Prime Contractor Wins Summary Judgment Upholding Right to Terminate Subcontractor For Failure To Provide Submittals And Sufficient Work Force

Quality Trust Inc. v. Cajun Contractors, Inc.
2007 U.S. Dist. Lexis 25431 (D. Kan. 2007)

The District Court granted the prime contractor summary judgment on its right to terminate a subcontractor for failure to provide submittals and sufficient work force, while at the same time holding that the contractor was not entitled to summary judgment on the subcontractor’s claims for delay damages and contract balances.

Prime contractor, Cajun Contractors, Inc. (“Cajun”), entered into a general contract with the United States Army Corps of Engineers (“COE”) for the construction of a wastewater facility at Fort Riley, Kansas. The project entailed the partial demolition of an existing facility and the construction of a new facility. Cajun subcontracted with Quality Trust, Inc. (“QTI”) to erect eight metal buildings as part of the new facility. Under the subcontract, Cajun was to construct the concrete building pads, to procure the buildings through a third party supplier, and to provide the buildings for QTI to erect and finish.

Cajun terminated QTI for cause on June 26, 2004 due to QTI’s failure to complete its work in a timely and qualified manner. At the time of its termination QTI had partially erected four of the eight metal buildings. QTI sued Cajun in breach of contract, alleging wrongful termination. Cajun filed for summary judgment on its right to terminate QTI, alleging that QTI’s work did not meet the COE’s Critical Path Method (“CPM”) schedules as established in the subcontract, that QTI did not correct the concerns raised by Cajun in various correspondence, that QTI failed to provide proper submittals and to procure needed materials, and that QTI’s workmanship, manpower and submittals, insurance and safety compliance were inferior to the Project’s requirements.

Simultaneously, Cajun filed a counterclaim against QTI for breach of contract, alleging deficiencies in QTI’s work and seeking damages for increased completion costs subsequent to QTI’s termination. QTI filed for summary judgment on Cajun’s counterclaim, alleging that Cajun unreasonably delayed providing the concrete pads and metal buildings to QTI, demanded that QTI erect the buildings within an unreasonably short period of time and manner, wrongfully terminated the contract for cause, and refused to pay the QTI accordingly. Cajun’s defense to QTI’s summary judgment argument was that it released work to QTI consistent with the COE’s CPM schedule.

The Court granted Cajun’s motion for summary judgment as to QTI’s wrongful termination claim, finding that Cajun met its summary judgment burden in proving that it repeatedly notified QTI that it had failed to complete and provide the submittals required by the subcontract and that it was not diligently performing the subcontract with a sufficient workforce to complete the buildings on schedule. The Court found that prior to Cajun’s notices of default, QTI never furnished a written notice of unsuitable work conditions or a written notice of delay to Cajun. Having failed to avail itself of its express rights under the subcontract for extensions and delays and having no substantive proof to controvert all of the claims material breaches in its performance, the Court found that QTI’s breach of contract claim for unjustified termination was subject to summary judgment.

The Court also granted Cajun’s motion regarding its counterclaim for breach of contract and damages. However, the Court denied Cajun’s motion for summary judgment as to QTI’s claims under the Miller Act and its breach of contract claim for unnecessary and unreasonable delays and interference with performance.

Click here to view full opinion as PDF (provided with the permission of LexisNexis).

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