Duit Constr. Co. v. Bennett

• Decision Date: 25 June 2014
• Docket Number: Case No. 4:13-cv-00458-KGB
• Parties: DUIT CONSTRUCTION COMPANY, INC. PLAINTIFF v. SCOTT BENNETT, et al. DEFENDANTS
• Court: U.S. District Court — Eastern District of Arkansas

DUIT CONSTRUCTION COMPANY, INC. PLAINTIFF v. SCOTT BENNETT, et al. DEFENDANTS

Case No. 4:13-cv-00458-KGB

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF ARKANSAS WESTERN DIVISION

Dated: June 25, 2014

ORDER

On August 9, 2013, plaintiff Duit Construction Company ("Duit"), filed this action seeking a declaratory judgment that defendants violated the Federal Aid Highway Act of 1956, 23 U.S.C. § 101 et seq., and injunctive relief preventing such violations in the future (Dkt. No. 1). Duit brings this action against defendants, who are all officers, employees, or commissioners of the Arkansas State Highway and Transportation Department (the "AHTD") or Arkansas State Highway Commission (the "AHC"), in their official capacities only. On September 30, 2013, defendants filed a motion to dismiss (Dkt. No. 16). Duit filed a response to defendants' motion to dismiss (Dkt. No. 18), to which defendants filed a reply (Dkt. No. 21). For the reasons below, the Court grants in part and denies in part defendants' motion to dismiss. Only Duit's equal protection claim survives.

I. Background

Duit is a corporation organized and existing under the laws of the State of Iowa and has a principle office in Edmond, Oklahoma. Duit has done business with the AHTD and AHC in the past and expects to do so in the future.

The Federal Highway Administration, pursuant to the Federal Highway Act, 23 U.S.C. § 112(e), has developed standardized changed site condition clauses that must be included in all federal-aid construction contracts, unless such clauses are prohibited or otherwise provided forby state law. In Arkansas, which has no law prohibiting changed site condition clauses and does not provide guidance on changed site condition situations, all federal-aid construction contracts must and do contain the federally mandated differing site condition clauses.

The standardized changed site condition clauses govern how the parties would address any changed site conditions confronted during the project and are found in 23 C.F.R. § 635.109(a):

(1) Differing site conditions.

(i) During the progress of the work, if subsurface or latent physical conditions are encountered at the site differing materially from those indicated in the contract or if unknown physical conditions of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inherent in the work provided for in the contract, are encountered at the site, the party discovering such conditions shall promptly notify the other party in writing of the specific differing conditions before the site is disturbed and before the affected work is performed.

(ii) Upon written notification, the engineer will investigate the conditions, and if it is determined that the conditions materially differ and cause an increase or decrease in the cost or time required for the performance of any work under the contract, an adjustment, excluding anticipated profits, will be made and the contract modified in writing accordingly. The engineer will notify the contractor of the determination whether or not an adjustment of the contract is warranted.

(iii) No contract adjustment which results in a benefit to the contractor will be allowed unless the contractor has provided the required written notice.

(iv) No contract adjustment will be allowed under this clause for any effects caused on unchanged work. (This provision may be omitted by the S[tate] T[ransportation] D[epartment]s at their option.)

Duit alleges that the purpose of the standardized changed site condition clauses is "to encourage low, competent bids by taking the expense risk of unknown subsurface conditions out of bidding" (Dkt. No. 19, at 2). According to Duit, the clauses ensure that "[t]he contractors willhave no windfalls and no disasters" and that "[t]he Government benefits from more accurate bidding, without inflation for risks which may not eventuate" (Id.).

In 2002, Duit entered into two construction contracts with the AHTD and AHC. As required by federal law, the contracts included the changed site condition clauses. During performance of the contracts, Duit alleges that the AHTD and AHC encountered a soil condition that was materially different from that which could have been anticipated based upon the disclosures contained in the construction contract. Duit argues that the alleged materially different soil condition constituted a differing site condition within the meaning of the federally mandated differing site condition clauses and that it was entitled to a contract adjustment thereunder but did not receive one. Instead, the AHTD and AHC allegedly directed Duit to "dry, disc, and compact" the top 12 inches of the soil, a labor-intensive method, as opposed to authorizing the use of "B stone" or chemical stabilization of the soil (Id. at 4). Duit further argues that the AHTD and AHC continue to violate the Federal Highway Act by interpreting the changed site condition clauses in a way that allegedly obliterates their purpose.

In 2006 and 2007, Duit litigated two claims for additional compensation arising from the 2002 contracts and the alleged materially different soil condition before the Arkansas State Claims Commission (the "Claims Commission"). In 2010, Duit voluntarily dismissed its two previously filed claims and refiled them together. After a hearing held on October 20, 2011, the Claims Commission denied all of Duit's claims. Both Duit and the AHTD and AHC were represented throughout the proceedings by counsel. Pursuant to Arkansas Code Annotated § 19-10-211, Duit appealed the decision to the Arkansas General Assembly. The General Assembly's Claims Review Subcommittee affirmed that Duit was not entitled to additional compensation.

II. Legal 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 on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible "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. (citing Twombly, 550 U.S. at 556). "While a complaint attacked by a [Federal] Rule [of Civil Procedure] 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (alteration in original) (citations omitted). "When ruling on a motion to dismiss, the district court must accept the allegations contained in the complaint as true and all reasonable inferences from the complaint must be drawn in favor of the nonmoving party." Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001).

III. Alleged Bars To Duit's Claims

Defendants allege that Duit's claims are barred by res judicata; the Rooker-Feldman doctrine; the Anti-Injunction Act, 28 U.S.C. § 2283; and the principles of abstention set forth in Younger v. Harris, 401 U.S. 37 (1971), and Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). Having carefully reviewed all of defendants' arguments regarding these issues, the Court determines that none of Duit's claims are barred by them.

In regard to defendants' argument that Duit's claims are barred by res judicata, at the motion to dismiss stage, this Court must consider the allegations in the complaint. The Claims Commission's decision is described in the complaint. The Court determines that the claims Duitseeks to advance here are not barred by res judicata based on the Claims Commission's decision. Further, references to a now-pending state-court action filed by Duit appear only in defendants' motion to dismiss. There is no indication in the record before this Court of the claims asserted in or of the procedural posture of that state-court action. The state-court action will not be considered by this Court in ruling on the now-pending motion to dismiss.

In regard to the Rooker-Feldman doctrine, there is no indication from the face of Duit's complaint that Duit is a "state-court loser[]" asking this court to review or reject any final state court judgment. See Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). Further, as the Supreme Court has determined "neither Rooker nor Feldman supports the notion that properly invoked concurrent jurisdiction vanishes if a state court reaches judgment on the same or related question while the case remains sub judice in a federal court." Id. at 292; see Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77, 87 (2d Cir. 2005) ("[A] plaintiff who seeks in federal court a result opposed to the one he achieved in state court does not, for that reason alone, run afoul of Rooker-Feldman.").

The Court determines that, because Duit is not seeking an injunction to stay a state court proceeding, the Anti-Injunction Act does not apply. See Beech v. Select Portfolio Servicing, Inc., 4:10-CV-00547-DPM, 2010 WL 2775855 (E.D. Ark. July 13, 2010). Lastly, on the record before it, with the claims Duit currently presents, the Court declines to decide this matter on abstention grounds under either Younger or Colorado River.

Defendants also allege that Duit's claims are barred by sovereign immunity. The Eleventh Amendment bars private litigants' suits against non-consenting states, state agencies, and state officials being sued in their official capacities in federal court, subject to certain exceptions. See Will v. Mich. Dep't of State Police, 491 U.S. 58, 70-71 (1989); Pennhurst StateSch. & Hosp. v. Halderman, 465 U.S. 89, 98 (1984); Monroe v. Ark. State Univ., 495 F.3d 591, 594 (8th Cir. 2007). One exception is the Ex parte Young doctrine. In Ex parte Young, the Supreme Court recognized an...