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CLARK RESOURCES, INC v. VERIZON BUSINESS NETWORK SERVICES

November 30, 2010

CLARK RESOURCES, INC., PLAINTIFF
v.
VERIZON BUSINESS NETWORK SERVICES, INC., DEFENDANT



The opinion of the court was delivered by: (Chief Judge Kane)

MEMORANDUM

Before the Court is Defendant's motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff's multiple claims arise from an alleged breach of contract related to a Pennsylvania Department of General Services Request for Proposal in which Defendant served as a general contractor and Plaintiff served as a subcontractor. This Court has jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). For the reasons explained herein, the Court will grant Defendant's motion to dismiss in part, deny the motion to dismiss in part, and order Plaintiff to file an amended complaint.

I. BACKGROUND

On November 12, 2008, the Pennsylvania Department of General Services issued a Request for Proposal related to a telecommunications project. (Doc. No. 1-2 ¶ 3.) Defendant Verizon Business Network Services contacted Plaintiff Clark Resources to assist in Defendant's bid for the project. (Id. ¶ 8.) In response to Defendant's request, Plaintiff produced a subcontract proposal indicating that it would supply Defendant with seven "helpdesk agents" for the project over the course of seven years at a total cost of $2,806,505. (Id. ¶¶ 13-14.) Defendant ultimately used Plaintiff's proposal when submitting its own proposal to the Department. (Id. ¶ 18.)

Plaintiff contends that prior to the ultimate award of the contract, Defendant provided Plaintiff with oral and written assurances that Defendant would use Plaintiff as a subcontractor on the project, contingent on the award from the Department. (Id. ¶ 19.) Plaintiff notes that Defendant referred to Plaintiff as a member of "the Verizon team" during Defendant's presentation to the Department. (Id. ¶ 25.) And Defendant "explicitly manifested its intent to negotiate with [Plaintiff] in good faith upon the award of the project to [Defendant]." (Id. ¶ 22.) Plaintiff further contends, that in exchange for Defendant's promise to use Plaintiff as a subcontractor on the project, Plaintiff engaged in lobbying in support of Defendant's proposal. (Id. ¶¶ 20, 24.)

However, Plaintiff's efforts proved to be for naught. On September 28, 2009, Defendant informed Plaintiff that it would only require two of Plaintiff's helpdesk agents to work on the project, rather than the seven Plaintiff had anticipated. (Id. ¶¶ 27-28.) Plaintiff rejected this reduction in the scope of the project, and Defendant declined to negotiate the issue. (Id. ¶¶ 29-30.) When Defendant's proposal was subsequently accepted by the Department, Defendant replaced Plaintiff with a different subcontractor. (Id. ¶ 32.)

Plaintiff filed a complaint in the Court of Common Pleas of Dauphin County on April 26, 2010, asserting five causes of action based on Pennsylvania law.*fn1 Defendant removed the case pursuant to 28 U.S.C. §§ 1332(a)(1), 1441, and 1446. The motion for removal was granted. On July 1, 2010, Defendant moved to dismiss each of Plaintiff's claims pursuant to Rule 12(b)(6).

II. STANDARD OF REVIEW

A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the complaint, Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). In reviewing a Rule 12(b)(6) motion, a court should "consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim." Lum v. Bank of Am., 361 F.3d 217, 221 n.3 (3d Cir.2004). The motion will only be is properly granted when, taking all factual allegations and inferences drawn therefrom as true, the moving party is entitled to judgment as a matter of law. Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). The burden is on the moving party to show that no claim has been stated. Johnsrud v. Carter, 620 F.2d 29, 33 (3d Cir. 1980). Thus, the moving party must show that Plaintiff has failed to "set forth sufficient information to outline the elements of his claim or to permit inferences to be drawn that those elements exist." Kost, 1 F.3d at 183 (citations omitted). A court, however, "need not credit a complaint's 'bald assertions' or 'legal conclusions' when deciding a motion to dismiss." Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906, 908 (3d Cir. 1997). Indeed, the Supreme Court has recently held that while the 12(b)(6) standard does not require "detailed factual allegations," there must be a "'showing,' rather than a blanket assertion of entitlement to relief. . . . '[F]actual allegations must be enough to raise a right to relief above the speculative level.'" Phillips v. County of Allegheny, 515 F.3d 224, 231-32 (3d Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Put otherwise, a civil complaint must "set out 'sufficient factual matter' to show that the claim is facially plausible." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1955 (2009)).

III. DISCUSSION

In its complaint, Plaintiff raises five claims for relief. Count I asserts a claim for breach of contract for Defendant's failure to award Plaintiff the subcontract. Count II asserts a claim for specific performance of the contract. Count III asserts a claim for promissory estoppel related to Defendant's failure to award Plaintiff the subcontract. Count IV asserts a claim for breach of contract for Defendant's failure to negotiate changes to the subcontract proposal in good faith. Finally, Count V asserts a claim for unjust enrichment because Plaintiff was not compensated for the lobbying efforts it undertook on behalf of Defendant's proposal. The Court will consider Defendant's motion to dismiss each claim in turn.

A. Breach of Contract

In Count I of its complaint, Plaintiff alleges that "the identification of [Plaintiff] as [a minority business enterprise] in [Defendant]'s submission to [the Department of General Services] constituted a binding commitment by [Defendant] to use [Plaintiff] as a subcontractor if it was awarded the contract." (Doc. No. 1-2 ¶ 37.)In its complaint Plaintiff relies on the Department of General Services' Request for Proposal to support this claim for relief. In its memorandum in opposition to Defendant's motion to dismiss, however, Plaintiff abandons this theory.

A solicitation of bids by a general contractor coupled with the submission of a bid by a subcontractor does not give rise to a contract binding on the general contractor. Nat'l Constr. Servs. v. Phila. Reg'l Port Auth., 789 A.2d 306, 309 (Pa. Commw. Ct. 2001). Even where a subcontractor's bid is subsequently used by the general contractor in calculating its bid, a contract will not be found. See, e.g., Project Dev. Grp v. O.H. Materials Corp., 766 F. Supp. 1348, 1352 (W.D. Pa. 1991), aff'd 993 F.2d 225 (3d Cir. 1993); see also A. Corbin, Corbin on Contracts § 2.31 (Rev. ed. 1993) ("Use of the bid is not an acceptance.").

Likewise, the Commonwealth Court of Pennsylvania has previously found that a Request for Proposal does not give rise to a contract. Commonwealth v. On-Point Tech. Sys., 821 A.2d 641, 649 (Pa. Commw. Ct. 2003). As in On-Point, the language in the Request for Proposal form at issue here cannot reasonably be read to give rise to a contract. The very first paragraph of the form makes clear that the form only serves to provide "information to enable [those interested] to prepare and submit proposals." (Doc. No. 1-2, Ex. A, at 20.) Further, the Request for Proposal states that submissions do not constitute a "legal and valid contract, in law or in equity." (Id., Ex. A, at 28.) And the provisions relied upon in Plaintiff's complaint state that the provisions only "become a contractual obligation once the contract is fully executed." (Id., Ex. A, at 40.) This limiting language in the Request for Proposal "clearly demonstrated that subsequent manifestations of assent were prime requisites to the formation of a contract." On-Point, 821 A.2d at 649.

Plaintiff does not attempt to dispute that the Request for Proposal process could not give rise to a contract in its response to Defendant's motion to dismiss. Rather, Plaintiff recharacterizes its contract claim as one based on the existence of an oral contract, presumably independent of the Request for Proposal. (Doc. No. 9-2 at 11.) In support of this new theory, Plaintiff cites those paragraphs of its complaint in which it states that Plaintiff "provide[d] Verizon with information necessary to submit a proposal"; "agreed to submit a formal proposal"; and "submitted a proposal."(Id. ¶¶ 11-14.) Plaintiff further contends in its complaint that "Verizon acknowledged that it would use Clark to supply seven (7) helpdesk agents for the Project if DGS awarded the contract to Verizon." (Id. ¶ 19.) In support of this statement, Plaintiff cites an email, sent by a representative of Defendant to Plaintiff on February 25, 2009, which states in part:

We are wrapping up the final elements of our proposal response to the Commonwealth. I wanted to send you a note to introduce you to Mark Kirsch from Adept Consulting Services, Inc. Adept will be the lead on the Help Desk services for the Verizon response to the Commonwealth. Mark is anxious to meet with you since Clark Resources will be providing 7 Help Desk agents in support of the project. (Id., Ex. G, at 164.)

This theory was not raised with any clarity in Plaintiff's initial complaint. As such, the facts Plaintiff is able to muster in support of the theory are vague at best. And it is questionable whether any facts exist such that Plaintiff could support this theory to the level of plausibility required by the federal pleading standards. See Phillips, 515 F.3d at 231-32 (quoting Twombly, 550 U.S. at 555). However, in light of our liberal pleading standards and the existence of some facts in the complaint that may, upon ...


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