v. N. Am. Specialty Ins. Co.

• Decision Date: 21 February 2014
• Docket Number: Civil Action No. 13–4171.
• Citation: 2 F.Supp.3d 610
• Parties: U.S.A. ex rel. LIBERTY MECHANICAL SERVICES, INC. v. NORTH AMERICAN SPECIALTY INSURANCE COMPANY.
• Court: U.S. District Court — Eastern District of Pennsylvania

2 F.Supp.3d 610

U.S.A. ex rel. LIBERTY MECHANICAL SERVICES, INC.

v.NORTH AMERICAN SPECIALTY INSURANCE COMPANY.

Civil Action No. 13–4171.

United States District Court, E.D. Pennsylvania.

Filed Feb. 21, 2014.

Edward Seglias, Matthew Gioffre, Cohen Seglias Pallas Greenhall & Furman PC, Philadelphia, PA, for U.S.A. ex rel. Liberty Mechanical Services, Inc.

Paul T. Devlieger, Robert M. Dunn, Devlieger Hilser PC, Philadelphia, PA, for North American Specialty Insurance Company.

MEMORANDUM

RESTREPO, District Judge.

On July 17, 2013, Liberty Mechanical Services, Inc. (“Liberty”) filed this Miller Act suit against North American Specialty Insurance Company (“NASIC”). NASIC moves to dismiss the action as untimely filed.

Liberty acknowledges its late filing, but argues that the motion should be denied on equitable tolling grounds. NASIC counters that pursuant to U.S. for Use of Soda v. Montgomery, 253 F.2d 509, 510 (3d Cir.1958), the Miller Act time limit is jurisdictional, and thus, equitable tolling is not permitted. As explained below, pursuant to intervening Supreme Court authority, I find that Soda is no longer good law, that the Miller Act time limit should be construed as non-jurisdictional, and that a court may grant equitable tolling. However, because the Complaint lacks sufficient justification for such tolling, the result does not change, and the motion will be granted.

I. FACTS AND PROCEDURAL HISTORY

The facts, as alleged in the Complaint, are as follows: Persuad Companies, Inc. (“Persuad”) entered into a contract with the Department of Veteran Affairs (“VA”) to “perform construction work on a renovation project” at a VA facility in West Philadelphia. Compl. ¶ 5. On August 27, 2010, Liberty and Persuad entered into two subcontracts whereby Liberty would “provide the labor and materials necessary to complete the plumbing and mechanical scopes of work” at the VA facility. Id. ¶ 7. In total, through the original subcontracts and subsequent revisions, Persuad agreed to pay Liberty $464,005.48 for its work. Id. ¶¶ 8–11. Liberty's work on the project concluded in or around January of 2012. Although it apparently made no complaint about the quality of the work performed, Persuad failed to pay Liberty the final $52,535.39 owed. Id. at Ex. E.

Because this was a construction project on federal government property, and pursuant to the Miller Act, 40 U.S.C. § 3131 et seq., Persuad secured a bond with NASIC that guaranteed payment for subcontractors working at the site. Id. ¶ 17. Thus, when Liberty was not paid, it sought the identification of the surety from the VA. Id. ¶ 18–19. In its attempts to identify the surety, Liberty made at least two unsuccessful requests to the VA, including traveling in person to the VA offices. Id. Finally, in September of 2012, eight to nine months after concluding its work, Liberty secured a copy of the bond, and along with it, the identification of NASIC as surety. Id. ¶ 20.

On September 28, 2012, Michael Burns, the owner of Liberty, sent an email to Marcelo Virgili, a representative of NASIC. Id. ¶ 21, Ex. E. Burns stated that Liberty was owed $52,535.00 in unpaid invoices for its work, along with additional money for a separate subcontract for which Liberty believed NASIC was the surety. Id. He further stated that Liberty would refuse to provide needed “close out documents until [it was] paid in full.” Id. Finally, Burns hinted at legal action: “I have contacted my lawyer and we are going to file a claim against both bonds. He will be contacting you.” Id.

The day following Burns' email, Virgili responded that he would “get the ball rolling on the claim against [the bond at issue] for $52,535.” Id. ¶ 22, Ex. E. After stating that he did not think NASIC was the surety for the second project discussed by Burns, he concluded that NASIC “reserves all rights and defenses under the contract, the bond, at law, and in equity.” Id. Soon thereafter, Liberty submitted a claim to NASIC for the bond at issue here. Id. ¶ 24.

At some point after submitting a claim, Andrew Persuad, president of Persuad Companies, contacted Liberty. Id. ¶ 25. Persuad “indicated that [he] would issue final payment to Liberty, and therefore an action against NASIC would be unnecessary.” Id. But in February of 2013, approximately thirteen months after finishing its work, Liberty had received no payment from Persuad. Liberty called and emailed NASIC, seeking payment, but received no response. Id. ¶¶ 26–27. Then, on March 18, 2013, NASIC told Liberty that it would not pay the amount allegedly owed, because any such claim was now time-barred by the Miller Act's one-year limitations period. Id. ¶ 28.

On June 3, 2013, Liberty filed a Miller Act suit against NASIC in the Philadelphia Court of Common Pleas. Because federal courts are the exclusive venue for Miller Act suits, that action was dismissed via preliminary objections. On July 17, 2013, one day after the state court dismissal, Liberty filed suit here. EFC No. 1. NASIC then moved to dismiss the suit as untimely filed. ECF No. 6.

II. STANDARD OF REVIEW

In reviewing a motion to dismiss for failure to state a claim, a district court must accept as true all well-pleaded allegations and draw all reasonable inferences in favor of the nonmoving party. See Bd. of Trs. of Bricklayers & Allied Craftsman Local 6 of N.J. Welfare Fund v. Wettlin Assocs., 237 F.3d 270, 272 (3d Cir.2001). A court need not, however, credit “bald assertions” or “legal conclusions.” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997); see also Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

To survive a motion to dismiss, a complaint must include “enough facts 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). “Factual allegations [in a complaint] must be enough to raise a right to relief above the speculative level.” Id. at 555, 127 S.Ct. 1955. Although the Federal Rules impose no probability requirement at the pleading stage, a plaintiff must present “enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s]” of a cause of action. Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir.2008). “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.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Simply reciting the elements will not suffice. See id.; see also Phillips, 515 F.3d at 231. Finally, when, as here, a complaint contains attachments, examination of the attachments is proper when considering a motion to dismiss. Sands v. McCormick, 502 F.3d 263, 268 (3d Cir.2007) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993)).

III. DISCUSSIONA. The Miller Act in the Third Circuit

“The Miller Act requires every contractor on a federal government contract exceeding $100,000 to provide ‘[a] payment bond with a surety ... for the protection of all persons supplying labor and material in carrying out the work provided for in the contract.’ ” U.S. ex rel. E & H Steel Corp. v. C. Pyramid Enters., Inc., 509 F.3d 184, 186 (3d Cir.2007) (quoting 40 U.S.C. § 3131(b)(2)); see also Dep't of Army v. Blue Fox, Inc., 525 U.S. 255, 264, 119 S.Ct. 687, 142 L.Ed.2d 718 (1999) (“[R]ecognizing that sovereign immunity left subcontractors and suppliers without a remedy against the Government when the general contractor became insolvent, Congress enacted the Miller Act.”). Any supplier or sub-contractor who “has not been paid in full within 90 days” for labor performedor supplies furnished “may bring a civil action on the payment bond for the amount unpaid at the time the civil action is brought and may prosecute the action to final execution and judgment for the amount due.” 40 U.S.C. § 3133(b)(1).

The Act requires that suit “must be brought no later than one year after the day on which the last of the labor was performed or material was supplied by the person bringing the action.” 40 U.S.C. § 3133(b)(4). While courts must construe the Act liberally “to protect those whose labor and materials go into public projects,” J.W. Bateson Co. v. U.S. ex rel. Bd. of Trs. of Nat. Automatic Sprinkler Indus. Pension Fund, 434 U.S. 586, 594, 98 S.Ct. 873, 55 L.Ed.2d 50 (1978), the law of this Circuit has been that the Act's limitations period is a jurisdictional prerequisite to suit. See U.S. ex rel. Soda, 253 F.2d 509; see also U.S. ex rel. J.D.M. Materials Co. v. Fireman's Fund Ins. Co., No. 98–5186, 1999 WL 94614, at *2 (E.D.Pa. Feb. 3, 1999) (citing Soda); United States v. Fid. & Deposit Co. of Md., 999 F.Supp. 734, 741 (D.N.J.1998) (examining the complaint for the “jurisdictional requirement of the Miller Act's one-year statute of limitations”); Cacon, Inc. v. Fletcher & Sons, Inc., No. 90–2503, 1991 WL 25693 (E.D.Pa. Feb. 25, 1991) (citing Soda for proposition that “[c]ompliance with the statutory period is a jurisdictional prerequisite to the maintenance of any suit”); Pittsburgh Builders Supply Co. v. Westmoreland Const. Co., 702 F.Supp. 106, 109 (W.D.Pa.1989) (“The limitations period of the Miller Act has always been construed to be mandatory and jurisdictional.”).

If the Act's limitations period is jurisdictional, a court may not use equity to toll it. However, as detailed below, recent Supreme Court decisions have cast significant doubt on both the persuasive and precedential value in Soda. Thus, I am required to conduct a more significant examination of the Miller Act and relevant Supreme Court and Third Circuit case law.

B. Recent Supreme Court Decisions on Jurisdiction

In recent years, the Supreme Court has frequently stated that courts must conduct a thorough analysis before holding that a statute's requirements are jurisdictional. E.g., Henderson ex...