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Thermal Dynamics International, Inc. v. Safe Haven Enterprises, LLC

United States District Court, District Circuit

July 8, 2013

THERMAL DYNAMICS INTERNATIONAL, INC., Plaintiff,
v.
SAFE HAVEN ENTERPRISES, LLC, et al., Defendants.

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY, District Judge.

Plaintiff Thermal Dynamic International, Inc. ("TDI"), filed suit against Safe Haven Enterprises, LLC, Alta Baker, and John Baker, alleging the Defendants failed to pay the final invoice submitted by TDI for work performed as a subcontractor for Safe Haven for work on the United States embassy in Yemen. Presently before the Court is the Defendants' [15] Motion to Dismiss, which the Court construes as a motion to compel arbitration and in the alternative to dismiss for failure to state a claim. Upon consideration of the pleadings[1] and the relevant legal authorities, the Court finds the Plaintiff is contractually bound to arbitrate its claims against Safe Haven, but the Defendants failed to demonstrate the claims against the individual Defendants are subject to mandatory arbitration. Although the Plaintiff has stated a claim for unjust enrichment against the Baker Defendants, the Complaint fails to state a claim for negligent and fraudulent misrepresentation. Accordingly, the Defendants' Motion to Dismiss is GRANTED IN PART and DENIED IN PART as set forth below.

I. BACKGROUND

For purposes of this motion, the Court presumes as true all well-pleaded factual allegations in the Complaint. Safe Haven is a limited liability company organized under the laws of the state of Louisiana, with its principal place of business also in Louisiana. Compl. ¶ 1. Alta Baker, the Chief Executive Officer and owner of Safe Haven, and John Baker, an officer and co-owner of Safe Haven, both reside in Louisiana. Id. at ¶¶ 2-3. In September 2006, the Department of State awarded Safe Haven a contract to perform construction at the United States embassies in Yemen and Bahrain. Id. at ¶ 11. Safe Haven awarded a subcontract to TDI to perform work at both embassies, and subsequently issued a change order increasing the contract price in exchange for TDI performing additional work at the embassy in Yemen. Id. at ¶¶ 12-13. The subcontract provides that Safe Haven must make final payment to TDI once TDI completes the work required by the subcontract and Safe Haven has received payment from the State Department for the work performed by TDI. Id. at ¶ 14.

On April 28, 2009, the State Department, Safe Haven, and TDI executed a "Notice of Substantial Completion" verifying that TDI had fully performed its obligations under the subcontract with respect to the embassy in Yemen. Compl. ¶ 17. TDI subsequently submitted a final invoice in the amount of $356, 574.96 to Safe Haven for the work performed by TDI at the embassy in Yemen. Id. at ¶ 18. Safe Haven purportedly refused to pay the final invoice on the grounds Safe Haven had yet to receive final payment for the work from the State Department. Id. at ¶ 19. For more than three years, TDI continued to demand payment, but Safe Haven refused, asserting the State Department had yet to provide final payment to Safe Haven. Id. at ¶¶ 20-28. TDI asserts that throughout this process, the Defendants indicated the final invoice would be paid once Safe Haven received payment from the State Department. Id. at ¶ 29.

According to the Complaint, the State Department made the final payment to Safe Haven by no later than November 2012. Compl. ¶ 30. After learning of the final payment from the State Department, TDI once again demanded that Safe Haven satisfy the final invoice. Id. at ¶ 31. The Plaintiff filed suit on May 16, 2013, asserting five causes of action. Id. at ¶¶ 34-35. First, the Complaint alleges Safe Haven breached the subcontract by failing to satisfy the final invoice submitted by TDI despite receiving final payment from the State Department. Id. at ¶¶ 37-45. Second, the Plaintiff alleges it conferred a benefit upon Defendants Alta and John Baker through the work performed by TDI under the subcontract, and the individual Defendants were unjustly enriched by failing to pay the final invoice despite receiving final payment from the State Department. Id at ¶¶ 46-53. Third, the Complaint alleges Safe Haven breached the covenant of good faith and fair dealing by concealing final payment from the State Department and refusing to satisfy the final invoice from TDI. Id. at ¶¶ 54-64. Fourth, the Plaintiff alleges the Defendants had an obligation to "communicate carefully and honestly with TDI regarding... payments [Safe Haven] received from the State Department, " and thus are liable for negligent misrepresentations for claiming that Safe Haven had not received final payment from the State Department. Id. at ¶¶ 65-73. Fifth and finally, the Complaint asserts a claim for fraudulent misrepresentation against all Defendants based on the statement to the Plaintiff that Safe Haven had yet to receive final payment from the State Department, and failed to notify the Plaintiff when the final payment was received. Id. at ¶¶ 74-85. The Defendants subsequently moved to dismiss the Complaint.

II. LEGAL STANDARD

A. Motion to Compel Arbitration

Although styled as a motion to dismiss, the Defendants in essence move to compel the Plaintiff to arbitrate the claims asserted in the Complaint. The Federal Arbitration Act ("FAA") provides that "[a] written provision in any... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract... or the refusal to perform the whole or any part thereof... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Under District of Columbia law, [2] "arbitration is predicated on the consent of the parties to a dispute, and the determination of whether the parties have consented to arbitrate is a matter to be determined by the courts on the basis of contracts between the parties." Bailey v. Fed. Nat'l Mortgage Ass'n, 209 F.3d 740, 746 (D.C. Cir. 2000). "[A]n order to arbitrate [a] particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." Air Line Pilots Ass'n v. Fed. Express Corp., 402 F.3d 1245, 1248 (D.C. Cir. 2005) (citation omitted).

B. Motion to Dismiss for Failure to State a Claim

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a complaint on the grounds it "fail[s] to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). "[A] complaint [does not] suffice if it tenders naked assertion[s]' devoid of further factual enhancement.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). Rather, a complaint must contain sufficient factual allegations that, if accepted as true, "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. "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." Iqbal, 129 S.Ct. at 1949. In deciding a Rule 12(b)(6) motion, a court may consider "the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, " or "documents upon which the plaintiff's complaint necessarily relies even if the document is produced not by [the parties]." Ward v. D.C. Dep't of Youth Rehab. Servs., 768 F.Supp.2d 117, 119 (D.D.C. 2011) (citations omitted).

III. DISCUSSION

The Defendants move to dismiss the Complaint on four grounds: (1) the Plaintiff's claims are subject to a mandatory arbitration clause in the subcontract; (2) the Plaintiff failed to state a claim for breach of contract against Safe Haven; (3) the Plaintiff cannot sustain the alleged tort claims because they arise out of the subcontract; and (4) the Plaintiff cannot bring a claim against the individual member/owners of a limited liability company. The Court agrees that the Plaintiff's claims against Safe Haven must be pursued in arbitration, therefore the Court does not consider whether the Plaintiff adequately stated a claim for breach of contract. However, the Plaintiff is not required to arbitrate its claims against the individual Defendants. Therefore, the Court addresses the Plaintiff's motion to ...


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