United States District Court, D. Maryland
UNITED STATES OF AMERICA, for the use and benefit of Tusco, Inc., et al., Plaintiffs,
CLARK CONSTRUCTION GROUP, LLC, et al., Defendants.
J. MESSITTE, UNITED STATES DISTRICT JUDGE.
United States of America, for the use and benefit of Tusco,
Inc., and Tusco, Inc. in its own capacity (collectively
“Tusco”) have sued Clark Construction Group, LLC
(“Clark”) and Travelers Casualty and Surety
Company of America (“Travelers”) (collectively
“Defendants”) based on a dispute over work Tusco
performed on a federal construction project. Tusco, a
subcontractor on the project, alleges that Clark, the prime
contractor, failed to timely pay it for certain change order
work performed by Tusco at Clark’s request.
Tusco’s claims include breach of contract against Clark
(Count I); quantum meruit against Clark (Count II); and
breach of payment bond in violation of the Miller Act, 40
U.S.C. § 3133, against Travelers. Clark has moved to
dismiss Counts I and II, and Travelers has moved to stay
Count III. For the reasons that follow, the Court
will DENY Clark’s Motion to Dismiss (ECF No. 7) and
DENY Travelers’ Motion to Stay (ECF No. 7).
FACTS AND PROCEDURAL HISTORY
about September 27, 2011, Clark contracted with the United
States (the “Prime Contract”) to provide
construction services with respect to a federal project
located in Bethesda, Maryland, known as the Intelligence
Community Campus-B (ICC-B) North Campus (the
“Project”). Compl. ¶ 7, ECF No. 1. On
September 28, 2011, Clark secured a payment bond (the
“Bond”) from Travelers Casualty and Surety
Company with a penal sum of $39, 912, 000.00. Id.
¶ 8. Under the terms of the Bond, Travelers agreed to be
bound jointly and severally with Clark to make payment to all
persons having a direct contractual relationship with Clark
or to any of Clark’s subcontractors who furnished
labor, material, or both in performing the work for the Prime
Contract in the event Clark failed to make prompt payment.
Id.; Compl., Ex. A, ECF No. 1-1.
about January 16, 2012, Clark entered into a subcontract with
Tusco (the “Subcontract”) to furnish
labor, materials, equipment, and all other items necessary to
complete Tusco’s work for the Project. Compl. ¶ 9;
Compl., Ex. B, ECF No. 1-2. Under the Subcontract, Clark
agreed to pay Tusco $615, 000.00 for the work. Compl. ¶
10; Compl., Ex. B, Art. 4(a). The Subcontract contained a
provision making payment to Clark by the Government (referred
to in the Subcontract as the “Owner”) a condition
precedent to Clark’s payment to Tusco. Specifically,
Article 4(j) of the Subcontract provided, in part:
Subcontractor agrees that payment by the Owner to Clark for
work performed by the Subcontractor . . . is a condition
precedent to any payment obligation of Clark to
Subcontractor. Subcontractor agrees that the liability of
Clark’s sureties on any bond for payment to
Subcontractor is subject to the same conditions precedent as
are applicable to Clark’s liability to Subcontractor.
Ex. B, Art. 4(j).
addition to setting forth these payment procedures, the
Subcontract contained several clauses governing
“changes” in the scope of Tusco’s work
under the Project. In general, the Subcontract permitted
Clark to order such changes unilaterally and without notice,
provided that it notified Tusco of the changes in
writing. Id., Art. 9(a). If Tusco claimed
entitlement to additional compensation for such work (beyond
the $615, 000.00 Subcontract price), it had to submit any
requests or claims for adjustment in the Subcontract price to
Clark. Id., Art. 9(b). Under the terms of the
Subcontract, the manner and timing of Tusco’s
compensation for such work depended upon whether, on the one
hand, the Government ordered the changes or, on the other
hand, Clark independently ordered the changes. For changes
“made by the Owner, ” Article 9(c) stated:
Clark’s receipt of payment from the Owner on account of
pending changes made by the Owner shall be a condition
precedent to Clark’s obligation to make payment for
changed work to Subcontractor.
Id., Art. 9(c). For changes made by Clark
autonomously, Article 9(d) directed:
For changes ordered by Clark independent of the Owner of the
Contract Documents, Subcontractor shall be entitled to
equitable adjustment in the Subcontract price.
Id., Art. 9(d).
in the event Clark and the Subcontractor disputed payment,
the Subcontract contained several provisions governing
settlement of these disputes. For disputes involving the
Government, Article 11(b) of the Subcontract stated:
In any case of any dispute between Clark and the
Subcontractor, in any way relating to or arising from any act
or mission of the Owner or involving the Contract Documents,
Subcontractor agrees to be bound to Clark to the same extent
that Clark is bound to the Owner, by the terms of the
Contract Documents, and by any and all preliminary and final
decisions or determinations made thereunder by the party . .
. whether or not Subcontractor is a party to such
proceedings. In case of such dispute, Subcontractor will
comply with all provisions of the Contract Documents allowing
a reasonable time for Clark to analyze and forward to the
Owner any required communications or documentation. Clark
will, at its option, (1) present to the Owner, in
Clark’s name, or (2) authorize Subcontractor to present
to the Owner, in Clark’s name, all of
Subcontractor’s claims and answer the Owner’s
claims involving Subcontractor’s work, whenever Clark
is permitted to do so by the terms of the Contract Documents.
. . . The Subcontractor price shall be adjusted by
Subcontractor’s allocable share determined in
accordance with Article 9, hereof.
Id., Art. 11(b).
Tusco’s Work on the Project
alleges that it performed all the work it agreed to perform
under the original scope of the Project, which it says was
authorized and accepted by Clark. Compl. ¶¶ 11, 13.
During the course of the Project, however, Tusco says that
Clark requested additional work from Tusco.Tusco further
alleges that it submitted change orders and performed the
additional work, which Clark accepted. Id. ¶
last day of work on the Project was on or about August 18,
2014. Id. ¶ 12. Although Clark has paid Tusco
for the work performed under the original scope of the
Project, Tusco avers that Clark has not, to date,
paid Tusco the amount it claims it is owed for the
change-order work and extra work authorized by Clark, a total
of $100, 852.69. Id. ¶ 14.
thereafter, Tusco submitted a claim to Travelers for payment.
Id. ¶ 15. Although Travelers did not deny the
claim, it has failed to provide Tusco with a substantive
response or pay it the $100, 852.69 Tusco says it is owed.
Id. ¶ 16.
March 24, 2015, Tusco, Clark, Travelers, Fidelity and Deposit
Company of Maryland, and Federal Insurance Company entered
into a tolling agreement under which the statute of
limitations on all claims “arising from or in any way
connected with the construction of the ICC-B North Campus
Project” would be tolled from March 15, 2015, until
September 24, 2015. Id. ¶ 17.
September 23, 2015, Tusco filed its Complaint in this Court,
alleging on the basis of the above facts: breach of contract
against Clark (Count I), quantum meruit against Clark (Count
II), and breach of payment bond and violation of the Miller
Act against Travelers (Count III). See Id. Clark has
moved to dismiss Counts I and II for failure to state a claim
upon which relief may be granted. Defs.’ Mot. Dismiss
and Stay, ECF No. 7. Travelers has answered the Complaint,
but has moved to stay litigation of Count III. Id.;
Answer, ECF No. 8. Clark joins in Travelers’ Motion to
Stay, to the extent its claims are not dismissed for failure
to state a claim. Defs.’ Mot. Dismiss and Stay.
MOTION TO DISMISS COUNTS I AND II
Rule of Civil Procedure 8(a) prescribes “liberal
pleading standards, ” requiring only that a plaintiff
submit a “short and plain statement of the claim
showing that [he or she] is entitled to relief.”
Erickson v. Pardus, 551 U.S. 89, 93-94 (2007)
(citing Fed.R.Civ.P. 8(a)(2)). To survive a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6), a plaintiff
must plead facts sufficient to “state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 554, 570 (2007). But this standard
requires “more than a sheer possibility that a
defendant has acted unlawfully.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). Although a court will
accept factual allegations as true, “[t]hreadbare
recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice.”
Court addresses Clark’s arguments to dismiss the first
two Counts of the Complaint.
Count I: Breach of Contract Claim
claims in Count I that Clark breached its obligations under
the Subcontract when it “failed and refused to pay
Tusco in full for labor, services and materials provided by
Tusco in performing its scope of work under the Subcontract
and pursuant to Clark’s direction.” Compl. ¶
moving to dismiss this claim, Clark points to Article 9(c) of
the Subcontract, in which Tusco expressly agreed that receipt
of payment by the Government to Clark for change-order work
would be a “condition precedent” to Clark’s
obligation to pay Tusco. Defs.’ Mot. Dismiss and Stay,
Mem. Supp. 6-7, ECF No. 7-1. Clark argues that Tusco does not
- and, as a matter of law, cannot - allege satisfaction of
this condition precedent because Clark has not been paid by
the Government for the additional work at issue. Id.
In response, Tusco contends that Clark’s argument
amounts to an affirmative defense which is inappropriate at
the motion to dismiss stage. Plfs.’ Resp. Opp’n
4-5, ECF No. 12. Tusco also cites Article 9(c) of the
Subcontract, governing payment for change orders made ...