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United States v. Safeco Insurance Co.

United States District Court, Sixth Circuit

November 8, 2013



THOMAS B. RUSSELL, Senior District Judge.

This matter is before the Court upon Defendant Safeco Insurance Company of America's and Defendants PBS&J Constructors, Inc., and Peter R. Brown Construction, Inc.'s respective Motions To Dismiss or, in the Alternative, To Stay Proceedings Pending Arbitration. (Docket Nos. 10 & 9, respectively.) Plaintiff has responded to both, (Docket Nos. 16 & 15, respectively), and these Defendants each have replied, (Docket No. 19 & 18). These matters are now ripe for adjudication.


Plaintiff United States of America f/u/b/o Forrest B. White, Jr. Masonry, Inc. (White) filed its original Complaint in this matter on January 18, 2013. ( See Docket No. 1.) In December 2009, Defendant I.L. Fleming Construction, Inc. (Fleming) entered into a contract (the "Prime Contract") with the United States Army Corps of Engineers for a construction project at Fort Campbell, Kentucky (the "Project"). In connection with the Project, Fleming and Safeco Insurance Company of America (Safeco), as principal and surety, respectively, executed a "Payment Bond, " a copy of which is attached to White's Complaint. ( See Docket No. 1-1.) Fleming subcontracted the masonry portion of the Project to White. In September 2010, White received a proposed written subcontract agreement (the "Subcontract"), which White executed and returned. A copy of the Subcontract was not attached to White's Complaint but does appear in the record attached to Safeco's instant Motion. ( See Docket No. 10-4.) It is not clear whether Fleming ever executed the Subcontract. White alleges that during the course of the performance of the Project, the masonry work was delayed or suspended due to no fault on White's part. According to White, its work on the project was to begin on October 1, 2010, and was to be completed by November 24, 2010; however, White states that the masonry work did not begin until November 1, 2010, and that the bulk of work did not commence until December 20, 2010. White claims that during the delay, it was directed to maintain its labor and equipment onsite. White further states that it completed all of its obligations with respect to performance of the masonry work on the Project as of January 23, 2012.

At some point in late 2011, White became aware that the Project had been taken over by Safeco. In November 2011, the Army Corps of Engineers notified Safeco that it intended to terminate Fleming for defaulting on its performance of the Prime Contract. On December 13, 2011, a "Takeover Agreement" was entered into among Safeco, Fleming, and the Army Corps of Engineers, whereby Safeco agreed to take over and complete the Project. ( See Docket No. 10-5.) The Takeover Agreement is referenced in White's Complaint, ( see Docket No. 1, at 6-7), and appears in the record as an attachment to Safeco's instant Motion, (Docket No. 10-5). Thereafter, on December 19, 2011, Safeco entered into a "Completion Agreement" with Defendants PBS&J Constructors, Inc. (PBS&J) and Peter R. Brown Construction, Inc. (Brown), whereby PBS&J and Brown agreed to undertake completion of the Project. A copy of the Completion Agreement also is attached to White's Complaint. (Docket No. 1-2.) White states that it continued to perform masonry work on the Project under the direction of PBS&J and/or Brown subsequent to the execution of the Completion Agreement.

White asserts four counts in its Complaint. In Count I, White alleges breach of contract against Fleming for failing to make payment to White for the masonry work performed and for failing to compensate White for its damages incurred as a result of the delays that affected White's performance of its work. (Docket No. 1, at 4-5.) White states elsewhere in the record that this claim is not based on the written Subcontract but instead on the fact that "White provided labor and materials on the basis of its quote to Fleming and the verbal discussions between the parties." (Docket No. 21, at 2-3 n. 1.) In Count II, White asserts a claim under the Miller Act, 40 U.S.C. ยง 3131 et seq., and seeks to hold Safeco liable pursuant to the terms of the Payment Bond. (Docket No. 1, at 5-6.) In Count III, White alleges breach of contract against Safeco relative to the Completion Agreement based on a theory that White is a third-party beneficiary to that agreement. (Docket No. 1, at 6.) And in Count IV, White similarly alleges breach of contract against PBS&J and Brown relative to the Completion Agreement as a third-party beneficiary to that agreement. (Docket No. 1, at 7.)


The Federal Rules of Civil Procedure require that pleadings, including complaints, contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A complaint may be attacked for failure "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). When considering a Rule 12(b)(6) motion to dismiss, the court will presume that all the factual allegations in the complaint are true and will draw all reasonable inferences in favor of the nonmoving party. Total Benefits Planning Agency v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983)). "The court need not, however, accept unwarranted factual inferences." Id. (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)). Additionally, "[w]hen a court is presented with a Rule 12(b)(6) motion, it may consider the Complaint and any exhibits attached thereto [as well as] items appearing in the record of the case and exhibits attached to the defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein." Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (citing Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001)).

Even though a "complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). Instead, the plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). That is, a complaint must contain enough facts "to state a claim to relief that is plausible on its face." Id. at 570. A claim becomes plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). If, from the well-pleaded facts, the court cannot "infer more than the mere possibility of misconduct, the complaint has alleged-but has not show[n]'-that the pleader is entitled to relief.'" Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Id.


Defendant Safeco and Defendants PBS&J and Brown each move to dismiss the claims against them or, alternatively, to stay this action pending arbitration of White's underlying claim for delay damages against Fleming. The Court in turn will address each of the contested Counts in White's Complaint. I. Miller Act Claim Against Defendant Safeco (Count II)

Safeco argues that because the Subcontract[1] purports to release Fleming from any claim for delay damages, White cannot recover such damages from Safeco as Fleming's surety. (Docket No. 10-3, at 3-4.) In this regard, Safeco points to paragraph 8.4 of the Subcontract, which provides, in relevant part:

Subcontractor shall not be entitled to any claim for damages (including but not limited to claims for delay...) on account of hindrances or delays from any cause whatsoever. An extension of time shall be Subcontractor's sole and exclusive remedy for any occurrence giving rise to a delay, and [Fleming] shall be released and discharged of and from any claims for damages which Subcontractor may have on account of any cause of delay, whether or not specifically stated herein....

(Docket No. 10-4, at 9.) Safeco insists that because its liability is coextensive with that of its principal, Fleming, it follows that, under the terms of paragraph 8.4, White "released any claims for delay damages, and cannot recover ...

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