Earth Pipeline Servs., Inc. v. Columbia Gas Transmission, LLC (In re Welded Constr., L.P.)
| Decision Date | 01 December 2020 |
| Docket Number | Adv. Pro. No.: 19-50275 (CSS),Adv. Pro. No.: 19-50274 (CSS),Case No. 18-12378 (CSS) (Jointly Administered) |
| Citation | 623 B.R. 100 |
| Parties | IN RE WELDED CONSTRUCTION, L.P., et al., Debtors. Earth Pipeline Services, Inc. Plaintiff, v. Columbia Gas Transmission, LLC, and Welded Construction, L.P., Defendant. Columbia Gas Transmission, LLC, Counter-claimant, v. Earth Pipeline Services, Inc, Counter-defendant. |
| Court | U.S. Bankruptcy Court — District of Delaware |
ARCHER & GREINER, P.C., David W. Carickhoff, 300 Delaware Avenue, Suite 1100, Wilmington, DE 19801 and MAYER BROWN LLP, Charles S. Kelley, Andrew C. Elkhoury, 700 Louisiana Street, Suite 3400, Houston, TX 77002, Counsel for Columbia Gas Transmission, LLC
COHEN, SEGLIAS, PALLAS, GREENHALL, & FURMAN, P.C., Stephen A. Venzie, Sally J. Daugherty, 500 Delaware Avenue, Suite 730, Wilmington, DE 19801, Counsel for Earth Pipeline Services, Inc.
Before the Court is Columbia Gas's Motion to Dismiss with prejudice Earth's Amended Complaint. Columbia Gas owned the Property and the Project. Welded, a nominal defendant, entered into a contract with Columbia Gas to complete the Project on the Property. Welded then subcontracted Earth to complete work on the Project. Earth, after completing work on the Project, submitted an invoice to Welded for $7,342,519.62 but only received $3,692,219.20 leaving unpaid $3,650,300.42.
As a result, Earth filed the above captioned Amended Complaint seeking recovery of $3,650,300.42 from Columbia Gas under three theories: Count 1—for the enforcement of the Liens; Count 2—for recovery under the theory of unjust enrichment; or Count 3—for recovery under the theory of quantum meirut .
In response, Columbia Gas filed the Motion to Dismiss with prejudice Earth's Amended Complaint because, (1) Earth either (i) waived its right to file or record a mechanic's lien under the terms of the Subcontract or (ii) owes Columbia Gas nothing under West Virginia law and the terms of the Subcontract; and (2) Earth cannot seek quasi-contractual claims where the claim is based on recovery under the express terms of a contract—the Subcontract.
For the reasons set forth below, the Court will grant the motion to dismiss, without prejudice on Counts 2 and 3 for unjust enrichment and quantum meirut , and with prejudice on Count 1 for the enforcement of liens.
The Court has jurisdiction over this matter, pursuant to 28 U.S.C. §§ 157 and 1334. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. Earth does not consent to the Court's entry of a final order on this matter.2
Plaintiff Earth Pipeline Services, Inc. ("Earth") is a Wyoming corporation with its principal place of business in Washington, Pennsylvania.3 Columbia Gas Transmission, LLC ("Columbia Gas") is a Delaware limited liability company, with a principal place of business in Houston, Texas.4 Welded Constructed, L.P. ("Welded") is a Delaware limited partnership, with a principal place of business in Perrysburg, Ohio.5
In early 2018, Columbia Gas hired Welded as a general contractor to construct Spread 1 of the Mountaineer Xpress Pipeline Project (the "Project") on property owned by Columbia Gas in Marshall and Wetzel counties, West Virginia (the "Property").6 On or about March 20, 2018, Welded entered into a written subcontract with Earth ("the Subcontract").7 The Subcontract provided that, among other things, Earth would perform mechanical clearing of the pipeline construction right-of-way and all extra work spaces and access roads for the Project on the Property.8
On or about June 22, 2018, Welded, at the direction of Columbia Gas, informed Earth that it was terminating the Subcontract.9 Earth invoiced Welded for $7,342,519.62, reflecting labor performed and materials used in furtherance of the Subcontract.10 To date, Welded only paid Earth $3,692,219.20 for its work.11 On September 12, 2018, Earth filed two separate notices of mechanic's liens, pursuant to West Virginia Code § 38-2-1, et seq. , (the "Lien Law"). One notice was filed in Marshall County, West Virginia, and another in Wetzel County, West Virginia (together, the "Notices" or "Liens").12 The Notices were each recorded in the amount of $3,650,300.42—which reflects the difference between the invoice for $7,342,519.62 and the $3,692,219.20 paid.13
The Subcontract contains two provisions relevant to liens. First, the following clause (the "Lien Clause"):
Subcontractor shall cause any Lien which may be filed or recorded against the Work, the Facility, the Work Site or any lands or property of Company to be released and discharged forthwith at the cost and expense of Subcontractor ... No amounts are payable by Contractor to Subcontractor so long as a Lien remains registered against the Work, the Facilities, the Work Site or any lands or property of Contractor, arising out of the Work.14
Second, a clause from the indemnity section (the "SLI Clause") stating:
On October 22, 2018, Welded filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code with this Court.16 On or about March 8, 2019, Earth filed complaints to foreclose the Liens in the circuit courts of Marshall and Wetzel counties, and named Columbia Gas as a defendant (the "Foreclosure Complaints").17 Columbia Gas then moved for removal of the Foreclosure Complaints.18 On or about April 10, 2019, the Foreclosure Complaints were removed to the United States Bankruptcy Court for the Northern District of West Virginia.19 Thereafter, Columbia Gas moved for, and on June 26, 2019 the Northern District of West Virginia Bankruptcy Court granted, a transfer of venue to this Court.20
On May 6, 2020, the Court entered a scheduling order that, among other things, consolidated Earth's Foreclosure Complaints into a single adversary proceeding (Adv. Proc. No. 19-50274) within the Welded bankruptcy proceedings.21 On May 13, 2020, Earth amended its complaint to add Welded as a nominal defendant. On May 20, 2020, Earth again amended its complaint—which is the Amended Complaint presently before the Court—adding additional allegations in support of its action in rem pertaining to the Liens and adding equitable actions in personam against Columbia Gas for unjust enrichment and quantum meruit (the "Claims in Equity").22
On June 3, 2020, Columbia Gas filed its Columbia Gas Transmission's Motion to Dismiss Earth Pipeline Services, Inc.'s Amended Complaint (the "Motion to Dismiss"). On June 26, 2020, Earth filed the Plaintiff Earth Pipeline Services, Inc.'s Response and Brief in Opposition to Defendant Columbia Gas Transmission's Motion to Dismiss Plaintiff Earth Pipeline Services, Inc.'s Amended Complaint (the "Response"), and on July 13, 2020, Columbia Gas filed its Reply in Support of its Motion to Dismiss (the "Reply").23
In July 2020, both Columbia Gas and Earth requested oral arguments be held on the Motion to Dismiss.24 On July 21, 2020, counsel for Columbia Gas entered the Notice of Completion of Briefing on behalf of the parties to this adversary proceeding.25 Meanwhile, another Welded subcontractor sought intervention into this adversary proceeding, which the Court denied in an opinion dated July 31, 2020.26 The Court is now tasked with ruling on Columbia Gas's Motion to Dismiss.
A motion to dismiss under Federal Rules of Civil Procedure 12(b)(6) —made applicable in bankruptcy adversary proceedings pursuant to Federal Rule of Bankruptcy Procedure 7012(b) —challenges the sufficiency of the factual allegations in the complaint.27 "In reviewing a motion to dismiss ..., we treat as true all well-pleaded facts in the complaint, which we construe in the ‘light most favorable to the plaintiff.’ "28 The "court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents."29
A motion to dismiss is granted when the pleading fails "to state a claim upon which relief can be granted ...."30 "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 ... 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."31 "But detailed pleading is not generally required."32
In considering a motion to dismiss, the Third Circuit has formulated three steps lower courts must follow in "reviewing the sufficiency of a complaint."33 Courts must: (1) identify the elements of a claim, (2) identify conclusory allegations, and (3) accept factual allegations as true and "view them and reasonable inferences drawn from them in the light most favorable to [the plaintiff] to decide whether ‘they plausibly give rise to an entitlement to relief.’ "34
The Court first addresses Count 1 of Earth's Amended Complaint—the Lien Claims. Afterwards, the Court addresses Counts 2 and 3 of Earth's Amended Complaint—the Claims in Equity. As explained below, the Court concludes that Earth has failed to state a claim upon which relief can be granted.
The parties use West Virginia law in their discussion of (i) the Lien Law, (ii) the interpretation and enforcement of the Subcontract, and (iii) the...
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