GULF ATLANTIC CONSTRUCTORS INC v. WEBB LLC (2025)

ORDER

Before the Court is NGM Insurance Company's (NGM) motion for sanctions against HITT Contracting, Inc. (HITT) and its counsel for allegedly attempting to perpetrate a fraud on the Court. (Docs. 82, 83, 88). HITT has responded in opposition. (Docs. 86, 96). The Court held an evidentiary hearing, and the matter is ripe for resolution. As explained below, NGM's motion for sanctions is denied.

I. Background

This case arises out of the construction of an air traffic control tower at Naval Air Station Whiting Field. HITT, who was subcontracted to complete the entire tower project, executed a “sub-subcontract” with Gulf Atlantic Constructors, Inc. to furnish labor, services, and materials for the control tower project. Gulf Atlantic held a performance surety bond through NGM. HITT has alleged that NGM breached the bond by failing to reimburse HITT for costs that HITT paid to supplement Gulf Atlantic's allegedly faulty performance.

In its motion for sanctions, NGM argues that HITT and its counsel have fraudulently attempted to recover damages from NGM that HITT knows were not caused by Gulf Atlantic. (Doc. 82 at 32-47). According to NGM, HITT knows it cannot recover damages from NGM for replacement contractors' defective work and delays, work done outside of Gulf Atlantic's sub-subcontract scope, or other delays Gulf Atlantic did not solely cause. Nevertheless, NGM argues that HITT attempted to do just that by purposefully concealing its lawsuits against other subcontractors and not disclosing one subcontractor in response to a discovery request. NGM argues HITT initiated at least two other lawsuits seeking to recover the same damages HITT attempts to recover from NGM, and NGM says that HITT failed to disclose these other lawsuits to either NGM or the Court.

NGM further accuses HITT's counsel of fabricating evidence during discovery to omit a subcontractor in support of HITT's false claim that Gulf Atlantic delayed the air traffic control tower project. According to NGM, HITT's actions were “all fraudulently designed to prevent or hinder the Court and NGM from uncovering that HITT cannot prove the central issues of its case against NGM.” (Doc. 82 at 35).

II. Factual Findings

The Court held an evidentiary hearing on NGM's motion. (See Doc. 98). What follows are the Court's factual findings from that hearing.

1.  On April 19, 2022, HITT retained Gulf Atlantic to perform earthwork for the air traffic control tower project. The scope of work included preparation of the building pad, clearing and grubbing, excavating, fencing, and storm drain installation. (Doc. 50-1)

2.  NGM provided the performance surety bond for Gulf Atlantic's work on the air traffic control tower project. (Doc. 50-2).

3.  A few weeks before HITT retained Gulf Atlantic, HITT had retained Everdean for cast-in-place work on the air traffic control tower project. (Doc. 83-20).

4.  On February 4, 2023, HITT issued delay/supplementation notices to Everdean and Gulf Atlantic. (Doc. 98-1 at 1-4).

5.  On March 24, 2023, HITT retained Chapel Branch & Lagniappe, LLC (CB&L) to supplement Gulf Atlantic's work. (Doc. 83-7 at 6).

6.  On November 3, 2023, Gulf Atlantic filed the current lawsuit against HITT for failing to pay for the work it performed. (Doc. 1).

7.  On January 17, 2024, HITT counterclaimed against NGM as Gulf Atlantic's performance bond surety. (Doc. 19).

8.  On April 20, 2024, CB&L notified HITT that it could not continue its work on the air traffic control tower project. (Doc. 98-1 at 10-11).

9.  On April 25, 2024, HITT issued a notice of default to CB&L. (Doc. 83-4).

10. On July 19, 2024, HITT terminated CB&L. (Doc. 98-1 at 13-15).

11. On July 29, 2024, HITT retained Raven Group to continue the work it had previously retained Gulf Atlantic and CB&L to do. (Docs. 83-6; 83-12 at 6).

12. On November 15, 2024, HITT sued CB&L (hereinafter, the CB&L case). (Doc. 98-2 at 1-5).

13. On December 2, 2024, NGM served discovery on HITT. (Docs. 83-8, 83-9).

14. On December 20, 2024, counsel for CB&L filed a notice of a similar case under Local Rule 5.6 in the CB&L case regarding Gulf Atlantic's suit against HITT. (Doc. 83-10).

15. On January 31, 2025, HITT served preliminary discovery responses on NGM. In those responses, HITT asserted Gulf Atlantic caused HITT to incur “actual expenditures” paid to CB&L, Raven Group, and National (another subcontractor) to supplement Gulf Atlantic's work. Specifically, HITT sought $563,076.50 in damages for the amount paid to Raven Group. HITT also sought general condition delay damages against NGM in the amount of $133,368.00. (Doc. 98-3 at 3-13).

16. NGM served its Second Set of Interrogatories upon HITT on January 31, 2025. In those interrogatories, NGM asked HITT to identify “each subcontractor, supplier, and/or other lower-tier contractor with which HITT contracted or hired to perform work” other than Gulf Atlantic, and whether HITT accused any of those entities of delay. (Doc. 83-13).

17. On February 3, 2025, HITT sent a demand letter to Everdean seeking $1.178 million for failure to satisfy its performance obligations under the subcontract. (Doc. 98-3 at 26-27).

18. On February 4, 2025, HITT answered CB&L's counterclaim alleging CB&L failed to perform under the subcontract. HITT sought a setoff for CB&L's billed work which was not performed or performed defectively. (Doc. 83-14 at 10).

19. On February 11, 2025, NGM notified HITT of its intent to subpoena CB&L, Raven Group, and National. (Doc. 83-15). Because NGM was unaware of the CB&L case, its subpoena to CB&L did not ask CB&L to produce documents related to the CB&L case. (Doc. 82 at 21).

20. On February 20, 2025, HITT provided Rule 26 disclosures to CB&L in the CB&L case. (Doc. 83-16). HITT's disclosure listed the same $563,076.50 in damages for Raven Group's supplementation that was included in HITT's preliminary discovery responses to NGM. (Docs. 83-16 at 5; 98-3 at 43-44).

21. On February 28, 2025, HITT served NGM with supplemental interrogatory answers. HITT's supplemental answers again included damages for Raven Group's supplementation costs, although this time for $355,814.11 instead of the $563,076.50 that was initially identified. (Doc. 98-4 at 4).

22. On February 28, 2025, in response to NGM's second set of interrogatories, HITT provided a spreadsheet as an answer to NGM's interrogatory, which asked HITT to identify “each subcontractor, supplier, and/or other lower-tier contractor with which HITT contracted or hired to perform work at the Project.” (Doc. 98-4 at 29, Interrogatory #2). That spreadsheet did not list Everdean nor did it list Gulf Atlantic. (Doc. 98-4 at 31).

23. Also in those interrogatories, NGM asked HITT to state whether it ever notified or believed that any entity “was delaying any Project schedule activity.” (Doc. 98-4 at 29, Interrogatory #3). HITT responded that it formally notified Spring Precast that it was “critically delaying the project in its failure to complete the precast erection scope in a timely manner.” (Id. at 30).

24. On March 26, 2025, NGM notified HITT of its intent to reissue its subpoena to CB&L (NGM was unable to effect service of the previously issued CB&L subpoena). (Docs. 83-21; 75). HITT did not offer CB&L counsel's information to NGM. (Doc. 82 at 29-30).

25. On March 20, 2025, HITT sued Everdean (hereinafter, the Everdean case). (Doc. 98-5 at 1-6).

26. On March 28, 2025, NGM discovered the CB&L and Everdean cases. (Doc. 82 at 30-32).

27. In this case, HITT did not file a notice of similar case under Local Rule 5.6 regarding the CB&L or Everdean cases. (Tr. 31:19-23).

28. The law firm of Clark Partington serves as HITT's counsel. (Tr. 13:21-14:12). The lead attorney representing HITT is Mr. Bruce Partington, and he testified at the evidentiary hearing.

29. Mr. Partington did not dispute that the CB&L case is related to this case. (Tr. 31:14-18). But Mr. Partington interpreted Local Rule 5.6 to require a notice be filed in the “later filed” case, meaning he did not believe he had to file a notice in the current case because it was filed before the CB&L case. (Tr. 31:19-32:6).

30. Mr. Partington did not file a notice of similar case in the Everdean case because he did not believe such a notice was warranted. That was so because Mr. Partington concluded that this case and the Everdean case did not share common issues of law or fact. Because Everdean's scope of work was sequential to Gulf Atlantic's scope of work, Mr. Partington believed that the two cases were not sufficiently related to warrant a notice of similar case filing. (Tr. 66:16-68:4).

31. Mr. Partington testified that at the time HITT provided NGM with its discovery responses, it was seeking the amount listed from NGM, but damages calculations are always refined throughout the course of litigation. (Tr. 34:1-9).

32. Mr. Partington testified that HITT later discovered—after it sent the February 3, 2025 letter—that Everdean did not delay the project. (Tr. 42:17-19; 43:14-18; 66:19-68:4).

33. All cases—the current case, the CB&L case, and the Everdean case—are publicly available through CM/ECF and PACER.

34. Judge Wetherell is the assigned District Judge in both this case and the CB&L case.

35. As to the spreadsheet provided to NGM in response to NGM's second set of interrogatories, Mr. Partington explained that the spreadsheet was provided to him by HITT and was not prepared by Mr. Partington or his law firm. Unbeknownst to Mr. Partington at the time, HITT had provided only the entities that were currently providing work on the project (as opposed to all entities that had performed any work on the project since its inception). Mr. Partington testified that the spreadsheet should have included Everdean and Gulf Atlantic, but because they were not currently working on the project, both entities were mistakenly omitted by HITT when it provided the spreadsheet. (Tr. 56:22-57:19).

36. With regards to HITT's response to NGM's interrogatory regarding delay notices, Mr. Partington explained that he interpreted this question to ask whether HITT noticed any subcontractor that caused a “critical path delay.” Mr. Partington testified that CB&L's work may not have been on “the critical path” and that Everdean's default did not cause critical path delays. (Tr. 58:2-59:15).

37. None of HITT's discovery responses to NGM were filed with the Court prior to the filing of the motion for sanctions. (Tr. 68:21-69:17).

III. Analysis

NGM seeks fraud-on-the-court sanctions against HITT and its counsel under both the Court's inherent authority and 28 U.S.C. § 1927. The Court will first address its inherent authority and then address 28 U.S.C. § 1927.

A. Inherent authority

District courts have the inherent authority to sanction litigants and attorneys who perpetrate a fraud on the court. Martin v. Automobili Lamborghini Exclusive, Inc., 307 F.3d 1332, 1335 (11th Cir. 2002). This authority is rarely exercised, however, because “only the most egregious misconduct, such as bribery of a judge or members of a jury, or the fabrication of evidence by a party in which an attorney is implicated, will constitute a fraud on the court.” Patterson v. Lew, 265 F. App'x 767, 768 (11th Cir. 2008) (cleaned up). For the Court to exercise this authority, there must be clear and convincing evidence of subjective bad faith. Hyde v. Irish, 962 F.3d 1306, 1310 (11th Cir. 2020). This “standard can be met either (1) with direct evidence of the attorney's subjective bad faith or (2) with evidence of conduct so egregious that it could only be committed in bad faith.” Id. (cleaned up). The Court's “inherent power must be exercised with restraint and discretion.” Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1225 (11th Cir. 2017).

Here, NGM has failed to show by clear and convincing evidence that HITT's counsel perpetrated a fraud on the Court. NGM has not shown by direct evidence that HITT's counsel acted with subjective bad faith. Nor has NGM shown that HITT's counsel engaged in conduct that was so egregious that it could only be committed with bad faith. At most, NGM has shown that HITT's counsel acted negligently. But negligence is a far cry from bad faith and making a mistake is a far cry from perpetrating a fraud.

The Court finds that Mr. Partington's testimony was credible, and the Court accepts his explanation for what happened in this case. The Court does not believe that Mr. Partington (or his colleagues) acted with bad faith when taking any of the actions complained of by NGM. With regard to the inclusion of Raven Group's supplementation damages in both this case and the CB&L case, Mr. Partington explained that he believed HITT could seek those damages in both cases although it could only recover the damages once. NGM may disagree with Mr. Partington's legal argument on that point. Whether NGM's counsel agrees with Mr. Partington's legal argument (or whether that legal argument is a winner) is not the issue before the Court today. The issue is whether NGM has shown that Mr. Partington acted with subjective bad faith to defraud the Court. That showing has not been made.

As for the omission of Everdean from the spreadsheet that HITT provided to NGM in discovery, the evidence before the Court shows that the omission was a mistake. It was not an intentional act undertaken in bad faith. Mr. Partington's uncontroverted testimony was that HITT inadvertently provided a spreadsheet that listed only the current entities working on the project instead of all the entities that had done any work on the project since its inception. There was no evidence presented to support the allegation that Mr. Partington, his law firm, or his client fabricated the spreadsheet in an attempt to defraud anybody—let alone an intent to defraud the Court.

Similarly, as for HITT's response to NGM's interrogatory regarding notices of delay, the Court accepts Mr. Partington's testimony that HITT and its counsel read the question differently than NGM and its counsel intended. Even if Mr. Partington's reading of the question was incorrect, there is far from clear and convincing evidence to support a finding that Mr. Partington or his colleagues acted with subjective bad faith or an intent to defraud the Court.

The Court also wishes to make clear that the damages calculations, spreadsheet, and other discovery responses were not filed with the Court (except as exhibits to this motion for sanctions). Those documents were exchanged between the parties as part of the discovery process. That alone is sufficient to doom NGM's fraud-on-the-court claim as it relates to those documents. See Patterson v. Lew, 265 F. App'x 767, 769 (11th Cir. 2008) (“We have consistently held that a fraud between parties is not fraud on the court.”).

The Court is also unpersuaded by NGM's argument that HITT's counsel perpetrated a fraud on the Court by failing to file a related case notice regarding HITT's litigation with CB&L and Everdean. Under Local Rule 5.6, a party who files a case must file a notice of related case if “(A) a case in this District that includes an identical claim—or a similar claim—between some or all of the same or related parties was previously terminated by any means; or (B) the new case involves issues of fact or law in common with the issues in another case pending in the District.” N.D. Fla. Loc. R. 5.6. According to NGM, Mr. Partington and his colleagues failed to file a notice of related case under Rule 5.6 because they were acting in bad faith to intentionally hide the Everdean and CB&L cases from the Court and NGM's counsel.

The Court rejects NGM's argument. First, the Everdean and CB&L cases were not hidden. They were filed and available on a publicly accessible docket. And one of the cases (CB&L) is being handled by the same U.S. District Judge as the current case, so it is hard to see how that case was somehow hidden from the Court. Mr. Partington acknowledged in his testimony and in the briefing that HITT should have filed a notice of related case when it filed the CB&L litigation because the current case and the CB&L case involve common issues. But NGM has failed to show that the failure to file the related case notice regarding the CB&L case resulted from anything more than negligence.¹

With regard to the Everdean case, Mr. Partington explained that a related case notice was not filed because in his opinion the Everdean case and the current case did not share common issues of law or fact. Thus, Mr. Partington concluded that Rule 5.6 did not require the filing of a notice. Although NGM may not agree with Mr. Partington's legal analysis and interpretation of Rule 5.6, a disagreement about the application and meaning of a legal rule is not the stuff that bad faith is made of. See Bryant v. Troutman, No. 3:05-CV-162, 2006 WL 1640484, at *1 (M.D. Fla. June 8, 2006) (“The fact that a party disputes his or her opponent's interpretation of the facts is not grounds for dismissal for fraud.”). Regardless of whose interpretation of Rule 5.6 is correct, what is clear is that Mr. Partington was not acting with a bad faith intent to defraud the Court when he failed to file a notice of related case for the Everdean matter.

Because NGM has failed to meet its burden of showing subjective bad faith, the Court declines to issue sanctions under its inherent authority.

B. 28 U.S.C. § 1927

NGM has also moved for sanctions under 28 U.S.C. § 1927, which provides as follows:

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.

28 U.S.C. § 1927. “The statute imposes a high standard that requires the moving party to show that the other side engaged in behavior that grossly deviates from reasonable conduct.” Hyde v. Irish, 962 F.3d 1306, 1310 (11th Cir. 2020) (cleaned up). This high standard “is satisfied only when the attorney's conduct is so egregious that it amounts to bad faith.” Tarasewicz v. Royal Caribbean Cruises Ltd., No. 14-CIV-60885, 2016 WL 3944176, at *4 (S.D. Fla. Feb. 9, 2016). Bad faith in this context means “objective bad faith.” Hyde, 962 F.3d at 1310. In addition to showing bad faith, the movant must show that counsel's conduct resulted in a multiplication of proceedings “that would not have been conducted otherwise.” Peterson v. BMI Refractories, 124 F.3d 1386, 1396 (11th Cir. 1997).

For the reasons explained above, NGM has failed to show that HITT's counsel acted in bad faith (subjective or objective). At most, NGM has shown that HITT's counsel acted negligently. Moreover, NGM has not met its burden of showing that HITT's counsel engaged in conduct that resulted in the multiplication of proceedings. “In order for § 1927 to be applicable, there must be a causal connection between the objectionable conduct of counsel and multiplication of the proceedings.” Id. NGM has not shown any such causal connection here. Accordingly, the Court will not impose sanctions under 28 U.S.C. § 1927.

IV. Conclusion

At bottom, NGM has failed to provide evidentiary support for the inflammatory allegations found in its motion for sanctions. It is one thing to accuse opposing counsel of violating the discovery rules, of being negligent, or of failing to file required documents. It is quite another thing to accuse opposing counsel of fabricating documents and concocting a scheme to defraud the Court. Unfortunately, NGM's counsel chose to make a mountain out of several molehills and attempted to sully the reputation of a fellow member of the bar in the process.

For the reasons above, NGM's Motion for Sanctions, (Doc. 82), is DENIED.

DONE AND ORDERED this 14th day of August 2025.

FOOTNOTES

1.   Although HITT's counsel did not file a notice of related case, CB&L's counsel did file such a notice.

Zachary C. Bolitho, United States Magistrate Judge