United States District Court, M.D. Florida, Orlando Division
G. BYRON, UNITED STATES DISTRICT JUDGE.
cause is before the Court on the following:
1. Defendant Archer Western Contractors, LLC's Motion for
Summary Judgment (Doc. 82), filed October 2, 2017;
2. Plaintiff Developers Surety and Indemnity Company's
Memorandum in Opposition to Defendant's Motion for
Summary Judgment (Doc. 92), filed November 20, 2017;
3. Defendant's Reply in Support of Motion for Summary
Judgment (Doc. 112), filed December 20, 2017;
4. Plaintiff's Motion for Summary Judgment (Doc. 96),
filed November 20, 2017;
5. Defendant's Response in Opposition to Plaintiff's
Motion for Summary Judgment (Doc. 111), filed December 20,
6. Plaintiff's Reply in Support of Its Motion for Summary
Judgment (Doc. 115), filed January 9, 2018.
April 13, 2018, the Court requested supplemental briefing
regarding the application of Paragraph 6 of the Performance
Bond. (Doc. 125). The parties both briefed the issue. (Docs.
126, 127). With briefing complete, the Court is fully advised
on the premises. Upon consideration and review of the record
as cited by the parties in their respective briefs, Plaintiff
Developers Surety Insurance Company's motion is due to be
denied, and Defendant Archer Western Contractors, LLC's
motion is due to be granted.
case arises out of a subcontract agreement gone wrong. In
February 2012, Archer Western Contractors, LLC
(“Archer”) entered into a contract with the
Florida Department of Transportation to work on the Central
Florida Commuter Rail Transit Station Finishes Project (the
“Sunrail Project”). (Doc. 82-5, p. 2).
2012, Archer entered into a Subcontract Agreement (the
“Subcontract”) with Prince Land Services, Inc.
(“Prince”), which required Prince, as
subcontractor, to perform landscaping and irrigation work on
the Sunrail Project. (Doc. 82-8, p. 2). On September 7, 2012,
Developers Surety and Indemnity Company (“DSIC”),
as surety, issued Subcontractor Performance Bond No. 504957P
(the “Bond”). (Doc. 82-11). The Bond listed
Prince as subcontractor, DSIC as surety, and Archer as
obligee. (Id.). This case centers on the
parties' rights and obligations vis-à-vis the
Subcontract and Bond.
2014, disputes arose relating to Prince's performance
under the Subcontract, eventually leading to Archer
defaulting Prince. (Docs. 120, 121). Archer thereafter
engaged a third party to make up for Prince's alleged
shortcomings. After obtaining a June 19, 2014, proposal from
LaFleur Nurseries & Garden Center
(“LaFleur”), Archer retained LaFleur to perform
limited landscaping services at the Sanford, Florida, Sunrail
station on June 28, 2014. (Docs. 82-17, 82-18). After Prince
defaulted, LaFleur and Archer entered into a replacement
subcontract (the “LaFleur Subcontract”), whereby
LaFleur was hired to complete the work originally
subcontracted to Prince. (Doc. 82-10). LaFleur and Archer
exchanged communications regarding drafts of the proposed
subcontract and pricing between July 14, 2014, and July 22,
2014. (Docs. 82-26, through 82-30). LaFleur signed the
LaFleur Subcontract on July 25, 2014; Archer signed on July
29, 2014. (Doc. 82-10).
weeks before the LaFleur Subcontract was executed, Archer
notified Prince and DSIC of its default. On July 3, 2014,
Archer emailed Prince a “Notice of Default”
letter, notifying Prince of numerous alleged failures of
performance, which put Prince in default on the Subcontract.
(Doc. 82-21). The Notice further instructed that if Prince
did not cure the default within seventy-two hours, Archer
would “take whatever steps it deems necessary to
mitigate the damages caused by Prince's default.”
(Id. at p. 3).
9, 2014, Archer sent DSIC a letter making a claim on the Bond
(“Bond Claim”) after Archer's default. (Doc.
82-24). DSIC received the Bond Claim on July 10, 2014. (Doc.
120, ¶ 16). In response, DSIC sent Archer a July 14,
2014, letter stating that the Bond Claim lacked sufficient
documentation of Prince's alleged deficiencies and
requesting more information. (Doc. 82-31). DSIC's July
14, 2014, letter also indicated that DSIC had
“commenced a preliminary investigation, ” and
advised that DSIC would formally respond to Archer's
claim “within fifteen (15) calendar days of receipt of
the [requested] documents.” (Id.). Thereafter,
Archer and DSIC did not communicate for months.
learning of the LaFleur Subcontract, DSIC sent Archer a
letter dated October 16, 2014, stating that the Bond was null
and void due to Archer's (1) failure to provide the
documentation requested by DSIC's July 14, 2014, letter,
and (2) unauthorized, unilateral decision to replace much of
the work performed by Prince under the Subcontract. (Doc.
83-32). The letter also avers that Archer's actions to
replace Prince's Subcontract performance interfered with
DSIC's rights under the Bond to mitigate damages caused
by default. (Id.). Accordingly, DSIC formally denied
Archer's Bond Claim. (Id.).
completing its work on the Sunrail Project, Archer sent DSIC
a letter dated August 29, 2016, demanding DSIC reimburse
Archer $631, 148.65-the cost to replace Prince's
work-pursuant to the Bond. (Doc. 83-33).
Surety and Bond Provisions
interplay between the Bond and Subcontract is critical to the
question of whether either party breached their contractual
obligations. The Subcontract set forth the following default
8 - RECOURSE BY CONTRACTOR
8.1 Failure of Performance and Default.
If the Contractor [Archer] determines at Its sole discretion
that the Subcontractor [Prince] has: (i) refused or failed to
supply enough properly skilled workers, proper materials, or
maintain the Schedule of Work; (ii) failed to make prompt
payment for, or failed to prevent claims of non-payment from,
Its workers, subcontractors or suppliers of any tier; (iii)
disregarded Laws or orders of any public authority having
jurisdiction; or (iv) otherwise materially breached, a
provision of this Agreement; and Subcontractor fails within
seventy-two (72) hours after receipt of written notice
(facsimile, email, or letter, shall constitute sufficient
written notice and declaration of default) to commence and
continue satisfactory correction of such default with
diligence and promptness, the Contractor, without prejudice
to any other rights or remedies, shall have the right to any
or all of the following remedies: (i) supply such number of
workers and quantity of materials, equipment and other
facilities as the Contractor deems necessary for the
completion of the Subcontractor's Work, or any part
thereof which the Subcontractor has failed to complete or
perform after the aforesaid notice, and charge the cost
thereof to the Subcontractor, who shall be liable for the
payment of same including reasonable overhead, profit and
attorney's fees; (ii) contract with one or more
additional contractors to perform such part of the
Subcontractor's Work as the Contractor shall determine
will provide the most expeditious completion of the total
Work and charge the cost thereof to the Subcontractor who
shall be liable for the payment of same including reasonable
overhead and profit; (iii) discharge the claim of
non-payment; and/or (iv) withhold payment of any moneys due
the Subcontractor pending corrective action to the extent
required by and to the satisfaction of the Contractor, Owner
and the Architect/Engineer. Any costs incurred by Contractor
under this article, including attorney fees, shall be
deducted from funds otherwise due Subcontractor under this
Agreement. Contractor may use any materials, implements,
equipment, appliances or tools furnished by or belonging to
the Subcontractor to complete the Subcontractor's Work.
Subcontractor shall provide its surety with all notices,
letters, or email, from the Contractor referred to in this
paragraph. In the event of an emergency affecting the safety
of persons or property, the Contractor may proceed as
outlined above without notice.
8.2 Failure of Performance-Termination for Default by
If the Subcontractor fails to commence and satisfactorily
continue correction of a default within seventy-two (72)
hours after the notice is issued under Paragraph 8.1, then
the Contractor may, in lieu of or in addition to the remedies
provided therein, terminate this Agreement or a portion
thereof, and use any materials, implements, equipment,
appliances or tools furnished by or belonging to the
Subcontractor to complete the Subcontractor's Work. The
Contractor also may furnish those materials, equipment and/or
employ such workers or subcontractors as the Contractor deems
necessary to maintain the orderly progress of the work.
In the event of Termination for Default, Subcontractor shall
receive no further payment of any unpaid portion of the
Subcontract Price until such time as the Subcontract Work is
completed, at which time Subcontractor will be entitled to
the unpaid portion of the Subcontract Price, less all of the
costs incurred by the Contractor in so performing the
Subcontractor's Work, including reasonable overhead,
profit, liquidated or consequential damages, and
attorney's fees, which shall be deducted from any moneys
due or to become due the Subcontractor. The Subcontractor and
its surety shall be liable for the payment of any amount by
which such expense may exceed the unpaid balance of the
10-1, ¶¶ 8.1-8.2). The Bond outlines four
alternative responses DSIC was authorized to undertake upon
notice of Price's default:
Whenever Obligee [Archer] has declared Subcontractor [Prince]
to be IN DEFAULT OF THE SUBCONTRACT, the
Surety [DSIC] shall, within fifteen (15) calendar days of its
receipt of notice from Obligee that Subcontractor is in
default, respond as follows:
a. Complete the Subcontract Work in accordance with the
Subcontract terms and conditions; or
b. Obtain bids or offers from contractors acceptable to
Obligee for completing the Subcontract in accordance with its
terms and conditions, and upon determination by Obligee and
the Surety jointly of the lowest responsible bidder or
offeror, arrange for a subcontract between such completion
contractor and the Obligee, and arrange for new performance
and payment bonds for such completion contractor from a
surety acceptable to the Obligee. Upon acceptance of the
completion contractor by the Obligee, the Surety shall pay to
the Obligee the difference between the cost to complete the
Subcontract work and the balance of the Subcontract Price,
including the cost of obtaining new performance and payment
c. Tender to Obligee the penal sum of the Bond less any
amounts expended by the Surety in financing the Subcontractor
pursuant to Paragraphs 3, or 4(e) hereof.
d. Having made an independent investigation of the facts and
circumstances of the alleged default, deny its liability in
whole or in part and notify and explain to the Obligee the
reasons why the Surety believes it does not have liability
for the default, in which event Obligee may proceed to take
such action as may be allowed under the Subcontract or at law
and the Surety's liability shall be determined in
accordance with Paragraph 10 hereof.
(Doc. 10-2, ¶ 4).
Bond also provided the following provision imposing liability
on DSIC for liabilities Prince may incur for the completion
or correction of its Subcontract work: 6. The Surety [DSIC]
shall be liable for:
a. The responsibilities of the Subcontractor for correction
of defective work and completion of the Subcontract Work.
d. The Surety's liability under this Paragraph 6 shall
not exceed, in the aggregate, the penal sum set forth on the
cover page of this Bond, subject to Paragraph 2.
(Doc. 10-2, ¶ 6).
the Bond explicitly incorporated the Subcontract by
reference. (Doc. 10-2, p. 1).