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Congrove v. Western Mesquite Mines

February 26, 2009


The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court


On January 6, 2009, Plaintiff Don Congrove, doing business as Congrove Construction ("Congrove"), filed a first amended complaint ("FAC") against Defendant Western Mesquite Mines, Inc. alleging claims for relief based upon: (1) breach of written contract; (2) unjust enrichment; (3) common count for services rendered; and (4) foreclosure of mechanic's lien. (See Doc. No. 12, FAC) On January 20, 2009, Defendant filed a motion to dismiss Plaintiff's fourth claim for relief, pursuant to Federal Rule of Civil Procedure 12(b)(6), and a request for judicial notice. (Doc. No. 15.) Plaintiff filed a response in opposition on February 9, 2009. (Doc. No. 16.) Defendant filed a reply on February 23, 2009. (Doc. No. 17.)

The Court, pursuant to Local Rule 7.1(d)(1), determines this matter is appropriate for resolution without oral argument and thus submits the motion on the papers. For the reasons set forth below, the Court denies Defendant's motion to dismiss the fourth claim for relief.


Plaintiff and Defendant entered into a written contract on August 8, 2007, for Plaintiff to provide management services to Defendant for a period of up to six months in connection with a construction project on Defendant's property, an open pit mine known as Western Mesquite Mine. (FAC ¶¶ 7--8.) Under the contract, titled "Management Representative Agreement between Western Mesquite Mine and Congrove Construction," the Plaintiff was to act as Defendant's management representative to monitor the subcontractors for compliance with the Defendant's instructions, plans, and specification. (Id. ¶ 8.) Defendant under the Agreement was to provide Plaintiff with all engineering designs, all plans, and five complete sets of drawings for each of the improvements. (Id. ¶ 8.) Defendant was to compensate Plaintiff $230,000 for management, plus 3% of the project budget (initially scheduled for $4,000,000, later increased to $4,630,000), plus 50% of any cost savings achieved for the project. (Id. ¶ 8.) Additionally, Defendant could, and did according to Plaintiff, request Congrove to perform additional services. (Id. ¶ 8.)

Plaintiff alleges that under the agreement and/or at the request of Defendant, it obtained construction permits; reviewed construction plans and drawings; furnished corrections and design change proposals to the architect and engineers that were used for revision, clarification, and correction of the construction drawings and plans used for the improvements and for value engineering; interfaced with the architect and engineers for clarification and correction of the construction drawings and plans; participated in design change meetings; solicited bids for work by various trades for the construction; determined the scope of work to be bid by various trades and reviewed the bids to determine their sufficiency; qualified, reviewed and made recommendations for approval by Defendant of subcontractor's bids; developed the contractual agreement attachment for Defendant's purchase order agreement and oversaw the execution thereof; ensured proper certificates were on file, such as workman's comp and insurance; determined methods to obtain cost savings in the construction; supervised, managed, directed, and scheduled the construction of the improvements; scheduled, supervised, and interfaced with the trades and their work in construction of the improvements; monitored and inspected the work done by the trades to be constructed in accordance with the final plans, drawings, and building codes; scheduled and interfaced with building inspectors; prepared and tracked budgets and costs; provided safety meetings and training to the trades and ensured safety procedures were followed; prepared progress and safety reports for Defendant; and attended progress and safety meetings with Defendant. (Id. ¶ 9.)

Plaintiff began performing on the contract on August 19, 2007. (Id. ¶ 12.) According to Plaintiff, Defendant unilaterally terminated Plaintiff's services without proper cause on October 26, 2007. (Id. ¶ 15.) Plaintiff alleges that as a result of Defendant's breach of the contract, Plaintiff has been damaged in the amount of $576,086.72. (Id. ¶ 20.) Plaintiff brought this action seeking to recover those damages, plus prejudgment interest, and for a foreclosure of a Mechanic's Lien on Defendant's property. (Id., Prayer for Relief.)

Plaintiff's fourth claim for relief, the subject of Defendant's motion to dismiss, seeks foreclosure on a Mechanic's Lien for the sum of $523,505.16, filed on June 11, 2008. (Id. ¶ 30.) The lien was placed upon Defendant's real property located at 6502 East Highway 78, Brawley, Imperial County, CA 92227, Assessor's Parcel No. 739-330-002 (the "Property"). (Id. ¶ 7.) In the FAC, Plaintiff alleges that the reasonable value of services which Plaintiff provided to Defendant is $523,505.16. (Id. ¶ 27.) Plaintiff alleges that the services it provided were actually used in the work of improvement upon Defendant's real property and that the whole of the property is required for the convenient use and occupation of the work of improvement. (Id. ¶¶ 28--29.) Plaintiff asserts that the lien was timely filed with the Imperial County Recorder and recorded as Document No. 2008-016344. (Id. ¶ 30.)

Defendant seeks dismissal of this claim for relief under Rule 12(b)(6) on the grounds that Plaintiff is not properly within the class of persons entitled to a Mechanic's Lien and alternatively that the lien was not timely filed. (Doc. No. 15.) Additionally, Defendant requests the Court take judicial notice of the Agreement, a California Preliminary Notice and two corrections and amendments thereto, the Mechanic's Lien, and the Court's Order granting Defendant's motion to dismiss without prejudice Plaintiff's fourth claim for relief, dated December, 10, 2008. (Doc. No. 15, Exs. 1, 2-A, 2-B, 2-C, 3, 4.)


I. Legal Standard Motion to Dismiss Pursuant to Rule 12(b)(6)

A motion to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Black, 250 F.3d 729, 731 (9th Cir. 2001). A complaint generally must satisfy only the minimal notice pleading requirements of Federal Rule of Civil Procedure 8(a)(2) to evade dismissal under a Rule 12(b)(6) motion. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). Rule 8(a)(2) requires that a pleading stating a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The function of this pleading requirement is to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964--65 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level." Id. at 1965 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235--36 (3d ed. 2004)). "All allegations of material fact are taken as true and construed in the light most favorable to plaintiff. However, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim." Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir.1996); see also Twombly, 127 S.Ct. at 1964--65. "Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n .19 (9th Cir.1990). The court may, however, consider the contents of documents specifically referred to and incorporated into the complaint, and whose authenticity is not challenged. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002). A court may also consider documents "the authenticity of which is not contested" and on which the complaint "necessarily relies," even if not explicitly referred to in the complaint Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998), superseded by statute on other grounds as stated in Abrego v. Dow Chem. Co., 443 F.3d 676, 681 (9th Cir. 2006). In addition, a court ruling on a motion to dismiss may consider facts that are subject to judicial notice under Federal Rule of Evidence 201. A district court may take judicial notice of matters of public record, but cannot use this rule to take judicial notice of a fact that is subject to "reasonable dispute" simply because it is contained within a pleading that has been filed as a public record. Lee v. City of Los Angeles, 250 F.3d 668, 689--90 (9th Cir.2001).

The Court grants Defendant's request to consider the Agreement, the California Preliminary Notice and corrections and amendments thereto, the Mechanic's Lien documents, and the Court's own record in this case. (See Doc. No. 15 Exs. 1, 2-A, 2-B, 2-C, 3, 4.) Plaintiff has not contested the authenticity of any of these documents, and the complaint explicitly references the Agreement and the Mechanic's Lien. Plaintiff does contest the effect of the Agreement. (Doc. No. 16 at 7.) Thus, although the Court may consider the Agreement, because Plaintiff contests the effect of the contract, the contract alone "may not resolve the relevant issues in the context of a motion to dismiss." Sgro v. Danone Waters of North Am., Inc., 532 F.3d 940, 943 n.1 (9th Cir. 2008). Plaintiff's fourth claim for relief for foreclosure of the Mechanic's Lien necessarily relies on the California Preliminary notice pursuant to California Civil Code section 3097, even if not specifically referenced in the FAC. The Court has also previously taken judicial notice of the permit application, as its authenticity is not ...

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