Keymel Technologies, LLC v. Zurich North America Insurance Company et al

Filing 15

ORDER AND REASON granting 12 Motion to Dismiss claims against defendant, Zurich North America Insurance Company with prejudice. Signed by Judge Stanwood R. Duval, Jr on 12/30/2013. (swd, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

KEYMEL TECHNOLOGIES, LLC
VERSUS

CIVIL ACTION
NO. 13-3004

ZURICH NORTH AMERICA
INSURANCE COMPANY, ET AL

SECTION “K”(4)

ORDER AND REASONS
Before the Court is a Motion to Dismiss filed by the defendant, Zurich North America
Insurance Company. (Rec. Doc. 12). Having reviewed the pleadings, memorandum, and
relevant law, the Court GRANTS the defendant’s Motion to Dismiss for the following reasons.
I.

BACKGROUND
In its complaint, plaintiff alleges the following facts. Plaintiff Keymel Technologies,

LLC (“Keymel”) entered into an employment contract on April 15, 2010 with defendants
Benetech, LLC (“Benetech”) and Aaron Bennett (“Bennett”), whereby Keymel would provide
materials (sand, clay, limestone, concrete, and asphalt) to a project site owned by the United
States Army Corps of Engineers. (Rec. Doc. 12, at 1; Rec. Doc. 1, at 2). Keymel provided
materials as per the contract until March 3, 2011. (Rec. Doc. 1, at 3). Afterward, Keymel made
demands seeking payment on the balance owed by defendants Benetech and Bennett, but
Keymel did not receive the full amount requested in the demands. (Rec. Doc. 1, at 3). Keymel
then filed suit to recover the unpaid amount from defendants Benetech, Bennett, and Zurich
North America Insurance Company (“Zurich”), Benetech’s surety. (Rec. Doc. 1, at 1-2).
Plaintiff Keymel initially brought an action in the Louisiana State Civil District Court for
the Parish of Orleans on January 4, 2012. (Rec. Doc. 14, at 2). On July 20, 2012, the state court

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granted Zurich’s exception of lack of subject matter jurisdiction, dismissing the suit from state
court. On May 28, 2013, plaintiff Keymel filed the instant matter with this Court. Plaintiff
Keymel asserts its claim under the Miller Act, 40 U.S.C. § 3131 and alleges jurisdiction pursuant
to 28 U.S.C. § 1332. However, defendant Zurich in its motion to dismiss contends that the
plaintiff failed to bring this action timely under 40 U.S.C. § 3133(b)(4), and, therefore, the suit
should be dismissed. Though defendant Zurich makes no mention of the applicable rule, the
Court infers that the defendant intended its motion to dismiss to be asserted under Rule 12(b)(6)
as its claim was not asserted in an answer as an affirmative defense.
II.

LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) permits a defendant to seek dismissal of a

complaint based on the “failure to state a claim upon which relief can be granted.” When
considering a motion to dismiss under Rule 12(b)(6), district courts should construe the
complaint liberally in favor of the plaintiff, assuming all factual allegations to be true and
resolving any ambiguities and doubts in favor of the plaintiff. Fernandez-Montes v. Allied Pilots
Ass'n., 987 F.2d 278, 284 (5th Cir.1993); see Leleux v. United States, 178 F.3d 750, 754 (5th
Cir.1999). A complaint may not be dismissed “unless it appears beyond doubt that the plaintiff
can prove no set of facts in support of his claim which would entitle him to relief.” Id. (quoting
Lowrey v. Texas A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir.1997)); Leffall v. Dallas
Independent School District, 28 F.3d 521, 524 (5th Cir.1994); Fernandez-Montes, 987 F.2d at
284-85. Conclusory allegations or legal conclusions masquerading as factual conclusions will
not suffice to prevent a motion to dismiss. Fernandez-Montes, 987 F.2d at 284; Tuchman v. DSC
Communications Corp., 14 F.3d 1061, 1067 (5th Cir.1994). However, if factual allegations
show the running of a statute of limitations, it “may support dismissal under Rule 12(b)(6) where

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it is evident from the plaintiff’s pleadings that the action is barred and the pleadings fail to raise
some basis for tolling or the like.” Jones v. Alcoa, Inc., 339 F.3d 359, 366 (5th Cir. 2003).

III.

ANALYSIS
The Miller Act, 40 U.S.C. § 3131 et seq., requires a contractor on a project involving any

public building or public work of the Federal Government to post a performance bond, for the
protection of the Government, and a payment bond “for the protection of all persons supplying
labor and material in carrying out the work provided for in the contract.” 40 U.S.C. § 3131(a) &
(b). Thus, “[a]ny person who has supplied labor or material on the project may bring a civil
action on the payment bond against the contractor.” U.S. ex rel. Air Control Technologies, Inc.
v. Pre Con Industries, Inc., 720 F.3d 1174 (9th Cir. 2013); 40 U.S.C. § 3133(b)(4). However,
the Miller Act provides a limitation on this right: “An action brought under this subsection must
be brought no later than one year after the day on which the last of the labor was performed or
material was supplied by the person bringing the action.” 40 U.S.C. § 3133(b)(4) (emphasis
added).
Defendant Zurich contends that plaintiff Keymel did not file suit timely under the Miller
Act’s statute of limitations. Both parties agree that March 3, 2011 was the day on which the last
of the labor was performed. (Rec. Doc. 1, at 3; Rec. Doc. 12, at 2). Because the plaintiff
delivered no materials after March 3, 2011, and the Complaint was filed nearly two and a half
years after that date on May 28, 2013, defendant Zurich asserts that the suit should be dismissed.
(Rec. Doc. 12, at 2-3).
Plaintiff Keymel contends, however, that the action is not time-barred. Keymel notes that
it filed its action in Louisiana state court within the one-year prescriptive period under Louisiana

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law, commencing on March 3, 2011, the date work was last performed. (Rec. Doc. 14, at 2). It
contends that the prescriptive period was interrupted under Louisiana state law due to the filing
of suit in state court, and thus the one-year prescriptive period commenced again running from
July 20, 2012. (Rec. Doc. 14, at 2-3; see La. Civ. Code Art. 3463, 3466). Because the suit was
filed within that one year period expiring July 20, 2013, plaintiff asserts that the action is timely.
(Rec. Doc. 14, at 2). Moreover, the plaintiff contends that it waited until March 28, 2013 to file
the suit in the United States Eastern District Court for the Eastern District of Louisiana, as
plaintiff believed “in good faith” that the Orleans Parish court would transfer the suit to the
Eastern District Court of Louisiana pursuant to the state court’s Order stating: “IT IS FURTHER
ORDERED that Plaintiff’s lawsuit be transferred to the U.S. District Court for the Eastern
District of Louisiana at Plaintiff’s cost.” (Rec. Doc. 14, at 3). Only when plaintiff realized that
the Civil District Court Clerk for the Parish of Orleans could not transfer the suit did plaintiff file
its Complaint with this Court. (Rec. Doc. 14, at 3).
By its terms, the Miller Act’s statute of limitations period is clear: actions that are
brought later than one year after the last day on which the last of the labor was performed or
material was supplied are barred. Keymel does not contest that March 3, 2011 was the day on
which the last of performance under the contract nor does it contest the fact that it filed suit in
this Court on May 28, 2013. Applied strictly, the Miller Act’s statute of limitations bars the
instant action.
Moreover, Keymel’s argument that Louisiana law has interrupted the running of the
Miller Act statute of limitations is inapposite. As the Fifth Circuit has stated, because “the rights
created by the Miller Act are federal in nature and scope [,] federal law controls the computation

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of the limitations period.” U. S. For Use & Ben. of Harvey Gulf Int'l Marine, Inc. v. Maryland
Cas. Co., 573 F.2d 245, 247 (5th Cir. 1978).
The Fifth Circuit has interpreted the Miller Act’s statute of limitation to be
“jurisdictional.” See, e.g., Maryland Cas. Co., 573 F.2d at 247; U.S. For Use & Benefit of
Bernard Lumber Co., Inc. v. Lanier-Gervais Corp., 896 F.2d 162, 164 (5th Cir. 1990). However,
the Fifth Circuit in United States v. Fidelity & Deposit Co. of Maryland clarified that “to the
extent that the word ‘jurisdictional’ is used in those [earlier] cases, it refers to the conditional
nature of the right to sue, not to the jurisdiction of the court itself.” 813 F.2d 697, 699 (5th Cir.
1987); see U.S. For Use & Benefit of Bernard Lumber Co., Inc. v. Lanier-Gervais Corp., 896
F.2d 162, 164 (5th Cir. 1990) (noting that the term jurisdictional as applied to the Miller Act
statute of limitations was a misnomer). Indeed, it is clear that the Fifth Circuit and other courts
consider the Miller Act statute of limitations to be “limitational” or a “claim-processing rule,”
that promotes orderly progress of litigation by requiring certain procedural steps at certain times,
rather than a jurisdictional rule. U.S. for Use of Am. Bank v.C.I.T. Const. Inc. of Texas, 944 F.2d
253, 257 (5th Cir. 1991) (“The one-year period in the Miller Act is limitational, not
jurisdictional.”); accord Pre Con Industries, Inc., 720 F.3d at 1176-77 (“A proper analysis of the
Miller Act’s statute of limitations makes clear that it is a claim-processing rule, not a
jurisdictional requirement.”). As such, the statute of limitations may be subject to modification
under equitable estoppel or equitable tolling. See Rhodes v. Guiberson Oil Tools Div., 927 F.2d
876, 878 (5th Cir. 1991); Fid. & Deposit Co. of Maryland 813 F.2d 697, 700 (5th Cir. 1987).

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Generally, the doctrine of equitable estoppel applies to “any conduct, express or implied,
which reasonably misleads another to his prejudice so that a repudiation of such conduct would
be unjust in the eyes of the law. It is grounded . . . on the objective impression created by the
actor’s conduct.” Morgan v. Thomas, 448 F.2d 1356, 1365 (5th Cir.1971) (quoting Matsuo
Yoshida v. Liberty Mut. Ins. Co., 240 F.2d 824, 829–30 (9th Cir.1957)). The Fifth Circuit
considers “equitable estoppel” separately from “equitable tolling” by focusing on the specific
actor:
Several courts, including the Supreme Court in Irwin, have used the terms “equitable
tolling” and “equitable estoppel” interchangeably. This Circuit, however, has joined
several others in distinguishing between the two doctrines. In Rhodes, we explained this
distinction by noting that equitable tolling focuses on the plaintiff’s excusable ignorance
of the facts underlying the suit, while equitable estoppel focuses on the defendant’s
misrepresentation of concealment of the facts underlying the suit. The instant case, which
involves plaintiffs being lulled into not filing suit by the RTC's false statements, involves
equitable estoppel, not equitable tolling.
McAllister v. F.D.I.C., 87 F.3d 762, 767, n.4 (5th Cir. 1996) (citations omitted). The Fifth
Circuit addressed the issue of whether a state court filing during the one-year period after work
was performed would toll the Miller Act statute of limitations and in Maryland Cas. Co
suggested that because the rights under the Miller Act are federal in nature, “[i]n principle . . . the
filing of a suit in a non-federal jurisdiction does not toll the statute.” 573 F.2d at 247. Whether
filing a suit in state court may equitably estop the defense from relying on the statute of
limitations defense against a Miller Act plaintiff who files first in state court appears, however,
to remain an open question in the Fifth Circuit. See U.S. ex rel. United Rentals, Inc. v. Hartford
Fire Ins. Co., 339 F.Supp.2d 799 (2004).
Though Plaintiff Keymel has not argued for an equitable extension of the statute of
limitations, the Court notes that, under the facts alleged in plaintiff’s Complaint, the
circumstances do not appear to warrant equitable estoppel or tolling. The doctrines of equitable
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estoppel and equitable tolling are discretionary and turn upon the facts and circumstances of the
particular case. See Fisher v. Johnson, 174 F.3d 710, 713 (5th Cir.1999). No facts indicate that
the defendant attempted to actively mislead or prevent the plaintiff from bringing the cause of
action. Further, while the plaintiff’s failure to file suit in federal court before the one-year
limitation might be due to an error in “good faith,” the Supreme Court has found that that “a
garden variety claim of excusable neglect, such as a simple miscalculation that leads a lawyer to
miss a filing deadline, does not warrant equitable tolling.” Holland v. Florida, 560 U.S. 631, 130
S. Ct. 2549, 2564, 177 L. Ed. 2d 130 (2010) (internal quotations and citations omitted). Though
it is regrettable that the action could have been filed in federal court during the one-year time
period, no facts allude to any lack of knowledge or means of acquiring knowledge that the Miller
Act applied in this case. Given the absence of facts warranting equitable extension, an equitable
remedy would not be warranted. Without deciding whether the Court must consider and apply
these equitable considerations, the Court notes that even if relief was requested it may refuse “to
exercise its equitable discretion to toll.” Teemac v. Henderson, 298 F.3d 452, 456 (5th Cir.
2002).

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IV.

CONCLUSION
In sum, the plaintiff’s claims have been barred by the running of the statute of limitations

under the Miller Act. Accordingly,
IT IS ORDERED that the defendant Zurich’s Motion to Dismiss (Rec. Doc. 12) is
hereby GRANTED and plaintiff Keymel’s Miller Act claim is DISMISSED WITH
PREJUDICE.
Hello This is a Test

December
30th
New Orleans, Louisiana, this ______ day of ____________________, 2013.

_________________________________________
STANWOOD R. DUVAL, JR.
UNITED STATES DISTRICT COURT JUDGE

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