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77 Construction Co. v. UXB International, Inc.

United States District Court, W.D. Virginia, Roanoke Division

April 16, 2015

77 CONSTRUCTION COMPANY, Plaintiff,
v.
UXB INTERNATIONAL, INC., Defendant.

MEMORANDUM OPINION

GLEN E. CONRAD, Chief District Judge.

This case is presently before the court on the plaintiff's motion to dismiss the defendant's amended counterclaims. For the reasons set forth below, the motion will be granted in part and denied in part.

Background

On June 9, 2004, UXB International, Inc. ("UXB") was awarded a prime contract by the United States Army Corps of Engineers. Pursuant to the prime contract, a delivery order was issued on December 28, 2009, which authorized funds for mine clearance and associated projects at Bagram Air Base in Afghanistan. UXB subsequently entered into a series of eight purchase order subcontracts ("subcontracts") with 77 Construction Company ("77 Construction"), pursuant to which 77 Construction agreed to provide construction and related services in support of UXB's demining operations.

The two largest subcontracts were for services related to the erection of base camps. On April 27, 2010, UXB and 77 Construction entered into Purchase Order 10-0028 ("PO-28") in the amount of $1, 194, 034.00. On May 19, 2013, UXB and 77 Construction entered into Purchase Order 10-0052 ("PO-52") in the amount of $2, 781, 142.00. Because these subcontracts were expected to exceed $700, 000.00, 77 Construction was required to submit certified cost or pricing data for the work to be performed, pursuant to the Truth in Negotiations Act, 10 U.S.C. ยง 2306a.[1] Prior to entering into PO-28 and PO-52, 77 Construction submitted a construction cost estimate analysis for each of the purchase orders, which identified various costs for labor and materials and included a 15% overhead charge.

In addition to PO-28 and PO-52, UXB and 77 Construction entered into six smaller subcontracts. On April 22, 2010, the parties entered into Purchase Order Number 10-0026 ("PO-26") in the amount of $18, 750.00 for the delivery of 30 T-walls. On May 1, 2010, the parties entered into Purchase Order 10-0033 ("PO-33") in the amount of $110, 000.00 for the rental of two cranes. On June 23, 2010, the parties entered into Purchase Order 10-0073 ("PO-73") in the amount of $300, 000.00 for the installation of perimeter fencing. On July 2, 2010, the parties entered into Purchase Order 10-0078 ("PO-78") in the amount of $235, 308.00 for the construction of a dog kennel, On July 29, 2010, the parties entered into Purchase Order 10-0091 ("PO-91") in the amount of $61, 785.00 for the relocation of T-wall barriers. That same day, they entered into Purchase Order 10-0092 ("PO-92") in the amount of $171, 075.00 for the construction of additional perimeter fence line.

In order to obtain payment for work performed under the subcontracts, 77 Construction was required to invoice UXB. 77 Construction issued a total of 26 invoices for services allegedly performed on behalf of UXB in 2010. Some of the invoices were paid in full by UXB, some were partially paid by UXB, and others were not paid by UXB.

On July 25, 2013, 77 Construction filed the instant action against UXB, seeking to recover for unpaid work allegedly performed pursuant to the subcontracts. In its amended answer, UXB alleges that 77 Construction submitted cost estimate analyses and invoices that falsely represented its actual overhead costs. UXB also alleges that 77 Construction submitted invoices that falsely represented certain material and equipment costs, and were not properly documented as required by the applicable contract provisions. UXB further alleges that 77 Construction breached a settlement agreement reached by the parties during a February 6, 2014 settlement conference. Based on these allegations, UXB asserts counterclaims against 77 Construction for fraud, breach of contract, and statutory recoupment.

77 Construction has moved to dismiss the majority of the counterclaims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The court held a hearing on the motion on March 9, 2015. The matter has been fully briefed and is ripe for review.

Standard of Review

When deciding a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court must accept as true all well-pleaded allegations and draw all reasonable factual inferences in the plaintiff's favor. Vitol, S.A. v. Primerose Shipping Co., 708 F.3d 527, 539 (4th Cir. 2013). "To survive the motion, a complaint (or counterclaim, as is the case here) must contain sufficient facts to state a claim that is plausible on its face.'" E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Discussion

I. Fraud

In Count I of its amended counterclaims, UXB asserts a claim for fraud against 77 Construction. The fraud claim is based on false representations that 77 Construction allegedly made in the invoices and cost estimate analyses submitted to UXB. UXB claims that 77 Construction submitted these documents with the intent to receive payment for improperly inflated costs; that UXB relied on the documents in paying 77 Construction for work performed under the subcontracts; ...


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