NHM Constructors, LLC v. Heartland Concrete, LLC
| Decision Date | 28 February 2022 |
| Docket Number | 1:21-cv-00100-MR-WCM |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | NHM CONSTRUCTORS, LLC, Plaintiff, v. HEARTLAND CONCRETE, LLC, Defendant. |
NHM CONSTRUCTORS, LLC, Plaintiff,
v.
HEARTLAND CONCRETE, LLC, Defendant.
No. 1:21-cv-00100-MR-WCM
United States District Court, W.D. North Carolina, Asheville Division
February 28, 2022
MEMORANDUM AND RECOMMENDATION
W. CARLETON METCALF UNITED STATES MAGISTRATE JUDGE
This matter is before the Court on Defendant's Motion to Dismiss (Doc. 9), which has been referred to the undersigned pursuant to 28 U.S.C. § 636 for the entry of a recommendation.
I. Relevant Background
A. Procedural History
On February 15, 2021, Plaintiff NHM Constructors, LLC (“Plaintiff”) filed a Complaint in the Superior Court of Buncombe County, North Carolina. Doc. 1-1. On March 11, 2021, Plaintiff filed an Amended Complaint. Doc. 1-2.
On April 12, 2021, Defendant Heartland Concrete, LLC (“Defendant”) removed the matter to this Court. Doc. 1.[1]
On June 28, 2021, Plaintiff, with Defendant's consent, filed a second Amended Complaint (the “Second Amended Complaint”). Doc. 6. The Second Amended Complaint is Plaintiff's current operative pleading.
On August 16, 2021, Defendant filed the instant Motion to Dismiss along with a supporting memorandum. Docs. 9, 10. Plaintiff has responded, and Defendant has replied. Docs. 11, 12.
B. Plaintiff 's Allegations
Plaintiff's Second Amended Complaint alleges as follows:
Plaintiff, a licensed general contractor, was awarded a project by the North Carolina Department of Transportation (“NCDOT”) to rehabilitate multiple bridges in Western North Carolina (the “Project”). Seven of these bridges involved “latex overlays.” Doc. 6 at ¶¶ 1, 3.
Defendant held itself out as having prior experience supplying concrete type materials on NCDOT projects, had produced and sold specialized modified latex concrete in the past, and was one of a handful of producers of the specialized concrete that was qualified to work on NCDOT projects. Id. at ¶¶ 2, 4. Defendant knew that if it supplied materials for a NCDOT project, such materials would have to conform to NCDOT standards. Id. at ¶ 4.
After the Project was awarded to Plaintiff, Defendant contacted Plaintiff and requested the opportunity to submit “an after the fact price.” Id. at ¶ 5. Plaintiff responded with an email containing a link to the relevant NCDOT project files, plans, and contract requirements and specifications (the “Specifications”). Id. at ¶ 6. The Specifications included documents specific to the Project as well as the 2018 NCDOT Standard Rate Roadway Specifications. Id. at ¶ 7.
Subsequently, Defendant issued to Plaintiff a series of proposals to provide “Latex Modified Concrete” for the Project. Ultimately, three different proposals were accepted by Plaintiff, id. at ¶ 8, and the parties “made at least 3 written contracts, ” copies of which are attached to the Second Amended Complaint. Id. at ¶ 8; Doc. 6-1.[2] Plaintiff alleges that these proposals “expressly incorporated the relevant NCDOT Project Specifications” and that it accepted the proposals “in reasonable reliance on the express statements that Defendant's proposal[s] included the Specifications [and] that Defendant had expertise in NCDOT procurement and project procedures.” Id. at ¶¶ 8, 10. Plaintiff further alleges that it relied on Defendant's warranties and on the
fact that the parties had worked on other NCDOT projects together in the past. Id.[3]
Defendant provided material for the seven bridge overlays between September 2018 and August 2019. Defendant mixed the materials on location in its mixers. Id. at ¶ 11.
After each concrete pour was completed, and within a “12 Month Guarantee Period, ” the NCDOT noted “bullet shaped voids and openings” in the materials that Defendant had supplied and deemed the material to be defective, nonconforming, and showing unacceptable distress. Id. at ¶ 12. The NCDOT therefore requested remediation on all seven bridges. Id.
On August 23, 2019, Plaintiff informed Defendant via email that it was placing a hold on the remaining $77, 341 due to Defendant (the “Holdback Amount”). Id. at ¶ 13.
In response, Defendant assured Plaintiff that it would resolve the issues with the concrete. Id. at ¶ 13. In addition to verbal assurances, Defendant sent an email to Plaintiff on September 11, 2019 wherein Defendant “admitted that the ‘surface problems' in Defendant's Materials [were] due to the sand and small #7 stone it elected to incorporate into its mix, ” and proposed a repair
plan. Id. at ¶ 13. Plaintiff alleges that “to induce the Plaintiff to release one half” of the Holdback Amount, Defendant further stated via email that it “agreed to pay to repair the pot marks that occurred in the surface of the 7 bridges….” Id. In reliance on these assurances, Plaintiff released the entire Holdback Amount (rather than half of the Holdback Amount) to Defendant.
The NCDOT, however, did not accept Defendant's proposed repair plan and demanded that the overlay of all seven bridges be removed and replaced (i.e., a complete remediation). Id. at ¶ 14. In December of 2019, and at Defendant's request, Plaintiff provided Defendant with an estimated cost for a complete remediation exceeding $2.3 million. Id. at ¶ 16.
Defendant did not deny responsibility for the damages but submitted a claim to one or more of its liability carriers. Id. at ¶ 17. The carriers, however, denied coverage for the claim, and on September 28, 2020, Defendant advised Plaintiff that it had “no obligation, and that we lack both the ability and means to perform the work demanded by NCDOT or compensate [Plaintiff] for that work.” Id. at ¶ 18.
Plaintiff alleges that it remains obligated by the terms of its contract with the NCDOT to carry out the requested remediation of the bridges, and its failure to do so may expose it to litigation with the NCDOT or cause the NCDOT to suspend Plaintiff's right to bid on other NCDOT projects, which is Plaintiff's primary source of construction work. Id. at ¶ 19.
II. Legal Standard
When considering a motion made pursuant to Rule 12(b)(6), the court, accepting the allegations in the complaint as true and construing them in the light most favorable to the plaintiff, determines “whether the complaint on its face states plausible claims upon which relief can be granted.” Francis v. Giacomelli, 588 F.3d 186, 189, 192 (4th Cir. 2009); accord Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009).
The court, however, is not required to accept “legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement.” Consumeraffairs.com, 591 F.3d at 255; see Giacomelli, 588 F.3d at 192. That is, while “detailed factual allegations” are not required, the complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); accord Consumeraffairs.com, 591 F.3d at 255. “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); accord Consumeraffairs.com, 591 F.3d at 255. In short, the well-pled factual allegations must move a plaintiff's claim from conceivable to plausible. Twombly, 550 U.S. at 570; Consumeraffairs.com, 591 F.3d at 256.
III. Discussion
Plaintiff's Second Amended Complaint asserts claims for breach of contract, fraud, unfair and deceptive trade practices, negligence, products liability, breach of express warranties, and breach of implied warranties. Additionally, Plaintiff alleges, in the alternative, that its release of the entire Holdback Amount, in reliance on Defendant's statements that Defendant agreed to pay the costs of repair, formed a second contract (the “Repair Contract”) that Defendant also breached.
By the Motion to Dismiss, Defendant seeks the dismissal of all of Plaintiff's claims, except the claim for breach of contract. Defendant asserts that Plaintiff's other claims are restatements of Plaintiff's breach of contract claim, are barred by the economic loss rule, and/or that Plaintiff has failed to state a claim.
“Because this case is in federal court based on diversity jurisdiction, the law of the forum state-in this case, North Carolina-applies.” Ellis v. Louisiana-Pacific Corp., 699 F.3d 778, 782-83 (4th Cir. 2012).
A. Plaintiff's Tort Claims
1. Fraud
Plaintiff alleges that Defendant knowingly and falsely promised that it would pay for repairs to the seven bridges, and that in reliance on that promise, Plaintiff was damaged by releasing the Holdback Amount. See Doc. 11 at 8.
Defendant responds that Plaintiff's fraud claim is not separate from its breach of contract claim. Doc. 10 at 7.
“The elements of a civil cause of action for fraud are (1) a false representation or concealment of a material fact (2) that is reasonably calculated to deceive (3) made with intent to deceive (4) which does in fact deceive and (5) results in damage to the injured party.” Charlotte Motor Speedway, LLC v. County of Cabarrus, 230 N.C.App. 1, 10, 748 S.E.2d 171, 178 (2013). “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” Fed.R.Civ.P. 9(b).
Here, Plaintiff's fraud claim is based on conduct that occurred after the breach of the underlying contract, to wit: Defendant's alleged false representation that it was going to repair the seven bridges. Such conduct, however, is intertwined with Plaintiff's breach of contract claim. See International Designer Transitions, Inc. v. Faus Group, Inc., 663 F.Supp.2d 432, 445 (W.D. N.C. 2009) (finding the argument that Defendant induced plaintiff to alter shipping schedules and increase inventory based on post-contract discussion and...
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