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United States, Iowa Based Milling LLC v. Fischer Excavating, Inc.

United States District Court, C.D. Illinois, Rock Island Division

September 17, 2014

UNITED STATES OF AMERICA and, STATE OF ILLINOIS for the use and benefit of IOWA BASED MILLING, LLC, an Iowa limited liability company, Plaintiffs,
v.
FISCHER EXCAVATING, INC., CONCRETE STRUCTURES OF THE MIDWEST, INC., WESTERN SURETY COMPANY, and CONTINENTAL CASUALTY COMPANY, Defendants.

ORDER

SARA DARROW, District Judge.

Defendant Concrete Structures of the Midwest, Inc. ("Concrete Structures") won a contract to resurface a runway at Quad Cities International Airport ("QCIA"). Concrete Structures hired a subcontractor, Defendant Fischer Excavating, Inc. ("Fischer Excavating"), who then allegedly hired Plaintiff Iowa Based Milling, LLC, in an oral agreement, to mill the runway on several occasions. Concrete Structures obtained a bond on the project from Defendant Continental Casualty Company ("Continental") and Fischer Excavating obtained a bond on the project from Western Surety Company ("Western Surety"). Afterward, Fischer Excavating allegedly shorted Iowa Based Milling more than $85, 000 in fees. Iowa Based Milling filed a seven-count amended verified complaint seeking to recover from Concrete Structures or Fischer Excavating or the bonds provided in their favor. Defendants filed individual motions to dismiss for failure to state a claim, which, if granted, would eliminate all but the first count. For the following reasons, Defendants' Motion to Dismiss, ECF Nos. 45, 46, 47, 48, are DENIED.

BACKGROUND[1]

The State of Illinois and United States awarded a contract to resurface Runway 9/27 at the QCIA. As a contractual requirement, Concrete Structures obtained a bond from Continental with Illinois as the obligee. Concrete Structures hired Fischer Excavating as a subcontractor, and required that it obtain a bond, which it did from Western Surety. The Continental-Concrete Structures bond provides that it "shall inure to the benefit of any person... to whom any money may be due for payment of material or objects used in the work and for all labor performed in the work, whether by subcontractor or otherwise, " and that person may bring suit on the bond to recover. Iowa Based Milling believes that the Western Surety-Fischer Excavating bond similarly permits anyone not paid for work on the runway project to sue on the bond to recover payment, and makes unpaid contractors parties to the bond.

Fischer Excavating hired Iowa Based Milling through an oral agreement, which came about in this way. Iowa Based Milling provided a quote for the runway milling work to Fischer Excavating. In Fall 2010, a Fischer Excavating representative contacted Peter Simon-owner, sole member, and manager of Iowa Based Milling-to ask whether Simon was aware that the project required milling fourteen inches of material. Simon responded that Iowa Based Milling lacked the twelve-inch mill necessary to mill at that depth, and assumed this meant any offer by Fischer Excavating on the quote would be withdrawn. However, in February 2011, Fischer Excavating informed Simon that Iowa Based Milling "got the job." Simon contacted a Fischer Excavating representative to reiterate that Iowa Based Milling lacked the necessary equipment and therefore could not perform at the price originally quoted. Fischer Excavating representatives responded that only the middle of the runway was fourteen inches thick and the peripheral portions were thinner, and that Fischer Excavating was not worried about Iowa Based Milling's performance ability and would "work with" Iowa Based Milling on any problems. Simon understood this to mean that, where Iowa Based Milling could not mill at the quoted price, Fischer Excavating would obtain another milling subcontractor or increase payment for Iowa Based Milling's work.

Fischer Excavating mailed Simon a contract to sign and mail back. Simon contacted a Fischer Excavating representative and refused to sign a contract for work Iowa Based Milling may not be capable of performing. Weeks later, a Fischer Excavating representative asked Simon about the unreturned contract, and Simon again said that the Iowa Based Milling could not meet the work specifications or perform at the quoted price without losing money on the project. Fischer Excavating encouraged Iowa Based Milling to come to the worksite and determine whether its equipment was suitable. After two days of milling, Simon told an onsite Fischer Excavating representative that Iowa Based Milling could not mill for the quoted price and was going to stop work.

On April 13, 2011, Simon met with Wayne and Frank Fischer of Fischer Excavating, who said they were bringing in another subcontractor to finish the milling, but asked Iowa Based Milling to work the remainder of the week, which Iowa Based Milling did. On April 18, 2011, Simon returned to the worksite to remove Iowa Based Milling's equipment and a Fischer Excavating representative asked Simon to work again that day; Iowa Based Milling did and then demobilized. Approximately two weeks later, Joe Fischer of Fischer Excavating called Simon "pleading" for Iowa Based Milling to return. Iowa Based Milling agreed to if Fischer Excavating paid $650 per hour and supplied all fuel and water required by Iowa Based Milling for the project. Joe Fischer agreed. Simon also asked about pay for Iowa Based Milling's previous work, and Fischer told Simon to submit a pay request and Fischer Excavating would pay Iowa Based Milling shortly thereafter.

Iowa Based Milling milled on May 16, 25, and 31, 2011, and submitted invoices for previous work. On each day, Simon asked a Fischer Excavating representative about payment. When Iowa Based Milling billed for its May 31, 2011 work on June 6, 2011, a Fischer Excavating representative said Fischer Excavating was itself awaiting payment from Concrete Structures and assured Simon that Iowa Based Milling would be paid. On June 20, 2011, Iowa Based Milling received partial payment for its April 2011 milling. Simon asked about the remaining invoices, and a Fischer Excavating representative said that Illinois' fiscal year ended in June and "they were holding everything" until then, a statement Iowa Based Milling claims was false. Fischer Excavating agents also claimed that a temporary state government shutdown had prevented Fischer Excavating from receiving payment, and so it could not yet pay its subcontractors. The Illinois Department of Aeronautics later provided to Simon proof of its disbursements to Fischer Excavating indicating that the state regularly paid Fischer Excavating. According to Iowa Based Milling, Joe Fischer and the other Fischer Excavating employees offering these excuses for delayed payment, along with claims that Fischer Excavating did not know what it owed Iowa Based Milling, knew these statements were false or "did not make the necessary effort" to determine their truthfulness.

Iowa Based Milling milled again on August 25, 2011, and September 1, 2011, billing a few days after each job. On September 9, 2011, Simon again inquired about payment, and a Fischer Excavating representative said he would speak to Fischer Excavating's Tony Gilbertson and then reply. Simon called twice more and received no return call. Iowa Based Milling did not work on the runway again after September 1, 2011.

In total, Iowa Based Milling submitted eight invoices to Fischer Excavating for a total of $121, 692.85, along with supporting foreman worksheets. Fischer Excavating paid only $36, 511.18, leaving $85, 181.67 unpaid. On September 22, 2011, Joe Fischer called Simon and said Fischer Excavating only owed Iowa Based Milling $10, 815.00 and would send Iowa Based Milling the milling quantities. Fischer said that if Iowa Based Milling would not accept this amount, he would "take down" Iowa Based Milling "for breach of contract." Iowa Based Milling received no payment thereafter. The QCIA runway project was completed, the work accepted, and Fischer Excavating paid in whole or in part. Iowa Based Milling's counsel served notices of bond claims upon Ann Schneider, acting Secretary for the Illinois Department of Transportation, on October 26, 2011, and November 17, 2011. Iowa Based Milling also contacted counsel representing Continental and Western Surety to demand payment for Iowa Based Milling's unpaid work.

Iowa Based Milling claims it is entitled to the outstanding $85, 181.67 along with eighteen percent interest. On August 31, 2012, Iowa Based Milling filed suit against the four Defendants under the Miller Act, 40 U.S.C. § 3131, and the Illinois Public Construction Bond Act ("Little Miller Act"), 30 ILCS 550/1-550/2, and also asserted claims for breach of contract, fraud and misrepresentation, unjust enrichment, and quantum meruit. The Court has both federal question and diversity jurisdiction over this controversy. On September 26, 2013, the Court dismissed most of Iowa Based Milling's claims due to their failure to adequately notify Defendants of the nature of the claims against each. With the Court's leave, Iowa Based Milling filed an Amended Verified Complaint, which each Defendant moved to partially dismiss on November 7, 2013. Those motions are now before the Court.

DISCUSSION

Count I[2] alleges that Fischer Excavating breached its oral contract with Iowa Based Milling. Am. Compl. ¶¶ 49-56. Count II is a breach of contract claim against Concrete Structures based on the terms of the Continental-Concrete Structures bond. Id. ¶¶ 57-69. Count III alleges unjust enrichment and quantum meruit against Fischer Excavating and Concrete Structures. Id. ¶¶ 70-76. Count IV claims that Fischer Excavating engaged in fraud and misrepresentation. Id. ¶¶ 77-94. Count V asserts a claim under the Miller Act for recovery from the Continental-Concrete Structures bond. Id. ¶¶ 95-104. Count VI asserts similar bond claims under the Illinois "Little Miller Act" against the Continental-Concrete Structures and Western Surety-Fischer Excavating bonds. Id. ¶¶ 105-113. Finally, Count VII is a breach of contract claim to recover from the Western Surety-Fischer Excavating bond to the extent that it falls outside of the requirements of the state or federal Miller Acts. See id. ¶¶ 114-126. Except for Count I, which no one has moved to dismiss, each Defendant separately moves to dismiss all claims against it.

I. Standard on Motion to Dismiss

The Federal Rules of Civil Procedure require a pleading to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). To survive a motion to dismiss under Rule 12(b)(6), a complaint must state a claim to relief that is "plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007). A claim "has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Aschroft v. Iqbal , 556 U.S. 662, 678 (2009). The Seventh Circuit has identified the practical requirements of Twombly and Iqbal for federal pleading:

First, a plaintiff must provide notice to defendants of her claims. Second, courts must accept a plaintiff's factual allegations as true, but some factual allegations will be so sketchy or implausible that they fail to provide sufficient notice to defendants of the plaintiff's claim. Third, in considering the plaintiff's factual allegations, courts should not accept as ...

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