Tri-state Employment Services, Inc., Plaintiff-appellant, v. the Mountbatten Surety Company, Inc., Defendant-appellee, 328 F.3d 703 (2d Cir. 2003)

Plaintiff-Appellant Tri-State Employment Services, Inc. ("Tri-State"), a New York corporation, appeals from a memorandum and order of the United States District Court for the Southern District of New York (Knapp, J.) granting summary judgment in favor of Defendant-Appellee The Mountbatten Surety Company, Inc. ("Mountbatten"), a Pennsylvania corporation. Tri-State Employment Servs. v. Mountbatten Sur. Co., No. 99 Civ. 9684, 2001 WL 487423 (S.D.N.Y. May 7, 2001). Mountbatten is a licensed surety company engaged in the business of issuing bonds in connection with construction contracts. At issue in this case is whether Tri-State, a Professional Employer Organization ("PEO") or employee leasing company, is a proper bond claimant under a surety bond issued by Mountbatten to Team Star Contractors, Inc. in connection with a construction project in Quincy, Massachusetts. The district court held that Tri-State was not a proper claimant because, as a PEO, Tri-State does not provide "`labor and materials' as the terms are used in the language of the Bonds." Id. at *3.

Tri-State appealed, and on July 9, 2002, this court certified the following question to the New York Court of Appeals:

In the circumstances presented, is a PEO, under New York law, a proper claimant under a labor and materials surety bond?

Tri-State Employment Services, Inc. v. Mountbatten Sur. Co., Inc., 295 F.3d 256, 269 (2d Cir. 2002). On April 1, 2003, the New York Court of Appeals answered the certified question as follows:

In the circumstances presented, under New York law, Tri-State Employment Services, Inc. is not a proper claimant under a labor and materials surety bond.

Tri-State Employment Servs., Inc. v. The Mountbatten Sur. Co., Inc., 99 N.Y.2d 476, 486, 758 N.Y.S.2d 595, 602, 788 N.E.2d 1023, 1030, Slip Op. 12563, 2003 WL 1700061 at *11 (2003). The Court of Appeals expressly decided that "as a matter of law [the plaintiff] was not a provider of labor to the project," and therefore that the plaintiff could not prosecute a claim under the surety bond at issue. Id. at *10, 99 N.Y.2d at 484, 758 N.Y.S.2d at 599, 788 N.E.2d at 1027.

We have considered all of the plaintiff's arguments and find them unavailing. Accordingly, we AFFIRM the district court's grant of summary judgment to the defendant, for the reasons stated by the New York Court of Appeals.