United States District Court, D. Delaware
ANTHONY ALLEGA CEMENT CONTRACTOR, INC. and UNITED STATES OF AMERICA, by and for the Benefit of Anthony Allega Cement Contractor, Inc., Plaintiffs,
JOHNSON CONTROLS FEDERAL SYSTEMS/VERSAR, LLC, and VERSAR, INC., and WESTCHESTER FIRE INSURANCE COMPANY, Defendants.
R. FALLON UNITED STATES MAGISTRATE JUDGE.
before the court in this breach of contract action is a
motion filed by defendants Johnson Controls Federal
Systems/Versar, LLC (the "Joint Venture"), Versar,
Inc. ("Versar"), and Westchester Fire Insurance
Company ("Westchester") (collectively,
"defendants") to dismiss for lack of subject matter
jurisdiction pursuant to Federal Rule of Civil Procedure
12(b)(1) and failure to state a claim upon which relief can
be granted pursuant to Federal Rule of Civil Procedure
12(b)(6), or alternatively to stay or transfer
venue. (D.I. 10) The court has jurisdiction
pursuant to 28 U.S.C. §§ 1331, 1332(a), and
1367(a). For the following reasons, defendants' 12(b)(1)
motion is denied, defendants' 12(b)(6) motion is
granted-in-part and denied-in-part, defendants' motion to
transfer venue is denied, and defendants' motion to stay
is granted for a limited period.
13, 2018, plaintiffs Anthony Allega Cement Contractor, Inc.
("Allega") and the United States of America
(collectively, "plaintiffs") originally filed this
action against multiple defendants for money damages and a
declaratory judgment. (D.I. 1) On July 18, 2018, defendants
filed their pending motion to dismiss pursuant to
Fed.R.Civ.P. 12(b)(1) and 12(b)(6), or, in the alternative,
to stay or transfer venue. (D.I. 10)
Joint Venture was the prime contractor to the Department of
Air Force Installation Contracting Agency ("the
Government") on a public improvement project in Delaware
at Dover Air Force Base, Project FJXT031005 (the
"Project"). (D.I. 1 at ¶ 2) Versar was the
Joint Venture's subcontractor on the Project.
(Id.) Allega was a second-tier subcontractor and
cement supplier to Versar. (D.I. 11 at 2) Westchester
provided the required Miller Act surety bond with a penal sum
of $98, 299, 269.39 that the Joint Venture furnished to the
Government. (D.I. 1 at ¶ 24)
November 14, 2014, Versar and Allega executed Subcontract
Agreement No. 009300 (the "Subcontract"). (D.I. 1
at ¶ 1) Pursuant to the Subcontract, Allega was to
demolish and replace a 9, 600 foot long, 150 foot wide
runway, "adjoining taxiways, airfield lighting, NAVAIDs,
incidental related work, and repair instrumental landing
system (ILS) and runway approach lighting" at the Dover
Air Force Base. (D.I. 11, Ex. A at 9; D.I. 1 at ¶ 20)
Following the award of the Subcontract to Allega, the Project
experienced repeated significant delays and Allega incurred
costs as it attempted to get the Project back on schedule.
(D.I. 1 at ¶¶ 28-29, 37, 39-41) Allega notified
Versar of the problems with delays and expenses.
(Id. at¶43) Allega avers in the complaint that
the Joint Venture and Versar have not paid Allega additional
unit costs for labor, equipment, and services. (Id.
at ¶¶ 46, 54)
29(a) of the Subcontract includes a provision regarding
disputes that mandates alternative dispute resolution
("ADR") in accordance with the prime contract's
provisions,  as the plaintiffs' sole remedy
"[t]o the extent a claim, dispute or controversy arises
out of, or relates to, problems caused by
Client or for which Client is responsible."
(D.I. 11, Ex. A at 29) For disputes or controversies "not
arising out of, or relating to, problems caused by Client or
for which Client is responsible," Article 29(b) of the
Subcontract states that:
Seller [Allega] and Buyer [Versar] will first attempt to
resolve such claim, dispute or controversy at the field level
through discussions between Buyer's Representative and
Seller's Representative. If a claim, dispute or
controversy cannot be resolved through Buyer's
Representative and Seller's Representative, Buyer's
Senior Representative and Seller's Senior Representative,
upon the request of either party, shall meet as soon as
conveniently possible, but in no case later than thirty (30)
days after such a request is made, to attempt to resolve such
claim dispute or controversy. Prior to any meetings between
the Senior Representatives, the parties will exchange
relevant information that will assist the parties in
resolving the claim, dispute or controversy.
(Id. at 29-30)
The Subcontract includes a forum selection clause that
provides that any disputes arising from or regarding the
Subcontract "will be litigated in a court of
jurisdiction in the Commonwealth of Virginia."
(Id. at 7, 28, 30)
Finally, the Subcontract includes a "pay-if-paid"
provision, which provides that:
[i]f Client shall order any changes, including additions,
reductions or deletions, in the work to be performed,
[Allega] shall only be entitled to adjustments in its
Subcontract Sum and the times for completion of the Work
attributable to such Client directed changes and then only to
the extent [Versar] actually receives such adjustments from
(Id. at 18)
22, 2017, the Joint Venture filed suit against the Government
in the United States Court of Federal Claims (the
"Government Action"), seeking delay costs in
connection with a six month delay in the Project "[d]ue
to the contract changes directed by the Air
Force."(D.I. 11, Ex. B at ¶¶ 14, 34-37)
On June 6, 2016, the Joint Venture submitted a request for
equitable adjustment to recover its delay costs from the
Government, which the Government rejected. (Id. at
¶ 16) On October 5, 2016, the Government issued a final
offer of $7, 549, 967, which the Joint Venture rejected.
(Id. at ¶¶ 17-18) On November 18, 2016,
after negotiations, the Government issued a unilateral
modification, Modification 7 ("Mod 7"), in the same
amount as its final offer and extended the period of
performance by six months. (Id. at ¶¶
19-20) According to the complaint in the Government Action,
the Government has not explained how it calculated the amount
paid under Mod 7. (Id. at ¶ 21)
Joint Venture alleges, "[u]pon completion of the Phase 1
and Phase 2, total Delay Costs incurred by [the
Joint Venture] and its subcontractors totaled $13, 119,
015.40. Since [Mod 7] paid out $7, 549, 967.00, [the Joint
Venture's] unpaid Delay Costs total $5, 569,
048.40." (Id. at ¶ 23) Thus, the Joint
Venture seeks to recover the difference between the actual
delay costs incurred and the adjustment received under Mod 7.
(Id. at ¶¶ 35-37) The Government Action
remains pending and whether the Joint Venture may recover
additional delay costs has not yet been determined.
Subcontract Forum Selection
Subcontract mandates that "all disputes arising out of
or related to [the Subcontract] shall be governed by the laws
of the Commonwealth of Virginia without regard to its
conflict of law principles that would apply the law of
another jurisdiction . . . ." (D.I. 11, Ex. A at 28)
Therefore, Virginia law is applicable to the resolution of
contractual disputes in the instant case. See Pyott-Boone
Elecs. Inc. v. IRR Trust for Donald L. Fetterolf Dated Dec.
9, 1997, 918 F.Supp.2d 532, 537 (W.D. Va. 2013).
Federal Rule of Civil Procedure 12(b)(1)
Rule of Civil Procedure 12(b)(1) authorizes dismissal of a
complaint for lack of jurisdiction over the subject matter,
or if the plaintiff lacks standing to bring its claim.
Motions brought under Rule 12(b)(1) may present either a
facial or factual challenge to the court's subject matter
jurisdiction. See Lincoln Ben. Life Co. v. AEI Life,
LLC, 800 F.3d 99, 105 (3d Cir. 2015) (quoting Common
Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir.
2009)). In reviewing a facial challenge under Rule 12(b)(1),
the standards relevant to Rule 12(b)(6) apply. In this
regard, the court must accept all factual allegations in the
complaint as true, and the court may only consider the
complaint and documents referenced in or attached to the
complaint. See Church of Universal Bhd. v. Farmington
Twp. Supervisors, 296 Fed.Appx. 285, 288 (3d Cir. 2008);
Gould Elec, Inc. v. United States, 220 F.3d 169, 176
(3d Cir. 2000). In reviewing a factual challenge to the
court's subject matter jurisdiction, the court is not
confined to the allegations in the complaint. See
Mortensen v. First Fed. Sav. & Loan Ass 'n, 549
F.2d 884, 891 (3d Cir. 1977). Instead, the court may consider
evidence outside the pleadings, including affidavits,
depositions and testimony, to resolve any factual issues
bearing on jurisdiction. See Gotha v. United States,
115 F.3d 176, 179 (3d Cir. 1997). Once the court's
subject matter jurisdiction over a complaint is challenged,
the plaintiff bears the burden of proving that jurisdiction
exists. See Lincoln, 800 F.3d at 105;
Mortensen, 549 F.2d at 891.
Federal Rule of Civil Procedure 12(b)(6)
12(b)(6) permits a party to move to dismiss a complaint for
failure to state a claim upon which relief can be granted.
Fed.R.Civ.P. 12(b)(6). When considering a Rule 12(b)(6)
motion to dismiss, the court must accept as true all factual
allegations in the complaint and view them in the light most
favorable to the plaintiff. Umlandv. Planco Fin.
Servs., 542 F.3d 59, 64 (3d Cir. 2008).
state a claim upon which relief can be granted pursuant to
Rule 12(b)(6), a complaint must contain a "short and
plain statement of the claim showing that the pleader is
entitled to relief." Fed.R.Civ.P. 8(a)(2). Although
detailed factual allegations are not required, the complaint
must set forth sufficient factual matter, accepted as true,
to "state a claim to relief that is plausible on its
face." BellAtl. Corp. v. Twombly, 550 U.S. 544,
570 (2007); see also Ashcroft v. Iqbal, 556 U.S.
662, 663 (2009). A claim is facially plausible when the
factual allegations allow the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged. Iqbal, 556 U.S. at 663; Twombly,
550 U.S. at 555-56.
determining whether dismissal is appropriate, the court must
take three steps. See Santiago v. Warminster Twp.,
629 F.3d 121, 130 (3d Cir. 2010). First, the court must
identify the elements of the claim. Iqbal, 556 U.S.
at 675. Second, the court must identify and reject conclusory
allegations. Id. at 678. Third, the court should
assume the veracity of the well-pleaded factual allegations
identified under the first prong of the analysis, and
determine whether they are sufficiently alleged to state a
claim for relief. Id.; see also Malleus v. George,
641 F.3d 560, 563 (3d Cir. 2011). The third prong presents a
context-specific inquiry that "draw[s] on [the
court's] experience and common sense."
Iqbal, 556 U.S. at 663-64; see also Fowler v.
UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). As the
Supreme Court instructed in Iqbal, "where the
well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged
- but it has not 'show[nj' - 'that the pleader is
entitled to relief" Iqbal, 556 U.S. at 679
(quoting Fed.R.Civ.P. 8(a)(2)).
1404(a) of Title 28 of the United States Code grants district
courts the authority to transfer venue "[f]or the
convenience of parties and witnesses, in the interests of
justice ... to any other district or division where it might
have been brought." 28 U.S.C. § 1404(a).
selection clauses are presumptively valid and enforceable
absent a showing by the resisting party that enforcement of
the clause would be unreasonable under the
circumstances." Asphalt Paving Sys., Inc. v.
Gannon, 2015 WL 3648739, at *3 (D.N.J. June 11, 2015)
(citing MS Bremen v. Zapata Offshore Co., 407 U.S.
1, 10 (1972)). In the Third Circuit, when facing a valid
forum selection clause, a district court modifies its
analysis three ways:
First, no weight is given to the plaintiffs choice of forum.
Second, the court does not consider arguments about the
parties' private interests. Instead, 'a district
court may consider arguments about public-interest factors
only.' Third, 'when a party bound by a
forum-selection clause flouts its contractual obligation and
files suit in a different forum, a § 1404(a) transfer of
venue will not carry with it the original ...