Southern Atlantic Companies, LLC et al v. School Board of Orange County, Florida

Filing 22

ORDER granting 3 motion to dismiss; granting in part and denying in part 5 motion to dismiss. Signed by Judge Gregory A. Presnell on 5/7/2015. (ED)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
SOUTHERN ATLANTIC COMPANIES,
LLC and SOUTHERN ATLANTIC
ELECTRIC COMPANY, INC.,
Plaintiffs,
v.

Case No: 6:15-cv-254-Orl-31TBS

SCHOOL BOARD OF ORANGE
COUNTY, FLORIDA,
Defendant.

ORDER
This matter comes before the Court without a hearing on the motions to dismiss (Doc. 3, 5)
filed by the Defendant, the School Board of Orange County, Florida (henceforth, the “School
Board”), and the responses in opposition filed by Southern Atlantic Companies, LLC (henceforth,
“Southern Atlantic”) (Doc. 14) and by Southern Atlantic Electric Company, Inc. (henceforth,
“SAE”) (Doc. 13).
I.

Background

According to the allegations of the First Amended Complaint (Doc. 2-20) (henceforth, the
“FAC”), which are accepted in pertinent part as true for purposes of resolving these motions to
dismiss, this dispute stretches back to 2010, when Southern Atlantic submitted a bid to perform
electrical work on a renovation project at Oak Ridge High School in Orange County. WhartonSmith, Inc. (“Wharton-Smith”), the School Board’s construction manager on the renovation
project, did not select Southern Atlantic’s bid. Believing it should have been the winning bidder,

Southern Atlantic initiated a bid protest against the School Board. The School Board tendered the
defense of the bid protest to Wharton-Smith, which retained counsel to defend the School Board.
Florida Statute § 255.0516 1 and School Board policy require entities engaging in bid
protests to obtain a bond – referred to as a “protest bond” – in the event the Board is awarded its
attorney’s fees and costs against the protester. Southern Atlantic obtained a protest bond
(henceforth, the “Bond”) from International Fidelity Insurance Company (henceforth,
“International Fidelity”) in the amount of $127, 920. To obtain the Bond, Southern Atlantic was
required to execute an indemnity agreement in favor of International Fidelity. In that agreement,
SAE also agreed to indemnify International Fidelity.
Southern Atlantic was unsuccessful in its bid protest against the School Board. The
Administrative Law Judge (“ALJ”) presiding over the proceedings concluded that Wharton-Smith
was not the School Board’s agent and therefore the School Board could not be held responsible for
Wharton-Smith’s decision to select someone other than Southern Atlantic for the electrical

1

In pertinent part, Fla. Stat. § 255.0516 provides that
if a school board, a community college board of trustees, or a state
university board of trustees uses procedures pursuant to chapter 120
for bid protests, the board may require the protestor to post a bond
amounting to:
(1) Twenty-five thousand dollars or 2 percent of the lowest
accepted bid, whichever is greater, for projects valued over
$500,000; and
(2) Five percent of the lowest accepted bid for all other projects,
conditioned upon payment of all costs and fees which may be
adjudged against the protestor in the administrative hearing. If at the
hearing the agency prevails, it shall recover all costs and attorney’s
fees from the protestor; if the protestor prevails, the protestor shall
recover from the agency all costs and attorney’s fees.

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subcontract. On November 8, 2010, the School Board submitted a proposed order to the ALJ. In
the proposed order, the School Board was awarded its attorney’s fees and costs.

However, the

ALJ’s recommended order – issued on November 10, 2010 – did not contain such an award.
Both parties had the right to submit “exceptions” to the ALJ’s recommended order, but
only Southern Atlantic did so. On February 8, 2011, after a hearing on Southern Atlantic’s
exceptions, the School Board entered the ALJ’s recommended order without alteration. Neither
party appealed from the entry of that order.
On February 24, 2011, the School Board submitted a claim on the Bond to International
Fidelity for the attorney’s fees and costs incurred during the bid protest. On May 26, 2011,
International Fidelity denied the claim on the grounds that the ALJ had not awarded fees and
costs. Subsequently, the School Board assigned its rights with respect to the Bond to WhartonSmith. Wharton-Smith filed suit (henceforth, the “Bond Action”) in Florida court against
International Fidelity on August 12, 2011. On November 6, 2012, the Florida court found that it
lacked subject matter jurisdiction over Wharton-Smith’s claim against the Bond. The Florida
court awarded summary judgment to International Fidelity.
On October 21, 2014, Southern Atlantic and SAE filed the instant suit in state court
against the School Board, generally alleging that the School Board had retaliated against Southern
Atlantic for having initiated the bid protest. On January 20, 2015, Southern Atlantic and SAE
filed the FAC, asserting for the first time that the School Board’s actions violated 42 U.S.C.
§1983. Relying on this alleged violation of federal law, the School Board timely removed the
case to this court pursuant to 28 U.S.C. §§1331 and 1446(b)(3).
In the FAC, the Plaintiffs assert the following claims: retaliation in violation of Florida’s
Public Sector Whistle-Blower’s Act (henceforth, the “FPSWA”), §§112.3187-112.31895, Florida

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Statutes (Count I); First Amendment retaliation in violation of 42 U.S.C. § 1983; breach of
contract (Count III); and common law indemnity (Count IV). In Count V of the FAC, the
Plaintiffs seek a declaratory judgment that the School Board had not had the right to assign the
Bond to Wharton-Smith and had been obligated to return the Bond to Southern Atlantic. 2 By way
of the instant motions, the School Board seeks dismissal as to all five counts asserted by SAE
(Doc. 3) and by Southern Atlantic (Doc. 5).
II.

Legal Standard

Federal Rule of Civil Procedure 8(a)(2) requires “a short and plain statement of the claim
showing that the pleader is entitled to relief” so as to give the defendant fair notice of what the
claim is and the grounds upon which it rests, Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103,
2 L.Ed.2d 80 (1957), overruled on other grounds, Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A Rule 12(b)(6) motion to dismiss for failure to state a
claim merely tests the sufficiency of the complaint; it does not decide the merits of the case.
Milbum v. United States, 734 F.2d 762, 765 (11th Cir.1984). In ruling on a motion to dismiss, the
Court must accept the factual allegations as true and construe the complaint in the light most
favorable to the plaintiff. SEC v. ESM Group, Inc., 835 F.2d 270, 272 (11th Cir.1988). The
Court must also limit its consideration to the pleadings and any exhibits attached thereto. Fed. R.
Civ. P. 10(c); see also GSW, Inc. v. Long County, Ga., 999 F.2d 1508, 1510 (11th Cir. 1993).
The plaintiff must provide enough factual allegations to raise a right to relief above the
speculative level, Twombly, 550 U.S. at 555, 127 S.Ct. at 1966, and to indicate the presence of the
required elements, Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1302 (11th Cir.2007). Conclusory

2

The Plaintiffs assert that the Bond was returned on December 3, 2014 – after the filing of
the suit, but before the filing of the FAC. (FAC at 8).

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allegations, unwarranted factual deductions or legal conclusions masquerading as facts will not
prevent dismissal. Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003).
In Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L.Ed.2d 868 (2009), the Supreme
Court explained that a complaint need not contain detailed factual allegations, “but it demands
more than an unadorned, the-defendant-unlawfully-harmed-me accusation. A pleading that offers
labels and conclusions or a formulaic recitation of the elements of a cause of action will not do.
Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.”
Id. at 1949 (internal citations and quotations omitted). “[W]here the well-pleaded facts do not
permit the court to infer more than the mere possibility of misconduct, the complaint has alleged –
but it has not ‘show[n]’ – ‘that the plaintiff is entitled to relief.’” Id. at 1950 (quoting Fed. R.
Civ. P. 8(a)(2)).
III.

Analysis

A.

Claims asserted by SAE

The School Board argues that SAE has failed to state any claims against it and cannot do
so. The School Board asserts that the only connection alleged between SAE and the instant
dispute is that SAE agreed to indemnify International Fidelity in connection with the protest bond
obtained by Southern Atlantic and that SAE has not included any allegations in the First Amended
Complaint that would support a finding of liability in its favor. In response, SAE challenges
these assertions only in regard to Count IV, the indemnity count. 3 Accordingly, the Court finds
that the remaining four counts should be dismissed with prejudice as to SAE.

3

SAE also argues that it has standing to pursue claims in this case, but this issue was not
raised by the School Board.

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In Count IV, SAE (along with Southern Atlantic) seeks indemnification from the School
Board “for the damages they incurred in defending the Bond Action, indemnifying [International
Fidelity], and in pursuing this Action – all of which include, but are not limited to, a substantial
amount of attorneys’ fees and costs.” (FAC at 14). In its response to the motion to dismiss,
however, SAE does not attempt to justify its entitlement to indemnification for any damages it
incurred in defending the Bond Action or in bringing this suit.
SAE does allege in Count IV that it was sued, pursuant to the indemnity agreement, by
International Fidelity, which sought to recover costs and fees expended in defending WhartonSmith’s claim against the Bond. 4 SAE argues that it is “a contractual indemnitor with vicarious
or derivative liability to IFIC” and therefore it may seek common law indemnity from the School
Board “since the School Board is responsible for the wrong that caused injury to IFIC.” (Doc. 13
at 6).
Under Florida law, common law indemnity is an equitable remedy that arises out of
“obligations imposed through special relationships.” Camp, Dresser & McKee, Inc. v. Paul N.
Howard Co., 853 So. 2d 1072, 1099 (Fla. 5th DCA 2003). To state a claim for common law
indemnity, a party must allege
that [it] is without fault, that another party is at fault, and that a
special relationship between the two parties makes the party seeking
indemnification vicariously, constructively, derivatively, or
technically liable for the acts or omissions of the other party.
Tsafatinos v. Family Dollar Stores of Florida, Inc., 116 So. 3d 576, 581 (Fla. 2d DCA 2013).

4

Although a copy of International Fidelity’s complaint for indemnity was attached to the
First Amended Complaint (Doc. 2-19), the record does not indicate whether that suit has been
resolved.

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Although there is an allegation in the FAC that International Fidelity has sued the
Plaintiffs, the FAC does not contain an allegation that either Plaintiff has paid (or will have to pay)
anything to International Fidelity in connection with the Bond Action. Assuming arguendo that
SAE has had to pay International Fidelity, the allegations in the FAC are that the payment was
required by the indemnification agreement with International Fidelity rather than because of some
“special relationship” between SAE and the School Board. Similarly, there is no allegation that
the School Board was under any obligation to pay International Fidelity’s costs and fees in the
Bond Action (in which, it should be remembered, International Fidelity was sued by WhartonSmith, not the School Board). Because of this, any payment by SAE for those costs and fees
could not have been based on vicarious, constructive, derivative, or technical liability for acts or
omissions of the School Board. Count IV will also be dismissed as to SAE.
B.

Claims asserted by Southern Atlantic

Count I: Florida Public Sector Whistle-Blower Claim
The School Board argues that Southern Atlantic did not satisfy several prerequisites to
bringing suit under the FPSWA. First, the School Board argues that before bringing this suit,
Southern Atlantic was required to “initiate an action with the Florida Commission on Human
Relations, the Office of the Governor, or with the School Board itself, but only if the School
Board had a procedure for Whistleblower claims.” (Doc. 5 at 1). The School Board does not
cite to the portion of the FPSWA that allegedly imposes this requirement. The School Board
cites to two cases that apparently are intended to support this assertion but does not provide
pinpoint citations. (In addition, so far as the Court can tell, the language employed by the School
Board and the cases it cites deal with whistleblower claims brought by public employees, which

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Southern Atlantic is not.) The Court cannot discern the School Board’s argument on this point
well enough here to determine whether it has any merit.
The School Board also argues that whistle-blowers are required to exhaust their
administrative remedies before filing suit under the FPSWA, and that Count I should be dismissed
because Southern Atlantic failed to appeal its loss of the bid protest. (Doc. 5 at 2). However, the
statute requires that whistle-blowers exhaust their administrative remedies in regard to the alleged
retaliation, not the initial disclosure. In other words, an employee who loses his or her job after
revealing information that embarrasses his or her public agency would have to exhaust
administrative remedies as to the job loss, not the revelation. See, e.g., Pino v. City of Miami, 315
F.Supp.2d 1230, 1251 (S.D.Fla. 2004) (dismissing FSPWA claim because police officer plaintiff
failed to file Civil Service complaint as to his allegedly retaliatory transfer). In this case, the
failure to select Southern Atlantic’s bid for the Oak Ridge High School renovation is not alleged
to have been retaliatory, and therefore Southern Atlantic was not obligated to appeal the adverse
decision in its bid protest before seeking relief under the FPSWA.
Next, the School Board asserts that Southern Atlantic’s complaint was too vague to state a
claim under the FPSWA. However, the case cited by the School Board in support of its argument
involved a dismissal by the Florida Commission on Human Relations of a whistleblower
complaint that failed to satisfy a provision of the Florida Administrative Code. See Caldwell v.
Florida Department of Elder Affairs, 121 So. 3d 1062, 1064 (Fla. 1st DCA 2013). The School
Board has not shown that this provision of the Florida Administrative Code governs pleading
standards before this court.
Finally, the School Board asserts that Southern Atlantic filed this suit outside the 180-day
statute of limitations set forth in Fla. Stat. § 112.3187(8). (Doc. 5 at 2-3). As the School Board

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notes, it is not entirely clear from the FAC when the limitations period began to run. Southern
Atlantic argues that the retaliation consisted of the School Board’s refusal to return the Bond, Doc.
14 at 9-10, but never states (in the FAC or elsewhere) the date upon which the Bond should have
been returned. Rule 28-110.005 of the Florida Administrative Code, which governs bid protest
bonds, provides in pertinent part:
If, at the conclusion of the proceeding and any appellate
proceedings, the petitioner prevails, the agency shall return the
bond, cashier's check or money order to the petitioner. If the agency
prevails but the petitioner is not ordered to pay costs, the agency
shall return the bond or alternate security to the petitioner.
Fla. Admin. Code R. 28-110.005(4). Impliedly, an agency that prevails on the protest but is not
awarded fees must return the bond at the conclusion of the proceeding or, where applicable, at the
conclusion of any appeal. The final order as to the bid protest was entered on February 8, 2011,
and there were no appellate proceedings. The instant suit was filed in state court on October 21,
2014, more than three years after conclusion of the bid protest.
Southern Atlantic does not disagree that the Bond should have been returned as soon as its
bid protest ended, and it does not dispute the applicability of the 180-day statute of limitations in
Fla. Stat. § 112.3187(8). Rather, Southern Atlantic argues that the refusal to return the Bond was
a “continuing act of retaliation, as it was a result of a pattern or practice by the School Board to
perpetuate the wrong,” Doc. 14 at 9-10, and therefore the limitations period did not begin to run
until the Bond was returned on December 3, 2014. Southern Atlantic offers no explanation as to
how the School Board’s failure to return the Bond could constitute a “continuing act” of
retaliation. Southern Atlantic cites – without discussion or pinpoint citation – to the case of
Jacobs v. Board of Regents, 473 F. Supp. 663 (S.D.Fla. 1979). Jacobs is a Title VII case in
which the court found that the plaintiff’s complaints that her salary and rank were lower than those
of her male counterparts “right up to the day of the filing of her complaint and presumably until

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the present day” made dismissal of her complaint on statute of limitations grounds
“inappropriate”. Id. at 671. Presumably, Southern Atlantic believes the instant situation to be
analogous. But the citation to Jacobs is unpersuasive. First, it is a Title VII case, not a
whistleblower case, with a different statute of limitations at issue. Second, the plaintiff in Jacobs
– whose pay was allegedly smaller than it should have been due to discrimination – would have
been harmed anew every time she received a paycheck. In this case, there was only one instance
where the School Board was allegedly obligated to return the Bond.
Count I will be dismissed with prejudice.
Count II: First Amendment Retaliation
The School Board argues that First Amendment retaliation claims can only be brought by
government employees or by independent contractors with preexisting business relationships with
the government. Because Southern Atlantic was neither (at least with respect to the Oak Ridge
High School renovation project), it is the School Board’s position that Southern Atlantic cannot
assert a First Amendment Retaliation claim. Southern Atlantic responds that its First Amendment
retaliation claim is based upon actions taken by the School Board in its capacity as a sovereign,
rather than its capacity as an employer. In addition, the law is clear that private citizens may
bring First Amendment retaliation claims. See, e.g., Bennett v. Hendrix, 423 F.3d 1247, 1252
(11th Cir. 2005) (discussing difference between public employment retaliation cases and
retaliation cases involving private citizens).
The School Board also argues that a failure to return a bond cannot constitute retaliation
for purposes of a First Amendment claim, but provides no authority to support this proposition.
To state a retaliation claim ... a plaintiff must establish first, that his
speech or act was constitutionally protected; second, that the
defendant’s retaliatory conduct adversely affected the protected
speech; and third, that there is a causal connection between the

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retaliatory actions and the adverse effect on speech.” Bennett v.
Hendrix, 423 F.3d 1247, 1250 (11th Cir.2005). As to the second
prong, “[a] plaintiff suffers adverse action if the defendant’s
allegedly retaliatory conduct would likely deter a person of ordinary
firmness from the exercise of First Amendment rights.” Id. at 1254.
Thompson v. Hall, 426 Fed. Appx. 855, 859 (11th Cir. 2011). The Court cannot say that, as a
matter of law, the failure to return a bond could never deter a person of ordinary firmness from the
exercise of First Amendment rights.
The School Board further argues that Southern Atlantic’s bid protest cannot constitute
speech on a matter of public concern, and therefore be subject to First Amendment protection,
because it was made primarily for Southern Atlantic’s benefit, and because the bid protest was
meritless from its inception. These are factual disputes, which are not appropriate for resolution
at this stage of the proceedings.
Count III: Breach of Contract
In Count III, Southern Atlantic argues that the School Board breached the terms of the
Bond by failing to return it at the conclusion of the bid protest. More particularly, Southern
Atlantic argues that every bond creates a tripartite relationship between the obligor, the surety, and
the obligee, and that, because they are contracts, every bond incorporates every Florida law into its
terms, such that the failure to obey even an administrative rule by one of the three parties to the
contract constitutes a breach of that contract. (Doc. 13 at 15-17). Accordingly, the School
Board’s failure to return the Bond at the conclusion of the bid protest as required by Fla. Admin.
Code R. 28-110.005(4) was a breach of the Bond.
Southern Atlantic’s argument goes too far. Under Florida law, bonds and other contracts
do not incorporate every law, just those
existing at the time and place of the making of the contract and
where it is to be performed which may affect its validity,
construction, discharge and enforcement.

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Shavers v. Duval Cnty., 73 So. 2d 684, 689 (Fla. 1954) (emphasis added). The administrative
rule relied on by Southern Atlantic would not affect the validity, construction, discharge, or
enforcement of the Bond and therefore would not have been incorporated into it.
In addition, while surety bonds create a “tripartite relationship” between the parties
involved, Southern Atlantic has not cited any cases permitting an obligor to enforce a bond against
an obligee. At most, the cases cited by Southern Atlantic provide that the obligee cannot alter the
terms of the underlying obligation and then seek to enforce the bond against the surety. See, e.g.,
Matt Howard Bail Bonds v. Escambia County Clerk of Court, 13 So. 3d 109, 111 (Fla. 1st DCA
2009) (where State added additional felony charge and thereby increased risk that defendant
would flee, surety was absolved from liability on bond that had been issued before charge was
added) and see Pennsylvania Nat. Mut. Cas. Ins. Co. v. City of Pine Bluff, 354 F.3d 945, 952 (8th
Cir. 2004) (discussing a “series of federal decisions which support the proposition that a bond
obligee may not increase the surety’s risk or otherwise undermine the surety’s subrogation
rights”). Count III fails as a matter of law and will be dismissed with prejudice.
Count IV – Common Law Indemnity
Southern Atlantic’s claim in Count IV fails for the same reasons that SAE’s claim for
common law indemnity failed: Even assuming that Southern Atlantic has had to make payment
to International Fidelity, any payment is alleged in the FAC to have resulted from the
indemnification agreement between Southern Atlantic and International Fidelity rather than
because of some “special relationship” between Southern Atlantic and the School Board, as
required to state a claim for common law indemnity. Moreover, there is no allegation that the
School Board was obligated to pay International Fidelity’s costs and fees, and therefore any
payment by Southern Atlantic for those costs and fees could not have been based on vicarious,

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constructive, derivative, or technical liability for acts or omissions of the School Board. Count IV
will also be dismissed with prejudice.
Count V – Declaratory Judgment
In Count V of the FAC, Southern Atlantic seeks a declaration that “the Bond was required
to be returned to [Southern Atlantic]” and that the School Board “had a duty to return the Bond
and thus did not have the right to assign the Bond to Wharton-Smith”. According to the
allegations of the FAC, the Bond was returned on December 3, 2014. (FAC at 8). The School
Board argues that the return of the Bond has rendered Count V moot. In making this argument,
the School Board – for reasons the Court cannot discern – discusses the distinction between
returning a copy of a bond and returning an “original” bond. (Doc. 5 at 3). Southern Atlantic
seizes on this discussion to argue that the School Board intends to pursue a claim against the Bond
based on a copy, and therefore Count V is not moot. (Doc. 14 at 20).
After reviewing the motion, it is clear that, contrary to Southern Atlantic’s contention, the
School Board is not suggesting that it intends to pursue a claim against the Bond. Even if the
School Board were making such a suggestion, it would not have any impact on the issue of
whether Count V has become moot. Count V was only concerned with the School Board’s
obligation to return the Bond and its ability to assign it to Wharton-Smith, not its intention to
pursue another claim against it. Count V will be dismissed with prejudice.
IV.

Conclusion

In consideration of the foregoing, it is hereby ORDERED that the motions to dismiss
(Doc. 3, 5) filed by the Defendant, the School Board of Orange County, Florida are GRANTED
IN PART AND DENIED IN PART, as set forth above. Counts I, III, IV and V are

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DISMISSED WITH PREJUDICE as to both parties. Count II is also DISMISSED
WITHPREJUDICE, but only in regard to Southern Atlantic Electric Company, Inc.

DONE and ORDERED in Chambers, Orlando, Florida on May 7, 2015.

Copies furnished to:
Counsel of Record
Unrepresented Party

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