United States ex rel. Tusco, Inc. v. Clark Constr. Grp., LLC

• Decision Date: 15 August 2016
• Docket Number: Civil No. PJM 15–2885
• Citation: 235 F.Supp.3d 745
• Parties: UNITED STATES of America, FOR the USE AND BENEFIT OF TUSCO, INC., et al., Plaintiffs, v. CLARK CONSTRUCTION GROUP, LLC, et al., Defendants.
• Court: U.S. District Court — District of Maryland

235 F.Supp.3d 745

UNITED STATES of America, FOR the USE AND BENEFIT OF TUSCO, INC., et al., Plaintiffs,

v.CLARK CONSTRUCTION GROUP, LLC, et al., Defendants.

Civil No. PJM 15–2885

United States District Court, D. Maryland.

Signed August 15, 2016

John David Folds, Mindy Lynn Rattan, Baker Donelson Bearman Caldwell & Berkowitz, Washington, DC, for Plaintiffs.

Jason C. Constantine, Moore & Lee, LLP, McLean, VA, for Defendants.

MEMORANDUM OPINION

PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE

The United States of America, for the use and benefit of Tusco, Inc., and Tusco, Inc. in its own capacity (collectively "Tusco") have sued Clark Construction Group, LLC ("Clark") and Travelers Casualty and Surety Company of America ("Travelers") (collectively "Defendants") based on a dispute over work Tusco performed on a federal construction project. Tusco, a subcontractor on the project, alleges that Clark, the prime contractor, failed to timely pay it for certain change order work performed by Tusco at Clark's request. Tusco's claims include breach of contract against Clark (Count I); quantum meruit against Clark (Count II); and breach of payment bond in violation of the Miller Act, 40 U.S.C. § 3133, against Travelers. Clark has moved to dismiss Counts I and II, and Travelers has moved to stay Count III.¹ For the reasons that follow, the Court will DENY Clark's Motion to Dismiss (ECF No. 7) and DENY Travelers' Motion to Stay (ECF No. 7).

I. FACTS AND PROCEDURAL HISTORY²

On or about September 27, 2011, Clark contracted with the United States (the "Prime Contract") to provide construction services with respect to a federal project located in Bethesda, Maryland, known as the Intelligence Community Campus–B (ICC–B) North Campus (the "Project"). Compl. ¶ 7, ECF No. 1. On September 28, 2011, Clark secured a payment bond (the "Bond") from Travelers Casualty and Surety Company with a penal sum of $39,912,000.00. Id. ¶ 8. Under the terms of the Bond, Travelers agreed to be bound jointly and severally with Clark to make payment to all persons having a direct contractual relationship with Clark or to any of Clark's subcontractors who furnished labor, material, or both in performing the work for the Prime Contract in the event Clark failed to make prompt payment. Id. ; Compl., Ex. A, ECF No. 1–1.

A. The Subcontract

On or about January 16, 2012, Clark entered into a subcontract with Tusco³ (the "Subcontract") to furnish labor, materials, equipment, and all other items necessary to complete Tusco's work for the Project. Compl. ¶ 9; Compl., Ex. B, ECF No. 1–2. Under the Subcontract, Clark agreed to pay Tusco $615,000.00 for the work. Compl. ¶ 10; Compl., Ex. B, Art. 4(a). The Subcontract contained a provision making payment to Clark by the Government (referred to in the Subcontract as the "Owner") a condition precedent to Clark's payment to Tusco. Specifically, Article 4(j) of the Subcontract provided, in part:

Subcontractor agrees that payment by the Owner to Clark for work performed by the Subcontractor...is a condition precedent to any payment obligation of Clark to Subcontractor. Subcontractor agrees that the liability of Clark's sureties on any bond for payment to Subcontractor is subject to the same conditions precedent as are applicable to Clark's liability to Subcontractor.

Compl., Ex. B, Art. 4(j).

In addition to setting forth these payment procedures, the Subcontract contained several clauses governing "changes" in the scope of Tusco's work under the Project. In general, the Subcontract permitted Clark to order such changes unilaterally and without notice, provided that it notified Tusco of the changes in writing.⁴ Id. , Art. 9(a). If Tusco claimed entitlement to additional compensation for such work (beyond the $615,000.00 Subcontract price), it had to submit any requests or claims for adjustment in the Subcontract price to Clark. Id. , Art. 9(b). Under the terms of the Subcontract, the manner and timing of Tusco's compensation for such work depended upon whether, on the one hand, the Government ordered the changes or, on the other hand, Clark independently ordered the changes. For changes "made by the Owner," Article 9(c) stated:

Clark's receipt of payment from the Owner on account of pending changes made by the Owner shall be a condition precedent to Clark's obligation to make payment for changed work to Subcontractor.

Id. , Art. 9(c). For changes made by Clark autonomously, Article 9(d) directed:

For changes ordered by Clark independent of the Owner of the Contract Documents, Subcontractor shall be entitled to equitable adjustment in the Subcontract price.

Id. , Art. 9(d).

Finally, in the event Clark and the Subcontractor disputed payment, the Subcontract contained several provisions governing settlement of these disputes. For disputes involving the Government, Article 11(b) of the Subcontract stated:

In any case of any dispute between Clark and the Subcontractor, in any way relating to or arising from any act or mission of the Owner or involving the Contract Documents, Subcontractor agrees to be bound to Clark to the same extent that Clark is bound to the Owner, by the terms of the Contract Documents, and by any and all preliminary and final decisions or determinations made thereunder by the party... whether or not Subcontractor is a party to such proceedings. In case of such dispute, Subcontractor will comply with all provisions of the Contract Documents allowing a reasonable time for Clark to analyze and forward to the Owner any required communications or documentation. Clark will, at its option, (1) present to the Owner, in Clark's name, or (2) authorize Subcontractor to present to the Owner, in Clark's name, all of Subcontractor's claims and answer the Owner's claims involving Subcontractor's work, whenever Clark is permitted to do so by the terms of the Contract Documents....The Subcontractor price shall be adjusted by Subcontractor's allocable share determined in accordance with Article 9, hereof.

Id. , Art. 11(b).

B. Tusco's Work on the Project

Tusco alleges that it performed all the work it agreed to perform under the original scope of the Project, which it says was authorized and accepted by Clark. Compl. ¶¶ 11, 13. During the course of the Project, however, Tusco says that Clark requested additional work from Tusco.⁵ Tusco further alleges that it submitted change orders and performed the additional work, which Clark accepted. Id. ¶ 11.

Tusco's last day of work on the Project was on or about August 18, 2014. Id. ¶ 12. Although Clark has paid Tusco for the work performed under the original scope of the Project,⁶ Tusco avers that Clark has not, to date, paid Tusco the amount it claims it is owed for the change-order work and extra work authorized by Clark, a total of $100,852.69. Id. ¶ 14.

Soon thereafter, Tusco submitted a claim to Travelers for payment. Id. ¶ 15. Although Travelers did not deny the claim, it has failed to provide Tusco with a substantive response or pay it the $100,852.69 Tusco says it is owed. Id. ¶ 16.

C. The Complaint

On March 24, 2015, Tusco, Clark, Travelers, Fidelity and Deposit Company of Maryland, and Federal Insurance Company entered into a tolling agreement under which the statute of limitations on all claims "arising from or in any way connected with the construction of the ICC–B North Campus Project" would be tolled from March 15, 2015, until September 24, 2015. Id. ¶ 17.

On September 23, 2015, Tusco filed its Complaint in this Court, alleging on the basis of the above facts: breach of contract against Clark (Count I), quantum meruit against Clark (Count II), and breach of payment bond and violation of the Miller Act against Travelers (Count III). See id. Clark has moved to dismiss Counts I and II for failure to state a claim upon which relief may be granted. Defs.' Mot. Dismiss and Stay, ECF No. 7. Travelers has answered the Complaint, but has moved to stay litigation of Count III. Id. ; Answer, ECF No. 8. Clark joins in Travelers' Motion to Stay, to the extent its claims are not dismissed for failure to state a claim. Defs.' Mot. Dismiss and Stay.

II. MOTION TO DISMISS COUNTS I AND II

A. Legal Standards

Federal Rule of Civil Procedure 8(a) prescribes "liberal pleading standards," requiring only that a plaintiff submit a "short and plain statement of the claim showing that [he or she] is entitled to relief."Erickson v. Pardus , 551 U.S. 89, 93–94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citing Fed. R. Civ. P. 8(a)(2) ). To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff must plead facts sufficient to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). But this standard requires "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Although a court will accept factual allegations as true, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id.

The Court addresses Clark's arguments to dismiss the first two Counts of the Complaint.

B. Count I: Breach of Contract Claim

Tusco claims in Count I that Clark breached its obligations under the Subcontract when it "failed and refused to pay Tusco in full for labor, services and materials provided by Tusco in performing its scope of work under the Subcontract and pursuant to Clark's direction." Compl. ¶ 20.

In moving to dismiss this claim, Clark points to Article 9(c) of the Subcontract, in which Tusco expressly agreed that receipt of payment by the Government to Clark for change-order work would be a "condition precedent" to Clark's obligation to pay Tusco. Defs.' Mot. Dismiss and Stay, Mem. Supp. 6–7, ECF No. 7–1.⁷ Clark argues that Tusco does not—and, as a matter of law, cannot—allege satisfaction of this condition precedent because Clark has not been paid by the Government for the...