M. Cohen & Sons, Inc. v. Platte River Ins. Co.

M. COHEN AND SONS, INC., Plaintiff, v. PLATTE RIVER INSURANCE COMPANY and W.S. CUMBY, INC., Defendants. v. ALLEN COHEN, SUSAN COHEN,HOWARD COHEN, EILEEN COHEN,RONALD COHEN, BARBARA COHEN,SAMUEL COHEN, JANET COHEN, H.R. REED ROAD, L.P.,

PENMAWR, L.P., H.R. SARASOTA LLC and PENMAWR-FLA, LLC, Counterclaim Defendants.

Case No. 3:20-cv-2149 (BRM) (LHG)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

February 27, 2021

NOT FOR PUBLICATION

OPINION

MARTINOTTI, DISTRICT JUDGE

Before the Court are two motions: (1) Defendant Cumby, Inc.'s ("Defendant Cumby") Motion to Dismiss pursuant to Federal Rule 12(b)(1) and 12(b)(6) (ECF No. 34); and (2) Defendant Cumby's Motion to Stay this action pending resolution of its Motion to Dismiss. (ECF No. 60.) Plaintiff M. Cohen & Sons, Inc. ("Plaintiff") opposes Defendant Cumby's Motion to Dismiss. (ECF No. 50.) Defendant Platte River Insurance Company ("Defendant Platte River") opposes Defendant Cumby's Motion to Stay in part. (ECF No. 61.) Defendant Cumby filed a Reply to both oppositions. (ECF No. 51; ECF No. 64.) Having reviewed the filings submitted in connection with the Motions and having declined to hear oral argument pursuant to Federal Rule of Civil Procedure 78(b), for the reasons set forth below and for good cause shown, Defendant Cumby's Motion to Dismiss is GRANTED and its Motion to Stay is DENIED AS MOOT.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff and Defendant Cumby entered into an agreement on or about March 23, 2018 (the "Agreement"). (Am. Compl. (ECF No. 24) ¶ 8.) Under the Agreement, Plaintiff agreed to perform certain services for Defendant Cumby, and Defendant Cumby agreed to pay for those services. (Id.) The Agreement specified Plaintiff would perform the work at the Institute for Advanced Studies, Rubenstein Commons, 50 Maxwell Lane in Princeton, New Jersey. (Id. ¶ 9.) Plaintiff alleges Defendant Cumby "failed to meet its contractual obligations" under the Agreement. (Id. ¶ 12.) Specifically, "the fluted glass as drawn in the architectural documents could not comply with the contractual specifications." (Id. ¶ 14.) This created a faulty design, which "created a life safety issue" that "Defendant Cumby refused to address." (Id. ¶¶ 15-16.) Because of these breaches, "Plaintiff commenced litigation against Defendant Cumby in the Court of Common Pleas, Delaware County, Pennsylvania, Docket No. 2019-0009455." (Id. ¶ 21.)

On October 26, 2018, in furtherance of the Agreement, "Plaintiff, Defendant Cumby, and Defendant Platte River entered into a Performance Bond whereby Plaintiff and Defendant Platte River bound themselves to Defendant Cumby for the performance of the Agreement" (the "Performance Bond"). (Id. ¶ 23.) According to Plaintiff, Defendant Platte River understood Plaintiff was an intended beneficiary to the Performance Bond. (Id. ¶ 24.) Under the Performance Bond, Defendant Platte River's obligation to act arises only when Defendant Cumby is not in default, but since Defendant Cumby is in default, Defendant Platte River has no obligation to act. (Id. ¶¶ 25-27.) Further, even if Defendant Cumby was not in default, "Defendant Platte River'sobligation to act under the Performance Bond arises only after Defendant Cumby meets the provisions of § 3.1, 3.2, and 3.3 of the Performance Bond." (Id. ¶ 28.)

On February 12, 2020, Plaintiff's counsel wrote to Defendant Platte River to confirm whether Defendant Cumby satisfied § 3.3 of the Performance Bond, but Defendant Platte River did not respond. (Id. ¶¶ 35-38.) Plaintiff also alleges Defendant Platte River interfered with a subcontract Plaintiff had with Walter P. Moore ("WPM") by requesting documents created by Plaintiff and inviting WPM to attend a meeting at the Project on February 27, 2020. (Id. ¶¶ 39-41.) Moreover, Plaintiff alleges after its Complaint was filed on February 27, 2020, Defendant Platte River engaged "in a systematic scheme to defame Plaintiff and to interfere with Plaintiff's contractual business relationships." (Id. ¶ 44.)

On April 6, 2020, Plaintiff completed a projected for Clark-McCarthy Healthcare Partners II ("Clark McCarthy"), and Defendant Platte River wrote to Clark-McCarthy demanding that it direct "all future payments to Plaintiff to Defendant Platte River instead." (Id. ¶ 46.) On April 10, 2020, Plaintiff wrote to Defendant Platte River "requesting it to cease and desist from interfering with its contractual relationship with Clark-McCarthy" but Defendant Platte River refused to do so. (Id. ¶¶ 47-48.) As a result of this interference, Clark-McCarthy will not release the funds earned by Plaintiff to Plaintiff, which resulted in Plaintiff's inability to pay its employees during the pandemic and caused "a loss of Plaintiff's good will," tarnished reputation, and "threatened future losses to Plaintiff's business operations and revenue." (Id. ¶¶ 49-53.)

Plaintiff also alleges Defendant Platte River interfered with several general contractors for whom Plaintiff is performing work. Specifically, "representatives of Turner Construction have contacted Plaintiff to say Defendant Platte River has contacted Turner Construction directly and made derogatory statements about Plaintiff." (Id. ¶ 55.) Plaintiff and Turner Construction had aletter of intent for the Ernst & Young Project ("EY Project"), and Plaintiff has started work on the EY Project, but "as the parties are preparing to enter into a contract for the EY Project, Turner Construction is suddenly claiming there may be concerns with entering into a contract with Plaintiff." (Id. ¶¶ 56-58.) Plaintiff is also bidding on two projects for Turner Construction, but "Turner Construction has expressed to Plaintiff its concerns over Plaintiff's alleged financial problems—all raised by Defendant Platte River," so Plaintiff is at risk of losing those projects. (Id. ¶¶ 59-60.) Plaintiff alleges it "is not on the verge of bankruptcy but does need the money from the Fort Bliss Project and could incur additional financial losses if Defendant Platte River continues to interfere with its contractual relationships." (Id. ¶ 66.)

Further, Plaintiff alleges Defendant Platte River has interfered with Plaintiff's contractual relationship with its own accountant Joseph P. Melvin Company, LLC ("Accountant") by threatening litigation against the Accountant for "alleged negligence in preparing various financial statements for Plaintiff upon which Defendant Platte River allegedly relied," but notes "Defendant Platte River is making these unsubstantiated threats merely to gain a tactical advantage over Plaintiff in this litigation." (Id. ¶¶ 68-71.) Plaintiff also alleges "Defendant Platte River supplied a bid bond for the Pier 55 Project in Manhattan, New York ("Pier 55") and upon 20% completion of Plaintiff's work on the Pier 55 Project, Defendant Platte River failed to issue a Performance Bond as promised in the bid documents," which resulted in the general contractor's removal of Plaintiff from the Pier 55 Project and resulting damages to Plaintiff. (Id. ¶¶ 74-76.)

Lastly, according to Plaintiff, Defendant Platte River and Defendant Cumby conspired together to misappropriate Plaintiff's drawings and calculations. Plaintiff allegedly supplied drawings and calculations to Defendant Cumby, who then, without paying Plaintiff, gave toDefendant Platte River "to use when Defendant Platte River solicited bidders to replace Plaintiff on the Project." (Id. ¶¶ 79-81.)

On February 27, 2020, Plaintiff filed a complaint in this Court. (ECF No. 1.) Then on June 15, 2020, Plaintiff filed an amended complaint. (ECF No. 24.) The Amended Complaint alleged a breach of the Performance Bond, breach of the implied covenant of good faith and fair dealing, tortious interference with contractual relations, and violation of the Defend Trade Secrets Act. (Id. ¶¶ 82-109, 115-28.) Plaintiff also seeks a declaratory judgement. (Id. ¶¶ 110-14.) All of Plaintiff's allegations are against both Defendant Cumby and Defendant Platte River. (Id. ¶¶ 82-128.) On July 2, Defendant Cumby filed a motion to dismiss Plaintiff's amended complaint. (ECF No. 34.) On July 6, 2020, Defendant Platte River answered Plaintiff's Amended Complaint, raised several affirmative defenses, and asserted counterclaims against Plaintiff, Allen Cohen, Susan Cohen, Howard Cohen, Eileen Cohen, Ronald Cohen, Barbara Cohen, Samuel Cohen, Janet Cohen, H.R. Reed Road, LP, H.R. Sarasota, LLC, and Penmawr FLA, LLC (collectively, "Counterclaim Defendants"). (ECF No. 37.) On August 3, 2020, Plaintiff filed an opposition to Defendant Cumby's Motion to Dismiss. (ECF No. 50.) On August 10, 2020, Defendant Cumby filed a reply. (ECF No. 51.) Then, on August 28, 2020, Defendant Cumby filed a motion to stay. (ECF No. 60.) On September 8, 2020, Defendant Platte River opposed the motion. (ECF No. 61.) On September 11, 2020, Defendant Cumby filed a reply. (ECF No. 64.) On September 17, 2020, Magistrate Judge Lois H. Goodman adjourned the motion day for Defendant Cumby's Motion to Stay and permitted each Defendant to file a sur-reply. (ECF No. 65.) On September 21, 2020, Plaintiff opposed the motion to stay. (ECF No. 69.) And on September 24, 2020, Defendant Cumby filed a sur-reply. (ECF No 71.)

II. LEGAL STANDARDS

A. 12(b)(1)

Defendant Cumby moves to dismiss Plaintiff's amended complaint for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to state a claim under Rule 12(b)(6). "When a motion under Rule 12 is based on more than one ground, the court should consider the 12(b)(1) challenge first because if it must dismiss the complaint for lack of subject matter jurisdiction, all other defenses and objections become moot." Dickerson v. Bank of Am., N.A., No. CIV. 12-03922 RBK, 2013 WL 1163483, at *1 (D.N.J. Mar. 19, 2013) (citing In re Corestates Trust Fee Litig., 837 F. Supp. 104, 105 (E.D. Pa. 1993)). In considering dismissal for lack of subject-matter jurisdiction, a district court's...