Opinion
98 C 3261
February 7, 2000
MEMORANDUM OPINION AND ORDER
Plaintiffs United States ex rel. Aldridge Electric Company, Inc. ("Aldridge") and Reliance Insurance Company ("Reliance") sue for payment from a payment bond issued by Defendant American Insurance Company ("American") on behalf of Defendant Pickus Construction and Equipment Company, Inc. ("Pickus") pursuant to the Miller Act, 40 U.S.C. § 270a-270d. Plaintiffs also allege that Pickus committed a breach of contract. Defendants move for summary judgment. For the reasons set forth below, the court denies defendants' motion.
Background
Pickus entered into an agreement with the United States Navy for the construction of the Damage Control Building at the Great Lakes Naval Training Center in Illinois ("Project"). (12(M) ¶¶ 4-5.) In accordance with the provisions of the Miller Act, 40 U.S.C. § 270a-270d, and the general contract, American, as surety, executed a payment bond to the United States. (12(N) ¶ 2.)
Pickus then subcontracted major portions of the work on the Project. It signed a contract (the "Subcontract") with Metrick Electric Company, Inc. ("Metrick") to do the electrical construction. (12(M) ¶ 6.) Reliance was Metrick's surety for the Project. As such, it executed to Pickus a performance bond for which Metrick was the principal. (Id. ¶ 7.)
On December 8, 1995, Metrick ceased work on the Project and defaulted on the Subcontract. (Id. ¶ 8.) Following Metrick's withdrawal from the Project, and until Reliance could respond under the performance bond, Pickus hired Aldridge from December 8 through December 22, 1995 to continue the electrical work. (Id. ¶ 9.)
On January 29, 1996, Pickus and Reliance arranged for the completion of the electrical subcontract work. (Id. ¶ 10.) This Takeover Agreement provided in part:
B. Reliance, as surety, shall perform all the Remaining Work in accordance with the terms and conditions of the Subcontract. Reliance shall engage Aldridge as contractor that will actually perform the Remaining Work. The agreement between Reliance and Aldridge will expressly require Aldridge to perform the Remaining Work subject to the supervision and direction of Pickus as fully and completely as if Aldridge was the "Subcontractor" under the Subcontract.
C. Reliance shall expend such of its own funds as may from time to time be necessary to pay for the completion of the Remaining Work; provided, however, that Reliance's monetary obligation under the Performance Bond [is not exceeded].
(12(M) Ex. A at 2.)
On February 23, 1996, Reliance entered into a contract with Aldridge to perform and complete the work that remained under the Subcontract. (12(M) ¶ 14.) This Completion Contract specified that Aldridge should coordinate all work through Pickus and act as if it had a direct contract with Pickus. (Id. Ex. B at 2.) Reliance and Aldridge later entered into a Claim Cooperation Agreement. Under this Agreement, Aldridge released Reliance from any further payment, duty, or obligation and gave Reliance the "sole option and discretion" to pursue the lawsuit against Pickus. (Id. Ex. D at 2.)
Pickus indicated to Reliance that the Project would be completed in 17.3 months — approximately 10.8 months to construct the structure and building enclosures and 6.5 months to complete the interior finishes and test the systems. (Am. Compl. ¶ 24.) In actuality, the Project took 19.5 months to complete the structure and building enclosures and only 1.5 months to finish the interior. (Id. ¶ 25.) Because of the extended duration of the initial phase and the acceleration of the interior work, Aldridge asserts that it incurred additional costs. (12(N) ¶ 17.)
Although the Project was turned over the Navy in December 1996, Aldridge did not complete the punch list work until February 1997. (12(M) ¶¶ 21-22.) Aldridge also asserts that the work it performed from May 27 through May 29, 1997 was within the scope of the Subcontract. (12(N) ¶ 18-19.) Plaintiffs filed their original complaint on May 27, 1998 and their amended complaint on July 10, 1998.
Analysis
Defendants move the court to enter summary judgment on their behalf under Rule 56 of the Federal Rules of Civil Procedure. The court will render summary judgment only if the factual record shows "that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law."Bratton v. Roadway Package Sys., Inc., 77 F.3d 168, 173 (7th Cir. 1996) (quoting Fed.R.Civ.P. 56(c)). The court will not render summary judgment if "a reasonable jury could return a verdict for the nonmoving party." Sullivan v. Cox, 78 F.3d 322, 325 (7th Cir. 1996) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In ruling on a motion for summary judgment, the court views the facts in the light most favorable to the nonmoving party. See Bratton, 77 F.3d at 171 (citation omitted); Sullivan, 78 F.3d at 325 (citation omitted).
On a motion for summary judgment, the moving party "bears the initial burden of showing that no genuine issue of material fact exists." Hudson Ins. Co. v. City of Chicago Heights, 48 F.3d 234, 237 (7th Cir. 1995) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). Then the burden shifts to the nonmoving party, which "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); accord NLFC, Inc. v. Devcom Mid-America. Inc., 45 F.3d 231, 234 (7th Cir. 1995) (citations omitted).
I. Miller Act
According to defendants, Aldridge does not have a Miller Act claim because it was fully paid when it released the subcontractor, Reliance, from any legal claims. Alternatively, Pickus maintains that plaintiffs' recovery under the Miller Act is time barred.
The Miller Act, 40 U.S.C. § 270a-270d, requires a general contractor to post a payment bond that guarantees payment to subcontractors if the general contractor becomes insolvent. See 40 U.S.C. § 270a(a)(2); see also Clifford F. MacEvoy Co. v. United States ex rel. Calvin Tomkins Co., 322 U.S. 102, 104 (1944). Ordinarily, the subcontractors on a private construction project can secure a mechanic's lien against the property, but a lien cannot attach to government property. See F. D. Rich Co., Inc. v. United States ex rel. Industrial Lumber Co., Inc., 417 U.S. 116, 122 (1974). Therefore, Congress intended the Miller Act to provide protection for the suppliers of material and labor on federal projects. See United States ex rel. Westinghouse Elec. Supply Co. v. Sisson, 927 F.2d 310, 312 (7th Cir. 1991); accord Rich, 417 U.S. at 118. Furthermore, the Miller Act is "entitled to a liberal construction and application in order properly to effectuate the Congressional intent to protect those whose labor and materials go into public projects." MacEvoy, 322 U.S. at 107.
Reliance is a subcontractor and is entitled to protection under the Miller Act. "[A] performing guarantor who exercises its option to assume the duties and obligations of its defaulting subcontractor and completes the subcontractor's work on the construction project, can be considered a `subcontractor' entitled to the Act's protection." United States ex rel. CTI Ltd. v. Mellon Stuart Co., 860 F. Supp. 556, 559 (N.D. Ill. 1994). Reliance was Metrick's surety for the project. After Metrick defaulted on its Subcontract, Reliance executed a Takeover Agreement and agreed to perform all of the remaining work in accordance with the Subcontract. Therefore, Reliance is a subcontractor and has standing to sue on the payment bond. The parties disagree, however, whether Aldridge can sue on the payment bond.
Section 270b(a) of the Miller Act provides:
Every person who has furnished labor or material in the prosecution of the work provided for in such contract, in respect of which a payment bond is furnished . . . shall have the right to sue on such payment bond for the amount, or the balance thereof, unpaid at the time of institution of such suit and to prosecute said action to final execution and judgment.
Plaintiffs must prove four elements to collect under this section of the Miller Act: (1) that labor and materials were supplied for work in the particular contract at issue; (2) that the supplier is unpaid; (3) that the supplier had a good faith belief that the labor and materials were for the specified work; and (4) that the jurisdictional requirements were met. See United States ex rel. Krupp Steel Products, Inc. v. Aetna Ins. Co., 831 F.2d 978, 980 (11th Cir. 1987); United States ex rel. Martin Steel Constructors, Inc. v. Avanti Constructors, Inc., 750 F.2d 759 (9th Cir. 1984); United States ex rel. Roy Strom Refuse Removal Serv., Inc. v. Cheney, No. 89 C 5283, 1992 WL 130163, at *1 (N.D. Ill. June 9, 1992); United States ex rel. AGR Co. v. Cheney, No. 89 C 8307, 1992 WL 130155, at *1 (N.D. Ill. June 5, 1992). A. Jurisdictional Requirements
The first and third elements are met in this case and are not in dispute.
The Miller Act limits the right to initiate suit to (1) those laborers and subcontractors who deal directly with the general contractor and (2) those laborers and sub-subcontractors who lack an express or implied contractual relationship with the general contractor but have a direct contractual relationship with a subcontractor. See MacEvoy, 322 U.S. at 107. The sub-subcontractors in this second category must give written notice of their claim to the general contractor within ninety days. See 40 U.S.C. § 270b; MacEvoy, 322 U.S. at 108. The parties disagree under which category Aldridge falls.
The Miller Act provides "[t]hat any person having direct contractual relationship with a subcontractor but no contractual relationship express or implied with the contractor furnishing said payment bond shall have a right of action upon the said payment bond upon giving written notice to said contractor within ninety days from the date on which such person did or performed the last of the labor or furnished or supplied the last of the material for which such claim is made." 40 U.S.C. § 270b(a). Furthermore, "no suit shall be commenced after the expiration of one year after day on which the last of the labor was performed or material was supplied." Id. § 270b(b).
Under the Miller Act, the court finds that Aldridge was a subcontractor and had a direct relationship with Pickus. As noted earlier, courts should liberally construe the Miller Act to protect those who supply labor and materials for public projects.See MacEvoy, 322 U.S. at 107. Furthermore, the MacEvoy Court "adopted a functional rather than a technical definition for the term subcontractor." F. D. Rich Co., 417 U.S. at 123. The MacEvoy Court explained that
The relatively few subcontractors who perform part of the original contract represent in a sense the prime contractor and are well known to him. It is easy for the prime contractor to secure himself against loss by requiring the subcontractors to give security by bond, or otherwise, for the payment of those who contract directly with the subcontractors. But this method of protection is generally inadequate to cope with remote and undeterminable liabilities incurred by an ordinary materialman, who may be a manufacturer, a wholesaler or a retailer. . . . To impose unlimited liability under the payment bond to those submaterialmen and laborers is to create a precarious and perilous risk on the prime contractor and his surety.Id. at 110-11 (citations omitted). Because Congress did not intend to "impose liability on the payment bond in situations where it is difficult or impossible for the prime contractor to protect himself," MacEvoy, 322 U.S. at 110, the test for whether one is a subcontractor is "the substantiality and importance of his relationship with the prime contractor," F. D. Rich Co., 417 U.S. at 123. "It is the substantiality of the relationship which will usually determine whether the prime contractor can protect himself, since he can easily require bond security or other protection from those few `subcontractors' with whom he has a substantial relationship in the performance of the contract." Id. at 123-24.
To determine whether Aldridge was a subcontractor, the court must look at the total relationship between Aldridge and Pickus.See id. at 124. The Takeover Agreement specified that Aldridge would be the contractor who would complete the remaining work subject to the "terms and conditions of the Subcontract." (12(M) Ex. A at 2.) The Agreement also required Reliance to "engage Aldridge as the contractor that will actually perform the Remaining Work. The agreement between Reliance and Aldridge will expressly require Aldridge to perform the Remaining Work subject to the supervision and direction of Pickus as fully and completely as if Aldridge was the `Subcontractor' under the Subcontract [between Pickus and Metrick]." (Id.) Furthermore, from December 8 through December 22, 1995, prior to entering into the Takeover Agreement with Reliance, Pickus engaged Aldridge "to continue the work required under Metrick's subcontract." (12(M) ¶ 9.)
Although Pickus was not a party, the completion Contract between Aldridge and Reliance also specified that Aldridge was to coordinate all work through Pickus and "otherwise conduct itself as if it has a direct contract with the General Contractor." (Id. Ex. B at 2.)
Defendants counter that there was no obligation in the Takeover Agreement running from Pickus to Aldridge because the Agreement only defined Reliance's obligations. Defendants also argue that even if Aldridge was a third party beneficiary of the Takeover Agreement, this does not establish a direct relationship as required by the Miller Act.
The court finds that Aldridge had a "substantial and important" relationship with Pickus. Pickus initially hired Aldridge when Metrick withdrew from the Project. Later, when Pickus and Reliance entered into the Takeover Agreement, it expressly stipulated that Aldridge would complete the remaining electrical work on the Project. Furthermore, Aldridge was to perform the work at the direction of Pickus. Functionally, Aldridge was a subcontractor to Pickus.
Furthermore, because of the substantial relationship between Pickus and Aldridge, Pickus was in a position to protect itself against loss. It could have required Aldridge to give bond security or other protection as part of the Takeover Agreement. Thus, there is no reason to exclude Aldridge from Miller Act subcontractor protection.
The Miller Act requires that a lawsuit must be filed within one year "after the day on which the last of the labor was performed." Id. § 270b(b). The parties agree that the lawsuit was filed on May 27, 1998. They agree that the Project was turned over to the Navy in December 1996 and that the punch list work was completed by the end of February 1997. Aldridge contends, and defendants acknowledge, for purposes of this motion, that the work it did with Commonwealth Edison through May 29, 1997 was required under the contract. (Reply at 8.) Defendants argue, however, that Aldridge was required to file suit within one year from the last date of labor for which its claim is made, not from the date it last furnished labor to the project. As authority, defendants cite United States ex rel. McGrath v. Travelers Indem. Co., 253 F. Supp. 330, 331 (D. Ariz. 1966) and United States ex rel. First Nat'l Bank v. United States Fidelity Guar. Co., 240 F. Supp. 316, 321 (N.D. Okla. 1965).
This court, however, elects to follow other courts in this district and all Courts of Appeal that have considered this issue. They have all ruled that the one year limitations period "does not begin to run so long as labor or materials continue to be required to fulfill the original contract." United States ex rel. Automatic Elevator Co. v. Lori Constr., 912 F. Supp. 398, 400 (N.D. Ill. 1996); accord United States ex rel. Skip Kirchdorfer, Inc. v. M.J. Kelley Corp., 995 F.2d 656, 659 (6th Cir. 1993);United States ex rel. T.M.S. Mechanical Contractors, Inc. v. Millers Mut. Fire Ins. Co., 942 F.2d 946, 950 (5th Cir. 1991);United States ex rel. Aetna Drywall Contractors, Inc. v. Aetna Cas. Sur. Co., 725 F.2d 650, 650-51 (11th Cir. 1984); United States ex rel. Magna Masonry, Inc. v. R.T. Woodfield, Inc., 709 F.2d 249, 250-51 (4th Cir. 1983); United States ex rel. Celanese Coatings Co. v. Gullard, 504 F.2d 466, 468 (9th Cir. 1974). Aldridge finished Project work on May 29, 1997 and filed this lawsuit on May 27, 1998. Consequently, this lawsuit was filed timely.
American, for the first time in its reply, argues that this suit is time barred against it. The original complaint included Fireman's Fund Insurance Company ("Fireman's Fund") as a defendant. Two weeks after the suit was filed, defendants' counsel informed plaintiffs that the payment bond had in fact been issued in the name of American, which is a wholly owned subsidiary of Fireman's Fund. The suit against American was not commenced until it was added as a defendant on July 10, 1998 in the Amended Complaint.
American argues that the Miller Act time constraint operates as a limitation on both the remedy and the liability. See United States ex rel. Statham Instruments, Inc. v. Western Cas. Sur. Co., 359 F.2d 521, 523 (6th Cir. 1966). "It is a condition attached to the right to sue at all." Id. Plaintiffs, however, argue that Statham is not binding and instead the court should apply the general relation back rules pursuant to Rule 15.
The court agrees with plaintiffs' argument. Statham is no longer good law. Statham was decided before Congress enacted the 1966 amendments to Rule 15(c). Under these changes, an amendment to a pleading that changes the party against whom a claim is asserted shall relate back to the date of the original pleading.See Advisory Committee Notes to Fed.R.Civ.P. 15(c). Furthermore,
[i]t is well settled that the Federal Rules of Civil Procedure are to be liberally construed to effectuate the general purpose of seeing that cases are tried on the merits and to dispense with technical procedural problems. To this end, amendments pursuant to Rule 15(c) should be freely allowed.Staren v. American Nat'l Bank Trust Co., 529 F.2d 1257, 1263 (7th Cir. 1976). "Rule 15(c) . . . recognizes that legitimate legal claims may not be squelched when a party mistakenly identifies a party to be sued within the meaning of Rule 15(c)."Hill v. Shelander, 924 F.2d 1370, 1375 (7th Cir. 1991). Therefore, the complaint against American is not time barred if it meets the requirements of the relation back doctrine.
Under Rule 15(c) and cases interpreting that rule, an amended complaint adding a new defendant "relates back" to the original complaint if (A) the claim against the new defendant arose from the "same conduct, transaction, or occurrence" set forth in the original complaint, (B) the new defendant shares an "identity of interest" with the original defendant, (C) the new defendant has "fair notice" of the claim, and (D) adding the new defendant does not prejudice the defendants. See Fed.R.Civ.P. 15(c); Sherwin Manor Nursing Ctr., Inc. v. McAuliffe, No. 92 C 6659, 1997 WL 367368, at *6 (N.D. Ill. June 25, 1997). Although these four requirements overlap considerably, the court will treat each one separately.
The relevant parts of Fed.R.Civ.P. 15(c) state: "Relation Back of Amendments. An amendment of a pleading relates back to the date of the original pleading when . . . (2) the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, or (3) the amendment changes the party against whom a claim is asserted if the foregoing provision (2) is satisfied and, within the period provided by Rule 4(m) [120 days] for service of the summons and complaint, the party to be brought in by amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party."
Rule 15(c) does not allow relation back unless the new defendant's claim arose from the same transaction or occurrence alleged in the original complaint. In this case, the original and amended complaints are nearly identical. The only substantive change was the substitution of American for Fireman's Fund as surety.
Rule 15(c) allows relation back when an "identity of interest" exists between the original and the new defendants. When a defendant has an identity of interest with the original defendant, courts generally assume that the new defendant received proper notice and suffers no prejudice by his addition as a defendant. See Travelers Indem. Co. v. United States ex rel. Construction Specialties Co., 382 F.2d 103, 106 (10th Cir. 1967) (finding it proper to substitute subsidiary for parent). The identity of interest between American and Fireman's Fund supports the relation back of the amended complaint.
Rule 15(c) does not allow relation back unless the original complaint gave the defendant "fair notice." American must have known, within 120 days of the filing of the original complaint, that but for a mistake concerning its identity the action would have been brought against it. Here there is no question that American received fair notice within 120 days. The amended complaint naming American as a defendant was filed seven weeks after the original complaint.
Finally, Rule 15(c) does not allow relation back if the substitution of defendants caused American any undue prejudice. Courts generally find that substituting a subsidiary for a parent corporation does not prejudice a defendant because the subsidiary was on constructive notice of the action against the parent. See Staren, 529 F.2d at 1263; E.I. du Pont de Nemours Co. v. Phillips Petroleum Co., 621 F. Supp. 310, 315 (D. Del. 1985). In this case, clearly American is not prejudiced by the delayed filing of the amended complaint. It is a wholly owned subsidiary of the original defendant; they share the same headquarters, officers, directors, and shareholders. Moreover, the amended complaint was filed less than 60 days after the original, allowing American sufficient time to prepare for the case.
Finding that (A) the claim against American arose from the same conduct and occurrence set forth in the original complaint; (B) American shared an identity of interest with Fireman's Fund; (C) American had fair notice of plaintiffs' claims; and (D) the substitution of American does not prejudice the defendants, the court concludes that the relation back doctrine under Rule 15(c) applies, and the claims against American are not time-barred.
B. Unpaid for Work
Under the Claim Cooperation Agreement, Aldridge released Reliance from any further payment, duty, or obligation and gave Reliance the "sole option and discretion" to pursue the lawsuit against Pickus. (12M Ex. D at 2.) Pickus claims that because Aldridge has released Reliance from any further obligations, Aldridge is not unpaid for the work that it performed. Consequently, the supplier has been "paid," defendants argue, and has no Miller Act claim. Pickus relies on the Severin doctrine, which states that when a subcontractor releases a general contractor from any further claims, it cannot turn around and sue the government for further relief. Severin v. United States, 99 Ct. CI. 435 (1943).
Defendants arguments are without merit. The Severin doctrine only applies in cases where the government is a defendant; the doctrine is an application of sovereign immunity. The subcontractor could not sue the government in Severin because the government had not consented to be sued. The Severin doctrine does not apply in the instant case where defendant is a general contractor.
Finding that plaintiffs remain unpaid and that they have met their jurisdictional requirements and with the other Miller Act elements not in dispute, the court concludes that plaintiffs have satisfied the prima facie case for a Miller Act claim. Consequently, the court denies defendants motion for summary judgment on Count I.
II. Contract Claim
In Count II of the complaint, plaintiffs allege that Pickus breached the Takeover Agreement. They claim that Pickus owed a duty to not only Reliance, who was a party to the Agreement, but also to Aldridge, who they argue was an intended third party beneficiary of the Agreement. Plaintiffs allege that they were damaged because of Pickus's schedule mismanagement.
The question of whether Aldridge is a third party beneficiary is a genuine issue of material fact. Illinois follows the "intent to benefit" rules when it comes to third party beneficiaries. The question then becomes "whether the contracting parties intended to confer a benefit upon a nonparty to their agreement." XL Disposal Corp. v. John Sexton Contractors Co., 659 N.E.2d 1312, 1316 (Ill. 1995); accord Bates Rogers Constr. Corp. v. Greeley Hansen, 486 N.E.2d 902, 906 (Ill. 1985). According to plaintiffs, the Takeover Agreement between Reliance and Pickus intended to benefit Aldridge. The Agreement specified that Aldridge would be the "Subcontractor" who would complete the remaining work subject to the "terms and conditions of the Subcontract." (12M Ex. A at 2.) The Completion Contract between Aldridge and Reliance also specified that Aldridge was to coordinate all work through Pickus and "otherwise conduct itself as if it has a direct contract with the General Contractor." (Id. Ex. B at 2.)
Defendants seek a summary judgment against Reliance on Count II alleging that Reliance does not have a claim under the Takeover Agreement. Reliance counters that the Takeover Agreement incorporates by reference the Subcontract between Metrick and Pickus. Therefore, Reliance argues, it is entitled to delay damages caused by Pickus' mismanagement. Defendants reply that there is no language in either the Takeover Agreement or the Subcontract to support a right to delay damages.
Plaintiffs who file Miller Act claims can also file pendant state contract claims. "The Miller Act was not meant to replace subcontractors' state law contract remedies, which allow for recovery of lost profits." Consolidated Elec. Mechanicals, Inc. v. Biggs Gen. Contracting. Inc., 167 F.3d 432, 436 (8th Cir. 1999); accord K-W Indus. v. National Sur. Corp., 855 F.2d 640, 642 n. 3 (9th Cir. 1988) ("[N]othing in the Miller Act or in its legislative history suggest[s] that Congress intended the Act to protect [defendants] from liability . . . in connection with payment bonds executed pursuant to the Act.").
Illinois law allows delay damages for a breach of contract. See Premier Elec. Constr. Co. v. American Nat'l Bank, 658 N.E.2d 877, 890 (Ill.App.Ct. 1995.) "The burden of proof is on the party claiming delay damages to prove the amount of delay, the amount of damages attributable to that delay, and that those delays were caused by the other party separate from any damages that may have resulted from the acts of the claimant." Id. (citations omitted). Furthermore, an implied duty exists in Illinois to avoid frustrating a contractor's efforts with lengthy delays. See Amp-Rite Elec. Co. v. Wheaton Sanitary Dist., 580 N.E.2d 622, 636 (Ill.App.Ct. 1991). "In Illinois, it is settled that, in the absence of contractual provisions to the contrary, a construction contractor has the right to recover increased-cost-of-performance damages resulting from delay caused by default of the contractee." Id.; c.f. J.F. Edwards Constr. Co. v. Illinois State Toll Highway Auth., 340 N.E.2d 572, 574 (Ill.App.Ct. 1975) (finding that consequential damages for delays are allowed except if specific provisions in a contract expressly limit or preclude such claims).
Plaintiffs here allege that Pickus's mismanagement caused additional costs and a right to delay damages. There exists no language in either the Takeover Agreement or the Subcontract that precludes such claims. Consequently, the court denies defendants' motion for summary judgment on Count II.
Conclusion
For the reasons stated above, the court denies defendants' motion for summary judgement. The parties should discuss a settlement before the next court date.