John's filing suit, Siska brought suit under the Miller Act, 40 U.S.C. § 270a-270d (1982), against John's and Hartford Accident and Indemnity Company, the surety on John's payment bond, in the United States District Court for the District of Massachusetts. The Massachusetts action was for John's alleged failure of payment on the Fort Devens construction contract. It was transferred to this Court and consolidated for trial with the action pending here.

John's maintains that the termination of Siska's subcontract was warranted because of Siska's poor workmanship, failure to follow direction and unauthorized deviations from contract requirements. John's asserts that the termination was procedurally proper under the terms of the subcontract agreement.

Siska claims that such termination was wrongful and came at the behest of the Army's contracting officer. It argues that its performance was proper and that the Army's contracting officer was without authority to direct that John's terminate Siska. It alleges that it was removed from the project improperly so as

  to silence any criticism of the site engineer's
  ineptitude, to bury the fact that the government
  had awarded contracts to several firms to perform
  the same work, that there were embarrassing
  shortcomings in the plans, and that the defendants
  would be able to pocket the earnings due to the
  plaintiff through its participation in illegal and
  conspiratorial act [sic].

Siska Brief at 8-9. John's counters that, regardless of whether or not the officer had the authority to direct John's to terminate Siska, the termination of Siska's subcontract was warranted based upon Siska's failure to perform properly.

Siska claims that it was entitled to notice and an opportunity for a hearing pursuant to the prime contract and certain federal regulations. John's, however, asserts that the notice and other procedural requirements to which Siska refers are contained in John's prime contract with the government and are rights and protections afforded John's by the government. Fenn Aff. at ¶ 13. John's maintains that the subcontract between John's and Siska contains no such provisions and affords Siska no such rights.*fn1 Siska had no contract with the government.

Despite its assertion that Siska was not entitled to notice or a hearing, John's alleges Siska was given notice of deficiencies in its performance but took no action to correct any of the deficiencies. Fenn Aff. at ¶ 14. Nor, maintains John's, did it request an opportunity to do so. Id. In addition, John's asserts, Siska failed to protest the termination or to request John's to submit a claim on its behalf to the government.*fn2 By failing timely to protest the termination or to submit a claim to John's for submission to the government, Siska is alleged to have deprived John's of the opportunity to present the issue of the propriety of the termination, as well as its allegations of conspiracy, to the Army for review in accordance with the Act. Fenn Aff. at ¶ 15.

Siska alleges that it was not paid for the work it performed on the project. Siska claims an unpaid balance of $104,092 due for work performed. Defendants' Amended Counterclaim at ¶¶ 4, 40. John's submits that Siska's claims as asserted in this action are grossly inflated and fabricated for the purposes of this litigation. John's argues that of the $41,205, which on August 18, 1986 Siska claimed to have been due for work performed on the contract, $33,175 was paid by John's to subcontractors and suppliers of Siska whom Siska had refused to pay subsequent to its termination. Fenn Aff. at ¶¶ 18-19. John's alleges that since the time of Siska's alleged default, John's has had to perform extensive repair work and to complete the remaining portion of Siska's work. John's alleges that the costs incurred by John's in completing and correcting Siska's work far exceeded the balance of Siska's subcontract price that remained unpaid.


Siska's Motion for Summary Judgment

Rule 56(c), Fed.R.Civ.P., provides that summary judgment is appropriate if "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The burden is on the moving party to demonstrate the absence of a material, factual dispute. Fed.R.Civ.P. 56(e); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). "In considering the motion, the court's responsibility is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight v. U.S. Fire Insurance Company, 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). Thus, "[s]ummary judgment is appropriate when, after drawing all ...

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