Norair Engineering Corp. v. URS Federal Services, Inc.
Filing
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MEMORANDUM OPINION. Signed by Judge Richard D. Bennett on 12/14/2016. (bas, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
NORAIR ENGINEERING CORP.,
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Plaintiff/Counter-Defendant,
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v.
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URS FEDERAL SERVICES, INC.,
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Defendant/Counter-Plaintiff.
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Civil Action No. RDB-16-1440
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MEMORANDUM OPINION
Plaintiff/counter-defendant Norair Engineering Corp. (“Norair”) has filed this action
against defendant/counter-plaintiff URS Federal Services, Inc. (“URS”) alleging that URS
breached the parties’ contract by failing to pay Norair over $2.3 million for construction
services performed by Norair at Fort George G. Meade (“Ft. Meade”), located in Anne
Arundel County, Maryland. (ECF No. 2 at ¶ 1.) Norair originally filed its Complaint in the
Circuit Court for Anne Arundel County, Maryland, and URS removed the case to this Court
on the basis of federal question jurisdiction, 28 U.S.C. § 1331, asserting that Norair’s work
was performed on a federal enclave. (ECF No 1 at ¶ 4.)
Currently pending are Norair’s Motion to Remand (“Norair’s Motion”) (ECF No. 15)
and URS’s Motion to Dismiss for Failure to State a Claim (“URS’s Motion”) (ECF No. 8).
The parties’ submissions have been reviewed, and no hearing is necessary. See Local Rule
105.6 (D. Md. 2016). For the reasons stated below, Norair’s Motion is DENIED, and
URS’s Motion is GRANTED IN PART and DENIED IN PART; specifically, it is
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GRANTED as to the unjust enrichment claim (Count III) and DENIED as to the breach of
contract claims (Counts I and II).
BACKGROUND
Defendant URS was awarded a federal government contract by the United States
Government for the construction of power and cooling system services at Ft. Meade. (ECF
No. 2 at ¶¶ 8-9.)
On September 23, 2013, URS subcontracted with Norair for the
replacement of an existing Cooling Tower located on Ft. Meade. (Id. at ¶¶ 10-11.) Norair
alleges that URS unilaterally modified the construction subcontract on multiple occasions,
thereby causing delays in the completion of the project, depriving Norair of its expected
profits under the subcontract, and resulting in significant monetary damages to Norair. (Id.
at ¶¶ 12-17.) Norair alleges that it fully performed its work under the subcontract, and now
seeks over $2.38 million in damages from URS.
(Id. at ¶¶ 18-21.)
URS has filed a
counterclaim alleging that Norair failed to complete its work on the Ft. Meade project in the
manner required by the subcontract and seeks to recover all costs associated with Norair’s
alleged breach. (ECF No. 9 at ¶¶ 11-17.)
STANDARDS OF REVIEW
I.
Motion to Remand
A defendant in a state civil action may remove the case to federal court only if the
federal court can exercise original jurisdiction over at least one of the asserted claims. 28
U.S.C. § 1441(a)-(c). Once an action is removed to federal court, the plaintiff may file a
motion to remand the case to state court if there is a contention that jurisdiction is defective.
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28 U.S.C. § 1447(c). The party seeking removal, and not the party seeking remand, bears the
burden of establishing jurisdiction in the federal court. Mulcahey v. Columbia Organic Chemicals
Co., Inc., 29 F.3d 148, 151 (4th Cir. 1994) (citing Wilson v. Republic Iron & Steel Co., 257 U.S. 92
(1921)).
Federal courts are obliged to carefully scrutinize challenges to jurisdictional
authority, and must “do more than simply point jurisdictional traffic in the direction of state
courts.” 17th Street Associates, LLP v. Markel Int’l Ins. Co. Ltd., 373 F. Supp. 2d 584, 592 (E.D.
Va. 2005). On a motion to remand, this Court must “strictly construe the removal statute
and resolve all doubts in favor of remanding the case to state court.” Richardson v. Phillip
Morris, Inc., 950 F. Supp. 700, 701-02 (D. Md. 1997) (citation omitted).
“If federal
jurisdiction is doubtful, a remand is necessary.” Mulcahy, 29 F.3d at 151; see also Dixon v.
Coburg Dairy, Inc., 369 F.3d 811, 815-16 (4th Cir. 2004).
II.
Motion to Dismiss
Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a
complaint if it fails to state a claim upon which relief can be granted. The purpose of Rule
12(b)(6) is “to test the sufficiency of a complaint and not to resolve contests surrounding the
facts, the merits of a claim, or the applicability of defenses.” Presley v. City of Charlottesville, 464
F.3d 480, 483 (4th Cir. 2006).
The Supreme Court’s opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007),
and Ashcroft v. Iqbal, 556 U.S. 662 (2009) have articulated “[t]wo working principles” that
courts must employ when ruling on Rule 12(b)(6) motions to dismiss. Iqbal, 556 U.S. at 678.
First, while a court must accept as true all the factual allegations contained in the complaint,
legal conclusions drawn from those facts are not afforded such deference. Id. (stating that
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“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice” to plead a claim). Second, a complaint must be dismissed if it
does not allege “a plausible claim for relief.” Iqbal, 556 U.S. at 679. Although a “plaintiff
need not plead the evidentiary standard for proving” her claim, she may no longer rely on
the mere possibility that she could later establish her claim. McCleary-Evans v. Maryland
Department of Transportation, State Highway Administration, 780 F.3d 582, 586 (4th Cir. 2015)
(emphasis omitted). Under the plausibility standard, a complaint must contain “more than
labels and conclusions” or a “formulaic recitation of the elements of a cause of action.”
Twombly, 550 U.S. at 555.
ANALYSIS
I.
Motion to Remand
Norair argues in support of its Motion to Remand that URS “must do more than
merely allege that Fort Meade is a federal enclave to establish jurisdiction prima facie. It must
prove that the area on which the work giving rise to this cause of action was performed on
part of the federal enclave under exclusive federal jurisdiction.” (ECF No. 15-1 at 3.) Citing
Baltimore Gas & Elec. Co. v. United States, 133 F. Supp. 2d 721, 742 (D. Md. 2001), Norair
notes that parts of Fort Meade have been ceded back to the State of Maryland, and are thus
outside of this Court’s original jurisdiction. (Id.) Norair thus argues that because URS did
not specifically ‘prove’ in its Notice of Removal that the work in question occurred on an
exclusively federal portion of Fort Meade, removal was defective.
In its opposition, URS raises two specific arguments: (1) the notice of removal is
subject only to the Federal Rules’ notice pleading standard; and (2) the Complaint and
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Subcontract “clearly evidence that Norair’s work was performed in a highly secured federal
facility.” (ECF No. 18 at 2.) In addition, URS provides an affidavit stating that the work
was performed on federal property. (Id.) Finally, URS asks the Court to take judicial notice
of the status of the property. (Id.)
URS convincingly rebuts Norair’s suggestion that the work at issue in this case
occurred outside of the federal enclave. First, URS’s notice of removal was not facially
defective. The federal removal statute, 28 U.S.C. § 1446(a), provides that the notice of
removal need only contain “a short and plain statement of the grounds for removal.” The
United States Court of Appeals for the Fourth Circuit has explained that this language “is
deliberately parallel to the requirements for notice pleading in Rule 8(a) of the Federal Rules
of Civil Procedure.” Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 199 (4th Cir.2008)
(citing Twombly, 550 U.S. at 554–56). Thus, a notice of removal is not subject to “a higher
pleading standard than the one imposed on a plaintiff in drafting an initial complaint.” Id. at
200. See also Jones v. John Crane-Houdaille, Inc., No. CIV. CCB-11-2374, 2012 WL 1197391, at
*2 (D. Md. Apr. 6, 2012). While Norair correctly notes that the party seeking removal bears
the burden of establishing jurisdiction in the federal court, this rule does not require the
removing party to conclusively establish federal jurisdiction in the Notice of Removal;
rather, the issue may be properly raised, as here, in a Motion to Remand. See Johnson v.
Nutrex Research, Inc., 429 F. Supp. 2d 723, 726 (D. Md. 2006) (assessing removing party’s
proof of federal jurisdiction in the context of motion to remand).
In this case, URS’s Notice of Removal states, in pertinent part, that: “Norair’s breach
of contract and other causes of action arise out of work performed by Norair at the
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Government enclave known as Fort Meade located in Maryland. Norair’s performance of
the work on a federal enclave creates federal question jurisdiction pursuant to 28 USC
Section 1331…” (ECF No. 1 at ¶ 4.) Accordingly, URS’s Notice of Removal satisfies the
Federal Rules’ notice pleading standard and is not facially defective.
Second, the Complaint and Subcontract (filed as Exhibit A to the Complaint) (ECF
No. 2-1) plainly indicate that the location of the work performed was on a federal enclave.
The address to which supplies for the project are to be shipped is listed in the Subcontract is
the “Maryland Procurement Office, 9800 Savage Road, Fort G. Meade, MD 20755.”
(Subcontract at § F.6, ECF No. 2-1 at 12.) This address, as URS notes, is the publiclypublished address of the National Security Agency (“NSA”). (ECF No. 18 at 6) (citing
cases). While the location to which supplies are to be shipped is not necessarily the site of the
work performed, this fact is nonetheless highly probative of the location of the work.
Important to the present discussion, this Court has recognized that the NSA operates on an
exclusive federal enclave on Fort Meade. See Baltimore Gas & Elec. Co. v. United States, 133 F.
Supp. 2d 721, 744 (D. Md. 2001). Other aspects of the Subcontract also support the
conclusion that the work was to be performed on exclusively federal property: the extensive
security provisions set forth in Section H of the Subcontract and the application of extensive
federal regulations noted in Part II(I) of the Subcontract are particularly probative in this
respect. (ECF No. 2-1 at 17-26.)
Third, URS has submitted the sworn affidavit of Bob Iman, Director of Subcontracts
for URS, in which Mr. Iman states that the work was performed “on the premises of 9800
Savage Road…within the fenced security perimeter of a secured area…patrolled by a
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[Department of Defense] Agency police force.” (ECF No. 18-1 at ¶ 4.) In his affidavit, Mr.
Iman has produced an email from a Fort Meade official indicating that the building where
the work was performed is located on federal property. (ECF Nos. 18-2, 18-3.) While
Norair questions the reliability of this evidence in its reply brief, Norair has produced no
evidence whatsoever to the contrary. (ECF No. 19.)
Finally, pursuant to Rule 201 of the Federal Rules of Evidence, this Court takes
judicial notice of the fact that the 9800 Savage Road address is the publicly-published
address of the National Security Agency. This information “can be accurately and readily
determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid.
201(b)(2).
See
National
Security
Agency,
Points
of
Contact,
available
at:
https://www.nsa.gov/business/contacts/ (last accessed December 12, 2016) (listing the
“9800 Savage Road” address).
Thus, the evidence presented, coupled with Norair’s presence on the work site for
nearly two years, clearly indicates that Norair’s Motion is without merit. Accordingly, the
Motion to Remand (ECF No. 15) is DENIED.
II.
Motion to Dismiss
URS’s Motion to Dismiss is based on two principal arguments. First, URS asserts
that the “No Damages for Delay” clause in Section 8.0 of the Subcontract’s General
Conditions precludes Norair’s recovery of any damages arising out of delay. (ECF No. 8-1
at 5-6.) URS notes that Maryland courts have strictly enforced “No Damages for Delay”
clauses and relies in particular on the opinion of the Maryland Court of Special Appeals in
State Highway Admin. v. Greiner Eng’g Scis., Inc., 83 Md. App. 621, 577 A.2d 363 (1990).
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Second, URS asserts that Norair’s unjust enrichment / quantum meruit (Count III) cause of
action is barred by the existence of an express contract between the parties. (Id. at 8-9.)1
In its Response to URS’s Motion, Norair raises several arguments to avoid the effect
of the “No Damages for Delay” clause. (ECF No. 14.) First, Norair argues that the scope
of the “No Damages for Delay” clause is more limited than URS’s claims: specifically,
Norair asserts that “Section 8.0 only bars damages for delays caused by ‘other work’
occurring concurrently on the project site.” (ECF No. 14-1 at 5.) Second, Norair argues
that URS’s interpretation of Section 8.0 conflicts with the “Changes” clause (Section 9.0) of
the Subcontract and, therefore, the ambiguity should be construed against URS as drafter.
(Id. at 6.) Third, Norair suggests that the “Order of Precedence” clause (Section H.21) of
the Subcontract incorporates Federal Acquisition Regulations (“FAR”) which permit delay
damages and which “must take precedence over Section 8.0.” (Id. at 6-7.)
In addition, Norair seeks to avoid the general rule that “no quasi-contractual claim
can arise when a contract exists between the parties concerning the same subject matter on
which the quasi-contractual claim rests,” Chevron U.S.A. Inc. v. Apex Oil Co., Inc., 113 F. Supp.
3d 807, 822 (D. Md. 2015) (quoting Cnty. Comm’rs of Caroline Cnty. v. J. Roland Dashiell & Sons,
Inc., 358 Md. 83, 96–97, 747 A.2d 600, 607 (2000), by invoking certain purported exceptions
to the rule.
1 URS’s Motion does not address Norair’s allegations of damages incurred for “modifications, work
performed, [and] retainage.” (ECF No. 2 at ¶ 164.) Indeed, the Complaint on several occasions notes
damages incurred for reasons other than delays. See, e.g., ECF No. 2 at ¶¶ 25-27, 39-41. Nor does URS directly
address the merits of Count II (Breach of Contract (Covenant of Good Faith and Fair Dealing)) of Norair’s
Complaint in its Motion or Reply. See ECF Nos. 8, 17. Thus, the Court interprets URS’s Motion as one for
Partial Dismissal of Plaintiff’s Complaint.
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The parties’ arguments, including those set forth in URS’s Reply (ECF No. 17), are
addressed in turn below.
A. The “No Damages for Delay” Clause
The “No Damages for Delay” clause, found in Section 8.0 of the parties’
Subcontract, provides:
“Subcontractor shall be required in the performance of its Work to coordinate its
activities at the Facility Site with those of Contractor’s or Owner’s other
contractors. Subcontractor agrees that the Owner or Contractor shall have the
right to perform or have performed in or about the Facility Site during the time
when Subcontractor is performing its Work such other work as Owner or
Contractor may desire and that Subcontractor shall make every reasonable effort
to enable both its work and such other work to be completed without hindrance
or interference. In the event Subcontractor’s performance of its Work is
delayed or interfered with by the work of Contractor, Owner or their
respective other contractors, or the manner in which Contractor
coordinates, prioritizes or otherwise requires or permits the Work and
such other work to be performed, Subcontractor’s sole and exclusive
remedy shall be an extension of time for the performance of the Work.
Any claim by Subcontractor for an extension of time arising out of any alleged
delay or interference shall be made to Contractor in accordance with Article 9.0.”
(ECF No. 2-1 at 39)(emphasis added).2
Scope of the “No Damages for Delay” clause:
URS argues that the “No Damages for Delay” clause precludes Norair’s ability to
recover any damages based on any delays caused by URS or the site owner. Norair argues in
opposition that, as an exculpatory clause, Section 8.0 should be construed narrowly and,
therefore, that the clause “only bars damages for delays caused by ‘other work’ occurring
concurrently on the project site.” (ECF No. 14-1 at 5.) Thus, the “No Damages for Delay”
clause is distinguishable from that in Greiner, which relieved defendant from delay-based
2 This clause will be referred to herein as the “No Damages for Delay Clause” or “Section 8.0.”
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liability “from any cause whatsoever,” Greiner, 83 Md. App. at 625, 577 A.2d at 365, and not
solely because of “other work.” In its Reply Brief, URS argues that because Norair’s
Complaint attributes the delays to URS, “[i]t defies logic that these delays would not fall
within the scope of the statement ‘Subcontractor’s performance of the Work is delayed or
interfered with by the work of Contractor.’” (ECF No. 17 at 6-7.)
Section 8.0 of the Subcontract is entitled “Other Work.” (ECF No. 2-1 at 39.) This
section contemplates work being performed by more than one party “at the Facility Site,”
and requires coordination and cooperation among the parties “to enable both [the
Subcontractor’s] work and such other work to be completed without hindrance or
interference.” (Id.) The clause pragmatically requires the parties to recognize that not all
parties can be in the same place—“the Facility Site”—at once. (Id.)
While this section of the Subcontract thus gives URS immunity from liability for
delays caused by the manner in which it schedules and coordinates the various
subcontractors’ access to—and ability to work on—the site, this immunity is premised on
“Other Work” being performed “in or about the Facility Site.” (ECF No. 2-1 at 39.) To the
extent that Norair has alleged damages caused by delays which are not attributable to “Other
Work” being performed “in or about the Facility Site,” Norair’s claims are not barred by the
“No Damages for Delay Clause.”3 Accordingly, Norair has stated a plausible claim for
breach of contract, and URS’s Motion is DENIED as to Count I.4
3 Norair has alleged, inter alia, delays based on URS’s purported failure to communicate certain revisions to
design plans. (ECF No. 2 at ¶¶ 45-67.) To the extent that this alleged miscommunication and, possibly,
other acts, resulted in delays (and, in turn, damages), Section 8.0 does not appear to bar Norair’s recovery.
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In light of this result, the Court need not address Norair’s other arguments.
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B. Norair’s Quasi-Contract / Unjust Enrichment Claim
URS also seeks dismissal of Norair’s unjust enrichment claim (Count III). URS
argues that this cause of action is barred by the existence of an express contract between the
parties. (ECF No. 8-1 at 8-9.) URS relies on the well-established rule that “no quasicontractual claim can arise when a contract exists between the parties concerning the same
subject matter on which the quasi-contractual claim rests,” Chevron, 113 F. Supp. 3d at 822.
While Norair “agrees with the general principle cited by URS,” Norair asserts that
exceptions to the general rule apply in this case. (ECF No. 14-1 at 8-9.) Those exceptions,
Norair argues, apply when: “(1) the express contract does not fully address a subject matter;
(2) the parties disagree as to their respective contractual liability; [and] (3) when the terms of
a contract or parties to said contract are disputed.” (Id. at 9) (internal citations omitted).
Norair’s reliance on these purported exceptions to the general rule is misplaced. As a
threshold matter, Maryland courts “rarely depart from th[e] long-standing rule,” that quasicontract claims are barred by the existence of an express contract. Janusz v. Gilliam, 404 Md.
524, 537, 947 A.2d 560, 567 (2008). Furthermore, the exceptions which Norair invokes
pertain to situations where the very existence and/or scope of the contract are in dispute—
not, as here, where “there is no dispute as to whether [Norair and URS] were parties to a
valid, enforceable contract,” and Norair “has made no allegations of bad faith or fraud in the
contract's formation.” Chevron, 113 F. Supp. 3d at 822. See also Jones v. Pohanka Auto N., Inc.,
43 F. Supp. 3d 554, 573 (D. Md. 2014) (“Where a contract exists between the parties
covering the same subject matter as the unjust enrichment claim, however, a plaintiff’s claim
for unjust enrichment must include an allegation of fraud or bad faith in the formation of the
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contract.”). Thus, the exceptions which Norair invokes do not save its claim for unjust
enrichment, and URS’s Motion is GRANTED as to Count III.
CONCLUSION
For the reasons stated above, Norair’s Motion to Remand (ECF No. 15) is
DENIED, and URS’s Motion to Dismiss for Failure to State a Claim (ECF No. 8) is
GRANTED IN PART and DENIED IN PART; specifically, it is GRANTED as to the
unjust enrichment claim (Count III) and DENIED as to the breach of contract claims
(Counts I and II).
A separate Order follows.
Dated: December 14, 2016
___/s/___________________________
Richard D. Bennett
United States District Judge
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