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United States v. Lexon Insurance Co.

United States District Court, C.D. California

June 3, 2015

UNITED STATES, for the use and benefit of DRILL TECH DRILLING & SHORING, INC., a California corporation; and DRILL TECH DRILLING & SHORING, INC., a California corporation, Plaintiff,
LEXON INSURANCE COMPANY, a Texas corporation; INNOVATIVE CONSTRUCTION SOLUTIONS, a California corporation, Defendants.


DEAN D. PREGERSON, District Judge.

Presently before the court is Defendant Innovative Construction Solutions' Motion to Dismiss Plaintiff's sixth claim for relief. Having considered the submissions of the parties, the court grants the motion and adopts the following order.

I. Background

Plaintiff Drill Tech Drilling & Shoring, Inc. ("Drill Tech") is a construction company that provides services in geotechnical construction. Defendant Innovative Construction Solutions ("ICS") is also a construction company that provides general contracting services.

As alleged in the complaint, the United States Air Force hired nonparty Toltest, Inc. as the primary contractor for a construction project known as the "Southeast Slope Stabilization" project in San Pedro, California. (Complaint ¶¶ 9, 12). TolTest then subcontracted a portion of the project to Defendant ICS. (Id. ¶ 9). In February 2013, 2013 Plaintiff Drill Tech entered into a subcontracting agreement with ICS to furnish and install soil nails, shotcrete, and architectural shotcrete, and perform other work, for $1, 940, 445.90 plus additional sums for certain overbreak work. (Id. at ¶ 12, Ex. 2 at 12.)

Plaintiff alleges the contract was subsequently modified due to multiple change orders, and the price of the work to be performed increased to $2, 014, 589.56. (Id. at ¶ 12.) Plaintiff alleges that it has fully and completely performed all of its obligations the contract. (Id. at 14.) Plaintiff claims, of the total contract price for the work furnished, ICS only paid $1, 538, 694.74, leaving a balance due of $475, 894.82. (Id. at ¶ 16.)

Plaintiff's Complaint alleges a claim against ICS under the Prompt Payment Act. ICS now moves to dismiss Plaintiff's sixth claim for relief.

II. Legal Standard

A complaint will survive a motion to dismiss when it contains "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations, " it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions, " a "formulaic recitation of the elements, " or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks omitted).

"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

III. Discussion

ICS argues that Plaintiff's sixth claim for relief against ICS fails as a matter of law because no express or implied private right of action exists under the Prompt Payment Act. The court agrees.

"The fact that a federal statute has been violated and some person harmed does not automatically give rise to a private cause of action in favor of that person." Cannon v. Univ. of Chicago, 441 U.S. 667, 688 (1979). "Instead, the statute must either explicitly create a right of action or implicitly contain one." In re Digimarc Corp. Derivative Litig., 549 F.3d 1223, 1230 (9th Cir. 2008). A statute explicitly creates a private right of action when the statute contains language that defines a cause of action. Id . Where a federal statute does not explicitly create a private right of action, a plaintiff can maintain a suit only if Congress intended to provide the Plaintiff with an implied private right of action. Touche Ross & Co. v. Redington, 442 U.S. 560, 568 (1978). In the absence of clear evidence of congressional intent, the Court may not usurp the legislative power by unilaterally creating a cause of action. Digimarc, 549 F.3d at 1231.

In 1982, Congress enacted the Prompt Payment Act "to provide incentives for the Federal Government to pay its bills on time." Sarang Corp. v. United States, 76 Fed.Cl. 560, 569 (Fed. Cl. 2007) (citation omitted). In furtherance of that goal, the Prompt Payment Act provides that "the head of an agency acquiring property or service from a business concern, who does not pay the concern for each complete delivered item of property or service by the required payment date, shall pay an interest penalty to the concern on the amount of the payment due." 31 U.S.C. § 3902(a) ...

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