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Appalachian Power Co. v. Wagman Heavy Civil, Inc.

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

November 20, 2019

Appalachian Power Company, Plaintiff,
v.
Wagman Heavy Civil, Inc., Defendant.

          MEMORANDUM OPINION

          NORMAN K. MOON SENIOR UNITED STATES DISTRICT JUDGE.

         Introduction

         Before the Court is Appalachian Power Company's (“APCO”) Motion to Dismiss Wagman Heavy Civil's Counterclaim. Wagman pleads in Count I of its Counterclaim that APCO breached its written contract to remove and relocate its utility structures in order to facilitate a construction project that Wagman had undertaken as part of a contract with the Virginia Department of Transportation. Dkt. 4 at 12. Wagman alternatively pleads in Count II that APCO breached an unwritten contract between the two to complete the same construction project. Id. at 13.

         APCO argues that Wagman's Counterclaim fails without an enforceable timeline for APCO's performance, because the written contract lacks a “time is of the essence” clause and any alleged communications outlining that timeline are prohibited from modifying the terms of the contract. APCO further argues that Wagman's Counterclaim does not plead sufficient factual allegations to support its claim for damages, because it fails to “specifically state” items of special damages as required by Rule 9(g) of the Federal Rules of Civil Procedure. APCO also contends that Wagman's obligations were conditions precedent to APCO's contractual performance, and Wagman's failure to allege the discharge of such conditions is fatal to the Counterclaim. As to Count II, APCO argues that Wagman does not plead any facts that permit the finding of a reasonably certain, definite, and complete oral agreement between the two parties.

         APCO's Motion to Dismiss, Dkt. 8, will be granted in part and denied in part, in accordance with this memorandum opinion. Count I of Wagman's Counterclaim will be dismissed without prejudice, and Wagman will be granted leave to amend its Counterclaim, pursuant to Federal Rule of Civil Procedure 15(a)(2).

         I. Alleged Factual Background

         In January 2015, Wagman and Virginia Department of Transportation (“VDOT”) entered into a contract to undertake design and construction of a project known as Odd Fellows Road Interchange at U.S. Route 29/460 and Road Improvements (the “Project”). Dkt. 4 at 12.

         On May 24, 2017, APCO and Wagman entered into an alleged written contract (the “Written Contract”), “whereby APCO agreed to remove and relocate its utility structures (the ‘Work') in order to facilitate construction for the Project.” Id. Among other obligations, APCO specifically agreed to “[u]se its best efforts to complete the relocation of Structure Numbers 442-99, 442-100, 442-101, and install Structure 442-102A based on the completion of the conditions set forth in DESIGN-BUILDER items 1 through 4 above.”[1] Dkt. 12, at Ex. A.

         Wagman alleges that it and APCO “communicated regarding both the Project schedule and the schedule for APCO's performance of services under the Written Contract, and so had a mutual understanding as to the reasonable period for APCO to perform the Written Contract.” Dkt. 4 at 12. Wagman further alleges that APCO failed to begin its obligation under the Written Contract when directed, failed to perform such obligations within the schedule it provided, and failed to conform to the “parties' understanding of the period for performance of its services, or of the Project as a whole.”[2] Dkt. 4 at 13. Accordingly, Wagman concludes that APCO breached its obligations under the Written Contract to “use its best efforts to perform the Work, to honor the covenant of good faith and fair dealing, to perform the Work within a reasonable time, and to perform the Work in accordance with the schedule for its performance of the Work.” Id. Wagman alleges costs and other damages foreseeably resulting from APCO's breach in an amount of at least $1, 039, 074.20. Id.

         Wagman also alleges that it and APCO entered into the alleged Unwritten Contract whereby “APCO agreed to remove and relocate its utility structures (the “Work”) in order to facilitate construction for the Project, and in exchange Wagman would reimburse it for one-half of its cost of doing so.” Id. at 13. APCO is claimed to have breached the Unwritten Contract when it “failed to commence its work when directed, [and] failed to perform within the schedule it provided for its Work.” Id. at 14. Wagman similarly alleges that it and APCO “communicated regarding both the Project schedule and the schedule for APCO's performance of services under the Agreement, and APCO submitted a written schedule for performance of its Work to Wagman.” Id. The Counterclaim contends that Wagman suffered directly and proximately from APCO's breach of the agreement by incurring “delay costs, and other damages foreseeably resulting from APCO's acts and omissions, in an amount of at least $1, 039, 074.20.” Id.

         On August 9, 2019, APCO filed its Complaint against Defendant/Counterclaim Plaintiff Wagman. Dkt. 1. On September 4, 2019, Wagman filed its Answer along with its Counterclaim against APCO. Dkt. 4. On September 24, 2019, APCO filed a Motion to Dismiss Wagman's Counterclaim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Dkt. 8. Wagman filed its Memorandum in Opposition to the same on October 8, 2019, Dkt. 12, making this matter ripe for disposition.

         II. Standard of Review

         A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of a complaint to determine whether a plaintiff has properly stated a claim. This same standard of review applies to both claims and counterclaims. Falls Lake Nat'l Ins. Co. v. Martinez, No. 7:16-cv-00075, 2016 WL 4131995, at *2 (W.D. Va. Aug. 1, 2016). The counterclaim's “[f]actual allegations must be enough to raise a right to relief above the speculative level, ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), with all of its allegations taken as true and all reasonable inferences drawn in the plaintiff's favor, King v. Rubenstein, 825 F.3d 206, 212 (4th Cir. 2016). A motion to dismiss “does not, however, resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Id. at 214.

         Although the complaint or counterclaim “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.” Twombly, 550 U.S. at 555. A court need not “accept the legal conclusions drawn from the facts” or “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 768 (4th Cir. 2011) (quotation marks omitted). This is not to say Rule 12(b)(6) requires “heightened fact pleading of specifics, ” instead the plaintiff must plead “only enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (“only a complaint that states a plausible claim for relief survives a motion to dismiss”).

         III. Analysis

         Under Virginia law, “[t]he elements of a breach of contract action are (1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation.” Filak v. George, 594 S.E.2d 610, 614 (Va. 2004).[3]

         As to Count I, APCO argues that Wagman's Counterclaim insufficiently pleads a legally enforceable obligation as to the alleged timeline for APCO's performance, because the Written Contract does not contain a “time is of the essence” clause and any alleged communications outlining that timeline are prohibited from modifying the terms of the contract. Additionally, APCO argues that Wagman's Counterclaim does not plead sufficient factual allegations to support its claim for damages, because it fails to “specifically state” items of special damages as required by Rule 9(g) of the Federal Rules of Civil Procedure. APCO also contends that Wagman's obligations were conditions precedent to APCO's contractual performance, and Wagman's failure to allege the discharge of such conditions is fatal to its Counterclaim. As to Count II, APCO argues that Wagman does not plead any facts that permit the finding of a reasonably ...


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