J.C. Penney Properties, Inc. et al v. Hiram LL, LLC et al

Filing 98

ORDER granting Defendant Benning Construction Company's re 59 Partial MOTION to Dismiss First Amended Complaint. Accordingly, Counts 8 and 9 of Plaintiffs' First Amended Complaint 48 with respect to Benning are DISMISSED with prejudice. Signed by Judge Clarence Cooper on 1/25/2016. (cem)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
J. C. PENNEY PROPERTIES, INC.,
and J.C. PENNEY CORPORATION
INC.
Plaintiffs
vs.
HIRAM LL, LLC, EBERLY &
ASSOCIATES, INC., BENNING
CONSTRUCTION COMPANY, and
PLATEAU EXCAVATION, INC.,
Defendants

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CIVIL ACTION NO.
1:13-CV-02984-CC

OPINION AND ORDER
This matter is before the Court on Defendant Benning Construction
Company’s Partial Motion to Dismiss First Amended Complaint (“the Motion”)
[Doc. No. 59]. On November 23, 2015, this Court held a hearing on the Motion and
issued an oral ruling from the bench. Consistent with the factual and legal basis
articulated by the Court for that ruling, the Court now enters this written Opinion
and Order granting Defendant Benning’s Motion and dismissing with prejudice
Counts 8 and 9 of Plaintiff’s First Amended Complaint [Doc. No. 48] with respect
to Defendant Benning Construction Company.
I.

BACKGROUND
On September 6, 2013, Plaintiff J. C. Penney Properties, Inc. and Plaintiff J.C.

Penney Corporation Inc. (collectively referred to as “Plaintiffs”) filed a complaint
[Doc. No. 1] against Defendant Hiram LL, LLC (“Hiram”) and Defendant Eberly &
Associates, Inc. (“Eberly”).

On April 7, 2015, Plaintiffs then filed their First

Amended Complaint [Doc. No. 48] to include claims against Defendant Benning
Construction Company (“Benning”) and Defendant Plateau Excavation, Inc.
(“Plateau”). On May 29, 2015, Benning subsequently filed its Answer [Doc. No. 57].

It then moved to dismiss two counts of Plaintiff's First Amended Complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6): (1) Count 9 - Plaintiffs' Third
Party Beneficiary Claim Against Benning; and (2) Count 8 - Plaintiffs' Attorney's
Fees Claim Against Defendants Under O.C.G.A. § 13-6-11 with respect to Benning.
Plaintiffs First Amended Complaint seeks damages and other relief in
connection with the September 2009 flooding of a J.C. Penney retail store. (See
generally Doc. No. 48.) In January 2008, Hiram leased property to Plaintiff J.C.
Penney Properties, Inc. for the construction and operation of a J.C. Penney retail
store located at 5043 Jimmy Lee Smith Parkway in Hiram, Georgia. (See id. at 4.)
Under the lease, Hiram was required “to design and construct certain improvements
on the Premises.” (Id. at 5.) Based on plans and specifications prepared by Eberly
and pursuant to a written construction contract between Hiram and Benning,
Benning was hired by Hiram to construct the site on which Plaintiffs planned to
build their retail store (“the Premises”). (See id. at 6-7.) The contract is based upon
two AIA form contracts: (1) the AIA A101 Standard Agreement (“Standard
Agreement”) and (2) the AIA A201 General Conditions (“General Conditions”)
(hereinafter collectively referred to as “the Contract”)1. (Doc. Nos. 59-2, 59-3, 69 at
5.)
Plaintiffs have asserted a breach of contract claim and related claim for
attorney’s fees against Benning for allegedly failing to ensure that fabric inserts were
removed from all of the stormwater drain inlets on the Premises in a timely manner.
(See Doc. No. 48 at 22.) Plaintiffs allege that they are “intended third party
beneficiaries” of the Contract and that Benning is liable for all damages caused by
the fabric inserts that “remained inside drain inlets on the Premises when flooding
occurred on September 20, 2009.” (See id. at 22-23.)
On May 29, 2015, Benning filed its Partial Motion to Dismiss First Amended

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Plaintiffs are not signatories to the contract between Hiram and Benning.
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Complaint. Plaintiffs filed a response in opposition to the Motion on July 1, 2015,
and Hiram subsequently filed its response on July 2, 2015. Benning filed its replies
on July 15, 2015, and July 16, 2015. On November 23, 2015, the parties presented oral
argument on the Motion before this Court. The Court subsequently ruled in favor
of Benning and granted the Motion. (See Doc. No. 94.)
II.

STANDARD OF REVIEW
Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may seek to

dismiss a complaint for failure to state a claim upon which relief can be granted.
While detailed factual allegations are not required in order to withstand a motion
to dismiss under Rule 12(b)(6), “a plaintiff’s obligation to provide the ‘grounds’ of
his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (citation omitted). The complaint must allege
facts sufficient “to raise a right to relief above the speculative level.” Id. “In
evaluating such a motion, [the court] accept[s] the factual allegations in the
complaint as true and . . . construe[s] them in the light most favorable to the
plaintiff.” 75 Acres, L.L.C. v. Miami-Dade Cnty., 338 F.3d 1288, 1293 (11th Cir. 2003)
(citing Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003)). The Court evaluates the
plausibility of the grounds pleaded in support of the claims for relief, rather than
either their possibility or probability. See Twombly, 550 U.S. at 555-57.
A court evaluating a Rule 12(b)(6) motion may not consider matters outside
the pleadings unless the court treats the motion to dismiss as a motion for summary
judgment under Federal Rule of Civil Procedure 56 and gives all parties “reasonable
opportunity to present all material made pertinent to such a motion by Rule 56.”
Fed. R. Civ. P. 12(d). On the other hand, a court can consider documents beyond the
pleadings “in cases in which a plaintiff refers to a document in its complaint, the
document is central to its claim, its contents are not in dispute, and the defendant
attaches the document to its motion to dismiss.” Fin. Sec. Assur., Inc. v. Stephens,
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Inc., 500 F.3d 1276, 1284 (11th Cir. 2007).
III.

DISCUSSION
As a preliminary matter, the Court rejects Plaintiffs’ request to convert

Benning’s Motion into a motion for summary judgment. Plaintiffs argue that the
Court “must examine documents outside the pleadings to rule on the motion,”
namely the Contract attached to the Motion. (See Doc. No. 69 at 1.) Thus, Plaintiffs
argue that the Court should convert the Motion to Dismiss into a motion for
summary judgment under Federal Rule of Civil Procedure 12(d) and that the Court
should consider additional documents allegedly incorporated into the Contract by
reference.
The Court finds that the Contract may be considered in ruling on the Motion
without converting the Motion to one for summary judgment, as Plaintiffs assert a
breach of contract claim, the Contract is incorporated by reference in the First
Amended Complaint [Doc. No. 48 at 21-23], and the Contract is the subject of
Benning’s arguments in the Motion regarding whether Plaintiffs were intended
third-party beneficiaries of the Contract. While Plaintiffs argue that the Contract is
incomplete because it does not attach other drawings or performance obligations
allegedly incorporated by reference in the Contract, there is no dispute between the
parties regarding the core documents that comprise the Contract [see Doc. Nos. 59-2,
59-3, 69 at 6]. The Court concludes that the additional documents presented by
Plaintiffs are not incorporated into the Contract by reference. In addition, Plaintiffs
notably did not rely on these other documents in their written opposition to the
Motion and did not attach these documents to their opposition brief. Therefore,
only the Contract, as attached to the Motion, will be considered in resolving the
Motion. The additional documents upon which Plaintiffs seek to rely will not be
considered, and the Court will be considering this Motion as a motion to dismiss.
A.

Motion to Dismiss Third-Party Beneficiary Claim

Benning argues that Plaintiffs’ third-party beneficiary claim should be
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dismissed because Plaintiffs are unable to identify a specific contractual provision
that shows an intent to benefit J.C. Penney as a third party. The Court agrees with
Benning’s argument.
It must be clear from the face of a contract that a third-party beneficiary
relationship was the intention of the contracting parties. Lawson v. Life of the S. Ins.
Co., 648 F.3d 1166, 1171 (11th Cir. 2011). Whether a particular party is an intended
third-party beneficiary of a contract “depends upon the intention of the contracting
parties to benefit the third party, and this intention is determined by a construction
of the contract as a whole.” Am. Fletcher Mortg. Co. v. First Am. Inv. Corp., 463 F.
Supp. 186, 195 (N.D. Ga. 1978). Benning relies on General Conditions Section 1.1.2
of the Contract, which contains language regarding the scope of the contractual
relationships created by the documents and states the following:
The Contract Documents shall not be construed to create a contractual
relationship of any kind (1) between the Architect and Contractor, (2)
between the Owner and Subcontractor or Sub-subcontractor, (3)
between the Owner and Architect or (4) between any persons or entities
other than the Owner and Contractor. The Architect shall, however, be
entitled to performance and enforcement of obligations under the
Contract intended to facilitate performance of the Architect's duties.
(Doc. No. 59-3 at 10). Thus, dismissal of Plaintiffs’ claim is warranted unless
Plaintiffs can identify another specific provision in the contract that demonstrates
an intent to benefit them as third parties. See Estate of Pitts v. City of Atlanta, 323
Ga. App. 70, 84, 746 S.E.2d 698 (2013) (finding that the potential third-party must
demonstrate that "the specific contractual provisions alleged to have been breached"
were intended to benefit it); see also Deal v. Chemical Constr. Co., 99 Ga. App. 413,
417, 108 S.E.2d 746 (1959) ("The rights of a third person to sue on a contract made for
his benefit depend on the terms of the agreement and are no greater than those
granted by the contract as intended by the parties thereto.").
Plaintiffs initially argue that the identification of the “JCP Hiram Project” on
the first page of the Contract [Doc. No. 59-2] evidences an intent to make J.C. Penney
a third-party beneficiary. To the contrary, simply identifying J.C. Penney as a
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potential future occupant of the building pad falls short of expressing a clear intent
to grant Plaintiffs the right to enforce the construction contract.
Plaintiffs also contend that Sections 10.2.1.2 and 10.2.1.3 of the General
Conditions of the Contract demonstrate a clear intent to benefit J.C. Penney and both
were breached by Benning. Section 10.2.1.2 requires Benning to take reasonable
precautions and provide reasonable protection to prevent damage, injury, or loss to
its own work, material, and equipment under its care, custody, or control. Section
10.2.1.3 requires Benning to take reasonable precautions and provide reasonable
protection to prevent damage, injury, or loss to other property at or adjacent to the
work site that is not designated for removal, relocation, or replacement in the course
of construction.
Neither of the sections Plaintiffs point to demonstrate an intent to benefit
Plaintiffs as third-party beneficiaries. The alleged damage at issue in this case did
not occur during the course of Benning’s construction work, and Benning’s work
was no longer under its care, custody, or control at the time the J.C. Penney store
flooded in September 2009. As pleaded in the First Amended Complaint, Benning
had completed its construction work and Plaintiffs' retail store was open for
business at the time the store flooded in September 2009. Thus, the damage that
Plaintiffs allegedly suffered is not the kind of damage that General Conditions
Sections 10.2.1.2 and 10.2.1.3 obligate Benning to guard against.
As Plaintiffs can point to no specific provision in the Contract that
demonstrates an intent to benefit J.C. Penney specifically, the Court finds that
Plaintiffs are not intended third-party beneficiaries. Therefore, Plaintiffs third-party
beneficiary claim must be dismissed.
B.

Motion to Dismiss Attorney’s Fees Claim

Benning argues that Plaintiffs’ claim for attorneys’ fees pursuant to O.C.G.A.
§ 13-6-11 should be dismissed if the Court dismisses Plaintiffs’ third-party
beneficiary claim, as there would be no underlying claim upon which an award of
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attorneys’ fees would be based.
Plaintiffs agreed with Benning at the hearing on the Motion that if Plaintiffs’
underlying third-party beneficiary claim against Benning is dismissed, their claim
for attorney’s fees must be dismissed as well. See United Jewish Cmtys., Inc. V.
Wachovia Bank, N.A., 2011 U.S. Dist. LEXIS 97222, at *6-7 (N.D. Ga. Aug. 29, 2011),
aff’d, 464 Fed. Appx. 861 (11th Cir. 2012) (finding that where a plaintiff’s underlying
claims against a defendant were dismissed, its claim for attorneys’ fees must also
fail). As Plaintiffs’ third-party beneficiary claim must be dismissed, so must
Plaintiffs’ claim for attorneys’ fees.
Finally, in light of the Court’s findings, the Court denies Plaintiffs’ request
that they be granted leave to file an amended complaint within thirty (30) days. The
Court finds that any amendments at this juncture would be futile. Plaintiffs have
already had an opportunity to point to contractual provisions that demonstrate an
intent to benefit them. Further, during oral argument, Plaintiffs’ counsel did not
persuasively argue or convince the Court that the documents Plaintiffs would attach
to an amended complaint would clearly show that J.C. Penney is an intended thirdparty beneficiary of the Contract or that those documents would include specific
contractual provisions intended to benefit J.C. Penney.
IV.

CONCLUSION
For the reasons set forth above, the Court hereby GRANTS Defendant

Benning Construction Company’s Partial Motion to Dismiss First Amended
Complaint [Doc. No. 59]. Accordingly, Counts 8 and 9 of Plaintiffs’ First Amended
Complaint [Doc. No. 48] with respect to Benning are DISMISSED with prejudice.

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SO ORDERED this 25th day of January, 2016.

s/ CLARENCE COOPER
CLARENCE COOPER
SENIOR UNITED STATES DISTRICT JUDGE

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