VSI Sales LLC v. Griffin Sign Inc.
1:13-cv-01970
D. Del.Apr 25, 2014Background
- VSI Sales, LLC subcontracted to supply and install highway sign structures on a DelDOT highway project; Griffin Sign was its direct contractor and Cherry Hill Construction was the prime contractor. IFIC issued a payment bond for Griffin.
- VSI sued Griffin and IFIC asserting multiple claims, including Count IV under Delaware’s Construction Prompt Payment Act (6 Del. C. §§ 3501–3509). Defendants moved to dismiss Count IV under Rule 12(b)(6); VSI separately moved to compel release of $187,000 it called “undisputed” funds.
- Defendants argued the Act applies only to building construction and not to highway sign/guardrail work. Griffin also asserted counterclaims/charges for VSI’s alleged design defects and late deliveries.
- VSI argued its steel sign structures are functionally analogous to building steel members and sought discovery to show related building work on the project (toll booths, stations, etc.), and urged a broader construction aligned with mechanics’ lien statutes.
- The court found the Act’s language unambiguous and limited to the construction of buildings and held VSI’s alleged highway sign work falls outside the statute; the court dismissed Count IV without prejudice and permitted amendment if factual support exists.
- The court denied VSI’s motion to compel, characterizing it as a premature merits determination where facts were disputed (e-mails showing defects, back-charge uncertainty, no answer or discovery yet).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Delaware Construction Prompt Payment Act applies to highway sign/roadway work | VSI: sign superstructures are like building steel members; discovery may show related building construction on the project | Defendants: statute is limited to building construction; highway signs are not "buildings" | Court: Act is unambiguous and limited to buildings; Count IV dismissed without prejudice |
| Whether to allow discovery to expand Act's scope or plead additional facts | VSI: discovery may show connected building work (toll booths, stations) and factual basis to invoke the Act | Defendants: statute’s plain language controls; discovery cannot change statutory scope | Court: refused to broaden statute by discovery; permitted amendment only if factual allegations can meet pleading rules |
| Whether the Construction Prompt Payment Act should be construed like the broader Mechanics’ Lien Law | VSI: statutory purpose/analogies to lien law support broader reading | Defendants: Legislature used narrower term "building," so Act is narrower than Lien Law | Court: declined to expand Act; interprets text as written and narrower than Lien Law |
| Whether the court should compel release of the claimed "undisputed" $187,000 now | VSI: funds are undisputed and should be released under the Act and UCC | Defendants: funds are disputed; back charges and design defects remain unresolved | Court: denied motion as premature and disputed; also questioned UCC applicability to mixed goods/services contract |
Key Cases Cited
- Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir.) (standard for construing complaints on Rule 12(b)(6))
- Scheuer v. Rhodes, 416 U.S. 232 (Supreme Court) (plaintiff entitled to offer evidence unless claim implausible)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Supreme Court) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court) (conclusory allegations insufficient)
- Bistrian v. Levi, 696 F.3d 352 (3d Cir.) (pleading plausibility in context)
- CML V, LLC v. Bax, 28 A.3d 1037 (Del. 2011) (Delaware statutory construction principles)
- United States v. Great Northern Railway Co., 343 U.S. 562 (Supreme Court) (courts must apply statute as written)
- Neilson Bus. Equip. Ctr., Inc. v. Italo V. Monteleone, 524 A.2d 1172 (Del.) (treatment of mixed goods/services contracts under UCC analysis)