Moorefield Construction, Inc. v. FPM Remediations, Inc. et al
ORDER DENYING 36 Motion to Dismiss; DENYING 37 Motion to Dismiss for Failure to State a Claim. Signed by Judge Andrew W. Austin. (td)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
INC. AND THE UNITED STATES
FOR THE USE OF MOOREFIELD
FPM REMEDIATIONS, INC. AND
FIDELITY AND DEPOSIT COMPANY
TME, INC. AND CORGAN
THIRD PARTY DEFENDANTS
Before the Court are Third Party Defendant TME, Inc.’s Motion to Dismiss for Failure to
State a Claim (Dkt. #36); Third Party Defendant Corgan Associates, Inc’s Motion to Dismiss for
Failure to State a Claim (Dkt. #37); Defendant/Third Party Plaintiff FPM’s Combined Objection to
Third-Party Defendants’ Motion to Dismiss (Dkt. #38); Plaintiff Moorefield Construction’s
Response to the Motions to Dismiss (Dkt. # 40); and Third Party Defendant TME, Inc’s Reply (Dkt.
I. GENERAL BACKGROUND
On May 8, 2012, Moorefield Construction, Inc. and The United States for the Use of
Moorefield Construction, Inc. (“Moorefield”) filed this breach of contract action against FPM
Remediations, Inc. (“FPM”) and Fidelity and Deposit Company of Maryland (“Fidelity”). FPM had
entered into a contract with The United States Army Corps of Engineers to design and build multiple
military facilities in Ft. Hood and El Paso, Texas (“Projects”). On June 10, 2009, Moorefield and
FPM entered into a subcontract agreement with FPM whereby Moorefield was to serve as
subcontractor and manage the construction of the Projects. Moorefield alleges that it completed all
of its work on the Projects but that FPM has refused to fully pay Moorefield in violation of the
contracts. Moorefield alleges that it has suffered $2,924,774.17 in damages as a result of FMP
refusing to pay Moorefield its full subcontract balance. Moorefield alleges breach of contract, a
bond claim, quantum meruit and a trust fund and prompt payment violation under the Texas Property
In response to the lawsuit, FMP filed a counterclaim against Moorefield alleging that
Moorefield breached its contractual and other obligations owed to FPM by failing to timely, fully
and properly complete its work on the Projects. On July 30, 2013, FPM filed a Third Party
Complaint against TME, Inc. (“TME”) and Corgan Associates, Inc. (“Corgan”), companies that
provided design, engineering and related services for FPM on the Projects. The Third Party
Complaint asserts claims for “common law, contractual and statutory right of indemnity and/or
contribution” in the event that Moorefield recovers damages against FPM as a result of some act or
omission on the part of TME and/or Corgan.
On January 9, 2013, the District Court consolidated this lawsuit with a similar lawsuit (1:12CV-771 JRN) Moorefield had filed against FPM in Arizona which was transferred to the Western
District of Texas. After all parties provided the District Court with a Notice, Consent and Reference
of a Civil Action to a Magistrate Judge, this case was reassigned to the undersigned. Third Party
Defendants TME and Corgan have each filed Motions to Dismiss for Failure to State a Claim
pursuant to Federal Rule of Civil Procedure 12(b)(6). TME and Corgan argue that FPM’s Third
Party Complaint should be dismissed because FPM failed to file a certificate of merit with its
Complaint as is allegedly required under § 150.002 of the Texas Civil Practice & Remedies Code.
II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) allows for dismissal of an action “for failure to state
a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). While a complaint attacked by
a Rule 12(b)(6) motion does not need detailed factual allegations in order to avoid dismissal, the
plaintiff's factual allegations “must be enough to raise a right to relief above the speculative level.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also, Cuvillier v. Taylor, 503 F.3d
397, 401 (5th Cir. 2007). A plaintiff's obligation “requires more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action will not do.” Id. The Supreme Court
recently expounded on the Twombly standard, explaining that a complaint must contain sufficient
factual matter to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662
(2009). “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.” Id. In
evaluating a motion to dismiss, the Court must construe the complaint liberally and accept all of the
plaintiff's factual allegations in the complaint as true. See In re Katrina Canal Breaches Litigation,
495 F.3d 191, 205 (5th Cir. 2009).
Section 150.002 of the Texas Civil Practice & Remedies Code requires a plaintiff seeking
damages for professional negligence by a licensed or registered professional, such as an architect or
engineer, to file an affidavit attesting to the claim’s merit with the complaint. Tex. Civ. Prac. &
Rem. Code. § 150.002(a). The affidavit must
set forth specifically for each theory of recovery for which damages are sought, the
negligence, if any, or other action, error, or omission of the licensed or registered
professional in providing the professional service, including any error or omission
in providing advice, judgment, opinion, or a similar professional skill claimed to
exist and the factual basis for each such claim.
Id. § 150.002(b). “The plaintiff's failure to file the affidavit in accordance with this section shall
result in dismissal of the complaint against the defendant.” Id. at § 150.002(e). Relying on §150.002,
Third Party Defendants TME and Corgan argue that FPM’s Third Party Complaint should be
dismissed because FPM failed to file a certificate of merit with its Complaint as required by the
statute. While FPM concedes that it did not file a certificate of merit with its Complaint, it contends
that § 150.002 is a state procedural rule that does not apply in federal court. FPM further argues that
even if the requirements of § 150.002 did apply in federal court, it was not required to file a
certificate of merit since the statute only applies to plaintiffs, not third party plaintiffs such as FPM.
Does Tex. Civ. Prac. & Rem. Code § 150.002 apply in Federal Court?
Under the Erie doctrine,1 “federal courts sitting in diversity apply state substantive law and
federal procedural law.” Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996). Because
“[c]lassification of a law as ‘substantive’ or ‘procedural’ for Erie purposes is sometimes a
challenging endeavor,” Erie and its progeny provide a multi-step inquiry. Id. However, “[w]hen a
party has alleged a direct conflict between the Federal Rules and state law, [ ] an additional step
precedes the Erie analysis.” All Plaintiffs v. All Defendants, 645 F.3d 329, 333 (5th Cir. 2011) (citing
Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).
Hanna v. Plumer, 380 U.S. 460, 469–70 (1965)). “The initial step is to determine whether, when
fairly construed, the scope of [the Rule] is sufficiently broad to cause a direct collision with the state
law or, implicitly, to control the issue before the court, thereby leaving no room for the operation of
that law.” Id. (internal quotation marks omitted). “In determining whether the Rule covers a
particular issue, [courts] look to the plain meaning of the Rule’s language.” Id. If a direct collision
exists, courts must apply the federal rule as long as it does not violate either the Constitution or the
Rules Enabling Act. Id.
The Fifth Circuit has not determined whether the certificate of merit filing requirement of
§ 150.002 is a substantive element of a state law professional negligence claim or whether it is
procedural. See Menendez v. Wal–Mart Stores, Inc., 364 F. App’x 62, 68 n. 7 (5th Cir. 2010)
(expressing “no views” in a removed case against an in-state architectural firm as to whether
§ 150.002 precluded recovery against that defendant and made removal improper). While a few
district courts in this circuit have applied § 150.002 in diversity cases asserting Texas negligence
claims, those courts assumed that § 150.002 applied without first analyzing whether it was proper
to apply that statute under Erie. See e.g., Garrison Realty, L.P. v. Fouse Architecture & Interiors,
P.C., 2011 WL 3740849 (E.D. Tex. Aug. 4, 2011); Garland Dollar General LLC, v. Reeves Dev.,
LLC, 2010 WL 4259818 (N.D. Tex. Oct. 21, 2010); Harris Const. Co. LTD. v. GGP-Bridgeland,
L.P., 2010 WL 1945734 (S.D. Tex. May 12, 2010).
In contrast, the only District Court that has addressed the issue in any depth has held that
§ 150.002 is a procedural rule that does not apply in federal court. See Estate of C.A. v. Grier, 752
F. Supp.2d 763 (S.D. Tex. 2010) (Lee H. Rosenthal, J.). In Judge Rosenthal found that § 150.002
is a procedural statute that directly collides with applicable Federal Rules of Civil Procedure.
Specifically, the Court found that “[s]ection 150.002 imposes more stringent pleading requirements
than Rules 8 and 9 of the Federal Rules of Civil Procedure and therefore conflicts with the federal
pleading sufficiency standards.” Id. at 770. She also found that § 150.002 was inconsistent with
Rules 11 and 26, and therefore “collides with federal law.” Id. at 771.
Federal courts outside of the Fifth Circuit have also split on the question of whether a state
law certificate of merit filing requirement constitutes a mere procedural rule that does not apply in
federal court or a substantive rule that must be applied in federal court. See Cornelius v. ECHN
Rockville General Hosp., 2014 WL 2986688 at * 3 (D. Conn. July 1, 2014) (discussing the split
among the courts nationwide on the certificate of merit filing requirement); 19 Charles Alan Wright
& Arthur R. Miller, Federal Practice & Procedure § 4511 (2014 Supp.). Thus,“the applicability of
state certification requirements in federal courts remains unresolved.” 19 Charles Alan Wright &
Arthur R. Miller, Federal Practice & Procedure § 4511(2014 Supp.). In the end, while the Court
finds Judge Rosenthal’s opinion in Grier persuasive, the Court need not determine whether Tex. Civ.
Prac. & Rem. Code. § 150.002 is a procedural rule that does not apply in federal court in order to
rule on the Motions to Dismiss in this case. Even if the Court found that § 150.002 must be followed
here, § 150.002 would not apply to a third party plaintiff or defendant asserting indemnity claims,
such as FPM.
Section 150.002 and Third Party Claims
Just last month, in Jaster v. Comet II Construction, Inc., – S.W.3d – , 2014 WL 2994503 at
* 11 (Tex. July 3, 2014), the Texas Supreme Court held that the certificate of merit requirement in
§ 150.002 of the Civil Practice and Remedies Code only “applies to ‘the plaintiff’ who initiates an
action for damages arising out of the provision of professional services by a licensed or registered
professional, and does not apply to a defendant or third-party defendant who asserts such claims.”
According to the term’s common, ordinary meanings, the court reasoned that § 150.002 requires “the
plaintiff” to file a certificate of merit in “any [lawsuit] or arbitration proceeding” against a licensed
professional, and “the plaintiff” is a party who initiates the “action” or suit, not any party who asserts
claims or causes of action within the suit.” Id. at 6. Thus, “[t]hird-party plaintiffs and crossclaimants do not initiate a lawsuit or legal proceeding” and thus are not plaintiffs under the statute.
Id. The court further reasoned that:
Having identified the common meanings of the terms “plaintiff” and “action” as
referring to a party who initiates a lawsuit, in contrast to a “claimant” who asserts a
claim for relief within a lawsuit, and having determined that the context of those
terms supports those common meanings, we conclude that section 150.002's
certificate-of-merit requirement applies to a party who initiates the lawsuit, and not
to defendants or third-party defendants who assert claims for relief within a suit.
Id. at 9.
Based upon the Texas Supreme Court’s holding in Jaster, the certificate of merit
requirements in section 150.002 of the Texas Civil Practice and Remedies Code does not apply to
a defendant or third party plaintiff such as FPM. Accordingly, Third Party Defendant TME, Inc.’s
Motion to Dismiss for Failure to State a Claim (Dkt. #36) and Third Party Defendant Corgan
Associates, Inc’s Motion to Dismiss for Failure to State a Claim (Dkt. #37) are without merit and
are HEREBY DENIED.
SIGNED this 21st day of August, 2014.
ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE
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