Windamir Development, Inc. v. Greenheart Construction, Inc. et al

REPLY BRIEF re MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM Against Greenheart's Counter-Claim

N.D. Ga.October 24, 2016

1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION WINDAMIR DEVELOPMENT, INC., ) ) Plaintiff, ) ) v. ) CIVIL ACTION ) FILE NO. 1:16-cv-02665-ELR GREENHEART CONSTRUCTION, INC. ) & NAVAL FACILITIES ENGINEERING ) COMMAND SOUTHEAST ) ) Defendants. ) PLAINTIFF’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO DISMISS DEFENDANT GREENHEART’S COUNTER-CLAIM COMES NOW Windamir Development, Inc. (“Windamir”), Plaintiff in the above-styled action, and hereby files this its Reply Brief in Support of its Motion to Dismiss Defendant Greenheart Construction, Inc.’s (“Greenheart”) Counter-Claim for failure to state a claim upon which relief may be granted. I. OVERVIEW In its response Brief (D.E. #15), Greenheart fails to show that its claims meet the controlling pleading standards so at to prevail in the face of this Motion to Dismiss. Greenheart cites incorrect pleading standards, fails to show the sufficiency of its proximate cause and damages allegations, fails to show how its “breach” allegations pass muster, and fails to show how its attorney’s fees claims may survive. Additionally, Greenheart’s request to amend its Counter-Claim should be denied as Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 1 of 13 2 futile. For these and other reasons, Windamir’s Motion to Dismiss Greenheart’s Counter-Claim should be granted.1 II. CORRECT STANDARD OF REVIEW Greenheart sets forth an inaccurate, or at least incomplete, recitation of the standard of review on a motion to dismiss. Contrary to Greenheart’s assertions, after Iqbal and Twombly, mere notice pleading is not sufficient to avoid dismissal. Instead, pleadings require “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To survive a motion to dismiss under Rule 12(b)(6), a claimant “must plead ‘enough facts to state a claim to relief that is plausible on its face.’” Ray v. Spirit Airlines, Inc., 767 F.3d 1220, 1223 (11th Cir. 2014) (quoting Twombly, 550 U.S. at 570), and its claim must demonstrate “more than the ‘mere possibility of misconduct,’” Williams v. Fed. Nat’l Mortgage Ass’n, No. 1:13-CV-1899-WSD, at *2 (N.D. Ga. Sept. 25, 2013). 1 Greenheart seems to argue in footnote 1 of its response brief (D.E. 15) that this matter must be stayed and referred to arbitration. This footnote is not a valid request or Motion for Arbitration. To the extent it is, however, Windamir notes that Greenheart waived any such right to relay on this clause and move to arbitration by failing to assert such a right in its Answer and availing itself of the remedies of this Court by filing its Counter-Claim. Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 2 of 13 3 Greenheart also misstates this Court’s duties when addressing what Greenheart asserts are “factual” allegations. While it is true that properly plead factual allegations must be viewed by this Court in a light favorable to Greenheart, this point is not absolute nor without limitation. This axiom certainly does not apply to naked legal conclusions without factual support. “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (Rule 8 “does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions”). The Court need not “accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555. As noted below, Greenheart’s claims – especially as to damages and proximate cause -- are mere threadbare recitals and conclusions, and do not meet the standard set forth above. III. THE ELEMENTS OF DAMAGES AND PROXIMATE CAUSE As noted in its initial brief, damages and proximate causation (along with breach) are essential and underlying elements of Greenheart’s contract claim. See, e.g., Kuritzky v. Emory Univ., 294 Ga.App. 370, 371, 669 S.E.2d 179 (2008); Budget Rent-A-Car & c. v. Webb, 220 Ga.App. 278, 279, 469 S.E.2d 712 (1996). If this Court finds Greenheart has not properly or sufficiently plead either of these Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 3 of 13 4 elements, Greenheart’s claims cannot survive.2 On pages 8 to 10 of its initial brief, Windamir set forth a comprehensive review of Paragraph 8 of Greenheart’s Counter- Claim, the one sentence in the document even touching on the essential elements of damages or causation: “The Damages associated with the forgoing breaches = $156,480.” This conclusory sentence is exactly the type of “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements” condemned as insufficient in Iqbal. In its response, Greenheart makes no attempt to contradict Windamir’s arguments as to the insufficiency of this recital. Instead, Greenheart devotes its entire arguments as to damages and/or causation to attacking one small comment in footnote 10 of Windamir’s original Brief regarding the use of the phrase “associated with.” Greenheart then supplies language of the type it proposes to use if this Court allows Greenheart to amend its Counter-Claim. Without waiving or relinquishing the arguments in its footnote, Windamir shows here that even if the Court allows Greenheart to amend its Counter-Claim and use the language it proposes, or even this Court implies sue sponte such language into Greenheart’s paragraph 8, 2 See Windamir’s Initial Brief, Page 5, Footnote 6. Put another way, Windamir need not show that Greenheart’s damages allegations, causation allegations, AND Greenheart’s breach allegations all fail to meet the proper pleading standards. Instead, if any such element fails, all of Greenheart’s claims fail. Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 4 of 13 5 Greenheart has still failed to properly and sufficiently allege it suffered damages proximately caused by Windamir. If such language were added, Greenheart’s sole and only “allegation” as to damages and causation would still only be that “as a direct, proximate, and foreseeable result of the material breaches of the subcontract by [Windamir], Greenheart has incurred damages equal to $156,480” -- or words to that effect. This is still the same bare legal statement without any factual allegation or support, and still fails to meet the appropriate pleading standard. Moreover, even if mere notice pleading were proper as Greenheart inaccurately suggests, Greenheart’s allegations are still insufficient. The only “notice” given by Paragraph 8 is that Greenheart merely alleges the elements of damages and proximate cause are met. Greenheart has not provided any factual allegations of any kind putting Windamir on notice of what, in any way whatsoever, these damages may be or entail. In describing its damages, Greenheart has only provided a number of total alleged damages – and literally nothing else. Further, Paragraph 8 gives no notice of how the amount of damages alleged was caused by the breaches alleged, what those damages might actually be, be from, or how they are calculated. Paragraph 8 simply does not provide any notice as to how the alleged breaches by Windamir as set out in Paragraph 7 caused Greenheart to suffer such damages. Paragraph 8, even as proposed to be amended, is a mere Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 5 of 13 6 formulaic recitation of the elements of a contract claim. The statements in Paragraph 8 are not sufficient to survive Windamir’s Motion to Dismiss. IV. THE ELEMENT OF BREACH Greenheart incorrectly calls Paragraph 7 of its Counter-Claim a “detailed list of allegations” asserting breaches of contract. Instead, Paragraph 7 is a mere recitation of various contract clauses and other contract obligations. While Greenheart does list numerous obligations it wishes this Court to believe Windamir violated, it has not plead any actual facts showing such contract clauses, or other contract obligations, were violated by Windamir. Greenheart doesn’t allege any specific act or omission violating these provisions – only generally conclusions of “failure.” While it is true a claim need not provide “detailed factual allegations” (Iqbal, 556 US. at 678), a claim still must provide some factual allegations. As Greenheart did not allege any such facts, its pleadings asserting the breach element are not sufficient and its Counter-Claim must be dismissed. Greenheart further attempts to make unsupported additional factual arguments as to its “breach” claim on page 8 and 9 of its brief. Such allegations are merely the unsupported statements of counsel and not proper evidence or pleadings before this Court. Nevertheless, as such statements provide factual inaccuracies, Windamir feels compelled to correct the record by informing the Court that Greenheart was not Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 6 of 13 7 forced to, nor did it ever, supplement any of Windamir’s work, nor did anyone ever allege to Windamir that its work was “sub-par,” as stated by Greenheart’s counsel. Specifically, not only was there no sub-par work by Windamir, but Greenheart never had anyone on site to either determine the status of any work or expend additional costs or efforts. Albern Johnson of Greenheart attended a project kick off meeting then was not present at the project until a single site visit at the end of the project work. No other Greenheart employee was ever involved with the project. Per the contract documents, the only direct project expenses that Greenheart had (other than payments to Windamir) under the Subcontract (See D.E. 1.2) were the costs of the surety bond as well as plumbing materials and labor. Windamir never received any notice of improper or untimely work, and was never asked or demanded to repair or correct any of its work, either by Greenheart or the Government. To Windamir’s knowledge, the only notice that the Government ever sent to Greenheart regarding problems at the project sited concerned Greenheart’s failure to pay their subcontractors.3 3 Unlike Greenheart’s allegations, not all of Windamir’s statements above are unsupported. In D.E. #7.2, Kim Glover of Windamir verified by affidavit the truthfulness of the claims in Windamir’s Complaint (D.E. 1), its Original TRO Motion (D.E. 4) and its first Amended TRO Motion (D.E. 7). These verified facts include the fact “Windamir has performed all tasks asked required of it by the Subcontract and/or otherwise requested of it by Defendant Greenheart.” (Complaint, D.E. 1, Par. 11) Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 7 of 13 8 V. ATTORNEY’S FEES. Windamir agrees with Greenheart on the basic idea that Greenheart’s Attorney’s fees claims are derivative of Greenheart’s underlying contract claims. See Greenheart’s Response Brief (D.E. #15), pp. 9-10. Windamir’s position is that if such underlying contract claims are dismissed, so then must Greenheart’s attorney’s fees claims in Count II of the Counter-Claim be automatically dismissed. See, e.g., Tri-State, 858 F.Supp.2d 1359, 1371. However, Greenheart attempts to argue the reverse of this proposition, i.e., that should Greenheart’s contract claims survive this Motion to Dismiss, then its Attorney’s Fees claims must also and automatically survive this Motion. That is not the law nor has Greenheart offered any support for such an argument. The Tri-State case4, cited by Greenheart in its response brief, does not support such an assertion. Instead, that case stands for the proposition, as noted above, that the failure of the underlying claims precludes an attorneys fee claim as a matter of law. The “ability [of a cross claimant] to state a claim [for attorney’s fees] under O.C.G.A. § 13–6– 11 depends upon whether it has stated at least one viable substantive claim in its counterclaim.” Tri-State, 858 F.Supp.2d 1359, 1371. Therefore, if its underlying claims survive this Motion, Greenheart must still show the validity of attorney’s fees 44 Tri-State Consumer Ins. Co., Inc. v. LexisNexis Risk Solutions, Inc., 858 F.Supp.2d 1359, 1373 (N.D. Ga. 2012). Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 8 of 13 9 allegations. As noted in Windamir’s prior brief (See, e.g., p. 10), Greenheart cannot do that, as its attorney’s fees claims are mere blanket and vague assertions with no factual support. Finally, as Greenheart has admitted O.C.G.A. § 9-15-14 is unavailable to it5, Greenheart’s only available attorney’s fees remedy is under O.C.G.A. § 13-6-11. First, Greenheart incorrectly cites to the existence of multiple motions filed by Windamir in this litigation as a potential source of its claim for fees under O.C.G.A. § 13-6-11. However, as a matter of law such acts occurring after suit is filed cannot be the basis for fees under O.C.G.A. § 13-6-11. See, e.g., Tri-State, 858 F.Supp.2d at 1370, citing David G. Brown, P.E., Inc. v. Kent, 274 Ga. 849, 850, 561 S.E.2d 89, 90-91 (2002). Second, as shown in Windamir’s initial Brief (See, e.g., pp. 11-12), Greenheart’s claims are not allowed under that statute. While a defendant may recover attorney’s fees pursuant to O.C.G.A. § 13-6-11 when it successfully prosecutes an independent counter-claim,6 a defendant cannot recover attorney’s fees and expenses on its compulsory counter-claims, i.e., those that “arise out of the transaction or occurrence that is the subject matter of the opposing party’s claim.”7 “[A] defendant and plaintiff-in-counterclaim cannot recover [under O.C.G.A. § 13- 5 See Greenheart Response Brief, D.E. #15, P. 11, FN 5. 6 See Gardner v. Kinney, 230 Ga. App. 771 (1998) 7 O.C.G.A. § 9-11-13(a). Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 9 of 13 10 6-11] where there is a compulsory counterclaim.” Tri-State, 858 F.Supp.2d 1359, 1373. See also Alcovy Properties v. MTW Investment Co., 212 Ga. App. 102, 104 (1994); White v. Lance H. Herndon, Inc., 2013 Ga. App. 580, 581 (1992); Byers v. McGuire Properties, Inc., 285 Ga. 530, 540 (2009); and Sanders v. Brown, 257 Ga. App. 566, 569 (2002). Windamir brought this action to recover for unpaid contractual obligations owed by Defendant Greenheart under the Subcontract. Defendant brought its counter-claim seeking its own cause of action for breach of contract pursuant to the same Subcontract on the same Project. Defendant’s Counter-Claim is therefore a compulsory counter-claim under O.C.G.A. § 9-11-13(a), as it arises from the same transaction or occurrence under which Greenheart now sues. Defendant may not recover any attorney’s fees under O.C.G.A. § 13-6-11 as a matter of Georgia law. Greenheart’s citations in its footnote 5 to N.Y. Life Ins. Co. v. Grant, 57 F. Supp. 3d 1401 (M.D. Ga 2012) and Singh v. Sterling United, Inc., 326 Ga. App. 504, 756 S.E.2d 728 (2014) do not contradict this law or this analysis. The Grant case does not stand for the proposition alleged, and does not even discuss whether the counter-claim in that case was independent8 or compulsory. See Grant, pp. 1417- 1418, Section II(i). Moreover, the Singh court found the counter-claim in that 8 The Grant case used the phrase “wholly distinct” rather than “independent.” Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 10 of 13 11 matter, as is the counter-claim here, as clearly compulsory and not independnt. Singh, at 736-737. VI. AMENDMENT WOULD BE FUTILE To the extent this Court finds Greenheart has brought forth a proper motion for leave to amend its Counter-Claim, the Court should still deny the same on the basis of futility. “A district court's ‘denial of leave to amend is justified by futility when the complaint as amended is still subject to dismissal.’” Brooks v. Warden, 800 F.3d. 1295, 1300 (2015), citing Hall v. United Ins. Co. of Am., 367 F.3d 1255, 1263 (11th Cir.2004) quoting Burger King Corp. v. Weaver, 169 F.3d 1310, 1320 (11th Cir.1999). Here, as noted above, Greenheart has provided what it proposes to add in any amended counter-claim in support of its damages and proximate cause argument, and such “allegations” are not sufficient to avoid dismissal on this indispensable element of Greenheart’s claims. (See Section III, above). Thus, even as it is proposed to be amended, Greenheart’s Counter-Claim would still be subject to dismissal. As discussed elsewhere in this Agreement, Greenheart makes unsupported unverified allegations related to contract breaches. Even if such statements are considered a proffer of potential additional allegations in an amended Counter- Claim, they do not warrant leave to amend. As noted in this section, leave to amend Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 11 of 13 12 on the proximate cause and damages elements is futile, and without either such element (regardless of the sufficiency of pleadings on the “breach” element), Greenheart’s claims fail as a matter of law. As such, an amendment would be futile and this Court’s failure to allow such futile amendment is justified. VII. CONCLUSION For the reasons set forth above, as well as in Windamir’s original brief, Greenheart’s Counter-Claim must be dismissed. Respectfully submitted this 24th day of October, 2016. PATEL BURKHALTER LAW GROUP /s/ David C. King David C. King Georgia Bar Number 422220 4045 Orchard Road Building 400 Atlanta, Georgia 30080 dking@patelburkhalter.com (678) 825-8132 Attorney for Plaintiff LOCAL RULE 7.1(D) CERTIFICATION By signature below, counsel certifies that the foregoing was prepared in Times New Roman, 14-point font in compliance with Local Rule 5.1C. Respectfully submitted this 24th day of October, 2016. /s/ David C. King David C. King Attorney for Plaintiff Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 12 of 13 13 CERTIFICATE OF SERVICE I hereby certify that I have this day electronically filed the foregoing PLAINTIFF’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO DISMISS DEFENDANT GREENHEART’S COUNTER-CLAIM with the Clerk of Court using the CM-ECF System which will automatically send e-mail notification of such filing to the following attorney(s) of record: David Powell The United States Attorney's Office Richard B. Russell Federal Building 75 Ted Turner Dr. SW, Suite 600 Atlanta, GA 30303-3309 R.David.Powell@usdoj.gov Counsel for Defendant NavFac John Menechino Wienberg Wheeler, Hudgins, Gunn & Dial 3344 Peachtree Road, NE, Suite 2400 Atlanta, GA 30326 jmenechino@wwhgd.com Counsel for Defendant Greenheart Construction, Inc. Respectfully submitted this 24th day of October, 2016. PATEL BURKHALTER LAW GROUP /s/ David C. King David C. King Georgia Bar Number 422220 4045 Orchard Road Building 400 Atlanta, Georgia 30080 dking@patelburkhalter.com (678) 825-8132 Attorney for Plaintiff Case 1:16-cv-02665-ELR Document 16 Filed 10/24/16 Page 13 of 13