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United States For the Use of PCC Construction, Inc. v. Star Insurance Co.

March 16, 2000

UNITED STATES FOR THE USE OF PCC CONSTRUCTION, INC.,
PLAINTIFF,
V.
STAR INSURANCE COMPANY, MEADOWBROOK INSURANCE GROUP, AND THE HACKNEY GROUP, INC.,
DEFENDANT.



The opinion of the court was delivered by: Brotman, District Judge.

FOR PUBLICATION

OPINION ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S CROSSMOTION FOR SUMMARY JUDGMENT

Presently before this Court is Plaintiff United States for the Use of PCC Construction, Inc.'s Motion for Summary Judgment and Defendant Meadowbrook Insurance Group's Crossmotion for Summary Judgment. Jurisdiction is based upon 40 U.S.C. §§ 270a and 270b.

I. FACTUAL AND PROCEDURAL BACKGROUND

On January 23rd 1996, Plaintiff United States for the Use of PCC Construction, Inc. ("PCC") and Defendant The Hackney Group, Inc. ("Hackney") entered into an agreement entitled "Subcontractor Agreement Between Contract and Subcontract." (See Subcontractor Agreement Between Contract and Subcontract ("Agreement"), attached to Ex. B of Pl[.'s] Motion for Summary Judgment) The Agreement designated Hackney as the contractor and PCC as the subcontractor to a roof replacement project located at a military base in Fort Dix, New Jersey. (See id.) Included within the Agreement was a provision that Hackney would pay PCC the specified sum of $427,000. (See id. at Article 7)

Alleging that Defendant Hackney subsequently failed to make payments specified in the Agreement, the Plaintiff brought suit against Hackney in both state and federal court. In the instant federal action, the Plaintiff seeks recovery under 40 U.S.C. §§ 270a and 270b, commonly known as the Miller Act. The Miller Act protects subcontractors involved in government contracts by requiring the general contractor to post a bond from which the subcontractor can recover in the event of the general's default.

In the initial federal complaint, filed on October 29th 1997, PCC asserted claims against Hackney as prime contractor to the project, and Defendant Meadowbrook Insurance Group ("Meadowbrook") as surety. (See Oct. 29th 1997 Compl. at ¶ 3) Defendant Star Insurance Company ("Star"), the company whose name appears on the surety bond, was not initially named as a party. Star was not included as a defendant to the instant action until March 15th 1999, when Plaintiff filed its First Amended Complaint. (See Mar. 15th 1999 First Amended Complaint at ¶ 3) However, in the period between the filing of the Plaintiff's initial and First Amended Complaint, PCC obtained a $118,276.00 default judgment in state court against Hackney. (See Final Judgment by Default, dated Dec. 3rd 1998, attached as Ex. A to Pl[.'s] Br.)

Shortly after receiving the amended complaint, Defendants Star and Meadowbrook ("Surety Defendants") filed an answer and counterclaim, *fn1 alleging, inter alia, that a joint venture existed between Hackney and PCC which barred the Plaintiff from recovering under the bond. (See May 12th 1999 Counterclaim at ¶ 13) In response thereto, PCC filed a motion for summary judgment, seeking enforcement of the state court judgment against Star and Meadowbrook, or in the alternative the dismissal of the Defendants' joint venture claims. In opposition, Defendant Meadowbrook submitted a crossmotion for summary judgment, seeking dismissal from the case. This opinion addresses the issues raised in the parties' motions.

II SUMMARY JUDGMENT STANDARD

The standard for granting summary judgment is a stringent but surmountable one. That is, summary judgment is appropriate only when the materials of record "show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Serbin v. Bora Corp., 96 F.3d 66, 69 n.2 (3d Cir. 1996). In deciding whether there is a disputed issue of material fact, the court must grant all reasonable inferences from the evidence in favor of the non-moving party. Serbin, 96 F.3d at 69 n.2. The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

Supreme Court decisions mandate that a motion for summary judgment must be granted unless the party opposing the motion "provides evidence `such that a reasonable jury could return a verdict for the non-moving party.'" Lawrence v. National Westminster Bank of New Jersey, 98 F.3d 61, 65 (3d Cir. 1996) (quoting Anderson, 477 U.S. at 248). Moreover, once the moving party has carried its burden of establishing the absence of a genuine issue of material fact, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Instead, the non-moving party must "by affidavits or by depositions and admissions on file `mak[e] a showing sufficient to establish . . . [that a genuine issue of material fact exists as to each] . . . element essential to that party's case.'" Equimark Commercial Fin. Co. v. C.I.T. Fin. Servs. Corp., 812 F.2d 141, 144 (3d Cir. 1991) (declaring that a non-movant may not "rest upon mere allegations, general denials, or . . . vague statements"). Thus, if the non-movant's evidence is merely "colorable" or is "not significantly probative," the court may grant summary judgment. Anderson, 477 U.S. at 249-50.

III DISCUSSION

a) Enforcement of State Court Judgment

The Plaintiff contends that full faith and credit requires the Court to enforce the judgment against Defendants Star and Meadowbrook, neither of whom were parties to the state court action. The Full Faith and Credit Statute, 28 U.S.C. § 1738 (1994), obligates a federal court to determine whether a prior judgment has either an issue or claim preclusive effect. See Dionne v. Mayor and City Council of Baltimore, 40 F.3d 677, 682 (4th Cir. 1994). In Migra v. Warren City School District Board of Education, 465 U.S. 75 (1984), the Supreme Court analyzed the distinction between these two theories of preclusion, explaining that:

Issue preclusion refers to the effect of a judgment in foreclosing relitigation of a matter that has been litigated and decided. . . . Claim preclusion refers to the effect of a judgment in foreclosing litigation of a matter that never has been litigated, because of a determination ...


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