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United States v. Fidelity and Deposit Co.

United States District Court, Fourth Circuit

September 9, 2013



RICHARD D. BENNETT, District Judge.

Cummins-Wagner Company, Inc. ("Plaintiff" or "Cummins-Wagner"), the use plaintiff, has brought this action under the Miller Act, 40 U.S.C. §§ 3131 et seq., against Defendant Fidelity and Deposit Company of Maryland ("Defendant" or "F&D") seeking payment pursuant to a surety bond in connection with a construction project known as NIST[1] Building 318 ("the Project"). Essentially, Cummins-Wagner provided certain equipment and materials to TK Mechanical, Inc. ("TK"), a subcontractor on the Project, and TK allegedly has failed to pay its bill in full. Pending before this Court is the Motion of the Defendant F&D, the surety on the payment bond, to Dismiss Plaintiff's Complaint for failure to comply with the Miller Act's notice requirement. The parties' submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the reasons that follow, Defendant Fidelity and Deposit Company of Maryland's Motion to Dismiss (ECF No. 5) is DENIED.


In ruling on a motion to dismiss, this Court accepts as true the facts alleged in the plaintiff's' complaint. See Aziz v. Alcolac, Inc., 658 F.3d 388, 390 (4th Cir. 2011). According to the Complaint, Milestone Construction Services, Inc. ("Milestone") entered into a contract with the United States Government on July 21, 2010 to "furnish the materials and perform the labor for renovations and construction at Building 318, National Institute[] of Standards and Technology [("NIST")] in Gaithersburg, Maryland" ("the Project"). Pl.'s Compl. ¶ 5, ECF No. 1. As the contracted amount exceeded $100, 000, on September 9, 2010, Milestone "executed and delivered to the United States a payment bond, " with Defendant Fidelity and Deposit Company of Maryland ("Defendant" or "F&D") acting as surety, to protect subcontractors and others supplying labor and/or materials to the Project pursuant to 40 U.S.C. § 3131(b). Id. ¶ 6. Subsequently, Milestone "entered into a subcontract with TK Mechanical, Inc. ("TK"), whereby TK was to perform certain mechanical work on the Project." Id. ¶ 7. In connection with that subcontract, TK and Cummins-Wagner entered into a series of purchase orders, "whereby [Cummins-Wagner] agreed to furnish certain equipment and materials... for the Project including, but not limited to, pumps, water heaters, dryers, filters, belts, etc." Id. ¶ 8. According to Cummins-Wagner, "it also agreed to provide operation and maintenance manuals and start-up services for the equipment and materials supplied to TK." Id. Cummins-Wagner alleges that in exchange for these equipment, manuals and services, TK agreed to pay the total amount of $47, 883.09. Id. ¶ 9.

In accordance with the purchase orders, Cummins-Wagner claims that it provided all the equipment and materials ordered to TK for the Project and submitted invoices in the amount of $47, 883.09. Id. ¶¶ 10-11. TK then allegedly made a partial payment of $21, 205 leaving a balance of $26, 678.09. Id. ¶ 12. The Complaint then alleges that Cummins-Wagner delivered the last equipment ordered by TK to the project on January 17, 2012. Id. ¶ 13. However, Cummins-Wagner claims that as of that date it had not yet provided the maintenance manuals or start-up services to TK. Id. At some point thereafter, TK abandoned the Project before completing its subcontract with Milestone and allegedly filed for bankruptcy. Def.'s Mem. in Supp. of Mot. to Dismiss at 2, ECF No. 5-1. As a result, on March 23, 2012, Milestone contacted Cummins-Wagner and requested information concerning the balances owed by TK to Cummins-Wagner. Pl.'s Compl. ¶ 14. The same day, Cummins-Wagner sent an email response to Milestone indicating that $26, 678.09 was the remaining unpaid balance. Pl.'s Compl., Ex. C, ECF No. 1-3. Cummins-Wagner alleges that it then provided copies of open invoices to Milestone on March 27, 2012. Pl.'s Compl. ¶ 14; Pl.'s Compl., Ex. C. Additionally, Cummins-Wagner alleges that at that time it still had not performed all of its obligations under the purchase orders with TK and that it had had no notice that TK was no longer working on the Project. Id. ¶ 15.

On May 17 and May 18, 2012, Milestone allegedly contacted Cummins-Wagner to request equipment and materials for the completion of an air compressor and water heater as well as solar tanks and glycol to complete the installation of a solar water heater. Id. ¶¶ 16-17. Milestone then allegedly notified Cummins-Wagner on June 27, 2012 that it was "relieved of its responsibility to provide additional parts, start-up service and the operation and maintenance manuals for the project." Id. ¶ 18.

Finally, on July 2, 2012, Cummins-Wagner sent a letter to Milestone and F&D requesting payment for the outstanding balance of $26, 678.09. Id. ¶ 19. Subsequently, Cummins-Wagner provided additional materials to F&D at F&D's request, but F&D ultimately denied the claim against the performance bond on December 14, 2012. Id. ¶¶ 20-24. As a result, Cummins-Wagner brought the presently pending action against Defendant F&D under the Miller Act, 40 U.S.C. §§ 3131 et seq., seeking to recover the outstanding balance of $26, 678.09. Id. ¶ 25.


Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P 8(a)(2). Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a complaint if it fails to state a claim upon which relief can be granted. The purpose of Rule 12(b)(6) is "to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006).

The Supreme Court's recent opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), "require that complaints in civil actions be alleged with greater specificity than previously was required." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citation omitted). The Supreme Court's decision in Twombly articulated "[t]wo working principles" that courts must employ when ruling on Rule 12(b)(6) motions to dismiss. Iqbal, 556 U.S. at 678. First, while a court must accept as true all the factual allegations contained in the complaint, legal conclusions drawn from those facts are not afforded such deference. Id. (stating that "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to plead a claim).

Second, a complaint must be dismissed if it does not allege "a plausible claim for relief." Id. at 679. Under the plausibility standard, a complaint must contain "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555. Although the plausibility requirement does not impose a "probability requirement, " id. at 556, "[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 663; see also Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 291 (4th Cir. 2012) ("A complaint need not make a case against a defendant or forecast evidence sufficient to prove an element of the claim. It need only allege facts sufficient to state elements of the claim." (emphasis in original) (internal quotation marks and citation omitted)). In short, a court must "draw on its judicial experience and common sense" to determine whether the pleader has stated a plausible claim for relief. Iqbal, 556 U.S. at 664.


Defendant Fidelity and Deposit Company of Maryland ("Defendant" or "F&D") contends that the Complaint in this case should be dismissed as the use plaintiff, Cummins-Wagner Company, Inc. ("Plaintiff" or "Cummins-Wagner"), failed to comply with the ninety-day notice requirement of the Miller Act. Under the Miller Act,

A person having a direct contractual relationship with a subcontractor but no contractual relationship, express or implied, with the contractor furnishing the payment bond may bring a civil action on the payment bond on giving written notice to the contractor within 90 days from the date on which the person did or performed the last of ...

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