United States ex rel. Precision Air Conditioning of Brevard, Inc. v. Cincinnati Ins. Co.
| Decision Date | 13 April 2021 |
| Docket Number | Civil Action No. 4:20-cv-190 |
| Citation | 533 F.Supp.3d 290 |
| Parties | UNITED STATES of America, FOR the USE OF PRECISION AIR CONDITIONING OF BREVARD, INC., Plaintiff, v. The CINCINNATI INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
Erik Hong Gerstner, Kristen Lynn Loesch, Praemia Law, PLLC, Reston, VA, for Plaintiff.
Thomas Andrew Coulter, Whiteford Taylor & Preston LLP, Richmond, VA, for Defendant.
Before the Court is Defendant the Cincinnati Insurance Company's ("Cincinnati"), Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6). ECF No. 22. The Court finds that a hearing is not necessary. Having reviewed the parties’ filings, both matters are ripe for judicial determination. For the reasons stated below, Defendant's Motion is DENIED.
The following facts taken from Plaintiff Precision Air Conditioning of Brevard, Inc.’s ("Precision Air") Complaint, ECF No. 1, are considered true and cast in the light most favorable to Plaintiff. Adams v. Bain , 697 F.2d 1213, 1219 (4th Cir. 1982).
The United States Army Corps of Engineer ("USACE") awarded Leebcor Services, LLC ("Leebcor"), a contract to design and build a Fire Crash/Rescue Station on Patrick Air Force Base in Florida (the "Project"). ECF No. 1 at ¶ 4; see also, id. at Exhibit 1. On June 1, 2017, Leebcor, as principal, and Surety, obtained a payment bond, in the amount of $12,383,350.00, which jointly and severally bound Leebcor and Surety. Id. at ¶ 5. The Bond was accepted by the United States. Id. at ¶ 6. Then, Leebcor hired Precision as a subcontractor, pursuant to a written Subcontract Agreement, to furnish mechanical contracting labor, services, and materials for the Project. Id. at ¶¶ 7-8; see also, id. at Exhibit 2 ("Subcontract Agreement"). The United States alleges that Leebcor breached its contract because it failed and neglected to pay Precision a sum of $185,417.61, which includes all unpaid due for labor, services, and materials furnished. Id. at ¶¶ 9-10.
On October 2, 2020, the United States filed a complaint against Defendant pursuant to the to the Miller Act in the United States District Court for the Middle District of Florida requesting judgment for the sum of $185,417.61. ECF No. 1. On November 16, 2020, Defendant filed a Motion to Transfer Venue alleging that the Subcontract Agreement contained a forum selection clause which required transferring the action pursuant to 28 U.S.C. § 140. ECF No. 23. On December 15, 2020, the Honorable U.S. District Judge Paul G. Bryon transferred the action to the U.S. District Court for the Eastern District of Virginia, Newport News Division. ECF No. 36.
On November 16, 2020, Defendant also filed the instant Motion to Dismiss Plaintiff's Complaint. ECF No. 22. On November 24, 2020, Plaintiff responded in opposition. ECF No. 27. On March 29, 2021, Defendant replied. ECF No. 50.
Federal Rule of Civil Procedure 12(b)(6) provides for dismissal of actions that fail to state a claim upon which relief can be granted. The United States Supreme Court has stated that in order "[t]o 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.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Specifically, "[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." Id. at 678, 129 S.Ct. 1937. Moreover, at the motion to dismiss stage, the court is bound to accept all of the factual allegations in the complaint as true. Id. However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Assessing the claim is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937.)). In considering a Rule 12(b)(6) motion to dismiss, the Court cannot consider "matters outside the pleadings" without converting the motion to a summary judgment. Fed. R. Civ. P. 12(d). Nonetheless, the Court may still "consider documents attached to the complaint ... as well as those attached to the motion to dismiss, so long as they are integral to the complaint and authentic." Sec'y of State for Defence v. Trimble Navigation Ltd. , 484 F.3d 700, 705 (4th Cir. 2007) ; see also Fed. R. Civ. P. 10(c).
As an initial matter, the Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332. Precision is a Florida corporation and maintains its principal place of business in Florida. ECF No. 1 at ¶ 1. Cincinnati Insurance Company is an Ohio company that maintains its principal place of business in Fairfield, Ohio. Id. at ¶ 2. The amount in controversy exceeds $75,000. Id. at ¶ 9. In a diversity action, district courts apply federal procedural law and state substantive law. See Gasperini v. Ctr. For Humanities, Inc. , 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996). Federal courts sitting in diversity jurisdiction apply the choice of law rules in the state in which it sits. Klaxon v. Stentor Elec. Mfg. Co. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941) ().
Generally, when an action brought under diversity jurisdiction is transferred from one federal district to another pursuant to 28 U.S.C. § 1404(a), as has happened here, the law of the state of the transferor court governs. Van Dusen v. Barrack , 376 U.S. 612, at 627, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). However, an exception to the Van Dusen rule applies when a Section 1404(a) transfer is made pursuant to a forum selection clause, and in such cases the law of the state of the transferee court is to be applied. Freedman v. America Online, Inc. , 325 F.Supp.2d 638, 651–52 & n. 28 (E.D. Va. 2004) ; see also 17 Moore's Federal Practice –Civil, § 111.20[3][a] (2010) (citing Caribbean Wholesales & Serv. Corp. v. U.S. JVC Corp. , 855 F.Supp. 627, 631 (S.D.N.Y. 1994) ); cf. Volvo Const. Equip. North America, Inc. v. CLM Equip. Co., Inc. , 386 F.3d 581, 600 (4th Cir. 2004) ().
In this case, because the action has been transferred to a federal court located in Virginia, pursuant to a forum selection clause in the Subcontract, the Court looks to Virginia's choice-of law rules. In Virginia, if a contract includes a choice of law provision, that provision governs. Paul Business Systems, Inc. v. Canon U.S.A., Inc. , 240 Va. 337, 397, 397 S.E.2d 804 (1990). "Virginia law looks favorably upon choice of law clauses in a contract, giving them full effect except in unusual circumstances...." Colgan Air, Inc. v. Raytheon Aircraft Co. , 507 F.3d 270, 275 (4th Cir. 2007) (citing Hitachi Credit Amer. Corp. v. Signet Bank , 166 F.3d 614, 624 (4th Cir. 1999) ); see also , Hooper v. Musolino , 234 Va. 558, 566, 364 S.E.2d 207 (1988) ; Tate v. Hain , 181 Va. 402, 410, 25 S.E.2d 321 (1943). The Subcontract Agreement contains a forum selection clause which provides that "[a]ny action instituted for the enforcement of this Agreement shall be resolved only in the federal or state courts of the state of the aforementioned Buyer's office." ECF No. 1 at Exhibit 1 ¶ 24. The Subcontract Agreement further identifies Leebcor as the "Buyer," and "430 McLaws Circle, Suite 201, Williamsburg, Virginia 23185" as the Buyer's office. Id. at Exhibit 1; see also , ECF No. 36. Therefore, the Court will adhere to the choice of law clause in the Subcontract and apply Virginia law when evaluating its provisions.
Precision brought a claim under the Miller Act, 40 U.S.C. § 3133, against Cincinnati, the Surety. The Miller Act provides that "[a] person having a direct contractual relationship with a subcontractor but no contractual relationship, express or implied, with the [general] contractor furnishing the payment bond," i.e. , a sub-subcontractor, such as Precision here, "may bring a civil action on the payment bond on giving written notice to the contractor within 90 days from the date on which the person did or performed the last of the labor or furnished or supplied the last of the material for which the claim is made." 40 U.S.C. § 3133(b)(2) ; see also , U.S. ex rel. Thyssenkrupp Safway, Inc. v. Tessa Structures, LLC , No. 1:10CV512 JCC/JFA, 2011 WL 1627311, at *3 (E.D. Va. Apr. 27, 2011).
"To state a valid Miller Act claim, a plaintiff must prove essentially two elements: (1) it has ‘furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished under section 3131’; and (2) it ‘has not been paid in full within 90 days.’ " United States ex rel. Tenn. Valley Marble Holding Co. v. Grunley Constr. , 433 F.Supp.2d 104, 114 (D.D.C. 2006) (quoting 40 U.S.C. § 3133(b)(1) ). The Miller Act is "highly remedial" and, therefore, is entitled to a "liberal construction and application in order properly to effectuate the Congressional intent to protect those whose labor and materials go into public projects." Clifford F. MacEvoy Co. v. United States ex rel. Calvin Tomkins Co. , 322 U.S. 102, 107, 64 S.Ct. 890, 88 L.Ed. 1163 (1944). Though entitled to liberal construction, "[w]hile the Miller Act is certainly meant to protect those who supply materials for public projects, the statute was not meant to entitle the supplier to more than it is ‘justly due.’ " Tenn. Valley Marble , 433 F.Supp.2d at 114 ; see also United States ex rel. Acoustical Concepts, Inc. v. Travelers Cas. and Sur....
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