Stryker Demolition & Enviromental Services, LLC v. Arcadis U.S., Inc.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
STRYKER DEMOLITION &
ENVIRONMENTAL SERVICES, LLC,
Plaintiff,
Vv.
ARCADIS US., INC. and ANSELL
HEALTHCARE PRODUCTS, LLC,
C.A. No. N20C-03-166 MMJ [CCLD]
Nee Nee ee Ne Ne’ Ne Ne Ne Ne NL SS’
Defendants.
Submitted: September 15, 2020
Decided: November 10, 2020
On Defendant Ansell Healthcare Products, LLC’s Motion to Dismiss Count III of
Plaintiff's Second Amended Complaint
GRANTED
OPINION
Sally J. Daugherty, Esq. (Argued), Cohen, Seglias, Pallas, Greenhall & Furman,
P.C., Wilmington, Delaware, Attorney for Plaintiff Stryker Demolition &
Environmental Services, LLC.
Sherilyn Pastor, Esq. (Argued), Joseph Vila, Esq., McCarter & English, LLP,
Newark, New Jersey, Kate Roggio Buck, Esq., McCarter & English, LLP,
Wilmington, Delaware, Attorneys for Defendant Ansell Healthcare Products, LLC.
JOHNSTON, J.
FACTUAL AND PROCEDURAL CONTEXT
Parties
This is a dispute between a subcontractor, general contractor, and property
owner concerning demolition of a facility in Louisiana. Plaintiff Stryker
Demolition & Environmental Services, LLC (“Stryker”) is a Delaware limited
liability company with its principal place of business in Pennsylvania.! Defendant
Arcadis U.S., Inc. (“Arcadis”) is a Delaware corporation with its principal place of
business in Colorado.? Defendant Ansell Healthcare Products, LLC (“Ansell”) is a
Delaware limited liability company with its principal place of business in New
Jersey.?
Stryker and Arcadis Enter into a Services Contract
In December 2018, Ansell hired Arcadis to act as its general contractor on a
construction project known as Former Ansell Facility.* The facility is located at
6901 Westport Avenue, Shreveport, Louisiana (the “Property Site”).°
In its role as general contractor, Arcadis entered into a services contract with
' Second Amended Complaint 1.
2 Id. at J 2.
> Id. at 93.
* Id. at 99.
> Id. at 45.
Stryker on December 11, 2018 (the “Contract’”’).® Under the terms of the Contract,
Stryker was to provide demolition and removal services, including demolishing the
roof of the existing building and disposing of the roofing material.’ Stryker was to
be paid for its work by Arcadis.® Any changes to Stryker’s work plans were to be
approved by both Arcadis and Ansell.? Ansell was not a party to the Contract.!°
Louisiana Litigation
After beginning work, Stryker discovered that the roof consisted of two
separate roofing systems on top of each other and included a layer of heavily
saturated fiberglass insulation.'! The unforeseen makeup of the roof increased the
cost of demolition and disposal substantially from the cost estimate included in
Stryker’s project bid.!* In May 2019, upon receipt of the first invoice for disposal
of the roofing materials, Stryker contacted Arcadis’ project manager and requested
a change order to compensate Stryker for the extra costs.'? Both Arcadis and
Ansell rejected the change order.'4 Stryker continued performing and incurred
6 Id. at 751.
1 Id. at 79 51, 53.
8 Jd. at Exhibit C, Schedule A § 3.1.
? Id. at § 6.
10 Id. at Ex. C.
" Td. at 99 35.
2 Td. at 459.
13 Id at 461.
14 Td.at J§ 62, 65, 67, 74.
additional unexpected and unforeseen costs with respect to different aspects of the
demolition and removal work.!>
Upon completion, Stryker sought full reimbursement of its costs from
Arcadis. On October 10, 2019, Stryker filed a Statement of Claim and Privilege
against the Property Site.!° After Stryker and Arcadis were unable to reach an
agreement about what amounts were due, the two parties entered into mediation.'”
This attempt at mediation was unsuccessful. On March 11, 2020, Arcadis filed a
lawsuit in Louisiana, asserting breach of contract claims against Stryker.!® Arcadis
argued that Stryker breached the Contract by failing to timely perform and by
filing the Statement of Claim and Privilege.'? The case was removed to the United
States District Court for the Western District of Louisiana, Shreveport Division at
Stryker’s request.2? Subsequently, Stryker filed a motion to dismiss for lack of
subject matter jurisdiction and failure to state a claim.”! That motion is currently
pending.”
1S Td. at 479.
'6 Arcadis U.S. Inc.’s Opening Brief in Support of its Motion to Dismiss or Stay at 4.
"7 Td.
8 Td.
9 Id.
20 Td. at 5.
21 Td.
22 Td.
Delaware Litigation
On March 17, 2020, Stryker filed a Complaint in this Court. The Complaint
asserted claims against Arcadis for breach of contract and violation of the
Louisiana Prompt Pay Statute.2? The Complaint additionally asserted a claim
against Ansell for unjust enrichment in Count III.”4 On April 30, 2020, Stryker
filed its First Amended Complaint which added claims against Arcadis for fraud
and negligent misrepresentation and a claim against Ansell for breach of contract.”°
On May 26, 2020, Stryker filed its Second Amended Complaint which eliminates
the claims against Arcadis for negligent misrepresentation and against Ansell for
breach of contract.?° On July 1, 2020, Ansell filed a Motion to Dismiss Stryker’s
claim of unjust enrichment. The parties briefed the issue and the Court heard oral
argument on September 15, 2020.?’
STANDARD OF REVIEW
Failure to State a Claim Upon Which Relief Can be Granted
In a Rule 12(b)(6) Motion to Dismiss, the Court must determine whether the
3 Complaint 9] 65-84.
24 Td. at FF 85-94.
> First Amended Complaint {J 103-166, 135-153.
26 See Second Amended Complaint.
27 On June 8. 2020, Arcadis filed a Motion to Dismiss or Stay all claims which it is a defendant
to so that the case in Louisiana may be litigated first. That motion is pending but does not have
an effect on Ansell’s Motion to Dismiss.
claimant “may recover under any reasonably conceivable set of circumstances
susceptible of proof.”*® The Court must accept as true all well-pleaded
allegations.”? Every reasonable factual inference will be drawn in the non-moving
party’s favor.*° If the claimant may recover under that standard of review, the
31
Court must deny the Motion to Dismiss.
ANALYSIS
Defendant Ansell’s Contentions
Ansell moves to dismiss Count ITI of Stryker’s Second Amended Complaint.
Ansell contends that Stryker’s unjust enrichment claim fails because Stryker has
other remedies at law available. The services provided by Stryker, and the
payment for such services, are governed by the express contract between Stryker
and Arcadis. The Contract controls the rights and remedies available to Stryker.
As such, Ansell maintains that any claims by Stryker involving payment for
services must be litigated by Stryker and Arcadis.
Plaintiff Stryker’s Contentions
Stryker argues in response that Ansell may properly be sued for unjust
enrichment because Ansell retained the authority to approve or deny change order
28 Snence v. Funk, 396 A.2d 967, 968 (Del. 1978).
29 Id.3° Wilmington Sav. Fund. Soc’v, F.S.B. v. Anderson, 2009 WL 597268, at *2 (Del. Super.) (citing
Doe v. Cahill, 884 A.2d 451, 458 (Del. 2005)).
31 Snence, 396 A.2d at 968.
requests under the Contract and ultimately received the benefits of Stryker’s
services. Stryker further contends that as a matter of policy, it would be
inequitable to allow the mere existence of the Contract to bar Stryker from seeking
relief from Ansell.
Unjust Enrichment
Unjust enrichment is “the unjust retention of a benefit to the loss of another,
or the retention of money or property of another against the fundamental principles
of justice or equity and good conscience.”** To succeed in a claim for unjust
enrichment, the plaintiff must show that there is: “(1) an enrichment; (2) an
impoverishment; (3) a relation between the enrichment and impoverishment; (4)
the absence of justification; and (5) the absence of a remedy provided by law.”*?
Before analyzing the merits of an unjust enrichment claim, the Court first must
determine whether there is an applicable contract.** Where a plaintiff's actions are
governed by contract, the plaintiff cannot attempt to circumvent that contract by
bringing an unjust enrichment claim against a third-party.*°
3? Fleer Corp. v. Topps Chewing Gum, Inc., 539 A.2d 1060, 1062 (Del. 1988).
33 Nemec v. Shrader, et al., 991 A.2d 1120, 1130 (Del. 2010).
34 Vichi y. Koninklijke Philips Electronic N.V., 62 A.3d 26, 58 (Del. Ch. 2012) (“[IJn evaluating a
party's claim for an equitable remedy based on unjust enrichment, courts inquire at the threshold
as to whether a contract already governs the parties’ relationship.”).
39 Metcap Secs. LLC v. Pearl Senior Care, Inc., 2007 WL 1498989, at *6 (Del. Ch.).
7
The parties primarily rely on two cases: MetCap Securities v. Pearl Senior
Care, Inc.** and Chrysler Corporation v. Airtemp Corporation.’ In MetCap, the
Court of Chancery addressed whether an unjust enrichment claim could be brought
against one party for services rendered at the behest of another party.°® MetCap
Securities, an investment banking advisory firm, entered into an agreement with
North American Senior Care, Inc. (““NASC”), a potential acquirer, to provide
advising services related to an acquisition.*? The agreement, solely between
MetCap and NASC, set forth the services MetCap would provide and stated that
NASC would pay MetCap an “investment advisory fee” plus expenses upon
closing.4? NASC’s obligations connected to the acquisition later were transferred
to the defendants.*! The final merger agreement, which absolved NASC of its
obligations, contained a clause that stated: “No broker, finder, financial advisor,
investment banker, or other Person is entitled to any brokerage, finder’s, financial
advisor’s or other similar fee or commission in connection with the Merger base
upon arrangements made by or on behalf of Parent or Merger Sub.’”** Thus, the
a6 7a)
37 426 A.2d 845, 847 (Del. Super. 1980).
38 Metcap Secs., 2007 WL 1498989.
39 Id. at *1.
40 Id.
AT 7d. at *2.
” Td. at *2, 3.
defendants had not assumed NASC’s obligation to pay MetCap the agreed upon
investment advisory fee.*?
Without knowledge of this clause, MetCap continued to provide advising
services after the merger agreement was signed and NASC was no longer involved
in the acquisition.** MetCap brought an unjust enrichment claim against the
defendants to receive the entirety of its fee, arguing that the defendants had
unjustly benefitted from MetCap’s services.*? The Court of Chancery separated
the claim into two parts based on services provided by MetCap before the merger
agreement was signed and services provided after.4© The Court of Chancery
reasoned that “[i]t is not enough that the defendant received a benefit from the
activities of the plaintiff; if the services were performed at the behest of someone
other than the defendants, the plaintiff must look to that person for recovery.’””*”
Although the defendants arguably benefitted from the entirety of MetCap’s
work, the services rendered prior to the merger agreement being signed were done
at the behest of NASC, not the defendants.** The Court of Chancery dismissed the
first part of the unjust enrichment claim, finding that MetCap needed to seek
* Id. at *3.
“4 Id. at *4.
* Td. at *5, 6.
46 Td.
47 Td. at *6 (quoting Michele Pommier Models, Inc. v. Men Women N.Y. Model Mgmt., Inc., 14
F.Supp.2d 331, 338 (S.D.N.Y. 1998), aff'd, 173 F.3d 845 (2nd Cir. 1999)).
48 Td.
payment from NASC in accordance with their express contract.*? However, after
the merger agreement was signed, NASC was no longer part of the acquisition.°°
Because MetCap potentially could show that the defendants were aware of and
benefitted from the services provided after the merger agreement was signed, and
understood that NASC would not pay for those services, the Court of Chancery
declined to dismiss the second part of the unjust enrichment claim.°!
In the instant case, only the first part of the Court of Chancery’s analysis is
applicable. It is undisputed that there is a relevant agreement in this case and that
the subject matter of the Contract covers the same services that give rise to
Stryker’s unjust enrichment claim. The Contract is the sole agreement that
determined: (1) the scope of the services to be rendered by Stryker; (2) to whom
the services were to be provided; (3) the payment that Stryker would receive for its
services; and (4) who was responsible for paying Stryker. Additionally, unlike in
MetCap, there was no change in parties at any point. Stryker entered into the
Contract with Arcadis and all of the services provided by Stryker were furnished at
the behest of Arcadis. Therefore, under the MetCap analysis, Stryker must seek to
recover from Arcadis, not Ansell.
49 Td.
aid
51 yd.
10
In Chrysler Corporation v. Airtemp Corporation, Chrysler Corporation
(“Chrysler”) entered into an agreement with Fedders Corporation (“Fedders”).*”
Fedders agreed to purchase assets from Chrysler’s Airtemp Division.*? The assets
purchased by Fedders were transferred to Airtemp, a wholly-owned subsidiary of
Fedders.** Pursuant to the contract, Chrysler provided services to Airtemp which
Fedders agreed to pay for.°> After Fedders failed to compensate Chrysler, Chrysler
brought a suit against Airtemp.°° Chrysler attempted to recover based on account
annexed, account stated, book account, and quantum meruit.°’ Chrysler did not
deny that the services provided to Airtemp were governed by its contract with
Fedders.** Instead, Chrysler argued that the quantum meruit claim was an
“alternative claim” that was permissible because Airtemp was a third-party
t.?
beneficiary of the contract.°” The Superior Court rejected this argument and found
that Airtemp, as a third-party beneficiary, was not liable under quantum meruit “at
least in the absence of inability to recover under the underlying contract.”
>? Chrysler, 426 A.2d at 847.
=
*4 Tad.
28 ak
aoa.
7 Id. at 848.
8 Td. at 853-54.
9 Id.6° Id. at 854.
1]
It cannot be denied that Ansell benefited from the services provided by
Stryker. This benefit alone, however, cannot support Stryker’s unjust enrichment
claim.*! In accordance with Chrysler, the Court finds that third-party beneficiary
status alone is an insufficient basis for pursuing relief from anyone other than
Stryker.
The Court finds that the express contract between Stryker and Arcadis
governs this dispute. Because Stryker’s potential recovery is governed by the
Contract, the unjust enrichment claim against Ansell must be dismissed.
Mechanics’ Lien
In Delaware, the ordinary remedy for a plaintiff in Stryker’s position would
be a mechanics’ lien. When a contractor cannot or will not pay a subcontractor,
and the property owner has benefitted from the subcontractor’s services, the
subcontractor may impose a lien against the property to secure payment.® A party
seeking a mechanics’ lien must file a statement of claim in accordance with the
statutory requirements. A writ of scire facias will determine the ultimate amount
6! Stryker contends that “Ansell is precisely the type of third party for which a cause of action for
unjust enrichment is intended.” To support this assertion, Stryker quotes Chrysler as saying that
“where the defendant ‘was not merely an innocent recipient of a gift but was intimately involved
at every stage of the arrangements,’ a claim for unjust enrichment will stand.” It should be noted
that this language actually came from a New York case which was expressly rejected by this
Court in Chrysler. However, even if this language were applicable, it would not change the
outcome here.
62.95 Del. C. § 2702.
63 Td. at § 2712.
12
that the party can recover through the lien.®* Payment may then be recovered
through a lien foreclosure sale.®
This issue was neither raised nor briefed by the parties. The Court need not
determine the applicability of any possible future lien at this time. However, the
Court notes that Stryker has contractually waived its right to place a mechanics’
lien on the Property Site.°° Such a waiver may be deemed void as against public
policy and unenforceable under Delaware law.®’ The parties stated during oral
argument they believe the waiver is valid under Louisiana law. Nevertheless, it is
a question for another day whether Stryker retains any ability to attach an
enforceable lien.®
Stryker’s Ability to Recover from the Defendants
During oral argument before the Court, Ansell acknowledged that there are
reasons why it may be beneficial to remain a party to this case. Nevertheless,
Ansell still requests dismissal. In doing so, Ansell assumes the risk that judgment
may be entered against Arcadis without Ansell participating in discovery or motion
64 Td. at § 2714.
65 Jd. at § 2719.
66 Second Amended Complaint, Exhibit C, Schedule F § SP-F3.
67 95 Del. C. § 2706.
68 See Shaw Constructors, Inc. v. ICF Kaiser Engineers, Inc., 395 F.3d 533, 549 (Sth Cir. 2004)
(discussing Louisiana cases which define “waiver” as the voluntary relinquishment of a “known
existing legal right”).
13
practice. Ansell further assumes the risk that it may be held responsible for any
amount of Arcadis’ liability and be bound by any legal determinations.
There is no suggestion at this time that Arcadis lacks the resources to pay
any judgement that may be obtained in favor of Stryker in this action. However, if
Arcadis is found liable and is unable to make Stryker whole, Stryker may
potentially: (1) seek relief under bankruptcy law; (2) question the validity of the
waiver of the mechanics’ lien; or (3) raise an unjust enrichment claim at that time.
CONCLUSION
The Court finds that the operative agreement governing this dispute is the
express Contract formed between Stryker and Arcadis on December 11, 2018.
Stryker has the ability to seek compensation from Arcadis and is currently doing
so. Ansell’s authority under the Contract to approve or deny change orders does
not create a separate relationship between Stryker and Ansell sufficient to permit
Stryker to assert a claim against Ansell for unjust enrichment. This is particularly
appropriate under the circumstances where there is no suggestion that Arcadis is
judgment proof. Should that change, Stryker may seek in the future to obtain relief
from Ansell on the basis of any liability Arcadis fails to satisfy.
14
THEREFORE, Ansell’s Motion to Dismiss Count III of Stryker’s Second
Amended Complaint is hereby GRANTED WITHOUT PREJUDICE.
IT IS SO ORDERED.
Fhe
ls
The Kororart Mary M. Johnston
15