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United States v. All State Construction, Inc.

United States District Court, D. Maryland

June 12, 2014

United States of America for the use and benefit of ARIOSA & COMPANY, LLC


DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for resolution in this case arising under the Miller Act is a motion to dismiss filed by Defendant SEI Group, Inc. ("SEI"). (ECF No. 7). The relevant issues have been briefed and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, the motion will be denied.

I. Background

A. Factual Background

The following facts are set forth in the complaint. (ECF No. 1). On or about October 22, 2012, SEI entered into a contract with the United States government for the construction of a "Helium Recovery Plant" in Gaithersburg, Maryland ("the project"). ( Id. at ¶ 14). As required under the Miller Act, SEI furnished performance and payment bonds to the government naming Defendant The Guarantee Company of North America USA ("Guarantee") as the surety on the project.[1] The payment bond provided that SEI and Guarantee were "jointly and severally" liable for the penal sum of the bond. (ECF No. 1-8, at 3).

SEI subcontracted with Defendant All State Construction, Inc. ("All State"), which, in turn, entered into a sub-subcontract with Plaintiff Ariosa & Company, LLC, "for the performance of work and the furnishing of labor and materials for completion of the installation of [a] mechanical component structure" of the project. (ECF No. 1 ¶ 9).[2] According to the complaint, Plaintiff fulfilled its obligations under the sub-subcontract, "provid[ing] all labor and materials, including extras and change orders, ... in a safe, careful and workmanlike manner... at substantial expense." ( Id. at ¶ 10). At some point, however, "[t]he project was stopped as a result of [SEI's] attempts to supply equipment not compliant with the specifications required by the United States government, namely a helium liquefier and associated equipment manufactured within the United States." ( Id. at ¶ 17). As a result, Plaintiff "incurred substantial costs and expenses, " which included "heating, cooling, and related equipment and materials" it had purchased in accordance with the sub-subcontract. ( Id. at ¶ 19). Plaintiff asserts that it has "not been paid the monies due and owing for its performance" and that there is "a contractual balance due of $72, 326.00, plus additional demobilization costs, lost profits, other damages and expenses totaling $65, 280.00, for a total amount of loss of $137, 515.00." ( Id. at ¶ 20).

B. Procedural Background

Plaintiff commenced this action on November 25, 2013, bringing separate counts against All State, SEI, Guarantee, and CNA Surety, d/b/a Western Surety Company - the surety on bonds furnished by All State - asserting jurisdiction under the Miller Act, 40 U.S.C. §§ 3131 et seq., and seeking a judgment against all defendants in the amount of "$137, 515.00 plus interest, attorneys' fees and costs[.]" (ECF No. 1 ¶ 12). On February 28, 2014, SEI filed the pending motion to dismiss the second count of the complaint, the sole count against it, pursuant to Fed.R.Civ.P. 12(b)(6). (ECF No. 7). Plaintiff filed a response in opposition on March 21 (ECF No. 15) and SEI filed a reply on April 7 (ECF No. 16).

II. Standard of Review

The purpose of a motion to dismiss under Rule 12(b)(6) is to test the sufficiency of the complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). A plaintiff's complaint need only satisfy the standard of Rule 8(a), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P 8(a)(2). "Rule 8(a)(2) still requires a showing, ' rather than a blanket assertion, of entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n. 3 (2007). That showing must consist of more than a "formulaic recitation of the elements of a cause of action" or "naked assertion[s] devoid of further factual enhancement." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted).

At this stage, the court must consider all well-pleaded allegations in a complaint as true, Albright v. Oliver, 510 U.S. 266, 268 (1994), and must construe all factual allegations in the light most favorable to the plaintiff, see Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). The court need not, however, accept unsupported legal allegations. Revene v. Charles Cnty. Comm'rs, 882 F.2d 870, 873 (4th Cir. 1989). Nor must it agree with legal conclusions couched as factual allegations, Ashcroft v. Iqbal, 556 U.S. 662 (2009), or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844 (4th Cir. 1979); see also Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged, but it has not show[n]... that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). Thus, "[d]etermining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.

III. Analysis

The Miller Act requires a general contractor on a federal construction project of more than $100, 000 to furnish, inter alia, a payment bond "for the protection of all persons supplying labor and materials in carrying out the work provided for in the contract." 40 U.S.C. § 3131(b)(2). "The Act further provides that any person who furnishes labor or materials for such a bonded project and has not been paid may sue on the bond for the amount due, " but recovery is limited "to first- and second-tier subcontractors." Datastaff Technology Group, Inc. v. Centex Const. Co., Inc., 528 F.Supp.2d 587, 592-93 (E.D.Va. 2007) (citing 40 U.S.C. § 3133). Pursuant to § 3133(b)(2), a second-tier subcontractor is required to provide written notice to the general contractor within ninety days of the date it last performed the labor or supplied the materials that form the basis of its Miller Act claim.

To state a claim under the Miller Act, the plaintiff must set forth facts showing that "(1) it has furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished[;]... and (2) it has not been paid in full within 90 days." U.S. ex rel. Tenn. Valley Marble Holding Co. v. Grunley Constr., 433 F.Supp.2d 104, 114 (D.D.C. 2006) (internal citation and marks omitted). The statute is "highly remedial in nature" and is liberally construed to "effectuate the Congressional intent to protect those whose labor ...

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