International Industrial Contracting Corporation v. Sofir Italia s.r.l.
2:16-cv-13168
E.D. Mich.Aug 16, 2017Background
- IICC (plaintiff) quoted to install Komatsu presses at Chrysler plants in Michigan after receiving drawings, specs, and a Komatsu cable-quantity table; Sofir (Italian supplier/contractor) later issued an RFQ and Technical Specification that did not include electrical/cable quantity tables.
- IICC and Sofir entered into purchase orders in October 2014 for installation “in accordance to the Technical Specification.” IICC alleges Sofir never provided sufficient cable-quantity information prior to contracting.
- When work began in March 2015, IICC discovered it needed to pull and connect more than double the cables it had estimated; IICC performed extra work and sought payment for additional cables and cable trays.
- Sofir approved some change orders but refused to pay for all additional cable work and withheld other contract payments; IICC sued for breach of contract, negligent/innocent misrepresentation (constructive fraud), quantum meruit/abandonment, violation of the Michigan Building Contract Fund Act (MBCFA), and common-law and statutory conversion (against Sofir and two officers, Fregolent and Vergani).
- Defendants moved to partially dismiss; Vergani separately moved to dismiss or for summary judgment. The Court held a hearing and issued decision granting dismissal of fraud-based claims and statutory conversion, but otherwise denying dismissal and allowing amendments by a deadline.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract — right to extra-pay for additional cables | Contract ambiguous; “turnkey” and course of performance support recovery for extra work | Contract was fixed-price turn‑key; no limitation/assumption about cables; integration clause bars reliance on Komatsu table | Denied dismissal: ambiguity and lack of full contract terms at pleading stage — fact development required |
| Fraud-based claims (negligent/innocent misrepresentation / constructive fraud) | Sofir represented RFQ was based on Komatsu info and knew Komatsu understated cable quantities; IICC relied on Sofir’s superior knowledge | Allegations lack particulars: no specific false statement, speaker, time/place, or particularized reliance; Rule 9(b) not satisfied | Granted: fraud-based claims dismissed for failing Rule 9(b) particularity and failure to plead actionable misrepresentation |
| Quantum meruit / abandonment (recovery for extra work) | IICC performed extra work outside express contract and Sofir accepted benefits without paying; facts support abandonment/abandonment inference | Existence of express contract bars implied contract/unjust enrichment recovery | Denied dismissal: Michigan allows quantum meruit for extra work outside express contract; factual record needed on scope and abandonment |
| MBCFA and conversion (common-law/statutory) — entitlement to project funds/trust | Sofir received Chrysler project funds subject to statutory trust, retained/used funds without paying IICC; officers participated; conversion arises from breach of statutory fiduciary duty | If contract was fixed-price, no entitlement to additional project funds; defendants contest officer control over funds (esp. under Italian law) | Denied dismissal on MBCFA and common-law conversion: allegations plausibly plead statutory trust and separate duty. Statutory conversion dismissed for failure to plead use of funds for defendants’ "own use" with factual detail. Vergani can be liable personally under alleged facts |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (labels/conclusions insufficient; factual enhancement required)
- Beck v. Park W. Galleries, Inc., 878 N.W.2d 804 (Mich. 2016) (contract interpretation: give words plain and ordinary meaning)
- Performance Contracting, Inc. v. DynaSteel Corp., 750 F.3d 608 (6th Cir. 2014) (MBCFA can apply irrespective of contract)
- Condaire, Inc. v. Allied Piping, Inc., 286 F.3d 353 (6th Cir. 2002) (MBCFA creates trust obligation on contractor to pay project labor/subcontractors first)
- Cleveland Indians Baseball Co. v. New Hampshire Ins. Co., 727 F.3d 633 (6th Cir. 2013) (elements of negligent misrepresentation)
- In re Patel, 565 F.3d 963 (6th Cir. 2009) (corporate officer liability under MBCFA may be based on participation in collection/handling of project funds)