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A Mountain Professional Construction LLC v. ARborunda, Inc.

United States District Court, D. New Mexico

July 6, 2018

ARBORUNDA, INC., Defendant.



         This matter is before the Court on Defendant ARborunda, Inc.'s Motion to Dismiss, filed on January 29, 2018. (Doc. 27.) Jurisdiction arises under 28 U.S.C. § 1331.[1] Having considered the submissions of counsel and the relevant law, the Court will GRANT IN PART the Motion as outlined below.

         ARborunda, Inc. (Defendant), the prime contractor for a project at the White Sands Missile Range, hired A Mountain Professional Construction, LLC (Plaintiff), a subcontractor, to perform concrete work. Sometime after Plaintiff started work on the project, Defendant urged Plaintiff to order “precast concrete troughs.” Despite Plaintiff's contention that precast concrete troughs were not within the scope of Plaintiff's services or responsibilities, Plaintiff made partial payment for the troughs. Plaintiff sought reimbursement for the troughs, and Defendant refused. Plaintiff continued to work on the project, but Defendant terminated Plaintiff's contract before Plaintiff finished all of its contractual obligations. Plaintiff now seeks payment from Defendant for the work it performed pursuant to the contract, as well as for the precast concrete troughs that Plaintiff alleges it was not obligated to purchase.

         I. Background[2]

         Defendant hired Plaintiff “to provide concrete placement and related services” for a project at White Sands Missile Range. (Doc. 26 (2d Am. Compl.) (“SAC”) ¶¶ 2, 15; see also Doc. 26-1 at 3.) The contract, signed by both parties in February 2017, specified in the “scope of work” section that the subcontractor would “furnish all labor, material, supplies, tools and supervision to diligently perform the following work . . . .” (See Docs. 26-1 at 9; 27-1 at 11.) The work is described simply as “Concrete.” (See Doc. 27-1 at 11.)

         On May 19, 2017, the manufacturer of the precast concrete troughs[3] at issue, TRENWA, Inc., sent Mr. “Dustin Munda, an agent of the Defendant, ” a price quotation for the troughs. (See SAC ¶¶ 24, 27-28; Doc. 26-10.) The total lot price was quoted as $59, 935. (Doc. 26-10 at 1.) On May 22, 2017, Mr. Munda “urged” one of Plaintiff's employees-Mr. Gilbert Espinoza-to order the troughs. (SAC ¶ 24.) Mr. Munda emailed Mr. Espinoza on June 7, 2017, and told Mr. Espinoza that “[t]he pre-cast troughs have been approved for order. So go ahead and move forward on this order.” (See Id. ¶ 29; Doc. 26-5 at 1.) Mr. Espinoza ordered the troughs, and Plaintiff “advanced partial payment to TRENWA . . . in the amount of $15, 500.00.” (See Doc. 26-5 at 2; SAC ¶ 34.) Plaintiff believes that Defendant paid for the balance of the troughs. (SAC ¶ 35.)

         Plaintiff had not obtained a quotation or ordered the troughs before this date, “because they were not included in their proposal [and were] not a part of their scope of services.” (Id. ¶ 30.) There is no specific mention of precast concrete troughs in the parties' contract. (See Docs. 26-1; 27-1.) Plaintiff never included a reference to precast concrete troughs in the proposals or schedule of values it submitted to Defendant. (SAC ¶¶ 19-21.) Plaintiff notes that a reference to troughs appeared in an amended draft of specifications, but the reference was included in an “electrical section, . . . which is outside the scope of Plaintiff's services.” (Id. ¶ 23.) Plaintiff further asserts that “[t]he plans for the project do not provide direction, nor any indication, that trenches and troughs would be Plaintiff A Mountain's responsibility.” (Id. ¶ 32.)

         The parties submitted conflicting affidavits from Plaintiff's employee, Mr. Espinoza. In his first affidavit signed on November 29, 2017, he states that at the time Plaintiff submitted the proposal for the project, Plaintiff understood that the proposal included work on the troughs. (See Doc. 16-3.) Mr. Espinoza goes on to state, however, that he originally proposed “cast in place” troughs, as opposed to “precast concrete troughs.” (Id. ¶ 11.) At some unspecified time later in the project, “the Army Corps of Engineers rejected the cast in place [troughs], and required precast concrete troughs as required in the specifications. After that time [Mr. Espinoza]-on behalf of A Mountain-ordered the pre-cast troughs from Trenwa.” (Id.) Mr. Espinoza asserts that it was Plaintiff's responsibility to pay for the troughs ordered from Trenwa. (Id. ¶ 12.)

         In his second affidavit signed on January 17, 2018, Mr. Espinoza “retract[ed] any and all statements” he made in an October 10, 2017 letter[4] that he says he signed “under a state of duress” and while “not in a sound state of mind due to the constant pressure by [Plaintiff and Defendant] looking to [him] to resolve the dispute between them.” (See Doc. 26-7.) Mr. Espinoza states that he did not have authority to bind Plaintiff to any contract, and “any obligation to purchase and/or manufacture the concrete ‘troughs' was in no way assumed to be the responsibility of [Plaintiff] at the time the contract was executed.” (Id.) He further asserts that Defendant “reviewed the associated schedule of values prior to the time the contract was executed and did not at that time make any indication that the concrete ‘troughs' were to be purchased and/or manufactured by” Plaintiff. (Id.)

         On November 29, 2017, Plaintiff submitted a pay request (“Pay Request No. 8”) and listed “Reimbursement for Precast Troughs” under a line item marked as a “change order” in the amount of $4, 468.71. (See Doc. 26-4; SAC ¶ 40.) The parties' contract provides that any changes to the contract “need prior written approval from the Project Manager in the form of a written Change Order. The progress billing should include amounts for approved (written) Change Orders only with reference to the Change Order numbers.” (Doc. 26-1 at 2.) The contract also includes a blank example “Subcontractor Change Order Agreement” form. (Doc. 27-1 at 12.)

         “On the morning of December 13, 2017, Defendant sent Plaintiff a letter stating that Plaintiff had repeatedly breached its contract with Defendant.” (SAC ¶ 44; see also Doc. 26-8.) Defendant accused Plaintiff of “submitting a false check . . . purporting to pay Trenwa when in fact Trenwa was not paid, not paying firms for materials, not having workers' compensation insurance, refusing to complete required work at the project, and not completing work in a timely manner, among other things.” (Doc. 26-8.) Plaintiff asserts that these accusations are “false or misleading . . . .” (See SAC ¶¶ 44-45, 48.)

         Plaintiff contends that Defendant had been in breach of the contract before it sent the December letter, because Defendant failed to make payment on Pay Request No. 8. (SAC ¶¶ 41, 46.) Plaintiff had also continued to perform work pursuant to the parties' contract into December 2017, and Defendant failed to pay Plaintiff for this work. (Id. ¶¶ 42, 46.)

         Defendant sent Plaintiff another letter the evening of December 13, 2017, and unilaterally terminated the parties' contract. (Id. ¶ 53; see Doc. 26-9.) Defendant stated that it was terminating the contract pursuant to ¶ 14 of the contract, which provides:

If the SUBCONTRACTOR repeatedly fails or neglects to carry out the Work in accordance with this AGREEMENT and fails to correct Work or fails to carry out Work in the time frame set forth, ARborunda may terminate this AGREEMENT and finish the SUBCONTRACTOR's work by whatever means ARborunda deems necessary. The SUBCONTRACTOR will be responsible for the expenses and damages incurred by ARborunda in finishing the SUBCONTRACTOR's work.

(Doc. 26-9 (quoting Doc. 26-1 at 4).)

         The parties' contract states:

After completion of work, SUBCONTRACTOR will submit to ARborunda, all required closeout documents, including a final waiver of liens . . . executed by SUBCONTRACTOR, an affidavit of certified payroll declaring that all required certified payrolls have been submitted to ARborunda, copies of all warranties for materials and equipment purchased by SUBCONTRACTOR, and any final invoices for services rendered. ...

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