United States District Court, W.D. Louisiana, Shreveport Division
YOR-WIC CONSTRUCTION CO., INC.
ENGINEERING DESIGN TECHNOLOGIES, INC., ET AL.
MAGISTRATE JUDGE HAYES
MAURICE HICKS, JR., CHIEF JUDGE UNITED STATES DISTRICT COURT
the Court is Third-Party Defendant Fidelity and Deposit
Company of Maryland's (“F&D”) Motion to
Dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). See Record Document 59.
Third-Party Plaintiff Engineering Design Technologies, Inc.
(“EDT”) opposes the motion. See Record
Document 67. F&D seeks dismissal of EDT's claims for
detrimental reliance and subcontract breach. For the reasons
set forth below, F&D's motion is hereby
case concerns the rights and obligations of multiple parties
under a subcontract (the “Subcontract”) executed
by EDT, as general contractor, and Yor-Wic Construction Co.,
Inc. (“Yor-Wic”), as subcontractor. See
Record Document 46 at 10. In addition, F&D, as surety,
issued a Subcontract Performance Bond (the
“Bond”) on behalf of Yor-Wic, as principal, and
EDT, as obligee. See Record Document 59-1 at 1-2.
January 3, 2017, Yor-Wic filed a “Petition for
Declaratory Judgment with Reservation of other Actions and
Defenses” against EDT in the 26th Judicial District
Court for the Parish of Bossier, State of Louisiana.
See Record Document 1-1 at 1. This suit was
initiated by Yor-Wic after EDT defaulted Yor-Wic for
non-performance. According to the original Petition, EDT
entered into a contract (the “Prime Contract”)
with the Naval Facilities Engineering Command, Southeast
(“NAVFAC”) for construction of drainage
improvements at Barksdale Air Force Base. See id.
EDT, in turn, entered into a March 30, 2016 agreement (the
“Subcontract”) with Yor-Wic to perform work under
the Prime Contract. See id. at 2.
Prime Contract specified that EDT should not enter into any
contract with a subcontractor who did not comply with the
requisite Experience Modification Rate (“EMR”).
See id. Yor-Wic alleged that, prior to the execution
of the Subcontract, it advised EDT that Yor-Wic's EMR
exceeded the maximum rate permitted by the Prime Contract.
See id. at 3. Thereafter, EDT submitted
Yor-Wic's EMR to NAVFAC, but NAVFAC rejected Yor-Wic as a
subcontractor. See id. at 10. Following the initial
rejection, “EDT submitted a written request for
additional consideration to the [c]ontracting [o]fficer due
to Yor-Wic's failure to meet the specified acceptable EMR
range, but NAVFAC refused to approve Yor-Wic as a
subcontractor to EDT for the [p]roject.” Id.
original Petition, Yor-Wic contended that the Subcontract, by
incorporating the EMR, included a suspensive condition that
NAVFAC must approve Yor-Wic as a subcontractor for the
project. See id. Because of the failure of the
suspensive condition, Yor-Wic sought a judgment declaring the
Subcontract invalid, void, null, unenforceable, extinguished,
and/or without cause or consent. See id. at 4. In
addition, Yor-Wic sought the same declaration as to the
payment and performance bonds that secured performance of the
Subcontract. See id.
February 1, 2017, EDT removed the case to federal court on
the basis of diversity jurisdiction pursuant to 28 U.S.C.
§ 1332. Also on February 1, Yor-Wic filed a Motion for
Leave to File First Amending and Supplemental Petition and
Incorporated Memorandum, and this Court administratively
entered Yor-Wic's First Amending, Supplemental and
Restated Petition on February 19, 2017. See Record
Document 9-1 at 26. In Yor-Wic's Amended Petition, it
added several more claims including equitable estoppel,
impossibility of performance based on a fortuitous event,
subjective novation, nullity based on an alleged False Claims
Act violation, and lack of consent due to error as to person.
See id. at 34. EDT filed an original and amended
answer with affirmative defenses and counterclaims against
Yor-Wic based on Yor-Wic's alleged termination for
default due to Yor-Wic's unilateral abandonment of the
work, not due to any non-compliance with the EMR rating.
See Record Document 13; Record Document 30-1 at 7;
Record Document 32.
11, 2018, this Court issued a Memorandum Ruling granting in
part and denying in part a Partial Motion for Judgment on the
Pleadings filed by EDT, which dismissed all of Yor-Wic's
claims except for its subjective novation claim. See
Record Document 73 at 16. On March 2, 2018, EDT filed a
Second Amended Answer and Counterclaim against Yor-Wic and a
Third-Party Demand (the “Third-Party Complaint”)
against F&D and United Fire and Casualty Company,
Yor-Wic's general liability insurer. See Record
Document 46; Record Document 59-1 at 2. In the Third-Party
Complaint, EDT asserts several claims including, inter
alia, that Yor-Wic and F&D are jointly, severally,
and solidarily liable for EDT's damages under its claims
for “Contract Default” and “Subcontract
Default.” See Record Document 46 at 19-20.
Additionally, EDT asserts a claim for “Detrimental
Reliance” for EDT's reliance on alleged
representations made by Yor-Wic concerning Yor-Wic's EMR
and ability to complete performance of the Subcontract.
See id. at 20. On May 8, 2018, F&D filed the
instant Motion to Dismiss, seeking dismissal of EDT's
claims for detrimental reliance and subcontract breach
asserted against it in the Third-Party Complaint.
See Record Document 59.
LAW AND ANALYSIS
Pleading and 12(b)(6) Motion to Dismiss Standards
8(a)(2) of the Federal Rules of Civil Procedure governs the
requirements for pleadings that state a claim for relief,
requiring that a pleading contain “a short and plain
statement of the claim showing that the pleader is entitled
to relief.” The standard for the adequacy of complaints
under Rule 8(a)(2) is now a “plausibility”
standard found in Bell Atlantic Corp. v. Twombly and
its progeny. 550 U.S. 544, 127 S.Ct. 1955 (2007). Under this
standard, “factual allegations must be enough to raise
a right to relief above the speculative level . . . on the
assumption that all the allegations in the complaint are true
(even if doubtful in fact).” Id. at 555-56,
127 S.Ct. at 1965. If a pleading only contains “labels
and conclusions” and “a formulaic recitation of
the elements of a cause of action, ” the pleading does
not meet the standards of Rule 8(a)(2). Ashcroft v.
Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009)
Rule of Civil Procedure 12(b)(6) allows parties to seek
dismissal of a party's pleading for failure to state a
claim upon which relief may be granted. In deciding a Rule
12(b)(6) motion to dismiss, a court generally may not
“go outside the pleadings.” Colle v. Brazos
Cty., Tex., 981 F.2d 237, 243 (5th Cir. 1993). However,
a court may rely upon “documents incorporated into the
complaint by reference and matters of which a court may take
judicial notice” in deciding a motion to dismiss.
Dorsey v. Portfolio Equities, Inc., 540 F.3d 333,
338 (5th Cir. 2008). Additionally, courts must accept all
factual allegations in the complaint as true. See
Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. However,
courts do not have to accept legal conclusions as facts.
See id. A court does not evaluate a plaintiff's
likelihood for success, but instead determines whether a
plaintiff has pleaded a legally cognizable claim. See
U.S. ex rel. Riley v. St. Luke's Episcopal Hosp.,
355 F.3d 370, 376 (5th Cir. 2004). Courts considering a
motion to dismiss under Rule 12(b)(6) are only obligated to
allow those complaints that are facially plausible under the
Iqbal and Twombly standard to survive such
a motion. See Iqbal, 556 U.S. at 678- 79, ...