Opinion
SA-22-CV-129-FB (HJB)
02-22-2024
UNITED STATES OF AMERICA f/u/b TITAN, CONSULTANTS & ENGINEERS, LLC, a Florida Limited Liability Company, Plaintiff, v. TOOTLE-QRI JV, LLC, a Florida Limited Liability Company, and THE GRAY INSURANCE COMPANY, a Louisiana Corporation Defendants.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Henry J. Bemporad, United States Magistrate Judge
To the Honorable United States District Judge Fred Biery:
This Report and Recommendation concerns the Motion for Summary Judgment filed by Plaintiff Titan Consultants & Engineers, LLC (“Titan”) (Docket Entry 24). Pretrial matters in this case have been referred to the undersigned for consideration. (Docket Entry 30.) For the reasons set out below, I recommend that Titan's Motion for Summary Judgment (Docket Entry 24) be GRANTED.
I. Jurisdiction.
This case involves an alleged violation of the Miller Act, 40 U.S.C. §§ 270(a) et seq., a claim for unjust enrichment, and alleged breaches of contract. (See Docket Entry 1, at 1; Docket Entry 18, at 2.) The Court has federal question jurisdiction over the Miller Act claim pursuant to 28 U.S.C. § 1331 and supplemental jurisdiction over the other claims pursuant to 28 U.S.C. § 1367(a). I have the authority to issue this Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1).
II. Background.
On September 30, 2019, Defendant Tootle-QRI JV, LLC (“Tootle”) entered into a contract with the United States Army Corps. of Engineers (“ACE”) to construct a horse-training arena. (Docket Entry 24-1, at 12, 14.) ACE prepared a calendar for the project, estimating completion within 670 days, with a final work-day of October 5, 2021. (See Docket Entry 24-5, at 4.) To complete this project, Tootle hired no less than nine subcontractors. (Id. at 7.) The first few months of the project were spent exclusively on planning and design. (See Docket Entry 24-1, at 13.) Actual construction began on September 11, 2020. (Id. at 15.)
Tootle's contract with ACE required Tootle to keep a quality control manager (“QCM”) on site while work was being performed on the project. (Docket Entry 25-1, at 1.) And one QCM would not cut it; the contract required Tootle to also keep an alternate QCM on staff at all times. (Docket Entry 24-1, at 24; Docket Entry 25-1, at 1.) Unfortunately, Tootle's first QCM did “not work[]. . . out,” causing a project delay of “[a]bout two months.” (Docket Entry 24-1, at 17.) Tootle accordingly terminated its original QCM, and it contracted with Titan to provide a new QCM on the project. (Id.)
Tootle contracted with Titan on February 1, 2021, signing Titan's General Service Agreement (“the Agreement”). (Docket Entry 24-1, at 9; Docket Entry 24-2, at 6.) The Agreement contains a choice-of-law clause, specifying that the Agreement and any disputes arising thereunder shall be governed by Florida law. (Docket Entry 24-1, at 5; Docket Entry 25-5, at 4.) The Agreement also states that “neither party shall be liable for or be required to indemnify the other party for any incidental, consequential, exemplary, special, punitive, or lost profit damages that arise in connection with th[e] Agreement ” (Docket Entry 24-1, at 3; Docket Entry 25-5, at 2 (capitalization removed).) Either party could unilaterally terminate the agreement “for any reason, however 30 days written notice shall be given.” (Docket Entry 25-5, at 2.)
The first QCM that Titan provided to Tootle was Matt Beauchamp. (See Docket Entry 24, at 3; Docket Entry 24-6, at 3.) When Beauchamp left the project on August 23, 2021, Titan replaced him with Michelle Linear. (See Docket Entry 24, at 3; Docket Entry 24-6, at 3.)) Sometime in late September of 2021, Tootle submitted a request for approval from ACE for an alternate QCM-as required to remain in compliance with the terms of its primary contract with ACE. (See Docket Entry24-1, at 24; Docket Entry 25-2, at 1.) Titan's Operations Manager, Justin Vann, then sent the following email to Tootle, on September 29, 2021:
We understand your request to USACE to approve your company QC/SSHO and replace Michelle. This is probably a great fit for you. As such, we have scheduled Michelle's next project. We would like to move her as soon as possible. We understand the contract completion date is Oct. 6 and can move her then or before. Please let us know which works best to get your QC/SSHO on-site as soon as possible.
(Docket Entry 25-2, at 1.) Tootle responded by email, explaining that the project would not actually be completed “until around mid[-]December” and that Tootle's request to ACE was only for an alternate QCM, not a replacement for Linear. (Id. at 2.) Neither Vann nor anyone else from Titan responded to Tootle's email. (See Docket Entry 25-1, at 1; Docket Entry 25-4, at 18-21.) Linear left the project on October 6, 2021. (See Docket Entry 24-1, at 19-20; Docket Entry 25-4, at 14-15.) According to Tootle, Titan's removal of Linear without providing 30 days' prior notice breached the Agreement. (See Docket Entry 25, at 2; Docket Entry 25-5, at 3.)
Tootle alleges that Linear's departure significantly delayed the completion of the project. (Docket Entry 25, at 4; Docket Entry 24-1, at 26.) According to Tootle, all work on the project ceased from October 6, 2021-when Linear left-until January 18, 2022. (See Docket Entry 241, at 25-27.) The reason for the length of the delay was that the steel erectors-i.e., “the ones who were constructing the building”-were “scheduled to start end of October,” but were unable to do so because Tootle “didn't have a [QCM] on site.” (Id. at 26.) The project was put on hold until the steel erectors became available again. (Id. at 26-27.)
Ultimately, Tootle refused to pay Titan's invoices. (See Docket Entry 24-1, at 32.) Those invoices amounted to $31,424.90. (See Docket Entry 1, at 3.) Titan filed suit on February 14, 2022, alleging a Miller Act violation, breach of contract, and unjust enrichment, and seeking payment of its invoices plus interest. (See Docket Entry 1.) Tootle filed a counterclaim for breach of contract on June 23, 2022, alleging that the damages Titan caused by prematurely terminating the Agreement offset what it owed to Titan for the unpaid invoices. (See Docket Entry18, at 2-3; Docket Entry 24-7, at 4.) The damages alleged by Tootle “consist of additional time to complete the work, supervisory time, and additional labor, as well as general conditions and general and administrative costs in the amount of $35,765.67.” (Docket Entry 18, at 2.)
Titan moved for summary judgment on its claims, and on Tootle's breach-of-contract counterclaim. (Docket Entry 24.) Tootle does not dispute Titan's summary judgment arguments regarding Titan's own claims, but Tootle does contest summary judgment on its counterclaim, and it argues that the damages on the counterclaim would more than offset the unpaid invoices that form the basis of Titan's claims. (See Docket Entry 25, at 2; Docket Entry 24-7, at 4.) Titan replied, and Tootle filed a sur-reply. (Docket Entries 26 and27.)
III. Legal Standard.
Summary judgment is warranted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Allen v. United States Postal Serv., 63 F.4th 292, 300 (5th Cir. 2023) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A disputed fact is material if it “might affect the outcome of the suit under the governing law.” Id. (quoting Anderson, 447 U.S. at 248). “When parties file cross-motions for summary judgment,” the Court “review[s] each party's motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party.” McGlothin v. State Farm Mut. Ins. Co., 925 F.3d 741, 745 (5th Cir. 2019) (citation omitted).
The party moving for summary judgment bears the initial burden of “informing the court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party carries its burden, “the nonmovant must then direct the court's attention to evidence in the record sufficient to establish that there is a genuine issue of material fact for trial.” Mary Kay, Inc. v. Weber, 601 F.Supp.2d 839, 851 (N.D. Tex. 2009) (citing Celotex Corp., 477 U.S. at 323-24). “The parties may satisfy their respective burdens by tendering depositions, affidavits, and other competent evidence.” Arthur v. Liberty Mut. Pers. Ins. Co., No. SA-21-CV-00602-FB, 2022 WL 17824520, at *1 (W.D. Tex. Dec. 20, 2022) (citing Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992)), report and recommendation adopted, No. SA-21-CA-602-FB, 2023 WL 2557392 (W.D. Tex. Feb. 3, 2023).
IV. Analysis.
As noted above, only Tootle's counterclaim for breach of contract is contested by the parties in the summary judgment pleadings. As to the counterclaim, the parties agree that Florida law governs; that, under Florida law, contracting parties may waive their right to consequential damages; and that, under the contract at issue in this case, neither party is liable to the other for consequential damages. (See Docket Entry 24, at 7-8; Docket Entry 25, at 4; Docket Entry 25-5, at 2, 4; Docket Entry 26, at 1, 4; Docket Entry 27, at 3; .) The parties dispute whether the damages Tootle alleges it incurred between October 6, 2021, and January 18, 2022-damages incurred as a result of Linear leaving the project-are, in fact, consequential damages. (Docket Entry 27, at 3.)Tootle contends that the damages it incurred are not consequential but, rather, general damages- a class of damages which are not waived by the Agreement. (Docket Entry 27, at 3.) As noted above, Tootle argues that those damages offset what it owes to Titan in unpaid invoices. (See Docket Entry 18, at 2; Docket Entry 24-7, at 4.) For its part, Titan contends that all of Tootle's alleged damages are consequential under Florida law, and thus contractually waived, which would mean that that its counterclaim for breach of contract fails as a matter of law. (Docket Entry 24, at 7-12.)
The parties also dispute whether Titan breached the Agreement by removing Linear from the project without providing 30 days' written notice. (See Docket Entry 25, at 4; Docket Entry 25-4, at 14-15; Docket Entry 25-5, at 3.) However, if all of Tootle's damages are consequential damages, which are waived under the Agreement, then the Court need not address the breach element of Tootle's counterclaim.
Under Florida law, consequential damages are defined as damages that “do not arise within the scope of the immediate buyer-seller transaction, but rather stem from losses incurred by the non-breaching party in its dealings, often with third parties, which were a proximate result of the breach, and which were reasonably foreseeable by the breaching party at the time of contracting.” Keystone Airpark Auth. v. Pipeline Contractors, Inc., 266 So.3d 1219, 1223 (Fla. Dist. Ct. App. 2019) (citation omitted). On its counterclaim, Tootle alleges damages “consist[ing] of additional time to complete the work, supervisory time, and additional labor, as well as general conditions and general and administrative costs....” (Docket Entry 18, at 2.) These alleged damages also include rental equipment expenses, insurance, taxes, fringe benefits, and overhead costs. (See Docket Entry 24-1, at 33.)
Assuming arguendo that Titan breached the Agreement, the aforementioned damages stem from losses Tootle incurred “in its dealings . . . with third parties, which were a proximate result of the breach, and which were reasonably foreseeable by the breaching party at the time of contracting.” HCA Health Servs. of Fla., Inc. v. CyberKnife Ctr. of Treasure Coast, LLC, 204 So.3d 469, 471 n.2 (Fla. Dist. Ct. App. 2016) (quoting Hardwick Props., Inc. v. Newbern, 711 So.2d 35, 40 (Fla. Dist. Ct. App. 1998)). In short, they are consequential damages, which are waived under the Agreement. (See Docket Entry 25-5, at 2.) According to Tootle, Titan's alleged breach prevented the steel erectors-i.e., third parties-from completing construction, which caused Tootle to incur additional costs in its dealings with other third parties, including painters, tax authorities, and companies leasing various equipment to Tootle. (See Docket Entry 18, at 2; Docket Entry 24-1, at 26, 32-35; Docket Entry 25, at 4.) Even if these consequences were foreseeable to Titan when it removed Linear from the project, they are still consequential damages as defined under Florida law. HCA Health Servs. Of Fla., Inc., 204 So.3d at 471 n.2; see also U.S. ex rel. Ragghianti Founds. III, LLC v. Peter R. Brown Const., Inc., 49 F.Supp.3d 1031, 1052 (M.D. Fla. 2014), aff'd, 674 Fed.Appx. 901 (11th Cir. 2017) (categorizing increased costs from delay as consequential damages precluded by contract). As such, they are not recoverable under the Agreement, and Tootle's breach-of-contract counterclaim fails as a matter of law.
Titan alternatively relies on a clause in the Agreement which states that Titan “is not responsible for any changes in the construction schedule, including any delays, down time, or project shut downs.” (Docket Entry 25-5, at 2.) And it notes a disclaimer in Titan's quotes for services rendered, whereby Tootle “agree[d] to indemnify and hold harmless TITAN . . . from any and all fault, liabilities, costs, expenses, claims, demands or lawsuits . . . against Buyer and/or Owner [i.e., Tootle] . . . arising out of the application, TITAN personnel actions, or any delays associated with TITAN's products to Buyer [i.e., Tootle], or any service of TITAN to the Buyer [i.e., Tootle].” (Docket Entry 24-2, at 1.) Because Tootle's counterclaim is barred by the consequential-damage waiver, the Court need not consider either of these alternative arguments.
V. Conclusion and Recommendation.
Under the Agreement, both parties waived any right to recover consequential damages. (See Docket Entry 25-5, at 2.) Neither party disputes this. (See Docket Entry24-2, at 3; Docket Entry 26, at 1; Docket Entry 27, at 1-3.) And Tootle does not dispute that it failed to pay Titan's invoices for $31,424.90. (See Docket Entry 24-1, at 32.) Instead, Tootle contends that it need not pay those invoices because it suffered greater damages as a result of Titan's own breach of contract. (Docket Entry 18, at 2-3; Docket Entry 24-7, at 4.) However, the only damages Tootle asserts are consequential damages, which are not recoverable. And “damages are an essential element of an action for breach of contract.” Farman v. Deutsche Bank Nat'l Tr. Co. as Tr. for Long Beach Mortg. Loan Tr. 2006-05, 311 So.3d 191, 195 (Fla. Dist. Ct. App. 2020). As such, Tootle's counterclaim- and its only basis for refusing to pay Titan's unpaid invoices-fails as a matter of law because Tootle cannot prove an essential element of its claim. Accordingly, I recommend that Titan's Motion for Summary Judgment (Docket Entry 24) be GRANTED.
VI. Notice of Right to Object
The United States District Clerk shall serve a copy of this Report and Recommendation on all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a “filing user” with the Clerk of Court, or (2) by mailing a copy to those not registered by certified mail, return receipt requested. Written objections to this Report and Recommendation must be filed within fourteen (14) days after being served with a copy of the same, unless this time period is modified by the district court. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b).
The parties shall file any objections with the Clerk of the Court and serve the objections on all other parties. An objecting party must specifically identify those findings, conclusions or recommendations to which objections are being made and the basis for such objections; the district court need not consider frivolous, conclusory, or general objections. Battle v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings, conclusions, and recommendations contained in this report shall bar the party from a de novo determination by the district court. Thomas v. Arn, 474 U.S. 140, 149-52 (1985); Acuna v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to file timely written objections to the proposed findings, conclusions, and recommendations contained in this Report and Recommendation shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).