CBX Technologies, Inc. v. GCC Technologies, LLC , 457 F. App'x 299 ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1380
CBX TECHNOLOGIES, INCORPORATED,
Plaintiff - Appellant,
v.
GCC TECHNOLOGIES, LLC, f/k/a Government Contract
Consultants, LP,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. James K. Bredar, District Judge.
(1:10-cv-02112-JKB)
Submitted: November 23, 2011 Decided: December 13, 2011
Before DUNCAN, KEENAN, and DIAZ, Circuit Judges.
Vacated and remanded by unpublished per curiam opinion.
John Christopher Belcher, Oxon Hill, Maryland, for Appellant.
Keith Leon Baker, BARTON, BAKER, THOMAS & TOLLEE, McLean,
Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
CBX Technologies, Inc. (“CBX”), a California
corporation, brought this one-count breach of contract action
against GCC Technologies, LLC (“GCC”), a Maryland corporation,
pursuant to 28 U.S.C. § 1332 (2006). The district court granted
GCC’s motion to dismiss for lack of subject matter jurisdiction,
and, alternatively, for failure to state a claim. CBX appeals.
In early 2009, CBX became interested in pursuing a
government contract with the United States Department of
Education’s Federal Student Aid (“FSA”) program. CBX, however,
was not eligible to enter a bid as a primary contractor, so it
sought out an eligible contractor with whom it could jointly
bid, eventually contacting GCC. On September 3, 2009, CBX and
GCC entered into a teaming agreement pursuant to which they
submitted a bid (the Teaming Agreement). CBX alleges that the
Teaming Agreement provided that GCC would provide 51% of the
full-time employees and receive 51% of the contract’s value,
while CBX was to provide 49% of the full-time employees and
receive 49% of its value. The Teaming Agreement provided that
it was to “automatically expire upon . . . [t]he execution of a
subcontract agreement between GCC and CBX pursuant to a Prime
Contract by the [Department of Education] to GCC for the
Project.” (J.A. 24).
2
In late September 2009, GCC was awarded the contract,
which had a value of $2,401,494.40. On approximately October 1,
2009, five CBX employees were in place to work on the FSA
contract, though it is not clear when work began.
In June 2010, CBX and GCC executed a subcontract
agreement with a retroactive effective date of November 9, 2009
(the Subcontract Agreement). The Subcontract Agreement provides
that it “supersedes all previous written or oral representation
or agreements between GCC and [CBX], if any, including any
[T]eaming [A]greement, . . . and constitutes the entire
agreement between GCC and [CBX] with respect to the subject
matter hereof.” (J.A. 53). The Subcontract Agreement also
specifies that CBX’s employees working under the subcontract
were to remain under CBX’s direction and control. CBX asserted,
however, that “starting almost immediately after” the parties
began work on the contract, GCC President James Bailey attempted
to supervise the employees in a manner they found offensive,
causing four of the five employees to quit by early 2010.
Bailey also is alleged to have interfered with CBX’s attempts to
replace the employees. After some initial communications,
Bailey sent a letter to CBX on July 15, 2010, terminating the
parties’ agreement.
CBX claims that it should have received at least
$1,176,000 from its work in the FSA contract. As of the filing
3
of its complaint, however, CBX had been paid less than $200,000.
Accordingly, CBX seeks $976,000 in compensatory damages. CBX’s
specific allegation is that “GCC has . . . breached the
[T]eaming [A]greement with CBX as subsequently incorporated into
the written [S]ubcontract [A]greement by” GCC’s interfering with
CBX’s employees’ work and retention, by refusing to allow CBX to
hire new employees to work under the subcontract, and by
terminating the agreement without just cause. (J.A. 7).
GCC filed an answer, asserting that CBX failed to
state a claim upon which relief could be granted. Subsequently,
GCC moved to dismiss under Fed. R. Civ. P. 12(b)(1) for lack of
subject matter jurisdiction and, alternatively, under Fed. R.
Civ. P. 12(b)(6) for failure to state a claim.
The district court granted GCC’s motion, dismissing
the case with prejudice. The court observed that the suit
alleged a breach only of the Teaming Agreement, yet the Teaming
and Subcontract Agreements made it “beyond clear that the
[T]eaming [A]greement was not incorporated into the
[S]ubcontract [A]greement.” (J.A. 63). Because “CBX’s
allegations about GCC’s actionable conduct appear to relate to
the time after the teaming agreement expired,” the court
concluded that the amount-in-controversy requirement was not
satisfied. (Id.). The district court went on to explain that
even if the teaming agreement had been in effect and been
4
breached by GCC, jurisdiction still would be lacking because the
Teaming Agreement “expresses . . . only an intent that CBX would
receive 49 percent under the contract that the parties hoped
would be awarded in the future,” and as such, the court had no
way to calculate damages.
The district court also ruled, in the alternative,
that CBX failed to state a claim. In this regard, the court
reiterated that the Teaming Agreement was not in effect at the
time of the alleged breach and that, even if it had been in
effect, the Teaming Agreement has no provision to measure
damages.
We are constrained to vacate the district court’s
order and remand this action for further proceedings. We begin,
as we must, with subject matter jurisdiction. See Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 94 (1998). The
relevant principles of the amount-in-controversy requirement, 28
U.S.C. § 1332 (2006), are well settled. Generally, “the sum
claimed by the plaintiff controls” the determination of the
amount in controversy, and if a plaintiff seeks a sum that
satisfies the statutory minimum, “a federal court may dismiss
only if it is apparent, to a legal certainty, that the plaintiff
cannot recover the amount claimed.” JTH Tax, Inc. v. Frashier,
624 F.3d 635, 638 (4th Cir. 2010) (internal quotation marks and
emphasis omitted).
5
Where, as here, a defendant “challenges the existence
of subject matter jurisdiction in fact, the plaintiff bears the
burden of proving the truth of such facts by a preponderance of
the evidence.” United States ex rel. Vuyyuru v. Jadhav, 555
F.3d 337, 347 (4th Cir. 2009). Where “the jurisdictional facts
are so intertwined with the facts upon which the ultimate issues
on the merits must be resolved, the entire factual dispute is
appropriately resolved only by a proceeding on the merits.” Id.
at 348 (internal citations and quotation marks omitted).
Here, the jurisdictional and merits facts are
intertwined because both the jurisdictional and merits inquiries
turn on whether the Teaming Agreement was in effect at the time
of the alleged breach. As to jurisdiction, whether the Teaming
Agreement was in effect is dispositive because the complaint
alleges breach only of the Teaming, and not the Subcontract,
Agreement. If the Teaming Agreement was not in effect at the
time of the alleged breach, it would be clear to a legal
certainty that CBX did not meet the amount-in-controversy
requirement. As to the merits, whether the Teaming Agreement
was still in effect is dispositive because the contract
allegedly breached was the Teaming Agreement. Cf. Jadhav, 555
F.3d at 349-50 (concluding jurisdictional and merits factual
issues were not intertwined because elements of respective
inquiries differed). The district court’s reliance on the same
6
reasons to dismiss the action on both jurisdictional and merits
grounds further indicates that the facts relating to the two
issues are intertwined.
Because the jurisdictional facts and the facts
relating to the merits of CBX’s claim are intertwined, the
district court erred in basing dismissal on lack of subject
matter jurisdiction. See Adams v. Bain, 697 F.2d 1213, 1220
(4th Cir. 1982). Rather, the factual dispute -- whether the
Teaming Agreement was in effect at the time of the alleged
breach -- must be assessed in a proceeding on the merits. As to
the merits, GCC argues that, under Rule 12(b)(6), CBX failed to
state a claim on which relief could be granted. To survive a
Rule 12(b)(6) motion, CBX’s complaint “must contain sufficient
factual matter, accepted as true, to state a claim to relief
that is plausible on its face.” Francis v. Giacomelli, 588 F.3d
186, 193 (4th Cir. 2009) (quoting Ashcroft v. Iqbal, 129 S. Ct.
1937, 1949 (2009)) (emphasis omitted). A court may consider
documents a defendant attaches to its Rule 12(b)(6) motion if
the documents “w[ere] integral to and explicitly relied on in
the complaint and if the plaintiff[] do[es] not challenge
[their] authenticity.” Am. Chiropractic Ass’n v. Trigon
Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004) (internal
quotation marks and alteration omitted).
7
In evaluating the Rule 12(b)(6) motion, the district
court properly considered the copies of the Teaming and
Subcontract Agreements GCC attached to its motion. However, the
record does not reveal whether the Teaming Agreement was in
effect at the time of the alleged breach. GCC was awarded the
FSA contract in late September 2009, and CBX had its five
employees in place on approximately October 1, 2009. CBX
alleges that Bailey began acting in a way the employees found
offensive “[s]tarting almost immediately after GCC and CBX
started work” on the project; that conduct forms the basis for
the claim of breach. The Subcontract Agreement did not go into
effect, and thereby terminate the Teaming Agreement, until
November 9, 2009. It is not clear from the record exactly when
work began, and when the alleged breach occurred. The
dispositive factual issues -- issues that were not properly
resolved on the face of the pleadings – are (1) whether work
began before the November 9, 2009 retroactive effective date of
the Subcontract Agreement, and if so, (2) whether a breach
occurred before November 9, 2009. Thus, the district court
erred in finding on the record before it that the Teaming
Agreement was no longer in effect at the time of the alleged
breach, and in finding a lack of jurisdiction on this basis.
The district court’s alternative rationale for
dismissal -- that CBX did not state a claim even if the Teaming
8
Agreement had been in effect at the time of the alleged breach -
- is also unpersuasive. First, the district court’s analysis
appears to rest on its own characterization of the Teaming
Agreement as manifesting “only an intent” that CBX would receive
49% of the contract’s value, and as providing “no mechanism for
payment.” Second, the court does not explain why CBX was
obliged to show a precise measure of damages in order to survive
GCC’s Rule 12(b)(6) motion. Accordingly, we are not able to
uphold the dismissal on this alternate basis.
For the foregoing reasons, we conclude that the
district court erred in dismissing CBX’s complaint.
Accordingly, we vacate the court’s order and remand for further
proceedings consistent with this opinion. We dispense with oral
argument because the facts and legal contentions are adequately
presented in the materials before the court and argument would
not aid the decisional process.
VACATED AND REMANDED
9