United States District Court, S.D. Texas, Galveston Division
MEMORANDUM AND ORDER
C. Hanks Jr. United States District Judge
Hurricane Ike struck Galveston Island in 2008, the City of
Galveston received federal funds in order to repair homes and
other structures within the City. Consolidated Concepts, Inc.
was a general contractor who was awarded contracts in 2011
under this program, and Consolidated Concepts, in turn, then
entered into various subcontracts and other relationships to
obtain supplies and perform work.
to the City, it received complaints from several of
Consolidated Concepts' subcontractors that they were not
being paid, so the City began a practice of instead often
issuing checks that were jointly payable to both Consolidated
Concepts and one of its subcontractors. However, according to
the City, beginning in January 2013, Consolidated Concepts
did not negotiate these checks and the checks instead
“went stale, ” leaving the City in possession of
the City received numerous conflicting claims for the money,
including notice of a tax lien from the United States, it
sought to interplead the funds with the District Clerk of
Galveston County, asking the court to determine the proper
allocation of the funds. On August 1, 2014, the United States
removed the lawsuit to this Court. Dkt. 1.
Court previously granted summary judgment for the City of
Galveston, finding that the City's interpleader was
proper and dismissing the City from this case. Dkt. 72. Now
pending before the Court are multiple cross-motions for
summary judgment or partial summary judgment filed by the
following: Ideal Lumber Company (Dkt. 95); Solar Supply, Inc.
(Dkt. 96); Elevators of Texas (Dkt. 97); Texas Bonding
Company (Dkt. 98); the United States of America (Dkt. 99);
CCI Housing, LLC (Dkt. 101).
United States: The United States claims that it is
entitled to all of the interpleaded funds because Internal
Revenue Service filed federal tax liens with the Texas
Secretary of State in September and October 2013, stating
that Consolidated Concepts had failed to pay its unemployment
taxes in 2012 as well as its employment taxes for 2 ½
years between the end of 2010 through the beginning of 2013.
The United States contends it is entitled to $ 1, 164,
841.56-all of the interpleaded funds.
Surety: American Contractors Indemnity Company d/b/a
Texas Bonding Company (“Texas Bonding”) alleges
that it into surety agreements with Consolidated Concepts and
its owners, issuing performance and payment bonds on behalf
of Consolidated Concepts in connection with multiple
construction projects in the States of Texas and Arizona. A
number of these bonds were issued for Consolidated
Concepts' projects in Galveston. Consolidated
Concepts' owners executed an indemnity agreement with
Texas Bonding on April 19, 2011, and Texas Bonding filed
notice of that indemnity agreement via a UCC-1 instrument
filed with the Texas Secretary of State on February 28, 2012.
Texas Bonding alleges that it has suffered over $1, 000, 000
in losses on the bonds it issued to Consolidated Concepts,
and it therefore argues that it is entitled to all of the
Lender/Judgment Creditor: CCI Housing argues it lent
Consolidated Concepts advance funds to pay for “costs
associated with the Galveston Contracts”. In exchange
for $875, 000, Consolidated Concepts signed a Promissory Note
on June 27, 2011, amended January 13, 2012, and a Security
Agreement granting CCI Housing a security interest in its
“accounts receivable, contract rights, and
compensation” from the Galveston work. Consolidated
Concepts also signed a Settlement Agreement in favor of CCI
Housing in January 2012, agreeing that it owed CCI Housing an
additional $409, 024.69. CCI Housing filed UCC-1 Financing
Statements for these debts in December 2011 and August 2012
with the Texas Secretary of State's Office.
Consolidated Concepts failed to pay the amounts owed, CCI
Housing initiated an arbitration proceeding by filing suit in
state court. At arbitration in July 2013, CCI Housing was
awarded $ 1, 284, 024.69. This award was entered as a final
judgment in District Court in Harris County, Texas on October
CCI Housing now contends that it is entitled to receive at
least $305, 656.48 of the interpleaded funds.
Subcontractors and Materialmen: Ideal Lumber
Company, Solar Supply, and Elevators of Texas are
subcontractors and materialmen who allege that they are also
each entitled to some part of the interpleaded funds under
Section 162 of the Texas Property Code, the Texas
Construction Trust Fund Act.
judgment is appropriate when the movant shows there are no
genuine issues of material fact and “the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A genuine dispute of material fact exists when the
“evidence is sufficient for a reasonable jury to return
a verdict for the non-moving party.” Willis v.
Cleco Corp., 749 F.3d 314, 317 (5th Cir. 2014).
“When assessing whether a dispute as to any material
fact exists, we consider all the evidence in the record but
refrain from making credibility determinations or weighing
the evidence; instead, we draw all reasonable inferences in
favor of the nonmoving party.” Haire v. Bd. of
Supervisors of La. State Univ. Agric. & Mech. Coll.,
719 F.3d 356, 362 (5th Cir. 2013) (citation omitted); see
also Bryan v. McKinsey & Co., 375 F.3d 358, 360