United States ex rel. Alamo Envtl., Inc. v. Cape Envtl. Mgmt., Inc.

U.S. ex rel ALAMO ENVIRONMENTAL, INC. d/b/a ALAMO 1, Plaintiff,

v.CAPE ENVIRONMENTAL MANAGEMENT, INC., et al., Defendants.

Case No. CIV-11-482-D

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA

Dated: September 24, 2012

ORDER

This matter comes before the Court for consideration of the motions for dismissal filed by all individual defendants: the Motion to Dismiss of Defendants Rios, Caviness, Vallejo, Hernandez, Blackmon, Flynn, and Sanchez [Doc. No. 40]; and the Motion to Dismiss of Defendant Blackmon [Doc. No. 52].¹ Plaintiff Alamo Environmental, Inc. ("Alamo") has responded in opposition to the Motions, and the movants have replied.² The Motions are thus at issue.

Factual and Procedural Background

This action was originally brought under the Miller Act, 40 U.S.C. § 3131 et seq., by second-tier subcontractors who performed work or provided materials for a federal construction project at Altus Air Force Base. Defendant Cape Environmental Management, Inc. ("Cape") was the general or prime contractor for the project, and Defendant Lexon Insurance Co., as surety, provided thepayment bond. Alamo was a first-tier subcontractor who entered into the second-tier subcontracts on which the suit was originally brought. Alamo claimed to be entitled to payment from Cape for its work on the project, as well as any amount owed to Alamo's subcontractors, and with its answer, Alamo filed cross-claims against Cape and the surety.

Alamo also initiated a third party action against the individual officers and directors of Cape based on allegations that the corporation was suspended by the Oklahoma Secretary of State on November 19, 2007, and forfeited its right to transact business within the state. Alamo further alleged that "Cape Officers and Directors are deemed under Oklahoma law as acting under a general partnership with regard to Cape's business affairs within the State of Oklahoma, and otherwise personally liable for all debts incurred by Cape from and after November 19, 2007, including the debts incurred in connection with the Project." See Third Party Compl. [Doc. No. 32], ¶ 14. In addition to the same allegations used to support its cross-claim against Cape, Alamo alleged that the individual defendants authorized Cape to conduct business within the state and to incur debts in the course of that business, including Cape's debts in connection with the project. See id. ¶¶ 13-14, 46. Because Cape was allegedly suspended from doing business at the time it incurred the debts, Alamo asserts: "Pursuant to 68 O.S. § 1212(C), Cape Officers and Directors are personally liable, as partners, for the debts incurred by Cape . . . , even though Cape was recently reinstated by the Oklahoma Secretary of State." See id. ¶¶ 47-48.

The individual defendants and their alleged positions with Cape are: Fernando J. Rios, chief executive officer and chairman of the board of directors; Chris Caviness, senior vice president and director of risk management; Richard Vallejo, vice president, director, and treasurer; Juan Hernandez, secretary; Troy Blackmon, vice president; Leslie Brian Flynn, senior vice president, chief operating officer, assistant secretary, and director; and Wilfred G. Sanchez, director ofcontracts and procurement, and facilities security officer. Notably, the Third Party Complaint does not allege that any particular officer or director was personally involved in the project, or personally participated in Cape's dealings with Alamo. Instead, Alamo's pleading states simply that "Cape and/or Cape Officers and Directors" engaged in the conduct that allegedly creates liability to Alamo and caused its damages. See id. ¶¶ 19-25, 29-31. According to Alamo's pleading, "Cape and/or Cape Officers and Directors" mismanaged the project, wrongfully refused to pay Alamo for its work, breached "their written and/or oral agreements," provided "false and misleading information" and inadequate designs and schedules, and caused Alamo to suffer damages due to project delays, increased costs, extra work, and expenses related to claims of subcontractors and suppliers. See id. ¶¶ 33-34, 36-45.

Through compromise and settlement, the original plaintiff-subcontractors have been paid and dismissed from the case. Upon joint motion of the remaining parties, Alamo has been denominated as Plaintiff, and all other parties are now denominated as Defendants.

Defendants' Motions

Although not specified in the Motions, the movants seek dismissal of the Third Party Complaint for failure to state a claim upon which relief can be granted, pursuant to Fed. R. Civ. P. 12(b)(6). The movants assert that the Oklahoma statute on which Alamo relies for its action against Cape's officers and directors, which they refer to as a "door closing" statute, does not apply in a Miller Act case.³ Alternatively, the movants contend Alamo's action should be dismissed infavor of arbitration, as provided by Alamo's written agreement with Cape and as argued in Cape's separate motion to dismiss.⁴

Alamo responds that its statutory claim is not barred by the Miller Act, which permits state law claims to be brought in the same action if they fall within supplemental federal jurisdiction conferred by 28 U.S.C. § 1367(a). Further, Alamo argues that the Motion ignores additional state common law claims for misrepresentation and negligence allegedly asserted against the individual defendants in the Third Party Complaint, also within the Court's supplemental jurisdiction. Finally, Alamo disputes the movants' ability to invoke the arbitration provision of the subcontract between Alamo and Cape because they were not signatories to the agreement.⁵

Standard of Decision

"To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see Robbins v. Oklahoma, 519 F. 3d 1242, 1247 (10th Cir. 2008). "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." Iqbal, 129 S. Ct. at 1949. The question to be decided is "whether the complaint sufficiently alleges facts supporting all theelements necessary to establish an entitlement to relief under the legal theory proposed." Lane v. Simon, 495 F.3d 1182, 1186 (10th Cir. 2007) (internal quotation omitted). Also, a defense of federal preemption or preclusion, if apparent on the face of a complaint, may properly be decided under Rule 12(b)(6). See, e.g., R.W. Beck, Inc. v. E3 Consulting, LLC, 577 F.3d 1133, 1146 (10th Cir. 2009) (Copyright Act preempted state-law claims of unfair competition, unjust enrichment, and deceptive trade practices); Anderson v. Merrill Lynch Pierce Fenner & Smith, Inc.. 521 F.3d 1278, 1283-84 (10th Cir. 2008) (Securities Litigation Uniform Standards Act of 1998 precluded state-law securities claims).

Discussion

A. Statutory Claim

Alamo seeks to hold the individual defendants liable for Cape's alleged debt to Alamo for work done on the project. Alamo's cross-claim against Cape, and thus the third-party claim against its officers and directors, rests on contractual and quantum meruit theories. See Third Party Complaint [Doc. No. 32], ¶¶ 37, 45; see also Answer and Cross-Claim [Doc. No. 7], at 10, ("Cross-Claim Against Cape and Lexon," ¶¶ 26, 34). Both theories are available to a subcontractor seeking to recover under the Miller Act. See United States ex rel. C.J.C., Inc. v. Western States Mech. Contractors, Inc., 834 F.2d 1533, 1539 (10th Cir. 1987) (recognizing this principle as "well established"). The statute under which Alamo asserts a right of recovery from Cape's officers and directors is a provision of the Oklahoma Tax Code, which provides in full as follows:

Each trustee, director or officer of any such corporation, association or organization [that is suspended by an order of the Tax Commission], whose right to do business within this state shall be so forfeited, shall, as to any and all debts of such corporation, association or organization, which may be created or incurred with his or her knowledge, approval and consent, within this state after such forfeiture and before the reinstatement of the right of such corporation to do business, be deemed and held liable thereon in the samemanner and to the same extent as if such trustees, directors, and officers of such corporation, association or organization were partners. Any corporation, association or organization whose right to do business shall be thus forfeited shall be denied the right to sue or defend in any court of this state, except in a suit to forfeit the charter of such corporation, association or organization. In any suit against such corporation, association or organization on a cause of action arising before such forfeiture, no affirmative relief shall be granted to such corporation, association or organization unless its right to do business in this state shall be reinstated as provided herein. Every contract entered into by or in behalf of such corporation, association or organization, after such forfeiture as provided herein, is hereby declared to be voidable.

Okla. Stat. tit. 68, § 1212(C) (emphasis added). According to the Oklahoma Supreme Court, the first sentence "holds [a corporation's] Officers personally liable for debts incurred with their knowledge, approval and consent even during the suspension of the corporation's license to do business within the state and even when suit is brought after reinstatement." See State Ins. Fund v. AAA Engineering & Drafting, Inc., 863 P.2d 1218, 1221-22 (Okla. 1993).

Although only the first sentence of § 1212(C) is pertinent to Alamo's claim, the Court has quoted the full text of the provision because the remaining sentences - which deprive the...