United States District Court, S.D. New York
August 15, 2005.
DIVERSIFIED CARTING, INC., DIVERSIFIED CONSTRUCTION CORP., and TROY CARUSO, Plaintiffs,
THE CITY OF NEW YORK; SEASONS CONTRACTING CORP.; TURNER CONSTRUCTION CORP.; THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY; THE NEW YORK STATE EMERGENCY MANAGEMENT OFFICE; THE FEDERAL EMERGENCY MANAGEMENT AGENCY; WORLD TRADE CENTER PROPERTIES LLC; SILVERSTEIN PROPERTIES, INC.; SILVERSTEIN WTC MANAGEMENT CO. LLC; WESTFIELD AMERICA TRUST WESTFIELD WTC LLC; WESTFIELD CORPORATION, INC.; WESTFIELD AMERICA, INC.; 7 WORLD TRADE CENTER CO.; MARRIOTT INTERNATIONAL, INC.; U.S. GENERAL SERVICES ADMINISTRATION; and "JOHN DOE" and "JANE DOE," being fictitious names, Defendants.
The opinion of the court was delivered by: HAROLD BAER, JR., District Judge[fn*] [fn*] Margaret Johnson, a summer 2005 intern in my Chambers, and currently a second year law student at New York University School of Law, provided substantial assistance in the researching and drafting of this opinion.
OPINION & ORDER
On December 3, 2004, Plaintiffs, Diversified Carting, Inc.,
Diversified Construction Corporation and Troy Caruso
(collectively, "Diversified"), filed the instant action against
the above named defendants for, inter alia, breach of
contract, unjust enrichment, quantum meruit, and breach of
fiduciary duty. (Compl. ¶ 1).*fn1 Presently before this
Court is a consolidated motion to dismiss and a motion for
summary judgment. (Dckt. 82; 90.) For the foregoing reasons, the
motion to dismiss is GRANTED in-part and DENIED in-part and the
motion for summary judgment is DENIED. I. BACKGROUND
A. Factual Background
The World Trade Center was a "complex of seven commercial
buildings" located in Lower Manhattan. (Compl. ¶ 24.) On
September 11, 2001, the World Trade Center was destroyed as a
result of a terrorist attack. As is now common knowledge, two
planes were hijacked and flown into the Twin Towers of the World
Trade Center, causing their collapse and the destruction of other
buildings within the complex and a myriad of deaths and personal
According to Diversified, on or about September 11, 2001, it
was retained to assist with the search, excavation, and clean-up
efforts at the World Trade Center disaster site. (Compl. ¶ 30.)
While Diversified acknowledges that its services were not
retained through the typical competitive bid process and no
written contract was ever executed, they alleged that they
performed excavation and demolition, and provided equipment and
trucking services from on or about September 11, 2001 through
sometime in January 2002. (Compl. ¶¶ 28; 30-32; 34.)
Consequently, Diversified billed for its work using "billing
rates for time, material, trucking and equipment" which it has
alleged were "fair [and] reasonable." (Compl. ¶¶ 31; 32.)
Diversified now alleges it has not been paid for the work it
performed at Building 7 and filed the instant action to recover
not less than $452,498.97 against a variety of public and private
entities involved in the recovery and clean-up efforts at the
World Trade Center following the September 11, 2001 terrorist
attacks. (Compl. ¶¶ 1; 35.)
First, the Complaint asserts that the Federal Government, and
in particular, the Federal Emergency Management Agency ("FEMA")
and the U.S. General Services Administration (collectively, "the
Federal Defendants") hired contractors, including Diversified, to
assist in the search, excavation, and clean-up efforts at the
World Trade Center. (Compl. ¶¶ 11; 21; 30).*fn2
Second, in addition to the Federal Defendants, the Complaint
also includes several New York City and State agencies. (Compl. ¶
8.) In particular, the Complaint alleges that the New York City
Department of Design and Construction, the New York City
Department of Transportation, and the New York City Office of
Emergency Management (collectively, "the City Defendants"), and
the New York State Emergency Management Office ("NYSEMO"), an
agency of the State of New York, contracted with general
contractors who, in turn, contracted with Diversified. (Compl. ¶¶ 30; 33.) The Port Authority of New
York and New Jersey ("the Port Authority"),*fn3 the owner of
the World Trade Center, is another governmental entity sued in
this lawsuit. (Compl. ¶¶ 9; 24.)
Third, beyond the governmental entities, the Complaint names
the lessees of the World Trade Center, World Trade Center
Properties LLC, Silverstein Properties, Inc., Silverstein WTC
Management Co. LLC, and 7 World Trade Company, L.P.
(collectively, "SRE"). (Compl. ¶¶ 12-14; 19; 25.) Other alleged
lessees of the World Trade Center included in the instant action
are Westfield America Trust, Westfield WTC LLC, Westfield
Corporation, Inc., and Westfield America, Inc. (collectively,
"Westfield"), which leased the retail space within the World
Trade Center. (Compl. ¶¶ 15-18.) In addition, Marriott
International, Inc.,*fn4 which either owned or leased the
land and/or the building that housed the Marriott Hotel located
at the World Trade Center, is a defendant. (Compl. ¶¶ 20; 26.)
Lastly, the Complaint names two contractors which allegedly
served as the general contractors for the recovery and clean-up
efforts at the World Trade Center, Turner Construction Corp.
("Turner") and Seasons Construction Corp. ("Seasons"). (Compl. ¶¶
6; 7; 33.)
B. Procedural History
Diversified filed the instant action on December 3, 2004.
(Dckt. 1.) HMH filed a motion for summary judgment on May 9,
2005. (Dckt. 82.) On May 16, 2005, I issued an Order requiring
defendants to file a single consolidated motion to dismiss.
(Dckt. 89.) The Defendants had apparently not bothered to chat
with one another about their proposed motions to dismiss, or if
they had, felt their prose deserved separate and distinct study
despite their overwhelming similarities. Subsequently, the
Federal Defendants, the City Defendants, and SRE filed a
consolidated motion to dismiss on June 6, 2005. (Dckt. 90.)
II. MOTION TO DISMISS
A. Motion to Dismiss
The Federal Defendants, the City Defendants, and SRE move to
dismiss the Complaint. The Federal Defendants contend that this
Court lacks subject matter jurisdiction because neither the
Tucker Act, 28 U.S.C. §§ 1346, 1491, the Miller Act,
40 U.S.C. § 3131 et. seq., nor the Stafford Act, 42 U.S.C. § 5121 et.
seq., waive federal sovereign immunity. Further, the Federal Defendants argue that if this Court has subject matter
jurisdiction, Diversified has failed to state a claim under the
Miller Act. Similarly, the City Defendants maintain that
Diversified's Second and Ninth Causes of Action improperly seek
recovery under the Miller Act and the Stafford Act. The City
Defendants and SRE also challenge the sufficiency of the
1. Subject Matter Jurisdiction
The Federal Defendants move to dismiss the Complaint for lack
of subject matter jurisdiction in accordance with Rule 12(b)(1)
of the Federal Rules of Civil Procedure ("Rule 12(b)(1)").
Pursuant to Rule 12(b)(1), this Court must accept all of the
facts alleged in the Complaint as true and "draw all reasonable
references in favor of the plaintiff." Raila v. United States,
355 F.3d 118, 119 (2d Cir. 2004). In any analysis of such a
motion, "the plaintiff bears the burden of proving by a
preponderance of the evidence that jurisdiction exists," Chayoon
v. Chao, 355 F.3d 141, 143 (2d Cir. 2004) (citing Garcia v.
Akwesasne Hous. Auth., 268 F.3d 76, 84 (2d Cir. 2001)), and
jurisdiction must be "affirmatively" demonstrated. APWU et. al.
v. Potter, 343 F.3d 619, 623 (2d Cir. 2003). Dismissal of the
Complaint is only appropriate where "it appears beyond doubt that
the plaintiff can prove no set of facts which would entitle him
or her to relief." Raila, 355 F.3d at 119.
Subject matter jurisdiction is, of course, essential for
Plaintiff to proceed, and to establish it here, a plaintiff must
"demonstrate a specific statutory waiver of sovereign immunity."
Lawson v. Fed. Emergency Mgmt. Agency, No. 03 Civ. 881, 2003 WL
2006600, at *2 (S.D.N.Y. Apr. 30, 2003), aff'd,
104 Fed. Appx. 216 (2d Cir. 2004). Absent such consent or statutory waiver, the
United States is immune from suit and this Court lacks subject
matter jurisdiction. United States v. Mitchell, 445 U.S. 535,
538 (1980) (citation omitted); Spinale v. United States, No. 03
Civ. 1704, 2004 WL 50873, at *6 (S.D.N.Y. Jan. 9, 2004) (holding
that if the United States "has not waived its sovereign immunity,
or if the conditions under which the United States has agreed to
waive that immunity have not been met, federal subject matter
jurisdiction does not exist").
Diversified relies on three statutes to establish subject
matter jurisdiction: (1) the Tucker Act, (2) the Miller Act, and
(3) the Stafford Act.
a. Tucker Act
The Tucker Act "provides a comprehensive system for commencing
actions against the United States as an entity." Coleman v.
Nolan, 693 F. Supp. 1544, 1548 n. 3 (S.D.N.Y. 1988) (internal quotations omitted). In particular, the Tucker Act
waives sovereign immunity and provides subject matter
jurisdiction for non-tort claims against the United States
"founded either upon the Constitution, or any act of Congress, or
any regulation of an executive department, or upon any express or
implied contract with the United States." C.H. Sanders Co. v.
BHAP Hous. Dev. Fund Co., 903 F.2d 114, 119 (2d Cir. 1990)
(quoting 28 U.S.C. § 1346(a)(2)). However, the Tucker Act "is
solely jurisdictional" and "does not create a substantive right
to money damages." Cheminova A/S v. Griffin L.L.C.,
182 F. Supp. 2d 68, 75 (D.D.C. 2002) (citing United States v.
Mitchell, 463 U.S. 206, 216-17 (1983) (emphasis added).
Under Tucker, and in order to prevail here, Diversified must
demonstrate more. The Tucker Act, without an independent waiver
of sovereign immunity, does not provide the Court with subject
matter jurisdiction over the Federal Defendants.
b. Stafford Act
The Stafford Act, also known as the Disaster Relief Act of
1974, was enacted to provide federal assistance to states in
times of disasters. See 42 U.S.C. § 5121 et seq. While the
Stafford Act empowers the President to order FEMA, inter
alia, to clear debris, FEMA's activities are not entitled to
sovereign immunity unless they were "based upon the exercise or
performance of . . . a discretionary function or duty." Dureiko
v. United States, 209 F.3d 1345, 1351 (Fed. Cir. 2000)
(quoting 42 U.S.C. § 5148). To determine whether FEMA's
activities were discretionary, and entitled to sovereign
immunity, the Federal Circuit has articulated a two-prong test:
(1) whether the act involves an element of judgment
or choice; and
(2) if so, whether that judgment is of the kind that
the discretionary function exception was designed to
Dureiko, 209 F.3d at 1351.*fn5
Under the first prong of
the test, an act does not involve judgment or choice, and FEMA
can be sued as they are here, if "a federal statute, regulation
or policy specifically prescribes a course of action for an
employee to follow." Id. (quoting Berkovitz v. United
States, 486 U.S. 531
, 536 (1988)); see also Graham v. Fed.
Emergency Mgmt. Agency, 149 F.3d 997
, 1006 (9th Cir. 1998).
Conversely, if FEMA's decision was discretionary, the analysis
continues to the second prong of the Dureiko test. See,
e.g., Dureiko, 209 F.3d at 1351. Under the second prong of
the test, FEMA is entitled to sovereign immunity if its actions
and decisions were "based on considerations of public policy." Id.
(citation omitted); see also Rosas v. Brock, 826 F.2d 1004
1009 (11th Cir. 1987). The Federal Circuit reasoned that Congress
could not have intended that this exception would:
[A]llow government agencies like FEMA to voluntarily
contract with other parties in the course of
providing disaster relief assistance, reap the
benefits of such contracts but refuse to perform
under them, and then claim immunity from liability
resulting from its non-performance.
Dureiko, 209 F.3d at 1353-4.
This two-prong analysis was fashioned by the Federal Circuit to
resolve a contractual dispute arising from a mobile home park
damaged by Hurricane Andrew. Id., at 1348. In the aftermath of
the federally declared disaster, FEMA was enlisted to oversee the
recovery and reconstruction efforts of the disaster area. Id.
As part of the recovery efforts, FEMA allegedly entered into a
contract with the plaintiff whereby FEMA would clear debris from
the mobile home park in exchange for permission to house
displaced hurricane victims in the mobile home park. Id.
Plaintiff alleged that FEMA failed to remove the debris in the
agreed upon manner and subsequently sued FEMA for, inter
alia, breach of contract. Id. at 1350. FEMA maintained that
sovereign immunity shielded it from liability and moved to
dismiss, claiming that the district court lacked subject matter
jurisdiction. Id. The district court agreed and granted the
motion. Id. at 1353. On appeal, the Federal Circuit rejected
FEMA's contention, and held that once FEMA entered into the
contract, its acts were no longer discretionary but, rather,
mandatory. Id. According to the Federal Circuit, a contract is
"indistinguishable from a federal statute, regulation, or policy
that specifically prescribes a course of action for an employee
to follow." Id. As such, the Federal Circuit reversed and
remanded the case. Id. at 1360.
Here, the Federal Defendants' contention that Diversified's
Second Cause of Action for breach of contract pursuant to the
Stafford Act does not provide a waiver of sovereign immunity is
belied not merely by a contractual arrangement but, by the
President's National Emergency Order: A national emergency exists by reasons of the
terrorist attacks at the World Trade Center . . . and
the continuing and immediate threat of further
attacks on the United States. Now, therefore, . . .
George W. Bush, President of the United States of
America, by virtue of the authority vested in me as
President by the Constitution and the laws of the
United States, . . . hereby declare that the national
emergency has existed since September 11, 2001.
Proclamation No. 7463, 66 Fed. Reg. 48199 (Sept. 14, 2001). In
the aftermath of the September 11, 2001 attacks, the President
directed FEMA to coordinate disaster relief efforts pursuant to
the Stafford Act:
I have determined that the damage in certain areas of
the State of New York, resulting from fires and
explosions on September 11, 2001, is of sufficient
severity and magnitude to warrant a major disaster
declaration under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act.
66 Fed. Reg. 48682-01 (Sept. 21, 2001). In the weeks following
the disaster, President Bush amended his initial order to ensure
that FEMA would pay one hundred percent of all costs for debris
removal at the World Trade Center site:
I amend my major disaster declaration of September
11, 2001, to provide that the Federal Emergency
Management Agency (FEMA) may reimburse 100 percent of
total eligible costs for all Categories under Public
66 Fed. Reg. 49674-02 (Sept. 28, 2001).*fn6
Presidential Order has the force of law, Acevedo v. Nassau
County, N.Y., 500 F.2d 1078
, 1084 n. 7 (2d Cir. 1974), under the
first prong of the Dureiko test, President Bush's Order that
FEMA would pay for all debris removal costs was mandatory and to
be strictly adhered to by FEMA. FEMA lacked discretion as to
whether it was obligated to pay for the clean-up and recovery
efforts at the World Trade Center. Therefore, the decision to pay Diversified pursuant to the alleged contract does
not "involve? an element of judgment or choice." Dureiko,
209 F.3d at 1351.
As the discretionary function exception to the Stafford Act's
waiver of sovereign immunity does not apply, the Federal
Defendants are not immune from this lawsuit. Dureiko,
209 F.3d at 1353. The Stafford Act, once the two-prong test is met,
contains the independent waiver of sovereign immunity and
provides this Court with subject matter jurisdiction over the
Federal Defendants. Therefore, the Federal Defendants' motion to
dismiss for lack of subject matter jurisdiction is
2. Failure to State a Cause of Action
The Federal Defendants also contend that even if I find subject
matter jurisdiction, the Complaint fails to adequately allege a
Miller Act claim. The City Defendants join this portion of the
Federal Defendants' motion and maintain that Diversified's Ninth
Cause of Action fails to state a cognizable claim under the
Miller Act. In addition, the City Defendants argue that the
Stafford Act does not include a right of recovery against a local
This branch of the motion is brought pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure. That rule requires the
Court to construe all factual allegations in the Complaint in
favor of the non-moving party. See Krimstock v. Kelly,
306 F.3d 40, 47-8 (2d Cir. 2002). The Court's consideration is
limited to facts stated on the face of the Complaint and in
documents appended to the complaint or incorporated in the
complaint by reference, as well as to matters of which judicial
notice may be taken. See Allen v. WestPoint-Pepperell, Inc.,
945 F.2d 40, 44 (2d Cir. 1991). The Complaint should not be
dismissed "unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would entitle
him to relief." Shakur v. Selsky, 391 F.3d 106, 112 (2d Cir.
2004) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
a. Miller Act
The Ninth Cause of Action against the Federal Defendants, the
City Defendants, NYSEMO, Turner, and Seasons, is for violation of
the Miller Act, in particular, the bond requirements. (Compl. ¶¶
81-85.) The Miller Act was enacted by Congress in 1935 to protect
subcontractors who work on government building projects. See
Active Fire Sprinkler Corp. v. United States Postal Serv.,
811 F.2d 747, 749 n. 1 (2d Cir. 1987). The provisions of the Miller
Act are "only applicable where the work in question was
contracted for by the United States, or one of its agents or
agencies." United States ex rel. Polied Envtl. Serv., Inc. v.
Incor Group, Inc., No. 3 Civ. 1254, 2003 WL 1797846, at *1 (D.
Conn. Apr. 4, 2003). The Miller Act requires, inter alia,
that general contractors on government building projects post a
payment bond "for the protection of all persons who supply labor
or materials for the project." Active Fire Sprinkler Corp.,
811 F.2d at 749.
The Miller Act also explicitly provides subcontractors with
"the right to sue on the surety bond posted by the prime
contractor," Dep't. of the Army v. Blue Fox, Inc.,
525 U.S. 255, 264 (1999), but "does not expressly create a substantive
right on behalf of a subcontractor to directly sue the United
States, for compensation owed to him by the prime contractor."
4-Star Constr. Corp. v. United States, 6 Cl. Ct. 271, 273 (Cl.
Ct. 1984) (emphasis in original); see also United States ex
rel. Fred's Plumbing & Heating, Inc. v. Small Bus. Admin.,
807 F. Supp. 675, 678 (D. Colo. 1992) ("the [Miller] Act creates no
affirmative rights against the government"). As such, "a
subcontractor's sole remedy is to institute a suit against the
governmental contractor . . . or the surety, in the name of the
United States." 4-Star Constr. Corp., 6 Cl. Ct. at 273;
40 U.S.C. § 3133.
According to Diversified, in the wake of September 11, 2001,
the President suspended the Miller Act's surety bond requirement,
"agreed to act as surety," and "guarant[eed] all payments for
work to be done." (Pl. Consol. Op. to Def. Mot. to Dismiss, at
20.). As such, Diversified argues, the Miller Act claim raises
numerous questions of fact that require discovery. Unfortunately
for Diversified, their claims are contradicted by the plain
language of the Miller Act and their Ninth Cause of Action must
be dismissed as a matter of law against the Federal Defendants
and the City Defendants.
Pursuant to Section 3147 of the Miller Act, "the President may
suspend the provisions of this subchapter during a national
emergency," 40 U.S.C.A. § 3147, but the provisions pertain solely
to wages. See 40 U.S.C. §§ 3141, 3142, 3143, 3144, 3145, 3146.
The President's authority to suspend the Miller Act is expressly
limited to Section 3147 and the suspension is limited to wages.
Section 3133, which contains the bond requirements, is located in
Subchapter III, entitled "Bonds." As such, the President's Order regarding
debris removal, made pursuant to the Stafford Act, cannot be
construed as having suspended the bond requirements of the Miller
Act and, as the Federal Defendants were neither the surety nor
the government contractor, Diversified cannot recover from them.
Similarly, the City Defendants were neither the surety nor the
government contractor. See 4-Star Constr. Corp.,
6 Cl. Ct. at 273; 40 U.S.C. § 3133. Assuming arguendo, that the City
Defendants acted as an agent or agency of the federal government
and contracted with Diversified for the work at the World Trade
Center (see Compl. ¶¶ 30; 32; 33), again, Diversified cannot
recover against the City because the Miller Act does not provide
a private right of recovery from the federal government or its
agents/agencies. See Dep't. of the Army, 525 U.S. at 264. In
addition, Diversified does not allege that the City Defendants
were general contractors. Thus, as the Complaint does not allege
that the City Defendants were either government contractors or
the surety, Diversified does not have a cognizable Miller Act
claim against the City Defendants.
Accordingly, the Federal Defendants' and the City Defendants'
motion to dismiss the Ninth Cause of Action for violation of the
Miller Act, in particular, the bond requirements, is GRANTED. It
is important to note, however, that at this stage of the
proceedings, Diversified's Miller Act claims against Turner and
Seasons remain viable.
b. Stafford Act/City Defendants
As previously mentioned, Diversified's Second Cause of Action
is for breach of contract. (Compl. ¶¶ 39-45.) According to the
City Defendants, Diversified cannot recover damages for breach of
contract under the Stafford Act against the non-federal
government defendants, e.g., New York City and State governments
and their respective agencies.
The Stafford Act authorizes the President to order the clearing
of debris which results from a major disaster, through use of
federal agencies, 42 U.S.C.A. § 5173(a)(1), and addresses the
ability to recover for, inter alia, breach of contract or
disaster relief, from the federal government. 42 U.S.C. § 5148.
However, the Stafford Act does not provide an explicit right of
recovery from a non-federal government entity. See
42 U.S.C. § 5148. As such, where a statute does not explicitly confer a right
to recover, I must determine whether "an implied right of action
is implicit." Hallwood Realty Partners, L.P. v. Gotham Partners,
L.P., 286 F.3d 613, 619 (2d Cir. 2002). The Supreme Court
articulated four factors to consider in this determination: (1) legislative intent, (2) the consistency of the
remedy with the underlying purposes of the
legislative scheme, (3) whether the plaintiff was a
member of the class for whose benefit that statute
was enacted, and (4) whether the cause of action is
one traditionally relegated to state law.
Id. (citing Cort v. Ash, 422 U.S. 66, 78 (1975)).
Legislative intent is the main factor to be considered, while the
other three are reviewed "only as possible indicia for
legislative intent." Hallwood Realty Partners, L.P.,
286 F.3d at 619 n. 7; see also County of Westchester v. N.Y.,
286 F.3d 150, 152 (2nd Cir. 2002). A determination of the legislative
intent is "a matter of statutory interpretation" and a court must
first look to the statute's text and structure. Olmsted v. Pruco
Life Ins. Co. of N.J., 283 F.3d 429, 432 (2d Cir. 2002).
Stafford Act claims are typically brought following national
disasters such as hurricanes, Hawaii ex rel. Attorney Gen. v.
Fed. Emergency Mgmt. Agency, 294 F.3d 1152 (9th Cir. 2002),
typhoons, Graham v. Fed. Emergency Mgmt. Agency, 149 F.3d 997
(9th Cir. 1998), severe freezes, Rosas v. Brock, 826 F.2d 1004
(11th Cir. 1987), floods, United Power Ass'n v. Fed. Emergency
Mgmt. Agency, No. 99 Civ. 180, 2001 WL 1789404, at *1 (D.N.D.
Aug. 14, 2001) and, droughts, Ornellas v. United States, 2 Cl.
Ct. 378 (Cl.Ct. 1983). In general, the actions are filed against
FEMA and challenge FEMA's decision, for instance, to deny
disaster relief to a particular party.*fn8
This is not the first time a court in this Circuit has been
asked to determine whether the Stafford Act includes an implied
right of action. In State of New York v. O'Hara, the state
filed an action for breach of contract and fraud against
defendants who were performing remedial work at Love Canal.
595 F. Supp. 1101 (W.D.N.Y. 1984). Defendants, as they do here, moved
to dismiss the Stafford Act claim and argued that the statute did
not confer a right of recovery upon the plaintiff. Id. The
district court agreed. Id. at 1103. Applying the Cort factors
to the Stafford Act, the district court reasoned that there was a
noticeable sound of silence, both in the statute and in the
legislative history, as to Congress's intent to create a right of
recovery from non-federal government entities and, indeed, there
was "some indication that Congress meant not to provide a
[private] right of action." Id. at 1102 (emphasis in original).
The district court concluded that because the case did "not involve a statute which
deal[t] with an area of law in which a private right of action
has been traditionally recognized by courts," such silence should
be viewed as "legislative acquiescence with existing case law,"
and, that no private right of action existed under the Stafford
Act Id. at 1103.
Here, Diversified, a subcontractor, sued the City Defendants,
in addition to FEMA, under the Stafford Act. (Compl. ¶¶ 39-45.)
In addition to the legislative history discussed in O'Hara, the
legislative history accompanying President Bush's Order indicates
that the House of Representatives understood the uniqueness of
the events of September 11, 2001 and that FEMA was to be the lead
agency in providing disaster relief.*fn9 There is no
indication in either the Stafford Act's legislative history,
O'Hara, 595 F. Supp. at 1102, or President Bush's Order,
suggesting that local government entities were to be in charge of
federal disaster relief.*fn10 In addition, as the court in
O'Hara recognized, breach of contract is an area of law
traditionally relegated to state common law. Indeed, a
subcontractor, such as Diversified, was not the intended
beneficiary of the Stafford Act, a statute designed to give aid
to states after disasters.
For the foregoing reasons, Diversified does not have an express
or an implied right of recovery against non-federal government
entities pursuant to the Stafford Act. Thus, the City Defendants'
motion to dismiss Diversified's Second Cause of Action as against
the City Defendants is GRANTED.
The City Defendants and SRE contend that the Complaint fails to
state a cause of action separate and apart from Diversified's
Second Cause of Action for breach of contract pursuant to the
Stafford Act and the Ninth Cause of Action for violation of the
Miller Act. In particular, SRE argues that the pleadings fail to
(1) specifically reference SRE, or (2) adequately allege a breach
of contract claim. In addition, both the City Defendants and SRE
maintain that Diversified cannot plead equitable doctrine claims
in the alternative to breach of contract claims. a. Claims Against SRE
SRE is implicated in the First Cause of Action for declaratory
relief (Compl. ¶¶ 36-38), the Third Cause of Action for breach of
contract (Compl. ¶¶ 46-51), the Fifth Cause of Action for
restitution (Compl. ¶¶ 59-66), the Sixth Cause of Action for
unjust enrichment (Compl. ¶¶ 67-71), and the Seventh Cause of
Action for quantum meruit. (Compl. ¶¶ 72-76.) SRE maintains that
Diversified's pleadings fail to state any cause of action because
the Complaint fails to refer specifically to SRE but instead
groups SRE together with other defendants. In addition, according
to SRE, Diversified has failed to allege sufficiently the
necessary elements of breach of contract. Poppycock.
In breach of contract claims, the claimant need only include
"short and plain statements of the case." See Power Travel
Int'l, Inc. v. Am. Airlines, Inc. 257 F. Supp. 2d 701, 703
(S.D.N.Y. 2003) (holding that Rule 8 "requires only short and
plain statements of the case when pleading a breach of contract
claim"). Under New York Law, a viable claim for breach of
contract "need only allege (1) the existence of an agreement, (2)
adequate performance of the contract by the plaintiff, (3) breach
of contract by the defendants, and (4) damages." Eternity Global
Master Fund, Ltd. v. Morgan Guar. Trust Co. of N.Y.,
375 F.3d 168, 177 (2d Cir. 2004) (citing Harsco Corp. v. Segui,
91 F.3d 337, 348 (2d Cir. 1996)); see also Valjean Mfg. Inc. v.
Michael Wediger, Inc., No. 03 Civ. 6185, 2005 WL 356799, at *14
(S.D.N.Y. Feb. 14, 2005) (Baer, J.).
Here, SRE are named defendants in the instant action. (Compl.
¶¶ 13; 14). In stating the breach of contract claim against all
Defendants, the Complaint states that it "repeats and re-alleges
paragraphs marked and numbered `1' through `45' as if fully and
at length set forth herein," incorporating all of the previous
factual allegations made in the Complaint. (Compl. ¶ 46.)
Consequently, the section of the Complaint which refers
specifically to SRE (Compl. ¶ 25) is considered a part of the
pleadings for the breach of contract claim against all
defendants. (Compl. ¶¶ 46-51.) By such incorporation, Diversified
has sufficiently met the notification requirement of Rule 8.
As SRE is clearly designated, let's turn to the adequacy of the
pleadings with respect to the elements of a breach of contract
claim. The Complaint alleges each of these necessary elements.
First, an agreement allegedly exists between SRE and Diversified
("Seasons and/or Turner, and the other defendants, agreed to pay
Diversified for its work"). (Compl. ¶¶ 47; 49.) Second, Diversified allegedly adequately performed the contract,
specifically the debris removal ("Diversified fully performed its
demolition and debris removal."). (Compl. ¶ 50.) Third, SRE
allegedly breached the contract in that it refused to pay
Diversified ("Defendants have refused to fully pay Diversified").
(Compl. ¶ 50.) Fourth, and last, Diversified was allegedly
damaged by the breach, in the amount of $452,498.97. (Compl. ¶
Construing Diversified's allegations liberally, and pending
discovery, Diversified, at this stage of the proceeding, has
adequately pled the required elements of a breach of contract
claim. See Xpedior Credit Trust, 341 F. Supp. 2d at 271.
Accordingly, SRE's motion to dismiss the Third Cause of Action
for breach of contract is DENIED.
b. Quantum Meruit, Restitution, and Unjust Enrichment
Diversified's Fifth, Sixth, and Seventh Causes of Action,
respectively, also contend that if no valid contract with the
City Defendants and/or SRE exists, then it is entitled to recover
under the equitable doctrines of quantum meruit, restitution, and
unjust enrichment. (Compl. ¶¶ 59-76.)
Quantum meruit is "a doctrine of quasi contract" and New York
law requires a claimant to establish "(1) the performance of
services in good faith, (2) the acceptance of the services by the
person to whom they were rendered, (3) an expectation of
compensation therefore, and (4) the reasonable value of the
services." Longo v. Shore & Reich, Ltd., 25 F.3d 94, 98 (2d
Cir. 1994); see also Bauman Assoc., Inc. v. H & M Int'l
Transp., Inc., 567 N.Y.S.2d 404, 408 (1st Dep't 1991).
Similarly, a party can recover under a theory of unjust
enrichment if no valid contract exists between the parties. See
In re First Cent. Fin. Corp., 377 F.3d 209, 213 (2d Cir. 2004).
To prevail, a claimant must establish: "(1) that the defendant
benefited, (2) at the plaintiff's expense and (3) that equity and
good conscience require restitution." Kaye v. Grossman,
202 F.3d 611, 616 (2d Cir. 2000); see also Valjean Mfg., No. 03
Civ. 6185, 2005 WL 356799, at *17 ("[T]o establish a claim for
unjust enrichment, a claimant must demonstrate defendant's
enrichment at claimant's expense and that equity and good
conscience militate against permitting defendant to retain what
[the claimant] is seeking to recover.") (Baer, J.). As for
restitution, it is available "where there has been a showing of
unjust enrichment." Brown v. Sandimo Materials, 250 F.3d 120,
126 (2d Cir. 2001).
The City Defendants and SRE's contentions that recovery under
(1) a claim of quantum meruit, (2) restitution, and (3) unjust
enrichment are not available because of the alleged contract between Diversified and Seasons. At this stage of the
proceedings, I cannot address and should not resolve the issue as
to whether an express agreement did in fact exist. Even if an
express contract existed, it is well settled that a plaintiff is
permitted to plead in the alternative. Fed.R.Civ.P. 8(e)(2)
("a party may set forth two or more statements of a claim or
defense alternately or hypothetically"); see also Aetna Cas.
and Sur. Co. v. Aniero Concrete Co., 404 F.3d 566, 585 (2d Cir.
2005). A party may bring a quantum meruit or unjust enrichment
claim on its own, without a breach of contract claim. See
Aniero Concrete Co., Inc. v. N.Y.C. Constr. Auth., No. 94 Civ.
3506, 2000 WL 863208, at *1 (S.D.N.Y. June 27, 2000).
The Complaint sufficiently alleges a claim in quantum meruit.
Diversified alleges that it performed services in good faith
(Compl. ¶ 73), that the defendants allegedly accepted the
services ("after accepting such work, materials, and equipment
defendants . . .") (Compl. ¶ 75), that Diversified expected
payment for the services (Compl. ¶ 76.), and, finally,
Diversified pled a value for the services which is reasonable.
(Compl. ¶¶ 32; 74.)
Similarly, the Complaint sufficiently alleges viable unjust
enrichment claims. First, the defendants allegedly benefited from
Diversified's work ("the defendants derived substantial benefits
due to Diversified's performance.") (Compl. ¶ 69.) Second, the
work was allegedly conducted at Diversified's expense
("Diversified contributed large amounts of time, materials and
equipment, and suffered equipment damage, to clear debris").
(Compl. ¶ 68.) Finally, the Complaint alleges that equity and
good conscience requires restitution ("it is against all notions
of equity and justice for the Defendants to retain the benefit of
Diversified's work at Site without compensating Diversified").
(Compl. ¶ 65.) As such, Diversified has adequately pled the
elements of an unjust enrichment claim against the City
Defendants and SRE.
Accordingly, at this stage in the proceedings and pending
discovery, the City Defendants and SRE's motion to dismiss
Diversified's Fifth, Sixth, and Seventh Causes of Action is
4. Fiduciary Duty Pursuant to New York Lien Law
Diversified's Eighth Cause of Action is for breach of fiduciary
duty against the Federal Defendants, the City Defendants, NYSEMO,
Turner and Seasons. (Compl. ¶¶ 77-80.) The City Defendants argue
that no fiduciary duty exists pursuant to New York Lien Law. While Rule 8 of the Federal Rules of Civil Procedure requires
minimal pleading, the Complaint's references to the New York Lien
Law fails to satisfy even the most liberal pleading requirements,
i.e., Diversified fails to point to any specific violation.
(Compl. ¶ 78.).
As the World Trade Center was not owned or operated by the City
Defendants and the Complaint does not allege that the City
Defendants became the effective owners or operators of the site
(Compl. ¶¶ 24-26), Diversified cannot establish a duty under § 3
of the Lien Law. Similarly, the Complaint does not allege that
the City Defendants were the general contractor or a
subcontractor nor does it establish a fiduciary duty under § 5 or
Accordingly, the City Defendants' motion to dismiss
Diversified's Eighth Cause of Action for breach of fiduciary duty
claim is GRANTED.
5. Pendant State Law Claims
Finally, Diversified's Tenth Cause of Action is for breach of
covenant of good faith and fair dealing (Compl. ¶¶ 86-89), and
the Eleventh Cause of Action is for constructive trust/trustee ex
maleficio. (Compl. ¶¶ 90-103.) The City Defendants argue these
state law claims should be dismissed for lack of jurisdiction.
Supplemental jurisdiction can be extended to state law claims
in district court where the state law claims are "so related to
claims in the action within such original jurisdiction that they
form part of the same case or controversy." 28 U.S.C. § 1367;
see also Jones v. Ford Motor Credit Co., 358 F.3d 205, 212
(2d Cir. 2004). "A state law claim forms part of the same
controversy if it and the federal claim derive from a common
nucleus of operative fact." Briarpatch Ltd. L.P. v. Phoenix
Pictures, Inc., 373 F.3d 296, 308 (2d Cir. 2004) (citing
Cicio v. Does, 321 F.3d 83, 97 (2d Cir. 2003)). Where a state
claim is part of the same case or controversy as a sustained
federal claim, the exercise of supplemental jurisdiction is
within the discretion of a district court. First Capital Asset
Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 182 (2d Cir.
This Court has original jurisdiction over Diversified's federal
claim against the Federal Defendants under the Stafford Act. The
remaining state law claims arise from the very same work that is
the subject of the federal claims. See Polygram Merch., Inc.
v. N.Y. Wholesale Co., No. 97 Civ. 6489, 1999 WL 4957, at *3
(S.D.N.Y. Jan. 6, 1999) (Baer, J.). The common nucleus is the
search, excavation, and clean-up efforts at the World Trade
Center site. The absence of any material differences of fact,
which distinguish the federal claims, make a single adjudication appropriate. Indeed, the allegations in the Complaint center
around a "constantly evolving project" (Compl. ¶ 31), thus the
federal law claims and the state law claims stem from a "common
nucleus of operative facts." See Briarpatch Ltd. L.P.,
373 F.3d at 308.
Accordingly, for now, this Court will extend supplemental
jurisdiction to Diversified's other state law claims against the
City Defendants and the City Defendant's motion to deny
supplemental jurisdiction and dismiss the Tenth Cause of Action
for breach of covenant of good faith and fair dealing and the
Eleventh Cause of Action for constructive trust/trustee ex
maleficio is DENIED.
III. MOTION FOR SUMMARY JUDGMENT
As for HMH's motion for summary judgment, it is, in my view and
at this juncture, not only far fetched but a waste of the
client's money. Summary judgment is only available where a court
determines that there is no genuine issue of material fact and
the undisputed facts are sufficient to warrant judgment as a
matter of law, Fed.R.Civ.P. 56; Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby Inc.,
477 U.S. 242, 250 (1986), it is rarely granted before discovery.
Here, there are genuine issues of material facts which cannot be
decided as a matter of law, to name a few (1) whether an
agreement between HMH and Diversified exists; (2) whether Turner,
Seasons, and the City Defendants had the ability to bind HMH to
agreements made with Diversified; (3) whether Diversified had
dealings with HMH, its property, or anyone acting on behalf of
HMH; (4) whether the City of New York or the Port Authority
assumed control of the World Trade Center site after the
terrorist attacks; and, (5) whether HMH, or a party acting on its
behalf, was involved in decisions regarding debris removal at the
World Trade Center site.
Accordingly, HMH's motion for summary judgment is DENIED.
For the reasons set forth above, the Defendant's motion to
dismiss is GRANTED in-part and DENIED in-part; and, it is hereby
ORDERED, that the Federal Defendants' motion to dismiss the
Second Cause of Action for breach of contract pursuant to the
Stafford Act is DENIED; and, it is further
ORDERED, that the City Defendants' motion to dismiss the Second
Cause of Action for breach of contract pursuant to the Stafford
Act is GRANTED and the Second Cause of Action is DISMISSED as
against the City Defendants; and, it is further ORDERED, that SRE's motion to dismiss the Third Cause of Action
for breach of contract is DENIED; and, it is further
ORDERED, that the City Defendants' and SRE's motion to dismiss
the Fifth Cause of Action for restitution, the Sixth Cause of
Action for unjust enrichment, and the Seventh Cause of Action for
quantum meruit is DENIED; and, it is further
ORDERED, that the City Defendants' motion to dismiss the Eighth
Cause of Action for breach of fiduciary duty is GRANTED and the
Eighth Cause of Action is hereby DISMISSED in its entirety; and,
it is further
ORDERED, that the Federal Defendants' and the City Defendants'
motion to dismiss the Ninth Cause of Action for violation of the
Miller Act is GRANTED and the Ninth Cause of Action is DISMISSED
against the Federal Defendants and the City Defendants; and, it
ORDERED, that the City Defendants' motion to deny supplemental
jurisdiction and dismiss the Tenth Cause of Action for breach of
covenant of good faith and fair dealing, and the Eleventh Cause
of Action for constructive trust/trustee ex malificio is DENIED;
and, it is further
ORDERED that HMH's motion for summary judgment is DENIED; and
it is further
ORDERED that (1) Movants, or group of Movants, are to file only
one consolidated motion for summary judgment, if any, on or
before October 11, 2005; (2) Respondent, or group of Respondents,
are to file only one consolidated response to Movants motion
for summary judgment, if any, on or before October 31, 2005; (3)
Movants, or group of Movants, are to file only one consolidated
reply brief in support of their motion for summary judgment, if
any, on or before November 15, 2005; (4) Movants, or group of
Movants, are to deliver the fully briefed motion for summary
judgment, if any, to Chambers on or before November 16, 2005 at
10.00 a.m.; and, (5) if Movant or Respondent desires oral
arguments on the motion for summary judgment to notify the Court
in writing on or before November 16, 2005 at 10.00 a.m.; and, it
ORDERED that the Clerk of the Court is instructed to close this
and any other open motions and remove these open motions from my
IT IS SO ORDERED.