United States District Court, E.D. Virginia, Newport News Division
MEMORANDUM OPINION AND ORDER
RAYMOND A. JACKSON UNITED STATES DISTRICT JUDGE
the Court is W.M. Jordan's ("Jordan") Motion to
Dismiss under Federal Rule of Civil Procedure 12(b)(1), (6),
and (7). ECF Nos. 22-23. For the reasons set forth below,
Jordan's Motion to Dismiss is GRANTED IN PART AND DENIED
FACTUAL AND PROCEDURAL HISTORY
following facts are taken from Mobilization's Complaint
and are taken to be true and cast in the light most favorable
to Mobilization. Adams v. Bain, 697 F.2d 1213, 1219
(4th Cir. 1982).
entered into a General Contract with Riverside Retirement
Services ("Riverside") to build the Apartments at
Patriots Colony in Williamsburg, Virginia. ECF No. 1 at
¶ 5; see ECF No. 1-1. On December 12, 2016,
Jordan entered into a Subcontract Agreement with Mexarg
Contractors, LLC ("Mexarg"). ECF No. 1 at
¶¶ 11-12; see ECF No. 1-2. Jordan had a
project manager, Jerry Barthelemy ("Barthelemy")
who approved payments to its subcontractors. ECF No. 1 at
¶¶ 9-10. On January 10, 2018, Mexarg's own
subcontractor complained that Mexarg had not paid them.
Id. at ¶ 14. On January 20, 2018, Mexarg
submitted a payment application (Payment Application No. 6)
to Jordan, which Barthelemy did not notify Mexarg that he had
approved it. Id. at¶¶ 17-18.
January 30, 2018, Mexarg entered into a loan agreement with
Mobilization for up to $361, 155; the loan was secured by
contract assignments, among other collateral. Id. at
¶¶ 19, 21; see ECF No. 1-5 at 3. On
January 31, 2018, Jordan entered into a Joint Check Agreement
("JCA") with Mexarg and Mobilization, which allows
Jordan to write checks jointly to both Mexarg and
Mobilization. ECF No. 1 at ¶ 21; see ECF No.
1-7. JCAs are commonly used in the construction industry. ECF
No. 1 at ¶ 20. Essentially, instead of Jordan writing a
check to Mexarg who would then write a separate check to
Mobilization to repay the loan, the JCA allows Jordan to
write checks to both companies for Mexarg's subcontract
work that Mobilization would be able to cash directly.
See Id. at ¶¶ 46-48. During the time that
Mobilization entered the Loan Agreement with Mexarg and the
JCA with Mexarg and Jordan, it did not know and was never
informed of the issues Mexarg had with its nonpayment of its
subcontractors. Id. at ¶ 22.
February 1, 2018, Jordan told Mexarg and Mobilization that it
had approved Payment Application No. 6 and that it would
issue a joint check pursuant to the JCA. See Id. at
¶ 25. On February 2, 2018, Mobilization released $140,
000 of the loan to Mexarg, which Mexarg used to pay its
subcontractors. Id. at ¶¶ 30-31. On
February 8, 2018, Jordan discovered that Mexarg had sent
bounced checks to its subcontractors and did not inform
Mobilization. Id. at ¶ 32. As such, Jordan
refused to issue a joint check despite approved Payment
Application No. 6. Id. at ¶ 33. That same day,
Barthelemy approved a payment plan to satisfy the bounced
checks to Mexarg's subcontractors, for which Mobilization
provided an additional $46, 000 to Mexarg in exchange for an
assignment of Mexarg's Payment Application No. 7.
Id. at ¶¶ 34-37.
February 23, 2018, Jordan terminated the Subcontract
Agreement with Mexarg, arguing that Mexarg had breached the
contract. Id. at ¶ 38. Mexarg argues that its
inability to complete the work was due to Jordan's
mismanagement. Id. Jordan has not written any joint
checks to Mobilization or Mexarg. Id. at ¶ 39.
11, 2018, Mobilization sued Jordan for what it claims are
outstanding payments under various legal theories, including
conversion (Count I), unjust enrichment (Count II), equitable
estoppel (Count III), and actual and constructive fraud
(Count IV and Count V, respectively). Id. at
¶¶ 58-106. Mobilization seeks to recover the $186,
000 it loaned to Mexarg, punitive damages, attorneys'
fees, and prejudgment and post-judgment interest.
Id. at 16-17.
filed three motions to dismiss on June 27, 2018. See
ECF Nos. 6-11. Mobilization filed three responses on July 11,
2018. See ECF Nos. 14-16. Jordan replied on July 17,
2018. See ECF Nos. 18-20. On September 10, 2018, the
Court ordered Jordan to refile a single motion because the
multiple motions violated the Local Rules. ECF No. 21. On
September 12, 2018, Jordan filed its single Motion to Dismiss
at issue here. See ECF Nos. 22-23. Jordan seeks to
dismiss the action under Federal Rule of Civil Procedure
12(b)(1), 12(b)(6), and 12(b)(7). Id. Mobilization
opposed the motion on September 26, 2018. ECF No. 25. Jordan
replied on October 1, 2018. ECF No. 26.
of Subject Matter Jurisdiction under Rule 12(b)(1)
Rule of Civil Procedure 12(b)(1) provides for the dismissal
of an action if the Court lacks subject matter jurisdiction.
Unless a matter involves an area over which federal courts
have exclusive jurisdiction, see 28 U.S.C.
§§ 1333-34, a plaintiff may bring suit in federal
court only if the matter involves a federal question arising
"under the Constitution, laws or treaties of the United
States," § 1331, or if "the matter in
controversy exceeds the sum or value of $75, 000, exclusive
of interests and costs, and is between citizens of different
States." § 1332(a)(1).
court assumes that all factual allegations in the complaint
are true if it is contended that a complaint simply fails to
allege facts upon which subject matter jurisdiction can be
based. Adams, 697 F.2d at 1219. However, if the
factual basis for jurisdiction is challenged, the plaintiff
has the burden of proving subject matter jurisdiction.
Richmond, Fredericksburg & Potomac R.R. Co. v. United
States, 945 F.2d 765, 768 (4th Cir. 1991). The plaintiff
bears the burden of proving that subject matter jurisdiction
exists by a preponderance of the evidence. United States
ex rel Vuyyuru v. Jadhav, 555 F.3d 337, 347-48 (4th Cir.
2009). To determine whether subject matter jurisdiction
exists, the reviewing court "may consider evidence
outside the pleadings without converting the proceeding to
one for summary judgment." Velasco v. Gov't of
Indonesia, 370 F.3d 392, 398 (4th Cir. 2004) (citing
Adams, 697 F.2d at 1219). A party moving for
dismissal for lack of subject matter jurisdiction should
prevail only if material jurisdictional facts are not in
dispute and the moving party is entitled to prevail as matter
of law. Richmond, Fredericksburg & Potomac R.R.
Co., 945 F.2d at 768. If a court lacks subject matter
jurisdiction, it must dismiss the action. Fed.R.Civ.P.
is a justiciability doctrine that requires federal courts to
withhold considering any actions that are based "upon
'contingent future events that may not occur as
anticipated, or indeed may not occur at all.'"
Texas v. United States, 523 U.S. 296, 300 (1998)
(quoting Thomas v. Union Carbide Agric. Prods. Co.,
473 U.S. 568, 580-81 (1985)). In determining whether a case
is ripe or not, the Court must "'balance the fitness
of the issues for judicial decision with the hardship to the
parties of withholding court consideration.'"
Miller v. Brown, 462 F.3d 312, 319 (4th Cir. 2006)
(quoting Franks v. Ross, 313 F.3d 184, 194 (4th Cir.
2002)). An action is deemed fit "when the issues are
purely legal and when the action in controversy is final and
not dependent on future uncertainties." Id.
(citing Charter Fed. Sav. Bank v. Office of Thrift
Supervision, 976 F.2d 203, 208 (4th Cir. 1992)).
Hardship is determined by comparing "'the immediacy
of the threat and the burden'" on the party bringing
suit. Id. (quoting Charter Fed. Sav. Bank v.
Office of Thrift Supervision, 976 F.2d 203, 208-09 (4th
Failure to State a Claim under Rule 12(b)(6)
Rule of Civil Procedure 12(b)(6) provides for dismissal of
actions that fail to state a claim upon which relief can be
granted. The United States Supreme Court has stated that in
order "[t]o survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to
state a claim to relief that is plausible on its face."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
BellAtl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Specifically, "[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. Moreover, at the motion to dismiss
stage, the court is bound to accept all of the factual
allegations in the complaint as true. Id. However,
"[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice." Id. Assessing the claim is a
"context-specific task that requires the reviewing court
to draw on its judicial experience and common sense."
Id. at 679.
considering a Rule 12(b)(6) motion to dismiss, the Court
cannot consider "matters outside the pleadings"
without converting the motion to a summary judgment.
Fed.R.Civ.P. 12(d). Nonetheless, the Court may still
"consider documents attached to the complaint, ... as
well as those attached to the motion to dismiss, so long as
they are integral to the complaint and authentic."
Sec'y of State for Defence v. Trimble Navigation
Ltd, 484 F.3d 700, 705 (4th Cir. 2007); see
also Fed. R. Civ. P. 10(c); Bassett v. NCAA,
528 F.3d 426, 430 (6th Cir. 2008) ("When a court is
presented with a Rule 12(b)(6) motion, it may consider the
Complaint and any exhibits attached thereto, public records,
items appearing in the record of the case and exhibits
attached to defendant's motion to dismiss so long as they
are referred to in the Complaint and are central to the
claims contained therein.").
Failure to Join an Indispensable Party under Rule 12(b)(7)
Rule of Civil Procedure 12(b)(7) states that an action should
be dismissed if a necessary party cannot be joined under Rule
19. In considering a Rule 12(b)(7) motion to dismiss for
failure to join a party pursuant to Rule 19, courts are
required to make a two-part inquiry. First, courts must
determine whether the party is necessary to the proceeding
because of its relationship to the matter under consideration
within the meaning of Rule 19. Teamsters Local Union No.
171 v. Keal Driveway Co., 173 F.3d 915, 917 (4th Cir.
1999). Rule 19(a) states that someone is a required party if
"the court cannot accord complete relief among existing
parties" without that person or if that person
"claims an interest relating to the subject of the
action and is so situated that disposing of the action in the
person's absence may" hurt their "ability to
protect their interest" or "leave an existing party
subject to a substantial risk of incurring double, multiple,
or otherwise inconsistent obligations because of the
if the party would destroy jurisdiction, a court must
determine if the action can continue in that party's
absence. Teamsters Local Union No. Ill. 173 F.3d at
917-18. "If it cannot, the party is indispensable and
the action should be dispensed." Id. at 918.
Under Rule 19(b), if the necessary party cannot be joined to
the suit, then "the court must determine whether, in
equity and good conscience, the action should proceed among
the existing parties or should be dismissed." Generally,
"[c]ourts are loath to dismiss cases based on nonjoinder
of a party, so dismissal will be ordered only when the
resulting defect cannot be remedied and prejudice or
inefficiency will certainly result." Owens-Ill, Inc.
v. Meade, 186 F.3d 435, 441 (4th Cir. 1999).
considers various factors in making this determination,
including (1) whether a judgment without the necessary party
"would prejudice that person or the existing
parties"; (2) if any such prejudice could be lessened
based on how the judgment was rendered; (3) whether a
judgment without the necessary party would be adequate; and
(4) whether the plaintiff "would have an adequate remedy
if the action were dismissed." Fed.R.Civ.P. 19(b). This
analysis under Rule 19 at both steps is not a
"procedural formula," but rather a decision that
'"must be made pragmatically, in the context of the
substance of each case."' Home Buyers Warranty