The opinion of the court was delivered by: JAMES MUNLEY, District Judge
Presently before the Court for disposition are three motions to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6): (1)
Defendant XL Surety's ("XL") motion to dismiss Count II of
Plaintiff RJE Telecom's ("RJE") amended complaint; (2) United
States Fidelity and Guaranty ("USF&G") and St. Paul Fire & Marine
Insurance Co.'s ("St. Paul") joint motion to dismiss Counts II
and IV of Pinnacle Electronic System's ("Pinnacle") Third Party Complaint; and (3) Bell Justice Facility's ("Bell") motion to
dismiss Counts II and III of Pinnacle's Third Party Complaint.
These matters have been fully briefed and are ripe for
disposition. For the following reasons, we will: (1) grant XL's
motion in part; 2) grant USF&G and St. Paul's motion to dismiss
as to Count II but deny it as to Count IV; and 3) deny Bell's
motion in its entirety.
The instant suit arises from wire installation work in the
construction of a federal penitentiary in Canaan, Pennsylvania.
Bell was the prime contractor for the construction of the
penitentiary ("the project"). Bell subcontracted security
installations work to Howard Organization, Inc. ("Howard"). Bell
subcontracted fiber optic installations to Pinnacle. Howard
subcontracted copper wire installation work to Pinnacle.
On March 7, 2002, Pinnacle subcontracted the communications
installations work to RJE, pursuant to its subcontract with Bell.
A significant portion of RJE's duties pursuant to this
subcontract was to install fiber-optic cable in an underground
duct system constructed by others. On June 19, 2002, RJE and
Pinnacle amended the March 7 subcontract by means of Change Order
# RJE-001, which expanded RJE's duties to include the
installation of copper cable in the duct system. Pinnacle
subcontracted the installation of the copper cable pursuant to
its subcontract with Howard, who subcontracted to Pinnacle
pursuant to its subcontract with Bell. Thus, regarding the fiber-optic cable installation, RJE was
a subcontractor to Pinnacle and a second-tier subcontractor to
Bell. Regarding the copper cable installation, RJE was a
subcontractor to Pinnacle, a second-tier subcontractor to Howard,
and third-tier subcontractor to Bell.
As surety on the project, Bell obtained payment bonds from
Defendants USF&G and St. Paul. Howard purchased a $9.35 million
performance bond from CGU Insurance, whose bond business was
thereafter purchased by Defendant XL Surety. Pinnacle procured a
labor and materials bond from Reliance Insurance, whose bond
business was subsequently purchased by Defendant Travelers
Property Casualty ("Travelers").
When RJE began to perform the cable installations in the duct
system, it found that the system deviated from Pinnacle's
specifications and contractual representations. The deviations
caused RJE to incur unanticipated costs in performing its
obligations. RJE informed Pinnacle of the difficulties it
encountered and the potential damages these difficulties may
cause the prison's security system. Additionally, RJE warned
Pinnacle that it would not provide any guaranty or warranty for
its work and that it would seek an equitable adjustment to the
contract. In response, Pinnacle terminated RJE and hired a
On September 14, 2004, RJE filed an amended complaint*fn2
advancing the following six counts: 1) breach of contract against Pinnacle; 2) violation of
the Miller Act, 40 U.S.C. § 3131 et seq., and payment bond
claims against USF&G, St. Paul, Travelers, and XL; 3) unjust
enrichment/quantum meruit against Pinnacle; 4) breach of good
faith and fair dealing against Pinnacle; 5) violation of the
Pennsylvania Contractor and Subcontractor Payment Act, 73 PA.
CONS. STAT. ANN. §§ 501 et seq. and/or the Federal Prompt Pay
Act, 31 U.S.C.A. § 3902 et. seq. against Pinnacle; and 6)
negligent misrepresentation against Pinnacle.
On November 19, 2004, Pinnacle filed an amended third party
complaint*fn3 asserting the following four claims: 1) breach
of contract against Bell and Howard; 2) common law indemnity
against Bell, Howard, USF&G, St. Paul, and XL; 3) negligent
misrepresentation against Bell and Howard; and 4) Miller Act
claims against USF&G, St. Paul, Travelers, and XL.
Presently, XL seeks to dismiss Count II of RJE's complaint,
USF&G and St. Paul seek to dismiss Counts II and IV of Pinnacle's
third party complaint, and Bell seeks to dismiss counts II and
III of Pinnacle's third party complaint.
Since a federal question is before the court under
40 U.S.C. §§ 3131 et seq. and 31 U.S.C. §§ 3902 et seq., this court has
jurisdiction over this dispute pursuant to
28 U.S.C. § 1331.*fn4 This court also has supplemental jurisdiction over
the plaintiff's claims that arise under state law, pursuant to 28 U.S.C. § 1367(a), as these claims are
"part of the same case or controversy" as the plaintiff's federal
When a 12(b)(6) motion is filed, the sufficiency of a
complaint's allegations are tested. The issue is whether the
facts alleged in the complaint, if true, support a claim upon
which relief can be granted. In deciding a 12(b)(6) motion, the
court must accept as true all factual allegations in the
complaint and give the pleader the benefit of all reasonable
inferences that can fairly be drawn therefrom, and view them ...