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LVI Environmental Services, Inc. v. Alcoa, Inc.

United States District Court, District of Maryland

March 25, 2014

ALCOA, INC., Defendant


James K. Bredar United States District Judge

I. Background

This case was filed on October 4, 2013, by Plaintiff LVI Environmental Services, Inc. (“LVI”), against Alcoa, Inc., alleging Alcoa’s breach of their contract for LVI’s demolition of the Alcoa Eastalco Works manufacturing facility in Frederick, Maryland. (Compl., ECF No. 2.) Filed in Maryland state court, the suit was removed by Alcoa to this Court. (ECF No. 1.) Under the Court’s scheduling order entered on December 31, 2013, the deadline for motions for amendment of pleadings was February 3, 2014. (ECF No. 28.) LVI timely filed a motion for leave to file an amended complaint. (ECF No. 35.) LVI’s motion has been thoroughly briefed (ECF Nos. 36, 37, 38),[1] and no hearing is necessary, Local Rule 105.6 (D. Md. 2011). It will be granted.

II. Standard for Amendment of Complaint

In the circumstances presented here, when a plaintiff’s motion is filed within the deadline that has been set in a scheduling order for filing motions for leave to amend, a motion for permission to amend the complaint is governed by Rule 15(a), which directs the Court to “freely give leave when justice so requires.” The Fourth Circuit has stated that leave to amend under Rule 15(a) should be denied only in three situations: when the opposing party would be prejudiced, when the amendment is sought in bad faith, or when the proposed amendment would be futile. Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006).

III. Analysis

Alcoa argues that leave to amend the complaint should be denied because amendment would be futile. (Def.’s Opp’n 3.) Specifically, LVI seeks to amend its complaint to add a conversion count premised upon Alcoa’s physically blocking LVI from removing from the work site scrap materials to which LVI is given ownership and possession under the contract and upon Alcoa’s exercising dominion and control over the scrap materials. (Pl.’s Mot. Supp. Mem. 2-3.)

These materials are allegedly of great value to LVI and that value was factored into LVI’s compensation under the contract. (Compl. ¶ 11.) In LVI’s original complaint, it alleged that Alcoa had materially breached the contract in the following ways:

(i) failing and refusing to make Straight-Line Payments to LVI from December 1, 2012 to date, (ii) blocking and prohibiting LVI from shipping its scrap materials from the Eastalco Project from February 7, 2013 to February 13, 2013 and again from April 11, 2013 to the date of the filing of this Complaint, (iii) demanding that LVI perform out of sequence Work in order to receive payment and release of scrap materials; (iv) failing to issue proper time extensions to LVI or pay LVI for changed and extra Work; (v) delaying, disrupting, interfering, and hindering LVI’s Work and refusing to issue proper time extensions or pay for same, (vi) accelerating LVI’s Work and refusing to pay for same, (vii) causing inefficiencies in LVI’s Work and refusing to issue proper time extensions or pay for same, and (viii) requiring LVI to perform Work to standards beyond those identified in the Contract or recognized in the industry and refusing to issue proper time extensions or pay for same.

(Id. ¶ 47.)

In its proposed amended complaint, LVI repeats and realleges all of the paragraphs preceding and comprising its breach-of-contract claim in setting out its proposed second count for conversion. (Prop. Am. Compl. ¶ 54, ECF No. 35-4.) In addition, LVI alleges that it possesses ownership of and is entitled to possession of the scrap materials, that Alcoa has blocked LVI from transporting the scrap materials off of the work site, that Alcoa has retained possession, dominion, and control of LVI’s scrap materials, and that Alcoa has converted LVI’s property with actual malice based upon Alcoa’s awareness of the wrongfulness of Alcoa’s possession of LVI’s property. (Id. ¶¶ 55-57.)

Alcoa contends that the proposed amended complaint “attempts to turn a run-of-the-mill breach of contract claim into a tort claim,” and that such is not allowed under Maryland law. (Def.’s Opp’n 1.) Alcoa further argues that LVI’s only claim to ownership arises under the contract and that is insufficient; implicitly, Alcoa argues that LVI’s ownership claim must arise independently of the contract in order for it to have a conversion claim. (Id. 1-2.) Alcoa’s arguments are unpersuasive.

The Maryland case that best elucidates the governing principles is Fink v. Pohlman, 582 A.2d 539 (Md. Ct. Spec. App. 1990). In Fink, a sister brought an action against her brothers, who had served as their mother’s estate’s personal representatives, and alleged that her brothers had committed breach of contract, conversion, and breach of trust based upon an allegedly uneven division of estate assets. In addressing the conversion count, the court noted the prevailing view that a mere breach of contract is insufficient to support a conversion claim; rather, conversion under a contract must be established by evidence of a positive, tortious act. Id. at 542-43. Given that the sister’s only evidence was that the brothers had breached their oral contract as to an even division of assets, the court determined that she had not proven a positive, tortious act. Id. at 543. In reaching its conclusion, the Fink court distinguished a decision by the Maryland Court of Appeals in K & K Management v. Lee, 557 A.2d 965 (Md. 1989). In that case, a conversion claim was appropriately based on both a breach of contract and the positive, tortious act of K & K Management in barring the plaintiff’s access to the restaurant he had operated pursuant to the plaintiff’s contract with K & K Management, resulting in the plaintiff’s inability to remove certain items of personalty to which he was entitled under the contract. See Fink, 582 A.2d at 543.

The K & K Management case, therefore, is closely analogous to the instant case. Indeed, the K & K Management opinion stated that the conversion claim there was “a perfect example of a tort arising out of contract.” 557 A.2d at 983. Here, the contract allegedly grants to LVI ownership and right of possession of scrap materials at the work site, similar to the K & K Management contract’s recognizing the plaintiff’s right of ownership and possession to certain personalty inside the restaurant. Alcoa’s physically blocking LVI from removing the scrap materials and exercising dominion and control over the scrap materials ...

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