Court Opinion

ID: 9379392
Source: CourtListenerOpinion
Date Created: 2023-03-15 16:00:41.540012+00
Date Added: 2024-06-11T17:15:51.434917
License: Public Domain

UNITED STATES DISTRICT COURT
                        FOR THE DISTRICT OF COLUMBIA

    SCG AMERICA GROUP, INC.,

               Plaintiff,

    v.                                   Civ. Action No. 20-2877
                                                  (EGS)
    STARLIGHT SECURITY INC.,

               Defendant.

                             MEMORANDUM OPINION

I.       Introduction

         SCG America Group, Inc. (“SCG” or “Plaintiff”) brings this

action against Starlight Security Inc. (“SSI” or “Defendant”)

alleging breach of contract and negligence claims following a

redevelopment project at the consular residence building owned

by the Embassy of the People’s Republic of China and located in

the District of Columbia (the “District”). See Am. Compl., ECF

No. 9 ¶¶ 16, 43-53. 1

         Pending before the Court is SSI’s Motion to Dismiss, ECF

No. 10. Upon careful consideration of the parties’ submissions,

1
 When citing electronic filings throughout this Opinion, the
Court refers to the ECF page numbers, not the page numbers of
the filed documents.
                                     1
the applicable law, and the entire record herein, the Court

hereby DENIES SSI’s motion.

II.   Background

      A. Factual

      The People’s Republic of China (“China”) hired SCG as its

general contractor to complete a redevelopment project at the

consular residence building in Washington, D.C. (the “Project”).

See Am. Compl., ECF No. 9 ¶ 16. SCG’s parent company is Shanghai

Construction Group, a large, prominent construction company in

China. Id. ¶ 7. The Project is the only construction work SCG

has ever performed in the District. Id. ¶ 8.

      On December 5, 2016, SCG entered into a contract with SSI,

a fire alarm subcontractor. Id. ¶¶ 10, 16 (citing Ex. A

(“Subcontract Agreement”), ECF No. 9-1). Pursuant to this

contract (the “Subcontract Agreement”), SSI was required to

furnish and install the fire alarm system at the Project for

$980,000.00. Id. ¶ 17. The parties agreed that SCG would make

payments on a progress basis. Id. ¶ 18. The parties also agreed

that SCG was entitled to withhold certain payments and/or

collect damages from SSI under certain circumstances. Id. ¶¶ 18-

22.

      SCG alleges that, during the duration of the Subcontract

Agreement, SSI repeatedly defaulted on its contractual

obligations. See id. ¶¶ 23-24, 34-35. In an attempt to resolve

                                2
their disputes and complete the fire alarm installation, the

parties entered into two additional agreements: the First

Addendum to Subcontract and the Second Addendum to Subcontract.

See id. ¶¶ 26, 28 (citing Ex. B (“First Addendum”), ECF No. 9-2;

Ex. C (“Second Addendum”), ECF No. 9-3). Pursuant to these

addenda, SCG paid SSI $100,000 in exchange for SSI’s agreement

to complete its work on the Project. See id. ¶ 27.

      SCG alleges that in December 2019, SSI again stopped work

on the Project and demanded payment. Id. ¶ 34. SCG then

determined that SSI “was not capable of completing the

contracted work” and sent SSI a Notice of Default as well as a

Notice of Termination of Subcontract Agreement in February 2020.

Id. ¶ 35 (citing Ex. D (“Notice of Default”), ECF No. 9-4; Ex. E

(“Notice of Termination of Subcontract Agreement”), ECF No. 9-

5).

      SCG thereafter engaged a different subcontractor to

complete the fire alarm installation and to redo a significant

portion of SSI’s work. Id. ¶¶ 36-38. SCG alleges that it has

incurred significant additional expenses, including its payments

to the new subcontractor, the costs of amplifier panels withheld

by SSI, and other damages. Id. ¶¶ 39-41.

      B. Procedural

      SCG filed this lawsuit on October 8, 2020, see Compl., ECF

No. 1; and amended the Complaint later that year on December 29,

                                3
2020, see Am. Compl., ECF No. 9. On January 12, 2021, SSI filed

this Motion to Dismiss the Amended Complaint. See Def.’s Mot.

Dismiss Pl.’s Am. Compl. &, in the Alternative, Mot. Summ. J.,

ECF No. 10; Def. Starlight Security Inc.’s Mem. Supp. Mot.

Dismiss (“Def.’s Mot.”), ECF No. 10-1. SCG filed its opposition

brief on January 26, 2021, see Pl.’s Mem. P. & A. Opp’n Def.’s

Mot. Dismiss Am. Compl. & Summ. J. (“Pl.’s Opp’n”), ECF No. 11;

and SSI filed its reply brief on February 1, 2021, see Reply

Supp. Def.’s Mot. Dismiss & Mot. Summ. J. (“Defs.’ Reply”), ECF

No. 12. SSI’s motion is now ripe and ready for adjudication.

III. Legal Standard

     A. Rule 12(b)(6) Motion to Dismiss

     A motion to dismiss pursuant to Federal Rule of Civil

Procedure 12(b)(6) tests the legal sufficiency of a complaint.

Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A

complaint must contain “a short and plain statement of the claim

showing that the pleader is entitled to relief, in order to give

the defendant fair notice of what the . . . claim is and the

grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550

U.S. 544, 555 (2007) (citation and internal quotation marks

omitted).

     Despite this liberal pleading standard, 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

                                4
on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(citation and internal quotation marks omitted). “In determining

whether a complaint fails to state a claim, [the court] may

consider only the facts alleged in the complaint, any documents

either attached to or incorporated in the complaint and matters

of which [the court] may take judicial notice.” EEOC v. St.

Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir.

1997). A claim is facially plausible when the facts pled in the

complaint allow the court to “draw the reasonable inference that

the defendant is liable for the misconduct alleged.” Iqbal, 556

U.S. at 678. The standard does not amount to a “probability

requirement,” but it does require more than a “sheer possibility

that a defendant has acted unlawfully.” Id.

     “[W]hen ruling on a defendant’s motion to dismiss [pursuant

to Rule 12(b)(6)], a judge must accept as true all of the

factual allegations contained in the complaint.” Atherton v.

D.C. Off. of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009)

(citation and internal quotation marks omitted). In addition,

the court must give the plaintiff the “benefit of all inferences

that can be derived from the facts alleged.” Kowal v. MCI

Commc’ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).

     B. Rule 12(b)(3) Motion to Dismiss

     Federal Rule of Civil Procedure 12(b)(3) authorizes a party

to move to dismiss a case for “improper venue.” Fed. R. Civ. P.

                                5
12(b)(3). “Whether venue is ‘wrong’ or ‘improper’ depends

exclusively on whether the court in which the case was brought

satisfies the requirements of federal venue laws.” Atl. Marine

Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49,

55 (2013). The plaintiff bears the burden of establishing that

venue is proper. Ananiev v. Wells Fargo Bank, N.A., 968 F. Supp.

2d 123, 129 (D.D.C. 2013) (citations omitted).

      In considering a motion to dismiss for improper venue, the

court “accepts the plaintiff’s well-pled factual allegations

regarding venue as true, draws all reasonable inferences from

those allegations in the plaintiff’s favor and resolves any

factual conflicts in the plaintiff’s favor.” McCain v. Bank of

Am., 13 F. Supp. 3d 45, 51 (D.D.C. 2014) (citations and internal

quotation marks omitted), aff’d sub nom. McCain v. Bank of Am.

N.A., 602 F. App’x 836 (D.C. Cir. 2015). “The Court, however,

need not accept the plaintiff’s legal conclusions as true, and

may consider material outside the pleadings, including

undisputed facts evidenced in the record, to determine whether

it has jurisdiction in the case.” Ananiev, 968 F. Supp. 2d at

129 (citations and internal quotation marks omitted).

IV.   Analysis

      A. SCG May Proceed with Its Breach of Contract Claim

      SSI moves to dismiss Count I of the Amended Complaint,

which alleges breach of contract, because SCG was the general

                                6
contractor for the Project but failed to comply with local

licensing regulations. See Def.’s Mot., ECF No. 10-1 at 5-13.

For the reasons that follow, the Court DENIES SSI’s motion as to

this claim.

     District of Columbia law requires that “individuals or

businesses engaged in general contracting or construction

management” obtain “[a] General Contractor/Construction Manager

License.” D.C. Code Ann. § 47-2851.03d(b). To comply, general

contractors 2 and construction managers 3 must apply to the

Department of Consumer and Regulatory Affairs to receive a basic

business license with a general contractor/construction manager

endorsement. D.C. Mun. Regs. tit. 17, § 3900.1. The District

prohibits “[a] person which is required under law to obtain a

license issued in the form of an endorsement to engage in a

business in the District of Columbia” from “engag[ing] in such

business in the District of Columbia without having first

2 District regulations define general contractor as “any person
who, for a fee, is contracted to do construction on real
property owned, controlled, or leased by another person of
commercial, industrial, institutional, governmental, residential
or accessory use buildings or structures. This also includes the
remodeling, repair, improvement or demolition of these buildings
or structures.” D.C. Mun. Regs. tit. 17, § 3999.
3 District regulations define construction manager as “any

person who, for a fee, is contracted to supervise and coordinate
the work of design professionals and multiple general
contractors, while allowing the design professionals and general
contractors to control individual operations and the manner of
design and construction.” D.C. Mun. Regs. tit. 17, § 3999.
                                 7
obtained a basic business license and any necessary

endorsements.” D.C. Code Ann. § 47-2851.02(a).

      Here, SSI argues that SCG is subject to the above licensing

scheme, has failed to comply, and therefore cannot enforce the

contract at issue. See Def.’s Mot., ECF No. 10-1 at 5-10. SSI

explains that SCG should have obtained the basic business

license with a general contractor/construction manager

endorsement because SCG was the general contractor for the

Project and the Project was located in the District. See id. at

8-10. SSI then reviews caselaw from the federal and local courts

in the District and determines that “courts have consistently

barred individuals and entities that violated licensing

requirements from asserting breach of contract and/or quantum

meruit actions.” Id. at 7 (collecting cases); see also id. at 5-

7 (collecting and discussing cases). SSI thus concludes that the

Subcontract Agreement is “void, unenforceable, illegal, and in

violation of [D.C.] public policy” because SCG did not have the

appropriate license at any time between execution of the

original contract and filing of the Amended Complaint. Id. at

10.

      SCG disagrees that the District’s licensing laws apply

here. Id. at 11. SCG argues that a 2009 executive agreement (the

“Executive Agreement”) between China and the United States

governs the Project and allows China “to engage a general

                                8
contractor . . . without regard for local government

‘restrictions’ or licensure requirements.” Id. at 11-12 (citing

Decl. of Hongquan Li (“Li Decl.”), ECF No. 11-1 ¶¶ 3-4; Ex. A,

Agreement Between the United States of America and China

(“Executive Agreement”), ECF No. 11-2 ¶ 1.5). SCG reasons that

the Court must resolve the conflict between the Executive

Agreement and the District’s licensing laws in favor of the

Executive Agreement because it is federal law to which state law

must yield. See id. at 13 (citing Am. Ins. Ass’n v. Garamendi,

539 U.S. 396, 425-27 (2003)).

     The Executive Agreement at issue here is the Agreement

Between the Government of the United States of America and the

Government of the People’s Republic of China on the Conditions

of Construction of Diplomatic and Consular Complexes in the

People’s Republic of China and the United States of America. See

generally Executive Agreement, ECF No. 11-2. This agreement

explicitly governs construction projects at the Chinese consular

building located at 2300 Connecticut Avenue in Washington, D.C.

Id. ¶¶ 1.5, 1.6. Having “entered into force” on August 20, 2009,

see id. at 4; it is “to be treated with similar dignity” as any

treaty, whose “supremacy . . . has been recognized from the

beginning,” United States v. Pink, 315 U.S. 203, 223 (1942)

(citation and internal quotation marks omitted). Accordingly,

the Executive Agreement “is not and cannot be subject to any

                                9
curtailment or interference on the part of the several states,”

and “state law must yield when it is inconsistent with or

impairs the policy or provisions” of the agreement. Id. at 223,

230-31 (citations and internal quotation marks omitted).

       The Executive Agreement sets forth the two countries’

responsibilities with respect to construction at the consular

property. See generally Executive Agreement, ECF No. 11-2. Two

sections are relevant to this dispute. The first section—on

Construction Standards and Quality Safety Responsibilities—

states: “The Construction Party 4 shall be responsible for the

quality and safety of its project during construction. The Host

Country 5 shall not require the Construction Party to enter into

a contract with a local firm to supervise the construction.” Id.

¶ 5.3. The second section—on Personnel and Companies—states:

“The Construction Party shall have the right to select project-

related personnel and companies of its own choosing and of any

nationality (including from the Host Country, the Construction

Party or third countries) to perform all work in connection with

its project.” Id. ¶ 9.1.

       SSI argues that these provisions do not absolve SCG from

complying with District licensing laws. See Def.’s Reply, ECF

No. 12 at 3. SCG interprets these provisions to “clearly mean[]

4   The Construction Party here is China.
5   The Host Country here is the United States.
                                 10
that the Construction Party need not choose an existing local

contractor to fulfill the work,” but “does not . . . in any way

state that the contractor, once chosen and retained, is

relieve[d] from the express obligation to properly register as a

general contractor in the District of Columbia.” Id. The Court

is unpersuaded by this construction. Under the Executive

Agreement, China is wholly responsible for the quality and

safety of all its consular construction projects, including the

Project here. Executive Agreement, ECF No. 11-2 ¶ 5.3. The

agreement therefore grants China wide latitude over its

selection of contractors for its consular construction projects,

specifying that China need not retain a “local firm” to

supervise construction. Id. Imposing the District’s licensing

requirements would effectively require China to engage a local

general contractor and adhere to District safety standards. This

result directly conflicts with the terms of the Executive

Agreement.

     SSI’s remaining arguments are similarly unpersuasive.

First, SCG contends that “the Executive Agreement repeatedly

establishes that it is subject to the laws of the Host country.”

Def.’s Reply, ECF No. 12 at 2-3 (citing Executive Agreement, ECF

No. 11-2 ¶¶ 2.1, 3.2, 3.6, 4.1, 4.2, 5.3). This summary is

misleading. The Executive Agreement makes clear that China must

comply with federal and local regulations for its consular

                               11
construction projects but only in certain instances. See, e.g.,

Executive Agreement, ECF No. 11-2 ¶¶ 4.1 (planning, design

review, and permits), 5.1 (inspections of equipment and lines at

utility interface points), 6.1 (use of temporary sites), 6.3

(obtaining easements), 10.8 (storage, use, and disposal of

hazardous materials), 12.4 (vehicle registration), 13.2 (local

work hour restrictions). For example, China must comply with

federal and local law in its installation and use of

telecommunications equipment, id. ¶ 3.6; but at the same time,

the agreement gives China complete discretion over its selection

of utility and service providers, id. ¶ 3.5. The Executive

Agreement does not contain any clear language requiring that

China comply with federal or state licensing for general

contractors, and the Court will not insert its own restriction.

     SSI also argues that another federal law—the Foreign

Missions Act, 22 U.S.C. § 4301 et seq.—applies here and requires

China to comply with the District’s licensing laws in its

consular construction projects. See Def.’s Mot., ECF No. 10-1 at

11-12; Def.’s Reply, ECF No. 12 at 5. The Foreign Missions Act

“‘was designed to provide the Secretary of State with the

leverage necessary to remove unreasonable restraints and costs

on United States missions abroad’ by giving the federal

government a voice in local regulation of services provided to

foreign missions within this country.” Sturdza v. Gov’t of

                               12
United Arab Emirates, No. CV 98-2051 (CKK), 1999 WL 35643442, at

*4 (D.D.C. Dec. 22, 1999) (quoting Embassy of the People’s

Repub. of Benin v. Dist. of Columbia Bd. of Zoning & Adjustment,

534 A.2d 310, 314 (D.C. 1987)), aff’d in part, rev’d in part and

question certified sub nom. Sturdza v. United Arab Emirates, 281

F.3d 1287 (D.C. Cir. 2002), certified question answered, 11 A.3d

251 (D.C. 2011). As relevant here, the Act provides that “[t]he

Secretary [of State] shall require foreign missions to comply

substantially with District of Columbia building and related

codes in a manner determined by the Secretary to be not

inconsistent with the international obligations of the United

States.” 22 U.S.C. § 4306(g). However, it contains no provision

regarding contractor licensing requirements. As the Sturdza

court explained, the District’s building codes and licensing

requirements “are separate and distinct.” Sturdza, 1999 WL

35643442, at *4. The Foreign Missions Act is thus inapplicable

here.

     Third, SSI contends that the licensing laws must apply to

SCG because the D.C. Code applies to other government

construction projects. Def.’s Reply, ECF No. 12 at 4 (citing

D.C. Mun. Regs. tit. 17, § 1735); id. at 6 (citing D.C. Mun.

Regs. tit. 17, § 3907.1); cf. id. at 4 (discussing SCG’s

registration and later correction of its registration). This

argument ignores supremacy principles, which dictate that “state

                               13
law must yield when it is inconsistent with or impairs the

policy or provisions” of federal law, including executive

agreements. Pink, 315 U.S. at 230-31. SSI’s citation to Sturdza

is equally unpersuasive. See Def.’s Reply, ECF No. 12 at 5. In

that case, the district court ruled that an unlicensed architect

could not bring her contract or quantum meruit claims against

the United Arab Emirates for her work on the country’s embassy

because she failed to comply with the District’s licensing

requirements. Sturdza, 1999 WL 35643442, at *4. That dispute did

not involve any executive agreement—and certainly not the

Executive Agreement here. See generally id. The Court therefore

cannot borrow the Sturdza court’s reasoning.

     In sum, the Court concludes that the Executive Agreement

grants China the discretion to retain a general contractor of

its choice without regard to local licensing laws. Because the

Executive Agreement constitutes federal law and prevails over

state law, SCG may pursue its breach of contract claim despite

having been unlicensed during the Project. Accordingly, the

Court DENIES SSI’s Motion to Dismiss Count I of the Amended

Complaint. 6

6 The Court need not address SCG’s remaining contract defenses
because SSI raises only the licensing issue in its Motion to
Dismiss. Cf. Benton v. Laborers’ Joint Training Fund, 121 F.
Supp. 3d 41, 51 (D.D.C. 2015) (“[I]t is a well-settled
prudential doctrine that courts generally will not entertain new
arguments first raised in a reply brief.” (citations and
                               14
     B. SCG May Maintain Its Negligence Claim

     SSI next moves to dismiss Count II of the Amended

Complaint, which alleges negligence, for two reasons. See Def.’s

Mot., ECF No. 10-1 at 13-15. First, it argues that SCG has not

adequately pleaded the existence of a duty to bring a negligence

claim. See id. at 13-14. Second, SSI argues that the economic

loss doctrine bars this claim. See id. at 14-15. For the reasons

below, the Court DENIES SSI’s motion as to this claim.

       1. SCG Has Adequately Alleged That SSI Owed a Duty

     SSI first argues that the Court should dismiss the

negligence claim because it “does not owe SCG an independent

duty under the law of the District of Columbia.” Id. at 13.

Under District of Columbia law, “for a plaintiff to recover in

tort for conduct that also constitutes a breach of contract,

‘the tort must exist in its own right independent of the

contract, and any duty upon which the tort is based must flow

from considerations other than the contractual relationship.’”

Attias v. CareFirst, Inc., 365 F. Supp. 3d 1, 18 (D.D.C. 2019)

(quoting Choharis v. State Farm Fire & Cas. Co., 961 A.2d 1080,

1089 (D.C. 2008)), on reconsideration in part, 518 F. Supp. 3d

internal quotation marks omitted)). Additionally, the Court will
not address SSI’s argument, made in passing, that the Court
should grant summary judgment because SSI has not presented any
other arguments showing that it is entitled to judgment as a
matter of law. See Fed. R. Civ. P. 56(a); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
                               15
43 (D.D.C. 2021). Here, SCG alleges that SSI owed a duty “to

perform its work on the [P]roject in a skillful, careful,

diligent, and workmanlike manner.” Am. Compl., ECF No. 9 ¶ 51.

SSI contends that this is “a near textbook example of an

unsupported legal conclusion” because SCG does not state “where

this legal duty is derived from under [D.C.] law.” Def.’s Mot.,

ECF No. 10-1 at 14. SSI thus concludes that its only legal duty

to SCG arises from the contract and the parties’ contractual

relationship. See id.

     In its opposition briefing, SCG argues that SSI “owed . . .

a duty to perform its work in a workmanlike manner.” Pl.’s

Opp’n, ECF No. 11 at 26. Citing authority from the District of

Columbia Court of Appeals (“D.C. Court of Appeals”), SCG

explains that this duty “exists independently from the terms of

the Subcontract Agreement.” Id. (citing Ehrenhaft v. Malcolm

Price, Inc., 483 A.2d 1192, 1200 (D.C. 1984)). SSI does not

address this caselaw in its reply briefing. See Def.’s Reply,

ECF No. 12 at 5-7.

     The Court is persuaded that SCG has adequately pleaded the

existence of a duty. SSI is correct that “[t]he failure to

perform a contractual obligation typically does not give rise to

a cause of action in tort.” Attias, 365 F. Supp. 3d at 18

(quoting Jones v. Hartford Life & Accident Ins. Co., 443 F.

Supp. 2d 3, 5 (D.D.C. 2006)). However, District of Columbia law

                               16
has long “‘extended the tort liability for misfeasance to

virtually every type of contract where defective performance may

injure the promisee,’” thereby permitting a plaintiff who

alleges a breach of contract to maintain a tort claim. See

Ehrenhaft, 483 A.2d at 1200 (quoting W. Prosser, Law of Torts §

92, at 617 (4th ed. 1971)). Following this principle, the D.C.

Court of Appeals has permitted negligence claims against

contractors to proceed where plaintiffs allege a failure to

perform work properly. See id. (collecting cases). Here, SCG

alleges that SSI “(i) failed to complete its work on the Project

in a timely manner and (ii) produced deficient and defective

work on the Project, requiring a substitute contractor to repair

and redo a substantial portion of the work SSI was obligated to

complete.” Am. Compl., ECF No. 9 ¶ 52. Stated differently, SCG’s

negligence claim is based on SSI’s alleged failure to perform

work properly. This allegation is sufficient to bring a

negligence claim under District of Columbia law.

       2. The Economic Loss Doctrine is Inapplicable

     SSI also argues that SCG’s negligence claim is barred by

the economic loss doctrine. See Def.’s Mot., ECF No. 10-11 at

14-15. Under District of Columbia law, this doctrine “bars

recovery of purely economic losses in negligence, subject to

only one limited exception where a special relationship exists.”

Aguilar v. RP MRP Wash. Harbour, LLC, 98 A.3d 979, 986 (D.C.

                               17
2014). A special relationship exists where the defendant had an

obligation to care for the plaintiff’s economic well-being or an

obligation that implicated the plaintiff’s economic

expectancies. Whitt v. Am. Prop. Constr., P.C., 157 A.3d 196,

205 (D.C. 2017) (quoting Aguilar, 98 A.3d at 985).

     Here, the parties agree, as they must, that SCG seeks

recovery of purely economic losses for its negligence claim. See

Def.’s Mot., ECF No. 10-1 at 15; Am. Compl., ECF No. 9 ¶ 53.

They dispute whether SCG has alleged a special relationship. SSI

contends that SCG alleges that “the only relationship whatsoever

between the parties is the December 2016 alleged agreement.”

Def.’s Mot., ECF No. 10-1 at 15 (citing Am. Compl., ECF No. 9 ¶

51 (“SSI was engaged to furnish and install a fire alarm system

for the Project.”)). SCG rejects this interpretation of the

Amended Complaint, see Pl.’s Opp’n, ECF No. 11 at 26-27;

explaining that the relationship between contractor and

subcontractor is a “paradigm” special relationship because SSI

“had an obligation . . . that implicated SCG’s economic

interests,” id. at 27 (citing Whitt, 157 A.3d at 206). SCG

further argues that the parties were in a special relationship

because they were in privity of contract. Id. at 26 (citing

Aguilar, 98 A.3d at 985; Commonwealth Land Title Ins. Co. v. KCI

Techs., Inc., 922 F.3d 459, 468 (D.C. Cir. 2019)).

                               18
     The Court concludes that SCG has adequately alleged that

the parties were in a special relationship. Admittedly, “there

is limited legal authority in the District of Columbia

addressing the factual circumstances that may give rise to a

‘special relationship.’” Heidi Aviation, LLC v. Jetcraft Corp.,

573 F. Supp. 3d 182, 199 (D.D.C. 2021) (reviewing relevant

cases). The existing caselaw, however, suggests that a special

relationship exists where there is contractual privity or some

other close nexus between the parties. Aguilar, 98 A.3d at 985

n.3 (citation omitted). Here, SCG has alleged that it was in

privity of contract with SSI. Pl.’s Opp’n, ECF No. 11 at 27; Am.

Compl., ECF No. 9 ¶ 16. This contract clearly implicated SCG’s

economic expectancies. See Am. Compl., ECF No. 9 ¶¶ 34-41. The

Court is persuaded that this is sufficient to plead a special

relationship. Cf., e.g., Vantage Commodities Fin. Servs. I, LLC

v. Willis Ltd., 531 F. Supp. 3d 153, 177–79 (D.D.C. 2021) (no

“special relationship” because “[t]here was no ‘contractual

privity or its equivalent’” between the parties); McDowell v.

CGI Fed. Inc., No. CV 15-1157, 2017 WL 2392423, at *4–5 (D.D.C.

June 1, 2017) (plaintiff did not adequately allege a “special

relationship” because plaintiff did “not argue that she was in

contractual privity, or its equivalent” with defendant).

     Because SCG has pleaded a special relationship between the

parties, the economic loss doctrine does not apply. The Court

                               19
therefore DENIES SSI’s Motion to Dismiss Count II of the Amended

Complaint.

     C. Venue is Proper in the District of Columbia

     Finally, SSI moves to dismiss this case for improper venue.

Def.’s Mot., ECF No. 10-1 at 15-17. For the following reasons,

the Court concludes that venue is proper in the District.

     Pursuant to 28 U.S.C. § 1391(b), a lawsuit “may be brought

in” a judicial district (1) where “any defendant resides, if all

defendants are residents of the State in which the district is

located”; (2) where “a substantial part of the events or

omissions giving rise to the claim occurred”; or (3) if there is

no judicial district where the case may be brought as provided

by the first two categories, where “any defendant is subject to

the court’s personal jurisdiction.” 28 U.S.C. § 1391(b). “When

venue is challenged, the court must determine whether the case

falls within one of the three categories set out in § 1391(b).”

Atl. Marine Constr. Co., 571 U.S. at 56.

     Here, SCG alleges that venue is proper in this judicial

district because (1) “a substantial part of the events or

omissions giving rise to the claim occurred” here, Am. Compl.,

ECF No. 9 ¶ 14 (citing 28 U.S.C. § 1391(b)(2)); and (2) the

District is “the exclusive venue for any dispute between the

parties” under the Subcontract Agreement, id. ¶ 15. SSI argues

that, “to the extent that the Court finds that the Project is

                               20
somehow exempt from [D.C.] regulations, that finding would

remove any substantial nexus between this forum and the

Project.” Def.’s Mot., ECF No. 10-1 at 17. This argument is

unpersuasive. The Project was located in the District. Am.

Compl., ECF No. 9 ¶ 16. The construction and contractual

activity at issue all occurred in the District. Id. ¶¶ 16-42.

The Court’s conclusion that the District’s licensing laws do not

apply to SCG’s work on the Project does not change the fact that

“a substantial part of the events or omissions giving rise to

the claim occurred” in the District. 28 U.S.C. § 1391(b)(2).

Venue is proper; accordingly, the Court DENIES SSI’s Motion to

Dismiss for improper venue.

V.   Conclusion

     For the foregoing reasons, the Court DENIES SSI’s Motion to

Dismiss. See ECF No. 10.

     An appropriate Order accompanies this Memorandum Opinion.

     SO ORDERED.

Signed:   Emmet G. Sullivan
          United States District Judge
          March 15, 2023

                               21