HDI Global Specialty SE v. Coreslab Structures (Texas) Inc. et al

Filing 21

REPORT AND RECOMMENDATIONS 6 Motion to Dismiss filed by Turner Construction Company. Signed by Judge Susan Hightower. (cc3)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
HDI GLOBAL SPECIALTY SE f/k/a
INTERNATIONAL INSURANCE
COMPANY OF HANNOVER SE,
as subrogee of CONSOLIDATED
CRANE & RIGGING, LLC and
CONSOLIDATED CRANE
COMPANY, INC.,
Plaintiff

§
§
§
§
§
§
§
§
§
§
§
§
§

v.
CORESLAB STRUCTURES
(TEXAS) INC. and TURNER
CONSTRUCTION COMPANY,
Defendants

Case No. 1:20-cv-01110-LY

REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
TO: THE HONORABLE LEE YEAKEL
UNITED STATES DISTRICT JUDGE
Before the Court are Defendant Turner Construction Company’s Rule 12(b)(6) Motion to
Dismiss for Failure to State a Claim, filed November 30, 2020 (Dkt. 6), and the associated response
and reply briefs. On December 28, 2020, the District Court referred the Motion to the undersigned
Magistrate Judge for Report and Recommendation, pursuant to 28 U.S.C. § 636(b)(1)(B), Federal
Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of the Local Rules of the United States
District Court for the Western District of Texas. Dkt. 16.
I.

Background

Plaintiff HDI Global Specialty SE, an insurance company headquartered in Hannover,
Germany (“HDI”), filed suit on November 9, 2020, as subrogee of Consolidated Crane and
Rigging, LLC and Consolidated Crane Company, Inc. (collectively, “Consolidated Crane”). HDI
contends that it is entitled to recover $1.5 million from Defendants Coreslab Structures (Texas)

1

Inc. and Turner Construction Company for a settlement paid on Consolidated Crane’s behalf.
Dkt. 1 ¶ 32. Turner engaged Coreslab as a subcontractor to assist with the construction of a parking
facility at the PanTex Plant near Amarillo, Texas. Id. ¶ 10. Turner provided workers’ compensation
coverage to subcontractors and their employees through a contractor-controlled insurance program
(“CCIP”). Id. ¶ 20. The CCIP covered Coreslab and the employees of other subcontractors working
at the PanTex site who were not specifically excluded from the program. Dkt. 1 ¶ 22; Dkt. 1-2 at
11. For the project, Coreslab rented a 250-ton crane and the services of a crane operator from
Consolidated Crane. Dkt. 1 ¶ 12. Under the terms and conditions of Consolidated Crane’s rental
contract, Coreslab agreed to:
1.

indemnify Consolidated Crane for any personal injuries caused by the crane
operator (id. ¶¶ 13, 15);

2.

deem the crane operator to be an employee of Coreslab (id. ¶ 16); and

3.

name Consolidated Crane as an additional insured on its insurance policies,
including any excess or umbrella policies (id. ¶ 17).

Neither Turner nor Coreslab informed Consolidated Crane about the CCIP or offered enrollment.
Id. ¶¶ 24-26.
On April 10, 2017, Coreslab employee Andrew Lopez was injured while working at the
PanTex site. Id. ¶ 27. He sued Consolidated Crane, alleging negligence and negligent hiring and
supervision of the crane operator. HDI settled with Lopez for $1.5 million. Id. ¶¶ 28-32.
Consolidated Crane repeatedly demanded indemnification from Coreslab under terms of its rental
contract, but Coreslab refused. Id. ¶ 29. Consolidated Crane assigned and subrogated its claims
against Turner and Coreslab to HDI. Id. ¶ 33.
HDI brings claims for breach of contract, breach of implied contract, quantum meruit, and
attorneys’ fees against Coreslab and Turner. Id. ¶¶ 36-92. Turner seeks dismissal of HDI’s claims
against it for failure to state a claim under Rule 12(b)(6).
2

II.

Legal Standard

Rule 12(b)(6) allows a party to move to dismiss an action for failure to state a claim on which
relief can be granted. In deciding a Rule 12(b)(6) motion to dismiss for failure to state a claim, the
court accepts “all well-pleaded facts as true, viewing them in the light most favorable to the
plaintiff.” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (citation
omitted). The Supreme Court has explained 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, 678 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Iqbal, 556 U.S. at 678.
While a complaint attacked by a Rule 12(b)(6) motion to dismiss does
not need 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. Factual allegations must be enough 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).
Twombly, 550 U.S. at 555 (cleaned up). The court’s review is limited to the complaint, any
documents attached to the complaint, and any documents attached to the motion to dismiss that
are central to the claim and referenced by the complaint. Lone Star Fund V (U.S.), L.P. v. Barclays
Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010).
III.

Analysis

Turner argues that HDI’s claims for quantum meruit and breach of implied contract should be
dismissed because HDI has not pled facts sufficient to support the requisite elements of either
claim. Turner also contends that, because HDI has not stated a claim for breach of contract, its
request for attorneys’ fees under Texas Civil Practice and Remedies Code Section 38.001 should
be dismissed.
3

A. Quantum Meruit
Quantum meruit is an equitable theory of recovery based on an implied agreement to pay for
benefits received. Mission Toxicology, L.L.C. v. UnitedHealthcare Ins. Co., No. 5:17-CV-1016DAE, 2018 WL 2222854, at *8 (W.D. Tex. Apr. 20, 2018) (citing Heldenfels Bros., Inc. v. City of
Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992)). To recover in quantum meruit, a plaintiff must
establish that (1) he rendered valuable services or furnished materials, (2) for the defendant,
(3) who accepted the services and materials, and (4) the defendant had reasonable notice that the
plaintiff expected compensation for those services or materials. Heldenfels Bros., 832 S.W.2d at
41. Recovery in quantum meruit requires a direct link between the parties involved, which means
that one party must have provided services or materials to the other. Mid-Town Surgical Ctr., LLP
v. Blue Cross Blue Shield of Tex., Inc., No. H-11-2086, 2012 WL 1252512, at *3 (S.D. Tex.
Apr. 11, 2012). A plaintiff must show that the efforts were undertaken for the defendant, not just
that his efforts benefited that person. Rodriguez-Meza v. Venegas, No. DR-17-CV-54-AM/CW,
2018 WL 7348864, at *15 (W.D. Tex. Sept. 27, 2018). Because quantum meruit is an equitable
theory of recovery intended to prevent unjust enrichment, it is not available where a valid express
contract covering the subject matter exists. Program Mgmt. Int’l v. Tetra Tech EC, Inc., No. SA09-CA-877-OLG, 2010 WL 11601881, at *3 (W.D. Tex. July 19, 2010).
HDI’s allegations are insufficient to state a claim for quantum meruit against Turner for two
reasons. First, Consolidated Crane rendered crane rental and operator services to Coreslab, not
Turner, under the terms of a rental contract. Dkt. 1-1 at 2. HDI alleges that Turner engaged
Coreslab as a subcontractor on the PanTex project, but does not allege that Consolidated Crane
had any direct relationship with Turner. Dkt. 1 ¶ 10. Rather, HDI alleges that “Coreslab for the
benefit of Turner requested services and equipment from Consolidated Crane.” Id. ¶ 68. Turner’s

4

status as a mere beneficiary of Consolidated Crane’s services precludes HDI’s claim for recovery
on a quantum meruit theory. See Mission Toxicology, L.L.C., 2018 WL 2222854 at *8 (dismissing
quantum meruit claim for failure to state a claim where plaintiff lacked “direct link” to defendant).
Second, HDI’s claim for recovery is based on the $1.5 million settlement it paid to Lopez on
behalf of Consolidated Crane. Dkt. 1 ¶¶ 81-84. HDI alleges that the settlement payment to Lopez
benefitted Turner by preventing a potential worker’s compensation claim on Turner’s CCIP. Id.
¶ 81. HDI, however, does not allege that it rendered valuable services or furnished materials to
Turner when it settled the Lopez lawsuit on behalf of Consolidated Crane. See Windmill Wellness
Ranch, L.L.C. v. Blue Cross & Blue Shield of Tex., Civil No. SA-19-cv-01211-OLG, 2020 WL
7017739, at *7 (W.D. Tex. Apr. 22, 2020) (dismissing quantum meruit claim brought against
insurer because plaintiff rendered services to insured rather than to insurer). Because HDI does not
allege that Consolidated Crane rendered services or furnished materials to Turner, HDI has failed
to satisfy the first three elements of its claim for quantum meruit.
B. Breach of Implied Contract
A party must show either privity or third-party beneficiary status to have standing to sue for
breach of contract. Estep v. Yuen Yung, No. A-15-CA-00053-SS, 2015 WL 13804249, at *4
(W.D. Tex. Sept. 24, 2015) (citing Ostrovitz & Gwinn, LLC v. First Specialty Ins. Co., 393 S.W.3d
379, 387 (Tex. App.—Dallas 2012, no pet.)). Turner argues that HDI’s breach of implied contract
claim should be dismissed because HDI fails to allege facts showing either privity of contract
between Turner and Consolidated Crane, or that Consolidated Crane was an intended third-party
beneficiary of the contract between Turner and Coreslab.

5

1. Privity
The elements of an express or implied contract are identical under Texas law. Electrostim Med.
Servs., Inc. v. Health Care Serv. Corp., 614 F. App’x 731, 744 (5th Cir. 2015) (citing Plotkin v.
Joekel, 304 S.W.3d 455, 476 (Tex. App.—Houston [1st Dist.] 2009, pet. denied)). To plead
existence of a valid implied contract, a plaintiff must allege (1) offer; (2) acceptance; (3) a meeting
of the minds; (4) each party’s consent to the terms; and (5) execution and delivery of the contract
with the intent that it be mutual and binding. Id. For implied contracts, mutual agreement is inferred
from the circumstances and evidenced by the parties’ conduct and course of dealing. ACS Primary
Care Physicians Sw., P.A. v. UnitedHealthcare Ins., No. 4:20-cv-01282, 2021 WL 235177, at *3
(S.D. Tex. Jan. 22, 2021); see also Ishin Speed Sport, Inc. v. Rutherford, 933 S.W.2d 343, 348
(Tex. App.—Fort Worth 1996, no writ) (stating that parties’ dealings may result in an implied
contract where facts show their minds met on contract terms). An implied contract must have
sufficiently definite terms to enable the Court to determine the parties’ legal obligations.
DAC Surgical Partners P.A. v. United Healthcare Servs., Inc., No. 11-cv-1355, 2016 WL
7177881, at *6 (S.D. Tex. Dec. 8, 2016).
HDI alleges that Turner entered into an agreement with Coreslab that established a CCIP to
provide workers’ compensation coverage to eligible employees and subcontractors on the PanTex
project. Dkt. 1 ¶¶ 20-21, 44. HDI asserts that the agreement between Turner and Coreslab was an
“offer” to Consolidated Crane to participate in the CCIP, and that Consolidated Crane “accepted”
the offer by providing services and equipment to the PanTex project. Id. ¶¶ 87-88. Yet Turner’s
CCIP manual, which HDI attaches to its Complaint, specifically excludes “Third Party Crane
Subcontractors/Companies of any tier” from participating in the CCIP. Dkt. 1-2 at 14.
Consolidated Crane completed its work on the PanTex project pursuant to a written rental contract

6

in which Coreslab, not Turner, agreed to indemnify Consolidated Crane for any personal injuries
caused by the crane operator. Dkt. 1 ¶¶ 13, 15. Consolidated Crane was never notified about or
enrolled in the CCIP. Id. ¶¶ 24-25.
HDI does not allege that Consolidated Crane had a previous course of dealing with Turner
such that enrollment in Turner’s CCIP could be implied or expected by the parties. Viewed in a
light most favorable to HDI, the factual allegations do not show the requisite “meeting of the
minds” between Turner and Consolidated Crane regarding CCIP coverage to establish an implied
contract. Consequently, there is no privity of contract between the parties, and HDI’s claim for
breach of implied contract against Turner should be dismissed for failure to state a claim. See
Electrostim, 614 F. App’x at 744 (affirming dismissal of breach of implied contract claim for
failure to state a claim where plaintiff failed to allege facts showing meeting of minds); ACS
Primary Care Physicians, 2021 WL 235177 at *3 (dismissing claim for breach of implied contract
where factual allegations were “bereft of facts that demonstrate a meeting of the minds”).
2. Third-Party Beneficiary
When a party lacks privity, a third party may recover on a contract between two other
individuals only if the contracting parties intended to secure a benefit to that third party and entered
the contract directly for the third party’s benefit. Estep, 2015 WL 13804249, at *4 (citing Stine v.
Stewart, 80 S.W.3d 586, 589 (Tex. 2002)). The contract must reflect “a clear and unequivocal
expression of the contracting parties’ intent to directly benefit a third party.” Id. (quoting Alvarado
v. Lexington Ins. Co., 389 S.W.3d 544, 552 (Tex. App.—Houston [1st Dist.] 2012, no pet.)).
Incidental benefits flowing from the contract to a third party do not confer the right to enforce it.
S. Tex. Water Auth. v. Lomas, 223 S.W.3d 304, 306 (Tex. 2007).

7

The Complaint contains no facts supporting HDI’s conclusory allegation that “Consolidated
Crane was an intended third-party beneficiary of the CCIP.” Dkt. 1 ¶ 73. The CCIP manual
excludes “Third Party Crane Subcontractors/Companies of any tier” from participation in the
CCIP, Dkt. 1-2 at 14, and HDI has alleged no facts that Turner and Coreslab intended their
agreement to benefit Consolidated Crane or third-party crane subcontractors in general. At best,
participation in the CCIP would be an incidental benefit to Consolidated Crane if it were eligible
to enroll, which does not confer status as a third-party beneficiary. Accordingly, HDI’s claim for
breach of implied contract against Turner should be dismissed for failure to state a claim. See
Estep, 2015 WL 13804249, at *4 (dismissing breach of contract action for failure to state a claim
because a “court will not create a third party beneficiary contract by implication”).
3. Conclusion as to Breach of Implied Contract Claim
Because HDI has not pled facts showing either contractual privity with Turner or that
Consolidated Crane was an intended third-party beneficiary, the undersigned recommends that
HDI’s claim for breach of implied contract against Turner be dismissed.
C. Attorneys’ Fees
Because the Court recommends dismissal of HDI’s claim for breach of implied contract against
Turner, the Court further recommends dismissal of HDI’s claim for attorneys’ fees under Texas
Civil Practice and Remedies Code § 38.001.
D. HDI’s Request for Leave to Amend
In its response, HDI seeks leave to file an amended complaint if the Court finds its pleadings
deficient. Dkt. 14 at 19. Courts should freely grant leave to amend when justice so requires. FED.
R. CIV. P. 15(a)(2). Courts should deny leave to amend when amendment would cause undue
delay or undue prejudice to the opposing party, or the amendment would be futile or in bad faith.

8

Mayeaux v. La. Health Serv. & Indem. Co., 376 F.3d 420, 425 (5th Cir. 2004). Amendment is
futile where it “would fail to state a claim upon which relief could be granted.” Stripling v. Jordan
Prod. Co., LLC, 234 F.3d 863, 872-73 (5th Cir. 2000).
HDI has not offered any additional facts it would plead to cure the defects in its Complaint to
adequately state a claim sufficient to survive a motion to dismiss. Dkt. 14 at 19. Without proposed
amendments, the Court is unable to assess whether amendment is warranted. See Edionwe v.
Bailey, 860 F.3d 287, 294 (5th Cir. 2017) (holding that leave to amend is not required where
movant fails to apprise court of facts he would plead in amended complaint to cure any
deficiencies). Accordingly, HDI’s request for leave to amend should be denied.
IV.

Recommendation

Based on the foregoing, the undersigned Magistrate Judge RECOMMENDS that the District
Court GRANT Defendant Turner Construction Company’s Rule 12(b)(6) Motion to Dismiss for
Failure to State a Claim (Dkt. 6) and DISMISS with prejudice Plaintiff’s claims against Turner in
Counts 4 through 6 of its Complaint under Federal Rule of Civil Procedure 12(b)(6).
It is FURTHER ORDERED that the Clerk remove this case from the Magistrate Court’s
docket and RETURN it to the docket of the Honorable Lee Yeakel.
V.

Warnings

The parties may file objections to this Report and Recommendation. A party filing objections
must specifically identify those findings or recommendations to which objections are being made.
The District Court need not consider frivolous, conclusive, or general objections. See Battle v.
United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987). A party’s failure to file written
objections to the proposed findings and recommendations contained in this Report within fourteen
(14) days after the party is served with a copy of the Report shall bar that party from de novo

9

review by the District Court of the proposed findings and recommendations in the Report and,
except on grounds of plain error, shall bar the party from appellate review of unobjected-to
proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C.
§ 636(b)(1); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass’n,
79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).
SIGNED on March 30, 2021.

SUSAN HIGHTOWER
UNITED STATES MAGISTRATE JUDGE

10