United States District Court, S.D. West Virginia, Charleston
THE SANITARY BOARD OF THE CITY OF CHARLESTON, WEST VIRGINIA, a municipal utility, Plaintiff,
COLONIAL SURETY COMPANY, a Pennsylvania corporation; and PARTNERRE INSURANCE COMPANY OF NEW YORK, a New York corporation, Defendants. and COLONIAL SURETY COMPANY, a Pennsylvania Corporation, Third-Party Plaintiff,
TRI-STATE PIPELINE, INC., an Ohio corporation; and ERIC D. TAYLOR, Third-Party Defendants and Fourth-Party Plaintiffs,
BURGESS & NIPLE, INC., an Ohio corporation, Fourth-Party Defendant.
MEMORANDUM OPINION AND ORDER
T. Copenhaver, Jr., Senior United States District Judge.
is a motion to dismiss, filed October 11, 2018 by The
Sanitary Board of the City of Charleston, West Virginia
(“the Sanitary Board” or “Owner”),
seeking to dismiss the crossclaim complaint filed by
third-party defendant and fourth-party plaintiff Tri-State
Pipeline, Inc. (“Tri-State, ” “Contractor,
” or “Bidder”).
Facts and Procedural Background
case arises from a project to improve the sewer systems of
Charleston, West Virginia. Specifically, according to the
crossclaim complaint, “[o]n or about July 26, 2016, the
[Sanitary Board] accepted bids for Contracts 15-1
‘Porters Branch & Spring Branch Sanitary Sewer
Improvement' and 15-2 ‘Callie Road & Anderson
Heights Road Sanitary Sewer Improvements'. These
contracts involved gravity sewer line replacement, manhole
installation, house service connections, restoration of
pavement and other related work.” Crossclaim ¶ 2.
As part of the bidding process, the Sanitary Board
“provided prospective bidders with the project design
prepared by [Project Engineer Burgess & Niple, Inc.,
(“Burgess & Niple” or
“Engineer”), ] including plans, specifications,
bid documents, and other contract documents, also prepared by
[Burgess & Niple] for the [Sanitary Board].”
Id. ¶ 4. According to Tri-State, “[t]hese
bidding documents were intended to provide a ‘road
map' for prospective bidders to allow reasonable
anticipation of the conditions in the work area and to allow
them to prepare accurate bids for the work.”
submitted a bid, “[i]n specific reliance upon the
information provided by [the Sanitary Board.]”
Id. ¶ 5. The Sanitary Board accepted
Tri-State's bid and on September 22, 2016, the parties
entered into an agreement for the completion of both projects
for a contract price of $9, 876, 186.44. Id. ¶
6, see also The Agreement, Motion to Dismiss, ECF # 28 Ex. C.
The contract had a start date of on or about October 10,
2016, and provided that substantial completion should be
achieved in 330 calendar days, with final completion 30 days
thereafter. Id. ¶ 8. Burgess & Niple acted
as the project engineer as well as the Sanitary Board's
onsite representative during the construction project.
Id. ¶ 7.
immediately suffered delays in its performance, allegedly
“as a direct result of the [Sanitary Board]'s
failure to timely and adequately perform its obligations
under its contract, including, but not limited to, a failure
to adequately and timely approve submittals, failure to make
timely payment for materials and work provided, [and] failure
to address and provide compensation for changed work and for
extra work resulting from unforeseen or changed site
conditions[.]” Id. ¶ 9. Specifically,
Tri-State alleges in paragraph 10 that the Sanitary Board
breached its obligations under the contract by:
a. failing to provide accurate and adequate plans,
specifications and contract documents adequate to perform the
b. interfering with, altering and controlling Tri-State's
planned means, methods, techniques, sequences and procedures
c. issuing unjustified stop work orders without adequate
cause and without compensating Tri-State for resulting delays
d. requiring Tri-State to comply with the direction of the
City Engineer of the City of Charleston in contravention of
the specifications included in the contract documents without
compensating Tri-State for resulting delays and costs;
e. failing to timely and adequately review and approve
Tri-State's requests for additional compensation and time
resulting from the [Sanitary Board]'s delays and changes
in the work;
f. failing to compensate Tri-State for delays and expenses
resulting from the Owner's failure to provide proper
g. failing to compensate Tri-State for extra work resulting
from changed site conditions;
h. failing to compensate Tri-State for delays, extra work and
added expense resulting from unmarked and mismarked existing
i. failing to compensate Tri-State for delays and extra work
resulting from owner caused changes in its manner and method
j. failing to compensate Tri-State for delays, extra work and
added expense resulting from faulty or leaking existing
underground utilities; and
k. failing to compensate Tri-State for delays and extra costs
associated with interference by other contractors operating
in its work area.
Id. ¶ 10. Tri-State alleges that it suffered
“at least 57 instances of changed work, delays,
unforeseen or changed site conditions[, ]” for each of
which it submitted claims to the Sanitary Board that were
denied. Id. ¶ 11. For such claims, section
10.05 of the contract's general conditions requires that
all claims be referred to the engineer, Burgess & Niple,
for decision, and that written notice be delivered “by
the claimant to Engineer and the other party to the Contract
promptly (but in no event later than 30 days) after the start
of the event giving rise thereto.” General Conditions,
ECF # 28, Ex. A at 7-8.
alleges that “the [Sanitary Board] had adequate and
timely notice [as to each claim Tri-State submitted] as the
[Sanitary Board]'s own actions were the direct cause of
the delay and/or extra work, the [Sanitary Board] had actual
notice of the events giving rise to the claim through its
on-site representatives who were on site daily during the
course of Tri-State's work and who kept a daily record of
events occurring on the Project, and through written and oral
communications with Tri-State and the [Sanitary Board]'s
project representatives.” Crossclaim ¶ 12.
Tri-State further alleges that the Sanitary Board,
“[t]hrough its conduct during the course of
Tri-State's work, including orally directing work
different from that specified in the contract documents
without utilizing the formal change order process set forth
in the contract documents, . . . waived its right to rely on
the formal written notice and claims provisions in the
contract[.]” Id. ¶ 13.
according to Tri-State, “[d]espite Tri-State's
diligent performance of its obligations under its contract
with the [Sanitary Board] in the face of delays, extra work
and added costs directly resulting from the acts or inactions
of the [Sanitary Board] and unforeseen or changed site
conditions, the [Sanitary Board] wrongfully terminated its
contract with Tri-State without adequate cause.”
Id. ¶ 16.
alleges that “[a]s a direct, proximate and foreseeable
result of the [Sanitary Board]'s material breaches of its
contract and its wrongful termination, Tri-State has suffered
a substantial financial loss, including the cost of
performing additional work directed by the [Sanitary Board],
extra costs resulting from delays and lost productivity,
extended overhead costs and lost profits.” Id.
¶ 17, see also ¶ 14.
these events, the Sanitary Board commenced this action on
June 29, 2018 against Colonial Surety Company, the surety on
the project, and PartnerRe Insurance Company of New York, the
re-insurer surety on the project, invoking the court's
diversity jurisdiction. See Original Complaint, ECF # 1.
Thereafter, on August 28, 2018, defendants Colonial Surety
Company and PartnerRe Insurance Company of New York filed an
answer to the complaint, accompanied by a third-party
complaint by Colonial Surety Company against third-party
defendants Tri-State and Eric D. Taylor, Tri-State's
president. See Answer and Third-Party Complaint, ECF # 16.
Then, on September 20, 2018, the third-party defendants filed
an answer to the third-party complaint, along with the
instant crossclaim by Tri-State against the plaintiff and the
fourth-party complaint by Tri-State against Burgess &
Niple, Inc. See Answer, Crossclaim and Fourth-Party
Complaint, ECF # 22.
brings its claim for breach of contract, seeking judgment
against the Sanitary Board in the amount of $5, 000, 000.00,
“or such other amount as will fully and fairly
compensate it for the Cross-Claim Defendant's breach of
its contract with Cross-Claimant, together with all other
relief as may be necessary to do justice in this
matter.” Id., WHEREFORE clause.
October 11, 2018, the Sanitary Board filed its motion to
dismiss Tri-State's claim against it under Rule 12(b)(6).
ECF # 28. Tri-State filed a response on October 25, 2018, ECF
# 32, to which the Sanitary Board replied on November 1,
2018, ECF # 36.
Motion to Dismiss Standard
Rule of Civil Procedure 8(a)(2) requires that a pleading
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Rule
12(b)(6) correspondingly provides that a pleading may be
dismissed when there is a “failure to state a claim
upon which relief can be granted.”
survive a motion to dismiss, a pleading must recite
“enough facts to state a claim to relief that is
plausible on its face.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007); see also
Monroe v. City of Charlottesville, 579 F.3d 380, 386
(4th Cir. 2009) (quoting Giarratano v. Johnson, 521
F.3d 298, 302 (4th Cir. 2008)). In other words, the
“[f]actual allegations must be enough to raise a right
to relief above the speculative level.”
Twombly, 550 U.S. at 555 (citation omitted).
resolving a motion pursuant to Rule 12(b)(6)[, ] a district
court cannot consider matters outside the pleadings without
converting the motion into one for summary judgment.”
Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th
Cir. 2013) (citing Fed.R.Civ.P. 12(d)). “A court may,
however, consider a ‘written instrument' attached
as an exhibit to a pleading, ‘as well as [documents]
attached to the motion to dismiss, so long as they are
integral to the complaint and authentic.'”
Id. (alteration in original) (internal citation
omitted) (quoting Fed.R.Civ.P. 10(c) and Phillips v. Pitt
Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir.
district court's evaluation of a motion to dismiss is
underlain by two principles. First, the court “must
accept as true all of the factual allegations contained in
the [pleading].” Erickson v. Pardus, 551 U.S.
89, 94 (2007) (citing Twombly, 550 U.S. at 555-56).
Such factual allegations should be distinguished from
“mere conclusory statements, ” which are not to
be regarded as true. Iqbal, 556 U.S. at 678
(“[T]he tenet that a court must accept as true all of
the allegations contained in a complaint is inapplicable to
legal conclusions.”). Second, the court must
“draw all reasonable factual inferences . . . in the
[nonmovant's] favor.” Edwards v. City of
Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
state a breach of contract claim, a plaintiff must allege: 1)
the existence of a valid contract; 2) that plaintiff has
performed under that contract; 3) that defendant breached or
violated its duties under that contract, and 4) that
plaintiff was injured as a result. Executive Risk Indem.,
Inc. v. Charleston Area Medical Center, Inc., 681