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UNITED STATES EX REL. CTI LTD., INC. v. MELLON STU

August 1, 1994

UNITED STATES OF AMERICA, for the use of CTI LIMITED, INC., Assignee of LOCKWOOD GLASS COMPANY, CTI LIMITED, INC., and CARL SEYFER, Plaintiffs,
v.
MELLON STUART COMPANY, a Corp., ST. PAUL FIRE AND MARINE INSURANCE CO., SEABOARD SURETY COMPANY and FEDERAL STREET CONSTRUCTION COMPANY, a Corp., Defendants. UNITED STATES OF AMERICA, for the use of G & 1 ASSOCIATES, INC. and MIDWEST INDUSTRIAL SIDINGS, Plaintiffs, v. FEDERAL STREET CONSTRUCTION CO., INC., a Pennsylvania Corporation, etc., et al., Defendants.


Castillo


The opinion of the court was delivered by: RUBEN CASTILLO

Plaintiffs, United States ex rel. CTI Limited, Inc. ("CTI"), and Carl Seyfer ("Seyfer"), sue for payment from a payment bond issued by defendant, Seaboard Surety Company ("Seaboard"), on behalf of Mellon Stuart Company, now known as Federal Street Construction Company ("Mellon Stuart"), pursuant to the Miller Act, 40 U.S.C. ยง 270a-270d (1988) (the "Act"). Seaboard moves for summary judgment.

 BACKGROUND

 In September, 1989, Mellon Stuart contracted with the United States Postal Service to become the general contractor on the construction of a postal processing center. Seaboard's Rule 12(M) Statement of Material Facts ("Defendant's Facts"), P 1. Mellon Stuart subcontracted with Lockwood Glass Company ("Lockwood") on December 7, 1989, to perform glazing, porcelain, and roofing work on the postal center project. Id. at PP 2, 3.

 The Lockwood subcontract required Lockwood to post a performance bond. Id. at P 4. Seyfer satisfied that requirement for Lockwood by guarantying a $ 75,000 Irrevocable Letter of Credit established by First of America Bank-Dekalb in Mellon Stuart's favor. Id.; Complaint Exhibit 5. Mellon Stuart was entitled to draw on the Letter of Credit in the event of Lockwood's default. Complaint Exhibit 5. In order "to provide protection to Seyfer," Mellon Stuart, Lockwood, and Seyfer subsequently entered into an Agreement (hereinafter referred to as "the Tri-Party Agreement") on December 13, 1989, which provided in pertinent part as follows:

 
(1) In the event that Lockwood is determined by Mellon Stuart to be in default under the terms and conditions of its contract dated December 7, 1989, with Mellon Stuart[,] Mellon Stuart, Seyfer and Lockwood acknowledge that Seyfer may assume and take control of the obligations and duties of Lockwood under its contract with Mellon Stuart, including but not limited to the right to complete the remainder of Lockwood's subcontract with Mellon Stuart. Nothing herein shall be construed to require Seyfer to so assume any of the duties or responsibilities or liabilities of Lockwood under its contract with Mellon Stuart.

 Tri-Party Agreement, Complaint Exhibit 3.

 Lockwood failed to complete the job as required, causing Mellon to declare a default. Defendant's Facts, P 7. Seyfer, in turn, exercised his right under the Tri-Party Agreement to complete performance of the Lockwood subcontract rather than forfeit his $ 75,000.00 Letter of Credit. In a September 3, 1991 agreement titled "Letter of Understanding," Mellon Stuart and Seyfer agreed, in pertinent part, as follows:

 Letter of Understanding, Complaint Exhibit 4.

 Seyfer and CTI forwarded invoices to Mellon itemizing the work performed and the payment expected for the services rendered. Plaintiff's Additional Statements of Fact Pursuant to Rule 12(N) ("Plaintiff's Facts"), P 4. Seyfer and CTI allege that after crediting Mellon with payments made to date for the work performed by Lockwood and CTI, a balance of $ 26,564.26 due to Seyfer and CTI remains for the work performed. Id. at P 5. They sue to recover the unpaid invoices from the Miller Act payment bond posted by Seaboard. Seaboard moves for summary judgment contending that because Seyfer was merely Lockwood's guarantor, not a "subcontractor," neither Seyfer nor CTI can make claims against the Miller Act bond.

 DISCUSSION

 Summary Judgment Standards

 A movant is entitled to summary judgment when the moving papers and affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). A genuine issue for trial exists only when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The court must view all evidence in a light most favorable to the nonmoving party, Valley Liquors, Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 659 (7th ...


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