Apple American Group, Llc v. Gbc Design, Inc.BRIEF in Opposition re Motion to Dismiss for Failure to State a ClaimW.D. Pa.July 7, 2017 1 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF PENNSYLVANIA APPLE AMERICAN GROUP, LLC, Plaintiff, vs. GBC DESIGN, INC., Defendant/Third- Party Plaintiff, vs. JACKSON TAYLOR CONTRACTORS, LLC, ACA ENGINEERING, INC., and L.R. KIMBALL & ASSOCIATES, Inc., Third-Party Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 3:15-CV-325 Judge Kim R. Gibson ELECTRONICALLY FILED DEFENDANT/THIRD-PARTY PLAINTIFF GBC DESIGN, INC.’S BRIEF IN OPPOSITION TO THIRD-PARTY DEFENDANT ACA ENGINEERING INC.’S MOTION TO DISMISS Now comes Defendant/Third-Party Plaintiff, GBC Design, Inc. (“GBC”), by and through counsel, and hereby respectfully submits its Brief in Opposition to Third-Party Defendant ACA Engineering, Inc.’s (“ACA”) Motion to Dismiss as follows: I. INTRODUCTION ACA’s Motion to Dismiss must be denied as it fails to address the issue presently before the Court on a 12(B)(6) Motion - whether a plausible claim for relief has been pled. Instead, ACA raises arguments that are more properly suited for a motion for summary judgment, as its Motion delves into questions of fact, and relies on improper extrinsic evidence that may not be considered at this time. ACA attempts to argue that there can be no basis for finding it was negligent based on its Case 3:15-cv-00325-KRG Document 52 Filed 07/07/17 Page 1 of 9 contract with Plaintiff Apple American Group, LLC (“Apple”); however, notwithstanding the fact that GBC’s claims sound in tort, not contract, ACA’s own Motion opens the door for liability for the conduct that GBC alleges ACA failed to properly perform. Indeed, ACA admitted that it was requested “that [ACA] be authorized to review the project plans and specifications to confirm the recommendations contained in this report have been interpreted and implemented in accordance with our intent." Clearly ACA’s responsibility for ensuring its Geotechnical Report was fully complied with was contemplated between the parties, and whether ACA ultimately had a duty to do so remains a question of fact, an issue not within the bounds of a 12(B)(6) motion. II. FACTUAL BACKGROUND This matter stems in part from alleged water drainage issues and moisture damage that occurred at Plaintiff’s recently constructed Applebee’s location in Ebensburg, Pennsylvania. ECF 1, ¶¶8-10. Prior to the construction of this new Applebee’s location, Plaintiff Apple retained the services of Third-Party Defendant ACA Engineering, Inc., (“ACA”) to conduct initial site inspections as well as a geotechnical investigation of the proposed site to be used during the site planning phase of the project. Id. at ¶11. On or around March 2013, Apple contracted with GBC to prepare the site plans for the new Applebee’s location. Id. at ¶¶12-16. The GBC site plans were completed around August or September 2013. Id. Following the completion of the GBC site plans, the construction of the new Applebee’s was conducted by a number of different contractors, including Third-Party Defendants Jackson Taylor and L.R. Kimball and Associates, Inc., (“L.R. Kimball”). Id. at ¶17. It is alleged that following the restaurant’s opening in late 2014, moisture and drainage issues occurred. Id. at ¶21. The cause of these moisture and drainage issues is in dispute. While Apple contends that its damages were caused by a failure of GBC to incorporate recommendations from the ACA geotechnical report into its site plan, it is GBC’s position that the issues, were caused and created Case 3:15-cv-00325-KRG Document 52 Filed 07/07/17 Page 2 of 9 by the combination of acts and/or omissions of several different parties, including those of ACA. ECF 24, ¶¶12-16. LAW AND ARGUMENT A. Standard of Review When considering a motion to dismiss made under Fed.R. 12(B)(6), a reviewing court must “assume all remaining factual allegations to be true, construe those truths in the light most favorable to the plaintiff, and then draw all reasonable inferences from them.” Connelly v. Lane Const. Corp., 809 F.3d 780, 790 (3d Cir. 2016) Further, a court’s role is limited to determining if a plaintiff is entitled to offer evidence in support of her claims. See Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir. 2000). The court does not consider whether a plaintiff will ultimately prevail. Id. A defendant bears the burden of establishing that a plaintiff's complaint fails to state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000). A pleading that states a claim for relief must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Nat'l Specialty Ins. Co. v. Tunkhannock Auto Mart, Inc., M.D.Pa. No. 3:16-CV-00268, 2017 U.S. Dist. LEXIS 23160, at *6 (Feb. 17, 2017) (citing Fed. R. Civ. P. 8(a)(2)). Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has not pleaded “enough facts to state a claim to relief that is plausible on its face,” Nat'l Specialty Ins. Co. at *7 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)), meaning enough factual allegations “to raise a reasonable expectation that discovery will reveal evidence of'” each necessary element. Id. (citing Phillips v. Cty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008)). Additionally, in regards to the sort of evidence that a court may rely on in ruling on a 12(B)(6) Motion to Dismiss, "courts generally consider only the allegations contained in the complaint, exhibits Case 3:15-cv-00325-KRG Document 52 Filed 07/07/17 Page 3 of 9 attached to the complaint, and matters of public record." Pension Benefit Guar. Corp. v. White Consol. Indus. Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) Here, ACA improperly relies on documents that are not attached to the Complaint, and not a matter of public record in support if its Motion. In regards to reliance on outside documents attached to a 12(B)(6) Motion, the Third Circuit Court of Appeals has set forth only a narrow exception of when they may be considered. A court may also consider an exhibit to a defendant's motion to dismiss if the plaintiff's claims are based on that document and if that document is indisputably authentic. See Id..; Pryor v. Nat'l Collegiate Athletic Ass'n, 288 F.3d 548, 560 (3d Cir. 2002). The exhibits attached to ACA’s Motion do not meet either prong of this test, and therefore cannot be considered when ruling on a 12(B)(6) Motion to Dismiss, and should be stricken. These exhibits are improper as they are extrinsic documents that are not integral to GBC’s Third-Party Complaint. As stated above, GBC’s Complaint brings claims for contribution and indemnity based on ACA’s negligence, and because such claims sound in tort, not contract, ACA’s exhibits are not integral to GBC’s claims. As these extrinsic documents have no relevance on the claims brought by GBC, and are improperly attached to a 12(B)(6) Motion, GBC requests that the Court disregard them, and strike them from the record. However, even if the Court were inclined to consider this improper extrinsic evidence, ACA’s exhibits have not been properly authenticated pursuant to Fed. R. 903. ACA has not provided any testimonial evidence that these documents are what they purport to be, and therefore, even if they were relevant to GBC’s claims, the Court should still disregard them for the purpose of ruling on this Motion. B. Whether ACA owed a duty to ensure its Geotechnical Report was followed is a question of fact. Case 3:15-cv-00325-KRG Document 52 Filed 07/07/17 Page 4 of 9 ACA attempts to argue that GBC’s claims must fail because: “(1) ACA specifically disclaimed any obligation to oversee the work of any other entity on the Project; and (2) was never retained by Apple American to perform such services.” However, in support of this argument ACA provides nothing except for bare, unsupported assertions as to what transpired between the parties. In-fact the ultimate relationship between the parties, including their respective rights, responsibilities, duties, and liabilities owed between them remain questions of material fact that cannot be resolved at this stage of litigation. While for the reasons set forth above, the attached exhibits should not even be considered in this 12(B)(6) Motion, they do not even set forth any basis for dismissing the claims against ACA. Again, GBC’s claims against ACA sound in tort, not contract, therefore the basis for potential liability is not grounded in the terms of ACA’s contract with Apple. Even if the contract was relevant in some way, Exhibit A to ACA’s Motion purports to be only a mere “Proposal” from ACA to Apple for its services. In-fact, even ACA labels the documents as such. However, ACA has not even attempted to provide any evidence that this “Proposal” is authentic or that memorializes the ultimate understanding between the parties. ACA’s own Motion creates a material question of fact as to whether certain duties arose between ACA and Apple. As ACA points out, the Geotechnical Report1 states, "[i]f requested, ACA would welcome the opportunity to provide field monitoring services during construction." (Exhibit B of ACA’s Motion at p. 10) The Geotechnical Report then goes on to state: "[w]e also request that we be authorized to review the project plans and specifications to confirm the recommendations contained in this report have been interpreted and implemented in accordance with our intent." Id. Clearly, ACA 1 ACA incorrectly labels the Geotechnical Report as being “Exhibit A” to the Motion to Dismiss. The Geotechnical Report is attached as “Exhibit B.” Case 3:15-cv-00325-KRG Document 52 Filed 07/07/17 Page 5 of 9 requested it be responsible for supervising the work or ensuring its report was implemented properly, which are the same tasks that GBC alleges were the causes of Plaintiff’s damages. ACA’s own Motion places its true scope of work at issue, while at the same time, while at the same time ACA provides nothing but bare, unsupported allegations that Apple did not request supervisory services or expect ACA to ensure their plans were followed, and such claims cannot alone support dismissal. In order to survive a Motion to Dismiss, GBC need not prove its case through the pleadings, yet many of the arguments raised by ACA surround factual questions that are not meant to be addressed in such a motion. When faced with a similar Motion to Dismiss in Berkley Mid-Atl. Grp., LLC v. G.F. Hoch Co., this Court recognized that at the early stages of litigation it had little information about the relationship between the parties and therefore could not properly assess the viability of an indemnity or contribution claim. See Berkley Mid-Atl. Grp., LLC v. G.F. Hoch Co., W.D.Pa. Civil Action No. 13-372, 2013 U.S. Dist. LEXIS 164872, at *10 (Nov. 20, 2013) Faced with such a lack of information, this Court found that it could not grant the Motion to Dismiss, but instead left the issue open for resolution at a later time such as by summary judgment once reasonable discovery had been conducted. Id. The only question at the 12(B)(6) stage is not whether a party would prevail, but merely whether based on the complaint they plausibly could prevail. See Semerenko, supra. Here, one of the issues in dispute is whether ACA owed a duty to supervise GBC and other contractors’ work, and to make sure the details of its Geotechnical Report were being properly implemented. While ACA may argue that the original understanding between it and Apple did not contemplate such work, clearly subsequent communications, including at minimum the Geotechnical Report, placed ACA’s scope of work at issue. Therefore, whether ACA owed a duty to oversee the implementation of the Geotechnical Report is a question of fact, which is not within the purview of a 12(B)(6) Motion. Case 3:15-cv-00325-KRG Document 52 Filed 07/07/17 Page 6 of 9 Based on the foregoing, GBC’s Third-Party Complaint meets the low threshold to overcome a 12(B)(6) Motion and as it states a plausible claim for relief against ACA, GBC should now be given the opportunity to produce evidence in support of those claims. C. A Limitation of Liability Clause, if valid, does not support dismissal of GBC’s claims. Contrary to ACA’s claim, a limitation of liability clause, if valid, limits potential damages, but does not provide the basis for dismissing GBC’s Third-Party Complaint. ACA attempts to draw the conclusion that because GBC’s potential recovery may be reduced by virtue of the Limitation of Liability clause, that its Third-Party Complaint must be dismissed in its entirety.2 However, the issue of the clauses’ validity is not even properly before the Court at this time. As discussed above, the purported contract attached to ACA’s Motion constitutes extrinsic evidence that is not integral to the claims raised by GBC, which sound in tort. Additionally, the purported contract has not been properly authenticated. Therefore, the attached contract is not a proper exhibit to a 12(B)(6) motion to dismiss, and may not be considered by the Court at this time. As the purported contract may not be as evidence at this time, ACA’s argument as to the preclusive effect of the limitation of liability clause similarly cannot be properly considered. However, should the Court still decide to entertain ACA’s limitation of liability argument, the Court must recognize that the limitation of liability clause does just that; it limits liability, and does not form the basis for dismissing this action in its entirety as ACA claims. Such an argument holds no basis in law, and ACA has provided no support for such a position, in-fact, the case law cited to by ACA leads to the opposite conclusion. 2 For the purpose of this Motion, GBC need not address the validity of the Limitation of Liability clause or its effectiveness in regards to Third-Party claims where GBC and ACA were not in privity of contract. However, GBC does not waive any such arguments and reserves the right to raise such issues when they are properly at issue before the Court. Case 3:15-cv-00325-KRG Document 52 Filed 07/07/17 Page 7 of 9 As ACA cites, “a limitation of liability clause caps one's liability, but it does not relieve one from bearing substantial responsibility for one's actions.” ACA then goes on to draw the distinction between a limitation of liability clause and an exculpatory clause, which “immunizes a person from the consequences of his/her negligence.” Evidently, these are two very different kinds of contractual clauses, and the arguments raised in ACA’s Motion appear to confuse the difference between the two. While the validity of the limitation of liability clause is not properly at issue here, it is important to note that in an attempt to argue that the clause is valid, ACA again relies on bare assertions that are not supported by any testimonial evidence. ACA simply claims that “The limitation of liability clause in the contract between Apple American and ACA was negotiated at arm's length and is reasonable in limiting liability to the lesser of fees paid ($4,250.50) or $25,000.00.” Even if such an issue were being addressed here, ACA has provided no evidence that the contract was negotiated at arm’s length and has similarly provided no support that the limitation amount was reasonable. Again, ACA relies merely on bald, unsupported conclusions, in support of its position. Even assuming arguendo that the clause is valid, in a nearly incomprehensible logical leap, ACA claims that because GBC cannot recover on contribution/indemnity claim against ACA for an amount greater than the contractual limitation, GBC cannot bring a claim against ACA at all. If the limitation of liability clause is found valid, which GBC disputes at this stage, and until the validity and viability of the contract is determined once further discovery is completed, damages would simply be reduced to the limited amount. However, as ACA even states, such a clause does not serve to entirely relieve a party of responsibility. As ACA has provided no support for why a limitation of liability clause would bar GBC’s claims in their entirety, ACA’s Motion should be denied. III. CONCLUSION Case 3:15-cv-00325-KRG Document 52 Filed 07/07/17 Page 8 of 9 ACA’s Motion to Dismiss relies on improper, extrinsic exhibits, does not address GBC’s claims, is not ripe at this 12(B) stage, and fails to provide any authenticated evidence to support its arguments for why GBC’s Third-Party Claim should be dismissed. The extent of ACA’s duties and responsibilities on the Project are clearly in question, and if it is determined that ACA did owe certain duties to Apple, and breached them, it will undoubtedly be held liable to GBC for contribution or indemnity as a joint- tortfeasor. As GBC’s Third-Party Complaint states a plausible claim for contribution/indemnity against ACA, GBC respectfully requests that ACA’s Motion be denied. Respectfully submitted, /s/ Brian C. Lee Brian C. Lee, Esq. (0081675) REMINGER CO., LPA 101 West Prospect Ave., Suite 1400 Cleveland, OH 44011 T: 216-687-1311 / F: 216-687-1841 Email: blee@reminger.com Attorney for Defendant/Third Party Plaintiff GBC Design, Inc. CERTIFICATE OF SERVICE I certify on July 6, 2017, the foregoing Defendant/Third-Party Plaintiff GBC Design, Inc.’s Brief in opposition to Third-party Defendant ACA Engineering, Inc.’s Motion to Dismiss was served, via the Court’s electronic filing system, to all counsel of record /s/ Brian C. Lee Brian C. Lee, Esq. (0081675) Case 3:15-cv-00325-KRG Document 52 Filed 07/07/17 Page 9 of 9