31 F. Supp. 3d 124
D.D.C.2014Background
- Corporate Systems Resources (plaintiff), a D.C. certified disadvantaged business, worked as a subcontractor on a WMATA railcar engineering services project and claims ~$158,800 unpaid under a Subcontract with LTK (the prime contractor).
- Plaintiff initially subcontracted with Unified Industries Inc. (UII) in 2010, then directly with LTK via a January 5, 2012 Subcontract which incorporated the LTK–WMATA Prime Contract.
- The Subcontract stated plaintiff "shall be compensated," but conditioned payment on LTK's receipt of payment from WMATA and allowed WMATA audit adjustments to plaintiff’s rates.
- Plaintiff alleged it performed, invoiced, and was told LTK had not been paid by WMATA; it sued LTK and WMATA for breach of contract, quantum meruit, and account stated (removed to federal court by WMATA).
- Plaintiff conceded the quantum meruit and account stated claims against WMATA; the court analyzed whether plaintiff stated claims against WMATA and LTK under Rule 12(b)(6).
- The court dismissed all claims with prejudice: (1) against WMATA because plaintiff was not a party to the Prime Contract, was not alleged as an intended third‑party beneficiary or in privity, and WMATA did not breach the Prime Contract; (2) against LTK because the Subcontract made LTK’s obligation to pay contingent on LTK’s receipt of payment from WMATA, which plaintiff pleaded did not occur, and alternative remedies were unavailable or unpled.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether WMATA can be liable for breach of contract to subcontractor | Plaintiff argued it was a third‑party beneficiary of the Prime Contract or effectively in privity because WMATA's procurement policies and audit rights affected payment | WMATA argued plaintiff is not a party, not an intended third‑party beneficiary, and not in privity; any failure was LTK’s duty | Dismissed: plaintiff not a party, no pleaded intended third‑party beneficiary or privity; WMATA did not breach the Prime Contract; Count I dismissed with prejudice |
| Whether LTK breached the Subcontract by not paying plaintiff | Plaintiff alleged performance and nonpayment; argued Subcontract requires payment to plaintiff | LTK argued payment obligation was expressly contingent on LTK receiving payment from WMATA; complaint admits LTK was not paid | Dismissed: court reads Subcontract as unambiguous pay‑if‑paid condition; plaintiff pleaded condition precedent did not occur, so no breach; dismissed with prejudice |
| Whether unjust enrichment (quantum meruit) is available against LTK | Plaintiff pleaded quantum meruit in the alternative | LTK argued an express contract exists, barring quantum meruit | Dismissed: under D.C. law unjust enrichment unavailable where express contract governs; dismissed with prejudice |
| Whether account stated is pleaded against LTK | Plaintiff alleged invoices and demands for payment | LTK contended no agreement as to a sum due; disputed amount | Dismissed: plaintiff did not allege assent to a specific balance; claim fails and amendment futile |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must state a plausible claim based on factual allegations)
- Logan v. LaSalle Bank Nat'l Ass'n, 80 A.3d 1014 (D.C. 2013) (elements for breach of contract under D.C. law)
- Sullivan v. United States, 625 F.3d 1378 (Fed. Cir. 2010) (government not liable where contractor breached and government merely failed to enforce contract provision)
- United States v. Johnson Controls, Inc., 713 F.2d 1541 (Fed. Cir. 1983) (privity/agency principles for subcontractor claims against government)
- Bagley v. Foundation for Preservation of Historic Georgetown, 647 A.3d 1110 (D.C. 1994) (contract ambiguity principles)
- Urban Masonry Corp. v. N&N Contractors, Inc., 676 A.2d 26 (D.C. 1996) (enforcement of pay‑if‑paid / pay‑when‑paid clauses in D.C.)