Berger Enterprises v. Zurich American Insurance

845 F. Supp. 2d 809, 2012 WL 88325, 2012 U.S. Dist. LEXIS 3097
CourtDistrict Court, E.D. Michigan
DecidedJanuary 11, 2012
DocketCivil Action No. 10-CV-14024
StatusPublished
Cited by3 cases

This text of 845 F. Supp. 2d 809 (Berger Enterprises v. Zurich American Insurance) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Berger Enterprises v. Zurich American Insurance, 845 F. Supp. 2d 809, 2012 WL 88325, 2012 U.S. Dist. LEXIS 3097 (E.D. Mich. 2012).

Opinion

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS

MARK A. GOLDSMITH, District Judge.

Before the Court is Defendants’ motion to dismiss. For the reasons explained below, the motion will be granted in part and denied in part.

I. Factual and Procedural Background

Plaintiff Berger Enterprises (Berger) is a North Dakota contractor in the business of commercial and industrial demolition, excavation, and site work. Second Am. Compl. ¶¶ 1, 6 (Dkt. 22). Defendants are TolTest, Inc. (TolTest), an Ohio corporation doing environmental remediation, design, management, and engineering, and Zurich American Insurance Company (Zurich). Id. ¶¶ 2, 3, 7. The events of this case relate to a contract between TolTest and Berger concerning a project at the Grand Forks Air Force Base in North Dakota.

In August 2008, TolTest contracted with the United States Government to serve as the general contractor for the demolition and restoration of housing and roads on a United States Air Force (USAF) base. As required by statute, TolTest (as principal) and Zurich (as surety) furnished a payment bond to the Air Force for the project. Id. ¶ 8. TolTest then contracted with Berger to do certain demolition and site work.1 The Purchase Order was signed in October 2008. The initial Agreement be[812]*812tween the two parties priced the work at $3,517,500. According to the second amended complaint, the scope of Berger’s work was increased via a “change order”; the total contract price was eventually increased to $5,924,148.68, based on changes in the work required. Id. ¶ 11.

According to the second amended complaint, Berger “experienced delays, interferences and disruption in the prosecution of the [w]ork” as a “direct result of TolTest failing to timely follow the original contract construction schedule, failing to properly represent the conditions that would be encountered at the Project, failing to represent to Berger that additional equipment would assist in the timely completion of the Project, failing to timely coordinate the activities of the subcontractors working in advance of Berger, and failing to manage and sequence the efficient and timely demolition of the structures at issue.” Id. ¶ 12. Berger alleges that, despite the fact that it completed the work in a responsible and professional manner, TolTest failed to fully pay Berger. According to the second amended complaint, there is “a balance due Berger under the Agreement in excess of $3,000,000 for additional labor cost overruns, additional equipment rental costs, extended overhead and retention.” Id. at 79.2

In October 2010, Berger filed suit in federal court; it amended its complaint in December 2010. In January 2011, Defendants filed a motion to dismiss. In its response, Berger noted its desire to amend the complaint to clarify the basis for its claims. Pursuant to this Court’s order, Berger filed a second amended complaint on April 15, 2011, and the Court denied Defendants’ motion to dismiss as moot. The second amended complaint alleges seven counts: violation of the Miller Act3 /claim on the payment bond (Count 1), breach of contract (Count 2), quantum meruit (Count 3), account stated (Count 4); promissory estoppel (Count 5), innocent misrepresentation (Count 6), and violation of the Ohio Prompt Pay Act4 (Count 7). On May 16, 2011, Defendant filed a motion to dismiss the second amended complaint (Dkt. 24). The parties submitted briefs and the Court held a hearing on the motion on August 4, 2011.5

II. Analysis

Defendants contend that Berger has failed to state a claim on which relief may be granted with regard to all seven counts. Before turning to each argument Defendants make with regard to each claim, the Court notes the governing standard and applicable law.

A. Standard for Motion to Dismiss

In evaluating a motion to dismiss pursuant to Rule 12(b)(6),

[c]ourts “must construe the complaint in the light most favorable to plaintiff,” League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. [813]*8132007) (citation omitted), “accept all wellpled factual allegations as true[,]” id., and determine whether the “complaint states a plausible claim for relief[,]” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009).
However, the plaintiff must provide the grounds for its entitlement to relief, Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 361 (6th Cir.2001), and that “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A plaintiff must “plead [ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. A plaintiff falls short if she pleads facts “merely consistent with a defendant’s liability” or if the alleged facts do not “permit the court to infer more than the mere possibility of misconduct ....” Id. at 1949,1950.

Albrecht v. Treon, 617 F.3d 890, 893 (6th Cir.2010) (first bracket added, all others in original).

B. Choice of Law

The Court agrees with Defendants that federal law applies to Count 1 (Miller Act), Ohio law applies to Counts 2, 3, 4, 5, and 7 (breach of contract, quantum meruit, account stated, promissory estoppel and Ohio Prompt Pay Act), and that Michigan law applies to Count 6 (innocent misrepresentation). Although Berger argues that North Dakota law applies to Counts 3, 4, and 5 of the complaint (quantum meruit, account stated, promissory estoppel), the argument is not well taken.

As the parties agree, the relevant provision is Article 16.1 of the Terms and Conditions.6 It states in pertinent part:

[t]he validity, interpretation, and performance of this Agreement and the Purchase Order and all other contract documents shall be governed, construed and interpreted in accordance with the laws of Ohio....

Terms and Conditions (Dkt. 15-3 ¶ 16.1). Despite the broad language of the choice-of-law provision, Berger contends that its quasi-contract claims fall outside of its purview. Berger argues that its quasi-contract claims are based, in part, on additional work that was outside the scope of the original Agreement between the parties. Berger contends that the Court should instead apply a balancing test and conclude that North Dakota law is applicable. See Resp. at 5-6 (Dkt. 26).

The Court rejects this argument. Berger does not effectively argue why its quantum meruit, account stated, and promissory estoppel claims are not covered by the provision above.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
845 F. Supp. 2d 809, 2012 WL 88325, 2012 U.S. Dist. LEXIS 3097, Counsel Stack Legal Research, https://law.counselstack.com/opinion/berger-enterprises-v-zurich-american-insurance-mied-2012.