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United States v. Morris, Inc.

United States District Court, D. South Dakota, Southern Division

September 29, 2015

UNITED STATES OF AMERICA, for the use and benefit of Ash Equipment Co., Inc., and ASH EQUIPMENT CO., INC., a Maryland corporation, d/b/a American Hydro, Plaintiffs,
v.
MORRIS, INC., a South Dakota corporation; UNITED FIRE AND CASUALTY COMPANY, an Iowa corporation; and RED WILK CONSTRUCTION, INC., a South Dakota corporation, Defendants.

MEMORANDUM OPINION AND ORDER ON MOTION TO DISMISS COUNTERCLAIM

LAWRENCE L. PIERSOL UNITED STATES DISTRICT JUDGE.

On August 22, 2014, Plaintiffs filed a three-count complaint against Defendants alleging: (1) breach of contract; (2) quantum meruit, and; (3) failure to pay under the Miller Act. (Doc. 1.) On October 2, 2014, Defendant Red Wilk Construction, Inc. (Red Wilk) filed an answer and a counterclaim against Plaintiff, American Hydro, for breach of contract. (Doc. 14.) Red Wilk includes requests for relief in the form of damages, liquidated damages and equitable relief. A supplemental complaint was filed by Plaintiffs which contains additional facts, but the counts remain the same. (Doc. 32.)

On October 16, 2014, American Hydro moved to dismiss Red Wilk's counterclaim for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 21.) The motion has been fully briefed. For the following reasons, the motion to dismiss the counterclaim will be denied in part and granted in part.

BACKGROUND

Plaintiff American Hydro is a national hydrodemolition contractor. On April 9, 2014, Defendant Red Wilk contracted with American Hydro to provide the labor, equipment and other facilities for concrete removal by hydrodemolition at the Fort Randall dam in Pickstown, South Dakota.

The general contractor for the project at the Fort Randall dam is Defendant Morris, a South Dakota corporation with its principal place of business in Pierre, South Dakota. On September 17, 2013, Morris entered into the Prime Contract for the Fort Randall dam project with the United States Army Corps of Engineers (USACE). Morris obtained a Miller Act payment bond on September 18, 2013, from Defendant United Fire and Casualty Co. in the amount of $7, 472, 670.25 as required by USACE. On October 8, 2013, Morris contracted with Red Wilk to complete certain work, including the concrete removal using hydrodemolition methods as required by USACE in its project plans and specifications. As indicated above, Red Wilk then subcontracted with American Hydro to perform the hydrodemolition work.

American Hydro began the concrete hydrodemolition work in May, 2014, about a month after entering into the contract with Red Wilk. American Hydro removed its equipment and labor forces from the work site as of August 25, 2014. American Hydro alleges it has been paid for some but not all of the work it provided. Red Wilk contends that American Hydro failed to perform some work in accordance with the contract specifications and failed to complete other work required by the contract. Red Wilk asserts that any amounts allegedly owed to American Hydro above and beyond what has been paid are completely offset because Red Wilk had to hire others to correct or complete the hydrodemolition work on the project. Both parties seek damages for the other's breach of the contract in an amount to be proven at trial. Red Wilk also requests liquidated damages and equitable relief.

DISCUSSION

Standard of Review

When reviewing a motion to dismiss under Rule 12(b)(6), a court must accept as true all factual allegations contained in the complaint or counterclaim, and review the pleading to determine whether its allegations show the pleader is entitled to relief. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); Fed.R.Civ.P. 8(a)(2). The purpose of a motion to dismiss for failure to state a claim is to test the legal sufficiency of the pleading. A complaint or counterclaim must be dismissed under Rule 12(b)(6) if it does not plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570 (abrogating the traditional 12(b)(6) "no set of facts" standard set forth in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). While the counterclaim need not provide specific facts in support of the claims contained therein, it must give the defendant fair notice of the claims and the grounds on which the claims rest. See Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam). This obligation requires a counterclaimant to plead "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555.

The Eighth Circuit elaborated on the standard enunciated in Twombly when addressing a motion to dismiss under Rule 12(b)(6):

After Twombly, we have said that a plaintiff must assert facts that affirmatively and plausibly suggest that the pleader has the right he claims rather than facts that are merely consistent with such a right. While a plaintiff need not set forth detailed factual allegations or specific facts that describe the evidence to be presented, the complaint must include sufficient factual allegations to provide the grounds on which the claim rests. A district court, therefore, is not required to divine the litigant's intent and create claims that are not clearly raised, and it need not conjure up unpled allegations to save a complaint.

Gregory v. Dillard's, Inc., 565 F.3d 464, 473 (8th Cir. 2009) (internal citations and quotations omitted).

Rule 12(b)(6) allows the Court to examine documents incorporated into the counterclaim by reference, such as the contract in this case. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) ("[C]ourts must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice."); see also Stahl v.U.S. Dep't of Agric, 327 F.3d 697, ...


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