Siboney Contracting Co. v. Berkley Insurance Company et al

Filing 23

ORDER AND REASONS: IT IS ORDERED that the 7 Motion to Dismiss is GRANTED in Part and DISMISSED in Part, as set forth in document. IT IS FURTHER ORDERED that Berkley's 14 Motion for Leave to File Reply is hereby GRANTED and all proposed pleadings are hereby filed into the record. Signed by Judge Ivan L.R. Lemelle on 2/28/2018. (jls)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SIBONEY CONTRACTING CO.

CIVIL ACTION

VERSUS

NO. 17-9681

BERKLEY INSURANCE CO., ET. AL.

SECTION “B”(4)

ORDER AND REASONS
Before the Court is Defendant Berkley Insurance Company’s
(“Berkley”)

Motion

to

Dismiss

Plaintiff

Siboney

Contracting

Company’s (“Plaintiff”) Miller Act, Federal Prompt Payment Act,
and declaratory judgment claims pursuant to F.R.C.P. 12(b)(6)
(Rec. Doc. 7), Plaintiff’s Response in Opposition (Rec. Doc. 13),
and Berkley’s Motion for Leave to File Reply (Rec. Doc. 14). For
the reasons discussed below,
IT IS ORDERED that the Motion to Dismiss (Rec. Doc. 7) is
GRANTED in Part and DISMISSED in Part;
IT IS FURTHER ORDERED that Berkley’s Motion for Leave to File
Reply (Rec. Doc. 14) is hereby GRANTED and all proposed pleadings
are hereby filed into the record.

Facts and Procedural History
On September 23, 2016, Plaintiff (as subcontractor) entered
into a contract with Defendant Tikigaq Construction, L.L.C. (as
contractor), in which Plaintiff agreed to haul sand to the United
States Army Corps of Engineers project referred to as the WBV-EVM78. Rec. Doc. 1 at 3. Pursuant to the requirements of 40 U.S.C. §
1

3131(b)(2), Tikigaq received a payment bond issued by Berkley to
secure Tikigaq’s payment of its obligations to its subcontractors.
Plaintiff’s alleges that Plaintiff and Tikigaq originally
agreed that Plaintiff would haul the sand at a fixed price of $4.82
per cubic yard. Rec. Doc. 1 at 3. However, prior to Plaintiff’s
commencing performance Tikigaq requested that payment be fixed, in
writing, at the same $4.82 rate, but “by the ton” rather than by
the cubic yard. Id. Plaintiff agreed to this proposal through a
text message conversation with a representative of Tikigaq. Rec.
Doc. 1 at 3-4.
Plaintiff

alleges

that

after

months

of

performing

in

accordance with this arrangement Tikigaq attempted to negotiate a
lower rate for the past rendered performance. Rec. Doc. 1 at 4.
While Plaintiff responded that it would not negotiate the price of
the sand it had already hauled, it would apply a discounted rate
to work performed in the future. Rec. Doc. 1 at 4. Plaintiff
alleges that Tikigaq stopped its payments to Plaintiff immediately
following this discussion, resulting in two unpaid invoices—one
for $29,356.90 billed by the ton and another for $2,287.50 billed
at a rate of $75.00 per hour—totaling $31,644.40. Rec. Doc. 1 at
4.
On May 15, 2017, Plaintiff demanded payment of the outstanding
debt to the U.S. Army Corps of Engineers, Tikigaq, and Berkley
through a Miller Act Notice; Plaintiff states that it received no
response to this notice. Rec. Doc. 1 at 5. Plaintiff then sent a
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demand letter to Berkley on the payment bond on June 23, 2017,
which Berkley acknowledged on June 26, 2017, stating that it would
investigate the claim. Rec. Doc. 1 at 5. On July 17, 2017, Tikigaq
sent a letter alleging that Plaintiff owed it $131,883.60 as a
result

of

overbilling

and

that

it

would

retain

the

disputed

$31,644.41 allegedly owed to Plaintiff as an offset. Rec. Doc. 1
at 5. Berkley adopted Tikigaq’s position on the matter in August
2017.
On September 27, 2017, Plaintiff filed suit against Berkley
and

Tikigaq,

seeking

recovery

of

the

$31,644.41

as

well

as

attorney’s fees under the Miller Act, the federal Prompt Payment
Act, La. R.S. § 9:2781 (Louisiana’s Open Account Statute), La.
R.S. § 9:2784 (Louisiana’s Late Payment by Contractor Law), breach
of

contract,

and

quasi-contract

claims.

Rec.

Doc.

1

at

6-9.

Plaintiff also seeks a declaratory judgment that Tikigaq was not
overbilled

by

Plaintiff,

and

that

Plaintiff

owes

Tikigaq

no

obligations, including reimbursement of money already paid. Rec.
Doc. 1 at 10. Berkley filed an answer to this complaint on December
20, 2017; Tikigaq has yet to respond.
In conjunction with its answer, Berkley filed the instant
motion to dismiss Plaintiff’s Miller Act, federal Prompt Payment
Act, and declaratory judgment claims pursuant to F.R.C.P. 12(b)(6)
on the grounds that Plaintiff has stated no cause of action for
which relief can be granted. Rec. Doc. 7-1.
LAW AND ANALYSIS

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A. Standard for 12(b)(6) Motion
A defendant may move to dismiss a complaint for failure to
state a claim upon which relief can be granted pursuant to rule
12(b)(6) of the Federal Rules of Civil Procedure. The court will
grant a 12(b)(6) motion if the plaintiff “has not set forth a
factual allegation in support of his claim that would entitle him
to relief.” Masonry Sols. Int'l, Inc. v. DWG & Assocs., Inc., 2016
WL 1170149, at *2 (E.D. La. Mar. 25, 2016) (citing Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007)). In order to survive a
12(b)(6) motion, “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Twombly, 550 U.S. at 570).
B. Failure to Bring Miller Act Claim in the Name of the United
States
In its Motion to Dismiss, Berkley alleged that Plaintiff’s
failure to bring its Miller Act claim in the name of the United
States warranted dismissal. Rec. Doc. 7-1 at 3-4. However, as
Berkley recognized in its Reply Memorandum in Support of its Motion
to Dismiss, Plaintiff remedied this issue in its First Amended
Complaint, rendering this issue MOOT. Rec. Doc. 14-2 at 2.

C.

Federal Prompt Payment Act Claim

Paragraph 24 of Plaintiff’s Original Complaint alleges that
Plaintiff is entitled to further recovery from Berkley due to
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Tikigaq’s failure to make timely payments under the federal Prompt
Payment Act, 31 U.S.C. § 3901, et seq. Rec. Doc. 1 at 6. Berkley
contends that the federal Prompt Payment Act does not create a
private right of action and therefore the claims contained in
paragraph 24 should be dismissed for failure to state a claim.
Rec. Doc. 7-1 at 4.
Working in conjunction with the Miller Act, 40 U.S.C. § 3131
et seq., the federal Prompt Payment act “confers additional rights
and duties on federal contractors and subcontractors.” U.S. ex
rel. Cal's A/C & Elec. v. Famous Const. Corp., 220 F.3d 326, 328
(5th Cir. 2000). However, courts have consistently held that the
Act does not create a private right of action in addition to Miller
Act or breach of contract claims. See Masonry Sols. Int'l, Inc. v.
DWG & Assocs., Inc., 2016 WL 1170149, at *4 (E.D. La. Mar. 25,
2016) (“DVA cites several cases expressly holding that [the Federal
Prompt

Payment

action...The

Act]
Court’s

does
own

not

create

research

an

independent

buttresses

cause

that

of

legal

conclusion.”); See also C&H Contracting of MS, LLC v. Lakeshore
Eng'g Servs., Inc., 2007 WL 2461017, at *1 (S.D. Miss. Aug. 24,
2007) (“The few courts addressing the matter have found that there
is no private right of action between contractors under the Prompt
Payment Act.”).
In its Opposition to Berkley’s Motion to Dismiss, Plaintiff
cites the district court ruling in U.S. ex rel. Cal's A/C & Elec.
v. Famous Const. Corp. in support of the proposition that the
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federal Prompt Payment Act provides subcontractors a private right
of action. Rec. Doc. 13 at 3 (citing 34 F. Supp. 2d 1042, 1044
(W.D. La. 1999)). The district court found that the Act “expressly
allows for subcontractors on federal projects to sue for the
awarding of attorney's fees and penalties for late payment or
nonpayment on the payment bond held by the surety” so long as state
law allows such actions. Cal's A/C & Elec., 34 F. Supp. 2d at 1044.
The court ruled that La. R.S. 9:2784, Louisiana’s Late Payment by
Contractor Law, expressly provides for those actions. Id.
Plaintiff’s

reliance

on

this

decision

is

misplaced.

The

district court’s reasoning that the 1988 amendments to the Federal
Prompt Payment Act as an addendum to the Miller Act—providing a
separate avenue for recovery by subcontractors—was rejected by the
Fifth Circuit in its review of the district court’s decision. Cal's
A/C & Elec., 220 F.3d at 328. The Fifth Circuit found that, while
the Miller Act does not expressly incorporate state law remedies
such

as

attorney’s

fees,

it

did

not,

as

the

district

court

reasoned, preclude the pursuit of such state law remedies in
addition to Miller Act claims. Id. at 327. The Court therefore
vacated the district court’s decision and allowed the plaintiff to
pursue attorney’s fees under Louisiana law. Id. at 328.
Because it is well established that the federal Prompt Payment
Act

does

not

confer

an

independent

cause

of

action

to

subcontractors, Tikigaq’s motion to dismiss this claim is GRANTED.
D. Declaratory Judgment

6

Berkley additionally seeks to dismiss Plaintiff’s claims for
declaratory judgments as redundant because they are duplicative of
the Miller Act and breach of contract claims. Rec. Doc. 7-1 at 5.
In response, Plaintiff contends that, assuming the resolution of
its Miller Act claim will require resolution of the accusations of
overcharging

Tikigaq,

the

declaratory

judgment

will

determine

whether it owes any other obligations that may fall outside the
scope of the Miller Act claim. Rec. Doc. 13 at 6.
The Declaratory Judgment Act, 28 U.S.C. § 2201, “[confers] on
federal

courts

unique

and

substantial

discretion

in

deciding

whether to declare the rights of litigants.” Wilton v. Seven Falls
Co., 515 U.S. 277, 286 (1995). A declaratory judgment is not a
substantive cause of action, but rather “a remedy available to a
litigant who can point to an existing right that the Court has
jurisdiction to enforce.” Fisher v. Beers, 2014 WL 3497572, at *4
(E.D. La. July 14, 2014). In Landscape Design & Const., Inc. v.
Transp. Leasing/Contract, the court held that, because the parties
asserted

substantive

determinations

for

claims
which

that

they

placed

sought

at

issue

declaratory

the

same

judgments,

separate declaratory judgments were not necessary and therefore
dismissed them. 2002 WL 257573, at *10 (N.D. Tex. Feb. 19, 2002).
Adjudication of Plaintiff’s Miller Act claim will resolve the
issue of the amount owed pursuant to the sand-hauling contract. In
order to determine whether Plaintiff is entitled to payment under
the contract, the Court will necessarily have to determine whether
7

Plaintiff

owes

overcharged

in

Tikigaq
its

for

the

execution

amount
of

the

it

alleges

contract.

Plaintiff
Therefore,

Plaintiff’s request for a declaration that that it does not owe
any obligation to Tikigaq is duplicative of the determinations to
be made in resolving the Miller Act claim. Because the substantive
claims

at

issue

require

resolution

of

the

same

issues

that

Plaintiff seeks to establish through a declaratory judgment, a
separate

declaration

is

not

necessary.

Therefore,

Defendant’s

motion to dismiss this claim is GRANTED. For the foregoing reasons,
IT IS ORDERED that the Motion to Dismiss is GRANTED in Part,
and DENIED as Moot relative to Miller Act claims.

New Orleans, Louisiana, this 28th day of February, 2018.

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE

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