United States District Court, D. New Mexico
ROCK ROOFING, LLC, an Arizona limited liability company, Plaintiff,
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, Defendant.
MEMORANDUM OPINION AND ORDER
C. BRACK SENIOR U.S. DISTRICT JUDGE.
lawsuit requires the Court to determine whether a
non-signatory surety may enforce the arbitration provision in
a subcontract entered into between a subcontractor and a
prime contractor, where the subcontractor has brought suit
against the surety pursuant to a payment bond that provides
for a right to bring a lawsuit in the event of nonpayment.
The Court finds that under the facts of this case, the surety
may enforce the arbitration agreement under a theory of
equitable estoppel and that the arbitration provision must be
exercised before the subcontractor can bring suit pursuant to
the payment bond, as the right to bring suit is derived from
the terms of the subcontract.
Factual Background 
2016, Spring River Apartments Limited Partnership LLLP
(Spring River) contracted with ICON Professional Building
Co., LLC dba ICON Builders Southwest (ICON) to construct the
Spring River Apartments (the Spring River Contract). (Doc. 13
(Am. Compl.) ¶ 12; see also Doc. 20-1.)
Travelers Casualty and Surety Company of America (Defendant),
a Connecticut corporation (Am. Compl. ¶ 2), issued a
payment bond to ICON “in the amount of $15, 579, 521.00
to cover [ICON's] obligation to ‘pay for labor,
materials, and equipment' furnished for use in the
performance of the Spring River Contract.”
(Id. ¶ 13 (quoting Doc. 13-1 at 2).)
August 2016, ICON entered into a subcontract with Rock
Roofing, LLC (Plaintiff), an Arizona limited liability
company (id. ¶ 1), “to furnish the labor,
materials, and equipment required to roof the Spring River
Apartments.” (Id. ¶ 16 (citing Doc.
13-2).) Plaintiff alleges that ICON has failed to pay it
pursuant to the subcontract and several change orders.
(See Id. ¶¶ 18-35; see also Docs.
13-2; 13-3.) Plaintiff filed a Mechanic's Claim of Lien
with the County Clerk of Chaves County, New Mexico on
December 1, 2017. (Am. Compl. ¶ 44; see also
Doc. 13-4.) On December 11, 2017, ICON filed a Petition to
Cancel Lien in the state district court. See ICON
Prof'l Bldg. Co. v. Rock Roofing, LLC, No.
D-504-CV-2017-01205, Pet. (5th Jud. Dist. Ct. Dec. 11, 2017).
The state district court granted ICON's petition on
December 20, 2017, and ordered ICON to deposit one and
one-half times the Lien amount into the state court's
registry as a security bond. (Am. Compl. ¶¶ 46-47;
see also Doc. 13-5.) Defendant issued the Bond to
Release Mechanic's Lien as required. (Am. Compl. ¶
48 (citing Doc. 13-6).) Plaintiff asserts that it is owed
$971, 183.55 plus interest and “is entitled to have the
Bond foreclosed against ICON and the proceeds thereof applied
in payment of the amount due” pursuant to N.M. Stat.
Ann. § 48-2-9(C). (Id. ¶¶ 49-50.)
filed suit in this Court on December 18, 2018. (Doc. 1.)
Plaintiff asserted that the Court has jurisdiction over the
lawsuit pursuant to the Miller Act, 40 U.S.C. §§
3131-3134. (Id. ¶ 4.) It filed an Amended
Complaint on March 1, 2019, and added an allegation that the
Court also has diversity jurisdiction. (See Am.
Compl. ¶¶ 1-3, 5.) Plaintiff asserts two claims:
(1) that it is entitled, pursuant to the Miller Act, to
collect on the payment bond (id. ¶¶
36-42); and (2) that it is entitled, pursuant to N.M. Stat.
Ann. § 48-2-9(C), to have the Bond to Release
Mechanic's Lien foreclosed and the proceeds applied to
the amount it is owed from ICON (id. ¶¶
moves to dismiss Count I on the basis that Plaintiff has
failed to state a claim under the Miller Act. (See
Doc. 10 at 4-5.) It also moves the Court to dismiss the
Amended Complaint or for an order staying and compelling
arbitration. (See Id. at 5-9.) ICON moves, pursuant
to Federal Rule of Civil Procedure 24(a)(2), to intervene in
the lawsuit. (See Doc. 24.)
The Court will grant Defendant's motion to dismiss Count
Motion to Dismiss Standard
reviewing a motion to dismiss under Rule 12(b)(6), the Court
“must accept all the well-pleaded allegations of the
complaint as true and must construe them in the light most
favorable to the plaintiff.” In re Gold Res. Corp.
Sec. Litig., 776 F.3d 1103, 1108 (10th Cir. 2015)
(citation omitted). To survive a motion to dismiss, the
complaint does not need to contain “detailed factual
allegations, ” but it “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
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570
ordinarily, a motion to dismiss must be converted to a motion
for summary judgment when the court considers matters outside
the complaint, see Fed. R. Civ. P. 12(d), matters
that are judicially noticeable do not have that effect . . .
.” Genesee Cty. Emps.' Ret. Sys. v. Thornburg
Mortg. Sec. Tr. 2006-3, 825 F.Supp.2d 1082, 1122 (D.N.M.
2011) (citing Duprey v. Twelfth Judicial Dist.
Court, 760 F.Supp.2d 1180, 1192-93 (D.N.M. 2009)).
Exhibits attached to a complaint are properly treated as part
of the pleadings for purposes of ruling on a motion to
dismiss. . . . [F]acts subject to judicial notice may be
considered in a Rule 12(b)(6) motion without converting the
motion to dismiss into a motion for summary judgment. This
allows the court to take judicial notice of its own files and
records, as well as facts which are a matter of public
record. However, the documents may only be considered to show
their contents, not to prove the truth of matters asserted
Id. at 1122-23 (quoting Tal v. Hogan, 453
F.3d 1244, 1264 n.24 (10th Cir. 2006)). Thus, the Court may
consider the exhibits Plaintiff attached to and referenced in
its Amended Complaint. (See Docs. 13; 13-1-13-6.)
Court may also consider the Spring River Contract that
Plaintiff attached to its response brief, as the contract
“is referred to in the complaint and is central to the
plaintiff's claim . . . .” Radian Asset
Assurance Inc. v. Coll. of the Christian Bros. of N.M.,
No. CIV 09-0885 JB/DJS, 2011 WL 10977180, at *17 (D.N.M. Jan.
24, 2011) (quotation and subsequent citations omitted);
see also Raja v. Ohio Sec. Ins. Co., 305 F.Supp.3d
1206, 1238 n.9 (D.N.M. 2018). Plaintiff cites to the Spring
River Contract throughout the Amended Complaint (see
Am. Compl. ¶¶ 12-15, 37-39, 42), and Defendant does
not dispute its authenticity (see Doc. 21).
Plaintiff has not sufficiently alleged a claim under the
brings its first claim for collection on the payment bond
under the Miller Act, 40 U.S.C. § 3131(b)(2). (Am.
Compl. ¶ 37.) Defendant argues that Plaintiff has not
alleged facts sufficient to maintain a claim under the Miller
Act. (See Doc. 10 at 2.) “The Miller Act, 40
U.S.C. § 3131 et seq., requires that before a
contract of more than $100, 000 is awarded for construction,
alteration or repair of any public building or public work of
the U.S. Government, a performance bond and payment bond must
be supplied, which become binding once the contract is
awarded.” United States for use of Sundance
Roofing, Inc. v. HDR Enters., LLC, No. CIV
09-00441-MV-WDS, 2010 WL 11626653, at *2 (D.N.M. Mar. 30,
2010) (citing 40 U.S.C. § 3131). The Miller Act
“provide[s] a remedy for suppliers of labor and
material to a ...