Callaway Marine Technologies, Inc. v. Tetra Tech, Inc. et al

Filing 50

ORDER granting 22 Motion to Dismiss Count III of Amended Complaint. Signed by Judge Darrin P. Gayles on 12/22/2016. (zvr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 16-cv-20855-GAYLES
CALLAWAY MARINE
TECHNOLOGIES, INC.,
Plaintiff,
v.
TETRA TECH, INC., and FIDELITY &
DEPOSIT COMPANY OF MARYLAND,
Defendants.
/
ORDER
THIS CAUSE comes before the Court on Defendant Tetra Tech, Inc.’s (“Tetra Tech”)
Motion to Dismiss Count III of the Amended Complaint [ECF No. 22]. In this action, Plaintiff
Callaway Marine Technologies, Inc. (“Callaway”), brings claims against Tetra Tech for breach
of payment bond, breach of contract, and negligent misrepresentation arising from the performance
of a construction subcontract. 1 In the instant motion, Tetra Tech seeks to dismiss the negligent misrepresentation claim contained in Count III of the Amended Complaint. The Court has carefully
considered the operative complaint, the exhibits attached thereto, the parties’ briefs, and the
applicable law and is otherwise fully advised in the premises. Because the Court finds that
Callaway has failed to allege a tort independent of the breach of contract, the motion to dismiss
Count III shall be granted.
I.

BACKGROUND
According to the allegations in the Amended Complaint, Tetra Tech entered into a sub-

contract with Great Lakes Dredge & Dock Company LLC to perform a scope of work for a con1

Callaway also brings its breach of payment bond claim against Defendant Fidelity Deposit Insurance Company
of Maryland.

struction project in Miami-Dade County known as the Miami Harbor Deepening Phase 3 Project.
Am. Compl. ¶ 7. On August 15, 2013, Tetra Tech entered into a subcontract with Callaway (the
“Subcontract”), later executed on November 15, 2013, under which Callaway would perform a
portion of Tetra Tech’s subcontract work. Id. ¶ 9. Callaway’s scope of work included placing limestone boulders (to be supplied by Tetra Tech) to build up approximately 5.57 acres of low-relief
artificial reef and 3.71 acres of high-relief artificial reef. Id. Tetra Tech’s obligations pursuant to
the Subcontract included the following: supplying rock, including required shop drawings, submittals, approvals, and quality control; supplying a suitable staging area; furnishing a sufficient
quantity of rock at the staging area at all times so as not to cause a delay or suspension of the work;
complying with a Limestone Placement Plan that, among other items, stated that the barge will
transport approximately 800 tons of rock per load; furnishing interim surveys as called for in the
contract documents; and verifying or performing benthic resource surveys of the artificial reef
placement areas to confirm there was no benthic hard-bottom resources inside of reef placement
areas. Id. ¶¶ 11-12.
Callaway’s scope of the rock placement was scheduled to start in the winter months of
2013, when inclement weather can make it prohibitive to work in the water on a consistent basis.
So, in October 2013, the parties agreed on a schedule modification, known as “Mod 1,” to the rock
placement that would allow Callaway, at its option, to potentially shut down work—completely
demobilizing—during winter months for weather considerations if it completed Section 1 of the
project’s three sections within thirty days. Id. ¶ 13. On or about December 24, 2013, Callaway
was issued a notice to proceed and directed to begin work on Section 1, thereby commencing the
thirty-day window. Id. ¶ 14. On December 28th, Callaway informed Tetra Tech of its plan to
continuously proceed with the rock placement, and Tetra Tech responded by thanking Callaway
for the update and stating that it was “look[ing] forward to the initiation and continuation of reef
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construction for as long as the weather permits.” Id. ¶ 15. Thereafter, Callaway incurred significant costs to undertake the labor of continuing the reef construction. Id. ¶ 16. However, as the
project began, Tetra Tech had difficulty suppling sufficient rock to the staging area to allow for
continuous placement of the rock, which hindered Callaway’s ability to be productive on goodweather days. Id. ¶ 17.
Due to the weather conditions, Callaway did not complete Section 1 within thirty days, so
it did not have the option to demobilize for the winter. Id. ¶ 18. As such, it continued with its plan
to continuously place rock as long as weather permitted. Id. However, on February 9, 2014, Tetra
Tech failed to deliver the necessary amount of rock to Callaway. Id. ¶ 19. On February 10th, Tetra
Tech delivered more rock to the staging area; later the same day, Tetra Tech provided written
notice to Callaway ceasing rock placement based on survey data until further notice from Tetra
Tech. Id. ¶¶ 21-22. Callaway believes that a reason for Tetra Tech’s directive to cease rock placement was its inability to supply sufficient quantities of rock. Id. ¶ 28.
On February 20, 2014—the tenth day of work stoppage—Callaway notified Tetra Tech of
its intention to send the crew home and move the tug offsite to mitigate costs if work could not
resume shortly thereafter. Id. ¶ 30. Work was not authorized to resume until seventy-six days later—
on or about April 27th—and “really did not start” until June 18th, when Tetra Tech resumed
delivering rock to the staging area. Id. ¶¶ 35-36. Around May 23rd, Callaway detected hard-bottom
resources in the reef site that Tetra Tech was responsible for verifying or surveying, and went on
standby as a result until June 16th. Id. ¶¶ 37-39. The struggle to make progress continued through
September, October, and November of that year, during which Tetra Tech was again unable to
supply sufficient amounts of rock to the staging area. Id. ¶¶ 40-41. Callaway completed demobilizing from the site on or around November 25, 2014. Id. ¶ 42.
Callaway filed this action on March 9, 2016, and amended its complaint on May 19th. It
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asserts three claims against Tetra Tech: breach of payment bond, breach of contract, and negligent
misrepresentation. In support of its negligent misrepresentation claim, Callaway alleges that Tetra
Tech—specifically, Eric Dohner 2—made the following four false statements of material fact to
Callaway—specifically, Charles Callaway: 3
(1)

that Callaway would be allowed to place rock in the artificial reef placement areas
continuously and that Callaway, at its option, could elect to fully demobilize in order
to mitigate costs if it timely completed Section 1 if prolonged inclement winter weather
did not efficiently, timely, and safely allow for rock placement;

(2)

that Tetra Tech would supply sufficient quantity of rock per day since Callaway was
required to furnish a barge capable of transporting 800 tons of rock per load;

(3)

that Tetra Tech understood the methodology for how rocks would be surveyed for the
designated high-relief reef locations and low-relief reef locations; and

(4)

that Tetra Tech verified or had performed all surveys required to ensure the protection of benthic resources in the artificial reef placement areas.

Id. ¶ 62. Callaway alleges that Tetra Tech knew these representations were false, made the misrepresentations without knowledge of their truth or falsity, or should have known the representations were false because (1) Tetra Tech did not allow Callaway to continuously place rock and
instead unilaterally, unreasonably, and arbitrarily ceased rock placement because it did not understand survey data and could not furnish sufficient rock; (2) Tetra Tech never furnished sufficient
quantities of rock notwithstanding Callaway furnishing a barge capable of transporting approxi2

The Amended Complaint contains no information about Eric Dohner other than his name; it is silent about his
relationship to Tetra Tech. Through a review of the exhibits attached to the Complaint, however, the Court found
email correspondence from Dohner sent during the relevant time period in which he identifies himself as “Director,
Resource Management” of Tetra Tech. See Am. Compl. Ex. C at 1.

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The Amended Complaint also contains no information about Charles Callaway other than his name, and is similarly
silent about his relationship to Callaway Marine Technologies, Inc. The Court was able to find email correspondence
from Charles Callaway sent during the relevant time period in which he identifies himself as the president of Callaway Marine Technologies, Inc. See Am. Compl. Ex. C at 3.

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mately 800 tons of rock per load; and (3) Tetra Tech did not verify or have performed the Benthic
Mapping Survey since work had to stop due to concerns over locations where rock was designated
to be placed. Id. ¶ 63.
Tetra Tech filed the instant motion to dismiss the negligent misrepresentation claim on
June 8, 2016. It advances three principal arguments in favor of dismissal: first, that Callaway failed
to allege a tort independent of the alleged breach of contract; second, that Callaway’s reliance on
the alleged misrepresentations, if any, was unreasonable; and third, that Callaway has failed to plead
negligent misrepresentation with particularity as required by Rule 9(b) of the Federal Rules of
Civil Procedure. Callaway opposes the motion.
II.

LEGAL STANDARD
To survive a motion to dismiss brought pursuant to Federal Rule of Civil Procedure

12(b)(6), a claim “must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face,’” meaning that it must contain “factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). While a court must accept well-pleaded factual allegations as true, “conclusory allegations . . . are not entitled to an assumption of truth—legal conclusions must be supported by factual
allegations.” Randall v. Scott, 610 F.3d 701, 709-10 (11th Cir. 2010). “[T]he pleadings are construed broadly,” Levine v. World Fin. Network Nat’l Bank, 437 F.3d 1118, 1120 (11th Cir. 2006),
and the allegations in the complaint are viewed in the light most favorable to the plaintiff, Bishop
v. Ross Earle & Bonan, P.A., 817 F.3d 1268, 1270 (11th Cir. 2016). At bottom, the question is not
whether the claimant “will ultimately prevail . . . but whether his complaint [is] sufficient to cross
the federal court’s threshold.” Skinner v. Switzer, 562 U.S. 521, 530 (2011).

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III.

DISCUSSION
Tetra Tech argues that Callaway’s negligent misrepresentation claim is barred under Flori-

da’s “independent tort rule.” In its claim, Callaway alleges that Tetra Tech breached a duty in tort
by making statements that Tetra Tech either knew were false, was without knowledge of their
truth or falsity, or should have known were false. That said, Callaway and Tetra Tech were in
contractual privity by virtue of the Subcontract between them that gives rise to this action.
Recently, in Tiara Condominium Ass’n, Inc. v. Marsh & McLennan Cos., 110 So. 3d 399
(Fla. 2013), the Florida Supreme Court limited the application of the economic loss rule, “a judicially created doctrine that sets forth the circumstances under which a tort action is prohibited if
the only damages suffered are economic losses,” to only cases involving products liability. In other
words, Tiara instructs that courts should no longer consider the economic loss rule in cases where
the parties are in contractual privity, such as the case here. However, in a concurring opinion to
the Tiara decision, Justice Pariente explained:
Basic common law principles already restrict the remedies available to parties who
have specifically negotiated for those remedies, and . . . our clarification of the
economic loss rule’s applicability does nothing to alter these common law concepts.
For example, in order to bring a valid tort claim, a party must still demonstrate that
all of the required elements for the cause of action are satisfied, including that the
tort is independent of any independent breach of contract.
Tiara, 110 So. 3d at 408 (Pariente, J., concurring). In the wake of Tiara, the Eleventh Circuit noted
that “[w]hile the exact contours of this possible separate limitation, as applied post-Tiara, are still
unclear, the standard appears to be that ‘where a breach of contract is combined with some other
conduct amounting to an independent tort, the breach can be considered negligence.’” Lamm v.
State St. Bank & Trust, 749 F.3d 938, 947 (11th Cir. 2014) (quoting U.S. Fire Ins. Co. v. ADT Sec.
Servs., Inc., 134 So. 3d 477, 480 (Fla. 2d DCA 2013)). Courts in this District have continually
followed the interpretation of Tiara suggested by the Eleventh Circuit in Lamm. See, e.g., Burdick

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v. Bank of Am., N.A., 99 F. Supp. 2d 1372, 1378 (“[T]he alleged duty [element of a negligence
claim] cannot stem from a contractual relationship between the parties. . . . To bring a negligence
claim under Florida law, a party must demonstrate that ‘the tort is independent of any breach of
contract claim.’” (quoting Tiara, 110 So. 3d at 408 (Pariente, J., concurring))); Kaye v. Ingenio,
Filale de Loto-Que., Inc., No. 13-61687, 2014 WL 2215770, at *4 (S.D. Fla. May 29, 2014) (“[T]o
set forth a claim in tort between parties in contractual privity, a party must allege action beyond
and independent of breach of contract that amounts to an independent tort.”); Altenel, Inc. v.
Millennium Partners, L.L.C., 947 F. Supp. 2d 1357, 1369 (S.D. Fla. 2013) (“While the economic
loss doctrine may no longer apply outside the product liability context, Justice Pariente’s concurring opinion in the Tiara Condominium Association case makes clear that the ruling does not disturb the landscape of contract law . . . .”).
In Kaye, for instance, the plaintiff assigned all rights, title, and interest in his patents for a
new method of playing interactive lottery games to the defendant company, Ingenio, which in
turn licensed the patents back to an entity owned by the plaintiff. 2014 WL 2215770 at *1. The
license agreement gave the plaintiff the right to prosecute all infringements of the patents if Ingenio
decided not to do so itself. Id. However, when widespread infringement was discovered and the
plaintiff sought to prosecute the suspected infringers, Ingenio began making “allegedly preposterous demands” so as to block the plaintiff from bringing his claims. Id. at *2-3. The plaintiff
filed suit bringing claims including fraud in the inducement, alleging that Ingenio never intended
the plaintiff or his companies to exercise their right to pursue infringers. Id. at *3. In dismissing
the plaintiff’s fraudulent inducement claim as barred by the independent tort rule, then–District
Judge Rosenbaum explained that “the fact that the economic-loss rule [no longer applies] to cases
where the parties are in contractual privity does not mean that parties in contractual privity may
recast causes of action that are otherwise breach-of-contract claims as tort claims.” Id. at *4. She
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found that the fraudulent misrepresentation alleged by the plaintiff (that Ingenio would allow him
to prosecute infringers) was a right “specifically embodied” in the parties’ license agreement. Id.
at *5. Based on that, she concluded that the plaintiff had not alleged action beyond breach of contract and amounting to an independent tort, because “[w]hile the initial promise may have been
fraudulent, the terms of the purported fraud were memorialized in the License Agreement. As a
result, any failure to comply with those terms results in an action for breach of contract.” Id.
The Court is persuaded by the analysis in Kaye. Callaway has, like the plaintiff in Kaye,
failed to allege conduct that is independent of a breach of contract amounting to an independent
tort. Each of the allegedly fraudulent statements advanced by Tetra Tech touches on subject matters that were later reduced to writing in the Subcontract.
First, the project’s construction schedule (and proposed modifications thereto) is memorialized in Exhibit E of the Subcontract, see Am. Compl. ¶ 13; see also Am. Compl. Ex. B at 52, so
Tetra Tech’s alleged failure to abide by that schedule is a breach of contract, not an independent
tort. Thus, the alleged fraudulent statement by Tetra Tech concerning the construction schedule—
which was later memorialized in the Subcontract—does not give rise to a cause of action sounding
in tort.
Second, article 4, section 8 of the Subcontract delineates Callaway’s avenue for recourse
in the event Tetra Tech “fail[ed] to procure and supply sufficient rock to the staging area [if] this
failure impacts [Callaway]’s ability to meet the scheduling requirements of the project.” See Am.
Compl. Ex. B. at 4. Callaway alleges in its breach of contract claim that Tetra Tech “materially
breached the Subcontract through its failure to perform its contractual obligations,” including its
obligation to procure and supply sufficient rock. Am. Compl. ¶ 55. Tetra Tech’s statement in
advance of the execution of the Subcontract, that it “would supply sufficient quantity of rock,” id.

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¶ 62—again, the precise promise later memorialized in the Subcontract—is not conduct independent
of the alleged breach of the Subcontract.
Third, Exhibit A of the Subcontract provided for interim surveys of both high-relief and
low-relief reef locations by Tetra Tech. See Am. Compl. Ex. B at 11. If Tetra Tech somehow misunderstood the methodology of those surveys, and that misunderstanding resulted in damage to
Callaway, Callaway’s proper recourse lies in breach of contract, not tort. Tetra Tech’s alleged precontractual statement that it did understand the survey methodologies is not conduct independent
of a breach.
And fourth, Callaway alleges that Tetra Tech was required by the Subcontract to “verify
and/or have performed benthic resource surveys of the artificial reef placement areas to confirm
there was no benthic hard-bottom resources inside of reef placement areas.” Am. Compl. ¶ 12.
Callaway also alleges that Tetra Tech “materially breached the Subcontract” by failing to perform
this obligation. Id. ¶ 55. Tetra Tech’s allegedly fraudulent statement that it “verified or had performed all surveys required to ensure the protection of benthic resources in the artificial reef
placement areas,” id. ¶ 62, is also not conduct independent of the alleged breach of contract, but
rather merely a statement that was eventually reduced to a contractual obligation.
Callaway’s contention that the fact that pre-contractual statements were made necessarily
transforms those statements into actions independent of the contract is a nonstarter. See, e.g., B&G
Aventura, LLC v. G-Side Ltd. P’ship, 97 So. 3d 308, 309-10 (Fla. 3d DCA 2012) (concluding that a
plaintiff’s fraudulent inducement claim “fails as a matter of law because the alleged oral misrepresentations are adequately covered or expressly contradicted in a later written contract” (quoting
Hillcrest Pac. Corp. v. Yamamura, 727 So. 2d 1053, 1056 (Fla. 4th DCA 1999))). Callaway’s position, in essence, is that Tetra Tech stated it could perform the duties later memorialized in the Subcontract and then did not perform those duties. As Kaye makes clear, alleging an independent tort
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requires allegations “beyond and independent of breach of contract.” 2014 WL 2215770, at *4
(emphasis added). Callaway’s arguments are not sufficient to circumvent the independent tort
rule—if they were, negligent misrepresentation claims would simply collapse into breach of contract claims, as the allegations giving rise to both claims would be identical.
The Court finds that because the purported pre-contract negligent misrepresentations were
each incorporated into the Subcontract (as acknowledged by Callaway), Callaway has not alleged
tortious conduct beyond and independent of the alleged breach of the Subcontract. Accordingly,
Callaway’s negligent misrepresentation claims are, therefore, barred under the independent tort
rule. 4
IV.

CONCLUSION
Based on the foregoing, it is ORDERED AND ADJUDGED that the Defendant’s Partial

Motion to Dismiss [ECF No. 22] is GRANTED. Count III of the Amended Complaint [ECF No.
13] is DISMISSED WITH PREJUDICE.
DONE AND ORDERED in Chambers at Miami, Florida, this 22nd day of December, 2016.

________________________________
DARRIN P. GAYLES
UNITED STATES DISTRICT JUDGE

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Given that the Court’s conclusion on this issue is dispositive of the instant motion, it need not address any of Tetra
Tech’s other arguments in favor of dismissal.

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