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City of Murray v. Robertson, Inc.

United States District Court, W.D. Kentucky, Paducah

November 3, 2017

CITY OF MURRAY, KENTUCKY, PLAINTIFF
v.
ROBERTSON INC. BRIDGE AND GRADING DIVISION, et. al., DEFENDANTS & THIRD PARTY PLAINTIFFS
v.
GRW ENGINEERS, INC., et. al., THIRD PARTY DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          THOMAS B. RUSSELL, SENIOR JUDGE UNITED STATES DISTRICT COURT

         This case comes before the Court upon two motions by Third Party Defendant GRW Engineers, Inc. (“GRW”). First, GRW has filed a motion to dismiss all claims against it pursuant to Federal Rule of Civil Procedure 12(b)(6). [DN 41.] Third Party Plaintiff Robertson Inc. Bridge & Grading Division (“Robertson”) has responded. [DN 42.] GRW has replied. [DN 43.] Second, GRW has filed a motion for a pretrial conference. [DN 44.] These matters are ripe for adjudication. For the following reasons, GRW's Motion to Dismiss [DN 41] is GRANTED, and GRW's Motion for a Pretrial Conference [DN 44] is DISMISSED AS MOOT.

         I. Background

         This case arises out of a municipal project undertaken in Murray, Kentucky. The City of Murray, the Plaintiff in this case, contracted with Robertson in 2015 “to construct the East Fork Clark's River Pump Station Improvements and Force Main (the “Project”), which is owned by the City [of Murray.]” [DN 1-1, at 3.] Part of the Project consisted of the construction of a “concrete wet well” by Robertson. [Id.] According to Robertson's Third-Party Complaint, Robertson subcontracted with Dale Bearden Construction Company, Inc., (“Bearden”), “to perform various items of work…includ[ing] but not limited to performance of the work in the construction of a concrete wet well….” [DN 19, at 2.]

         In relation to the Project, the City of Murray also entered into a contract with GRW, an engineering firm, which obligated GRW to provide “design phase services, including preparing the designs for the wastewater systems improvements, and…construction phase services, including ‘resident project representation.'” [DN 41-1, at 4.] According to GRW, “resident project representation” is completed by “resident project representatives, ” who “visit the various construction sites on behalf of the City, observe the contractor's work, and periodically report to the City as to the progress of said work and its general compliance with the project's design. [Id.]

         After the City of Murray filed suit against Robertson in January 2017, Robertson filed a Third-Party Complaint against both Bearden and GRW. [See id.] With respect to GRW, Robertson has brought four claims relating to the wet well construction issue: (1) breach of contract, (2) negligence, (3) indemnity, and (4) negligent misrepresentation. [See Id. See also DN 40.] Attached to Robertson's initial Third-Party Complaint is the contract into which it entered with the City of Murray. And in its Amended Third-Party Complaint, which incorporated in its entirety the original Third-Party Complaint, Robertson makes reference to GRW's contract with the City of Murray. [DN 40, at 2.] The Court uses these documents in reaching its disposition.

         II. Legal Standard

         Pursuant to Federal Rule of Civil Procedure 8(a)(2), pleadings, including complaints, must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” As such, a complaint may be attacked for failure “to state a claim upon which relief can be granted” under Rule 12(b)(6). When examining a motion to dismiss under Rule 12(b)(6), the Court must presume that all the factual allegations in the complaint are true and will draw all reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008). “The court need not, however, accepted unwarranted factual inferences, ” id., nor must it “accept as true a legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Also, “[w]hen a court is presented with a Rule 12(b)(6) motion, it may consider the Complaint and any exhibits attached thereto…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).

         Further, although 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) (internal citations omitted). Rather, 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. (internal citations omitted). The complaint should contain sufficient facts “to state a claim to relief that is plausible on its face.” Id. at 570. Plausibility attaches “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. Thus, if the court cannot infer from the well-pleaded facts “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. “Only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id.

         III. Discussion

         a. Breach of Contract Claim

         Robertson's first claim against GRW is for breach of contract. The record indicates that there was no contractual document binding these two parties to each other, and that the only three contracts relevant here are (1) the contract between the City of Murray and Robertson; (2) the contract between the City of Murray and GRW; and (3) the contract between Robertson and Bearden. As there was, and remains, no contract between Robertson and GRW, Robertson necessarily brings this claim under the theory that it was a third party beneficiary to GRW's contract with the City of Murray. [See DN 19, at 6-7.] “Privity of contract is the relationship between parties to a contract, allowing them to sue each other but preventing a third party from doing so.” Presnell Const. Managers, Inc. v. EH Const., LLC, 134 S.W.3d 575, 579 (Ky. 2004) (internal quotation marks omitted). This means that in the usual case, “the obligations arising out of a contract are due only to those with whom it is made; a contract cannot be enforced by a person who is not a party to it or in privity with it, except…[among other circumstances, ] by a third-party beneficiary.” Id. The question then becomes who a third-party beneficiary is, what subcategory they fall into, and what rights they may enforce. “Only a third-party who was intended by the parties to benefit from the contract, namely, a donee or a creditor beneficiary, has standing to sue on a contract; an incidental beneficiary does not acquire such right.” Id.

         “One is a donee beneficiary if the purpose of the promisee in buying the promise is to make a gift to the beneficiary. A person is a creditor beneficiary if the promisee's expressed intent is that the third party is to receive the performance of the contract in satisfaction of any actual or supposed duty or liability of the promisee to the beneficiary.” Sexton v. Taylor Cnty., 692 S.W.2d 808, 810 (Ky. Ct. App. 1985). Further, “[i]n order to be either a donee or creditor beneficiary, it must be proven that the contract in question was made for the actual and direct benefit of the third party.” Id. Here, Robertson claims status as a creditor beneficiary to the contract between GRW and the City of Murray. [DN 42, at 3-4.]

         GRW cites to this Court's 1993 decision in Blair v. General Motors Corp., 838 F.Supp. 1196, 1200 (W.D. Ky. 1993) in support of its contention that the contract between GRW and the City of Murray, by its very terms, precludes third-party beneficiary status for Robertson. In Blair, this Court stated that the agreement at issue in the case “specifically provides that third parties have no rights under the contract and that the agreement is not a third party beneficiary contract. Any interpretation of the…Agreement must give weight to this statement.” Id. Thus, “[a]bsent any proposal by Plaintiff that it could present any evidence that a contract was entered for its direct and primary benefit, the language of the agreement will control, and Plaintiff accordingly may not claim the authority to enforce that contract.” Id. (citing Simpson v. JOC Coal, Inc., 677 ...


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