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United States v. Liberty Mutual Ins. Co.

United States District Court, S.D. New York

August 28, 2017

UNITED STATES OF AMERICA for the use and benefit of FIVE STAR ELECTRIC CORP., Plaintiff,
v.
LIBERTY MUTUAL INS. CO. and CAULDWELL-WINGATE CO., LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          LAURATAYLORSWAIN United States District Judge

         Plaintiff Five Star Electric Corp. (“Five Star”), a subcontractor of defendant Cauldwell-Wingate Co., LLC (“Cauldwell”) for a construction project at the Thurgood Marshall United States Courthouse in Manhattan (the “Project”), brings this suit under the Miller Act, 40 U.S.C. § 3133, and for breach of contract and quantum meruit. This Court has subject matter jurisdiction of the Miller Act claim pursuant to 28 U.S.C. § 1331, and may exercise supplemental jurisdiction of the state-law claims pursuant to 28 U.S.C. § 1367.

         On November 1, 2016, this Court granted a motion to dismiss by Cauldwell and Liberty Mutual Insurance Company (“Liberty Mutual” and, with Cauldwell, “Defendants”), and dismissed Five Star's original complaint (docket entry no. 1, “Complaint”) for failure to state a claim, with leave to replead (docket entry no. 57, “November Opinion”). Five Star now moves for leave to file a proposed Amended Complaint (docket entry no. 63, Decl. of Matthew Minero, Ex. B., the “AC”). This Court has carefully considered the parties' submissions and, for the reasons that follow, Five Star's motion for leave to amend is denied as futile.

         Background

         The Court assumes the parties' familiarity with the allegations in the Complaint, as detailed in the November Opinion. All abbreviations used herein have the same meaning as in the November Opinion.

         The proposed AC repeats all the allegations and claims in the Complaint (see AC ¶¶ 1-11, 36-55), and adds a new breach of contract claim for underpayment based on additional work requested by Cauldwell under the subcontract (the “Changes”) (id. ¶¶ 32-35). The proposed AC also contains new factual allegations relating to the second breach of contract claim, alleging delays and inefficiencies in the Project caused by Cauldwell. (Id. ¶¶ 12-31.)

         On the first breach of contract claim based on underpayment, the proposed AC alleges that Five Star and Cauldwell entered into a subcontract for construction work at the Project (the “Subcontract”) for a specified price of $43, 100, 000.00. (Id. ¶ 8.) The proposed AC further alleges that Five Star performed additional work under the Changes as required by Cauldwell (id. ¶ 9), with the total price of the Subcontract and the Changes amounting to a sum of $56, 576, 658.69 (id. ¶ 33). The proposed AC contains no factual allegations about the nature of the Changes, except for stating the man hours allegedly spent performing the Changes. (Id. ¶ 19.) Five Star alleges that it has been paid $55, 899, 500.64 for the work it performed (id. ¶ 31), and seeks the difference of $667, 158.05 between the payment it received and the alleged total price in monetary damages against Cauldwell (id. ¶ 35).

         On the second breach of contract claim based on delays caused by Cauldwell, the proposed AC alleges that Cauldwell failed to timely coordinate the work of its subcontractors, imposed unanticipated changes in the design and sequencing of contractual work, and failed to timely respond to Five Star's requests for information. (Id. ¶¶ 14-18.) Such failure allegedly caused delays in Five Star's work on the Project, resulting in damages in the form of labor inefficiency costs and extended general condition costs. (Id. ¶¶ 42-43.) While Five Star did not attach the Subcontract to either its Complaint or the proposed AC, a copy of “Subcontract Agreement”, together with an attachment entitled “Subcontract Terms & Conditions”, was filed by Cauldwell with its memorandum of law in opposition to Five Star's motion for leave to amend. (Docket entry no. 65., Decl. of Michael T. Contos, Ex. 1.) § 5.0 of the “Subcontract Terms & Conditions” provides as follows:

[I]n the event SUBCONTRACTOR is delayed in performing any of its obligations under this SUBCONTRACT, and such delay is caused by ... or by acts or omissions of CONTRACTOR, OWNER or others, such delays shall be excused and the period thereof shall be added to the time for performance of the obligation delayed. Said time extension(s) shall constitute SUBCONTRACTOR's sole and exclusive remedy with respect to such delay(s), and SUBCONTRACTOR shall not be entitled to additional compensation as a result of such delays.

(Id. at ECF p. 9.) Five Star alleges that the costs incurred due to the delays amount to a sum of $22, 136, 009.00, and seeks this amount in compensatory damages against Cauldwell. (Id. ¶ 42.)

         In the proposed AC, Five Star relies on the same factual allegations underlying the two breach of contract claims to raise a quantum meruit claim, seeking $22, 813, 167.95 in monetary damages as the alleged fair and reasonable value of work performed. (Id. ¶¶ 47-48.) As the fourth and last cause of action, Five Star alleges that the Subcontract was entered into as part of a government construction project, and that a payment bond was posted by Liberty Mutual as a surety for the payment to subcontractors and material suppliers, pursuant to requirement of the Miller Act, 40 U.S.C. § 3131. (Id. ¶¶ 7, 50.) Invoking the payment bond-based cause of action established by 40 U.S.C. § 3133, and relying on the factual allegations underlying the two breach of contract claims, Five Star alleges that it was underpaid under the Subcontract and seeks the sum of $22, 813, 167.05 in monetary damages.

         Discussion

         Federal Rule of Civil Procedure 15 provides that the court may give leave to a party to amend its pleading when justice so requires. Fed.R.Civ.P. 15(a)(2). A proposed amendment to a pleading may be denied on grounds of futility, however, “if it could not withstand a motion to dismiss pursuant to Rule 12(b)(6).” Oneida Indian Nation of N.Y. v. City of Sherrill, 337 F.3d 139, 168 (2d Cir. 2003) (citation omitted). The party opposing the motion to amend bears the burden of establishing that the amendment would be futile. Ballard v. Parkstone Energy, LLC, No. 06 CV 13099, 2008 WL 4298572, at *3 (S.D.N.Y. Sep. 19, 2008).

         Under the standard of Rule 12(b)(6), the Court accepts as true the non-conclusory factual allegations in the complaint, and draws all reasonable inferences in the plaintiff's favor. Roth v. Jennings, 489 F.3d 499, 501 (2d Cir. 2007). To survive a motion to dismiss, a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. v. Twombly, 550 U.S. 544, 570 (2007). A pleading that only offers “labels and ...


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