Source: http://la.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20181025_0001368.ELA.htm/qx
Timestamp: 2020-05-30 23:01:46
Document Index: 40051366

Matched Legal Cases: ['§ 1332', '§ 38', '§ 1', '§ 9', '§ 2', '§ 3901', '§ 3901', '§ 2', '§ 2', '§ 3901', 'art. 3537', 'art. 3540', '§ 52']

FindACase™ | Max Foote Construction Company, L.L.C. v. MWH Constructors, Inc.
Max Foote Construction Company, L.L.C. v. MWH Constructors, Inc.
MAX FOOTE CONSTRUCTION COMPANY, L.L.C.
Before the Court are defendant MWH Constructors, Inc.'s Motion to Dismiss Plaintiff's First Amended and Supplemental Complaint (R. Doc. 22), and defendant MWH Constructors, Inc.'s Motion to Dismiss Plaintiff's Second Amended and Supplemental Complaint (R. Doc. 34) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.[1] Plaintiff Max Foote Construction Company, L.L.C. (“MFCC”) filed oppositions to both motions.[2] Defendant MWH Constructors, Inc. (“MWH”) filed a reply memorandum in support of its motion to dismiss MFCC's First Amended and Supplemental Complaint.[3] MFCC filed a surreply memorandum in opposition to MWH's motion to dismiss MFCC's First Amended and Supplemental Complaint.[4]Having considered the parties' memoranda and the applicable law, the Court issues this Order & Reasons.
This action arises out of a contract dispute between MFCC and MWH. Non-party American Water Operations & Maintenance (“AWOM”) is the prime contractor on a project involving the demolition and removal of two preexisting water treatment plants, and the design and construction of two new wastewater treatment plants known as the North Fort and South Fort Plants, located on Fort Polk in Vernon Parish, Louisiana.[5] On November 8, 2013, MWH entered into a subcontract with AWOM to perform work on the project.[6] Pursuant to its contract with AWOM, MWH obtained payment bonds from Federal Insurance Company (“Federal”), Fidelity and Deposit Company of Maryland (“Fidelity”), and Zurich American Insurance Company (“Zurich”) to secure MWH's payment obligations to its lower-tier subcontractors and suppliers.[7]
On December 30, 2013, MWH entered into a subcontract with MFCC to perform work on the project (the “Subcontract”).[8] MFCC alleges that it experienced numerous delays, resequencings, disruptions, and interferences on its work for MFCC that were out of its control.[9]As an example, MFCC alleges that on June 15, 2017, it informed MWH that it could not perform any further work because another subcontractor had not yet completed necessary predecessor work.[10] Thus, on July 20, 2017, MFCC notified MWH in an email that MFCC would temporarily relocate some equipment and personnel from the project until the predecessor work was completed and MFCC could resume its work under the Subcontract.[11] MFCC claims that it was at all times ready, willing, and able to perform under the Subcontract.[12] On August 14, 2017, MWH sent a letter to MFCC terminating the Subcontract, claiming that MFCC abandoned the project.[13]
On March 12, 2018, MFCC filed this civil action against MWH in the 22nd Judicial District Court, Parish of St. Tammany, State of Louisiana, alleging that MWH wrongfully terminated the Subcontract and that MWH owes MFCC for its work on the project.[14] MWH removed the action to the United States District Court for the Eastern District of Louisiana alleging diversity and federal-question subject-matter jurisdiction under 28 U.S.C. §§ 1332 and 1331, respectively.[15] Thereafter, MWH filed a motion to dismiss.[16] The Court granted MFCC leave to file its First Amended and Supplemental Complaint, and dismissed as moot MWH's motion to dismiss.[17]
On May 3, 2018, MWH filed its Motion to Dismiss Plaintiff's First Amended and Supplemental Complaint.[18] MFCC opposed the motion, and also filed a motion for leave to file its Second Amended and Supplemental Complaint.[19] The Court granted MFCC's motion for leave to file its Second Amended and Supplemental Complaint.[20] Thereafter, the Court granted leave to MWH to file a reply in support of its Motion to Dismiss Plaintiff's First Amended and Supplemental Complaint, [21] and to MFCC to file a surreply in opposition to MWH's Motion to Dismiss Plaintiff's First Amended and Supplemental Complaint.[22]
On June 22, 2018, MWH filed a Motion to Dismiss Plaintiff's Second Amended and Supplemental Complaint, which is nearly identical to MWH's Motion to Dismiss Plaintiff's First Amended and Supplemental Complaint.[23] MFCC filed an opposition in which it adopted its opposition and surreply to MWH's Motion to Dismiss Plaintiff's First Amended and Supplemental Complaint.[24] MFCC also stated that, during a June 7, 2018 status conference, counsel and the Court determined that the filing of MFCC's Second Amended and Supplemental Complaint “should not moot MWH's” Motion to Dismiss Plaintiff's First Amended and Supplemental Complaint because that motion is “directed at the identical prompt pay and unjust enrichment/quantum meruit claims” that are asserted in both the first and second amended complaints.[25]
MFCC's Second Amended and Supplemental Complaint adds the sureties, Federal, Fidelity and Zurich, as defendants.[26] In the Second Amended and Supplemental Complaint, MFCC alleges that MWH owes it at least $1, 949, 337.03 for its work on the project, exclusive of delay damages and other additional compensation and damages.[27] MFCC also claims that it is entitled to compensatory damages for lost profits, escalated materials and equipment costs, lost productivity, inefficiencies and other unspecified extra costs and damages that resulted from the delays, changed and unforeseen conditions, resequencings, disruptions, and interference with its work.[28]
MFCC raises several claims against MWH and its sureties. In Count I, MFCC alleges a breach-of-contract claim against MWH, arguing that MWH wrongfully terminated the Subcontract and failed to make certain required payments to MFCC.[29] Count II alleges claims against the payment bonds under “La. Rev. Stat. Ann. §§ 38:2246 and 9:3902, Louisiana Acts 1918, No. 225, §§ 1-2; New Jersey law, federal law and/or any other applicable law(s).”[30]MFCC alleges that the sureties are liable, in solido, with MWH for all amounts due to MFCC.[31]In Count III, MFCC alleges that MWH violated prompt-pay laws by failing to reduce MFCC's retainage from 5% to 2.5% as required by the Subcontract and failing to pay MFCC for past due amounts within 30 days of MWH's receipt of payment.[32] MFCC alleges that MWH's failure to pay MFCC after receipt of payment constitutes violations of Section 4.14 of the Subcontract and applicable prompt-pay laws, “including but not limited to the provisions of La. Rev. Stat. Ann. § 9:2784, N.J. Stat. Ann § 2A:30A-2, 31 U.S.C. §§ 3901, et seq., and/or any and all other applicable law.”[33] MFCC alleges that it is entitled to recover all penalties, interest, attorneys' fees, and other damages as authorized by the applicable law due to MWH's failure to pay promptly.[34] Finally, in Count IV, MFCC alleges that it is entitled to payment from MWH under the theories of unjust enrichment and quantum meruit, because MWH has received payment for MFCC's work and failed to pay MFCC.[35]
MWH's motions to dismiss are directed at Counts III and IV. As to Count III, MWH argues that MFCC's prompt-pay claims are governed by federal law pursuant to the federal enclave doctrine, including Prompt Pay Act, 31 U.S.C. §§ 3901, et seq., and thus, MFCC cannot maintain a claim under the prompt-pay statutes of Louisiana, La. R.S. 9:2784, or New Jersey, N.J. Stat. Ann. § 2A:30A-2.[36] With respect to Count IV, MWH argues that MFCC cannot state causes of action for the equitable doctrines of unjust enrichment or quantum meruit under either Louisiana or New Jersey law because MFCC has viable causes of action for breach of contract and under the federal Prompt Pay Act.[37]
The Federal Rules of Civil Procedure require a complaint to contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8 “does not require ‘detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007)). The statement of the claim must “‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.'” Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A pleading does not comply with Rule 8 if it offers “labels and conclusions, ” “a formulaic recitation of the elements of a cause of action, ” or “‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555-57).
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a party to move to dismiss for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). A claim is plausible on the face of the complaint “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. (quoting Twombly, 550 U.S. at 556). Plausibility does not equate to probability, but rather “it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556). “Where a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of “entitlement to relief.”'” Id. (quoting Twombly, 550 U.S. at 557). Thus, if the facts pleaded in the complaint “do not permit the court to infer more than a mere possibility of misconduct, the complaint has allege - but it has not ‘show[n]' - ‘that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).
In considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court employs the two-pronged approach utilized in Twombly. The court “can choose to begin by identifying pleadings that, because they are no more than conclusions [unsupported by factual allegations], are not entitled to the assumption of truth.” Id. However, “[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id.
A court's review of a Rule 12(b)(6) motion to dismiss “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) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)). A court may also take judicial notice of certain matters, including public records and government websites. Dorsey v. Protfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2007); see also Hawk Aircargo, Inc. v. Chai., 418 F.3d 453, 457 (5th Cir. 2005). Motions to dismiss are disfavored and rarely granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009)).
(i) Count III - Prompt-Pay Claims
MFCC alleges that MWH's failure to reduce MFCC's retainage and failure to pay MFCC for past due amounts within 30 days of MWH's receipt of payment constitute a breach of Section 4.14 of the Subcontract and a violation of prompt-pay laws, including La. R.S. 9:2784, N.J. Stat. Ann. § 2A:30A-2, and 31 U.S.C. §§ 3901, et seq.[38] MWH argues MFCC's prompt-pay claims are governed by federal law, and as a result, MFCC cannot maintain claims under the prompt-pay statutes of Louisiana or New Jersey.[39]
A choice-of-law analysis is required to determine which law governs MFCC's prompt-pay claims. MWH removed this action citing diversity and federal-question subject-matter jurisdiction.[40] A federal court exercising diversity subject-matter jurisdiction applies the choice-of-law rules of the state in which it sits to determine which substantive law will apply. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 498-97 (1941). Conversely, when exercising federal-question subject-matter jurisdiction, a federal court applies federal common law choice- of-law principles to determine which substantive law will apply. Haynsworth v. The Corporation, 121 F.3d 956, 962 (5th Cir. 1997). However, when subject-matter jurisdiction is based on both diversity and federal question, as here, a federal court follows the choice-of-law rules of the state in which it sits. Totalplan Corp. of Am. v. Colborne, 14 F.3d 824, 832 (2d Cir. 1994). Thus, this Court will apply Louisiana's choice-of-law rules.[41]
MFCC's prompt-pay claims against MWH arise under the Subcontract. Louisiana's general choice-of-law rule applicable to conventional obligations provides:
La. Civ. Code art. 3537. However, when a contract specifies the law applicable thereto, the contract is “governed by the law expressly chosen or clearly relied upon by the parties, except to the extent that law contravenes the public policy of the state whose law would otherwise be applicable under Article 3537.” La. Civ. Code art. 3540. The parties may choose the law of any state, regardless of whether “that state has a particular factual, geographical, or legal relationship with the contract” subject to the limitation that the chosen law must not contravene “the public policy of the state whose law would have been applicable to the issue ‘but for' the parties' choice.” Id. at Revision Cmt. (f).
The Subcontract contains the following choice-of-law clause:
34.1 Governing Law. This Subcontract shall be governed by and construed in accordance with the laws of the State of New Jersey, excluding its choice of law rules, except that any provision in this Subcontract that is (i) incorporated by reference from the FAR; or (ii) incorporated in full text or by reference from any agency regulation that implements or supplements the FAR; or (iii) that is substantially based on any such agency regulation or FAR provision, shall be construed and interpreted according to the federal common law of government contracts as enunciated and applied by federal judicial bodies, boards of contract appeals and quasi-judicial agencies of the federal government.
Thus, pursuant to Article 3540, New Jersey law generally applies to the Subcontract, unless one of the exceptions related to the Federal Acquisition Regulations (“FAR”) applies.[42]
MWH argues that the third FAR exception applies to Section 4.14 of the Subcontract, which is titled “Prompt Payment.”[43] MWH contends that Section 4.14 specifically incorporates the federal Prompt Pay Act, and is thus “substantially based” on 48 C.F.R. § 52.232-27 of the FAR, which MWH argues is practically identical to the federal Prompt Pay Act.[44] As such, MWH argues that the federal Prompt Pay Act applies to MFCC's prompt-pay claims.[45]
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 4.14 provides that an interest penalty is due if the owner of the project &ldquo;is an agency or instrumentality of the United States Government and the provisions of the Prompt Payment Act, as amended (31 U.S.C. &sect; 3901 et seq.), are applicable to the Prime Contract.&rdquo;[46](Emphasis added.) If these two preconditions are satisfied, Section 4.14 specifies the terms and conditions for the interest penalty that could be due from the contractor to the subcontractor and requires that the subcontract include a similar payment and interest penalty clause ...