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SUN CO. v. BADGER DESIGN & CONSTRUCTORS

February 1, 1996

SUN COMPANY, INC. (R & M)
v.
BADGER DESIGN & CONSTRUCTORS, INC. and GRAMATGES & ASSOCIATES



The opinion of the court was delivered by: PADOVA

 Padova, J.

 February 1, 1996

 Plaintiff, Sun Company, Inc. (R & M) ("Sun"), a Pennsylvania corporation, filed a complaint against Defendants, Badger Design & Constructors ("Badger"), a Delaware corporation, and Gramatges & Associates ("Gramatges"), a Puerto Rican partnership, alleging various breach of contract, fraud, and negligence claims. Defendants move to dismiss the complaint, and, in the alternative, for a more definite statement. For the following reasons, I will grant in part and deny in part Defendants' Motions. *fn1"

 I. FACTS

 Plaintiff operates a Lube Feedstock Optimization Project at its Yabucoa Refinery in Yabucoa, Puerto Rico (the "Plant"). On October 1, 1992, Badger entered into a contract (the "Contract") with Sun to provide engineering, procurement, and construction management services for the Plant. The Contract called for demolishing some existing structures and replacing them with new and revised structures, equipment, and piping in an effort to improve the Plant's efficiency. On October 1, 1992, Badger assigned all of its right, title, and interest in the Contract to Gramatges. Sun was party to the Assignment and expressly consented to it. See Am. Compl. Ex. B. Gramatges then subcontracted certain construction management services to a related entity, Raytheon Catalytic, Inc. ("RCI"), who is not a party to this lawsuit. In June, 1993, Sun and Badger entered into a Guaranty Agreement ("Guaranty") whereby Sun agreed to accept the Guaranty from Badger in lieu of a performance bond or other security from Gramatges. Badger guaranteed that Gramatges would complete the project. See Am. Compl. Ex. C.

 Work began in September, 1992 and lasted until October, 1993. While the Plant has been in operation since October 5, 1993, Sun, refuses to pay Gramatges, Badger, and RCI. They have submitted a final demand to Sun requesting payment of the $ 1,600,000.00 balance due under the Contract. On August 3, 1995, Sun filed its Complaint in this Court against both Badger and Gramatges asserting eighteen counts of breach of contract, negligence, and fraud. The Complaint avers that "subsequent to the commencement of the work, Plaintiff discovered numerous deficiencies in the engineering, management and construction undertaken by Badger and Gramatges." *fn2" Am. Compl. P 11. On October 27, 1995, Badger filed a Motion to Dismiss and a Motion for a More Definite Statement, and, on November 16, 1995, Plaintiff filed an Amended Complaint. *fn3"

 
failing / refusing to: (a) exercise due care in the performance of [the Contract], (b) provide competent engineering services, (c) provide competent construction and project management services, (d) minimize, if not eliminate design errors, (e) send two highly qualified piping engineers to the field to prepare isometric drawings of the required field piping changes, (f) discover and / or correct alleged errors in Sun's existing drawings for the [Plant], (g) conduct a proper field survey, (h) properly supervise subcontractors on the job, (i) establish a credible schedule for the piping work, (j) inspect certain component equipment before its arrival in Puerto Rico, (k) hire competent management personnel for the project, (l) appoint an engineering manager; (m) properly man the project, (n) utilize a planner to establish a proper schedule for the project (o) advise Sun of the problems at the project in a timely fashion, (p) employ adequate quality control personnel at the project, and (q) maintain adequate communications between Badger's San Juan and Tampa offices; (r) deliberately, intentionally, and / or negligently misleading Sun regarding the progress of the work and the problems connected with the project; (s) deliberately, intentionally and / or negligently instructing employees and / or subcontractors to remain silent regarding the problems associated with work; failing / refusing to: (t) identify and implement a critical path for the construction project, (u) provide its subcontractors with the scope of work in a timely fashion, (v) furnish drawings to its subcontractors in a timely fashion, (w) properly and adequately supervise the work of its subcontractors at the site, (x) timely recognize the problems as they occurred; (y) breaching the applicable standards and codes; and (z) committing other acts and / or omissions to be identified through discovery.

 Am. Compl. P 14. The remaining Counts in the Amended Complaint recycle and reiterate these allegations with slight modification. Each Count rests, in some form or another, on these averments.

 II. STANDARD OF REVIEW

 A claim may be dismissed under Fed. R. Civ. P. 12 (b)(6) only if the plaintiff can prove no set of facts in support of the claim that would entitle her to relief. ALA v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994). The reviewing court must consider only those facts alleged in the complaint and accept all of the allegations as true. Id. The district court can grant a Rule 12 (b)(1) motion when the claim clearly appears to be immaterial and made solely for the basis of obtaining jurisdiction or is wholly unsubstantial and frivolous. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1408-1409 (3d Cir. 1991) (citation omitted).

 "If a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before interposing a responsive pleading." Fed. R. Civ. P. 12(e). "The class of pleadings that are appropriate subjects for a motion under Rule 12(e) is quite small - the pleading must be sufficiently intelligible for the court to be able to make out one or more potentially viable legal theories on which the claimant might proceed." 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure ยง 1376 (1990). The motion is appropriate when the pleading is "so vague or ambiguous that the opposing party cannot respond, even with a simple denial, in good faith, without prejudice to [itself]." Id. (citing Hicks v. Arthur, 843 F. Supp. 949, 954 (E.D. Pa. 1994)).

 A. FRAUD

 Plaintiff's Amended Complaint presents two fraud claims against Defendants: fraud in the execution of the contract and fraud in the inducement of the contract. Specifically, Plaintiff contends Defendants intentionally misrepresented that they would perform those activities described in Count I, Plaintiff was unaware of the falsity of Defendants' representations, and Plaintiff relied on these misrepresentations to its detriment. Defendants move to dismiss the fraud counts, arguing they fail to satisfy the stringent pleading requirements articulated in Federal Rule of Civil Procedure 9(b): "in averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed. R. Civ. P. 9(b). I agree.

 Under Rule 9(b), a plaintiff alleging fraud must plead "(1) a specific false representation of material fact; (2) knowledge by the person who made it of its falsity; (3) ignorance of its falsity by the person to whom it was made; (4) the intention that it should be acted upon; and (5) that the plaintiff acted upon it to his damage." Shapiro v. UJB Fin. Corp., 964 F.2d 272, 284 (3d Cir.), cert. denied, 506 U.S. 934, 113 S. Ct. 365, 121 L. Ed. 2d 278 (1992) (citation omitted). "There is a special kind of proximate cause requirement for fraud and misrepresentation, and plaintiff must demonstrate that a specific statement caused a specific harm." Hurt v. Philadelphia Hous. Auth., 806 F. Supp. 515, 530 n.25 (E.D. Pa. 1992) (emphasis in original). "Plaintiff may not simply point to a bad result and allege fraud. Rather, plaintiff must . . . inject precision and some measure of substantiation into [the] allegations ...


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