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Ebi Directional Drilling, Inc v. Fidelity & Deposit Company of Maryland and

December 16, 2010

EBI DIRECTIONAL DRILLING, INC., PLAINTIFF,
v.
FIDELITY & DEPOSIT COMPANY OF MARYLAND AND
ZURICH AMERICAN INSURANCE COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge

Thursday, 16 December, 2010 11:25:51 AM

Clerk, U.S. District Court, ILCD

OPINION

This matter comes before the Court on Defendants' Motion to Dismiss (d/e 9) (Motion). For the reasons stated below, the Motion is ALLOWED IN PART AND DENIED IN PART.

FACTS Plaintiff EBI Directional Drilling, Inc. (EBI) is a company whose principal place of business is in Minnesota. See Complaint (d/e 1), at ¶ 3. On July 13, 2009, Merryman Excavation (Merryman) asked EBI for a quote to perform horizontal drilling for a water transmission line project (Project) in Pittsfield, Illinois. Merryman had a Contract with the Project's owner, the City of Pittsfield (City), to perform various work on the Project. See Complaint at Exhibit B (d/e 3) (Payment Bond). On November 25, 2009, Merryman subcontracted the Project's drilling work to EBI pursuant to a written Agreement. Id. at Exhibit A (Subcontract). The Subcontract stated that EBI's was to provide directional boring services for the Project, at specified costs, with work commencing on November 30, 2009, and ending on February 1, 2009 [sic]. Id. EBI was supposed to be paid by Merryman within 15-days of Merryman receiving money from the City. See Complaint at ¶ 9.

Payment under the Subcontract was secured by the Payment Bond, which was issued by Defendant Fidelity & Deposit Company of Maryland (Fidelity). Id. at ¶ 10. On the Payment Bond, Merryman was listed as the Project's contractor (or Principal) and the City was listed as the Project's "Owner". See Exhibit B at p. 8.*fn1 The Payment Bond's recitations stated that it was posted to ensure that subcontractors, such as EBI, were paid in the event Merryman did not "promptly make payment" to them. Id.

EBI completed its work on February 17, 2010, and sought a $312,311.70 payment from Merryman. See Complaint at ¶ 13. Although Merryman had received that money from the City, Merryman refused to pay EBI. Id. at ¶¶ 14, 17. On May 17, 2010, EBI demanded Fidelity pay the money pursuant to the terms of the Payment Bond. Id. at ¶ 15. Defendant Fidelity, a Surety whose principal place of business is in Maryland, and Defendant Zurich American Insurance Company (Zurich), an insurer whose principal place of business is in New York, refused to pay EBI. Id. at ¶¶ 4, 5, 15.

On July 13, 2010, EBI sued Defendant Fidelity and Defendant Zurich in a single-count Complaint alleging that the Defendants' nonpayment breached their contractual duties under the Payment Bond. See Complaint at ¶ 20. EBI attached a copy of the Subcontract and Payment Bond in support of its claim. Id. at Exhibits A and B. Pursuant to Federal Rule of Civil Procedure 12(b)(6), the Defendants moved to dismiss EBI's claim. Motion. They have submitted Defendant's Memorandum of Law In Support of Its Motion to Dismiss (Memorandum) (d/e 10). EBI responded by filing Plaintiff's Memorandum of Law In Opposition to Defendants' Motion to Dismiss and In Support of Plaintiff's Cross Motion For Partial Summary Judgment (Response) (d/e 21).

JURISDICTION & VENUE

Since all of the Defendants are diverse from EBI and the amount in controversy exceeds $75,000, this Court has subject matter jurisdiction under 28 U.S.C. § 1332(a)(1). Personal jurisdiction exists over Fidelity because Fidelity's issuance of the Payment Bond shows it conducted business in Illinois. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (personal jurisdiction exists where a defendant "'purposefully avail[ed] itself of the privilege of conducting activities'" in the forum state)(quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). However, there is no personal jurisdiction over Zurich since there is nothing to show that Zurich conducted any business in Illinois. See World-Wide Volkswagen, 444 U.S. at 297. Venue for the claim against Fidelity exists because "a substantial part of the events or omissions giving rise" to EBI's claim occurred in this judicial district. See 28 U.S.C. § 1391(a)(2).

STANDARD

Complaints are construed in the light most favorable to a plaintiff, taking as true all well-pleaded factual allegations and drawing all factual inferences in plaintiff's favor. See Reger Development, LLC v. Nat'l City Bank, 592 F.3d 759, 763-64 (7th Cir. 2010). A complaint's "allegations must plausibly suggest that the plaintiff has a right to relief, raising that possibility above a 'speculative level'; if they do not, the plaintiff pleads itself out of court." Tamayo v. Blagojevich, 526 F.3d 1074, 1084 (7th Cir. 2008) (citation omitted).

A Rule 12(b)(6) motion must be "decided solely on the face of the complaint and any attachments that accompanied its filing." See Miller v. Herman, 600 F.3d 726, 733 (7th Cir. 2010)(citations omitted); see also, Reger, 592 F.3d at 764. If a complaint "refers to and rests on a contract or other document that is not attached to the complaint, a court might be within its rights to consider that document in ruling on a Rule 12(b)(6) motion to dismiss the complaint without converting the motion into one for summary judgment, so long as the authenticity of the document is ...


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