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W.C. English, Inc. v. Rummel, Klepper & Kahl, LLP

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

May 16, 2017

W.C. English, Inc., Plaintiff,
v.
Rummel, Klepper & Kahl, LLP, ET AL., Defendants.

          MEMORANDUM OPINION

          NORMAN K. MOON UNITED STATES DISTRICT JUDGE.

         This matter is before the Court upon Defendant Rummel, Klepper & Kahl, LLP's (“RK&K”) motion to dismiss for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt. 15). The instant case arises out of a construction subcontract between Plaintiff W.C. English, Inc. (“English”) and RK&K involving improvements to Interstate 81 in Rockbridge County, including the replacement of two bridges. The bridgework failed to meet the Virginia Department of Transportation's (“VDOT”) design and construction specifications within the agreed timeline. English alleges that RK&K breached their agreement by negligently performing quality assurance on the project, contributing to the project's failure to meet VDOT specifications.

         RK&K asks the Court to dismiss the claims against it because it argues the subcontract between RK&K and English, when viewed in light of the contract between English and VDOT, absolves them of any liability regarding English's failure to complete the bridge work in accordance with VDOT's specifications and timeline. However, the precise meaning of the subcontract is unclear, as it contains seemingly contradictory terms. Because there is ambiguity in the subcontract-the resolution of which is an issue of fact that cannot be settled at this stage-and English has pled facts that could constitute breach under a reasonable interpretation of the contract's ambiguous terms, the Court holds that English has stated a plausible claim against RK&K, and the motion to dismiss will be DENIED.

         I. Legal Standard

         A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of a complaint to determine whether the plaintiff has properly stated a claim; “it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of North Carolina v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). Although a complaint “does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted).

         A court need not “accept the legal conclusions drawn from the facts” or “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Eastern Shore Markets, Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). “Factual allegations must be enough to raise a right to relief above the speculative level, ” Twombly, 550 U.S. at 555, with all allegations in the complaint taken as true and all reasonable inferences drawn in the plaintiff's favor. Chao v. Rivendell Woods, Inc., 415 F.3d 342, 346 (4th Cir. 2005). Rule 12(b)(6) does “not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. Consequently, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

         II. Facts as Alleged

         On February 27, 2009, English entered into a contract (“the Contract”) with VDOT for construction of improvements to Interstate 81 (“I-81”) in Rockbridge County. (Dkt. 1-1 ¶¶ 8, 12-13). The Contract called for construction of a “Truck Climbing Lane, ” which is an additional lane or roadway; associated improvements to the shoulder and median; replacement of two bridges on I-81 Northbound; and replacement of one bridge over I-81 Northbound and Southbound near Lexington (collectively “the Project”). (Id. ¶ 13). English was responsible to VDOT for designing and constructing the Project, as well as performing Quality Assurance (“QA”) and Quality Construction Inspection (“QC”), which are typically performed by VDOT or its consultants. (Id. ¶ 14).

         The Contract specified that English was to achieve “Substantial Completion” by September 4, 2012, and “Final Completion” by October 30, 2012. (Id. ¶¶ 15-16). The Contract contained a series of penalties: (1) $3, 000 per day in liquidated damages for failure to meet the Substantial Completion date; (2) $2, 000 per day in liquidated damages for failure to meet the Final Completion date; (3) $5, 000 per day in monetary disincentives for failure to meet the Substantial Completion date. (Id. ¶ 17).

         Under the terms of the Contract, the QA and QC functions had to be performed by companies approved by VDOT, licensed to perform professional engineering work in Virginia, and prequalified to perform such work by VDOT. (Id. ¶ 19). One or about October 6, 2009, English entered into a subcontract with RK&K (“the QA Subcontract”) to perform the QA tasks required by the Contract. (Id. ¶ 20). The duties of RK&K under the QA Subcontract were further elaborated in a Construction Quality Assurance Plan (“QA Plan”), prepared by RK&K and approved by both English and VDOT. (Id. ¶ 21).

         The Contract required English to design and construct a replacement bridge, known as “Bridge B603, ” for the existing and newly constructed lanes of I-81 Northbound in Rockbridge County. (Id. ¶ 30). RK&K, through the actions or omissions of its QA Manager, failed to correctly perform its QA duties by (1) failing to conduct proper inspections; (2) approving noncompliant conditions; and (3) failing to comply with requirements of the QA Manager for field changes. (Id. ¶ 36). These breaches led to VDOT's rejection of the B603 Stage 1 bridge deck following its construction. (Id. ¶ 38).

         On March 13, 2013, VDOT issued a Notice of Non-Conforming Work with regard to the Stage 1 B603 deck. (Id. ¶ 46). English received second and third Notices of Non-Conforming Work on April 1, 2013, and April 5, 2013, respectively. (Id. ¶ 47). English hired consultants to analyze the Stage 1 bridge and met multiple times with VDOT to negotiate, but VDOT refused to accept the Stage 1 bridge. (Id. ¶¶ 45, 48).

         In August 2013, VDOT gave a final directive to remove and replace the deck on the Stage 1 bridge, and English complied with this order. (Id. ¶¶ 49-50). Following demolition and reconstruction, the B603 bridge was completed on December 21, 2013. (Id. ¶ 53). On February 4, 2016, VDOT executed Work Order 3 with English, which resolved all other outstanding issued between VDOT and English. (Id. ¶ 56). Work Order 3 increased the contract price and reduced previous assessment of liquidated damages and disincentives, but it stated that “[n]o adjustment in the contract price or time of performance shall be made for the B603 Stage 1 Demolition and Reconstruction issue.” (Id.).

         The demolition and reconstruction led English to incur additional costs for engineering design, structural and geotechnical analyses, liquidated damages, and disincentive fees. (Id. ΒΆΒΆ 54-55). English has calculated its total damages due ...


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