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ARCO/Murray National Constr. Co. Inc. v. Equitable Development LLC

United States District Court, D. Maryland

August 5, 2016

ARCO/MURRAY NAT’L CONSTR. CO., INC., Plaintiff
v.
EQUITABLE DEVELOPMENT, LLC, Defendant

          MEMORANDUM

          James K. Bredar United States District Judge.

         I. Background

         This case is almost the mirror image of Equitable Development, LLC v. ARCO/Murray National Construction Co., Inc., et al., Civ. No. JKB-16-549 (D. Md.). That case was filed in the Circuit Court for Baltimore City on January 28, 2016, and timely removed to this Court on February 25, 2016. (No. 16-549, Notice of Removal ¶ 7, ECF No. 1.) Therein, Equitable Development, LLC (“Equitable”), sued ARCO/Murray National Construction Company, Incorporated (“ARCO/Murray”), and Travelers Casualty and Surety Company of America (“Travelers”) for breach of contract in connection with the renovation, construction, and conversion of the Equitable Building in downtown Baltimore into apartments; ARCO/Murray was the contractor on that project, and Travelers provided payment and performance bonds on the contract. (No. 16-549, Compl. ¶¶ 1, 4, ECF No. 2.)

         The instant case, No. 16-591, was filed on January 29, 2016, in the Circuit Court for Baltimore City (Civil Case Information Report, ECF No. 2-1), and timely removed to this Court on March 1, 2016 (Notice of Removal, ECF No. 1). In this case, ARCO/Murray sued Equitable in a “Verified Petition to Establish and Enforce Mechanic’s Lien, ” alleging Equitable had not paid ARCO/Murray all that it was due pursuant to the contract between them and asking the court to establish a mechanic’s lien against the Equitable Building property in the amount of $1, 164, 500, to enter an order requiring Equitable to show cause why a mechanic’s lien should not be established, and to grant an order enforcing the lien and directing the sale of the property unless the lien were satisfied. (Compl. ¶¶ 10, 11, ECF No. 2.)

         Now pending before the Court are Equitable’s motion to consolidate Numbers 16-549 and 16-591 (ECF No. 4) and Equitable’s motion to dismiss the Verified Petition for failure to state a claim for relief (ECF No. 10). Equitable also filed a companion motion to consolidate in Number 16-549. (No. 16-549, ECF No. 9.) The motions have been briefed (No. 16-591, ECF Nos. 8, 13, 15), and no hearing is required, Local Rule 105.6 (D. Md. 2016). The motion to dismiss will be granted, thereby rendering the two motions to consolidate moot.

         II. Standard of Dismissal for Failure to State a Claim

         A complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists “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. An inference of a mere possibility of misconduct is not sufficient to support a plausible claim. Id. at 679. As the Twombly opinion stated, “Factual allegations must be enough to raise a right to relief above the speculative level.” 550 U.S. at 555. “A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ . . . Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555, 557). Although when considering a motion to dismiss a court must accept as true all factual allegations in the complaint, this principle does not apply to legal conclusions couched as factual allegations. Twombly, 550 U.S. at 555.

         III. Allegations of the Verified Petition

         According to the Verified Petition, ARCO/Murray alleges the following: ARCO/Murray, as general contractor, executed a construction contract with Equitable, as owner of the Equitable Building Property (“Property”) to perform construction work and services on or about the Property for the purpose of converting an historic office building into luxury apartments, with retail space on the ground level. (Compl. ¶ 7.) Under the parties’ contract, Equitable agreed to pay ARCO/Murray $18, 274, 000. (Id. ¶ 8.) During the course of the construction project, Equitable requested and directed ARCO/Murray to perform additional work on the Property pursuant to change orders and extra work authorizations; these totaled $2, 631, 289. (Id. ¶ 9.) Equitable interfered with ARCO/Murray’s progress and denied or limited ARCO/Murray’s access, which caused delays to progress in the construction. (Id.) ARCO/Murray incurred additional general conditions on the project in the amount of $190, 500. (Id.) ARCO/Murray’s total costs for changed and extra work and delay costs are $2, 821, 789. (Id.) ARCO/Murray incorporated by reference and attached to the Verified Petition copies of approved change orders and pending change orders. (Id. Ex. F.)

         The total value of ARCO/Murray’s work and services on the Property is $21, 095, 833. (Id. ¶ 10.) As of January 29, 2016, the date of the filing of the Verified Petition, Equitable had paid ARCO/Murray $19, 931, 333 for its work under the contract. (Id. ¶ 11.) The contract balance is $974, 000, and the general conditions total $190, 500, leaving a principal sum due of $1, 164, 500. (Id.) “The total value of the work and services rendered by ARCO/Murray at the Property, combined with the repairs, rebuilding and improvements to the Property and the building situated thereon performed by ARCO/Murray and its subcontractors exceeds fifteen percent (15%) of the value of the Property, and therefore, pursuant to Md. Real Prop. Code Ann. § 9-102(a), the Property and the building and improvements thereon, including the condominium units and all common elements, are subject to a mechanics’ lien.” (Id. ¶ 14.) “The work and services performed by ARCO/Murray on the Project began on or about June 18, 2014 and ARCO continues to work on the project.” (Id. ¶ 15.)

         IV. Statutory Provisions

         Under the Maryland Code, “[e]very building erected and every building repaired, rebuilt, or improved to the extent of 15 percent of its value is subject to establishment of a lien in accordance with this subtitle for the payment of all debts, without regard to the amount, contracted for work done for or about the building and for materials furnished for or about the building ..... Md. Code Ann., Real Prop. § 9-102(a) (LexisNexis 2015). The statute also sets forth the requisites of a proceeding for a claim to a lien:

(a) In general. -- In order to establish a lien under this subtitle, a person entitled to a lien shall file proceedings in the circuit court for the county where the land or any part of the land is located within 180 days after the work has been finished or the materials furnished. The ...

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