JBI Elec. Sys., Inc. v. KW AQE, LLC

Decision Date19 March 2021
Docket NumberNo. CIV 19-0614 JB/SCY,CIV 19-0614 JB/SCY
PartiesJBI ELECTRICAL SYSTEMS, INC, Plaintiff, v. KW AQE, LLC and JMD CONSTRUCTION SERVICES, LLC, Defendants.
CourtU.S. District Court — District of New Mexico
MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court on: (i) the Defendant JMD Construction Services, LLC's Motion to Dismiss or Transfer, filed July 26, 2019 (Doc. 6)("MTD"); (ii) the Defendant KW AQE, LLC's Motion for Summary Judgment, filed August 25, 2020 (Doc. 53)("KW AQE MSJ"); (iii) the Defendant JMD Construction Services, LLC's Motion for Summary Judgment, filed September 9, 2020 (Doc. 61)("JMD MSJ"); (iv) the Plaintiff JBI Electrical Systems' Motion for Judgment on the Pleadings, filed September 17, 2020 (Doc. 65)("JBI MJP"); and (v) the Plaintiff's Cross-Motion for Partial Summary Judgment, filed January 11, 2021 (Doc. 80)("JBI MSJ"). The Court held a hearing on the MTD on March 9, 2020. See Clerk's Minutes at 1, filed March 9, 2020 (Doc. 26). The Court entered an Order denying the MTD on March 16, 2020, but indicated that it would "issue a Memorandum Opinion at a later date more fully detailing the rationale for its decision." Order at 1 n.1, filed March 16, 2020 (Doc. 27). The Court held a hearing on the remaining motions -- the KW AQE MSJ, the JMD MSJ, the JBI MJP, and the JBI MSJ -- on January 13, 2021. See Clerk's Minutes at 1, filed January 13, 2021 (Doc. 86). The primary issues are: (i) whether the Court should dismiss Counts I through III of the Amended Complaint, filed August 16, 2019 (Doc. 15), under rule 12(b)(6) of the Federal Rules of Civil Procedure, because Plaintiff JBI Electrical Systems, Inc. ("JBI Electrical") is barred statutorily from bringing those claims; (ii) whether the Court should dismiss this case under rule 12(b)(3) of the Federal Rules of Civil Procedure or should transfer this case to the Eastern District of Arkansas because of a forum selection clause in the Subcontract between JBI Electrical and JMD Construction; (iii) whether JBI Electrical did not comply substantially with the Construction Industries Licensing Act, N.M.S.A. § 60-13-1 (the "CILA"), and, therefore, is barred statutorily from bringing (a) its Foreclosure on Claim of Lien, Count III of the Amended Complaint, or (b) its Unjust Enrichment Claim; Count IV of the Amended Complaint; (iv) whether JBI Electrical must disgorge funds that it received under the Subcontract; (v) whether JBI Electrical can maintain an unjust enrichment claim against KW AQE, although it is not in contractual privity with KW AQE; (vi) whether KW AQE can bring directly claims against JBI Electrical for breach of the CILA; and (vii) whether JMD Construction can (a) assign validly its claims against JBI Electrical for breach of contract to KW AQE, and (b) agree to indemnify KW AQE from any claims against it by JBI Electrical, in exchange for KW AQE agreeing not to pursue claims against JMD Construction. The Court concludes that: (i) as the Court stated in its Order, the Court declines to dismiss JBI Electrical's claims, because the Court must view the facts in the light most favorable to JBI Electrical, and JBI Electrical alleges that it is a properly licensed general contractor in the State of New Mexico; (ii) the Court declines to dismiss this case under rule 12(b)(3) of the Federal Rules of Civil Procedure or transfer this case to the Eastern District of Arkansas, because N.M.S.A. § 57-28A-1 prohibits transfers of cases involving construction contracts relating to New Mexico real property, such as the Subcontract at issue here; (iii) because JBI Electrical complied substantially with N.M.S.A. § 60-13-1, neither JBI Electrical's Amended Claim of Lien nor its Unjust Enrichment claim are barred statutorily; (iv) JBI Electrical need not disgorge the funds thatit received under the Subcontract, because it complied substantially with N.M.S.A. § 60-13-1; (v) JBI Electrical cannot maintain an unjust enrichment claim against KW AQE, because it is not in contractual privity with KW AQE, and JBI Electrical has contractual remedies against JMD Construction that JBI Electrical is pursuing in the present action; (vi) KW AQE could not bring independently direct contractual claims against JBI Electrical, because JBI Electrical and KW AQE are not in contractual privity, KW AQE may do so in this case given its assignment agreement with JMD Construction; and (vii) JMD Construction's assignment contract with KW AQE is valid, because (a) assignments of contractual rights and obligations are presumptively valid, (b) the Supreme Court of New Mexico has allowed parties to assign rights to bring tort law claims, and (c) nothing in the assignment agreement between JMD Construction and KW AQE is contrary to public policy; thus, KW AQE may pursue claims against JBI Electrical on JMD Construction's behalf. The Court, therefore: (i) denies the MTD; (ii) grants in part and denies in part the KW AQE MSJ; (iii) grants in part and denies in part the JMD MSJ; (iv) denies the MJP; (v) grants in part and denies in part the JBI MSJ; (vi) dismisses Count IV of the Amended Complaint; (vii) dismisses KW AQE from this action as a Defendant; and (viii) dismisses Count I, Counterclaim for Violation of the CILA, of the Defendant KW AQE, LLC's Response to Plaintiff's First Amended Complaint and Counterclaim for Violation of Construction Industries Licensing Act and Negligent Construction, filed April 1, 2020 (Doc. 34).

FACTUAL BACKGROUND

The Court relies upon three distinct factual sections when deciding the motions before the Court. The first factual section contains the facts upon which the Court relies for the purposes of the MTD, which the Court takes from the Amended Complaint. See Fed. R. Civ. P. 12(b)(6). The second factual section summarizes the undisputed material facts upon which the Court relies for purposes of the MSJs. See Fed. R. Civ. P. 56. With the parties' consent, when evaluating theMSJs, the Court considers all undisputed material facts. See Fed. R. Civ. P. 56(a). The third factual section relays the facts upon which the Court relies for purposes of the MJP. See Fed. R. Civ. P. 12(c). With respect to the MJP, the Court considers the allegations of the nonmoving parties' -- KW AQE, LLC, ("KW AQE") and JMD Construction Services, LLC ("JMD Construction") -- to be true, and all of the movant JBI Electrical's, contrary assertions to be disputed or false. See Nat'l Metro. Bank v. United States, 323 U.S. 454, 456-57 (1945).

1. Facts for the MTD's Purposes.

JBI Electrical "is a Texas corporation with its primary place of business in Fort Worth, Texas," and "is a properly-licensed general contractor in the State of New Mexico." See Plaintiff JBI Electrical Systems, Inc.'s First Amended Complaint for Breach of Contract, Breach of the Implied Warranty of Good Faith and Fair Dealing, Foreclosure on the Claim of Lien, and Unjust Enrichment ¶ 1, at 1, filed August 16, 2019 (Doc. 15)("Am. Compl."). KW AQE "is an Arizona limited liability company, with its principal place of business in Tucson, Arizona." Am. Compl. ¶ 2, at 1. JMD Construction "is an Arkansas limited liability company, with its principal place of business in Little Rock, Arkansas." Am. Compl. ¶ 3, at 2. The property at issue, "the FedEx Freight Center, is located at the NWC of I-40 and Atrisco Vista Boulevard NW, Albuquerque, Bernalillo County, New Mexico . . . ." Am. Compl. ¶ 4, at 2.

JMD Construction, a general contractor, entered into a Subcontract with JBI Electrical related to the FedEx Freight Center. See Am. Compl. ¶ 8, at 2. KW AQE owned the FedEx Freight Center. See Am. Compl. ¶ 8, at 2. JMD Construction and JBI Electrical made the agreement on April 25, 2018, for a price of $2,275,000.00. See Am. Compl. ¶¶ 8-9, at 2. In the Subcontract, JBI Electrical agreed to provide "all labor and materials necessary to perform a complete turnkey electrical contract." Am. Compl. ¶ 10, at 3.

JBI Electrical began work, and "KW AQE, LLC, through Defendant JMD, as contractor,directed JBI to perform additional work that was not required by the Project plans and specifications." Am. Compl. ¶ 11-12, at 3. Although JBI Electrical requested payment for the additional work, JBI Electrical never received payment. See Am. Compl. ¶ 13, at 3. JBI Electrical's additional labor and materials amounted to $248,414.63. See Am. Compl. ¶ 14, at 3.

JBI Electrical recorded a Claim of Lien on June 3, 2019. See Am. Compl. ¶ 15, at 3. On July 1, 2019, JBI Electrical recorded an Amended Claim of Lien. See Am. Compl. ¶ 15, at 3. The "Defendants have refused to pay any portion of the outstanding balance of $248,414.63, plus interest and attorneys' fees, and the balance remains unpaid to date." Am. Compl. ¶ 16, at 3.

2. Facts for Purposes of the Motions for Summary Judgment.

KW AQE is the owner and developer of property located at 1 Shamrock Way NE, Albuquerque, New Mexico (the "Property"). See KW AQE, LLC's Memorandum Brief in Support of Summary Judgment ¶ 1, at 1, filed August 25, 2020 (Doc. 54)("KW AQE MSJ Memo")(asserting this fact); Plaintiff/Counter-Defendant JBI's Response to Defendant/Counter-Plaintiff KW AQE, LLC's Motion for Summary Judgment ¶ 1, at 2, filed September 25, 2020 (Doc. 69)("JBI Response")(admitting this fact); Declaration of Kevin Kiernan ¶ 3, at 1 (dated Aug. 24, 2020), filed August 25, 2020 (Doc. 57)("Kiernan Decl."). KW AQE developed the Property pursuant to a lease agreement with FedEx Freight, Inc. ("FedEx"). See KW AQE MSJ Memo. ¶ 2, at 1 (asserting this fact); JBI Response ¶ 1, at 2 (admitting this fact); Kiernan Decl. ¶ 4, at 1. FedEx intended to use the property as a FedEx Freight Center. See KW AQE MSJ Memo. ¶ 2, at 1 (asserting this fact); JBI Response ¶ 1, at 2 (admitting this fact); Kiernan Decl. ¶ 4, at 1.

On November 27, 2017, KW AQE entered into a construction contract with JMD Construction, a general contractor; JMD Construction agreed to construct the FedEx Freight Center at the Property. Se...

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