Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Quantum Corporate Funding, Ltd. v. Bast Hatfield

June 2, 2008

QUANTUM CORPORATE FUNDING, LTD., PLAINTIFF,
v.
BAST HATFIELD, INC., DEFENDANT.
BAST HATFIELD, INC., INTERPLEADER-PLAINTIFF,
v.
FIDELITY & GUARANTY INSURANCE COMPANY; UNITED STATES OF AMERICA, DEPARTMENT OF TREASURY-INTERNAL REVENUE SERVICE; EDISON BRIDGE, L.L.C.; STATE OF NEW YORK DEPARTMENT OF TAXATION AND FINANCE; AND DEVOE'S RAINBOW ORCHARD, INTERPLEADER-DEFENDANTS.



The opinion of the court was delivered by: Scullin, Senior Judge

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Currently before the Court are Interpleader-Defendant United States' motion and Interpleader-Defendant Fidelity's cross-motion for summary judgment.

In response to Plaintiff's June 13, 2002 complaint against it in New York State Supreme Court to recover payments due under a series of construction contracts, Defendant Bast Hatfield, Inc. filed an interpleader action, which was subsequently removed to the United States District Court for the Southern District of New York.*fn1 In its interpleader complaint, Defendant conceded liability for these contract payments but was uncertain whom it should pay. After Defendant deposited the interpleader fund containing $191,747.63 into the Court's registry and submitted the names and addresses of the known trust beneficiaries, the Court dismissed Defendant from this action and from liability to Interpleader-Defendants with respect to the interpleader fund. See Memorandum-Decision and Order, dated June 8, 2005, at 17.

Interpleader-Defendant United States asserts a counterclaim against Defendant and cross-claims against Interpleader-Defendants Edison Bridge, L.L.C. ("Edison"), Fidelity & Guaranty Insurance Company ("Fidelity"), the State of New York Department of Taxation and Finance ("NYDTF"), and Devoe's Rainbow Orchard, asserting that it is entitled to the interpleader fund by virtue of its senior tax lien.*fn2

Interpleader-Defendant Fidelity asserts counterclaims against Defendant claiming that Defendant owes it payments of (1) $52,357.04 plus interest on an October 12, 2000 contract ("DOT Subcontract") between Defendant and Interpleader-Defendant Edison together with $150,340.90 plus interest on a second October 12, 2000 contract ("Site Work Subcontract) between Defendant and Interpleader-Defendant Edison; (2) $202,697.94 in quantum meruit plus interest for work performed for Defendant by Interpleader-Defendant Edison and its subcontractors, supplies, and laborers; or (3) $202,697.94 plus interest on the basis of Defendant's unjust enrichment by the value of the labor and materials that Interpleader-Defendant Fidelity provided to Defendant. See Interpleader-Defendant Fidelity's Answer at ¶ 56.

Interpleader-Defendants Edison, NYDTF, and Devoe's Rainbow Orchard have not answered Defendant's interpleader complaint or Interpleader-Defendant United States' cross-claims against them. Interpleader-Defendant United States and Interpleader-Defendant Fidelity now renew their motion and cross-motion for summary judgment, which this Court earlier denied based on both parties' failure to bring a representative action to enforce an Article 3-A trust pursuant to New York Lien Law.*fn3 See Memorandum-Decision and Order, dated June 8, 2005, at 9, 12.

II. BACKGROUND

On October 13, 2000, Defendant, operating as general contractor, entered into a series of contracts ("Subcontracts") with Interpleader-Defendant Edison, operating as subcontractor, for the construction of a Wal-Mart store on Route 9 in Halfmoon, New York ("Project"). Pursuant to the DOT Subcontract, Interpleader-Defendant Edison agreed to provide labor and materials for improvements made in concert with the New York State Department of Transportation ("NYSDOT"). Pursuant to the Site Work Subcontract, Interpleader-Defendant Edison agreed to provide labor and materials relating to the site work for the Project. That same day, Interpleader-Defendant Fidelity, as surety, and Interpleader-Defendant Edison, as principal, executed and delivered to Defendant, as obligee, a subcontract performance bond and a subcontract labor and material payment bond for the Subcontracts.

In May 2001, Interpleader-Defendant Edison entered into a series of assignment agreements with Plaintiff under which Plaintiff agreed to pay Interpleader-Defendant Edison's subcontractors, suppliers, and laborers in exchange for Interpleader-Defendant Edison's assignment to Plaintiff of the right to recover certain contract amounts related to the Project.

On July 16, 2001, the NYSDOT notified Defendant that the highway improvements to Route 9 were substantially complete. On July 17, 2001, the Town of Halfmoon issued a certificate of occupancy for the Project.

Before September 2001, Interpleader-Defendant Edison became insolvent and began to fail to pay its obligations with respect to the Project. In September 2001, Interpleader-Defendant Fidelity undertook to complete all of Interpleader-Defendant Edison's remaining payment obligations with respect to the Project. Interpleader-Defendant Edison or Interpleader-Defendant Fidelity or both substantially completed the work required under the DOT Subcontract. On September 13, 2002, Interpleader-Defendant Fidelity sent Defendant a notice of claim for the entire amount due to Interpleader-Defendant Edison under the DOT Subcontract. Defendant paid Interpleader-Defendant Edison $747,742.96 on the DOT Subcontract, leaving a balance due of $52,357.04. Defendant paid Interpleader-Defendant Edison $1,113,294.60 on the Site Work Contract, leaving a balance due of $150,340.90.

On September 24, 2001, Interpleader-Defendant United States served a notice of levy on Defendant for $462,752.43 in taxes that Interpleader-Defendant Edison owed.

By letter dated September 28, 2001, Interpleader-Defendant Fidelity undertook to investigate a claim that Plaintiff made against the bond related to the Site Work Subcontract, which claim Fidelity paid following its investigation.

On December 19, 2001, Plaintiff executed a release of Interpleader-Defendants Fidelity and Edison for all claims arising from the Project. The agreement between Plaintiff and Interpleader-Defendant Fidelity provided that, in exchange for a payment from Interpleader-Defendant Fidelity, Interpleader-Defendant Fidelity was subrogated to all of Plaintiff's rights related to the Project. Plaintiff also expressly assigned its rights to Interpleader-Defendant Fidelity.

III. DISCUSSION

A. Priority of Interests

Although Interpleader-Defendant Fidelity continues to argue that it has first priority to the interpleader fund under federal tax law, the Court has already held that "New York Lien Law ยงยง 70-79-a ("Article 3-A") defines the basic contours of this action." See Memorandum-Decision and Order, dated June 8, 2005, at 7 (citing Titan Indem. Co. v. Triborough Bridge & Tunnel Auth., Inc., 135 F.3d 831, 836 (2d Cir. 1998)). The Court also implied, and now holds, that Interpleader-Defendant United States and ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.