Wright v. C. Watts and Sons Construction Co., Inc. et al
MEMORANDUM OPINION AND ORDER granting 24 MOTION to Dismiss and denying as moot 9 MOTION to Dismiss. Further all claims against Travelers are dismissed without prejudice. All parties to bear their own costs and fees. Signed by Honorable Robert T. Dawson on September 27, 2012. (lw)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FORT SMITH DIVISION
LARRY A. WRIGHT
Case No. 2:12-2089
C. WATTS AND SONS CONSTRUCTION
CO., INC. AND TRAVELERS CASUALTY
AND SURETY COMPANY OF AMERICA
MEMORANDUM OPINION AND ORDER
Surety Company of America’s (“Travelers”) Motion to Dismiss and
Supporting Brief (Doc. 9).
Travelers has replied.
Plaintiff Wright has responded and
(Docs. 12, 14).
Following the filing of
Wright’s Amended Complaint (Doc. 3), Travelers filed a second
Motion to Dismiss, incorporating the first by reference.
For reasons set forth herein, Travelers’ first Motion to
Dismiss (Doc. 9) is DENIED AS MOOT and Travelers’ second Motion
to Dismiss (Doc. 24) is GRANTED.
Wright filed a Complaint in Sebastian County Circuit Court
on March 20, 2012.
On April 18, 2012, Defendant C.
Watts and Sons Construction Co., Inc. (“Watts and Sons”) removed
the case to federal court based on diversity jurisdiction, as
Complaint was amended on September 19, 2012.
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purposes of this Motion, the following facts, taken from the
Amended Complaint, are assumed true and viewed in the light most
favorable to Wright.
Highway 71 in Sebastian County, Arkansas.
The contract included
a bond that Watts and Sons executed with Travelers.
property adjacent to a portion of the highway that is under
On June 16, 2010, Watts and Sons contracted with
Wright to take fill material from his land and park an office
trailer on the property over a period from 1 to 18 months.
exchange, Watts and Sons agreed to pay Wright $5,000.00 as an
advance prior to excavation and seventy cents per cubic yard of
Watts and Sons agreed to smoothly grade all areas it
By letter agreement dated July 30, 2010, Watts and
Sons acknowledged that it would also build a parking lot for
Wright on his land and that it would remove debris from and reseed grass on the area on which it would burn debris.
agreed to grade and re-seed all haul roads on Wright’s property.
Wright alleges that Watts and Sons excavated outside of the
The contract specified that the “approximate amount of the material required
(common fill) is plus/minus 50,000 cubic yards” but that the amount “can be
subject to change and project requirements.” (Doc. 21, Ex. A.)
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vehicles, performed work in such a manner as to create a flood
risk from inadequate drainage and a safety risk from buried and
improperly stored debris.
Wright also alleges that Watts and
Sons has held over on the contract and failed to pay rent for
the staked property during the holdover and has not paid any
Finally, Wright alleges that Watts and Sons failed to build the
parking lot at the agreed-upon elevation.
The Complaint seeks
further modifications to Wright’s property while litigation is
guaranteed payment for damages caused by Watts and Sons if they
Travelers has moved to dismiss the Complaint pursuant to
Fed. R. Civ. P. 12(b)(6), contending that Wright has failed to
Standard of Review
Dismissal is proper if Plaintiffs’ complaint fails to state
The factual allegations in the complaint must be
taken as true and construed in the light most favorable to the
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Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007);
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).
should not be dismissed for failure to state a claim unless Ait
appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to relief.@
Thomas W. Garland, Inc. v. City of St. Louis, 596 F.2d 784 (8th
which lists Travelers as surety and Watts and Sons as principal.
Wright did not attach a copy to his complaint, but Travelers
incorporated supporting brief.
The bond is unsealed,
undated and contains only the signature of a representative of
“Licensed Agent, State of Arkansas.”
It is in the amount of
$9,035,798.51, which is stated to be 80% of the contract amount.
unpaid claims for materials, labor and supplies used in the
course of the work, and by its terms was executed pursuant to
contractors cannot create a lien against a public property when
working for a public entity.
The first act was passed in 1911,
and is codified under the Mechanic’s and Materialmen’s Liens
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section of the Code.
The second act was passed in 1929 and is
Section 18-44-503 provides that in all contracts over $20,000
for public construction projects, the contractor must furnish a
bond, and that all persons who have a claim against the bond may
bring an action against the surety.
Section 22-9-401 provides
construction of public works “shall be liable on all claims for
labor and materials entering into the construction, or necessary
or incident to or used in the course of construction, of the
The Arkansas Supreme Court has noted that § 22-9-401 cannot
be reasonably interpreted to require protection for claims based
United States Fidelity and Guaranty Company v.
(1992)(statute contains considerable language defining the scope
of claims for labor and materials).
Therefore, Wright’s claims
negligence must fail as a matter of law.
The same is true for
protection afforded by the legislature to furnishers of labor
and materials used in or incident to the construction of public
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This leaves Wright’s breach of contract claims.
consists of claims that Watts and Sons generally abused Wright’s
property by excavating outside of the agreed upon area, taking
water without authorization, using it as a dumping site, storage
and equipment parking lot and failing to build the parking area
Wright requested and which was made a part of the contract.
second includes Wright’s claims that Watts and Sons took over
125,000 cubic yards of fill material and in addition, has held
over on the contract and failed to pay rent for property used
outside the staked areas.
The statute requiring the giving of a bond by contractors
was intended to protect those providing labor and materials used
liberally in order to effectuate the purpose of the legislature.
Detroit Fidelity & Sur. Co. v. Yaffe Iron & Metal Co., 184 Ark.
1095 (1932)(pipe purchased by appellee was necessary to and was
incorporated into and did not become a part of the construction
Yaffe was decided with reference to Act 368 of 1929,
incident and contingent to the work, specifically,
[A]ll claims for labor, material, camp equipment, fuel
including oil and gasoline, food for men and feed for
animals, labor and material expended in making repairs
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on machinery or equipment used in connection with the
construction of said public buildings or works
aforesaid, lumber and material used in making forms
and supports and all other supplies or things entering
into the construction, or necessary or incident
thereto or used in the course of construction of said
public buildings or public works; said bonds shall
also be liable for rentals on machinery, equipment,
mules and horses used in the construction of said
public buildings or public works....
Section 22-9-401, which had its genesis in Act 368, speaks in
(b) Claims for labor and materials shall include, but
not be limited to, fuel oil, gasoline, camp equipment,
food for workers, feed for animals, premiums for bonds
and liability and worker’s compensation insurance,
rentals on machinery, equipment, and draft animals,
Arkansas...which shall have arisen on account of, or
in connection with, wages earned by workers on the
project covered by the bond.
Although the language in the two statutes is not identical,
each limits its application to persons who actually performed
labor or services, or furnished equipment or materials to the
Arkansas’ statute is based on similar language within
The Miller Act, which identifies those who may sue on a payment
bond as “Every person who has furnished labor or material in the
prosecution of the work provided for a contract for which a
payment bond is furnished....”
40 U.S.C. § 3133(b)(1)(2006).
“materials”, Wright’s first category of claims for misuse of his
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property must fail.
These allegations are a restatement of his
damage to property, not payment for use of materials.
The second category requires a deeper inquiry.
Wright’s allegations that Watts and Sons (1) took over 125,000
cubic yards of dirt from his land and (2) failed to pay rent for
the property it used outside the agreed-upon area.
seventy cents per cubic yard for fill material. Although the
construction was 50,000 cubic yards, the contract clearly states
Even the broadest interpretation of Arkansas Code
Annotated § 22-9-401 does not support Wright’s claim that the
especially when there are no allegations that the material was
not paid for at the contract rate, which is the essence of the
payment bond requirement.
This leaves Wright’s claims that Watts and Sons failed to
Arkansas Code Annotated § 18-44-147 defines “material supplier”
as “any person who supplies materials, goods, fixtures, or any
other tangible item to the contractor.”
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The Court can find no instance, nor has Wright pointed to
any, in which a court in Arkansas has found rental of real
property itself or damage to rented real property to be within
the scope of any labor and materials payment bond.
state statute, “materials” have been found to include items such
as tools (National Sur. Corp. v. Ideal Lumber Co., 249 Ark. 545
(1970)), pipes (Yaffe Iron & Metal, 184 Ark. 1095 (1932)), road
materials (Little Rock Quarry, 309 Ark. 269 (1992)), and asphalt
(State ex rel. Berry Asphalt Co. v. Western Sur. Co., 223 Ark.
Leased materials that have been recognized as
subject to the bond under The Miller Act or Arkansas law have
included trucks supplied to a subcontractor to haul materials
(Basich Bros. Const. Co. v. U.S., for Use of Turner, 159 F.2d
182 (9th Cir. 1946)), tractors used on a dam project (Roane v.
U.S. Fidelity & Guaranty Co., 378 F.2d 40 (10th Cir. 1967)),
earth-compacting machine (Arnold v. Koehring Co., 242 Ark. 415
(1967)), dirt-moving equipment used in constructing improvements
to a municipal airport (Continental Cas. Co. v. Clarence L. Boyd
Co., 140 F.2d 115 (10th Cir. 1944)), cars, track and equipment
used in work on a naval training station (Illinois Sur. Co. v.
scaffolding planks furnished to a subcontractor (United States,
for Use and Benefit of P.A. Bourquin & Co. v. Chester Const.
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Co., 104 F.2d 648 (2d Cir. 1939)), and construction equipment
(National Sur. Corp v. Edison, 240 Ark. 641 (1966)).
Despite a liberal reading, alleged unpaid rent for use of
real property in a state construction project does not appear to
Contractor’s Bonds statute.
While Wright’s claims against Watts and Sons may or may not
stand, Wright has failed to state a claim for which relief can
be granted against Travelers.
In the absence of any statement
payment has not been made, Plaintiff’s claims against Travelers
Dismiss (Doc. 9) is DENIED AS MOOT and its Motion to Dismiss
DISMISSED without prejudice.
All parties are to bear their own
costs and fees.
IT IS SO ORDERED this 27th day of September, 2012.
/s/ Robert T. Dawson
Honorable Robert T. Dawson
United States District Judge
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