United States District Court, D. Nevada
UNITED STATES OF AMERICA FOR THE USE AND BENEFIT OF AMERICAN GENERAL CONSTRUCTION, INC., and AMERICAN GENERAL CONSTRUCTION, INC. d/b/a AGC, INC., Plaintiffs,
YACK CONSTRUCTION, INC., MERCHANTS BONDING COMPANY MUTUAL, and PAE APPLIED TECHNOLOGIES, LLC, Defendants.
MIRANDA M. DU, CHIEF UNITED STATES DISTRICT JUDGE.
a contractual dispute between construction companies.
Defendant Yack Construction, Inc. (“Yack”) was
hired to construct a hangar at Creech Air Force Base
(“the Project”) and subcontracted with Plaintiff
American General Construction, Inc. (“AGC”) to
carry out a portion of the Project. AGC completed part of its
work, but then its relationship with Yack deteriorated. Yack
terminated AGC and hired one of AGC’s former
subcontractors to complete the work. Yack has refused to pay
AGC, contending that AGC violated the contractual agreement
that governed their relationship.
following motions are pending before the Court: (1)
Defendants Yack and Merchants Bonding Company
(Mutual)’s (“Merchants”) motion for summary
judgment (ECF No. 47) and (2) Plaintiffs United States of
America for the Use and Benefit of American General
Construction, Inc. and AGC’s motion for partial summary
judgment (ECF No. 48). The Court has reviewed the
parties’ responses (ECF Nos. 51, 52) and replies (ECF
Nos. 53, 54). The Court also held a hearing on the pending
motions on September 24, 2019 (“the Hearing”).
(ECF No. 59.) For the following reasons, the Court denies the
following facts are undisputed unless otherwise indicated.
United States Air Force entered into a Range Support Services
Agreement with PAE Applied Technologies, LLC
(“PAE”) in 2002. (ECF No. 52-4 at 2.) Under that
agreement, PAE “provides a broad array of services to
the Government at multiple locations on the Nevada Test and
Training Range . . . [including] Creech Air Force
Base.” (Id.) One of the services PAE provided
was overseeing the construction of the Project. (Id.
solicited proposals for the Project on October 6, 2016.
(Id.) The request for proposals “expressly
required bidders to obtain a Performance and Payment bond, as
required under the Miller Act.” (Id.) PAE
entered into an agreement with Yack on January 30, 2017 that
made Yack primarily responsible for the Project and required
Yack to obtain the bond required under the Miller
(Id.) Yack obtained a bond in the amount of $3, 168,
122 from Merchants on April 5, 2017. (Id.)
submitted a proposal (“Proposal”) on December 22,
2016 to Yack to carry out certain aspects of the Project.
(See ECF No. 48-1 at 1.) The Proposal contains
pricing for a regular schedule, accelerated schedule, payment
terms, and exclusions. (See Id . at 2-5.)
Yack’s agent signed the Proposal on January 6, 2017,
agreeing to the regular schedule pricing and the following
payment term: “Balance upon invoicing. Net 30
days.” (Id. at 4.) The Proposal also bears the
signature of AGC’s agent. (See Id . at 5.) The
Proposal references additional forthcoming agreements between
the parties, indicating that it “will need to be added
. . . to any Ownership Contract Agreements.”
(Id. at 1.)
contacted Yack on January 25, 2017 to ask whether a draft
subcontract agreement was ready for review. (ECF No. 48-4 at
2.) Yack instructed AGC two days later to proceed with the
work under the Proposal even though the subcontract agreement
was not ready for review because Yack was “behind on
[its] contracts.” (Id. at 4.) AGC commenced
work on the Project sometime after that. (ECF No. 52 at
4-5; see also ECF No. 52-5 at 6-7 (email dated
January 27, 2017 stating: “Rodney, we will have the
door loads need [sic] in order to continue with the
foundation work later today.”).)
provided a draft subcontract agreement (“Subcontract
Agreement”) to AGC on February 13, 2017. (ECF No.
52-11.) The Subcontract Agreement stated that upon receipt of
a copy for signature, if AGC “commences work on the
site prior to signing, ” such commencement would be
“deemed to be acceptance” of the Subcontract
Agreement. (Id. at 4 (Section 2.1).) AGC returned
the Subcontract Agreement to Yack with numerous changes.
(See ECF No. 52-12 (draft with notations); ECF No.
52-13 (email correspondence regarding changes to the
Subcontract Agreement); ECF No. 52-10 at 20-21 (describing
redline edits).) Yack did not agree to all changes, and AGC
refused to sign. (ECF No. 52-13 (email exchange in which Yack
refused to change the Subcontract Agreement); ECF No. 52-10
at 20-21 (deposition testimony of AGC’s agent that
“we never came to terms”).) In fact, AGC never
signed the Subcontract agreement. (ECF No. 52-10 at 20-21;
see also ECF No. 52-14 at 3 (email from AGC’s
agent stating that “[t]hese are
‘Agreements’ not ‘take it or leave
entered into a subcontract agreement with Central Concrete
Company of Ohio (“CCCO”) on February 14, 2017 for
CCCO to perform certain work on the Project. (See
ECF No. 52-18.) AGC contends that certain failures on the
part of Yack delayed this work:
[T]he presence of a hole near the pad where AGC’s Scope
of Work was to be performed, Yack’s failure to ensure a
complete pad was poured prior to AGC’s arrival,
Yack’s failure to clear the site of dirt piles or to
pour the concrete so that AGC and CCCO could proceed in a
prompt manner, Yack’s refusal to approve necessary
change orders, and Yack’s failure to create a master
schedule to the Project.
(ECF No. 52 at 7-8 (citing ECF No. 52-19; ECF No. 52-10 at 5,
19; ECF No. 52-20 at 3-6).)
representatives complained about CCCO’s efforts in
March 2017 and began to encourage AGC to terminate CCCO. (ECF
No. 52 at 8; see also, e.g., ECF No. 52-19 at 4
(“CCC did not show . . . . AGC needs to get control of
their subcontractor[‘]s actions.”), 5 (“CCC
is still a problem for AGC.”), 6 (“CCC’s
performance is lacking and the crew doesn’t seem
motivated.”); ECF No. 52-10 at 29-31.) AGC ultimately
provided CCCO with a notice of termination on April 4, 2017.
(ECF No. 52-25 at 2.) CCCO refused to return to the Project
site on April 17, 2017, and Yack notified AGC that AGC would
be terminated for failure to provide ...