United Illuminating Co. v. Whiting-Turner Contracting Co.

          MEMORANDUM OF DECISION ON THIRD-PARTY DEFENDANT'S MOTION TO DISMISS

          WARREN W. EGINTON SENIOR UNITED STATES DISTRICT JUDGE.

         Third-party defendant North American Specialty Insurance Company (“North American”) has moved to dismiss Count Nine of the first amended complaint filed by third-party plaintiff Whiting-Turner Contracting Co. (“Whiting-Turner”). For the following reasons, North American's motion to dismiss will be denied.

         BACKGROUND

         On June 30, 2010, The United Illuminating Company (“UI”) and Whiting-Turner entered into an agreement for the construction of The United Illuminating Central Facility Project located in Orange, Connecticut. The agreement required the construction of an office building, an operations building, and related parking lots and common driveways.

         On April 21, 2011, North American as surety executed and delivered a performance bond for The United Illuminating Central Facility, naming B&W Paving as principal and Whiting-Turner as obligee. Construction of the parking lots and common driveways was completed in 2012.

         Whiting-Turner alleges that during its performance on the Project, B&W Paving breached and defaulted on its obligations under the B&W Paving subcontract, including, but not limited to: B&W Paving installed an insufficient quantity of asphalt or otherwise improperly and/or incompletely installed the asphalt for the parking lots and driveways, failed and refused to remove and replace its nonconforming work and breached its warranties.

         In 2016, Whiting-Turner made a claim on the B&W Paving performance bond through several communications with North American. Whiting-Turner alleges that North American is liable by reason of the foregoing breach of the B&W Paving performance bond for any and all damages and costs arising from B&W Paving's breach and default, including attorney's fees.

         DISCUSSION

         The function of a motion to dismiss is "merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." Ryder Energy Distribution v. Merrill Lynch Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984). When deciding a motion to dismiss, the Court must accept all well-pleaded allegations as true and draw all reasonable inferences in favor of the pleader. Hishon v. King, 467 U.S. 69, 73 (1984). The complaint must contain the grounds upon which the claim rests through factual allegations sufficient “to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). A plaintiff is obliged to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         North American argues that Whiting-Turner fails to assert a plausible claim for breach of the bond for several reasons: (1) Absent performance of the remedial paving work by Whiting-Turner, North American has no obligation to reimburse Whiting-Turner for such work under the bond; (2) Given the one-year limitation on the subcontract's warranty obligation, Whiting-Turner's claim is untimely; (3) Whiting-Turner's allegations that B&W is in default directly contradict Whiting-Turner's posture as defendant, including express denials that any defective work was performed on the project; (4) Whiting-Turner's claim is asserted conditionally, demonstrating that actual default under the bond is merely a possibility; and (5) Whiting-Turner's claim is internally inconsistent with allegations in its underlying claim against B&W.

         Performance of Remedial Work

          North American argues that absent performance of the remedial work by Whiting-Turner, which has not occurred, North American has no obligation under the bond. The bond provides in relevant part:

the Surety shall, within ten (10) calendar days after notice of default from the Obligee, notify the Obligee of its election either to promptly proceed to remedy the default or promptly proceed to complete the contract in accordance with and subject to its terms and conditions. In the event the Surety does not elect to exercise either of the above stated options, then the Obligee thereupon shall have the remaining work completed, Surety to remain liable hereunder for all expenses, including attorney's fees, of completion.

(emphasis added). North American contends that since it elected to exercise neither of the first two stated options after notice of default, Whiting-Turner's right to reimbursement is expressly conditioned upon Whiting-Turner completing the paving work. According to North American, as Whiting-Turner has declined ...