**UNPUBLISHED**
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

**No. 10**  **- 1375** 
AAROW EQUIPMENT & SERVICES, INCORPORATED, United States of America for the use and benefit of , Plaintiff

- Appellant ,
v. TRAVELERS CASUALTY AND SURETY COMPANY OF A MERICA , Defendant

- Appellee.

Appeal from the United States District Court for the Eastern District of Virginia , at Alexandria
. Anthony J
. Trenga , District Judge. ( 1:09

- cv - 00861

- AJT

- TCB )
Argued : January 27, 2011 Decided: March 1 8 , 2011

Be fore NIEMEYER, D AVIS, and KEE NAN , Circuit Judges.

Vacated and remanded by unpublished per curiam opinion
.

**ARGUED:** Michael Jacob Kalish, WALSH COLUCCI LUBELEY EMRICH & WALSH, PC, Prince William, Virginia, for Appellant. James Dennis Coleman, WATT, TI EDER, HOFFAR & FITZGERALD, LLP, McLean, Virginia, for Appellee. **ON BRIEF:** Eugene Andrew Burcher, WALSH COLUCCI LUBELEY EMRICH & WALSH, PC, Prince William, Virginia, for Appellant.
Unpublished opinions are not binding precedent in this circuit.2 PER CUR IAM: This appeal concerns an action brought by a subcontractor against a surety under the Miller Act (the Act) , 40 U.S.C. § § 313 1 through

- 3134 . Under the Act, before a general contractor is awarded a contract by the federal government in an amount greate r than $100,000, th e general contractor is required to obtain a “ payment bond ” “for the protection of all persons supplying labor and material in carrying out the work provided for in the contract
. ” 40 U.S.C. § 3131(b)(2). The Act provides a cause of act ion , such as the one asserted here, permitting a subcontractor to file suit seeking payment from a surety on a payment bond when the subcontractor ha s not been paid by the general contractor within 90 days of comp leting the subcontractor’s work. 40 U.S.C. § 3133(b)(1). For the reasons that follow , we vacate the district court’s award of summary judgment in favor of the surety and remand the case for further proceedings.

I. We review the fact s in the light most favorable to Aarow , the non

- moving party in the district court. Hooven

- Lewis v. Caldera , 249 F.3d 259, 265 (4th Cir. 2001). In 2007, Syska Hennessy Group Construction, Inc. (Syska) was awarded a contract (the prime contract) by the United States government (the3 government) to construct a training facility for the District of Columbia Army National Guard at Fort Belvoir , Virginia (the project). Syska served as the general contractor on the project and obtained a payment bond , as required by the Miller Act, from Travelers Casualty and Surety Company of America (Travelers). Syska awarded Aarow Equipment & Services, Inc. (Aarow) a subcontract, which set forth the “work” that Aarow was required to perform on the project
. Section 11.1 of the subcontract stated that Syska may “make changes in the [w]or k covered by th is [ s ] ubcontract , ” and that any changes must be made in writing. T he subcontract also provided that Aarow must submit in writing to Syska any claims for changes in the price or payment due under the contract. According to the subcontract, any such change in price or payment to Arrow “shall be made” “only to the extent that” Syska is entitled to relief from the government , and payment to Aarow sha ll be equal to Aarow ’s share of any adjustment to the prime
contract.
W hen changes to the “wor k” under the subcontract were made,
Aarow generally submitted the proposed cost of the change to Syska, and Syska issue d a “c hange order” to the subcontract
. Aarow’s “ work ” described in the subcontract included several categories of responsibilities , incl uding “earthwork” relating
to water distribution and drainage. During Aarow ’s performance4 of this “earth work, ” the government determined that the “erosion control plan” Aarow was implementing was “not up to standard[s].” Aarow ceased working until it rec eived new erosion plan “drawings,” which required the construction of sedimentary ponds and other water management measures ( the pond work). Aarow and Syska agree d that th e pond work was not included in the “ work ” defined in the subcontract
. In Septembe r 2007, Aarow submitted a proposal of $402,500 to Syska for the pond work. Syska directed Aarow to perform the pond work, but did
not issue a “change order” for th e pond work at that time
. Aarow completed the pond work, with the understanding that Syska would issue a “change order” at some point in the future
. Upon Syska ’s determination that the pond work was not included in the scope of the prime contract , 1 Syska asked that the government agree to a “modifica t ion” of the prime contract. 2

1 The record does not contain a copy of the prime contract, and there were no depositions taken during discovery in this case of the government officials involved with the prime contract. Syska request ed that Aarow wait to submit its invoice for the

2 According to deposition testimony provided by a Sys ka employee, a “modification” is essentially the same as a “change order,” except that the prime contract was amended by a “modification,” while the subcontract was amended by a “change order.”5 pond wo rk until after the government issued a “modification” to the prime contract and Syska issued a “change order” to the subcontract. Several months later, neither a “ modification ” nor a

“ change order ” had been issued. N evertheless , Aarow submitt ed an invoice to Syska for the completed pond work. Syska instructed Aarow to use a billing procedure that would allow Syska to pay Aarow for the pond work even though a “change order” had not been issued. Thi s billing procedure required
Aarow to list the pond work under a “line item” designated for certain “finish ing ” work o n the project that had not yet been completed
. 3

After Aarow complied with th is different billing procedure in accordance with Syska’s directions , Sy ska submitted a similar invoice to the government identifying th e pond work as “finishing” for a “three

- story building.” T he government paid Syska $484,980 , which included the invoice in the amount of $402,500 submitted by Aarow , plus a fee representing Sy s ka’s “normal markup.” Syska , in turn, paid Aarow $402,500 for the According to Syska, the government had authorized this billing procedure while Syska’s “m odification” request was pending
.

3 The “finishing” work was included in the “work” described by the subcontract.6 pond work
. Syska advised Aarow that after Syska re ceived a

“ modification ” and issued a “ change order, ” Aarow could reallocate the funds received for the pond work to the proper “line item.” Shortly after the government paid Syska the requested amount of $484,980 , the government determined that the pond w ork was included in the prime contract . Accordingly , the government denied Syska’s request for a “modification” of the prime contract based on the government’s construction of the prime contract’s terms . The government later withheld several payment s to Syska to recover the funds previously paid for the pond work. In
response , Sysk a withheld payment from Aarow for other work completed by Aarow between May 2009 and June 2009
. On July 1, 2009, Aarow sent Syska a letter stating that Syska had a “signific ant outstanding and past balance due , ” and that Aarow would stop work on the project at the end of the week unless payment was made. When Syska did not submit payment to
Aarow under the terms of the demand , Aarow ceased work on the project. On July 17, 2009 , Syska sent Aarow a letter notifying Aarow that it was in default of the subcontract for failing “ to proceed with the work” according to the project schedule. In that letter, Syska instructed Aarow to correct and complete
spe cific alleged defaults
. Aarow did not return to work on the7 project or otherwise attempt to cure the alleged defaults
. On July 23, 2009, Syska sent another letter to Aarow stating that because Aarow had not cured the defaults, Syska was terminat ing the subcontract as provided in Section 12.1 of that agreement . Section 12.1 of the subcontract state d , in relevant part: If, in the opinion of [Syska], [Aarow] shall at any time . . . fail in any respect to prosecute the Work according to the current schedule. . . then, after serving three (3) days written notice, unless the condition specified in such notice shall have been eliminated within such three (3) days, [Syska] may at its option . . . terminate the Subcontrac t for default

. . . . [Aarow] shall not be entitled to receive any further payment until the Work shall be fully completed and accepted by [the government]. Under S ection 12.2 of the subcontract , however, if Syska wrongfully terminate d the subcontract, Syska w ould be liable for

“ the reasonable value of [ the ] W ork perfor med by [ Aarow ] prior
to [ Syska’s ] wrongful action. ” With regard to payment, t he subcontract require d that Syska pay Aar ow monthly, provided that Syska already had received payment from the government. This “pay

- when

- paid” prov ision
state d , in relevant p art : Conditioned upon the satisfactor y progress of [Aarow], compliance with the documentation requirements of this Subcontract, and [Syska] has received payment from the [government] THEN [Syska] will make monthly payments to [Aarow]. [Aarow] acknowledge s and agrees that in the event payment is not made to [Syska] for any reason . . . [Aarow] shall look exclusively to [the government] for payment of any and all funds due under this Contract. [Aarow] further agrees that the delay in payment or nonpayment by the [government] does not8 creat e any separate obligation of [Syska] to pay regardless of the extent of the delay. In its complaint filed against Travelers, the surety on Syska’s payment bond, Aarow assert ed that Syska breached the subcontract by faili ng to pay Aarow for several months . Aarow sought from Travelers the sum of Aarow’s past

- due invoices to Syska , in the amount of $484,870.71
. In response, Travelers filed a n answer and a motio n for summary judgment
. Aarow opposed the motion , and the par ties filed a series of b riefs addressing numerous issues
. In December 2009 , the district court held a hearing on the motion for summary judgment. In its pleadings and during the hearing, Travelers asserted
two primary arguments in support of its motion
. Travelers first maintained that b ecause the terms of the “pay

- when

- paid” provision in the subcontract w ere clear and the government did not pay Syska for several months , Syska did not breach its payment obligation to Aarow under the subcontract . Travele rs thus contended that Syska properly terminated the subcontract under Section 12.1 based on Aarow’s failure to perform , and that
Aarow was not en titled to payment under the terms of Section 12.1
. Travelers argued alternatively that even if Syska wrongful ly had terminated the subcontract, Syska paid Aarow more9 than Aarow was due under the subcontract and, therefore, Aarow was not entitled to additional payment. Two months after the hearing , but before the district court entered its judgment , Travelers re quested leave to supplement its motion for summary judgment to discuss a new decision issued by this C ourt . In that supplemental pleading, Travelers argued that under this Court’s decision in Universal Concrete v. Turner
Constr uction Co
.

Aarow filed a brief in response, argu ing that the holding in , 595 F.3d 527 (4t h Cir. 2010) , “ pay - when

- paid ” provisions are valid defenses in a breach of contract action when the terms of such provisions are un ambiguous
.

Universal Concrete did not establish a new principl e of law. (J.A. 649.) Aarow also cited in its supplemental brief the “prevention doctrine,” a principle of contract law establishing that one who prevents the performance or the happening of a condition to his performance may not take advantage of that

c ondition
. See Barnhill v. Veneman , 524 F.3d 458 , 474 (4th Cir. 2008)
. Aarow contended that this doctrine ba rred Syska from relying o n the “ pay - when

- paid ” provision of the contract because Syska wa s partially at fault for the g overnment’s failure to make the requested payment to Syska
. Aarow argued that Syska ’s fault was demonstrated by its failure to obtain the appropriate

“ modification ” to the prime contract , and by its failure to issue a “ change order ” to the subcontract for the pond work.10 The distric t court entered an order permitting both parties to supplement the record with the se pleadings
. Three weeks later, t he district court entered an order grant ing summary judgment in favor of Travelers
. In its memorandum opinion, t he district court held th at because the subcontract contained an enforceable “pay

- when

- paid” provision , and because it was undisputed that the government failed to pay Syska for several months , Aarow was unable to “justify its [ w ] ork stoppage based on Syska’s failure to pay Aarow. ” Notably, the district court did not address Aarow’s prevention doctrine argument.
T he district court concluded that Syska’s “termination for default ” was proper under Section 12.1 of the subcontract based
on Aa row’s failure to complete its work under the sub contract . Accordingly , the district court held that Aarow was not owed payment under the subcontract and that , therefore, Travelers had “no payment obligation to Aarow.” Aarow filed a timely appeal in this court.

II. We review the district co urt’s award of summary judgment de

novo. See S.C. Green Party v. S.C. State Election Comm’n , 612 F.3d 752, 755 (4th Cir. 2010). Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is appropriate when11 the mov ing party “ shows that th ere is no genuine dispute as to any material fact ” and when the moving party “ is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Anderson v. Liberty Lobby , Inc. , 477 U.S. 242, 247 (1986) (construing former Rule 56(c) of the Federal Ru les of Civil Procedure).

A. Aarow argu es on appeal t hat the district court erred in failing to apply the prevention doctrine in determining whether Travelers was entitled to judgment as a matter of law. Aarow asserts that Syska was responsible for the government’s failure
to make the requested payment unde r the prime contract.
T herefore, according to Aarow, a jury should determine whether Syska breached the terms of the subcontract by failing to pay
Aarow for the work it had completed. In response, Tra velers argue s that the district court properly granted summary judgment in its favor
. Initially, Travelers contends that Aarow’s prevention doctrine argument was not asserted timely and should not be considered in the resolution of this appeal. Addressin g the merits of Aarow’s argument, Travelers asserts that because the government withheld payment from Syska, the terms of Syska’s subcontract with Aarow permitted Syska to withhold the requested p ayment to Aarow.12 Travelers therefore maintains that , as a m atter of law, Travelers did not owe any payment to Aarow under the bond because Syska complied with the terms of the subcontract and Aarow wrongfully abandoned the project
. We disagree with Travelers’ arguments. We find no merit in Travelers ’ assertion that Aarow failed
to preserve its prevention doctrine argument in the district
court . Although Aarow used the term “ prevention doctrine ” for the fir st time in a late r - filed supplemental pleading , the dist rict court accepted th at supplemental pleading and included it in the record three weeks before the court rendered its judgment
. Furthermore, in Aarow’s initial brief opposing summary judgment , Aarow set forth the factual predicate for its prevention doctrine argument by asserting that Syska directed
Aar ow to complete the pond work before issuing a “ change order ” for th at work , and that Syska acted in bad faith by attempting to “back charge” Aarow for the pond work
. Thus, we conclude that Aarow’s prevention doctrine argument was presented adequately to t he district court and w as not, as Travelers
argues , articulat ed for the first time on appeal. See Evans v. Metro. Life Ins. Co. , 358 F.3d 307, 310 n.2 ( 4th Cir. 2004) ( explaining that although appellant’s argument was not raised in district court until or al argument on the motion for summary judgment, the argument was preserved for appellate review).13 B.
W e turn to examine the present record to determine whether Travelers was entitled to judgment as a matter of law at the summary judgment stage of the pr oceedings. Based on Aarow’s argument before the district court, we give particular consideration to the evidence before the district court bearing on the issue of the prevention doctrine. Under the prevention doctrine , when a general contractor materi ally contributes to the failure of a condition limiting the duty to perform under a contract , th e general contractor may not rely on that failure as a defense to its performance of its contractual obligations
. See Moore Bros. Co. v. Brown & Root,
Inc. , 20 7 F.3d 717, 725 (4th Cir. 2000)
. In Moore Brothers , we appli ed the prevention doctrine in a dispute involving a “pay

when

- paid” provision in a subcontract. There , in response to two subcontractors seeking payment for completed work , t he general contracto r asserted as a defense the “pay

- when

- paid” condition in the subcontract and the owner’s failure to pay the general contractor. Id. We affirmed the d istrict court’s award of summary judgment in favor of the subcontractors because the record e stablished that t he general contractor materially contributed to the owner’s failure to pay
. at 724

- 25.

Id. at 725

- 26
. Thus, we concluded that
t he general contractor was liable to its subcontractors for14 payment notwithstanding the “pay

- when

- paid” provision in the

s ubcontract. Id. at 725. Applying our analysis in Moore Brothers

Travelers mai ntains that the government directed the method of billing for the pond work and that , therefore, Syska was not

r esponsible for the government’s refusal to pay Syska when the government later determined that the billing for the pond work was improper
. In support of its position, Travelers relies on the deposition testimony of Robert F. Geremia, Syska’s vice presiden t in charge of construction, who stated that the government had “instructed my people in the field to bill for some [finish ing ] work that actually wasn’t done.” to the present case, we consider whether a jury reasonably could find that Syska’s actions materially contributed to the government’s failure to pay Syska under the prime contract , thereby p reventing Travelers from relying on the “pay

- when

- paid” condition in the subcontract in defense of Syska’s failure to pay Aarow
.

Aarow, however, asserts that Syska’s actions materially contributed to the government’s fail ure to make the payment at issue. Aarow points to evidence in the record that Syska directed Aarow to perform the pond work even though Syska had
not issued a “change order” or received a “modification” to the prime contract. The record also contains evi dence that Aarow

co mpleted the pond work, relying on Syska’s promise that a15 “change order” w as forthcoming. However, when Syska did not obtain a “change order , ” Syska directed Aarow to remove its invoice reference s to “sediment ponds and associated work,” and to categorize the pond work as “finishes” for a “three

- story building , ” which had not yet been constructed. Based on these facts, a jury reasonably could return a verdict for Aarow if the jury concluded that Syska’s actions , in directing Aarow to pe rform the pond work before issuing a

“ change order , ” and i n agreeing to employ a n arguably improper billing procedure that obscured the expanded scope of the “work” under the subcontract, mater ially contributed to the government’s later decision to withhol d certain payments to Syska. If Syska ’s actions materially contributed to the government’s decision , Travelers could not rely on the “pay

when

- paid” provision of the subcontract to excuse Syska’s failure to pay Aarow for its work performed under the subco ntract. See Moore Bros. We are not persuaded by Travelers ’ assert ion that it was entitled to summary judgment bas ed on Geremia’s testimony that the government instructed Syska to employ the questionable billing procedure. In essence, Travelers seeks to absolve Syska of any responsibility f or the arguably improper billing procedure because “the project owner told us to do it.” The allocation of responsibility for the billing practices, however, , 207 F.3d at 725.16 raises credibility issues and other issue s of fact that are matters for a jury’s consideration. Th erefore , we hold that Travelers was not entitled to summary judgment on the issue s whether Syska breached the subcontract and whether Aarow was entitled to payment from Travelers under the bond. 4
F or these reasons, we conclude that the district court erred in granting summary judgment in favor of Travelers
. Accordingly, we vacate the district court’s judgment and remand the case for further proceedings consistent with this opinion.

VACATED AND RE MANDED

4 Based on our holding, we do not address Aarow’s remaining argument regarding the issue whether the district court erred in relying on letters from Syska’s counsel to Aarow relating to Syska’s termination of the subcontract. We also need not address Aarow’s contention that the district court’s judgment violated the policy underlying the Miller Act.