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Tetra Tech Construction Inc. v. Summit Natural Gas of Maine Inc.

United States District Court, D. Maine

July 13, 2016

TETRA TECH CONSTRUCTION INC., Plaintiff, Counterclaim Defendant, and Third-Party Plaintiff
v.
SUMMIT NATURAL GAS OF MAINE INC., Defendant and Counterclaim Plaintiff
v.
JM CABLE CORP AND FIBER NET INC, Third Party Defendants

          RECOMMENDED DECISION ON DEFENDANT’S MOTION TO DISMISS

          John C. Nivison U.S. Magistrate Judge

         The matter is before the Court on Defendant Summit Natural Gas of Maine’s Motion to Dismiss Counts IV and V of Plaintiff Tetra Tech Construction’s Second Amended Complaint. (Motion to Dismiss, ECF No. 63.) Through its motion, Defendant argues that Plaintiff’s claims for intentional/fraudulent misrepresentation and negligent misrepresentation are barred by the economic loss doctrine. (Id. at 1.) Defendant also argues that Plaintiff has not plead its fraud claim with sufficient particularity. (Id.)

         In response to the motion, Plaintiff represents that it will voluntarily dismiss its fraud claim without prejudice with the understanding that it might reassert the claim based on the results of anticipated discovery. Plaintiff objects to the dismissal of the negligent misrepresentation claim. (Pl.’s Response in Opposition at 3, ECF No. 71.)

         Background Facts

         The following facts are drawn from Plaintiff’s second amended complaint. (ECF No. 62.) Plaintiff’s allegations are accepted as true for purposes of reviewing Defendant’s motion to dismiss.

         Plaintiff successfully bid on a project to serve as the prime contractor for the installation of the Kennebec Valley Pipeline, a natural gas pipeline project for which Defendant Summit Natural Gas of Maine, Inc. was responsible. (Sec. Am. Compl. ¶ 1, ECF No. 62.) The contract covered the installation of miles of underground pipe and several service installations for customers. (Id. ¶ 7.) In the bidding process, Defendant made certain representations to Plaintiff regarding the location of the line. Specifically, Plaintiff alleges that Defendant represented the pipeline would run “off the curb, ” which means the pipeline would not run directly beneath the roadway. Based on this representation, Plaintiff concluded that the trench would not have to run down paved streets. (Id. ¶ 8.)

         According to Plaintiff, after Plaintiff submitted its bid, Defendant “changed the trench line location such that a significant portion of the trench line would be in the roadways.” (Id. ¶ 9.) The changes caused Plaintiff “to incur additional costs, to perform additional Work and services that were compensable under the Contract, and caused [Plaintiff’s] Work to be more difficult, expensive and time-consuming.” (Id. ¶ 13.) Principally, the trench work under the roadway resulted in costs for hauling trenched material and replacement fill, and for a traffic control subcontractor. (Id. ¶ 18.)

         Plaintiff notified Defendant of the additional costs and work, and continued its work on the project with the understanding that Defendant would compensate it for the increased costs and work. (Id. ¶ 14.) According to Plaintiff, “[t]he changes in the scope of [Plaintiff’s] Work and additional obligations and directions of [Defendant] and/or local authorities caused [Plaintiff] to incur additional costs, to perform additional Work and services that were compensable under the Contract, and caused [Plaintiff’s] Work to be more difficult, expensive, and time-consuming.” (Id. ¶ 13.) When Plaintiff presented Defendant with a change order and supporting invoices to recoup the money expended on its additional costs, Defendant told Plaintiff that it did not intend to pay or even review the hauling and traffic control invoices, “despite the fact that [Plaintiff] met all the terms and conditions of the Contract, provided invoices, reformatted the invoices at Defendant’s request a number of times and requested payment.” (Id. ¶¶ 15, 18, 21.)

         Plaintiff filed a second amended complaint in which Plaintiff asserted two additional causes of action: a claim of fraudulent misrepresentation / fraud in the inducement (Count IV) and a claim of negligent misrepresentation (also titled Count IV).[1] (Id. ¶¶ 40 - 50.) Plaintiff alleges that Defendant misrepresented the nature of the work on the project for which Plaintiff was the successful bidder. Plaintiff alleges that it was harmed because the work was “more difficult, expensive, and time-consuming” than anticipated and required Plaintiff to assume additional and unexpected costs. (Id. ¶¶ 11, 13.)

         Standard of Review

         Pursuant to Federal Rule of Civil Procedure 12(b)(6), a party may seek dismissal of “a claim for relief in any pleading” if that party believes that the pleading fails “to state a claim upon which relief can be granted.” In its assessment of the motion, a court must “assume the truth of all well-plead facts and give the plaintiff[] the benefit of all reasonable inferences therefrom.” Blanco v. Bath Iron Works Corp., 802 F.Supp.2d 215, 221 (D. Me. 2011) (quoting Genzyme Corp. v. Fed. Ins. Co., 622 F.3d 62, 68 (1st Cir. 2010)). To overcome the motion, the plaintiff must establish that its allegations raise a plausible basis for a fact finder to conclude that the defendant is legally responsible for the claim(s) at issue. Id.

         Discussion[2]

Defendant argues that the economic loss doctrine requires the dismissal of Plaintiff’s negligent misrepresentation claim. Defendant maintains Plaintiff cannot assert a claim for negligent misrepresentation because the parties’ relationship is defined by a contract and thus Plaintiff’s damages, if any, are contractually-based and are not tort-based. (Motion at 1.) More particularly, Defendant characterizes Plaintiff’s claim as involving the “value and quality” of its bargain with Defendant, and argues that relevant case law precludes Plaintiff’s recovery for negligent misrepresentation. (Id. at 8 - 12, discussing cases.) Plaintiff contends dismissal is not appropriate because the claim is not about “value and quality, ” but is about a “bait and switch” whereby Plaintiff was induced or required to perform work outside the scope of the contract. (Response at 4 - 6.)

         A. Negligent Misrepresentation and the ...


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