RUDOLPH CONTRERAS, United States District Judge.
In 2009, a consortium of four cellular telephone carriers (collectively "Defendants" or the "Carrier Consortium"),
Now before the Court is Defendants' motion to transfer venue to the United States District Court for the District of Delaware (ECF No. 5) and Defendants' motion to dismiss this action for failure to state a claim (ECF No. 11). For the foregoing reasons, the Court will deny Defendants' motion to transfer venue and will grant in part and deny in part Defendants' motion to dismiss.
In 2008, as a condition of receiving $1.5 billion in federal funding, Congress required WMATA to ensure "that customers of [WMATA's] rail service ... have access within the rail system to services provided by any licensed wireless provider...." Passenger Rail Investment and Improvement Act of 2008, Pub. L. No. 110-432, Div. B, § 601(e)(1), 122 Stat. 4907, 4969; see also Am. Compl. ¶ 10, ECF No. 8. On February 26, 2009, WMATA's governing board granted approval for WMATA "to enter into a Master License Agreement with the Carrier Consortium to design, build, operate, and maintain seamless wireless communications coverage for 47 underground stations and 50.5 miles of tunnels" for the Carrier Consortium's own use and for the use of WMATA and its customers. Am. Compl. ¶ 11. The contract required the Carrier Consortium to fund the Project at its own expense, and Intelect alleges that the Defendants essentially "assumed the role of Project Owner." Id. ¶ 12. On June 18, 2009, Defendants hired Powerwave as the project's general contractor. Id. ¶ 14. Powerwave, in turn, hired Intelect as a subcontractor on June 16, 2010, entering into a $5,629,122.26 subcontract under which Intelect was to complete a portion of the project. Id. ¶ 17. The specific contours of Intelect's portion of the project are not described in the complaint.
Intelect alleges that WMATA's "internal policies and standard contract forms" typically require its contractors to supply a payment bond "in the amount of ... 100% of the contract" to ensure that all persons who supply labor and materials to the project are paid. Id. ¶ 13. Because the project was a "public-private partnership," however, WMATA only required the Carrier Consortium to obtain a nominal bond, in lieu of a surety payment bond for the full contract price. Id. Intelect alleges that WMATA "rel[ied] on the Carrier Consortium to require its contractor to bond the Project in the full amount of the contract." Id. The full amount of the project, according to the Carrier Consortium's contract with Powerwave, was $65,671,000. Id. ¶ 14. And Intelect claims that, although the contract between the Carrier Consortium and Powerwave divided the project into four milestones, or "phases," the Carrier Consortium's contract with Powerwave nevertheless "required Powerwave to provide for bonding in the amount of 100% of the full contract price." Id. ¶¶ 15-16.
Intelect alleges that Powerwave did obtain a bond, naming Defendants as joint obligees, but that the bond was only valued at $5,000,000 — a small fraction of the contract price. Id. ¶¶ 18-20 & Ex. A (providing a copy of the payment bond documents). Intelect thus contends that it was apparent to Defendants on the face of the bond that Powerwave had failed to comply with the terms of the Powerwave-Carrier Consortium contract and had failed to secure the required bond. Id. ¶¶ 20-22.
Powerwave began to suffer financial difficulties in late 2012. As a consequence, Powerwave failed to make several payments to Intelect. In total, Intelect contends that invoices totaling $1,013,016.83 remain unpaid. Id. ¶¶ 23-24. Once Powerwave defaulted on its payment obligations, Intelect claims that one of its officers and its counsel both "requested a copy of the Powerwave Payment Bond" from the Carrier Consortium, which they "refused to provide." Id. ¶ 30. Intelect states that it was only after it "was able to obtain a copy of the bond, indirectly, through its insurance
Notwithstanding Powerwave's failure to pay Intelect, Intelect "continued to supply labor and materials to the Project for the benefit [of] and use by the Carrier Consortium." Id. ¶ 26. Intelect further claims that although Defendants "had actual knowledge that Powerwave was financially unstable" as of the fall of 2012, "and that the work being performed by Powerwave's subcontractors and suppliers were not covered by the Payment Bond ... the Carrier Consortium continued to accept the benefits of Intelect's performance." Id. ¶ 28. Moreover, as relevant to its promissory estoppel claim, Intelect alleges that "the Carrier Consortium represented to Intelect that work on the Project would resume in early Spring 2013, and requested that Intelect leave its equipment and materials on site, and to continue to maintain its labor force in place." Id. ¶ 80.
On January 28, 2013, Powerwave filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware. See Chapter 11 Voluntary Petition, In re Powerwave Techs., Inc., .0 (Bankr. D. Del. Jan. 28, 2013), ECF No. 1. Intelect filed a proof of claim in those bankruptcy proceedings seeking $1,013,017.00. See Defs.' Mot. to Dismiss Ex. A, ECF No. 11 (attaching proof of claim). Separately, Intelect commenced this action in District of Columbia Superior Court against the Carrier Consortium. Intelect's complaint seeks judgment in the amount of $1,013,016.83 on alternative theories of negligence, negligent misrepresentation, implied contract, unjust enrichment, constructive fraud, and as a third-party beneficiary to the various agreements between WMATA, Defendants, and Powerwave. See Am. Compl. at 15. Each of these counts are based on the Carrier Consortium's alleged failure to ensure that the project was fully bonded or to advise Powerwave's subcontractors that they might not be paid by the payment bond should Powerwave default on its obligations.
Defendants removed the action to this Court on June 11, 2015, invoking diversity jurisdiction under 28 U.S.C. § 1332, and bankruptcy jurisdiction under 28 U.S.C. § 1334. See Notice of Removal at 6, ECF No. 1. Defendants have since filed a motion to transfer venue to the United States District Court for the District of Delaware, where Powerwave's bankruptcy proceedings are ongoing, see Defs.' Mot. to Transfer Venue, ECF No. 5, and a motion to dismiss Intelect's Amended Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, see Defs.' Mot. to Dismiss, ECF No. 11.
The Court will first consider Defendants' motion to transfer venue. Finding that the convenience of the parties and witnesses and the interest of justice weigh against transferring this case, the Court will deny that motion. As a result, the Court proceeds to consider Defendants' motion to dismiss and, as explained below,
Defendants seek to transfer this case to the United States District Court for the District of Delaware. Changes of venue in civil actions are generally governed by 28 U.S.C. § 1404(a), which states that: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). A separate change of venue provision, 28 U.S.C. § 1412, applies when a party seeks to transfer a bankruptcy case or proceeding.
Defendants' motion to transfer venue hollowly invokes 28 U.S.C. § 1412, and does little to justify the existence of bankruptcy jurisdiction. In their opening motion, Defendants argue in a footnote that this action "involves matters that are both `core' and that `arise under' title 11," specifically referencing Count VII of Intelect's original complaint. See Defs.' Mot. to Transfer Venue at 2 n.3; Notice of Removal Ex. A, ¶¶ 78-84 (reproducing initial complaint, including Count VII). That Count alleged that Defendants had converted certain Intelect property Defendants "purported to purchase ... in a bankruptcy-court approved transaction, notwithstanding actual knowledge that such property was owned by Intelect." Notice of Removal Ex. A, ¶ 81. Defendants contend that title to this property was transferred to them pursuant to an order of the Bankruptcy Court approving a settlement agreement between Powerwave and Defendants, and therefore argue that Count VII represents a direct challenge to the Settlement Approval Order. See Defs.' Mot. to Transfer Venue at 2 n.2, 4; Notice of Removal at 8 (arguing that Count VII "`arises under' and `arises in' Powerwave's Bankruptcy Case" because that count "directly implicates — on the face of the Complaint — the Delaware Bankruptcy Court's Settlement Approval Order").
Nevertheless, with Count VII of the original complaint no longer a part of this case, the application of § 1412 depends upon a finding that Counts I through VI of the Amended Complaint "relate to" the Powerwave bankruptcy proceedings. Briefly stated, the Court has considerable doubt that they are. While the D.C. Circuit has not yet discussed the contours of "related to" bankruptcy jurisdiction, the Supreme Court has generally agreed with the test expressed by the Third Circuit in Pacor, Inc. v. Higgins, 743 F.2d 984 (1984), despite noting some minor differences among circuits. See Celotex Corp. v. Edwards, 514 U.S. 300, 308 & n. 6, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995); see also 1 Collier on Bankruptcy ¶ 3.01[3][e][ii], at 3-16 (16th ed. 2015) ("Almost every other court considering the issue, including the United States Supreme Court, has agreed in principle with Pacor's statement of the law" (footnotes omitted)). As described in Pacor, "[t]he usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy ...." Celotex Corp., 514 U.S. at 308 n. 6, 115 S.Ct. 1493 (quoting Pacor, 743 F.2d at 994); see Abbey v. Modern Africa One, LLC, 305 B.R. 594, 601 (D.D.C.2004) (applying the Pacor test). This includes proceedings among third parties — and not including the debtor — so long as the "outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively)." Celotex Corp., 514 U.S. at 308 n. 6, 115 S.Ct. 1493 (quoting Pacor, 743 F.2d at 994); see also 1 Collier on Bankruptcy ¶ 3.01[3][e][ii][B] (providing examples of cases between third parties that are "related to" bankruptcy proceedings).
In the circumstances of this case, the question is a close one. On the one hand, it is somewhat difficult to conclude that this action is "related to" the Powerwave bankruptcy action. Powerwave is not a party to this action, and no monetary recovery is being sought from directly from Powerwave. See Abbey, 305 B.R. at 602-03 (declining to transfer case, and concluding that the bankruptcy court would lack jurisdiction, in part because no monetary award was being sought from the debtor). Although Intelect seeks to recover a sum identical to the amount it seeks through its proof of claim in the bankruptcy proceeding,
On the other hand, Defendants' Notice of Removal posits that resolution of Counts I through VI will have a "conceivable effect" on the Powerwave bankruptcy case because "any award of damages would relieve Powerwave of its obligation to satisfy these amounts" and therefore "impact Powerwave's liability to Intelect." Notice of Removal at 8; cf. HH1, LLC v. Lo'r Decks at Calico Jacks, LLC, Adv. Case No. 10-02004, 2010 WL 1009235, at *2 (Bankr.M.D.N.C. Mar. 18, 2010) (concluding that "related to" jurisdiction existed where a plaintiff might recover from a guarantor of the debtor's debt which "would reduce or eliminate the plaintiff's claim in the bankruptcy case and result in a substitution of the guarantors as the claimants against the Debtor" despite the existence of "additional issues related to whether the guarantors are liable even if there is a showing of liability on the part of the Debtor"). And Pacor itself stands for the proposition that "[a]n action is related to bankruptcy if the outcome could alter the debtor's rights, [or] liabilities, ... (either positively or negatively)" even if the claims are not brought against the debtor or the debtor's property. 743 F.3d at 994 (emphasis added); accord Celotex Corp., 514 U.S. at 308 n. 6, 115 S.Ct. 1493 (quoting same).
The Court is inclined to think that Intelect's claims in this case do not "relate to" the Powerwave bankruptcy proceeding in the legal sense. Intelect does not claim that Defendants are guarantors of Powerwave's obligations to Intelect. And Intelect's claims here arise out of Defendants' own actions, so it is therefore unlikely that the Court will have to meaningfully consider Powerwave's liability to resolve Intelect's claims against the Carrier Consortium. If the Court is not being asked to determine Powerwave's liability, then it is not immediately clear that a successful recovery against the Defendants here
In any event, the Court declines to definitively resolve the question.
Consequently, the Court will consider Defendants' motion to transfer venue under § 1404(a) but notes that its conclusion would remain the same if § 1412 applies.
"For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought...." 28 U.S.C. § 1404(a). Section 1404(a) vests "discretion in the district court to adjudicate motions to transfer according to an `individualized, case-by-case consideration of convenience and fairness.'" Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964)). The moving party bears the burden of establishing that transfer under § 1404(a) is proper. Montgomery v. STG Int'l, Inc., 532 F.Supp.2d 29, 32 (D.D.C.2008).
Accordingly, the defendant must make two showings to justify transfer. First, the defendant must establish that the plaintiff originally could have brought the action in the proposed transferee district. Van Dusen, 376 U.S. at 616, 84 S.Ct. 805. Second, the defendant must demonstrate that considerations of convenience and the interest of justice weigh in favor of transfer to that district. Trout Unlimited v. Dep't of Agric., 944 F.Supp. 13, 16 (D.D.C.1996). In evaluating a motion to transfer, a court may weigh several private- and public-interest factors. Sheffer v. Novartis Pharm. Corp., 873 F.Supp.2d 371, 375 (D.D.C.2012) (citing Trout Unlimited, 944 F.Supp. at 16). The private-interest considerations include: (1) the plaintiff's choice of forum; (2) the defendant's preferred forum; (3) the location where the claim arose; (4) the convenience of the parties; (5) the convenience of the witnesses;
Because Defendants focus on § 1412 and assume the existence of bankruptcy jurisdiction, they do not directly address the first showing under § 1404(a): whether the plaintiff originally could have brought the action in the proposed transferee district. Van Dusen, 376 U.S. at 616, 84 S.Ct. 805. That showing appears to be satisfied here, even if there is no "related to" bankruptcy jurisdiction over this action under 28 U.S.C. § 1334(b).
Despite clearing this first hurdle, the Court nevertheless concludes that neither the public nor the private considerations indicate that transferring this case would further the convenience of the parties and the witnesses or the interest of justice.
Considering the private interests, Defendants posit that because the parties have all "actively participated in the Powerwave Bankruptcy case," and because Intelect "is headquartered in Baltimore," Delaware would be "nearly equally convenient for Plaintiff as is Washington, D.C." Defs.' Mot. to Transfer Venue at 5. Even if Delaware would be equally convenient, however, "a plaintiff's choice of forum is ordinarily `a paramount consideration' that is entitled to `great deference' in the transfer inquiry." F.T.C. v. Cephalon, Inc., 551 F.Supp.2d 21, 26 (D.D.C.2008) (quoting Thayer/Patricof Educ. Funding L.L.C. v. Pryor Res., 196 F.Supp.2d 21, 31 (D.D.C.2002)). While "[d]eference to the plaintiff's chosen forum is minimized ... where that forum has no meaningful connection to the controversy," United States v. H&R Block, Inc., 789 F.Supp.2d 74, 79 (D.D.C.2011), Intelect's claims are related to the Defendants' contract with WMATA,
Defendants counter that this lawsuit presents "precisely the situation where Plaintiff's original choice of venue should be disturbed" because it "assert[s] claims that duplicate [the Plaintiff's] Proof of Claim." Defs.' Mot. to Transfer Venue at 4. But, as already explained, even though Intelect seeks to recover a value identical to the amount Powerwave owes to it, its claims are distinct and raise separate grounds for imposing liability on Defendants, not Powerwave. And if Defendants' argument intends to invoke the "home court" presumption that many courts have applied when considering whether to transfer bankruptcy proceedings, the Court's doubts that "related to" jurisdiction exists render that presumption largely inoperative here. See, e.g., Irwin v. Beloit Corp. (In re Harnischfeger Indus., Inc.), 246 B.R. 421, 439 (Bankr.N.D.Ala.2000) (explaining that "[a] majority of the courts that have considered whether change of venue is appropriate have created a presumption that the bankruptcy court in which the debtor's case is pending, the home court, is the proper venue for adjudicating all proceedings in the case").
For similar reasons, the Court finds Defendants' arguments that Powerwave "will be a central party in this action," that it will be "most convenient for potential witnesses and the parties to adjudicate Plaintiff's disputes with both Powerwave and Defendants only once," and that Powerwave "will be subject to third party discovery" all fail to weigh in favor of transfer. Defs.' Mot. to Transfer Venue at 5. Powerwave is not a party to this dispute, nor does Intelect assert any claim against Powerwave. Although the Court cannot foreclose the possibility of third party discovery, presumably many of the contractual documents relevant to Intelect's claims against Defendants, specifically the Carrier Consortium-WMATA contract documents and the Carrier Consortium-Powerwave contract, are likely already in Defendants' possession. And the Defendants do not explain exactly what witnesses or documents they will be unable to obtain if this case is not tried in Delaware, or where those witnesses or documents are actually located. Having failed to address these points, Defendants have likewise failed to carry their burden to show that either the convenience of the witnesses or the ease of access to sources of proof weigh in favor of transfer. Thus, the Court concludes that the private factors weigh against transfer.
The public interests also do not weigh in favor of transfer.
Of course, it is possible that any favorable recovery Intelect obtains from Defendants on Counts I through VI will be offset by Intelect's recovery, if any, on the proof of claim it has submitted in the Powerwave bankruptcy proceedings. The damages issues in this case may overlap in that respect. But the Court does not believe that the factual and legal questions pertinent to the liability issues concerning Intelect's distinct claims against the Carrier Consortium are likely to overlap considerably with the Powerwave bankruptcy proceedings. And Intelect's promissory estoppel claim based on representations Defendants allegedly made directly to Intelect after Powerwave defaulted on its contract obligations to Intelect bears no relation to the bankruptcy proceedings.
Finally, Defendants have not addressed the remaining two public interest considerations: the "transferee's familiarity with the governing law" and "the relative congestion of the courts of the transferor and potential transferee." Onyeneho, 466 F.Supp.2d at 3. In any event, the Court believes that both of these factors weigh against transfer here. As explained below, the parties argue that either Maryland or District of Columbia law applies to Intelect's claims. In either event, the federal
Absent a showing that the District of Delaware would prove more convenient to the parties or judicial economy would be substantially served by considering this case in tandem with the Powerwave bankruptcy proceedings, the Court believes that "[t]he deference owed to the plaintiffs' choice of forum tips the scale against the transfer motion." Sparshott v. Feld Entm't, Inc., 89 F.Supp.2d 1, 4 (D.D.C. 2000) (declining to transfer a case to the "Eastern District of Virginia, where a pending bankruptcy proceeding involves many of the same issues and parties"). Defendants' motion to transfer will be denied.
Defendants have also moved to dismiss all seven counts of Intelect's Amended Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. As explained below, the Court agrees that Intelect has failed to state a claim for negligent misrepresentation (Count II), constructive fraud (Count VI), and — at least considering complaint's current factual allegations — promissory estoppel (Count VII). On the remaining counts, however, the Court concludes that Intelect has plausibly stated a claim and therefore will deny Defendants' motion to dismiss as to Counts I, III, IV, and V.
The Federal Rules of Civil Procedure require that a complaint contain "a short and plain statement of the claim" in order to give the defendant fair notice of the claim and the grounds upon which it rests. Fed. R. Civ. P. 8(a)(2); accord Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam). A motion to dismiss under Rule 12(b)(6) does not test a plaintiff's ultimate likelihood of success on the merits; rather, it tests whether a plaintiff has properly stated a claim. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). A court considering such a motion presumes that the complaint's factual allegations are true and construes them liberally in the plaintiff's favor. See, e.g., United States v. Philip Morris, Inc., 116 F.Supp.2d 131, 135 (D.D.C.2000). Nevertheless, "[t]o survive a motion to dismiss, 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, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). This means that a plaintiff's factual allegations "must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Twombly, 550 U.S. at 555-56, 127 S.Ct. 1955 (citations omitted). "Threadbare recitals of the
The Court must first identify the law that governs Intelect's claims. The parties dispute what law applies to this action. Defendants urge that Maryland law should apply because Intelect is a corporate citizen of Maryland, because a portion of the project was performed in Maryland, and because, they claim, any injury Intelect suffered occurred in Maryland. See Defs.' Mem. Supp. Mot. to Dismiss at 7 ("Defs.' Mem. Supp."), ECF No. 11; Defs.' Reply Supp. Mot. to Dismiss at 3 ("Defs.' Reply"), ECF No. 15. Intelect, by contrast, contends that District of Columbia law should apply because the location of the project at issue here — the Metrorail stations and tunnels — is primarily in the District and the parties' relationship is therefore centered in the District of Columbia. See Pl.'s Mem. in Opp'n to Defs.' Mot. to Dismiss at 3-5 ("Pl.'s Mem. Opp'n"), ECF No. 13.
"A federal court sitting in diversity must apply the choice-of-law rules of the forum state — here, the District of Columbia." In re APA Assessment Fee Litig., 766 F.3d 39, 51 (D.C.Cir.2014).
Here, the parties do not meaningfully engage with the first step of the analysis. By proceeding directly to analyzing which jurisdiction has the most significant relationship over this dispute, the parties seem to assume that there is a true conflict among Maryland and District of Columbia law. That implicit assumption makes some sense, as Maryland would appear to have an interest in protecting its corporate citizen, Intelect, while the District of Columbia presumably has an interest in regulating the course of business transactions engaged in the forum and the agreements governing the projects taking place there. Cf. Washkoviak, 900 A.2d at 181 (finding that a conflict existed where "Wisconsin has a powerful interest in protecting its residents from fraud and misrepresentation, while the District of Columbia has an equally strong interest in ensuring that its corporate citizens refrain from fraudulent activities"); Hercules & Co. v. Shama Rest. Corp., 566 A.2d 31, 42 (D.C.1989) (concluding that "Virginia has a stronger interest than does the District in setting standards and expectations for architects in connection with a renovation project in Virginia").
But even if Maryland and the District of Columbia both have an interest in having their law applied to a case like this one, the parties do not discuss whether "the law of the competing jurisdictions is different." GEICO, 958 F.2d at 1141. In fact, with one exception, the parties have not identified any substantive differences among Maryland and District of Columbia law with respect to the claims Intelect asserts.
Regardless, upon consideration of the substantial relationship factors and the present record, the Court concludes that District of Columbia law applies. In their opening memorandum, Defendants only reference the first factor, the place of the injury, and generally assert that any injury Intelect suffered "would have occurred in Maryland, the state under which it is organized and authorized to conduct business." Defs.' Mem. Supp. at 7. In reply, Defendants go a bit further to argue that the injury underlying Intelect's negligent misrepresentation claim occurred in Maryland, where Intelect "received the alleged misrepresentations." Defs.' Reply at 3. Plaintiff counters that its location "is sheer happenstance." Pl.'s Mem. Opp'n at 3. District of Columbia courts agree that the place of injury in these types of cases is not particularly significant when weighing the jurisdictions' relative connections to the case. See, e.g., Washkoviak, 900 A.2d at 181 (citing the Restatement (Second) of Conflict of Laws for the proposition that "the place of injury is less significant in the case of fraudulent misrepresentations"); Hercules & Co., 566 A.2d at 42 (noting that, while the plaintiff "alleges that it suffered pecuniary loss in its place of business," in "cases of economic loss," the "place of injury does not play as important a role for choice of law purposes as it does where personal injury is alleged" (citing Restatement (Second) of Conflict of Laws § 145 cmt. f)). And it is not entirely clear where the injury here predominately occurred. Particularly with respect to Intelect's unjust enrichment and promissory estoppel claims, neither party identifies where along the Metrorail line — which stretches from the District of Columbia into Maryland and Virginia — Intelect performed its portion of the project and supplied labor and equipment that Defendants allegedly accepted to their benefit. In sum, the Court concludes that the place of the injury might support application of Maryland law, but finds this factor of limited importance here. Similarly, because Intelect is a citizen of Maryland, Am. Compl. ¶ 3, and none of the Defendants are alleged to be citizens of the District of Columbia, id. ¶¶ 4-9, the third factor, concerning the place of incorporation or business of the parties, also seems to counsel in favor of Maryland law.
While neither party discusses the second Restatement factor, construing the reasonable factual inferences from Intelect's complaint in its favor, Washkoviak, 900 A.2d at 183, the Court finds that the place where the conduct causing the injury occurred was likely the District of Columbia. Intelect's claims are centered on actions Defendants took, or did not take, when contracting with WMATA and Powerwave. The Court presumes that those discussions and communications likely took place in the District. In the same vein, the fourth factor, the place where the relationship is centered, favors applying District of Columbia law. As Intelect points out, "the location of the project at issue, Metrorail stations and tunnels, is primarily in the
That two factors favor application of Maryland law and two favor District Columbia law might alone counsel in favor of applying District of Columbia law as a tie-breaker. Washkoviak, 900 A.2d at 182; accord In re APA Assessment Fee Litig., 766 F.3d at 51, 55. In any event, the District of Columbia Court of Appeals has instructed that the "mere counting of contacts is not what is involved" when applying the Restatement factors. Washkoviak, 900 A.2d at 181 (quoting LeJeune v. Bliss-Salem, Inc., 85 F.3d 1069, 1072 (3d Cir.1996)). Rather "[t]he weight of a particular state's contacts must be measured on a qualitative rather than quantitative scale." Id. Because the thrust of Intelect's claims focus on actions Defendants allegedly took, or failed to take, when contracting with WMATA and Powerwave, and when generally managing the WMATA project, as a qualitative matter the second and fourth factors should be provided greater weight here. Accordingly, the Court finds that District of Columbia law applies to this action.
The Court does acknowledge that, given "the lack of evidence available in the record defining the connections between appellants' claims and either jurisdiction," it is somewhat "difficult to make any kind of qualitative judgment at all." Id. at 182. The District of Columbia Court of Appeals instructs that "any uncertainty" with respect to choice of law questions at the motion to dismiss stage should be resolved in favor of the plaintiff and, furthermore, that if the court "cannot determine from the pleadings which jurisdiction has a greater interest in the controversy" the court "must apply the law of the forum state" — in this case the District of Columbia. Id. With this guidance in mind, this Court holds that "within the present context of a 12(b)(6) motion to dismiss," and given the limited factual presentation so far provided by the parties, it is not clear that Maryland law should be applied rather than District of Columbia law. Id. at 183. In so concluding, however, the Court "leave[s] open the possibility that, after both parties have been afforded the opportunity to conduct discovery and present evidence," it will ultimately be the case that Maryland, rather than the District of Columbia, has "a greater interest ... in the resolution of this controversy." Id.
Intelect's first claim is for negligence. To state a claim of negligence under District of Columbia law, "a plaintiff must allege `(1) a duty, owed by the defendant to the plaintiff, to conform to a certain standard of care; (2) a breach of this duty by the defendant; and (3) an injury to the plaintiff proximately caused by the defendant's breach.'" Friends Christian High Sch. v. Geneva Fin. Consultants, 39 F.Supp.3d 58, 63 (D.D.C.2014) (quoting District of Columbia v. Fowler, 497 A.2d 456, 462 n. 13 (D.C.1985)). Whether a duty of care exists is a question of law "to be determined by the court as a necessary precondition to the viability of a cause of action for negligence," and the court must "consider the relevant evidence and make a decision on the pleadings, on summary judgment, or, where necessary, after a hearing." Hedgepeth v. Whitman Walker Clinic, 22 A.3d 789, 811 (D.C.2011).
Here, Intelect alleges that "[e]ach of the members of the Carrier Consortium, in their capacities as obligees on the Powerwave Payment Bond, had a duty of care to those persons who supplied labor and materials to the Project to assure them of full and complete coverage, not just partial coverage for Phase I," and that the Defendants "negligently breached their duty of due care to Intelect by their failure to assure full and complete coverage under the Payment Bond." Am. Compl. ¶¶ 32, 34.
Defendants' motion focuses solely on the duty element, claiming that Intelect has failed to "identify and adequately plead a legal duty the Carriers owe to Intelect." Defs.' Mem. Supp. at 7. They cite the Second Restatement of Torts for the proposition that "[t]he fact that [an] actor realizes or should realize that action on his part is necessary for another's aid or protection does not of itself impose upon him a duty to take such action." Defs.' Mem. Supp. at 8 (quoting Restatement (Second) of Torts § 314 (Am. Law Inst. 1965)). They claim that "a contract between third parties... is insufficient to establish any duty the Carriers separately owe to Intelect." Id. at 9-10.
On the other hand, however, when read with reference to the other allegations made in the complaint, Intelect does plausibly allege a source of Defendants' duty to obtain a payment surety bond that is specific to the circumstances of this case: the WMATA-Carrier Consortium contract. Intellect emphasizes the "public-private partnership"
As Intelect points out, the Restatement explains that there are exceptions to the general principle that an actor has no duty to affirmatively act to protect another. See Pl.'s Mem. Opp'n at 7; see also Restatement (Second) of Torts § 314 cmt. a ("[A]n actor may have committed himself to the performance of an undertaking, gratuitously or under contract, and so may have assumed a duty of reasonable care of the other, or even a third person." (emphasis added)). The District of Columbia Court of Appeals, too, has "acknowledged that a legal duty arises when a party undertakes to `render[] services to another which he should recognize as necessary for the protection of a third person or his things ...'" Presley v. Commercial Moving & Rigging Inc., 25 A.3d 873, 888-89 (D.C.2011) (quoting Haynesworth v. D.H. Stevens Co., 645 A.2d 1095, 1097 (D.C. 1994)). That court has "looked to § 324A" of the Second Restatement of Torts when "determining whether a party who performs services under a contract for one party assumes a duty to an unrelated third party."
In Presley, for example, the court considered a plaintiff's tort claim arising out of injuries he sustained after falling twenty feet from a cooling tower assembly on a State Department construction project. See id. at 880. One of the defendants, CRSS Constructors, Inc., had contracted with the General Services Administration ("GSA") to serve as the contract compliance
The District of Columbia Court of Appeals was ultimately unpersuaded in Presley that a duty arose "based upon the facts in [that] case," but the court did note that "imposition of a duty may be appropriate in other cases, with different contractual arrangements." Id. And that court has cited approvingly to cases in the D.C. Circuit finding a common law duty to third parties arising out of a contractual arrangement. See Haynesworth, 645 A.2d at 1097 (citing Long v. District of Columbia, 820 F.2d 409, 419 (1987)). In Long v. District of Columbia, for example, the D.C. Circuit concluded that the Potomac Electric Power Company had assumed a duty to third parties — namely, the traveling public — when it contracted to maintain the District's traffic signals. 820 F.2d at 417; see also Caldwell v. Bechtel, Inc., 631 F.2d 989, 992, 997 (D.C.Cir.1980) (considering a contract between the defendant, Bechtel, and WMATA that required Bechtel to provide "safety engineering services" and concluding that "by assuming a contractual duty to WMATA, Bechtel placed itself in the position of assuming a duty to appellant in tort").
Here, at the motion to dismiss stage, the relevant contract documents are not before the Court. Intelect has alleged that WMATA relied upon Defendants to obtain a surety bond and required only a nominal bond from Defendants. Am. Compl. ¶ 13. The scope of that obligation, and the terms of those parties' contract, "remains central" to the Court's analysis of whether Defendants owed any duty to Intelect in tort, as a subcontractor for whom the payment bond would ostensibly benefit. See Presley, 25 A.3d at 889. To be sure, there is some imprecision in Intelect's allegations which raises some question about whether Defendants truly took on a duty as a result of their contract with the WMATA. For example, Intelect refers only generally to the "contract documents" as requiring "the Carrier Consortium to provide full surety bond coverage ... to assure payment to those persons supplying labor and material to the Project." Am. Compl. ¶ 2. In addition, Intelect merely states that WMATA was "relying on the Carrier Consortium to require its contractor to bond the Project in the full amount of the contract," and does not explicitly allege whether that condition was contained in the parties' contract. Id. ¶ 13 (emphasis added).
Nevertheless, given Intelect's factual allegations about the relationship between WMATA and Defendants — and the agreement among those parties about Defendants'
The Court notes that a separate doctrine, the economic loss rule, may or may not pose a problem for Intelect. Defendants invoke the rule in passing and in a single sentence of their memorandum, but do not further develop the argument. See Defs.' Mem. Supp. at 8-9. "Generally, under the economic loss rule, a plaintiff who suffers only pecuniary injury as a result of the conduct of another cannot recover those loses in tort." Aguilar v. RP MRP Wash. Harbour, LLC, 98 A.3d 979, 982 (D.C.2014) (quoting Apollo Grp., Inc. v. Avnet, Inc., 58 F.3d 477, 479 (9th Cir. 1995)). The District of Columbia Court of Appeals recently adopted the economic loss doctrine, resolving what it described as "a matter of first impression." See id. at 980. That court held in Aguilar that "[t]he economic loss doctrine in the District of Columbia bars recovery of purely economic losses in negligence, subject to only one limited exception where a special relationship exists." Id. at 985-86. In that case, several cooks, servers, bartenders, and other employees of businesses that were flooded in the Washington Harbour retail complex argued that the defendants "owed them a duty of care to ensure the safe operation of Washington Harbour, that included raising the flood walls when notified of an impending flood." Id. at 980-81. The plaintiffs sought to recover lost wages resulting from the closure of their places of employment due to that flood. Id. at 980.
Yet, the contours of the economic loss rule are nuanced and it is not immediately clear to the Court that the economic loss rule would necessarily operate to Intelect's detriment on the facts of this case. See 3 Dan B. Dobbs, Paul T. Hayden & Ellen M. Bublick, The Law of Torts § 607 (2d ed. 2011) ("[T]he implication of references to `the' economic loss rule that there is but a single overarching economic loss rule is misleading. Several discrete rules dominate the decisions, not a single rule."). In Aguilar, the District of Columbia Court of Appeals appeared to be confronted with a situation in which plaintiffs claimed that their adverse economic consequences were foreseeable to the defendants and that that foreseeability alone sufficed to give rise to a duty of care. See 98 A.3d at 981 (describing plaintiffs' claim as urging "the court to ignore the economic loss doctrine in favor of a foreseeability test to determine whether appellees owed them a duty of care to raise the flood walls to prevent economic injury" (emphasis added)). In this case, by contrast, if the Court were to find that a duty of care to Intelect arose out of the WMATA-Carrier Consortium contract, there would be a separate basis for Defendants' duty. And the District of Columbia Court of Appeals has previously stated
As far as the Court can tell, the District of Columbia Court of Appeals has not refined or further developed its economic loss rule since Aguilar was decided. Another Court in this district, in a pre-Aguilar decision, seemed to view the doctrine as a limitation on tort recovery even where an independent duty of care is potentially cognizable. See Himmelstein, 908 F.Supp.2d at 58 (declining to decide at the motion to dismiss stage whether a "special relationship between a creditor and debtor" suffices to "create[] an independent duty that would support a negligence claim," and permitting the claims to proceed, but nevertheless noting that the court had "serious concerns" that the claims "may alternatively be barred by the economic-loss doctrine"). But see Aguilar, 98 A.3d at 984-86 (concluding that a "`special relationship' between the parties" can create "an independent duty of care" to overcome the economic loss rule). Moreover, each of the cases finding (or considering) a duty of care arising out of a contractual obligation involved claims for personal injury or circumstances presenting a risk of personal injury. See, e.g., Presley, 25 A.3d at 877; Long, 820 F.2d at 410-11; Jefferson, 905 F.Supp.2d at 291. In fact, the Restatement itself speaks only of liability "to the third person for physical harm," although the District of Columbia Court of Appeals' language might be read more broadly. Restatement (Second) of Torts, § 324A. Thus, there remains at least some question whether the economic loss doctrine might apply to bar Intelect's claims for purely economic losses in this case, and the parties should address the economic loss rule more fully in future briefing.
At this juncture, however, and pending further information about the parties' contractual relationships, the Court concludes that Intelect has stated a sufficiently plausible claim of negligence to allow discovery to proceed.
Intelect also brings related claims of negligent misrepresentation and constructive
In support of its constructive fraud claim, Intelect similarly alleges that, because of the "payment procedures involved in the Project" and "the obligations contained in the Contract Documents that the Project be bonded, a special relationship of trust and confidence existed among the Carrier Consortium, Powerwave, and Intelect." Id. ¶ 75. Thus, Intelect claims that "[t]he Carrier Consortium's failure to advise Intelect that Intelect was providing labor and materials to the benefit of the Carrier Consortium at its risk.... constituted constructive fraud." Id. ¶ 76.
To state a claim for negligent misrepresentation under District of Columbia law, the plaintiff must show: (1) that the defendant "made a false statement or omitted a fact that he had a duty to disclose," (2) that the statement or omission "involved a material issue," and (3) that the plaintiff "reasonably relied upon the false statement or omission to his detriment."
Generally, "mere silence does not constitute fraud unless there is a duty to speak." Sundberg, 109 A.3d at 1131 (quoting Saucier v. Countrywide Home Loans, 64 A.3d 428, 438 (D.C.2013) (internal quotation marks omitted)). "[I]n the District of Columbia and other jurisdictions, a duty to speak arises in the fraud context only when there is some special relationship or contact between the parties justifying the imposition of a duty." Jefferson, 905 F.Supp.2d at 287. Such a duty to speak may "stem from a fiduciary relationship," or arise in "`an instance where a material fact is unobservable or undiscoverable by an ordinarily prudent person upon reasonable inspection.'" Sununu v. Philippine Airlines, Inc., 792 F.Supp.2d 39, 51 (D.D.C.2011) (quoting Cadet, 2007 WL 2893418, at *6). A duty may also arise "as a result of a partial disclosure." Jefferson, 905 F.Supp.2d at 287.
Here, because Intelect does not allege that Defendants made any affirmative statements, Intelect must rely on a "duty to disclose" information to support its negligent misrepresentation and constructive fraud claims. Intelect does not claim that it has a fiduciary relationship with Defendants. Nor does Intelect allege a partial disclosure — or indeed any direct communication at all — with Defendants prior to either Powerwave's default or Intelect's entry into its subcontract with Powerwave on June 16, 2010 (the action it allegedly took after reasonably relying on the payment bond). See Id. at 287-88 (finding "no basis for imposing a duty to speak" where "plaintiffs do not allege any contact with the ... Defendants prior to closing on the Property"). Finally, there is no indication that the amount of the payment bond obtained by Powerwave was unobservable or undiscoverable, nor does Intelect claim as much. Intelect in fact alleges the opposite. After Defendants allegedly "refused to provide" a copy of the bond, Intelect contends that it "was able to obtain a copy of the bond indirectly, through its insurance agent." Am. Compl. ¶ 31.
At bottom, Intelect merely alleges that, by undertaking "the duty to assure meaningful and effective coverage by the surety," Defendants "implicitly represented to those persons who supplied labor and materials to the Project, including Intelect, that they would be paid by the surety if not paid by Powerwave," and had a "duty of due care ... to advise them that the Project was only partially bonded." Id. ¶¶ 37, 40 (emphasis added). But unlike with respect to their allegations that Defendants had to secure the bond, Intelect alleges no duty on Defendants' part to affirmatively communicate to Powerwave's subcontractors whether Powerwave had secured, or had failed to secure, the bond. It may be that Intelect assumed such a bond had been secured, and that Defendants negligently breached their duty under the WMATA-Carrier Consortium contract to obtain that bond. But it does not automatically follow that Defendants were under any additional affirmative duty to inform all subcontractors with whom they had not contracted about the status or amount of that bond. Accord Jefferson, 905 F.Supp.2d at 287, 290-92 (finding that there was no basis for imposing a duty to speak on defendants who renovated plaintiffs' home under a contract with a third party, but considering separately, and declining to determine at the motion to dismiss stage, whether those same defendants owed a legal duty of care to the plaintiffs based on their contract with a third party). Thus, Intelect has failed to state a claim for negligent misrepresentation or constructive fraud.
Intelect has not alleged facts sufficient to plausibly suggest the existence of a confidential relationship in this case; indeed, Intelect has done no more than make a conclusory allegation that a "special relationship of trust and confidence existed" among the parties. Am. Compl. ¶ 74. And based on what can be gleaned from the other allegations in the complaint, no facts plausibly support the existence of a confidential relationship. All parties are sophisticated business entities, and there is no indication that Intelect either entrusted its affairs to Defendants or was particularly susceptible to Defendants' influence. The parties appear to have had, at most, only limited communication prior to Powerwave's default and bankruptcy Cf. Cordoba Initiative, 900 F.Supp.2d at 51 (finding a confidential relationship plausibly alleged where defendants had advised and supported plaintiff "over several years"). Thus, Intelect has not plausibly alleged the confidential relationship necessary to support its constructive fraud claim.
The Court will dismiss Counts II and VI of Intelect's Amended Complaint.
Intelect also alleges that it is a third-party beneficiary of the contract documents. "A third party may sue on a contract if the contracting parties intended the third party to benefit," even if the third party was not a party to that contract. District of Columbia v. Campbell, 580 A.2d 1295, 1302 (D.C.1990); see also W. Union Tel. Co. v. Massman Const. Co., 402 A.2d 1275, 1277 (D.C.1979) ("One who is not a party to a contract nonetheless may sue to enforce its provisions if the contracting parties intend the third party to benefit directly thereunder."). "`Third-party beneficiary status requires that the contracting parties had an express or implied intention to benefit directly' the party urged to be a third-party beneficiary."
Here, Intelect plausibly alleges that it that it was an intended beneficiary of the "Contract Documents requiring full bonding" and the "Powerwave Payment Bond," albeit by a somewhat attenuated series of incorporations within the contract documents. Am. Compl. ¶¶ 50, 53. As already explained, Intelect alleges that WMATA waived its normal bonding requirements in reliance upon the Carrier Consortium's promise to obtain a bond, in the full contract price, from its general contractor. Id. ¶¶ 46-47. Accordingly, Intelect claims that the "purpose of the Payment Bond obtained by Powerwave ... in addition to assuring payment to those persons who supplied labor and materials to the Project under contract with Powerwave, was to substitute the nominal bond which had been jointly obtained by each of the members of the Consortium with the Powerwave Bond." Id. ¶ 48.
In their opening memorandum, Defendants' only argument for dismissal is that "Intelect does not specify any provision of a contract ... that identifies Intelect as an intended third-party beneficiary." Defs.' Mem. Supp. at 12. Yet, an intention to benefit a party directly need not be express; it can also be implied. Fort Lincoln Civic Ass'n, 944 A.2d at 1064. Moreover, while it may well be that Intelect, as a downstream subcontractor, is merely an incidental beneficiary of that contract, the court is unable to conclusively determine the issue at present. Neither the WMATA-Carrier Consortium contract nor the Powerwave-Carrier Consortium contract is currently before the Court on this motion. At this stage, the Court must take all factual allegations pled in the complaint as true, and Intelect has pled that, under the contract documents "as a whole" the "Carrier Group had an obligation to WMATA, in exchange for a waiver of the normal requirement of full bonding by the Carrier Group, to assure that Powerwave obtained bonding in the full amount" of the contract, and that "Intelect was within the class of persons who were intended beneficiaries of the Powerwave Payment Bond." Am. Compl. ¶¶ 51, 50. If any of those allegations plainly conflict with the contractual terms, Defendants could have attached the relevant contracts to their motion. "[A]t the motion to dismiss stage, [the court] may consider `documents attached as exhibits or incorporated by reference in the complaint, or documents upon which the plaintiff's complaint necessarily relies even if the document is produced not by the plaintiff in the complaint but by the defendant in a motion to dismiss.'" Angelex Ltd. v. United States, 123 F.Supp.3d 66, 82, 2015 WL 5011421, at *11 n. 11 (D.D.C. Aug. 24, 2015) (quoting Ward v. D.C. Dep't of Youth Rehab. Servs., 768 F.Supp.2d 117, 119 (D.D.C. 2011)); see also Banneker Ventures, LLC v. Graham, 798 F.3d 1119, 1133 (D.C.Cir.2015) ("The prototypical incorporation by reference occurs where a complaint claims breach of contract, and either party attaches to its
Defendants raise an additional argument for the first time in their reply. But "it is a well-settled prudential doctrine that courts generally will not entertain new arguments first raised in a reply brief." Lewis v. District of Columbia, 791 F.Supp.2d 136, 139-40 n. 4 (D.D.C.2011) (quoting Aleutian Pribilof Islands Ass'n v. Kempthorne, 537 F.Supp.2d 1, 12 n. 5 (D.D.C.2008)). In any event, the argument is unsuccessful. Defendants point out that they are obligees under the Powerwave Bond, and that they owe no duty under the bond. They therefore invoke the legal principle that a third-party beneficiary claim cannot be brought against the promisee of a contract, and may only be brought against the promisor. Defendants' argument validly states the law, but it does not benefit them. The District of Columbia Court of Appeals has held that, "[i]n the vast majority of cases, the third-party beneficiary's action lies only against the promisor." See Campbell, 580 A.2d at 1303. Thus, to the extent Intelect seeks to recover as a beneficiary of the Powerwave-Carrier Consortium contract, Intelect is likely barred from doing so. Nevertheless, Defendants were promisors under the WMATA-Carrier Consortium contract which, Intelect alleges, required the Defendants to obtain a payment bond for the full contract price. Indeed, perhaps anticipating this argument, Intelect's complaint specifically acknowledges that, the Carrier Consortium "was a promisee, not a promisor, with respect to the specific contract clause in the Carrier Group-Powerwave Construction Contract which required bonding," but claims that "under the Contract Documents as a whole, the Carrier Group had an obligation to WMATA, in exchange for a waiver of the normal requirement of full bonding ..., to assure that Powerwave obtained bonding in the full amount of the Carrier Group-Powerwave Construction Contract." Am. Compl. ¶ 51 (emphasis added). And if the Carrier Consortium is the promisor on the WMATA-Carrier Consortium contract, a third-party beneficiary claim may be asserted against them on the basis of that contract.
Accordingly, the Court will deny Defendants' motion with respect to the Count III.
Intelect also asserts claims of implied contract (Count IV) and unjust enrichment (Count V). "The District of Columbia recognizes causes of action for unjust enrichment and quantum meruit as implied contract claims in which there is no express contract between the parties but contractual obligations are implied, either in fact (quantum meruit) or in law (unjust enrichment)." Plesha v. Ferguson, 725 F.Supp.2d 106, 111 (D.D.C.2010). The causes of action are alternative remedies, however, and "in order to claim a remedy for unjust enrichment, there must be no contract, either express or implied." Schiff
While "the District of Columbia Court of Appeals uses the term `quantum meruit' to describe both forms of recovery, it distinguishes between these two causes of action." U.S. ex rel. Modern Elec., Inc. v. Ideal Elec. Sec. Co., 81 F.3d 240, 246 (D.C.Cir.1996) (internal citation omitted).
In urging the Court to dismiss these counts, Defendants' sole argument is that an express contract already covers this subject matter. Defs.' Mem. Supp. at 13. It is true that, under District of Columbia law, "[n]either form of restitution is available when there is an actual contract between the parties." Ellipso, Inc. v. Mann, 460 F.Supp.2d 99, 104 (D.D.C. 2006); see also Jordan Keys & Jessamy, LLP v. St. Paul Fire & Marine Ins. Co., 870 A.2d 58, 64 (D.C.2005) ("One who has entered into a valid contract cannot be heard to complain that the contract is unjust, or that it unjustly enriches the party with whom he or she has reached agreement."). Applied to the circumstances of this case, however, Defendants' argument misses the mark. The principle that a contract between the parties will bar an implied-in-fact contract or unjust enrichment claim applies only where those claims are brought among the contracting parties. See Jordan Keys, 870 A.2d at 64. Where, by contrast, a plaintiff brings implied-in-fact contract and unjust enrichment claims against a party with whom he has not
Moreover, as Intelect notes, the Third Restatement of Restitution definitively anticipates such situations. See Pl.'s Mem. Opp'n at 13. Comment a to § 25 explains that:
Restatement (Third) of Restitution and Unjust Enrichment § 25 cmt. a (Am. Law Inst. 2010). And the District of Columbia Court of Appeals has previously invoked § 25 of the Restatement when considering unjust enrichment claims.
Here, while contracts existed between the Defendants and WMATA, the Defendants and Powerwave, and Powerwave and Intelect, there was no contract between the relevant parties: the Defendants and Intelect. Thus, the existence of other contracts will not bar Intelect's implied-in-fact contract and unjust enrichment claims, and the Court will allow those claims to proceed.
Intelect's final count asserts a promissory estoppel claim. To state a claim for promissory estoppel, a plaintiff "must show (1) a promise; (2) that the promise reasonably induced reliance on it; and (3) that the promisee relied on the promise to his or her detriment." Myers v. Alutiiq Int'l Solutions, LLC, 811 F.Supp.2d 261, 272 (D.D.C.2011) (citing Simard v. Resolution Trust Corp., 639 A.2d 540, 552 (D.C. 1994); see also Bender v. Design Store Corp., 404 A.2d 194, 196 (D.C.1979). A promise "must be definite, as reliance on an indefinite promise is not reasonable," and it must have "definite terms on which the promisor would expect the promisee to rely," although the promise "need not be as specific and definite as a contract." In re U.S. Office Prods. Co. Sec. Litig., 251 F.Supp.2d 77, 97 (D.D.C.2003).
Taken as true, Intelect's complaint plausibly alleges a definite promise that it reasonably relied upon. Intelect alleges that upon Powerwave's default and bankruptcy, "all progress on the Project was suspended." Am. Compl. ¶ 79. Intelect further alleges that, "[i]n order to facilitate the prompt resumption of work under a replacement contractor, the Carrier Consortium represented to Intelect that work on the Project would resume in early Spring of 2013, and requested that Intelect leave its equipment and materials on site, and continue to maintain its labor force in place." Id. ¶ 79. With a necessary inference, this promise is sufficiently definite to state a claim at this stage, despite Defendants' argument to the contrary.
At present, however, Intelect's complaint fails to allege how its reliance on that promise worked to its detriment. See Osseiran v. Int'l Finance Corp., 498 F.Supp.2d 139, 147 (D.D.C.2007) ("To factually allege promissory estoppel, a plaintiff must establish ... that the promisee relied on the promise to his detriment."). Intelect's complaint states that it "continued to incur the expense of continuing to employ its key employees, at a cost of $400,000." Am. Compl. ¶ 81. But Intelect's complaint oddly does not explain whether the promised resumption of work took place. In fact, neither party explains what, if anything, happened with respect to the project after Powerwave defaulted. If work did resume as promised, that fact might indicate (depending on the circumstances) that the Defendants' promise did not work to Intelect's detriment. By contrast, if Intelect failed to receive that work, or did receive the work but incurred greater expenses than it would have absent Defendants' representation, those factual circumstances might support a detrimental reliance allegation. Intelect does state in its opposition that its "consent to [Defendants'] request caused [Intelect] to incur expenses which would have been covered by the Carriers as a change order if the Project had resumed as anticipated." Pls.' Mem. Opp'n at 16 (emphasis added). This statement implies — although it still does not state outright — that the Project either did not resume, or did not resume with Intelect onboard. In any event, this belated statement cannot sustain Intelect's claim, as "[i]t is axiomatic that a complaint may not be amended by the briefs in opposition to a motion to dismiss." Arbitraje Casa de Cambio, S.A. de C.V. v. U.S. Postal Serv., 297 F.Supp.2d 165, 170 (D.D.C. 2003).
Accordingly, the Court will dismiss Intelect's promissory estoppel claim based on the complaint in its current form. The Court will permit Intelect to seek leave to amend its complaint within 14 days from the issuance of this memorandum opinion, however, to clarify the promise it alleges and to properly plead factual allegations supporting the detrimental reliance element of its promissory estoppel claim.
For the foregoing reasons, Defendants' Motion to Transfer Venue (ECF No. 5) is
While the D.C. Circuit has not yet addressed the issue, no party disputes that state law, and not federal law, governs Intelect's claims against Defendants. In similar circumstances, the D.C. Circuit has held that if "a federal court applies state law when it decides an issue not addressed by federal law, regardless of the source from which the cause of action is deemed to have arisen for the purpose of establishing federal jurisdiction," a federal court should adopt the choice of law rules of the state in which the court sits because "[a] choice-of-law rule is no less a rule of state law than any other." A.I. Trade Fin., Inc. v. Petra Int'l Banking Corp., 62 F.3d 1454, 1463 (D.C.Cir.1995). As a result, the Court's choice of law analysis would be identical even if federal jurisdiction in this case is grounded on 28 U.S.C. § 1334.
Restatement (Second) of Torts, § 324A. In Presley the District of Columbia Court of Appeals directly quoted the Second Restatement, but that court had previously stated that "the Restatement has not been formally adopted by this Court." Haynesworth, 645 A.2d at 1097. But even if the D.C. Court of Appeals has not formally adopted section 324A, the Court explained in Haynesworth that "it is clear that the particular concept" contained in that section "is well known and has been readily applied, where appropriate." Id. (citing Long v. District of Columbia, 820 F.2d 409, 419 (D.C.Cir.1987)). As the Court explains below, however, § 324A's reference to physical harm might ultimately pose a problem for Intelect under the economic loss rule.
