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Equipment Rental Source, LLC v. Western Surety Co.

United States District Court, D. Nebraska

October 12, 2016

EQUIPMENT RENTAL SOURCE, LLC, a Colorado Corporation; Plaintiff,
v.
WESTERN SURETY COMPANY, a South Dakota Corporation; Defendant.

          MEMORANDUM AND ORDER

          Laurie Smith Camp, Chief United States District Judge.

         This matter is before the Court on the Motion for Summary Judgment (Filing No. 28) submitted by Defendant Western Surety Company (“WSC”). For the reasons stated below, the Motion will be granted.

         BACKGROUND

         Equipment Rental Source, LLC (“ERS”) responded to each of WSC's numbered facts and set forth additional facts in response. (See ECF No. 31, Page ID 135-39.) The Court has considered the additional facts to the extent they are relevant. The following is a summary of the pertinent facts presented in the parties' briefs, supported by pinpoint citations to evidence in the record, according to NECivR 56.1[1] and Federal Rule of Civil Procedure 56.

         The Project and the Parties' Contractual Relationships

         The Nebraska Department of Roads (“NDOR”) owned a construction project affecting a certain stretch of Interstate 80 in Keith County, Nebraska (the “Project”). On August 17, 2010, the NDOR entered into a contract (the “Prime Contract”) with Upper Plains Contracting, Inc. (“UPCI”). As part of its obligations under the Prime Contract, UPCI procured a payment bond from WSC, Bond No. 929507060 (the “Bond”), under which WSC agreed to pay claimants for labor performed and material, supplies, and equipment used or rented in the performance of the Prime Contract. In its capacity as prime contractor, UPCI engaged Paul Reed Construction (“PRC”) as a subcontractor for certain work on the Project. On March 28, 2011, PRC subcontracted with Arcon to perform some of its work, related to concrete crushing, for the Project (the “Arcon Subcontract”). Arcon purchased and/or leased materials and/or equipment from vendors, including Intermountain Construction Equipment, Inc. (“ICE”), and Equipment Rental Source, LLC (“ERS”), to perform work on the Project. ERS claims that Arcon failed to pay all amounts due for the materials and equipment purchased and/or leased from them. Accordingly, on September 20, 2011, ERS submitted notice to WSC of its claim on the Bond in the amount of $102, 672.11.

         The Arcon Action

         On January 27, 2012, PRC filed the case of Paul Reed Construction & Supply, Inc., v. Arcon, Inc., and Granite Re, Inc., in the District Court of Scotts Bluff County, Nebraska; Case No. CI12-56. PRC sought a declaratory judgment on certain aspects of the Arcon Subcontract as well as damages for breach of the Arcon Subcontract. On February 3, 2012, Arcon removed that action to this Court, captioned as Paul Reed Constr. & Supply, Inc. v. Arcon, Inc., 8:12-cv-00048-LSC-FG3 (the “Arcon Action”). That same day, Arcon filed a Counterclaim against PRC, alleging that PRC breached the Arcon Subcontract by “fail[ing] to pay Arcon for the labor, equipment[, ] and materials Arcon and Arcon's subcontractors and suppliers performed or supplied on the Project.” (Arcon Action, ECF No. 2, Page ID 24.) Arcon also filed a Third-Party Complaint against WSC on the Bond, seeking payment for its work on the Project, including payment for equipment that ERS supplied. On September 16, 2014, ERS filed a Motion to Intervene in the Arcon Action, proposing to assert a claim on the Bond against WSC for $102, 672.11, due to Arcon's alleged failure to pay. On September 26, 2014, the Court denied ERS's Motion to Intervene.

         On October 21, 22, 23, and 28, 2014, the Court conducted a jury trial in the Arcon Action. On October 30, 2014, the jury returned a verdict in PRC's favor and against Arcon on PRC's breach of contract claim; in PRC's favor and against Arcon on Arcon's breach of contract claim; and in Arcon's favor and against WSC on Arcon's claim against the Bond. (Arcon Action, ECF Nos. 174, 176.) The jury awarded PRC $14, 000.00 on its breach of contract claim against Arcon, and awarded Arcon $13, 438.26 on its breach of payment bond claim against WSC. (See Arcon Action, ECF No. 200, Page ID 2341-42.) On December 22, 2014, the Court determined that Judgment would be entered in PRC's favor and against Arcon in the amount of net $561.74, because the jury's verdict indicated that it intended the $13, 438.26 as an offset in the amount owed by Arcon to PRC. (Arcon Action, ECF No. 201.)

         ERS's Claims in this Case

         On October 15, 2014, ERS initiated a lawsuit in the District Court of Douglas County, Nebraska. (ECF No. 1-2.) ERS asserted a claim on the Bond against WSC for $102, 672.11 for amounts Arcon failed to pay. (Id., Page ID 4-5.) ERS also asserted a claim against Arcon for breach of the Rental Agreement for that same amount. (Id., Page ID 10.) Finally, ERS asserted a breach of contract claim against PRC, alleging PRC breached the Arcon Subcontract by failing to have Arcon obtain a separate payment bond for the benefit of ERS. (Id., Page ID 11.) On or about October 15, 2014, ERS amended its Complaint, adding Arcon's principal, Donna Schultejann (“Schultejann”), as a defendant and asserting a claim against her for breach of a personal guarantee that purported to secure Arcon's obligations to ERS.

         On or about November 21, 2014, Arcon, Schultejann, and ERS entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) with respect to the claims “arising out of the Project which include breach of contract for unpaid material and equipment rental and under the Personal Guarantee and questioning the accuracy of amounts outstanding on the Sale-Invoice/Rental Agreements” (ECF No. 29-3, Page ID 121-22.) Under the terms of the Settlement Agreement, ERS agreed “to accept the amount of Sixty-Five Thousand and no/100 Dollars ($65, 000.00) as a full and complete settlement of any and all claims held by ERS against Arcon and/or Schultejann in connection with the Project” (Id., Page ID 122.) As part of the Settlement Agreement, ERS executed an Assignment of Claims (the “Assignment”) in favor of Arcon with respect to ERS's “right, title[, ] and interest in and to its claim as a supplier of [Arcon] against Western Surety Company” on the Bond with respect to its furnishing equipment for the Project. (ECF No. 29-4, Page ID 125.)

         On April 30, 2015, ERS filed a Second Amended Complaint, asserting only a claim on the Bond against WSC (the “ERS Action”). (ECF No. 1-4.) ERS omitted its claims against Arcon, Schultejann, and PRC. On May 29, 2015, WSC removed the ERS Action to this Court.

         STANDARD OF REVIEW

         “Summary judgment is appropriate when, construing the evidence most favorably to the nonmoving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Crozier v. Wint, 736 F.3d 1134, 1136 (8th Cir. 2013) (citing Fed.R.Civ.P. 56(c)). “[S]ummary judgment is not disfavored and is designed for every action.” Briscoe v. Cnty. of St. Louis, 690 F.3d 1004, 1011 n.2 (8th Cir. 2012) (internal quotation marks omitted) (quoting Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc) cert. denied, 132 S.Ct. 513 (2011)). In reviewing a motion for summary judgment, the Court will view “all facts and mak[e] all reasonable inferences favorable to the nonmovant.” Gen. Mills Operations, LLC v. Five Star Custom Foods, Ltd., 703 F.3d 1104, 1107 (8th Cir. 2013). “[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue . . . Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The moving party need not negate the nonmoving party's claims by showing “the absence of a genuine issue of material fact.” Id. at 325. Instead, “the burden on the moving party may be discharged by ‘showing' . . . that there is an absence of evidence to support the nonmoving party's case.” Id. (quoting Fed.R.Civ.P. 56(c)).

         In response to the movant's showing, the nonmoving party's burden is to produce specific facts demonstrating “‘a genuine issue of material fact' such that [its] claim should proceed to trial.” Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 422 (8th Cir. 2009) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). The nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts, and must come forward with specific facts showing that there is a genuine issue for trial.” Briscoe, 690 F.3d at 1011 (internal quotation marks omitted) (quoting Torgerson, 643 F.3d at 1042). “[T]he mere existence of some alleged factual dispute between the parties” will not defeat an otherwise properly supported motion for summary judgment. Quinn v. St. Louis Cty., 653 F.3d 745, 751 (8th Cir. 2011) (internal quotation marks omitted) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)).

         In other words, in deciding “a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts.” Guimaraes v. SuperValu, Inc., 674 F.3d 962, 972 (8th Cir. 2012) (internal quotation marks omitted) (quoting Torgerson, 643 F.3d at 1042). Otherwise, where the Court finds that “the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, ” there is no “genuine issue for trial” and summary judgment is appropriate. Torgerson, 643 F.3d at 1042 (internal quotation marks omitted) (quoting Ricci v. DeStefano, 557 U.S. 557, 586 (2009)).

         DISCUSSION

         WSC argues that it is entitled to summary judgment on two principal grounds. First, it argues that ERS lacks standing to pursue the claims alleged against WSC. Second, WSC argues that ERS's claims are barred under Nebraska's “Little Miller Act, ” Neb. Rev. Stat. §§ 52-118, 52-118.01 (Reissue 2010). The Court concludes that ERS has standing to pursue its claims, but lacks a contractual relationship ...


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