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Merrill Iron & Steel, Inc. v. Blaine Construction Corporation

United States District Court, W.D. Pennsylvania

July 2, 2014

MERRILL IRON & STEEL, INC., Plaintiff,
v.
BLAINE CONSTRUCTION CORPORATION, ZURICH AMERICAN INSURANCE COMPANY and its Subsidiary FIDELITY & DEPOSIT COMPANY OF MARYLAND, TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, ALLEGHENY LUDLUM CORPORATION, on its own behalf and as merged into ALC MERGER, LLC, n/k/a ALLEGHENY LUDLUM, LLC a/k/a ATI ALLEGHENY LUDLUM, HOH ENGINEERS, INC., and CENTURY STEEL ERECTORS COMPANY, Defendants.
v.
BLAINE CONSTRUCTION CORPORATION, Counterclaimant and Cross Claimant,
v.
MERRILL IRON & STEEL, INC., ALLEGHENY LUDLUM STEEL CORPORATION, on its own behalf and as merged into ALC MERGER, LLC, n/k/a ALLEGHENY LUDLUM, LLC a/k/a ATI ALLEGHENY LUDLUM, HOH ENGINEERS, INC., and CENTURY STEEL ERECTORS COMPANY, Defendants by Counterclaim and Crossclaim, and LIBERTY MUTUAL INSURANCE COMPANY, and GREAT AMERICAN INSURANCE COMPANY, Additional Defendants by Counterclaim and Crossclaim.

MEMORANDUM OPINION

ROBERT C. MITCHELL, Magistrate Judge.

I. INTRODUCTION

Presently before the Court are three separate motions to dismiss for failure to state a claim and for lack of jurisdiction filed by Defendant Century Steel Erectors Company, Defendant HOH Engineers, Inc., and Defendant Allegheny Ludlum Steel Corporation. See Defs.' Mot. to Dismiss [ECF Nos. 33, 38, and 40]. For the following reasons, Defendants Century Steel Erectors Company and Allegheny Ludlum Steel Corporation's motions are granted and Defendant HOH Engineers, Inc.'s motion is granted in part and denied in part.[1]

II. BACKGROUND

The present dispute involves payments allegedly owed to Plaintiff, Merrill Iron & Steel, Inc. ("Merrill") for products and services, namely structural steel and other miscellaneous metals, it provided to Defendant Blaine Construction Corporation in connection with the construction of Defendant, Allegheny Ludlum Steel Corporation's ("ATI") Hot Rolling Processing Facility in Brackenridge, Pennsylvania. See Compl. [ECF No. 1] at ¶¶ 1-3.

Defendant Allegheny Ludlum Steel Corporation ("ATI") is a Pennsylvania corporation involved in the business of marketing and producing specialty metal materials worldwide. Id. at ¶ 11. Plaintiff Merrill is a Wisconsin corporation whose primary business activity is to fabricate and supply structural steel and miscellaneous metal products. Id. at ¶ 5. Defendant Blaine Construction Corporation ("Blaine") is a Tennessee corporation and provides general contracting, construction management and pre-engineered metal building services to commercial and industrial clients. Id. at ¶ 6. Defendant HOH Engineers, Inc., ("HOH") is an Illinois corporation and engineering-design firm serving the metal production industry. Id. at ¶ 12. Defendant Century Steel Erectors Company ("Century Steel") is a Pennsylvania limited partnership and provides steel erection services. Id. at ¶ 13.

On or about June 6, 2011, ATI contracted with Blaine to design and construct buildings for a Hot Strip Mill and a water treatment facility (the "Project") for ATI. Id. at ¶ 2. Blaine was the general contractor and/or design builder for the Project and subcontracted with the defendants to fulfill its obligations under its contract with ATI. Id. at ¶ 6. Blaine subcontracted with HOH to serve as the engineer for the Project and provide the design for the structural steel. Id. at ¶ 12. Additionally, Blaine subcontracted with Century Steel to erect the structural steel for the Project. Id. at ¶ 13.

On or about November 11, 2011, Plaintiff Merrill and Blaine entered into a Purchase Order for Merrill to furnish fabricated structural steel and miscellaneous metals necessary for the Project. Id. at ¶ 3. The Purchase Order incorporated by reference the contract between ATI and Blaine. Id. at ¶ 22. Merrill contends that it has delivered all of the structural steel and miscellaneous metals required under the Purchase Order, but has not received payment from Blaine for its delivered products. Id. at ¶¶ 23, 28. Additionally, because the Purchase Order was a unit price contract, the actual price varied depending upon the quantity of steel delivered by Merrill, and the actual amount of steel delivered exceeded the original estimate. Id. at ¶¶ 25-27.

After the Purchase Order was executed, the construction plans were revised requiring Blaine to order more fabricated structural steel from Merrill at a cost of approximately $1, 302, 164.71 and provided additional structural steel and miscellaneous metals at an increased cost of approximately $367, 790.51. Id. at ¶¶ 29-34, 37. Merrill claims that the total owed to it by Blaine, including increased bond premiums, is $6, 403, 889.26 and that Blaine has not "made any progress payments to Merrill since June 27, 2013." Id. at ¶ 44.

Merrill claims that in 2012, Blaine raised concerns relating to paint discoloration on the coated steel, gaps at some of the column seats and bending of some connection plates along several of the back-up tresses (collectively "alleged deficiencies") but continued to make payments in 2012 and 2013 as Blaine received and accepted delivery of the structural steel. Id. at ¶¶ 46-47. After Blaine received the structural steel in June 2013, it refused to make any further payments to Merrill and remitted its last payment to Merrill on June 27, 2013. Id. at ¶¶ 48-49.

As for the alleged paint discoloration of the structural steel, Blaine claimed that this was a sufficient basis for withholding the amounts due to Merrill. Id. at ¶ 52. Specifically, the project specification provided for a coating of Sherwin Williams 646 Fast Cure Epoxy, but Blaine, at the request of Merrill, approved and requested that ATI approve PPG Amercoat 240 epoxy as an alternative to the specified Sherwin Williams product, and ATI approved of said coating on November 9, 2011. Id. at ¶¶ 54-58. Plaintiff alleges that the paint discoloration will not affect the performance of the structural steel and Blaine has not provided Merrill with the cost of repair for the paint discoloration. Id. at ¶¶ 59-60. As for the gaps in the column seats on the structural steel and bending connection plates, Merrill alleges that it will not affect the performance of the steel, that Blaine has not identified what caused the gaps and bending, nor a cost of repair for such alleged deficiencies and Merrill contends that the gaps and bending are a result of HOH's design error, Blaine's mismanagement and/or Century Steel's faulty erection. Id. at ¶¶ 64-77.

Merrill filed suit in this Court on February 14, 2014.[2] Specific to the present motions, Merrill brings a declaratory judgment action against all defendants, a negligent misrepresentation claim against HOH Engineers, a right to indemnification against HOH Engineers and Century Steel, and an unjust enrichment claim against ATI.

Century Steel filed a motion to dismiss the claims against it on April 4, 2014 [ECF No. 33], HOH filed a motion to dismiss the claims against it on April 17, 2014 [ECF No. 38] and ATI filed a motion to dismiss the claims against it on April 18, 2014. [ECF No. 40]. Merrill has responded to the various motions, and defendants have filed replies.[3]

Century Steel, HOH and ATI all move to dismiss the declaratory judgment against them and argue that any such judgment is not ripe for adjudication because no sufficiently concrete case or controversy exists between Merrill and the moving Defendants and should be dismissed for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). Additionally, Century Steel and HOH Engineers seek to dismiss the indemnification claim against them as not ripe because Merrill has not suffered any reimbursable loss and lacks privity of contract with these defendants. Additionally, HOH Engineers moves to have the negligent misrepresentation claim dismissed as Merrill does not specify any factual averments made by HOH Engineers or allege any damages that were proximately caused from any alleged misrepresentation. Lastly, ATI moves to have the unjust enrichment claim dismissed against it as Merrill has not established that ATI was enriched nor has it been established that the enrichment was unjust.

The Court will address each argument separately.

III. STANDARD OF REVIEW

A motion to dismiss pursuant to 12(b)(1) "may be treated as either a facial or factual challenge to the court's subject matter jurisdiction." Gould Electronics Inc. v. U.S., 220 F.3d 169, 176 (3d Cir. 2000). If the defendant attacks the legal sufficiency of the claim, as here, it is considered a facial attack, and the court "must only consider the allegations of the complaint and documents referenced therein and attached thereto in the light most favorable to the plaintiff." Id. Alternatively, an attack based on the sufficiency of a jurisdictional fact is considered a factual challenge, and "the Court is free to weigh the evidence and satisfy itself whether it has power to hear the case." Carpet Grp. Intern. v. Oriental Rug Importers, 227 F.3d 62, 69 (3d Cir. 2000).

a. Federal Rule of Civil Procedure 12(b)(6)

To determine whether dismissal is proper under Federal Rule of Civil Procedure 12(b)(6) a complaint must include factual allegations that "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 697 (2009). A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint and in making this determination, a court must read the complaint in the light most favorable to the plaintiff and all factual allegations must be considered true. Estelle v. Gamble, 429 U.S. 97, 99 (1976). The court must also draw all reasonable inferences from all "well-pleaded" allegations contained in the complaint. Retail Clerks Intern. Ass'n, Local 1625, AFL-CIO v. Schermerhorn, 373 U.S. 746, 753 n. 6 (1963). In determining whether a plaintiff has met this standard, the reviewing court must ignore legal conclusions, "[t]hreadbare recitals of the elements of a cause of action supported by mere conclusory statements[, ]"... "labels and conclusions[, ]" and "naked assertions [that are] devoid of further factual ...


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