Gabriel Fuentes Jr. Construction Co, Inc. v. Carter Concrete Structures, Inc., et al
Filing
30
OPINION & ORDER denying 12 Motion to Dismiss for Failure to State a Claim. Signed by Judge Daniel R. Dominguez on 12/12/2014. (MM)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
GABRIEL FUENTES JR. CONSTRUCTION
CO., INC.,
Plaintiff,
Civil No. 14-1473(DRD)
v.
CARTER CONCRETE STRUCTURES, INC.
LIBERTY MUTUAL INSURANCE CO.
Defendants.
OPINION AND ORDER
I.
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
The instant case is an action for breach of a contract
between Gabriel Fuentes Jr. Construction Co., Inc., (hereinafter
“Plaintiff”
or
“GFC”)
and
Carter
Concrete
(hereinafter “Defendant” or “CCS”).
Structures,
Inc.
The dispute arose out of
work performed by GFC, a subcontractor, for CCS, the primary
contractor, on a parking structure for a hospital administered
by the
Department
of
Veterans
Affairs
(hereinafter
“Project”).
On December 12, 2012, Plaintiff and Defendant entered into
a
Subcontract
Agreement
pursuant
to
which
Plaintiff
was
to
install Auger Cast Piles as part of the Project. Docket No. 1 at
3.
According
to
the
contract
1
between
the
two
parties,
Plaintiff’s work was originally to be completed in seven weeks.
Id.
On May 23, 2014, Plaintiff GFC was able to complete the
work contracted for with Defendant.
Id. at 18.
At the time
the suit was filed, Plaintiff sought compensation for payments
amounting to $1,261,554.14.
Id.
Plaintiff filed the instant action (Docket No. 1) under
diversity
alleged
of
jurisdiction
that
Defendant
on
was
June
liable
16,
2014.
for
breach
Therein,
of
they
contract,
negligence, delay in fulfilling contractual obligations, and bad
faith in their contractual dealings.
See Id.
Included as a
defendant was Liberty Mutual Insurance, Co., Defendants surety
under the
Miller
Act
(hereinafter
“The
Act”),
40
U.S.C.A.
§
3133.
In
response
to
Plaintiff’s
complaint,
Defendant
filed
a
Motion to Dismiss, a Motion to Stay Proceedings, and a Motion to
Strike
counts
Docket No. 12.
III,
IV,
V,
and
VII
of
Plaintiff’s
complaint.
Therein, Defendant claims Plaintiff failed to
abide by two conditions for filing suit under the Miller Act.
Specifically, Defendant claims Plaintiff had not performed “the
last of [its] labor” as mandated by the Act and the action had
not been brought “in the name of the United States.”
No. 12 at 6-7.
See Docket
Furthermore, Defendant moved for a stay in the
2
proceedings
Plaintiff.
based
on
a
provision
in
their
contract
with
Id.
For the reasons elucidated below, the Court hereby denies
Defendant’s Motion to Dismiss, grants Defendant’s Motion to Stay
Proceedings, and denies Defendant’s Motion to Strike Counts III,
IV, and V.
We explain.
II. STANDARD OF REVIEW FOR MOTIONS TO DISMISS
Federal Rule of Civil Procedure 8(a) requires plaintiffs to
provide “a short and plain statement of the claim showing that
the pleader is entitled to relief.”
Fed. R. Civ. P. 8(a)(2).
Under Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007), a
plaintiff must “provide the grounds of his entitlement [with]
more
than
labels
and
conclusions.”
See
Ocasio-Hernandez
v.
Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011) (“in order to
‘show’ an entitlement to relief a complaint must contain enough
factual
material
‘to
raise
a
right
to
relief
above
the
speculative level on the assumption that all the allegations in
the complaint are true (even if doubtful in fact).’)(quoting
Twombly,
550
U.S.
at
555)
(citation
omitted).
Thus,
a
plaintiff must, and is now required to, present allegations that
“nudge
[his]
plausible”
8(a).
in
claims
order
across
to
the
comply
line
with
the
from
conceivable
requirements
of
to
Rule
Id. at 570; see e.g. Ashcroft v. Iqbal, 556 U.S. 662
(2009).
3
When considering a motion to dismiss, the Court’s inquiry
occurs in a two-step process under the current context-based
“plausibility” standard established by Twombly, 550 U.S. 544,
and Iqbal, 556 U.S. 662. “Context based” means that a Plaintiff
must allege sufficient facts that comply with the basic elements
of
the
cause
(concluding
of
action.
that
See
Iqbal,
plaintiff’s
556
U.S.
complaint
at
was
677-679
factually
insufficient to substantiate the required elements of a Bivens
claim, leaving the complaint with only conclusory statements).
First, the Court must “accept as true all of the allegations
contained
in
a
complaint[,]”
discarding
legal
conclusions,
conclusory statements and factually threadbare recitals of the
elements of a cause of action.
Iqbal, 556 U.S. at 678. “Yet we
need not accept as true legal conclusions from the complaint or
‘naked assertion[s]’ devoid of ‘further factual enhancement.’”
Maldonado
v.
Fontanes,
(quoting Iqbal,
556
568
U.S.
F.3d
678)
263,
(quoting
268
(1st
Twombly,
Cir.
550
2009)
U.S.
at
557).
Under
determine
the
second
whether,
step
based
of
upon
the
all
inquiry,
assertions
the
Court
that
were
must
not
discarded under the first step of the inquiry, the complaint
“states
a
plausible
claim
for
relief.”
Iqbal,
556
U.S.
679.
This second step is “context-specific” and requires that the
Court draw from its own “judicial experience and common sense”
4
to decide whether a plaintiff has stated a claim upon which
relief may be granted, or, conversely, whether dismissal under
Rule 12(b)(6) is appropriate.
Thus,
“[i]n
order
to
Id.
survive
a
motion
to
dismiss,
[a]
plaintiff must allege sufficient facts to show that he has a
plausible entitlement to relief.”
Sanchez v. Pereira-Castillo,
590 F.3d 31, 41 (1st Cir. 2009).
facts
do
not
permit
the
court
to
“[W]here the well-pleaded
infer
more
than
the
mere
possibility of misconduct, the complaint has alleged - but it
has not ‘show[n]’ ‘that the pleader is entitled to relief.’”
Iqbal,
556
U.S.
at
679
(quoting
Fed.
R.
Civ.
P.
8(a)(2)).
Furthermore, such inferences must be at least as plausible as
any “obvious alternative explanation.”
Twombly, 550 U.S. at 567).
Id. at 679-80 (citing
“A plaintiff is not entitled to
‘proceed perforce’ by virtue of allegations that merely parrot
the elements of the cause of action.”
Ocasio-Hernandez, 640
F.3d at 12, (citing Iqbal, 556 U.S. 679).
The
First
plausibility
merits,
with
affirming
Circuit
an
has
cautioned
analysis
that
of
the
the
against
likely
plausibility
success
standard
equating
on
the
assumes
“pleaded facts to be true and read in a plaintiff’s favor” “even
if seemingly incredible.” Sepúlveda-Villarini v. Dep’t of Educ.
of P.R., 628 F.3d 25, 30 (1st Cir. 2010) (citing Twombly, 550
U.S. at 556); Ocasio-Hernandez, 640 F.3d at 12 (citing Iqbal,
5
556 U.S. 679); see Twombly, 550 U.S. at 556 (“[A] well-pleaded
complaint may proceed even if it appears that a recovery is very
remote
and
unlikely.”)(internal
quotation
marks
omitted);
see
Ocasio-Hernandez, 640 F.3d at 12 (citing Twombly, 550 U.S. at
556)(“[T]he
court
may
not
disregard
properly
pled
factual
allegations, ‘even if it strikes a savvy judge that actual proof
of those facts is improbable.’”).
Instead, the First Circuit
has emphasized that “[t]he make-or-break standard . . . is that
the combined allegations, taken as true, must state a plausible,
[but] not a merely conceivable, case for relief.”
Sepúlveda-
Villarini, 628 F.3d at 29.
However,
a
complaint
that
rests
on
“bald
assertions,
unsupportable conclusions, periphrastic circumlocutions, and the
like” will likely not survive a motion to dismiss.
Blanchard, 83 F.3d 1, 3 (1st Cir. 1996).
Aulson v.
Similarly, unadorned
factual assertions as to the elements of the cause of action are
inadequate as well.
Penalbert-Rosa v. Fortuno-Burset, 631 F.3d
592 (1st Cir. 2011).
form
of
admissible
“Specific information, even if not in the
evidence,
would
likely
be
enough
motion to dismiss] stage; pure speculation is not.”
at
[the
Id. at 596;
see Iqbal, 556 U.S. at 681(“To be clear, we do not reject []
bald
allegations
on
nonsensical.
.
.
allegations,
rather
.
the
It
than
ground
is
that
the
their
they
are
conclusory
extravagantly
6
unrealistic
nature
of
fanciful
or
[the]
nature,
that disentitles them to the presumption of truth.”); see Mendez
Internet Mgmt. Servs. v. Banco Santander de P.R., 621 F.3d 10,
14
(1st
Cir.
District
2010)
Courts
to
(The
Twombly
“screen[]
and
out
Iqbal
standards
rhetoric
require
masquerading
as
litigation.”). However, merely parroting the elements of a cause
of
action
is
insufficient.
Ocasio-Hernandez,
640
F.3d
at
12
(citing Sanchez v. Pereira-Castillo, 590 F.3d 31, 49 (1st Cir.
2009)).
The First Circuit recently outlined two considerations for
district
courts
to
note
when
analyzing
a
motion
to
dismiss.
García-Catalán v. United States, 734 F.3d 100, 104 (1st Cir.
2013). First, a complaint modeled on Form 11 of the Appendix of
the Federal Rules of Civil Procedure which contains sufficient
facts
to
make
the
claim
plausible
is
ordinarily
enough
to
surpass the standard prescribed under Twombly-Iqbal. Id. at 104.
However, counsel are forewarned that merely copying a federal
form which or may not be identical to a form that complies with
a state cause of action being tried in federal court based on
diversity
jurisdiction
may
not
necessarily
be
sufficient.
Second, district courts should accord “some latitude” in cases
where “[a] material part of the information needed is likely to
be
within
the
defendant’s
control.”
Id.
(more
latitude
is
appropriate in cases where “it cannot reasonably be expected
that the [plaintiff], without the benefit of discovery, would
7
have any information about” the event that gave rise to the
alleged injury.)(internal citations and quotations omitted).
III. LEGAL ANALYSIS 1
i.
Miller Act Claims
The Miller Act, 40 U.S.C. § 3133, provides a federal cause
of action for those supplying labor or materials upon a payment
bond secured by the principal contractor of a federal government
project.
The
Act
authorizes
a
supplier
who
has
a
“direct
contractual relationship with a subcontractor but no contractual
relationship ... with the contractor furnishing” the bond to sue
on
the
bond
for
“the
balance
...
unpaid
at
the
time
of
institution” of the suit and to recover “judgment for the sum or
sums justly due him.”
40 U.S.C. § 270b.
Miller
remedial
Act
is
highly
in
It follows that the
nature
and
is
therefore
entitled to a liberal construction and application in order to
fulfill Congressional intent of protecting those whose labor and
materials go into public projects.
See U.S. for Benefit & on
Behalf of Sherman v. Carter, 353 U.S. 210, 216 (1957).
Congressional
intent
and
judicial
interpretation
unanimously favor the notion that Federal Miller Act claims were
not
meant
remedies.
to
replace
Consol.
Elec.
subcontractors'
&
Mechanicals,
1
state
Inc.
law
v.
contract
Biggs
Gen.
Finding that Plaintiff’s causes of action are not redundant as they each stand rest on distinct facts, the Court
summarily denies Defendants Motion to Strike Plaintiff’s Third, Fourth, Fifth and Seventh Causes of Action.
8
Contracting,
Inc.,
167
F.3d
432,
436
(8th
Cir.
1999).
Furthermore, although state courts are typically the ones to
adjudicate contract disputes, district courts are vested with
the
power
to
jurisdiction.
adjudicate
state
law
claims
under
diversity
See McDaniel v. University of Chicago, 548 F.2d
689, 695 (7th Cir.1977)(“an action for breach of an employment
contract is traditionally a state court action”); see also Erie
R.
Co.
v.
Tompkins,
304
U.S.
64
(1938)(“Except
in
matters
governed by the Federal Constitution or by acts of Congress, the
law to be applied in any case is the law of the state.”).
Thus,
a Miller Act suit is not a subcontractor's exclusive judicial
remedy
for
breach
of
contract.
See
United
States
[use
of]
Sunworks Div. of Sun Collector Corp. v. Insurance Co. of North
America, 695 F.2d 455 (10th Cir.1982) (allowing subcontractor to
sue
bonded
general
contractor
for
quantum
meriut
recovery);
United States [use of] Mobile Premix Concrete, Inc. v. Santa Fe
Engineers,
Inc.,
515
F.Supp.
512
(D.Colo.1981)
(holding
that
subcontractor could recover damages from general contractor for
delay in performance under state law).
ii.
The
Miller
Defendant CCS’ Motion to Dismiss
Act
establishes
a
one-year
limitations for the commencement of the action.
3133(b)(2).
statute
of
40 U.S.C. §
The one year period in which to bring suit under
the Miller Act begins to run 90 days after the last day on which
9
labor or materials were supplied and ends one year after that
date.
Id.
Defendant’s Motion is based on the position that
Plaintiff has not performed the “last of [its] labor” and, thus,
may not file claims under the Miller Act.
CCS
argues
that
“Fuentes’
work
Docket No. 12 at 6.
is
far
from
accepted
as
[CCS] continues to discover remedial work for Fuentes due to
defects in its performance.”
Id.
Fuentes counters that they
completed the work on May 23, 2014.
See Docket No. 26, p. 12.
The majority of Circuit Courts have found that corrections and
repairs
after
contract
terms
between
a
subcontractor
and
a
primary contractor have been fulfilled do not affect the running
of the term.
See U. S. for Use & Benefit of Austin v. W. Elec.
Co., 337 F.2d 568, 572 (9th Cir. 1964); see also United States
v.
Int'l
Fid.
Ins.
Co.,
200
F.3d
456,
460
(6th
Cir.
2000)
(quoting United States for the use of Billows Elec. Supply Co.
v.
E.J.T.
Constr.
Co.,
Inc.,
517
F.Supp.
1178,
1181
(E.D.Pa.1981), aff'd. 688 F.2d 827 (3rd Cir.); United States for
the use of Magna Masonry, Inc., v. R.T. Woodfield, Inc., 709
F.2d 249, 250 (4th Cir.1983); United States ex rel. Austin v.
Western Elec. Co., 337 F.2d 568, 572 (9th Cir. 1964); United
States
for
the
use
of
State
Elec.
Supply
Co.
Constr. Co., 404 F.2d 774, 776 (10th Cir.1968)).
v.
Hesselden
Therefore, the
crucial issue in the instant case is whether or not Plaintiff’s
work has been accepted by Defendant.
10
Here,
the
Parties
are
contractual completion.
at
odds
regarding
the
issue
of
The majority rule provides that the
trier of fact must distinguish “whether the work was performed
... as a ‘part of the original contract’ or for the ‘purpose of
correcting defects, or making repairs following inspection of
the project.’” Austin, 337 F.2d at 572–73 (quoting United States
ex rel. Gen. Elec. Co. v. Gunnar I. Johnson & Son, Inc., 310
F.2d 899, 903 (8th Cir.1962)).
the
Court
they
have
found
On one hand, Defendants assure
remedial
tasks
for
Plaintiff
complete and, thus, the contract has not been fulfilled.
Docket No. 12 at 6.
Defendant
has
“continued
to
in
See
On the other hand, Plaintiff avers that
fact
work
to
accepted
over
the
its
work,
foundation
as
built
Defendant
by
has
[Fuentes].”
Docket No. 22 at 14.
If the Court were to grant this motion to dismiss, it would
essentially be taking Defendant’s word that the contract has not
been fulfilled because Defendant continues to find remedial work
for
Plaintiff
to
complete
over
Defendant has accepted its work.
Plaintiff’s
assertion
that
Nevertheless, at this stage,
district courts are to take the facts alleged by the non-moving
party,
Gabriel
Fuentes
Jr.
Construction
Co.,
Inc.,
as
true.
Hence the Court must conclude, from the facts set forth in the
complaint, that the work performed by Plaintiff was accepted.
Accordingly, finding that Plaintiffs have pled sufficient facts
11
to make relief plausible, the Court hereby denies Defendant CCS’
Motion to Dismiss (Docket No. 12).
Defendant CCS also move for dismissal under the theory that
an action under the Miller Act must be brought “in the name of
the
United
States
for
the
use
of
the
person
action,” and Plaintiff has failed to do so.
bringing
the
Docket No. 12 at 7.
However, we are unpersuaded as failure to bring the action in
the name of the United States is a technical defect that is not
jurisdictional and can be cured by amending the complaint.
See
U.S. for Use & Benefit of Canion v. Randall & Blake, 817 F.2d
1188, 1191 (5th Cir. 1987).
Accordingly, Defendant’s Motion to
Dismiss for failing to file suit in the name of the United
States is hereby denied and Plaintiffs Motion to File an Amended
Complaint
(Docket
No.
22,
Exhibit
A)
is
hereby
granted.
Notwithstanding, all pleadings are to be filed in the name of
the United States for the benefit of Plaintiff Gabriel Fuentes
Construction Co., Inc.
iii. Motion to Stay Further Proceedings
After denying Defendant’s motion to dismiss, the Court must
now turn its attention to its Motion to Stay Further Proceedings
(Docket No. 12).
This power to stay a proceeding before it is
part of every court’s vested right to manage the disposition of
the causes on its docket with economy of time and effort for
itself, for counsel, and for litigants.
12
Landis v. N. Am. Co.,
299 U.S. 248, 254-55 (1936).
Courts contemplating whether to
stay a case must analyze the competing interests of litigants
and find a delicate balance between them.
Kansas City Southern
R. Co. v. United States, 282 U.S. 760, 763 (1931).
In order for
the Court to grant the stay, the moving party must allege a
clear
case
of
hardship
or
inequity
in
being
required
to
go
forward, if there is even a remote chance that the stay will
harm another party.
Landis, 299 U.S. at 255 (1936).
Plaintiff alleges that a stay will deprive it of its right
to have their day in court and will cause further economic harm
than what it has already endured, as it has paid all costs of
labor, material, and insurance, among others, and is yet to be
compensated by Defendants.
of
its
argument
for
a
See Docket No. 22 at 21.
stay,
Defendant
cites
In support
an
explicit
provision in their Subcontract Agreement with Plaintiffs which
states:
“For any claim or dispute to which these Disputes
provisions apply, [Plaintiff] agrees to forbear in
filing, or to stay any claim or action that has been
filed by [Plaintiff] pursuant to: (1) Article XVIII of
the Agreement; and (2) any other right or remedy that
Subcontractor may have, at law or in equity, including
without limitation rights or remedies under the Miller
Act (citation omitted) until dispute resolution and
appeal processes set forth in these Dispute provisions
are exhausted.”
Docket No. 12, Exhibit B. Defendant CCS allege that, under the
provision quoted above, Plaintiff agreed to stay any proceedings
until
their
matters
are
resolved
13
pursuant
to
the
dispute
resolution process provided by the Contracts Disputes Act of
1978 (“CDA”), 41 U.S.C. § 71919, et seq.
Based on the contract
language, it is Defendant’s position that, if their motion is
denied, they will be unjustly forced to litigate simultaneously
before the Court and before the Department of Veterans Affairs’
Contracting Officer.
See Docket No. 12 at 9.
Pursuant to the contract language, the Court is inclined to
side with the Defendants and grant the stay.
However, out of an
abundance of caution, the Court will also analyze whether the
Defendant has alleged a clear case of hardship or inequity if
the stay is to be denied and the degree to which the stay would
prejudice Plaintiff.
Plaintiff’s
See Landis, 299 U.S. at 255 (1936).
main
argument
for
hardship
relies
on
the
holding of NavCom Defense Electronics, Inc. v. Ball Corp., a
Ninth Circuit decision which they have interpreted as limiting
all claims brought under the CDA to claims between contractors
(not
sub-contractors)
and
the
government.
NavCom
Defense
Electronics, Inc. v. Ball Corp., 92 F.3d 877 (9th Cir. 1996).
The NavCom decision, however, stresses that the claims of the
subcontractor
may
be
represented
in
the
dispute
resolution
process by “having the prime contractor sponsor and certify the
subcontractor’s claim.”
See Id.
Defendants claim they “sought information from many of its
subcontractors about the costs and delays of the VA’s actions,
14
to
which
many,
including
[Plaintiffs],
submitted
cost
information that Carter then incorporated into its claim against
the VA.”
for
not
Docket No. 29 at 6.
granting
a
stay,
Thus, the Court sees no reason
as
Plaintiff’s
strongest
case
for
hardship is their delay in payment for the work performed and
Defendant assures the Court they have incorporated Plaintiff’s
claims into their case against the VA.
Accordingly, the Court
hereby reluctantly grants Defendants motion to stay proceedings.
However,
Defendants
indefinite.
are
forewarned
that
Therefore,
Defendants
are
progress
report
starting
in
on
the
January
CDA
2015
this
ordered
to
every
is
two
proceedings
and
stay
Plaintiff
is
to
position within ten days of Defendants statements.
not
file
a
months,
present
its
Furthermore,
both parties are hereby ordered to appear before the Court for a
status
conference
hearing
regarding
the
progress
of
CDA
proceedings on February 15, 2015. If the Court is dissatisfied
with the progress made in the dispute resolution process or is
dissatisfied with how Defendant is representing Plaintiff’s case
before
the
contract
officer
the
Court
will
continue
these
hereby
DENIES
proceedings into the discovery phase.
IV. CONCLUSION
For
the
aforementioned
reasons,
the
Court
Defendant CCS’ Motion to Dismiss, GRANTS Defendant CCS’ Motion
15
to Stay Proceedings, and DENIES Defendant CCS’ Motion to Strike
Counts III, IV, and V(Docket No. 12).
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 12th day of December, 2014.
s/ Daniel R. Dominguez
DANIEL R. DOMINGUEZ
U.S. DISTRICT JUDGE
16
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