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Travelers Casualty and Surety Company of America v. A.G. Cullen Construction

September 29, 2009


The opinion of the court was delivered by: Nora Barry Fischer United States District Judge


I. Introduction

This matter is before the Court on Plaintiff Travelers Casualty and Surety Company of America's ("Travelers") Motion to Dismiss (Docket No. 98) portions of Defendant County of Butler's ("Butler") counterclaim for breach of contract at Count I and its claim under the Pennsylvania Procurement Code, 62 Pa. C.S. § 101, et seq. , at Count II, pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the motion [98] is GRANTED.

II. Procedural Background*fn1

On May 1, 2008, Travelers filed its Amended Complaint (Docket No. 50) against A.G. Cullen Construction, Inc., Arlene and Paul Cullen (collectively "the Cullens") and Butler, to which the Cullens filed their Answer and Crossclaims against Butler on June 5, 2008. (Docket No. 57). The Cullens claim that Butler breached the construction contract and that Butler violated the Procurement Code, 62 Pa. C.S. 3101, et seq. (Docket No. 57 at 27, 46, 50). For their breach of contract claim, the Cullens seek recovery from Butler in excess of $3.8 million.

(Docket No. 57 at 27- 45). For their claim under the Procurement Code, the Cullens seek recovery of wrongfully withheld retainage and contract proceeds they claim they are due. ( Id. at 46-49).

On November 24, 2008, Butler filed Counter-cross claims against the Cullens alleging, inter alia , that the Cullens breached the construction contract in a number of ways, including performing faulty work and failing to complete the Project within the contractual time limit, i.e. 615 calendar days. (Docket No. 88 at ¶¶ 256-258, 260-272, 280-282). Butler denied Travelers' allegations and has also set forth two causes of action against Travelers: breach of contract (Count I) and violation of the Commonwealth Procurement Code (Count II). (Docket No. 86). In its denials, Butler admits that Travelers retained one or more consultants to investigate the project, but denies that said investigation was properly conducted, and further denies that Travelers took appropriate actions as a result of said investigation. (Docket No. 86 at 6-7, ¶ 31). Butler also avers that Travelers breached its duty to Butler in that its investigation determined that the Cullens were in default, but despite same, Travelers tendered a replacement contractor and reserved its rights in an attempt to reduce its exposure on the project, for which it is fully liable for the Cullens' default. ( Id. at 7, ¶ 34). Butler further alleges in its denials that Travelers did not provide it with any specific notice that Travelers intended to seek double recovery from Butler for breaches caused by the Cullens, and that Travelers failed to disclose this intention during the negotiations relating to the replacement of the Cullens in an effort to induce Butler to accept the replacement contractor and the agreement relating thereto. ( Id. at 11-12, ¶ 72).

At Count I of its counterclaims, Butler claims that Travelers, as the surety, failed to timely perform under the performance bond. ( Id. ). Butler avers that it notified Travelers in accordance with terms of the bond of the Cullens' default, but that Travelers refused to find the Cullens in default. ( Id. at 18). As a result of the Cullens' default and Travelers' failure to timely act under the bond, Butler contends it is entitled to relief for the project delays. (Docket No. 86 at 17-18). At Counts I and II, Butler requests that Travelers be held solely liable to or jointly liable with Butler on the Cullens' claims against Butler. ( Id. at 20). Further, Butler requests that if a judgment is recovered by the Cullens, then Travelers should be held liable by way of indemnification*fn2 and/or contribution.*fn3 ( Id. at 19-20). Butler also claims that Travelers violated the Pennsylvania Procurement Code, 62 Pa. C.S. 903(a)(1),*fn4 by ignoring the language of the performance bond and not paying the full amounts owed to Butler. (Docket No. 86 at 22-23).

Travelers filed the instant Motion to Dismiss portions of Butler's counterclaims and supporting Brief on January 8, 2009. (Docket Nos. 98 and 99). Butler filed its Brief in Opposition on January 28, 2009, to which Travelers filed a Reply on February 10, 2009. (Docket Nos. 101 and 103). Given the status of the parties' settlement discussions at that time, the Court held in abeyance its ruling on the instant motion on March 9, 2009. (Docket No. 105). However, the parties' further attempts to settle the case were unsuccessful. Accordingly, on April 16, 2009, the Court ordered the parties to file supplemental briefing identifying any changes in the law; but, neither party filed a supplemental brief at that time. (Docket No. 111).

The Court then heard oral argument on July 17, 2009.*fn5 (Docket No. 120). Pursuant to the Court's directives at the argument, Travelers filed a Supplemental Brief on July 24, 2009. (Docket No. 135). On July 27, 2009, Travelers also filed a Notice of State Court Decisions from the Butler County Court of Common Pleas wherein the Honorable Eugene E. Fike, II sustained Travelers' preliminary objections and dismissed allegedly similar claims brought by Butler against Travelers in the parallel state litigation.*fn6 (Docket No. 137). Butler filed a Response to the same on August 14, 2009. (Docket No. 139). In turn, Travelers filed a Reply to Butler's Response on August 21, 2009. (Docket Nos. 140, 145, and 146). As the parties' briefing has finally concluded, Travelers' motion is now ripe for disposition.

III. Standard of Review

A valid complaint requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." F ED. R. C IV. P. 8(a)(2). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal , 129 S.Ct. 1937, 1949 (2009)(citing Bell Atlantic Corp. v. Twombly , 550 U.S. 544 (2008)); see also Fowler v. UPMC Shadyside , Civ. A. No. 07-4285, -F.3d --, 2009 U.S. App. LEXIS 18626, at *14-15 (3d Cir. Aug. 18, 2009).

The Supreme Court in Iqbal clarified that the decision in Twombly "expounded the pleading standard for 'all civil actions.'" Iqbal , 129 S.Ct. at 1953; Fowler , 2009 U.S. App. LEXIS 18626, at *15. The court further explained that although a court must accept as true all of the factual allegations contained in a complaint, that requirement does not apply to legal conclusions; therefore, the pleadings must include factual allegations to support the legal claims asserted. Iqbal , 129 S.Ct. at 1949, 1953. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 1949 (citing Twombly , 550 U.S. at 555); see also Fowler , 2009 U.S. App. LEXIS 18626, at *15-16; and Phillips v. County of Allegheny , 515 F.3d 224, 232 (3d Cir. 2008). The determination of whether a complaint contains a plausible claim for relief under the facts asserted "is a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal , 129 S.Ct. at 1950 (citing Twombly , 550 U.S. at 556); Fowler , 2009 U.S. App. LEXIS 18626, at *18. In light of Iqbal , the United States Court of Appeals for the Third Circuit has instructed that district courts should first separate the factual and legal elements of a claim and then, accepting the "well-pleaded facts as true," "determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'" Fowler , 2009 U.S. App. LEXIS 18626, at *5. Ultimately, to survive a motion to dismiss, a plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 129 S.Ct. at 1949 (citing Twombly , 550 U.S. at 556)

In evaluating a Rule 12(b)(6) motion, a court "may look beyond the complaint to matters of public record, including court files and records ... and documents referenced in the complaint or essential to a plaintiff's claim which are attached to either the [c]omplaint or the defendant's motion." Spence v. Brownsville Area Sch. Dist. , Civ. A. No. 08-0626, 2008 U.S. Dist. LEXIS 55026, at *7 (W.D. Pa. July 15, 2008)(citing Pension Benefit Guar. Corp. v. White Consol. Indus. , 998 F.2d 1192, 1196 (3d Cir. 1993)). A court may consider "an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document." Pension Benefit Guar. Corp. , 998 F.2d at 1196 ...

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