MECO Elec. Co. v. Siemens Indus.
| Decision Date | 06 September 2022 |
| Docket Number | 21-CV-09166 (GHW) (RWL) |
| Parties | MECO ELECTRIC CO., INC., Plaintiff, v. SIEMENS INDUSTRY, INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
REPORT AND RECOMMENDATION TO HON. GREGORY H. WOODS MOTION TO DISMISS
Plaintiff MECO Electric Co., Inc. (“Plaintiff” or “MECO”) filed this action against Defendant Siemens Industry, Inc. (“Defendant” or “Siemens”), alleging breach of contract due to Siemens's failure to act in good faith and, in the alternative, that Siemens has been unjustly enriched by receiving services from MECO without paying for them. Siemens moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”), arguing that MECO has waived its right to damages by admittedly failing to strictly comply with the conditions precedent set out in the three contracts at issue. Siemens further argues that MECO failed to allege a claim for breach under Illinois law, and that MECO's unjust enrichment claim is barred by the existence of contracts addressing the subject matter at issue. For the reasons set forth below, I recommend that Siemens's motion be GRANTED.
As required on a motion to dismiss, the Court accepts as true all well-pled allegations of the Complaint and draws all reasonable inferences in favor of Plaintiff, the non-moving party.[1] The Court also considers documents referenced in the Complaint, including the contracts at issue.[2]
MECO is an electrical subcontractor based and incorporated in New York. ) Siemens is a Delaware Corporation with principal places of business in New Jersey Illinois, and Georgia. (Compl. ¶ 2.) MECO contracted with Siemens to provide various electrical services for three construction projects in Manhattan: the expansion of Pennsylvania Station (“Moynihan Project”), the expansion of the Jacob Javits Convention Center (“Javits Project”), and the construction of a transformer building at the Javits Center (“Transformer Project”). (Compl. ¶¶ 6, 12-14.)
MECO entered into a written subcontract with Siemens for each project (collectively, the “Subcontracts”). The Subcontract for the Moynihan Project is a fixed price contract for $2,190,950, with $249,065 in approved change orders, effective on September 12, 2018. (Compl. ¶¶ 12(a)-(c)). The Subcontract for the Javits Project is a fixed price contract for $2,380,525, with $997,219.62 in approved change orders, effective on February 28, 2019. (Compl ¶¶ 13(a)-(c)). The Subcontract for the Transformer Project is a fixed price contract for $425,000, with $260,870 in approved change orders, effective on March 8, 2018. (Compl. ¶¶ 14(a)-(c).)
MECO alleges that, due to Siemens's failure to act in good faith and its abuse of contractual discretion, MECO's “cost to perform the contracted scope of work far exceeded MECO's [fixed] contract price.”
Specifically, MECO claims that Siemens caused it to “incur excessive mobilizations and de-mobilizations of the lifts and the crews,” during the Moynihan and Javits Projects, thereby causing MECO to “suffer increased costs of performance that was not contemplated when [it] entered into the contract” (Compl. ¶ 19(a)(i); see also id. ¶ 23); that, falling short of expected industry standard, “Siemens never supplied a Critical Path Method (“CPM”) schedule for the work on a start to finish basis ... [and] [a]s a result, MECO did not know what other trades were doing,” resulting in MECO being unable to “perform its work in the most efficient sequence possible” on the Moynihan and Javits Projects (Compl. ¶ 19(a)(ii)); that “MECO worked under conditions that can best be described as chaotic” on these projects (Compl. ¶ 19(a)(iii)); and that “Siemens compelled overtime work that led to losses in productivity.” (Compl. ¶ 19(a)(iv).)
On the Transformer Project, MECO claims that after a “six-month lull,” MECO returned to the work site to find much of the space built out, which “blocked free access to installing electrical conduit runs” and made the work “much more costly,” and was an example of “Siemens' failure to act in good faith” and its “abuse of discretion.” (Compl. ¶ 20.) “Under a ‘total cost' theory of construction contract damages,” MECO “seeks damages in the amount of the difference between MECO's actual cost to perform minus MECO's contract price,” which totals $2,157,132 for the Moynihan Project, $482,772.38 for the Javits Project, and $281,306[4] for the Transformer Project. (Compl. ¶¶ 9, 12(g), 13(g), 14(j).)
MECO further alleges that the COVID-19 pandemic “exacerbated an already chaotic project” to the extent that MECO needed to “spend additional time cleaning and disinfecting tools and managing safety protocols,” in addition to loss of productivity due to spacing requirements between workers. (Compl. ¶ 19(b).)
Finally, MECO claims that it is owed the remaining balance of the base contract price, as well as “retainage” funds that Siemens agreed to release once the contractually-defined warranty period for the work under the Subcontracts had expired. (Compl. ¶¶ 12(e), 12(j), 13(e), 13(j), 14(e), 14(j).)
Seeking damages based on its “total cost” claim, compensation for extra costs incurred by COVID-19, and payment for the base contract balances - including retainage - due on each Project, MECO claims that it has been damaged in an amount of least $3,468,487. (Compl. ¶ 30.)
MECO filed its initial complaint in this action on November 5, 2021. (Dkt. 1.) The case was referred to me for general pretrial purposes and all dispositive motions on November 16, 2021. (Dkt 6.) On February 1, 2022, Siemens filed a letter seeking to file a motion to dismiss the complaint for failure to state a claim. (Dkt. 8.) On February 2, 2022, the Court ordered MECO to file an amended complaint to redress the issues raised by Defendant if there was a good faith basis to do so. (Dkt. 9.) On February 9, 2022, MECO filed its First Amended Complaint. (Dkt. 12.) On March 14, 2022, Siemens moved to dismiss the First Amended Complaint. (Dkts. 14-16.)
On April 13, 2022, MECO moved for leave to file a Second Amended Complaint, claiming that the grounds for dismissal raised by Siemens in its motion were different from those raised in its pre-motion letter at Dkt. 8. (Dkt. 19.) Siemens opposed the motion. (Dkt. 20.) The Court granted MECO's motion on April 19, 2022. (Dkt. 22.)
MECO filed its Second Amended Complaint on April 21, 2022. (Dkt. 23.) On May 9, 2022, Siemens informed the Court that it would like to withdraw its prior motion to dismiss and file a new motion to dismiss the Second Amended Complaint. (Dkt. 24.) Siemens then filed the present motion to dismiss on May 24, 2022. (Dkts. 26-28.) MECO filed its opposition on June 23, 2022. (Dkt. 29.) Siemens filed its reply on July 7, 2022, at which point the motion was fully briefed. (Dkt. 30.)
Under Rule 12(b)(6), a pleading may be dismissed for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). To survive a Rule 12(b)(6) motion, a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974 (2007). A claim is facially plausible when the factual content pleaded allows a court “to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009).
“Where a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.'” Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. at 1966). In considering a motion to dismiss, a district court “accept[s] all factual claims in the complaint as true, and draw[s] all reasonable inferences in the plaintiff's favor.” Lotes, 753 F.3d at 403 (internal quotation marks omitted). However, this tenet is Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. “[R]ather, the complaint's factual allegations must be enough to raise a right to relief above the speculative level ... i.e., enough to make the claim plausible.” Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (internal quotation marks and brackets omitted). A complaint is properly dismissed where, as a matter of law, “the allegations in [the] complaint, however true, could not raise a claim of entitlement to relief.” Twombly, 550 U.S. at 558, 127 S.Ct at 1966.
For the purposes of considering a motion to dismiss pursuant to Rule 12(b)(6), a court generally is confined to the facts alleged in the complaint. See Cortec Industries v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991). A court may, however, consider additional materials, including documents attached to the complaint, documents incorporated into the complaint by reference, public records, and documents that the plaintiff either possessed or knew about, and relied upon, in bringing the suit. See Kleinman, 706 F.3d at 152 (quoting ATSI Communications, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007)). In that regard, if “a document relied on in the complaint contradicts allegations in the complaint, the document, not the allegations, control, and the court need not accept the allegations in the complaint as true.” Poindexter v. EMI Record Group Inc., No. 11-CV-559, 2012 WL 1027639, at *2 (S.D.N.Y. March 27, 2012) (quoting Barnum v. Millbrook Care Ltd. Partnership, 850 F.Supp. 1227, 1232-33 (S.D.N.Y.1994)).
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