United States District Court, D. Massachusetts
RICHARD HISERT, Manager, on behalf of H2H ASSOCIATES, LLC, Plaintiff,
BLUE WATERS DREDGING LLC, DAVID URBANI, HERBERT HASCHEN, and DOROTHY B. WILLIAMS, Defendants.
MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY
Dennis Saylor IV United States District Judge
an action arising out of a contract dispute concerning a
marine dredging project. Jurisdiction is based on diversity
2015, the Army Corps of Engineers awarded H2H Associates, LLC
a contract for a dredging project in Cohasset Harbor in
Massachusetts. H2H subcontracted with Blue Waters Dredging
LLC (“BWD”) to perform work on that
project. The complaint alleges that BWD failed to
perform under the contract as promised and that its members
repeatedly made false statements and threats to induce H2H to
make payments not due under the contract. It alleges three
counts under Massachusetts law for breach of contract, breach
of the implied covenant of good faith and fair dealing, and
Herbert Haschen, defendant David Urbani, and plaintiff
Richard Hisert have separately moved for summary judgment.
For the following reasons, Urbani's motion will be
granted; Haschen's motion will be denied; and
Hisert's motion will be denied.
Associates, LLC, is a limited liability company organized
under New York law. (Hisert Aff. ¶ 3; Pl. SUF ¶ 1).
Richard Hisert, a resident of New York, is the managing
member of H2H. (Hisert Aff. ¶ 2).
Waters Dredging LLC was a limited liability company organized
under Maryland law. (Hisert Aff. ¶ 5; Pl. SUF ¶ 2;
Def. Urbani SUF ¶ 7). At the times relevant here, BWD
had three members: Herbert Haschen and Dorothy Williams, who
each owned a 40% share of the company, and David Urbani, who
owned the remaining 20%. (Pl. SUF ¶ 2; Def. Haschen; SUF
¶ 1; Def. Urbani SUF ¶ 13). All are residents of
was also the sole member of Morris Street Financial LLC, a
limited liability company formed in approximately February
2015 to “lend money and lease equipment.” (Pl.
SUF ¶ 3, Ex. 1 at 24, 26-31; Hisert Aff. ¶¶
8-9; Def. Urbani SUF ¶ 17). Although MSF had loan
agreements with other customers, it leased equipment only to
BWD. (Pl. SUF ¶ 3, Ex. 1 at 24, 26-31; Urbani SUF ¶
The Prime Contract with the ACOE
13, 2015, the Army Corps of Engineers awarded H2H a contract
to dredge Cohasset Harbor in Massachusetts. (Hisert Aff.
¶ 4, Ex. 1; Pl. SUF ¶ 4). The contract required H2H
to maintain sufficient capacity and equipment to complete the
project by January 31, 2016, and to propose a schedule of
equipment needed to meet that deadline. (Pl. SUF Ex. 4 at 13;
Pl. SUF Ex. 12 at 5). The contract also required H2H to
secure a 100% performance and payment bond. (Pl. SUF ¶
The Subcontract with BWD
August 27, 2015, H2H subcontracted with BWD to provide all
“labors, materials, equipment and services”
necessary to dredge the harbor for a price of $1, 194, 611.
(Hisert Aff. ¶ 6, Ex. 2 at 2; Pl. SUF ¶ 5).
same day, BWD sent H2H a list of specifications of the
equipment it intended to use on the project. (Pl. SUF ¶
23). H2H forwarded BWD's specifications to the Corps of
Engineers, as was required under the prime contract, and the
Corps approved the specifications. (Pl. SUF ¶¶
The Lease of the Booster Pump
specifications submitted by BWD and approved by the Corps of
Engineers included an Ellicott Series 670 Booster Pump that
was necessary to perform the dredging work. (Pl. SUF ¶
23). When BWD representatives arrived at Cohasset Harbor on
October 3, 2015, however, the company did not yet have the
booster pump, and thus was unable to start dredging. (Pl. SUF
¶ 30; Def. Urbani ¶¶ 30-31).
October 22, BWD still did not have a booster pump, and the
project had not begun. That day, H2H project manager Jennifer
Popp e-mailed Haschen requesting that BWD respond by close of
business with a plan for procuring the booster to
“ensure no further delays” to the project.
(Hisert Aff. ¶ 15; Hisert Aff., Ex. 4 at 3).
responded to H2H later that evening. (Hisert Aff. Ex. 4 at
2). In his response, Haschen wrote that he had
“contracted with a dredging company out of Long Island
better than a month ago to build [BWD] a booster that . . .
would have saved me  $100, 000, ” but that the
delivery of the booster had been delayed. (Id.). He
estimated that he expected the Long Island booster pump to
arrive by the “end of next week.” (Id.).
He did not, however, tell H2H that he had actually paid
Joseph Edgar, a member of the Long Island dredging company,
$100, 000 on September 6, 2015. (Pl. SUF ¶ 28). He also
did not tell H2H that he had never requested a refund from
Edgar, or that BWD had in fact retained Edgar as a paid
consultant. (Pl. SUF ¶¶ 31, 32; Pl. SUF, Ex. 23).
delivery of the Long Island booster pump more than a week
away, Haschen informed H2H that the “best/fastest
option to get a booster on site” would be to lease one
from Ellicott Dredge in Baltimore. (Hisert Aff, Ex. 4 at 3).
Haschen told H2H that because BWD was in a “tight spot
with cash flow, ” he needed a $70, 000
“advanc[e]” to pay the lease for the booster
pump. (Id.). Seeking to “exhaust every effort
. . . to begin pumping operations . . . next week, ”
H2H wired $70, 000 directly to Ellicott Dredge the next day,
October 23. (Hisert Aff. ¶ 17; Hisert Aff. Ex. 3 at 2;
Hisert Aff., Ex. 5 at 2). The leased booster pump arrived at
the work site on October 27, four days later, and BWD
commenced dredging on November 3. (Pl. SUF, Ex. 1 at 30; VAC
¶ 39). On November 12, H2H paid BWD $252, 154-the amount
called for in BWD's original invoice ($322, 654) less the
$70, 000 H2H had sent to Ellicott Dredge on October 23.
(Hisert Aff. Ex. 5).
Additional Delays in Performance
dredging project soon experienced significant additional
delays. (Pl. SUF, Ex. 2 at 62; Def. Urbani SUF ¶ 23).
Nonetheless, BWD contacted H2H on both November 29 and 30 and
threatened to stop work unless H2H paid BWD amounts it had
not yet earned under the subcontract. (Pl. SUF ¶ 38).
H2H complied with BWD's demands and sent it $62, 476.79
on December 14. (Hisert Aff. ¶ 21; Hisert Aff., Ex. 5).
December 22, Urbani contacted Hisert for the first time. He
introduced himself by e-mail as both the “silent
partner” of BWD and the “principle [sic] member
of the finance company funding BWD.” (Hisert Aff., Ex.
6). He told Hisert that BWD “basically came to
[H2H's] rescue, ” and blamed Hisert for his
“unilateral decision” to lease the booster pump
from Ellicott Dredge. (Id.). He also informed Hisert
that BWD had incurred significant operating, capital, and
payroll costs on the project. (Id.). He concluded by
stating “I think it would be appropriate for H2H to
advance BWD funds until the payments for yards dredged
start flowing.” (Id.).
December 29, Haschen e-mailed Hisert that BWD was “out
of available operating cash.” (Pl. SUF ¶ 39;
Hisert Aff., Ex. 8). Haschen asked Hisert for an additional
“payment” and warned that he didn't
“want to stop” the project. (Id.). Later
that day, H2H sent $262, 643.28 to BWD. (Hisert Aff.
¶¶ 22-23; Exs. 5 & 8).
January 18, 2016, Williams sent H2H an e-mail stating that
BWD was unable to “pay off outstanding
invoices.” (Def. Urbani SUF, Ex. 8). On a conference
call the next day, H2H agreed to make four “weekly
payments” to BWD to assist with, among other things,
outstanding vendor invoices. (Id.). H2H required BWD
to give “advance notice to H2H if there [was] a
concern over monies.” (Id.).
made three such “weekly payments” of $75, 000 to
BWD on January 20, January 25, and February 3. (Hisert Aff.
¶ 27). On February 4, Urbani sent Hisert an e-mail
threatening that BWD would cease dredging operations unless
H2H either shared all proceeds from the prime contract with
BWD or, in the alternative, assumed all of BWD's assets
and liabilities, including a $325, 000 debt owed to
Urbani's company, Morris Street Financial. (Pl. SUF
¶ 50; Pl. SUF, Ex. 1 at 192-205, 206-07; Pl. SUF, Ex.
26; Hisert Aff. ¶ 29).
February 6, Urbani sent another e-mail to Hisert stating that
BWD would continue operations only if, among other things,
H2H agreed to make an immediate lump-sum payment of $80, 000.
(Pl. SUF ¶ 51; Pl. SUF, Ex. 27; Hisert Aff. ¶ 33).
H2H did not make the $80, 000 lump-sum payment; however, on
February 10 it paid BWD the final of the four $75, 000 weekly
payments. (Pl. SUF ¶ 52; Pl. SUF, Ex. 5).
few more days of attempting to re-negotiate the contract, BWD
quit the job on February 20, 2016. It maintained that it did
so because it had run out of money. (Pl. SUF ¶ 22; Pl.
SUF, Ex. 1 at 172; Def. Urbani SUF ¶ 48).
The Lien Waivers
the course of their contractual relationship, H2H made eight
payments to BWD totaling $947, 774.07. (Pl. SUF ¶ 19;
Pl. SUF, Ex. 5). On seven occasions after receiving
payments from H2H, BWD completed and submitted “Partial
Lien Waiver[s]” that “certif[ied] that all
obligations for labor, services, equipment, materials, all
taxes, licenses, fees and or insurance; and all other bills,
which arose in any manner in connection with the performance
of the Subcontract between Subcontractor Blue Waters Dredge
[sic] LLC and the Contractor H2H Associates, LLC on Job
Number #700.01-Maintenance Dredging of Cohasset Harbor and
Beach Nourishment ha[d] been paid in full, and that there
[were] no unsatisfied claims for such items . . . of said
Subcontract.” (Pl. SUF, Ex. 31). Six of the seven
partial lien waivers were signed by Williams; the other,
which was completed on December 30, 2015, was signed by
Haschen. (Id. at 5).
contends that at the time Haschen signed the lien waiver, BWD
had open vendor invoices of more than $653, 000. (Pl. SUF
¶ 56). Urbani disputes that contention, and Haschen
contends that he has “no knowledge” as to its
truth. (Def. Urbani Resp. to Pl.'s SUF; Def. Haschen
Resp. to Pl.'s SUF).