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Construction Services, LLC v. Industrial & Crane Services, Inc.

United States District Court, S.D. Mississippi, Southern Division

March 18, 2019




         BEFORE THE COURT is Defendant Industrial & Crane Services, Inc.'s Motion [39] for Summary Judgment. This Motion is fully briefed. After review of the Motion, the Response, the related pleadings, the record as a whole, and relevant legal authority, the Court finds that Defendant's Motion [39] should be granted in part as to Plaintiff Construction Services, L.L.C.'s unjust enrichment claim, and denied as to Plaintiff's remaining claims.

         I. BACKGROUND

         A. Relevant facts

         Plaintiff Construction Services, L.L.C. (“Plaintiff”) “provides its clients workforce solutions, including contingent labor staffing, direct hire, and payroll services.”[1] Compl. [1] at 2. Defendant Industrial & Crane Services, Inc. (“Defendant”), is a construction contractor that specializes in large infrastructure construction projects including specialty rigging and heavy lift services, and in recent years has “specialized in the port world doing the ship to shore cranes.” Mem. in Supp. [42] at 3; Pritchard Depo. [42-4] at 8. Of relevance here, a company known as Kocks Krane, GmbH (“Kocks”), subcontracted with Defendant to assemble and place two new ship-to-shore gantry cargo cranes, manufactured by Kocks, as part of a project in Delaware. Mem. in Supp. [40] at 1-2.

         On or about January 31, 2017, Defendant “engaged Plaintiff to procure laborers, ironworkers, and administrative personnel for the Port of Wilmington, Procurement of New Gantry Cranes Project in New Castle County, Delaware” (“Delaware Project”). Id. The parties entered into a contract or “Agreement” which set out certain multipliers Plaintiff would apply to the hourly wages Plaintiff paid to the employees it procured for Defendant.[2] Id. at 2-6; Agreement [1-2] at 1. The multipliers were for the purpose of covering expenses such as “payroll taxes, workers compensation insurance, general liability insurance, fringe benefits and overhead, ” with any remaining funds serving as profit for Plaintiff. Agreement [1-2] at 1. Based upon the hourly wage for each employee hired from Plaintiff, Plaintiff would calculate the wages and pay the employees, then bill Defendant. Part of the calculation involved Plaintiff applying the multipliers set forth in the Agreement. Defendant would in turn remit payment of the invoices to Plaintiff. Id.

         The employees Plaintiff ultimately procured for Defendant to employ on the Delaware Project worked for varying lengths of time between January and May 2017. May 18, 2017, Letter [1-4] at 1-3. Plaintiff subsequently received a letter dated May 18, 2017, from the Delaware Department of Labor stating that three workers[3] it had supplied for the Delaware Project had not been paid in compliance with “Delaware's Prevailing Wage Law, 29 Del. C. §6960.” The Department demanded payment of $111, 233.76 to cure the deficiency. Compl. [1] at 1-7; May 18, 2017, Letter [1-4] at 1-3. The three employees had been paid under a classification of “laborers” while performing work as “iron workers.” May 18, 2017, Letter [1-4] at 1-3. Plaintiff complied with the demand by remitting the requested payment to the Delaware Department of Labor, and then invoiced Defendant for the additional amount of the employees' hourly wages plus the markup. Compl. [1] at 1-7. The dispute between the parties in this case arose when Defendant took the position that, under the terms of the contract, it did not owe Plaintiff reimbursement for these additional funds. Id.

         On September 15, 2017, Plaintiff's counsel sent Defendant a demand letter for the amount Plaintiff claimed it was owed, $168, 765.09, which included unpaid labor procured in the amount of $161, 191.02[4] and accrued interest in the amount of $7, 574.07. Plaintiff's counsel requested that Defendant send the payment to his office. Id. at 4; September 15, 2017, Letter [1-5] at 1-2. In response, on or about October 4, 2017, Defendant sent a check directly to the drop-box for Plaintiff's bank in the amount of $5, 974.44[5], together with various documents purporting to proclaim that, should Plaintiff negotiate the check, it would be accepting the check “in full and final settlement” under the terms of the parties' Agreement. Compl. [1] at 1-7; Compl. Exhibit 5 [1-6] at 1-6. It appears that upon receipt of the check, the bank automatically deposited the funds and notified Plaintiff of its receipt of the check and accompanying documents.

         On October 5, 2017, Plaintiff's counsel sent Defendant correspondence via “REGISTERED MAIL and ELECTRONIC MAIL” stating that it rejected Defendant's purported payment as full and final satisfaction of the outstanding debt, and advising that, if full payment was not received by October 15, 2017, Plaintiff would initiate legal proceedings. Compl. Ex. 6 [1-7] at 1-2.

         B. Procedural history

         1. Plaintiff's Complaint

         Invoking diversity jurisdiction, Plaintiff filed a Complaint [1] in this Court on October 23, 2017, advancing claims against Defendant for breach of contract, breach of the duty of good faith and fair dealing, and unjust enrichment. Compl. [1] at 1-7. Plaintiff seeks actual damages of $161, 191.02, plus interest at the rate of 18% per annum. Id. Plaintiff further seeks recovery of its costs, expenses, and attorneys' fees incurred in pursuing this collection action under the terms of the Agreement. Id.; Agreement [1-2] at 1.

         2. Defendant's Motion [39] for Summary Judgment

         a. Defendant's arguments

         Defendant has filed a Motion [39] for Summary Judgment arguing that Plaintiff has failed to state a claim upon which relief may be granted, or alternatively that its claims have been fully resolved and settled and are barred by the doctrine of accord and satisfaction. Mot. Summ. J. [39] at 1. Defendant asserts that the contract it entered into with Plaintiff set forth a two-step process. In the first step the parties engaged in a selection process by which Plaintiff would present potential employees to Defendant, Defendant would determine which of those individuals to hire for “general helper” positions, and Plaintiff would set the specific hourly rates of pay for each employee.[6] Id. At the second step,

the parties agreed on a “rate sheet” prepared by Construction Services that confirmed the terms and conditions for payment [of] Construction Services' employees, and sending payments to Construction Services. See Compl. Ex. 1 [ECF No. 1-2]. This single page document is the only statement of terms between the parties for pay rates and payment processes. The rate sheet provides for a markup on the hourly wages agreed upon by the parties. The markup rates “include all wages, payroll taxes, workers compensation insurance, general liability insurance, fringe benefits and overhead.” Id. The rate sheet does not address, in any shape or form, modifications or amendments to the rates, indemnification, or any other contingency. Id. The parties moved forward under these terms, and Industrial Services paid each of the invoices presented by Construction Services in due course, without protest or dispute from Construction Services.

Id. at 1-3; see Agreement [1-2] at 1.

         Defendant maintains that the parties “had no agreement for any base hourly wage rates other than those the parties negotiated and incorporated into the rate sheet: $15.00/hour and $18.00/hour; plus the markup established by Construction Services for all of the other pay components, such as fringes, overhead, and the withholdings it decided to include in its fee package.” Mem. in Supp. [40] at 7-17. Defendant further argues that there was no agreement to modify these rates, thus Plaintiff's unilateral decision to increase and pay the hourly rates based upon the Delaware Department of Labor's enforcement notice falls completely outside the contract terms. Mem. in Supp. [40] at 7-17. For these reasons, Defendant takes the position that its refusal to pay the last invoice with the recalculated hourly rates for the three employees was not a ...

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