Fritzsche et al v. Lexon Surety Group

Filing 15

MEMORANDUM AND ORDER - Defendant Lexon Surety Group's Motion to Dismiss Plaintiffs Complaint is dismissed, without prejudice; and A separate Judgment will be entered. Ordered by Chief Judge Laurie Smith Camp. (MKR)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
UNITED STATES OF AMERICA, for
the use of WILLIAM C. FRITZSCHE;
and WILLIAM C. FRITZSCHE, d.b.a.
ADVANTAGE BUILDING &
CONSULTING, Pro Se,
Plaintiffs,
v.
LEXON SURETY GROUP,
Defendant.

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CASE NO. 8:13CV146

MEMORANDUM
AND ORDER

This matter is before the Court on the Defendant’s Motion to Dismiss (Filing No. 10).
Defendant Lexon Surety Group (“Lexon”) moves to dismiss the Plaintiff’s1 Complaint under
Fed. R. Civ. P. 12(b)(6), for failure to state a claim upon which relief can be granted,
asserting that the claims are untimely.
FACTUAL AND PROCEDURAL HISTORY
The following facts, taken from the Plaintiff’s Complaint (Filing No. 1), are accepted
as true for purposes of the pending Motion.
On or about February 2, 2010, Tierra Dynamic, LLC, an Arizona corporation
(“Tierra”), entered into a contract with the United States Department of the Navy to repair
one of the Navy’s facilities in Omaha, Nebraska (the “project”). William C. Fritzsche, d/b/a
Advantage Building & Consulting (“Fritzsche”), a sole proprietor with his principal place of
business in Omaha, was engaged by Tierra to furnish certain contractor quality control
services and equipment for the project. Lexon issued a surety bond, pursuant to the Miller
Act, 40 U.S.C. § 3131, et seq., to guarantee payment by Tierra to all persons supplying

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Although the caption refers to Plaintiffs in the plural, there appears to be a single
Plaintiff, William C. Fritzsche, doing business as Advantage Building & Consulting, and the
Court will refer to the Plaintiff in the singular.

labor and materials in fulfillment of the project. The reasonable value of labor and
materials provided by Fritzsche in connection with the project was $16,639.37, and
Fritzsche billed Tierra on February 25, 2012, noting that the quality control services were
provided “9/20/2011 to 10/29/11" and “11/1/2011 to 2/21/2012." (Invoice attached to
Compl., Filing No. 1 at 5.)
Tierra acknowledged the validity of Fritzsche’s claim, but filed for bankruptcy and
failed to pay the invoiced amount. Fritzsche filed a claim with Lexon under the surety bond
on or about March 15, 2013, but Lexon denied payment.
Fritzsche brought this action, pro se, presenting two claims. The first claim seeks
payment of the invoiced amount through the surety bond, pursuant to the Miller Act. The
second claim seeks punitive damages, costs and attorney fees.
Lexon seeks to dismiss both claims, contending that claims against a surety under
the Miller Act 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.’” (Def.’s
Br., Filing No. 11 at 4 (quoting 40 U.S.C. § 3133(b)(4)).) Lexon further contends that the
Miller Act does not permit a subcontractor to collect punitive damages, costs or attorney
fees from a general contractor’s surety.
In response to Lexon’s Motion to Dismiss, Fritzsche states that he did not proceed
earlier with his claim against Lexon, because he thought he was barred from pursuing any
collection pending the stay issued by the bankruptcy court, which he notes is still in effect.
(Pl.’s Br., Filing No. 13 at 2.) He argues that he should have 30 days from the date the
bankruptcy stay expires to pursue his claim, because the statute of limitations expired while
a bankruptcy stay was in force. (Id. (citing 11 U.S.C. § 108(c)).)
Lexon argues that an automatic stay issued by a bankruptcy court does not apply

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to actions against third parties, like Lexon, and the extension of limitations provided
through 11 U.S.C. § 108(c) is inapplicable. Finally, Lexon argues that if the automatic stay
did apply to Fritzsche’s action against Lexon, and § 108 is applicable, then Fritzsche’s
action is premature, because the stay is still in force.
STANDARD OF REVIEW
A complaint 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). “[A]lthough a complaint need not
include detailed factual allegations, ‘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.’” C.N. v. Willmar Pub. Sch., Indep. Sch.
Dist. No. 347, 591 F.3d 624, 629-30 (8th Cir. 2010) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007)). “Instead, the complaint must set forth ‘enough facts to state
a claim to relief that is plausible on its face.’” Id. at 630 (citing Twombly, 550 U.S. at 570).
“'A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.'” Ritchie v. St. Louis Jewish Light, 630 F.3d 713, 716 (8th Cir. 2011) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009)). “'Courts must accept . . . specific factual
allegations as true but are not required to accept . . . legal conclusions.” Outdoor Cent.,
Inc. v. GreatLodge.com, Inc., 643 F.3d 1115, 1120 (8th Cir. 2011) (quoting Brown v.
Medtronic, Inc., 628 F.3d 451, 459 (8th Cir. 2010)). “A pleading that merely pleads ‘labels
and conclusions,’ or a ‘formulaic recitation’ of the elements of a cause of action, or ‘naked
assertions’ devoid of factual enhancement will not suffice.” Hamilton v. Palm, 621 F.3d
816, 817-18 (8th Cir. 2010) (quoting Iqbal, 556 U.S. at 678). The complaint’s factual
allegations must be “sufficient to ‘raise a right to relief above the speculative level.’”

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Williams v. Hobbs, 658 F.3d 842, 848 (8th Cir. 2011) (quoting Parhurst v. Tabor, 569 F.3d
861, 865 (8th Cir. 2009)).
When ruling on a defendant's motion to dismiss, a judge must rule “on the
assumption that all the allegations in the complaint are true,” and “a well-pleaded complaint
may proceed even if it strikes a savvy judge that actual proof of those facts is improbable,
and ‘that a recovery is very remote and unlikely.’” Twombly, 550 U.S. at 555 & 556
(quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). The complaint, however, must
still “include sufficient factual allegations to provide the grounds on which the claim rests.”
Drobnak v. Andersen Corp., 561 F.3d 778, 783 (8th Cir. 2009).
“Two working principles underlie . . . Twombly. First, the tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S.
at 555). “Second, only a complaint that states a plausible claim for relief survives a motion
to dismiss.” Id. at 1950 (citing Twombly, 550 U.S. at 556). “Determining whether a
complaint states a plausible claim for relief will . . . be a context-specific task that requires
the reviewing court to draw on its judicial experience and common sense.” Id.
DISCUSSION
The Miller Act, at 40 U.S.C. § 3133(b)(1) provides:
Every person that has furnished labor or material in carrying out work
provided for in a contract for which a payment bond is furnished under
section 3131 of this title and that has not been paid in full within 90 days after
the day on which the person did or performed the last of the labor or
furnished or supplied the material for which the claim is made may bring a
civil action on the payment bond for the amount unpaid at the time the civil
action is brought and may prosecute the action to final execution and
judgment for the amount due.
“An action brought under [40 U.S.C. § 3133(b)] must be brought no later than one
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year after the day on which the last of the labor was performed or material was supplied
by the person bringing the action.” Id. § 3133(b)(4).
The Miller Act creates a federal cause of action “‘separate and distinct from state
law breach of contract actions.’” U.S. for use of Lighting & Power Servs., Inc. v. Interface
Constr. Corp., 553 F.3d 1150, 1153 (8th Cir. 2009) (quoting United States ex rel. Consol.
Elec. & Mechs., Inc. v. Biggs Gen. Contracting, Inc., 167 F.3d 432, 435 (8th Cir.1999)).
“As subcontractors may not place liens on government property, the Miller Act bond
ensures full recovery of a subcontractor's out-of-pocket expenditures for labor and
materials, regardless of the general contractor's fault.” Id. at n.2. A bond obligee can
assert its Miller Act claim against the bond issuer or “surety” without joining the contractor
or “bond obligor.” Id. at 1154-55.
Fritzsche offers no reason for his failure to bring his action against Lexon within the
one-year limitations period, other than his concern that the commencement of the action
might violate the bankruptcy court’s notice to “cease all collection efforts against Tierra
Dynamic.” (Compl., Filing No. 1 at ¶ 17.) Fritzsche acknowledges that he later “discovered
the ability to collect from the Payment Bond from Lenox [sic] should not be precluded by
the Bankruptcy,” (id. at ¶ 21), and he commenced this action despite the fact that the
“Bankruptcy Court still has that stay in effect.” (Pl.’s Br., Filing No. 13 at 2.)
Fritzsche’s reliance on 11 U.S.C. § 108(c), for tolling of the one-year statute of
limitations, is misplaced. That subsection provides for the tolling of statutes of limitations
with respect to actions against debtors in bankruptcy, or co-debtors liable on consumer
debt. Under that subsection, if a statute of limitations for such a claim expires during a
bankruptcy stay, creditors may proceed to collect an undischarged debt by commencing
the action within 30 days after notice of the termination or expiration of the stay. The

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subsection does not provide for the tolling of statutes of limitations with respect to actions
against third party guarantors of non-consumer debt.
Fritzsche has not responded to Lexon’s arguments that the Miller Act does not allow
a subcontractor to collect punitive damage, costs, or attorney fees from a surety, and the
Court considers that claim to be abandoned. Even if the claim had merit and were not
abandoned, it also would be barred by the applicable statute of limitations.
Lexon’s Motion to Dismiss will be granted and Fritzsche’s Complaint will be
dismissed. Because Fritzsche has proceeded pro se, and advice of legal counsel may
reveal some avenue of relief not presented in the Complaint, the Court will dismiss the
action without prejudice.
IT IS ORDERED:
1. Defendant Lexon Surety Group’s Motion to Dismiss (Filing No. 10) is granted;
2. Plaintiffs’ Complaint is dismissed, without prejudice; and
3. A separate Judgment will be entered.
DATED this 25th day of July, 2013.
BY THE COURT:

s/Laurie Smith Camp
Chief United States District Judge

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