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Fluor Enterprises, Inc. v. Mitsubishi Hitachi Power Systems Americas, Inc.

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

June 15, 2018




         This matter comes before the Court on Plaintiff Fluor Enterprises, Inc.'s ("Fluor") Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).[1] (ECF No. 18.) Defendant Mitsubishi Hitachi Power Systems Americas, Inc. ("Mitsubishi") responded, and Fluor replied. (ECF Nos. 20, 21.) Accordingly, the matter is ripe for disposition. The Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1332.[2] For the reasons that follow, the Court will deny Fluor's Motion to Dismiss.

         I. Factual and Procedural Background

         A. Procedural History

         Fluor filed its Complaint against Mitsubishi, alleging one claim for breach of contract. (ECF No. 1.) Mitsubishi timely answered, asserting a single counterclaim against Fluor for defamation. (ECF No. 17.) Fluor moved to dismiss Mitsubishi's defamation claim, contending, pursuant to Federal Rule of Civil Procedure 12(b)(6), that Mitsubishi failed to state a claim on which relief could be granted.

         B. Summary of Allegations in the Counterclaim[3]

         Fluor is a California corporation with its principal place of business in Irving, Texas. Fluor designs and constructs large projects worldwide, including managing engineering, procurement, construction, maintenance, and overall project management. Mitsubishi is a Delaware corporation with its principal place of business in Lake Mary, Florida. Mitsubishi manufactures power generating equipment, including gas and steam turbines.

         In February 2012, Mitsubishi entered into a Turbine Supply Agreement (the "TSA") with Virginia Electric and Power Company ("VEPCO") to sell turbine generators-one steam turbine generator and three combustion turbine generators-to VEPCO for use in a power generating facility. The facility was located in Brunswick County, Virginia, so the project became known as the "Brunswick Project."

         Five months later, in July, 2012, VEPCO contracted with Fluor for Fluor to construct the Brunswick Project (the "Fluor Contract"). Under the Fluor Contract, Fluor was responsible for many aspects of the Brunswick Project, including "all design, engineering, procurement, construction, installation, start-up[J and testing work necessary to engineer, procure and construct the Brunswick Project." (Counterclaim ¶ 8, ECF No. 17.) Mitsubishi was not a party to the Fluor Contract. Around the same time VEPCO entered into the Fluor Contract, it assigned the TSA to Fluor through a Partial Assignment, Assumption, and Coordination Agreement. VEPCO retained the obligation to pay Mitsubishi per the terms of the TSA.

         Mitsubishi delivered the turbines to the Brunswick Project. VEPCO paid Mitsubishi the total sum contemplated by the TSA. Fluor, however, contends that Mitsubishi breached the TSA because it delivered parts late; it delivered improperly labeled parts; and it delivered parts that did not meet minimum quality requirements. Mitsubishi asserts that it did not breach the TSA, instead contending that it delivered the "Minor Components ... on or before the dates identified in the delivery schedule." (Answer 7, ECF No. 17.) Mitsubishi states that VEPCO's full payment to Mitsubishi signals substantial compliance and satisfaction with Mitsubishi's work. The Brunswick Project received multiple award and accolades. The President of Fluor made public statements lauding the Brunswick Project as showing Fluor's "ability to achieve quality completion ahead of schedule." (Counterclaim ¶ 14 (emphasis omitted).)

         On August 3, 2017, David Seaton, Fluor's Chief Executive Officer (CEO), held a conference call with shareholders and other interested parties during which he discussed Fluor Corporation's Second Quarter Consolidated Financial Results for 2017. During this earnings call, Mr. Seaton made the following statements (the "Statements"):

All three projects, four if you include the Brunswick project that incurred a charge in 2015, had a fundamental problem. And the projects did not meet the original baseline assumptions due to improper estimating, craft productivity and equipment issues. All of these projects were bid in 2014 by the same pursuit team.
In addition, all four projects were based on next gen turbines or steam generators that were first of a kind for Fluor. The quality control and completeness of these turbines delivered to the site were not in line with our bid assumptions, and we are pursuing our options.

(Id. ¶ 15 (emphasis omitted).) Mitsubishi asserts that the Statements are defamatory because they are false statements that impugn the reputation of Mitsubishi and negatively affect its business. Mitsubishi alleges that VEPCO's full payment to them signifies that "the [w]ork was fully functional and capable of dependable combined cycle operation" as required by the TSA. Mitsubishi further contends that Fluor's own records, the project's awards and accolades, and Fluor's statements lauding the Brunswick Project all demonstrate a lack of inadequacy with Mitsubishi's work or products. Mitsubishi avers that Mr. Seaton knew the Statements were false or acted with reckless disregard for the truth of the Statements.

         Mitsubishi also contends that people who work in this specialized industry would understand that Mitsubishi provided the turbines referenced in the Statements. In support of this proposition, Mitsubishi states that "numerous current and potential customers immediately contacted" Mitsubishi after the conference call "to inquire as to what were the issues with quality and completeness of [Mitsubishi's] turbines." (Counterclaim ¶ 23.)

         II. Federal Rule of Civil Procedure 12(b)(6) Standard

         In considering a motion to dismiss for failure to state a claim, a plaintiffs well-pleaded allegations are taken as true and the complaint is viewed in the light most favorable to the plaintiff. Matkari, 7 F.3d at 1134; see also Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). This principle applies only to factual allegations, however, and "a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). "A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Martin, 980 F.2d at 952 (citing 5 A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)).

         The Federal Rules of Civil Procedure "require[] only 'a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to 'give the defendant fair notice of what the ... claim is and the grounds upon which it rests.'" Bell Atl Corp. v. Twombly,550 U.S. 544, 555 (2007) (omission in original) (quoting Conley v. Gibson,355 U.S. 41, 47 (1957)). Plaintiffs cannot satisfy this standard with complaints containing only "labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Id. (citations omitted). Instead, a plaintiff must assert facts that rise above speculation and conceivability to those that "show" a claim that is "plausible on its face." Iqbal, 556 U.S. at 678-79 (citing Twombly, 550 U.S. at 570; Fed.R.Civ.P. 8(a)(2)). "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." Id. at 678 (citing Twombly, 550 U.S. at 556). Therefore, in order for a claim or complaint to survive dismissal ...

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