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United States v. Centerre Government Contracting Group, LLC

United States District Court, D. Colorado

March 3, 2014

UNITED STATES OF AMERICA, for the use and benefit of DARO TECH, LTD., a Colorado corporation, Plaintiffs,
v.
CENTERRE GOVERNMENT CONTRACTING GROUP, LLC, a Colorado limited liability company, BERKLEY REGIONAL INSURANCE COMPANY, a Colorado corporation, KIEWIT BUILDING GROUP, INC., TURNER CONSTRUCTION COMPANY, a New York corporation, KIEWIT-TURNER A JOINT VENTURE, a Joint Venture doing business in Colorado, TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, a Connecticut corporation, FEDERAL INSURANCE COMPANY, a New Jersey corporation, FIDELITY AND DEPOSIT COMPANY OF MARYLAND/ZURICH AMERICAN INSURANCE COMPANY, an Illinois corporation, LIBERTY MUTUAL INSURANCE COMPANY, a Massachusetts corporation, and THE CONTINENTAL INSURANCE COMPANY, an Illinois corporation, Defendants.

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

KATHLEEN M. TAFOYA, Magistrate Judge.

This case comes before the court on the following motions:

1. "Kiewit-Turner's Motion to Dismiss Second and Fourth Claims for Relief Against Kiewit-turner, Or, in the Alternative, Motion to Stay" (Doc. No. 30 [K-T's Mot.], filed August 23, 2013), to which Plaintiff filed its response on September 11, 2013 (Doc. No. 61 [Resp. K-T's Mot.]) and Defendant Kiewit-Turner filed its reply on September 25, 2013 (Doc. No. 70 [Reply K-T's Mot.]);

2. "Kiewit-Turner Sureties' Motion to Dismiss Plaintiff's Second and Fourth Claims for Relief, Or, in the Alternative, Motion to Stay" (Defendants Travelers Casualty and Surety Company of America, Federal Insurance Company, Fidelity and Deposit Company of Maryland/Zurich American Insurance Corporation, Liberty Mutual Insurance Company, and The Continental Insurance Company [K-T Sureties]) (Doc. No. 33 [K-T Sureties' Mot.]), to which Plaintiff filed its response on September 11, 2013 (Doc. No. 62 [Resp. K-T Sureties' Mot.]) and K-T Sureties filed its reply on September 25, 2013 (Doc. No. 71 [Reply K-T Sureties' Mot.]);

3. "Turner Construction Company's Motion to Dismiss" (Doc. No. 37 [Turner's Mot.], filed August 23, 2013), to which Plaintiff filed its response on September 13, 2013 (Doc. No. 64 [Resp. Turner's Mot.]) and Defendant Turner Construction Company filed its reply on September 26, 2013 (Doc. No. 75 [Turner's Reply]);

4. "Defendant Centerre Government Contracting Group, Llc's Motion to Dismiss Plaintiff's First, Third, Fifth, Sixth and Seventh Claims for Relief Or, in the Alternative, Motion to Stay the Proceedings" (Doc. No. 51 "Centerre's Mot.], filed September 10, 2013), to which Plaintiff filed its response on September 25, 2013 (Doc. No. 72 [Response. Centerre's Mot.]) and Centerre filed its reply on October 9, 2013 (Doc. No. 76 [Reply Centerre's Mot.]);

5. "Defendant Berkley Regional Insurance Company's Motion to Dismiss Plaintiff's First and Third Claims for Relief Or, in the Alternative, Motion to Stay the Proceedings" (Doc. No. 55 [Berkley's Mot.], filed September 10, 2013), to which Plaintiff filed its response on September 25, 2013 (Doc. No. 73 [Resp. Berkley's Mot.]) and Berkley filed its reply on October 9, 2013 (Doc. No. 77 [Reply Berkley's Mot.]); and

6. "Kiewit Building Group's Motion to Dismiss"[1] (Doc. No. 68 [Kiewit Building's Mot.], filed September 20, 2013), to which Plaintiff filed its response on September 26, 2013 (Doc. No. 74 [Resp. Kiewit Building's Mot.]) and Defendant Kiewit Building Group filed its reply on October 10, 2013 (Doc. No. 78 [Kiewit Building's Reply]).

These motions are ripe for recommendation and review.

STATEMENT OF THE CASE

On August 31, 2010, Kiewit-Turner ("K-T") and the United States Department of Veterans Affairs ("VA") entered into a contract ("Prime Contract") for renovations to the Replacement Medical Center Facility in Denver, Colorado, a hospital owned and operated by the VA (the "Project"). (Doc. No. 1 [Compl.], ¶ 20.) On or about September 8, 2010, K-T, as principal, and K-T's Sureties, as sureties, executed a payment bond in compliance with 40 U.S.C. §3131(b)(2) for the protection of all persons supplying labor and/or materials in the prosecution of the work provided for in the Prime Contract ("Kiewit-Turner's Payment Bond"). ( Id., ¶ 21, Ex. A.) On or about April 18, 2011, Defendant Centerre Contracting Group ("Centerre") entered into a written contract with K-T to perform labor and supply materials in the prosecution of the work provided for in the Prime Contract (the "Subcontract"). ( Id., ¶ 22.) On or about April 19, 2011, Centerre, as principal, and Centerre's Surety (Berkely Regional Insurance Company), as surety, executed a payment bond in compliance with 40 U.S.C. §3131(b)(2) for the protection of all persons supplying labor and/or materials in the prosecution of the work provided for in the Subcontract ("Centerre's Payment Bond"). ( Id., ¶ 23, Ex. B.) On or about May 17, 2011, Centerre awarded Plaintiff Daro Tech the contract for asbestos abatement and building demolition work for the Project (the "Sub-subcontract"). ( Id., ¶ 24.)

Daro Tech alleges the Project's schedule was repeatedly suspended and delayed, causing Daro Tech to incur overhead and operating expenses not originally anticipated. ( Id., ¶¶ 26, 28.) Daro Tech also alleges the original site report, which warranted the amount and location of asbestos, significantly understated the amount and inaccurately described the location of the asbestos, which increased both the duration and cost for Daro Tech's performance on the Project. ( Id., ¶¶ 31, 32.)

Daro Tech submitted invoices and applications for payment to Centerre. ( Id., ¶ 36.) Daro Tech asserts that Centerre issued several change orders adjusting the value of the Sub-subcontract. ( Id., ¶¶ 37, 28, 41, 47.) After the first amendment, Centerre requested that Daro Tech submit future requests for adjustments using Change Order Proposals, and Daro Tech began submitting Change Order Proposals in January 2012. ( Id., ¶ 39.) On July 17, 2012, Daro Tech furnished the last of its labor and materials to the Project. ( Id., 43.) From July 2012 through May 2013, Daro Tech attempted to obtain payments for amounts due and owing on the Project. ( Id., ¶ 44.)

On May 8, 2013, Centerre issued its final Amendment to the Sub-subcontract, which increased the value of the Sub-subcontract from $710, 273 to $1, 533, 052 due to added scope work, delay costs, and expanded general conditions. ( Id., ¶ 47.) Plaintiff alleges this amendment reflected only some of the work for which Daro Tech had submitted Change Order Proposals, and it was preceded by unilateral change orders issued by the VA, pursuant to which Centerre was required to pay Daro Tech in full for the amount authorized by the VA of $822, 779. ( Id., ¶¶ 48-49.) Of this amount, $449, 000 was intended to reimburse Daro Tech for delay and additional general condition costs, which the remaining amount was intended to reimburse Daro Tech for Added Scope Work. ( Id., ¶ 49.)

Daro Tech alleges the VA issued payment in the amount of $822, 779 to Defendant K-T, which then passed this amount to Centerre with explicit instructions to pay it to Daro Tech. ( Id., ¶ 50.) Instead, Daro Tech alleges Centerre has paid only $237, 600 of amount authorized by the VA's change orders. ( Id., ¶ 51.) Additionally, Daro Tech alleges Centerre has not paid Daro Tech $305, 985 on the adjusted value of the Sub-subcontract. ( Id., ¶¶ 51, 52.) Finally, Daro Tech alleges on May 30, 2012, Centerre issued a change order deducting $73, 540 from the amount authorized by the VA for payment to Daro Tech for payment of attorney's fees incurred by Centerre defending an action brought by Daro Tech against Centerre in the State of Colorado. ( Id., ¶¶ 54, 55.) Daro Tech alleges the amount still due and owing for materials furnished or supplied to Centerre and K-T, and for labor done or performed by Daro Tech for Centerre and K-T, is $874, 394, plus interest, costs, and attorneys' fees. ( Id., ¶ 59.)

Plaintiff asserts the following claims for relief:

1. First Claim for Relief under the Miller Act against Centerre and Centerre's Surety (hereinafter "Berkley");
2. Second Claim for Relief under the Miller Act against Kiewit-Turner and Kiewit-Turner Sureties;
3. Third Claim for Relief for Quantum Meruit against Centerre and Berkley;
4. Fourth Claim for Relief for Quantum Meruit against Kiewit-Turner and Kiewit-Turner Sureties;
5. Fifth Claim for Relief for Breach of Contract against Centerre;
6. Sixth Claim for Relief for Breach of the Covenant of Good Faith and Fair Dealing against Centerre; and
7. Seventh Claim for Relief for Unjust Enrichment against Centerre.

( See Compl.)

LEGAL STANDARD

1. Lack of Subject Matter Jurisdiction

Federal Rule of Civil Procedure 12(b)(1) empowers a court to dismiss a complaint for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). Dismissal under Rule 12(b)(1) is not a judgment on the merits of a plaintiff's case. Rather, it calls for a determination that the court lacks authority to adjudicate the matter, attacking the existence of jurisdiction rather than the allegations of the complaint. See Castaneda v. INS, 23 F.3d 1576, 1580 (10th Cir. 1994) (recognizing federal courts are courts of limited jurisdiction and may only exercise jurisdiction when specifically authorized to do so). The burden of establishing subject matter jurisdiction is on the party asserting jurisdiction. Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir. 1974). A court lacking jurisdiction "must dismiss the cause at any stage of the proceedings in which it becomes apparent that jurisdiction is lacking." See Basso, 495 F.2d at 909. The dismissal is without prejudice. Brereton v. Bountiful City Corp., 434 F.3d 1213, 1218 (10th Cir. 2006); see ...


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