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Boyd and Company, LLC v. Tom's Backhoe Service, Inc.

United States District Court, D. Minnesota

February 7, 2018

Boyd and Company, LLC, Plaintiff,
v.
Tom's Backhoe Service, Inc., et al. Defendants.

          ORDER ADOPTING REPORT AND RECOMMENDATION

          WILHELMINA M. WRIGHT, UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on the November 30, 2017 Report and Recommendation (R&R) of United States Magistrate Judge Leo I. Brisbois. (Dkt. 56.) The R&R recommends denying Defendant Prairie Winds Services, LLC's motion to dismiss Defendant Tom's Backhoe Service, Inc.'s cross-claim for breach of contract and granting the motion to dismiss Tom's Backhoe's cross-claim for negligence.[1] Both defendants filed timely objections to the R&R.[2] For the reasons addressed below, the Court overrules the objections and adopts the R&R.

         BACKGROUND[3]

         In February 2016, Tom's Backhoe entered into a contract with the City of Brainerd, Minnesota, to install underground piping for utility services. Tom's Backhoe subsequently subcontracted with Prairie Winds to perform directional drilling on the project. Because Prairie Winds threatened to abandon its work when Tom's Backhoe questioned whether Prairie Winds possessed the equipment and personnel to complete the directional drilling, Tom's Backhoe permitted Prairie Winds to subcontract with Plaintiff Boyd and Company, LLC. Tom's Backhoe alleges that “there were substantial problems” with the directional drilling work that Prairie Winds and Boyd negligently performed. In October 2016, Boyd served a written demand for payment on Defendant Travelers Casualty and Surety Company of America, which had issued the payment bond on the project. Travelers denied Boyd's claim, and Boyd subsequently initiated this lawsuit seeking payment. Tom's Backhoe asserted cross-claims against Prairie Winds for breach of contract and negligence, which Prairie Winds moves to dismiss. See Fed. R. Civ. P. 12(b)(6).

         ANALYSIS

         To defeat a Rule 12(b)(6) motion to dismiss, a claimant must allege sufficient facts that, when accepted as true, state a facially plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The factual allegations need not be detailed, but they must “raise a right to relief above the speculative level” in order to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). When determining whether a complaint states a claim for relief that is plausible on its face, a district court accepts as true all factual allegations in the complaint and draws all reasonable inferences in the plaintiff's favor. Blankenship v. USA Truck, Inc., 601 F.3d 852, 853 (8th Cir. 2010).

         For different reasons, both Prairie Winds and Tom's Backhoe object to the recommendation of the R&R to grant in part and deny in part Prairie Winds's motion to dismiss. Prairie Winds objects to the recommendation to deny its motion to dismiss Tom's Backhoe's cross-claim for breach of contract, arguing that the magistrate judge erred by declining to consider documents attached to Prairie Winds's motion to dismiss. Tom's Backhoe objects to the recommendation to dismiss its negligence claim, contending that Tom's Backhoe alleges negligence by Prairie Winds that exceeds a failure to perform contractual duties. The Court reviews these objections de novo and addresses each in turn. See 28 U.S.C. § 636(b)(1)(C); Fed.R.Civ.P. 72(b)(3); LR 72.2(b)(3); Grinder v. Gammon, 73 F.3d 793, 795 (8th Cir. 1996) (per curiam).

         I. Prairie Winds's Objections

         Prairie Winds objects to the recommendation to deny its motion to dismiss Tom's Backhoe's cross-claim for breach of contract. Prairie Winds maintains that the magistrate judge erred by failing to consider the documents attached to Prairie Winds's motion to dismiss. When these documents-purportedly the contracts governing the relationship between Tom's Backhoe and Prairie Winds-are considered, Prairie Winds contends, it is evident that Tom's Backhoe's cross-claim for breach of contract fails to allege the satisfaction of conditions precedent to Prairie Winds's contractual obligation of performance. Prairie Winds asserts that this deficiency warrants dismissal of Tom's Backhoe's cross-claim for breach of contract.

         Although matters outside the pleadings generally may not be considered when deciding a motion to dismiss, a district court may consider documents necessarily embraced by the pleadings. Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012). Materials are necessarily embraced by the pleadings when a complaint alleges the contents of the materials and no party questions their authenticity. Zean v. Fairview Health Servs., 858 F.3d 520, 526 (8th Cir. 2017). The contract on which a breach-of-contract claim rests ordinarily is embraced by the pleadings. See Gorog v. Best Buy Co., Inc., 760 F.3d 787, 791 (8th Cir. 2014).

         The R&R determines that the documents Prairie Winds attaches to its motion to dismiss are not necessarily embraced by the pleadings because Tom's Backhoe challenges the authenticity of the attached documents. Prairie Winds objects to this determination, arguing that Tom's Backhoe waived its authenticity challenge by failing to raise it until the hearing on the motion. For this reason, it was procedurally unfair for the magistrate judge to consider the authenticity challenge, Prairie Winds contends.

         Prairie Winds's argument mischaracterizes the record. In its brief opposing Prairie Winds's motion to dismiss, Tom's Backhoe maintains that the reason the Court “must not consider the . . . alleged subcontracts” is because the documents are not the contracts governing the relationship between the parties. This is the same argument that Tom's Backhoe advanced during the hearing before the magistrate judge. Because Tom's Backhoe challenges the authenticity of the documents attached to Prairie Winds's motion to dismiss, the R&R correctly determines that the attached documents are not necessarily embraced by the pleadings. Prairie Winds's objections are overruled.

         II. Tom's Backhoe's Objections

         Tom's Backhoe objects to the recommendation to dismiss its negligence cross-claim against Prairie Winds for failure to allege that Prairie Winds breached a duty of care that is distinct from its duty to perform its contractual obligations. Tom's Backhoe argues that its negligence claim survives for two reasons. First, Tom's Backhoe contends that it alleges damages that arise from a breach of a duty of care that is beyond the scope of Prairie Winds's contractual obligations. Second, according to ...


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