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Belonger Corporation, Inc. v. BW Contracting Services Inc.

United States District Court, E.D. Wisconsin

February 1, 2018

BELONGER CORPORATION, INC., and UNITED STATES OF AMERICA for the use and benefit of BELONGER CORPORATION, INC., Plaintiffs,
v.
BW CONTRACTING SERVICES, INC., et al., Defendants.

          DECISION AND ORDER

          WILLIAM E. DUFFIN, U.S. Magistrate Judge

         I. Background

         The United States Department of Veterans Affairs hired BW Contracting Services, Inc. to construct a medical center in Milwaukee. (ECF No. 32, ¶ 1.) BW obtained a performance bond and payment bond from Liberty Mutual Insurance Company. (ECF Nos. 29, ¶ 3; 32, ¶ 2.) By way of two subcontracts, BW hired Belonger Corporation, Inc. to perform certain heating, ventilation, and air conditioning (HVAC), plumbing, and medical gas work on the project. (ECF Nos. 29, ¶ 2; 32, ¶¶ 3-4.)

         Belonger performed work under the subcontracts, and on February 29, 2016, it issued two invoices, one under each subcontract, seeking payment. (ECF No. 29, ¶¶ 5, 12.) On each invoice the “balance to finish” was “$0.” (ECF No. 29, ¶¶ 7, 12 see also ECF Nos. 21-1 at 3, 21-2 at 3.) These invoices were neither paid nor approved by BW. (ECF No. 32, ¶ 14.)

         On May 14, 2016, BW learned that a plumbing line installed by Belonger had become clogged by another subcontractor and needed to be replaced. (ECF No. 29, ¶ 18.) That same day Belonger's president sent an email to, among others, Daniel Scharf, BW's project manager for the project, stating:

Ed contacted me stating that at Sims lab there is another back up in the sewer located in the 4” stack. My understanding is the VA already cut open the pipe and at first glance appears it is concrete/grout from other contractor. We will make the repair and inform you of the findings - however we need email acknowledgement that this additional work is authorized and a change order will be forthcoming between BW and Belonger.

(ECF No. 32, ¶ 15.) Scharf responded: “That is my understanding as well. Yes, please proceed with repair work on a T&M basis, and have your plumber get a sign-off from Dan Nelson as we go. A change order will be issued to compensate you for this time.” (ECF No. 32, ¶ 16.) Belonger performed this work on May 19 and 20, 2016, and charged $3, 708 for labor and $506.36 for materials. (ECF No. 29, ¶ 27.)

         A few months later, on October 4, 2016, the Veterans Administration issued a “Warranty and Installation Defect Notification” to BW. (ECF No. 29, ¶ 45.) In it the Veterans Administration reported that Belonger had cross-connected the hot water and chilled water returns in certain rooms, “contaminating the low temperature hot water system with glycol and the chilled water system for the entire hospital.” (ECF No. 29, ¶ 46.) On October 10 and 11, 2016, Belonger fixed the problem (ECF No. 29, ¶ 49) and did not charge BW for its work (ECF No. 29, ¶ 52). As a result of the defective cross-connection, the Veterans Administration asserted a claim against BW of $297, 286.40 for alleged damage to the building and its mechanical systems resulting from glycol contamination. (ECF No. 29, ¶ 51.)

         On February 13, 2017, Belonger submitted a “Notice of Payment Bond Claim” to Liberty Mutual for payment under the payment bond for work performed under the subcontract for which it had not been paid. (ECF No. 29, ¶ 28.) On April 5, 2017, Belonger submitted a “Proof of Claim - Construction Contract” to Liberty Mutual. (ECF No. 29, ¶ 33.)

         Belonger filed this lawsuit against BW on May 19, 2017, alleging that BW (and Liberty Mutual pursuant to the payment bond) owed it $25, 059.56 for plumbing and $54, 177.50 for the HVAC work, for a total of $79, 237.06. (ECF No. 1, ¶ 27.) Belonger also seeks $7, 864.35 relating to unpaid change orders. (ECF No. 1, ¶ 32.) Diversity of citizenship does not exist under 18 U.S.C. § 1332. (ECF No. 1, ¶¶ 5, 6.) Rather, this action is before the court pursuant to 18 U.S.C. § 1331 because, in addition to state law claims for breach of contract and unjust enrichment, Belonger seeks payment pursuant to a bond under the Miller Act, 40 U.S.C. § 3131, et seq.

         The defendants answered the complaint and alleged a counterclaim regarding damages they suffered as a result of Belonger having cross-connected the hot and chilled water returns. (ECF No. 14 at 6-9.) On November 2, 2017, the defendants moved for summary judgment on Belonger's claim under the Miller Act. They argue the court should dismiss the Miller Act claim and then decline to exercise supplemental jurisdiction over the remaining state law claims, see 28 U.S.C. § 1367(c)(3).

         The defendants argue that Belonger's claim under the Miller Act is untimely because this action was not filed within one year of Belonger's last work under the subcontracts. See 40 U.S.C. § 3133(b)(4). According to the defendants, Belonger's work under the subcontracts was completed in February 2016. The work fixing the clogged pipe was repair work and did not extend the Miller Act's one-year statute of limitations. Therefore, the defendants ask that the court dismiss the Miller Act claim, decline to exercise supplemental jurisdiction over the remaining state law claims, and dismiss the case with leave for Belonger to file the action in state court.

         Belonger contends that its work fixing the clogged pipe was work under the subcontracts. As a ...


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