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Precision Pipeline, LLC v. Dominion Transmission, Inc.

United States District Court, E.D. Virginia, Richmond Division

March 23, 2017



          John A. Gibney, Jr. United States District Judge

         In 2011, Dominion Transmission, Inc. ("DTI") retained Precision Pipeline, LLC ("Precision") to build a 55-mile stretch of natural gas pipeline through Pennsylvania and West Virginia. During the course of construction, Precision encountered many unexpected issues, making the project dramatically more difficult than planned. Precision now says that DTI failed to pay Precision for its work and drastically changed the scope of the project due to inaccurate information about the number of underground obstacles along the pipeline's path.

         Precision has now sued DTI asserting eight causes of action: (1) Cardinal Change -Quasi-Contract (Quantum Meruit), (2) Abandonment - Quasi-Contract (Quantum Meruit), (3) Constructive Fraud - Quasi-Contract (Quantum Meruit), (4) Breach of Contract, (5) Quantum Meruit - Quasi-Contract, (6) Pennsylvania's Contractor and Subcontractor Payment Act, (7) Pennsylvania's Underground Utility Line Protection Law, and (8) Unjust Enrichment - Quasi Contract.

         DTI has moved to dismiss Precision's claims. The Court grants the motion to dismiss Counts two, six, and seven. Count two fails because the law does not recognize an independent claim for abandonment. Counts six and seven fail because they arise exclusively under Pennsylvania law, but Virginia law governs these claims.

         The Court denies the motion as to the remaining claims, because Precision adequately pleads claims of breach of contract, quasi-contract, and constructive fraud.

         I. FACTS

         DTI sought bids for the pipeline project by providing Precision and other potential bidders with informational documents about the scope of the work. (Compl., ¶¶ 62-63.) These documents included alignment drawings which showed that the proposed pipeline would cross ninety other underground utility lines (the "Foreign Crossings"). (Compl. ¶ 80.) DTI hired Trico Surveying and Mapping, Inc. ("Trico") and G-A-I Consultants, Inc. ("G-A-I") to design the alignment drawings. (Compl, ¶¶ 21-22.)

         Precision won the bid, and in early 2011, the parties entered into two substantially similar contracts (the "Pipeline Contracts").[1] (Compl. ¶¶ 1-3; Dk. Nos. 49-1 and 49-2.) The Pipeline Contracts each contain a choice of law and forum selection clause naming Virginia as the forum and source of law.[2]

         In fulfilling the Pipeline Contracts, Precision encountered 257 Foreign Crossings. Excavating around the existing underground structures required a substantial amount of additional work not contemplated in the Pipeline Contracts. (Compl. ¶¶ 112-24, 133, 140.) Precision also ran into other problems including landslides, lack of access, and bad weather that made the job harder. Due to the extra work, Precision submitted, and DTI approved, a number of change orders. DTI, however, "either denied or ignored tens of millions of dollars in [legitimate] change order requests." (Compl. ¶ 164.)

         Before Precision brought this case, DTI sued Precision in this Court in 2013. The Court dismissed the case because DTI had failed to comply with a contractual provision requiring the parties to engage in alternative dispute resolution before filing suit. Before the beginning of a scheduled ADR process, Precision filed suit in the Western District of Pennsylvania. The Pennsylvania court enforced the forum selection clause of the Pipeline Contracts and transferred the case to this Court. This Court stayed the case pending the parties' attempts at ADR. ADR failed, and now the case proceeds.

         II. DISCUSSION[3]

         Relying on Virginia law, DTI moves to dismiss all of Precision's causes of action. Hoping to get a leg up on its opponent, Precision argues that Pennsylvania law controls this case.

         The lawsuit raises two types of claims: claims that arise from the contracts, and other claims that arise under the separate legal theory of quantum meruit, also known as quasi-contract. The choice of law analysis differs depending on the claims.

         A. Virginia Law Governs Claims Arising Under the Pipeline Contracts

         The Pipeline Contracts contain broad choice of law provisions. Specifically, the agreements say:

This Contract shall be governed by the laws of the Commonwealth of Virginia, without giving effect to the choice of laws principles thereof....

(Dk. Nos. 49-1 and 49-2 at Section 24.2.) This provision could not be clearer, and requires the Court to apply Virginia law to the claims arising from the contracts. Virginia law "looks favorably upon choice of law clauses in a contract, giving them full effect except in unusual circumstances." Colgan v Air, Inc. v. Raytheon Air craft, Co.,507 F.3d 270, 275 (4th Cir. 2007). No unusual circumstances exist here despite DTI's arguments that the Pipeline Contracts lack a reasonable relationship to Virginia and that enforcement of the provision violates Pennsylvania public policy. Tate v. Hain, 181 Va. 402, 410, 25 S.E.2d 321, 324 (1943) C'[T]he true test for the determination of the proper law of a contract is the intent of the parties and [] this ...

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