Court Opinion

ID: 2678006
Source: CourtListenerOpinion
Date Created: 2014-06-11 17:00:12.598231+00
Date Added: 2024-06-11T13:09:07.796936
License: Public Domain

NOT PRECEDENTIAL

                  UNITED STATES COURT OF APPEALS
                       FOR THE THIRD CIRCUIT
                            _____________

                                No. 13-3756
                               _____________

             REGINELLA CONSTRUCTION COMPANY, LTD,
                                            Appellant
                              v.

     TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA
                      _____________

               On Appeal from the United States District Court
                  for the Western District of Pennsylvania
                      District Court No. 2-12-cv-01047
               District Judge: The Honorable Mark R. Hornak

              Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                               May 13, 2014

         Before: SMITH, VANASKIE, and SHWARTZ, Circuit Judges

                           (Filed: June 11, 2014 )

                          _____________________

                                OPINION
                          _____________________

SMITH, Circuit Judge.

     Plaintiff Reginella Construction Company, Ltd. appeals two orders of the
District Court: (1) the order dismissing its complaint; and (2) the order denying its

motion to alter or amend judgment or, in the alternative, for leave to file an

amended complaint. For the reasons that follow, we will affirm.

                                         I.

        Reginella is a Pittsburgh-based construction company that performs mutli-

million dollar public construction projects and has been in business for over

twenty-five years. In 2010–2011, Reginella entered into contracts with (1) the

Moon Area School District (―MASD‖), for conversion of a high school into a

middle school, (―Moon Project‖) and (2) the Ohio Turnpike Commission (―OTC‖),

for re-construction of two service plazas (―Ohio Project‖). Defendant Travelers

Casualty and Surety Company of America provided bonding for both projects.

        Travelers signed these bonding contracts against the backdrop of a General

Indemnification Agreement (―GIA‖) it had entered into with Reginella in June

2009.    The GIA provided that if certain triggering events occurred—such as

Reginella defaulting on any contract bonded by Travelers, or Reginella breaching

the GIA itself—Reginella would transfer a number of rights to Travelers,

including, inter alia, the right to take possession of the work under any bonded

contract, to take possession of Reginella’s property, and to take possession of

funds owed to Reginella under any bonded contract.

        On April 26, 2012, Travelers sent a letter to MASD demanding payments

owed to Reginella on the Moon Project. Travelers urged MASD that it was
                                         2
contractually entitled to these payments because Reginella had defaulted on a

number of its subcontracts and the aggrieved subcontractors had asserted claims

against Travelers on the Moon Project’s payment bond. After receiving this letter,

MASD refused to remit payment to either Reginella or Travelers until the parties

agreed which company was entitled to payment.           Reginella alleges that after

Travelers sent this letter, Travelers informed Reginella’s subcontractors that

MASD was going to terminate Reginella from the Moon Project. According to

Reginella, this information caused the subcontractors to breach their subcontracts

by slowing down, stopping work, and submitting inflated and premature claims

against Reginella. On June 11, 2012, Reginella, having yet to receive payment

from MASD, terminated the Moon Project contract.

      During the same time period, problems arose on the Ohio Project.             In

November 2011, Reginella terminated a subcontractor for failing to perform its

contractual obligations, and this subcontractor filed a lien against the Ohio Project.

In response, OTC withheld payment from Reginella in the amount of the lien until

Reginella provided a lien-over bond from a surety. Reginella asked Travelers to

provide this lien-over bond, arguing that it had a continuing obligation to do so

under the Ohio Project’s contract bond. Travelers disagreed and refused to provide

the bond, arguing that OTC should release payment without the lien-over bond or

that Reginella should obtain this bond from another surety. Negotiations stalled,

and as OTC continued to withhold payment from Reginella, Reginella became
                                          3
unable to pay its subcontractors, causing delays in the project. On May 22, 2012,

OTC terminated Reginella from the Ohio Project.

      On July 26, 2012, Reginella filed a complaint against Travelers in the United

States District Court for the Western District of Pennsylvania. With respect to the

Moon Project, the complaint alleges four tort claims: (1) intentional interference

with the Moon Project construction contract; (2) intentional interference with the

Moon Project subcontracts; (3) breach of fiduciary duty; and (4) bad faith. With

respect to the Ohio Project, the complaint alleges two tort claims: (1) breach of

fiduciary duty; and (2) bad faith. The complaint does not allege any breach of

contract claims and makes no reference to the GIA between Travelers and

Reginella.

      Travelers filed a motion to dismiss, which the District Court granted on May

30, 2013. The District Court dismissed Reginella’s claims for breach of fiduciary

duty because it found that no fiduciary relationship existed between Travelers and

Reginella.   The District Court dismissed Reginella’s claims for intentional

interference with contractual relations and bad faith on the basis of the ―gist of the

action‖ doctrine, which it invoked sua sponte.

      On June 28, 2013, Reginella moved to alter or amend the judgment or, in the

alternative, to amend its complaint to include breach of contract claims. The

District Court denied this motion on September 5, 2013.          This timely appeal

followed.
                                          4
                                            II.1

       We agree with the District Court that Pennsylvania law controls the

disposition of this case.     There is no doubt that Pennsylvania law applies to

Reginella’s claims relating to the Moon Project. These claims arise from business

relationships entered into and carried out in Pennsylvania for the benefit of a

Pennsylvania municipal entity. With respect to Reginella’s two claims relating to

the Ohio Project, we also agree that there is no actual conflict between

Pennsylvania and Ohio law on the issue of whether Reginella can assert a breach

of fiduciary duty or bad faith claim against Travelers.2 Accordingly, for the sake

of convenience, this opinion will apply only Pennsylvania law.

       We also agree with the District Court that Reginella failed to plead facts that

could support a breach of fiduciary duty claim under Pennsylvania law. Nothing in

1
        The District Court had jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). We
exercise jurisdiction pursuant to 28 U.S.C. § 1291. ―Our standard of review of the
district court’s dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure is
plenary. When considering a Rule 12(b)(6) motion, we are required to accept as true all
allegations in the complaint and all reasonable inferences that can be drawn therefrom,
and view them in the light most favorable to the plaintiff.‖ Evancho v. Fisher, 423 F.3d
347, 350 (3d Cir. 2005) (internal citations omitted). We review a district court’s denial of
a motion to alter or amend the judgment for abuse of discretion, except that when ―the
court’s denial [is] based upon the interpretation and application of a legal precept, review
is plenary.‖ Koshatka v. Philadelphia Newspapers, Inc., 762 F.2d 329, 333 (3d Cir.
1985). We review the district court’s denial of leave to amend a complaint for abuse of
discretion. Kanter v. Barella, 489 F.3d 170, 175 (3d Cir. 2007).
2
        Reginella contends that factual development was needed to determine which
state’s laws properly applied. Because the District Court determined that Ohio and
Pennsylvania laws do not actually conflict, however, these factual determinations were
unnecessary.
                                             5
Reginella’s complaint suggests that its relationship with Travelers went ―beyond

mere reliance on superior skill, and into a relationship characterized by

overmastering influence on one side or weakness, dependence, or trust, justifiably

reposed on the other side.‖ Winiski v. Brown & Brown Ins. Co. of PA, 906 A.2d

571, 577 (Pa. Super. Ct. 2006) (internal quotation marks and citation omitted).

The complaint explains that Reginella is a large and well-established contractor

that has performed multi-million dollar public construction contracts for years.

J.A. 54. In fact, the complaint reveals that Reginella terminated its relationship

with Travelers in order to enter a relationship with a new surety on more favorable

terms.     Id. at 53-54.    In short, the complaint depicts a typical arms-length

relationship between a contractor and a surety.3

         Further, we agree with the District Court that Reginella’s claims for

intentional interference with contractual relations and bad faith are barred by

Pennsylvania’s ―gist of the action‖ doctrine.4 Upon consideration of the bonding

contracts and the GIA,5 it is clear that Travelers’s allegedly tortious actions were

3
       The District Court also concluded that the Pennsylvania Supreme Court would not
hold that a contractor/surety relationship was a fiduciary relationship as a matter of law.
Reginella does not challenge this ruling on appeal.
4
       The ―gist of the action‖ doctrine ―precludes plaintiffs from re-casting ordinary
breach of contract claims into tort claims.‖ eToll, Inc. v. Elias/Savion Adver., Inc., 811
A.2d 10, 14 (Pa. Super. Ct. 2002). As the Pennsylvania Superior Court has explained,
―[t]o permit a promisee to sue his promisor in tort for breaches of contract . . . would
erode the usual rules of contractual recovery and inject confusion into our well-settled
forms of actions.‖ Bash v. Bell Tel. Co., 601 A.2d 825, 829 (Pa. Super. Ct. 1992).
5
       Reginella also argues that the District Court’s consideration of the GIA was
inappropriate. We see no error here. It is true that when deciding a motion to dismiss,
                                            6
taken in pursuit of its perceived contractual rights and obligations. Thus, ―the

success of [Reginella’s claims] is wholly dependent on the terms of [the]

contract[s]‖ between the parties—namely, the GIA and subsequent bonding

contracts. eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 19 (Pa. Super. Ct.

2002). Accordingly, dismissal of these claims was appropriate.

       Finally, we conclude that the District Court did not abuse its discretion by

denying Reginella’s motion to amend its complaint. It was within the District

Court’s discretion to determine that granting Reginella’s motion would reward

undue delay by encouraging Reginella’s ―wait-and-see‖ tactics. Further, Reginella

is presently pursuing breach of contract counterclaims against Travelers in the

Allegheny County Court of Common Pleas. Travelers Cas. and Sur. Co. of Am. v.

Reginella Constr. Co., Ltd., et al., GD No. 12-012196.

                                            III.

―courts generally consider only the allegations contained in the complaint, exhibits
attached to the complaint and matters of public record.‖ Pension Ben. Guar. Corp. v.
White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). A court, however, ―may
consider an undisputedly authentic document that a defendant attaches as an exhibit to a
motion to dismiss if the plaintiff’s claims are based upon that document. Otherwise, a
plaintiff with a legally deficient claim could survive a motion to dismiss simply by failing
to attach a dispositive document on which it relied.‖ Id. (internal citations omitted).
Reginella does not dispute the authenticity of the GIA, and we agree with the District
Court that Reginella’s claims are necessarily ―based upon‖ this document. J.A. 14
(―Reginella cannot bring claims against Travelers for its alleged behavior during their
business relationship, yet protest the Court’s full review of the legal nature of that
relationship.‖); see also id. (explaining that review of the GIA is essential to determining
whether a fiduciary relationship existed between the parties, and whether Travelers was
contractually authorized to engage in its allegedly tortious behavior).
                                             7
For the reasons stated, we will affirm the judgment of the District Court.

                                   8