United States District Court, D. Maryland
K. Bredar, Chief Judge.
& Company, Inc. ("SCI") filed suit against
Defendant VersaTech, Inc. alleging breaches of contract and
promissory estoppel. SCI seeks actual damages, disgorgement
of all profits received by VersaTech as a result of
deliberate breaches, prejudgment interest on all amounts, and
costs and reasonable attorneys' fees. Versatech filed a
motion to dismiss, and the matter is fully briefed. No.
hearing is required. See Local Rule 105.6 (D. Md.
2018). For the reasons set forth below, VersaTech's
motion to dismiss will be granted in part and denied in part.
is a company which provides a variety of technology services
to government and private clients. (Compl. ¶ 6, ECF No.
1.) SCI entered into a contract to perform work on the United
States Food and Drug Administration's White Oak Campus to
provide "audio/visual and information technology support
services." (Id. ¶ 9.) When SCI entered
into the contract, it qualified as a small disadvantaged
business under the government's 8(a) Business Development
program, 13 C.F.R. § 124.1 et seq. (Id.) When
it was time for the FDA to re-bid the contract, SCI no longer
qualified under the 8(a) program. (Id. ¶ 11.)
SCI partnered with another 8(a) business, VersaTech, to help
it prepare its proposal for the White Oak project "on
the understanding that if VersaTech was awarded the contract,
SCI would bring its experience and employees to bear on the
project and would receive a commensurate workshare."
was awarded the contract and subsequently entered into a
subcontractor agreement (the "subcontract") with
SCI on January 20, 2017. (Id. ¶ 12.) Under the
subcontract, VersaTech issued task orders to SCI with
statements of work to be done, and SCI was paid pursuant to
rates established in the subcontract. (Id.
2017, Jason Peay, the CEO of VersaTech, contacted SCI to ask
if SCI could reduce its labor rates by 7%. (Id.
¶ 18.) Vineet Singhal, the CEO and Principal of SCI,
wrote back that he would agree to reduce the labor rates by
7% if VersaTech would 1) give SCI 49% of the workshare, and
2) source all project materials through SCI. (Id.
¶ 19.) In his email, Mr. Singhal also wrote, "[w]e
will do a contract mod with revised labor pricing and this
work share for our managers to implement." (Id.
Exh. B at 5.) Mr. Peay responded, "I've spoken to my
team and we are good with moving forward with the plan below.
Vivian will begin the process of setting up new
subK's." (Id. Exh. B at 2.) Hernan Rodas,
an SCI employee, then forwarded the email exchange to
VersaTech employee Omar Silver. (Id. Exh. B at 2.)
In his email, Mr. Rohas wrote:
Vineet and Jason have discussed and have agreed on a 51/49
set up with 7% VT mark up on the IDIQ LCAT rates and 10% mark
up on implementation materials for the life of the contract.
This is what was finalized per Jason's confirmation and
we will begin to implement this new set up to all task
orders. We will use this for requirements moving forward and
will start re-balancing exercise for all task orders.
(Id. Exh. B at 1.) Mr. Silver responded, "I
confirmed the assumption of the agreement yesterday. I hope
you are comfortable with the assumptions as well. I have
added Lee to this email because it will be Lee that
implements, tracks and monitors this new agreement."
(Id. Exh. B at 1.) Following this email exchange,
SCI "signed task order modifications that reduced
SCI's rates by the agreed upon 7%," and all
subsequent work done for VersaTech reflected that rate
reduction. (Id. ¶ 25.) SCI alleges that while
it reduced its rates by the agreed 7%, VersaTech did not
allocate 49% of the workshare to SCI or source all its
materials through SCI. (Id. ¶¶ 37-38.)
addition, SCI alleges VersaTech breached the subcontract by
unreasonably withholding consent to SCI's use of a
subcontractor, Vision Technologies ("Vision").
(Id. ¶¶ 28, 58.) Pursuant to § 22.2
of the subcontract, SCI "shall not subcontract or assign
this Agreement, or otherwise dispose of any of its right,
title, or interest herein to any third-party, without
obtaining the prior written consent of VersaTech, which will
not be unreasonably withheld . . ." (Id. Exh.
A.) SCI admits it did not seek prior written consent to use
Vision, but states that VersaTech was aware SCI was using
Vision as a subcontractor and withheld its consent
unreasonably and in bad faith. (Id. ¶¶ 29,
SCI claims that VersaTech breached the subcontract by failing
to pay SCI's invoices on time. (Id. ¶ 39.)
The subcontract requires that VersaTech pay SCI "within
seven (7) days after VersaTech receives payment for such
services performed by [SCI] from the Customer pursuant to the
Contract or within sixty (60) days after submission of a
valid invoice, whichever is earlier." (Id. Exh.
A § 2.3.) SCI states that at least $90, 850.83 is
overdue and claims that VersaTech began paying SCI's
invoices late after SCI rejected an offer from VersaTech to
buy SCI's assets. (Id. ¶¶ 39-40.)
filed a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim. (Mot
Dismiss, at 1, ECF No. 12.) 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 All 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 "the mere possibility of
misconduct" is not sufficient to support a plausible
claim. Id. at 679. Courts must "accept the
well-pled allegations of the complaint as true, . . .
constru[ing] the facts and reasonable inferences derived
therefrom in the light most favorable to the plaintiff."
Ibarra, 120 F.3d at 474. "A pleading that
offers 'labels and conclusions' or . . . 'naked
assertion[s]' devoid of 'further factual
enhancement'" will not suffice. Iqbal, 556
U.S. at 678 (alteration in original) (citation omitted)
(quoting Twombly, 550 U.S. at 555, 557). Courts need
not accept legal conclusions couched as factual allegations.
Twombly, 550 U.S. at 555.
Breach of Contract (Count I, III, IV)
breach of contract claim requires 1) a "contractual
obligation," 2) "breach," and 3)
"damages." Kumar v. Dhanda,17 A.3d 744,
749 (Md. Ct. Spec. App. 2011), aff'd, 43 A.3d
1029 (Md. 2012). Under Maryland law, the duty of good faith
and fair dealing is implied in every contract, but violation
of this duty does not constitute a separate cause of action.
Swedish Civil Aviation Admin, v. Project Mgmt.
Enters.,190 F.Supp.2d 785, 793-94 (D. Md. 2002)
(finding that a claim for breach of the duty of good faith
and fair dealing is no different than a contract claim),
Maryland law requires courts to interpret contracts
objectively. Cochran v. Norkunas,919 A.2d 700, 709
(Md. 2007). "A court must 'give effect to the
contract's plain meaning, without regard to what the
parties to the contract thought it meant or intended it to
mean.'" Gresham v. Lumbermen's Mut. Cas.
Co.,404 F.3d 253, 260 (4th Cir. 2005) (quoting
Turner v. Turner,809 A.2d 18, 49 (Md. Ct. Spec.
App. 2002)). "A contract is ambiguous if, 'when read
by a reasonably prudent person, it is susceptible of more
than one meaning.'" Diamond Point Plaza Ltd.
P'ship v. Wells Fargo Bank,929 A.2d 932, 951 (Md.
2007) (quoting United Servs. v. Riley,899 A.2d 819,
833 (Md. 2006)). If the court determines that the terms of a
contract are ambiguous, '"the court must consider
any extrinsic evidence which sheds light on the intentions of
the parties at the time. of the execution of the
contract."' Sy-Lene of Washington, Inc. v.
Starwood Urban Retail II, LLC,829 A.2d 540, 547 (Md.
2003) (quoting County Commissioners v. St. Charles,784 A.2d 545, 556 (Md. 2001). "If an ...