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United States for the Use and Benefit of Platinum Mechanical, LLC v. United States Surety Co.

December 21, 2007

THE UNITED STATES FOR THE USE AND BENEFIT OF PLATINUM MECHANICAL, LLC PLAINTIFF,
v.
UNITED STATES SURETY COMPANY, US SPECIALTY INSURANCE COMPANY AND THE CFP GROUP, INC., DEFENDANTS.
THE CFP GROUP, INC.,
v.
UTICA MUTUAL INSURANCE COMPANY ADDITIONAL DEFENDANT ON THE COUNTERCLAIM



The opinion of the court was delivered by: Brieant, J.

Memorandum and Order

On October 24, 2007, Counterclaim Defendant Utica Mutual Insurance Company ("Utica Mutual") filed this motion for summary judgment on the Amended Counterclaim brought by Defendant and Counterclaim Plaintiff CFP Group, Inc. ("CFP"). (Doc. 18.) CFP filed its opposition on November 6, 2007, and Utica Mutual filed its reply on November 14, 2007. Oral arguments were held on November 16, 2007 and this Court reserved decision.

Facts

The following facts are presumed true for the purposes of this motion only.

CFP was awarded a contract with the United States Government to refurbish facilities at Stewart Air National Guard Base in New York. Platinum Mechanical LLC subcontracted to furnish "all supervision, labor, materials, tools and equipment to complete all plumbing and HVAC work" for the project. (CFP's Br. 2.)

All work, including Platinum's subcontract was to be completed by March 12, 2007. Platinum Mechanical was aware of this deadline from the request for proposal website and a pre-construction conference, at which it received a two-page document that stated the contract duration. The United States Government accepted CFP's proposal and issued a notice to Platinum Mechanical to begin work on June 14, 2006.

Utica Mutual was the surety for Platinum Mechanical's work and issued Performance Bond No. SU3950828 and Payment Bond No. SU3950828 in connection therewith. The Performance Bond required CFP to notify both Platinum Mechanical and Utica Mutual if CFP was considering declaring a default. The bond stated as follows:

3. If there is no Owner [CFP] Default, the Surety's [Utica Mutual's] obligation under this Bond shall arise after:

3.1 The Owner has notified the Contractor [Platinum Mechanical] and the Surety at its address described in Paragraph 10 below that the Owner is considering declaring a Contractor Default and has requested and attempted to arrange a conference with the Contractor and the Surety to be held not later than fifteen days after receipt of such notice to discuss methods of performing the Construction Contract. If the Owner, the Contractor and the Surety agree, the Contractor shall be allowed a reasonable time to perform the Construction Contract, but such an agreement shall not waive the Owner's right, if any, subsequently to declare a contractor Default; and

3.2 The Owner has declared a Contractor Default and formally terminated the Contractor's right to complete the contract. Such Contractor Default shall not be declared earlier than twenty days after the Contractor and the Surety have received notice as provided in Subparagraph 3.1; and

3.3 The Owner has agreed to pay the Balance of the Contract Price to the Surety in accordance with the terms of the Construction Contract or to a contractor selected to perform the Construction Contract in accordance with the terms of the contract with the Owner.

(Ryan Aff. Ex. A, ¶ 3.)

Paragraph 10 of the Performance Bond reads, "Notice to the Surety, the Owner or the Contractor shall be mailed or delivered to the address shown on the signature page." The surety address on the signature page is "Utica Mutual Insurance Company, 180 Genesee Street, New Hartford, New York 13413." Tara Laverdiere signed on behalf of Utica Mutual Insurance as its "Attorney-in-Fact."

On February 28, 2007, CFP notified Platinum Mechanical that it was concerned that Platinum Mechanical's work would not be completed by the March 12, 2007 deadline. Platinum gave CFP assurances that it would complete the contract satisfactorily and on time. On March 5, 2007, CFP notified Platinum Mechanical that a significant water leak had occurred in the newly completed areas of the project. Platinum Mechanical did not respond to CFP and did not complete the work by March 12, 2007. On April 9, ...


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