17-2857 (L) United States ex rel. Five Star Elec. Corp. v Liberty Mut. Ins. Co.

17‐2857 (L) United States ex rel. Five Star Elec. Corp. v Liberty Mut. Ins. Co.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 18th day of December, two thousand eighteen.

PRESENT: ROBERT D. SACK, BARRINGTON D. PARKER, DENNY CHIN, Circuit Judges.

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UNITED STATES OF AMERICA FOR THE USE AND BENEFIT OF FIVE STAR ELECTRIC CORP., Plaintiff‐Appellant,

v. 17‐2857, 18‐1423

LIBERTY MUTUAL INSURANCE COMPANY, CAULDWELL‐WINGATE COMPANY, LLC, Defendants‐Appellees.

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FOR PLAINTIFF‐APPELLANT: ANDREW L. RICHARDS, Kaufman, Dolowich & Voluck, LLP, Woodbury, New York.

FOR DEFENDANTS‐APPELLEES: DAVID ROSENBERG (Michael T. Contos, on the brief), Marcus Rosenberg & Diamond LLP, New York, New York.

Appeal from the United States District Court for the Southern District of

New York (Swain, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the orders of the district court are AFFIRMED in

part and VACATED in part, and the case is REMANDED for further proceedings.

Plaintiff‐appellant Five Star Electric Corp. (ʺFive Starʺ), a subcontractor on

a federal construction project, appeals from the district courtʹs orders dated August 28,

2017 and April 19, 2018, denying its motions for leave to amend its complaint and for

reconsideration. Five Star commenced this action under state law and the Miller Act,

, for payments alleged to be due on the project for breach of contract and

unjust enrichment. We assume the partiesʹ familiarity with the underlying facts,

procedural history, and issues on appeal.

The following facts are drawn from the proposed Second Amended

Complaint (the ʺComplaintʺ) and are presumed to be true. In April 2009, Cauldwell‐

Wingate Company, LLC (ʺCWCʺ) contracted with the General Services Administration,

on behalf of the federal government, in connection with the renovation of the Thurgood

Marshall U.S. Courthouse, New York, New York. CWC, as the projectʹs general

contractor, subsequently entered into the subcontract at issue with Five Star for the

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performance of electrical work for the project. The subcontract was for the specified

sum of $43,100,000, and Five Star admits to having been paid $55,899,500.64 for its

work.

Five Star alleges that it performed additional work, at CWCʹs request, not

within the subcontractʹs original scope, and that it is entitled to $13,476,658.69 above the

original subcontract amount, of which $677,158.05 remains unpaid. Further, due to

delays and inefficiencies allegedly caused by CWCʹs mismanagement of the project,

Five Star also claims to have incurred an additional $19,694,447 in damages due to labor

and other general extension costs (exclusive of any markups Five Star asserts

entitlement to under the subcontract). While the subcontract did not specify an

anticipated completion date, Five Star expected to complete its obligations by October

2011, but instead was unable to finish work until October 2014 as a result of the delays.

The district court gave Five Star three opportunities to plead its claims. In

June 2015, Five Star filed the instant action asserting claims based on the Miller Act,

breach of contract, and quantum meruit against CWC and its surety, Liberty Mutual

Insurance Company. On November 1, 2016, the district court dismissed Five Starʹs

original complaint for failure to state a claim. Subsequently, Five Star moved for leave

to file a proposed amended complaint; the district court denied the motion on futility

grounds on August 28, 2017. Five Star then moved for reconsideration of the denial of

leave and, in the alternative, requested leave to file a second proposed amended

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complaint, the Complaint. On April 19, 2018, the district court denied the motion, again

on futility grounds, and found that the Complaint failed to cure the pleading

deficiencies. This appeal followed.1

We review a district courtʹs denial of leave to amend on the basis of

futility de novo, see Nielsen v. Rabin,

(2d Cir. 2014), and denial of

reconsideration for abuse of discretion, Johnson v. Univ. of Rochester Med. Ctr.,

, 125 (2d Cir. 2011). Upon such review, we conclude that (1) the district court erred

in holding that Five Star failed to plausibly allege a claim for the purported deficiency

of $677,158.05, and (2) the district court correctly dismissed the claims for additional

damages.

I. The Claim for the Deficiency in Payment

We conclude that the Complaint sufficiently alleges a breach of contract

claim for the underpayment of $677,158.05. The Complaint charges that the subcontract

was for the specified price of $43.1 million, and acknowledges that Five Star was paid

more than $55 million. The Complaint also asserts that CWC agreed to certain

additional work to be performed by Five Star, and specifies a number of change orders

ʺagreed to by CWC and performed by Five Starʺ totaling $13,476,658.69.2 The original

1 Five Star appeals only the August 28, 2017 and April 19, 2018 orders. It does not appeal the district courtʹs initial order granting defendants‐appelleesʹ motion to dismiss. 2 While the allegedly agreed‐upon change orders set forth in paragraph 10 only amount to $13,285,169.54, this miscalculation ultimately does not affect our analysis.

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contract price of $43,100,000 plus the purportedly agreed‐upon changes of

$13,476,658.69 equals $56,576,658.69. As the Complaint alleges that CWC paid only

$55,899,500.64, a deficiency of $677,158.05 is allegedly still owed. To this extent, the

Complaint states a claim, as Five Star alleges a meeting of the minds as to the change

orders set forth in paragraph 10 of the Complaint, for which payment was not made in

full.3

Similarly, Five Starʹs Miller Act claim for the underpayment for the

accepted change orders in paragraph 10 also survives as Five Star has plausibly alleged

that it performed work provided for in a contract for which a payment bond was

furnished and it ʺhas not been paid in fullʺ for such work. See U.S. ex rel. Hallenbeck v.

Fleisher Engʹg & Constr. Co.,

(2d Cir. 1939).

Therefore, we vacate the district courtʹs order and remand with

instructions for the district court to grant Five Star leave to file the Complaint to the

extent of its claim for the alleged $677,158.05 deficiency in payment.

II. The Claims for Additional Damages

To the extent Five Star seeks damages for additional work, we agree that

the Complaint fails to state a plausible claim.

3 At oral argument, counsel for defendants‐appellees essentially conceded that the Complaint plausibly states a breach of contract claim for these purportedly agreed‐upon changes.

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In connection with Five Starʹs demand for compensation for its extended

general condition costs, there are only allegations that Five Star submitted proposed

change orders in paragraph 24 ‐‐ and no allegations that CWC ever approved or

accepted these proposed change orders. Five Star has not identified a meeting of the

minds on what or how it was to be paid for work beyond that originally contemplated

by the subcontract and the change orders listed in paragraph 10. Even assuming Five

Star underestimated the number of hours the work would require, the subcontract

called for a set price and was not based on the number of hours performed. While there

was some agreement, as CWC in fact paid an additional $12.8 million, Five Star has not

explained the contractual basis for the alleged shortage beyond that relating to the work

covered by paragraph 10. Five Starʹs wish for more money is not a basis for a breach.

Additionally, Five Starʹs claim that CWCʹs incompetent supervision

caused delays and cost overruns is barred by the subcontractʹs ʺno‐damages‐for‐delayʺ

clause, which specifically provides that any delays caused by CWC in Five Starʹs work

is excused with its sole remedy being time extension for completion. While New York

law recognizes ʺuncontemplated delaysʺ as an exception to such a clauseʹs

enforceability, see Corinno Civetta Constr. Corp. v. City of New York,

, 309‐10

(1986), Five Starʹs factual assertions ʺamount[] to nothing more than inept

administration or poor planning,ʺ delays that were foreseeable at the time of contract

and therefore are unactionable, see Commercial Elec. Contractors, Inc. v. Pavarini Constr.

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Co.,

(1st Depʹt 2008); see also Corinno Civetta Constr. Corp., 67 N.Y.2d

at 313‐14 (noting that a contractorʹs ʺordinary, garden varietyʺ poor performance and

failure of coordination are within the partiesʹ contemplation and thus fall within the

scope of a ʺno‐damages‐for‐delayʺ clause).

Further, because Five Star has not plausibly alleged that ʺit has not been

paid in fullʺ for the work performed, as agreed to by the parties, in connection to the

delays and proposed change orders in paragraph 24, Five Starʹs Miller Act claim must

also fail as to these claims. See U.S. ex rel. Hallenbeck,

(noting that the

Miller Act requires a subcontractor to establish that it has ʺnot been paid in fullʺ for the

work performed for recovery under the bond).

We also identify no error in the district courtʹs denial of leave to amend as

to Five Starʹs quantum meruit claim because the parties do not dispute the subcontractʹs

validity or enforceability. See Mid‐Hudson Catskill Rural Migrant Ministry, Inc. v. Fine

Host Corp.,

(2d Cir. 2005) (ʺNew York law does not permit recovery in

quantum meruit . . . if the parties have a valid, enforceable contract that governs the same

subject matter as the quantum meruit claim.ʺ); see also Air Atlanta Aero Engʹg Ltd. v. SP

Aircraft Owner I, LLC,

(S.D.N.Y. 2009) (ʺCourts have permitted

pleading [quantum meruit] in the alternative in the face of a written agreement . . . when

there is a dispute as to the agreementʹs validity or enforceability.ʺ). Moreover, the

Complaint makes clear that the unjust enrichment claim is simply duplicative of Five

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Starʹs breach of contract claims. See Appʹx at 261 ¶¶ 48‐49 (ʺAt the special instance and

request of CWC, Five Star performed certain electrical work at the [p]roject,ʺ ʺ[t]he fair

and reasonable value of [which is] . . . in excess of the sum of $70 [million].ʺ). Under

these circumstances, we agree that Five Star cannot plead an unjust enrichment claim in

the alternative to its breach of contract claims.

Therefore, because Five Star failed both in the district court and on appeal

to specify how amendment would allow it to cure the pleading deficiencies as to its

claims for additional damages, leave to amend these claims would be futile. See Health‐

Chem Corp. v. Baker,

(2d Cir. 1990) (ʺ[W]here, as here, there is no merit

in the proposed amendments, leave to amend should be denied.ʺ). We likewise

conclude that the district court did not abuse its discretion in denying reconsideration,

as such a motion ʺis not a vehicle for relitigating old issues, presenting the case under

new theories, securing a rehearing on the merits, or otherwise taking [another] bite at

the apple.ʺ Analytical Surveys, Inc. v. Tonga Partners, L.P.,

(2d Cir. 2012)

(internal quotation marks omitted). Indeed, here, as the district court considered all

three iterations of the complaint, Five Star essentially had three bites at the apple to

plausibly allege its additional damages claims and failed to do so.

* * * * *

We have considered Five Starʹs remaining arguments and find them to be

without merit. Accordingly, the orders of the district court are AFFIRMED in part and

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VACATED in part, and the case is REMANDED for further proceedings consistent

with this ruling.

FOR THE COURT: Catherine OʹHagan Wolfe, Clerk of Court

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