O&G Industries, Inc. v. University of Massachusetts Building Authority et al

Filing 43

Judge Rya W. Zobel: MEMORANDUM OF DECISION entered denying 12 Motion to Dismiss (Urso, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

CIVIL ACTION NO. 11-12032-RWZ

O&G INDUSTRIES, INC.
v.
UNIVERSITY OF MASSACHUSETTS BUILDING AUTHORITY
and R.G. VANDERWEIL & COMPANY, INC.

MEMORANDUM OF DECISION
September 18, 2012

ZOBEL, D.J.
O&G Industries, Inc. (“O&G”) has sued the University of Massachusetts Building
Authority (“UMBA”) and R.G. Vanderweil & Company, Inc. (“Vanderweil”), for breach of
contract, unjust enrichment, quantum meruit, and negligent misrepresentation. The sole
count of the complaint against Vanderweil is the Seventh Count, claiming negligent
misrepresentation, which Vanderweil has moved to dismiss for failure to state a claim.
For the reasons discussed below, the motion is denied.
I.

Background
This case comes before the court on diversity jurisdiction under 28 U.S.C.

§ 1332. The factual background below is drawn from the allegations in O&G’s
complaint (Docket # 1).
UMBA, a public organization created by the Massachusetts legislature, solicited

bids to construct a central heating plant on the University of Massachusetts-Amherst
campus. As part of the bid solicitation, UMBA provided a Request for Proposal (“RFP”)
which had been prepared by Vanderweil, the plant’s designers. The RFP included,
among other things, the plans and specifications according to which the new plant
would be built.
O&G is a Connecticut corporation that provides construction management
services. Its bid to construct the plant, which it prepared based on the RFP, was
accepted, and on January 17, 2006, O&G and UMBA entered into an $87,984,869.00
lump sum contract for the project. Agreed changes to the contract as the project
proceeded raised the contract price to $109,111,041.00. UMBA has already paid
$107,648,789.64 to O&G, leaving a balance due under the contract of $1,462,251.36.
O&G also claims $370,594 for additional work, and $6,313,179.96 for increased
commissioning and construction costs caused by the defective planning and permitting
process, which it attributes to UMBA and Vanderweil. Including interest through
September 2011, O&G claims a total of $11,567,355.95.
In the Seventh Count of its complaint, O&G alleges that Vanderweil is liable for
the full $11,567,355.95 because Vanderweil negligently supplied false information in
the RFP, which O&G justifiably relied on in constructing the plant, and which led to the
increased costs described above.
II.

Legal Standard
A pleading must contain a “short and plain statement of the claim showing that

the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The court accepts as true all
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factual allegations contained in the complaint, but not legal conclusions. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). To survive a motion to dismiss, the complaint must
provide sufficient factual allegations to make its claim for relief plausible. “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements,
do not suffice.” Id.
III.

Analysis
To recover for negligent misrepresentation under Massachusetts law, a plaintiff

must prove that the defendant:
(1) in the course of his business,
(2) supplies false information for the guidance of others,
(3) in their business transactions,
(4) causing and resulting in pecuniary loss to those others,
(5) by their justifiable reliance upon the information, and
(6) with failure to exercise reasonable care or competence in obtaining or
communicating the information.
Nota Constr. Corp. v. Keyes Assocs., 694 N.E.2d 401, 405 (Mass. App. Ct. 1998).
Vanderweil challenges O&G’s pleadings primarily with respect to the second
element, arguing that O&G does not sufficiently allege any false statements by
Vanderweil. However, defendant concedes that the complaint alleges at least one
factual misrepresentation: that the RFP “indicates that the Solar Mars 100 Gas Turbine
was used in 169 installations in the United States and 715 installations worldwide, and
of the 715 installations worldwide, there were 700 units in operation and of that, 103
units had dual fuel capability like the one installed at UMass.” Compl. at 14, ¶ 54(j).
According to the complaint, this representation is false, and the “Solar Turbine
specified by Vanderweil for use on this Project was the first of its kind used within the
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United States (only the second in the world) and had never previously operated on
liquid fuel.” Compl. at 13, ¶ 54(c). Vanderweil claims that the alleged misrepresentation
does not appear in the RFP. However, O&G clarifies that it is set forth in the Approval
to Construct, which it claims was part of the construction documents included with the
RFP. Vanderweil denies that it prepared the RFP, but that contradicts the factual
allegations of the complaint. See Compl. at 12, ¶ 52 (alleging that Vanderweil’s work as
“Designer of Record for the Project” included “preparing and issuing the RFP and
specifications”).
O&G also alleges a host of other difficulties in the construction process that
derived from the false information in the RFP. Many of O&G’s allegations are couched
in language that sounds in negligence rather than negligent misrepresentation—e.g.,
“Vanderweil failed to timely address the engineering design deficiencies discovered
during commissioning of the Project,” Compl. at 15, ¶ 54(o). But taken as a whole,
O&G’s factual allegations in this section give sufficient detail to raise a plausible
inference that false information in the RFP, supplied by Vanderweil, caused harm to
O&G.
Vanderweil also briefly challenges O&G’s allegations with respect to the fourth,
fifth, and sixth elements of the negligent misrepresentation claim (causation, justifiable
reliance, and negligence). They are, however, sufficient to plausibly show that O&G
could satisfy each of these elements. The complaint explains the source of O&G’s
damages and asserts that those damages arose because O&G “construct[ed] the
Project in accordance with the information supplied by Vanderweil,” Compl. at 15, ¶ 55.
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The complaint likewise alleges justifiable reliance in that O&G constructed the plant
according to Vanderweil’s plans. Id. Finally, it plausibly alleges errors and
misrepresentations that an architectural firm exercising reasonable care would have
avoided. While perhaps not a model of clarity, O&G’s complaint is detailed and pointed
enough to satisfy Rule 8(a)(2) and state a claim for negligent misrepresentation.
IV.

Conclusion
Defendant Vanderweil’s Motion to Dismiss (Docket # 12) is DENIED.

/s/Rya W. Zobel
RYA W. ZOBEL
UNITED STATES DISTRICT JUDGE

September 18, 2012
DATE

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