Mason Tenders District Council of Greater New York et al v. Western Surety Company
MEMORANDUM AND OPINION re: 14 MOTION to Dismiss filed by Western Surety Company. For the foregoing reasons, Western's motion to dismiss is DENIED. Western shall file an answer to the Complaint on or before August 18, 2016. The Clerk of Court is directed to close the motion at docket number 14. SO ORDERED. (Signed by Judge J. Paul Oetken on 7/28/2016) (ama)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
MASON TENDERS DISTRICT COUNCIL OF :
GREATER NEW YORK, et al.,
WESTERN SURETY COMPANY,
OPINION AND ORDER
J. PAUL OETKEN, District Judge:
Plaintiffs Mason Tenders District Council of Greater New York (the “Union”), Mason
Tenders District Council Welfare Fund, Pension Fund, Annuity Fund, Training Fund, Health and
Safety Fund (the “Funds”), and Dominick Giammona in his capacity as Contributions/Deficiency
Manager for the Funds (collectively, “Plaintiffs”) filed this breach of contract action on
December 8, 2015, against defendant Western Surety Company (“Western”) to recover against a
bond guaranteed by Western. (Dkt. No. 1.) Western now moves to dismiss the Complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 14.) For the reasons that follow,
the motion is denied.
The following facts are taken from the Complaint and are presumed true for purposes of
This dispute arises out of a construction project in the Bronx, New York. (Dkt. No. 1
¶ 12.) G. Fazio Construction (“Fazio”), not a party to this action, served as the general
contractor. (Id. ¶ 13.) Vertical Building Concepts (“Vertical”) was a subcontractor involved
with the project, and is also not a party. (Id.) The Union furnished workers to Vertical to
perform labor on the project between April and at least December 2014. (Id. ¶¶ 14-15, 22-26.)
Western issued a payment bond (“the Bond”) on behalf of Fazio guaranteeing payment and
benefits for workers on the project. (Id. ¶ 12.) Specifically, the Bond covers any “individual or
entity having a direct contract with . . . a subcontractor of the Contractor [i.e., Fazio] to furnish
labor” for the project. (Id. ¶ 21.)
Plaintiff Funds provide fringe benefits to union workers. (Id. ¶ 5.) When a contractor
hires workers from the Union, it is required to contribute to the Funds pursuant to collective
bargaining agreements. (Id.) Vertical contributed to the Funds from April 2014 to June 2014 as
required, but failed to remit payments to the Funds from July to December 2014. (Id. ¶¶ 16, 23.)
The Union notified both Fazio and Western that Vertical had failed to remit these
payments and it sent a notice of claim against the Bond in the amount of $146,095.62. (Id.
¶¶ 18-19.) Western denied the claim on the theory that the Union had worked for a secondary
subcontractor (“MRG”) rather than Vertical, and that, accordingly, the Union did not furnish
labor to “a subcontractor of the Contractor” and was not a proper claimant under the terms of the
Bond. (Id. ¶ 20.) Plaintiffs allege that the Union did in fact perform work for Vertical, and that
Vertical had a direct subcontract with Fazio. (Id. ¶¶ 13-15, 22-26.)
In November 2015, Plaintiffs reasserted their claim against the Bond, which Western
again denied. (Id. ¶¶ 28-29.)
Motion to Dismiss Standard
In order to survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead sufficient
factual allegations “to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible “when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court must
accept as true all well-pleaded factual allegations in the complaint and “draw all inferences in
the plaintiff's favor.” Allaire Corp. v. Okumus, 433 F.3d 248, 249–50 (2d Cir. 2006) (internal
quotation marks omitted).
Western’s External Evidence
In support of its motion to dismiss, Western has submitted an affidavit and several
exhibits. (See Dkt. No. 15.) Included in these submissions are copies of (1) the Bond, (2) a
contract purporting to assign Vertical’s interest in its subcontract with Fazio to MRG, and (3) a
contract between Vertical and MRG. (Dkt. Nos. 15-1, 15-2, 15-3.)
According to Western, the effect of the latter two contracts (“the Assignment Contracts”)
is to insert MRG between Fazio and Vertical in the chain of contractors on the project, meaning
that Vertical had a “secondary subcontract” or “sub-subcontract” while MRG had the “direct
subcontract.” (See Dkt. No. 17 at 6, 8.) It follows, Western argues, that the Union may not
recover against the Bond, because it did not have “a direct contract with the Contractor or with a
subcontractor of the Contractor.” (Id. at 7.)
Plaintiffs contend that the Assignment Contracts are not properly before the Court on this
motion to dismiss. (Dkt. No. 21 at 10-11.)
At the motion to dismiss stage, “the Court confines its consideration to facts stated on the
face of the complaint, in documents appended to the complaint or incorporated in the complaint
by reference, and to matters of which judicial notice may be taken.” Tannerite Sports, LLC v.
NBCUniversal Media LLC, 135 F. Supp. 3d 219, 225 n.1 (S.D.N.Y. 2015) (quoting Tokio
Marine & Nichido Fire Ins. Co. v. Canter, No. 07-CV-5599, 2009 WL 2461048, at *4 (S.D.N.Y.
Aug. 11, 2009)) (alterations and internal quotation marks omitted). “A court may also consider a
document that is not incorporated by reference where the complaint relies heavily upon its terms
and effect, thereby rendering the document integral to the complaint.” Id. (quoting Mangiafico v.
Blumenthal, 471 F.3d 391, 398 (2d Cir. 2006)) (internal quotation marks omitted).
Western argues that the Court may rely upon the external evidence that it has submitted
in support of its 12(b)(6) motion because (1) Plaintiffs’ Complaint incorporates the Bond and the
Assignment Contracts by reference, (2) the Complaint “relie[s] upon [these documents’] terms
and effects,” and (3) “Plaintiffs had notice and/or possession of the documents” when drafting
the Complaint. (Dkt. No. 17 at 7 n.1.)
As to whether the documents are incorporated by reference, the Bond is extensively
referenced in the Complaint. (See Dkt. No. 1 ¶¶ 12, 17, 21.) In fact, the Bond is the very
contract that Plaintiffs allege Western breached. (Id. ¶¶ 31-41.) It may therefore be considered
“‘integral’ to the complaint,” and the Court may rely upon it in resolving this motion. Tannerite
Sports, 135 F. Supp. 3d at 225 n.1. Because the Assignment Contracts, on the other hand, are
not so much as mentioned in the Complaint, they are not incorporated by reference.
Likewise, the Complaint does not “rely” upon the Assignment Contracts so as to render
them “integral to the complaint.” The Complaint alleges that the Union provided labor directly
to Vertical, which had a direct subcontractor relationship with Fazio. (Dkt. No. 1 ¶¶ 13-15, 2226.) The Assignment Contracts contradict these allegations and purport to show that Vertical
contracted directly with MRG rather than Fazio during the relevant period. (Dkt. Nos. 15-2, 153.) As a result, it cannot be said that the Complaint “relie[d] heavily upon [the] terms and effect”
of the Assignment Contracts. Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.
2002)); see Anwar v. Fairfield Greenwich Ltd., 831 F. Supp. 2d 787, 793 (S.D.N.Y. 2011).
Western’s third argument—that the Court should consider the Assignment Contracts
because Plaintiffs had “notice and/or possession” of them—also fails. For external evidence to
be considered on a 12(b)(6) motion, “it is not sufficient that [Plaintiffs] had notice or possession
of” that evidence; rather, Plaintiffs “must have relied upon it in drafting the complaint.”
Gersbacher v. City of New York, 134 F. Supp. 3d 711, 719 (S.D.N.Y. 2015) (citing Chambers,
282 F.3d at 153 (2d Cir. 2002)). As explained above, Plaintiffs did not rely upon the Assignment
Contracts in drafting the complaint. Accordingly, even if Plaintiffs had “notice” of the
Assignment Contracts, consideration of these documents would not be proper at this stage.
Because Western’s motion to dismiss depends on evidence outside the scope of the
Court’s review, it is denied. 1
For the foregoing reasons, Western’s motion to dismiss is DENIED.
Western shall file an answer to the Complaint on or before August 18, 2016.
The Clerk of Court is directed to close the motion at docket number 14.
Dated: July 28, 2016
New York, New York
J. PAUL OETKEN
United States District Judge
Western’s request that, in the alternative, this Court convert the motion to dismiss into a motion
for summary judgment is denied. (Dkt. No. 17 at 11.) “Federal courts have complete discretion
in determining whether to exclude material beyond the pleadings or to convert a motion to
dismiss into a motion for summary judgment.” Vail v. City of New York, 68 F. Supp. 3d 412,
420 (S.D.N.Y. 2014) (citing Kouakou v. Fideliscare N.Y., 920 F. Supp. 2d 391, 396 (S.D.N.Y.
2012)) (internal quotation marks omitted).
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