United States District Court, E.D. Virginia, Norfolk Division
REPORT AND RECOMMENDATION
DOUGLAS E. MILLER, UNITED STATES MAGISTRATE JUDGE.
action alleging breach of contract and professional
malpractice, Plaintiff Gradillas Court Reporters, Inc., seeks
partial judgment on the pleadings as to its breach of
contract claim against Defendants Cherry Bekaert, LLP, and
Sara Crabtree. Mot. (ECF No. 37). Plaintiff has alleged
Defendants breached a contract and committed malpractice by
failing to timely submit Gradillas' bid to perform court
reporting services to a potential government client.
reviewing the pleadings and exhibits submitted in support of
the parties' respective positions on the Motion, this
Report concludes that Defendants' Answer contests both
the existence of the specific duty alleged and the asserted
breach of that duty. Accordingly, as explained in greater
detail below, the court should DENY the Motion, except it
should STRIKE Defendants' affirmative defense that
Plaintiff failed to mitigate its damages.
court recites the facts of the case as alleged or as
contested by Cherry Bekaert, LLP, and Sara Crabtree
(collectively, "Cherry Bekaert") as the non-moving
party in the Motion, and draws all reasonable
inferences from those facts in their favor. See Massey v.
Ojaniit, 759 F.3d 343, 347 (4th Cir. 2014) .
Court Reporters, Inc. ("Gradillas"), offers court
reporting services and is owned by Josephine Gradillas.
Answer at ¶¶ 1, 13. Gradillas has performed court
reporting services for government agencies for many years.
Id. ¶ 40. Since the execution of a 2 012 letter
outlining the contract between them, Gradillas has engaged
the services of Cherry Bekaert, LLP, an accounting and
consulting firm. See 2012 Contract (ECF No. 39-1).
The contract described the general privileges and obligations
of the parties under the agreement, including subjects like
hourly service rates and limitations on the nature of their
engagement, but did not assign specific tasks. As a result,
the written contract did not address the specific bid
underlying this action, nor did it assign responsibility for
the timely submission of any bid. See id. Since
entering its agreement with Gradillas in 2012, Cherry Bekaert
has performed both general accounting services and services
rendered specifically in support of Gradillas' pursuit of
various government contracts for court reporter services.
Answer at ¶¶ 2, 57, 18.
spring of 2017, Cherry Bekaert accepted a task under the
agreement to assist Gradillas in the preparation and
submission of a bid for court reporting services with the
U.S. Securities and Exchange Commission ("SEC").
Answer at ¶¶ 26-27. The deadline for the bid was
noon, Eastern Daylight Time, on March 17, 2017, and this was
known to Cherry Bekaert. Answer at ¶ 25.
lead employee from Cherry Bekaert assigned to the contract
with Gradillas was Susan Crabtree. Answer at ¶ 26.
Through Crabtree, Cherry Bekaert agreed to
“to provide services in preparing the
bid." Answer at ¶ 27. Neither the 2012
contract nor the emails discussing the SEC bid assigned
responsibility for submitting the bid before the noon
deadline on March 17, 2017. (ECF No. 39-1, 39-2, 39-3). In
fact, Cherry Bekaert asserts that it was to provide a draft
to Gradillas and that Gradillas would submit the bid. Later,
delays by both parties caused Gradillas to change this plan
at the last minute, resulting in the bid being late.
Def.'s Br. at 8 (ECF No. 41) (citing Emails between Sara
Crabtree and Josephine Gradillas (Mar. 17, 2017) (ECF No.
is no dispute that the bid was submitted to the SEC
contracting officer three minutes after the deadline. Answer
at ¶ 29. Although Gradillas alleges Crabtree submitted
the bid, Cherry Bekaert has not admitted this fact. Answer at
¶ 29. Cherry Bekaert has also not admitted that the bid
was rejected for having been submitted after the deadline.
See Answer at ¶30. After the bid was submitted
late, Crabtree did contact the SEC contracting officer to
tell the contracting officer it was her, Crabtree's,
"fault" that Gradillas "lost the chance to be
considered for [the bid] ." Answer at ¶ 33; see
also Answer at 34.
filed the instant action alleging professional negligence and
breach of contract against Cherry Bekaert in the Superior
Court of the District of Columbia. Compl. (ECF 1-2). Cherry
Bekaert removed the case to the U.S. District Court for the
District of Columbia. Removal Notice (ECF No. 1) . That court
subsequently transferred the case to this court to establish
proper venue. See Hrn'g Tr. at 20-24 (Oct. 6,
2017) (ECF No. 18).
pending motion seeks "partial judgment on the pleadings,
" asserting that Cherry Bekaert has admitted facts
sufficient to establish a breach of duty and some damage from
the company's lost opportunity. The company also claims
several of Cherry Bekaert's affirmative defenses are
defectively pled and seeks to preclude further argument on
them at trial. Cherry Bekaert denies that its pleadings
permit entry of judgment on any part of the claim, and with
one exception defends each affirmative defense as correctly
asserted. Counsel have fully briefed the Motion, making it
ripe for the court's review.
Standard of Review.
12(c) motions are governed by the same standard as motions
brought under Rule 12(b)(6). Massey, 759 F.3d at 347
(citing Edwards v. City of Goldsboro, 178 F.3d 231,
243 (4th Cir. 1999)). In order to survive a Rule 12(c)
motion, a pleading must assert facts or issue denials that
are "plausible on [their] face." C.f. Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) . A denial or
assertion is plausible on its face when it permits the
reasonable inference that it is true. Id. The court
considers the complaint in the light most favorable to the
plaintiff, reads the complaint as a whole, and takes the
facts asserted therein as true. Mylan Labs., Inc. v.
Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993);
Massey, 759 F.3d at 347. However, the court may also
refuse to accept allegations that contradict matters properly
subject to judicial notice or exhibits which are referenced
in the pleadings. Blankenship v. Manchin, 471 F.3d
523, 529 (4th Cir. 2006).
court has considered Cherry Bekaert's Answer;
Gradillas' Complaint; and exhibits to the Rule 12(c)
motion that were integral to the complaint and authentic.
Massey, 759 F.3d at 347 (citing Fed.R.Civ.P. 10(c));
Philips v. Pitt Cnty. Mem'1 Hosp., 572 F.3d 176,
180 (4th Cir. 2009). Specifically, The court considered the
text of the 2012 Summary of Services letter and the
correspondence between Gradillas and Crabtree, all of which
Gradillas submitted as exhibits in support of its Motion.
(ECF Nos. 39-1, 39-2, 39-3).
Choice of Law.
case was transferred to cure improper venue. See
Hrn'g Tr. at 20-24 (Oct. 6, 2017) (ECF No. 18). After a
transfer under 28 U.S.C. § 1406, the choice of law rules
of the state in which the transferee court sits govern the
case. See, e.g., Gerena v. Korb, 617 F.3d
197, 204 (2d Cir. 2010) ("If a district court receives a
case pursuant to a transfer under 28 U.S.C. § 1406(a)
... it logically applies the law of the state in which it
sits, since the original venue, with its governing laws, was
never a proper option.")/ Lafferty v. St. Riel,
495 F.3d 72, 77 (3d Cir. 2007) ("When cases have been
transferred for improper venue, transferee courts generally
apply the substantive law they would have applied had the
action been brought there initially."); Ellis v.
Great Sw. Corp., 646 F.2d 1099, 1110 (5th Cir. 1981)
(“[F]ollowing a section 1406(a) transfer, regardless of
which party requested the transfer or the purpose behind the
transfer, the transferee court must apply the choice of law
rules of the state in which it sits."). As the
transferee in this case, this court will apply the choice of
law rules of the Commonwealth of Virginia to determine the
law applicable to the case.
Virginia, questions related to the sufficiency of contract
performance are governed by the law of the jurisdiction in
which the contract was to be performed. Equitable Tr. Co.
v. Bratwursthaus Mgmt. Corp., 514 F.2d 565, 567 (4th
Cir. 1975) (citing Arkla Lumber & Mfg. Co. v. W.Va.
Timber Co., 146 Va. 641, 648 (1926)). Gradillas'
breach of contract claim revolves around the adequacy of
Cherry Bekaert's performance of a contractual duty it is
alleged to have owed Gradillas, and performance of that duty
was to have taken place in Virginia. See Mem. and
Order at 2 (ECF No. 21) . Accordingly, Virginia law governs
Gradillas' claims in the case.