United States District Court, D. Idaho
ARBON VALLEY SOLAR, LLC., INTERCONNECT SOLAR DEVELOPMENT, LLC., and JOHN HESS CONSTRUCTIONS, INC., Plaintiffs,
THOMAS & BETTS CORPORATION, a Tennessee Corporation, and John and Jane Does I through, whose true identities are unknown, Defendants.
MEMORANDUM DECISION AND ORDER
J. Lodge United States District Judge
matter is before the Court on a Motion to Dismiss (Dkt. 11)
filed by Defendant Thomas & Betts Corporation. Having
fully reviewed the record, the Court finds that the facts and
legal arguments are adequately presented in the briefs and
record. Accordingly, in the interest of avoiding further
delay, and because the Court conclusively finds the
decisional process would not be significantly aided by oral
argument, this matter shall be decided on the record before
this Court without oral argument.
Arbon Valley Solar, LLC (“Arbon Valley Solar”)
and Interconnect Solar Development LLC (“Interconnect
Solar”) (referred to collectively hereinafter as
“Plaintiffs”) bring claims for breach of contract
and breach of the implied covenant of good faith and fair
dealing, negligence, breach of assumed duty, and negligent
hiring, supervision and training, against Defendant Thomas
& Betts Corporation (“Thomas & Betts” or
“Defendant”). Plaintiffs' claims arise out of
the construction of a solar power facility in Idaho
(“Solar Project”). Arbon Valley Solar is an
affiliate of Cranney Farms, a business enterprise engaged in
agricultural operations carried out in the Arbon Valley,
about December 3, 2012, Arbon Valley Solar entered into an
agreement (“Construction Agreement”) with
Interconnect Solar, under which Interconnect Solar agreed to
provide all labor, materials, equipment and services
necessary to complete the Solar Project on behalf of Arbon
Valley Solar. The Solar Project was designed to charge five
irrigation pivots and two irrigation wells, which would then
serve the agricultural operations of Cranney Farms by way of
a lease agreement between it and Arbon Valley Solar. Before
entering into the Construction Agreement, Interconnect Solar
contacted Thomas & Betts to seek comment and feedback on
the viability of the Construction Agreement, as well as
general contract oversight and project management with
respect to the Solar Project.
contacting Thomas & Betts, Interconnect Solar primarily
communicated and dealt with Sammy Germany, Thomas
&Betts', “Market Development Manager of
Renewable Energy and Power Generation for the United States
and Latin America.” Mr. Germany's business card
identified him with the aforementioned title, and also stated
Mr. Germany held a PhD/MBA. Mr. Germany reviewed the
Construction Agreement between Arbon Valley Solar and
Interconnect Solar. After reviewing and confirming the
viability of the Construction Agreement, Mr. Germany agreed
to provide contractual oversight, project management, and
engineer procurement for the Solar Project.
consideration of such services, Plaintiffs tendered $50,
000.00 in care of Mr. Germany, who represented the sum would
be deposited into an escrow account maintained by Sunjoy
Power, LLC (“Sunjoy Power”), a subsidiary of
Thomas & Betts. Thereafter, Mr. Germany began providing
contractual oversight and project management for the Solar
Project. Mr. Germany procured engineering services by
retaining Eric R. Hepburn, a professional engineer with
Hepburn and Sons, LLC (“Hepburn and Sons”), for
the purpose of completing the necessary engineering plans and
drawings for the Solar Project. Mr. Germany paid an invoice
amount of $7, 500.00 to Hepburn and Sons from the $50, 000.00
tendered by Plaintiffs to Sunjoy Power in care of Mr.
March 5, 2013, while conducting contractual oversight,
project management, and other duties, Mr. Germany executed an
agreement (“Confidentiality Agreement”) with
Dynapower Company LLC (“Dynapower”) on behalf of
Sunjoy Power. Plaintiffs suggest the Confidentiality
Agreement was entered into for the purpose of facilitating
the completion of the Solar Project. On March 21, 2013, based
upon Mr. Germany's review and recommendation,
Interconnect Solar purchased four 100 kilowatt Micro Power
System Inverters, for a total purchase price of $240, 000.00,
from Dynapower. The products were delivered in July or August
of 2013. Interconnect Solar also purchased $100, 000.00 of
equipment and other products for the Solar Project from
another company, Wesco, based on the recommendation of Mr.
April 2013, Randy Vigos, another employee of Thomas &
Betts, traveled to Boise, Idaho, to meet with Interconnect
Solar, Mr. Germany, and others. Plaintiffs suggest the
meeting with Mr. Vigos concerned Defendant's project
management, contractual oversight and engineer procurement
duties in relation to the Solar Project which were being
performed by Mr. Germany. During the aforementioned meeting,
Mr. Vigos introduced himself as a manager for Thomas &
Betts and presented a business card to Interconnect Solar
which identified him as “Product Specification
Specialist Pacific N.W. Region Electrical Division Masters
Award.” Both Mr. Vigos and Mr. Germany stated Mr. Vigos
was the representative of Thomas & Betts who would be
able to assist with the Solar Project in the event Mr.
Germany was not available.
the meeting in Boise, Mr. Vigos transmitted an e-mail through
his account with Thomas & Betts to thank Bill Piske of
Interconnect Solar for the meeting and opportunity.
Plaintiffs note the e-mail was also sent to Thomas &
Betts' top level executives, and contend the e-mail thus
ratified the authority Thomas & Betts delegated to Mr.
Germany to provide project management, construction
oversight, and engineer procurement in relation to the Solar
about July 2013, Interconnect Solar suspected that Mr.
Germany had improperly used the professional engineer stamp
of Richard D. Hepburn with respect to the Solar Project.
Interconnect Solar confronted Mr. Germany about the
authenticity of the engineering drawings and was assured by
Mr. Germany that all matters were “above board.”
(Dkt. 10, ¶ 39.) However, on or about December 11, 2013,
an engineer with Dynapower performed an initial assessment of
the Solar Project on behalf of Plaintiffs and concluded many
deficiencies existed which rendered the Solar Project
incompatible with the operations of Arbon Valley Solar and
Cranney Farms. Moreover, on January 13, 2014, an attorney for
Hepburn and Sons sent a demand letter to Mr. Germany stating:
“Our investigation demonstrates that you and [SunJoy
Power] have purposefully and with intent to deceive affixed
Mr. Hepburn's professional engineer stamp issued by the
Commonwealth of Massachusetts to multiple drawings which you
submitted to [Interconnect Solar] for use on the [Solar
Project].” (Dkt. 10, Ex. C.)
thereafter learned that assembling, building and fabricating
the Solar Project in reliance upon the faulty engineering
plans procured by Mr. Germany rendered all of the labor,
material, equipment and services involved in the Solar
Project incompatible and obsolete. Plaintiffs maintain they
have suffered in excess of $5, 000, 000.00 in losses as a
direct and proximate cause of Defendant's actions.
filed their Complaint and Demand for Jury Trial in Oneida
County, Idaho, district court on January 13, 2016. (Dkt.
1-3.) On February 12, 2016, Thomas & Betts removed the
matter to this Court on the basis of diversity jurisdiction.
(Dkt. 1.) On March 16, 2016, Thomas & Betts moved to
dismiss Plaintiffs' Complaint and Demand for Jury Trial
pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt.
5.) Plaintiffs responded by filing an Amended Complaint on
April 6, 2016. (Dkt. 10.) Thomas & Betts then filed
the instant Motion to Dismiss the Amended Complaint (Dkt.
11.) Although both the initial and Amended Complaint included
John Hess Construction, Inc. as a plaintiff, the parties have
since stipulated to, and the Court has approved, dismissal of
the claims of John Hess Construction, Inc. (Dkt. 16; Dkt.
STANDARD OF REVIEW
motion to dismiss for failure to state a claim challenges the
legal sufficiency of the claims stated in the complaint.
Conservation Force v. Salazar, 646 F.3d 1240, 1242
(9th Cir. 2011). To sufficiently state a claim to relief and
survive a 12(b)(6) motion, the pleading “does not need
detailed factual allegations, ” however, the
“[f]actual allegations must be enough to raise a right
to relief above the speculative level.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Mere “labels and conclusions” or a
“formulaic recitation of the elements of a cause of
action will not do.” Id. Rather, there must be
“enough facts to state a claim to relief that is
plausible on its face.” Id. at 570. A claim
has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged. Id. at 556. The plausibility standard is
not akin to a “probability requirement, ” but
does require more than a sheer possibility that a defendant
acted unlawfully. Id.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), the
Supreme Court identified two “working principles”
that underlie Twombly. First, although a court must
accept as true all factual allegations in a complaint when
ruling on a motion to dismiss, the court need not accept
legal conclusions as true. Id. “Rule 8 marks a
notable and generous departure from the hyper-technical,
code-pleading regime of a prior era, but it does not unlock
the doors of discovery for a plaintiff armed with nothing
more than conclusions.” Id. at 678-79. Second,
only a complaint that states a plausible claim for relief
will survive a motion to dismiss. Id. at 679.
“Determining whether a complaint states a plausible
claim for relief will . . . be a context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense.” Id.
light of Twombly and Iqbal, the Ninth
Circuit has summarized the governing standard as follows:
“In sum, for a complaint to survive a motion to
dismiss, the nonconclusory factual content, and reasonable
inferences from that content, must be plausibly suggestive of
a claim entitling the plaintiff to relief.” Moss v.
U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).
Apart from factual insufficiency, a complaint is also subject
to dismissal under Rule 12(b)(6) where it lacks a cognizable
legal theory, Balistreri v. Pacifica Police Dept.,
901 F.2d 696, 699 (9th Cir. 1990), or where the allegations
on their face show that relief is barred for a legal reason.
Jones v. Bock, 549 U.S. 199, 215 (2007).
& Betts argues the claims asserted in Plaintiffs'
Amended Complaint should be dismissed because Plaintiffs fail
to allege any relationship between the parties that would
give rise to any contractual obligation or other duties that
would support Plaintiffs' claims. Thomas & Betts
argues Plaintiffs fail to allege any facts that indicate Mr.
Germany had express, implied or apparent authority that would
allow him to provide construction oversight services on its
behalf. In the absence of any allegations of an agency
relationship between Mr. Germany and Thomas & Betts,
Thomas & Betts suggests Plaintiffs' negligence claims
must also be dismissed. Thomas & Betts maintains
Plaintiffs have not alleged it had any duty to Plaintiffs,
and have not alleged any facts to show Mr. Germany's
actions were reasonably foreseeable to Thomas & Betts.
Thomas & Betts also seeks dismissal of Plaintiffs'
negligence claims on the basis of the economic loss rule.
first claim is for breach of contract and breach of the
implied covenant of good faith and fair dealing. The elements
of a claim for breach of contract are: (1) the existence of a
contract; (2) breach; (3) causation; and (4) damages.
Mosell Equities, LLC v. Berryhill & Co., 297
P.3d 232, 241 (Idaho 2013). The implied covenant of good
faith and fair dealing “is a covenant implied by law in
the parties' contract. No covenant will be implied which
is contrary to the terms of the contract negotiated and
executed by the parties.” Idaho First Nat. Bank v.
Bliss Valley Foods, Inc., 824 P.2d 841, 863 (Idaho 1991)
(citations omitted). A violation of the covenant occurs only
when either party violates, nullifies or significantly
impairs any benefit of the contract. Sorensen v. Comm
Tek, Inc., 799 P.2d 70, 75 (Idaho 1990). Plaintiffs
allege a valid and binding contract was entered into by and
between Plaintiffs and Thomas & Betts, that
“Defendant materially breached the contract in several
respects, ” and that “Defendant… likewise
breached the covenant of good faith and fair dealing implied
in the valid contract entered into by and between the
parties.” (Dkt. 10, ¶ 49.) Plaintiffs do not
specify whether the agreement Defendant allegedly entered
into (through Mr. Germany) was written or oral.
Motion to Dismiss, Thomas & Betts argues Plaintiffs'
Amended Complaint fails to allege either the existence of a
contract between Plaintiffs and Defendant or entry of a
contract between Plaintiffs and Defendant's authorized
agent. Thomas & Betts claims the Amended Complaint is
focused entirely on the actions of a non-party, Mr. Germany.
Thomas & Betts suggests Mr. Germany acted “largely
unilaterally and in an area in which [Defendant] does not do
business, ” and that Plaintiffs have not alleged facts
to establish Mr. Germany had the authority of Thomas &
Betts when he agreed to provide construction management
services for Plaintiffs. (Dkt. 11-1, p. 2.)
are three separate types of agency, any one of which is
sufficient to bind the principal to a contract entered into
with a third party, provided the agent has acted within the
course and scope of the authority granted by the
principal.Clark v. Gneiting, 501 P.2d 278
(Idaho 1972); American West Enter., Inc. v. CNH,
LLC, 316 P.3d 662, 669 (Idaho 2013). The three types of
agency are: (1) express authority (a form of agency commonly
referred to as actual authority); (2) implied authority (also
referred to as actual authority); and (3) apparent authority.
Id.; see also Hieb v. Minn. Farmers Union,
672 P.2d 572, 575 (Idaho 1983).
authority” refers to the authority a principal has
explicitly granted the agent to act in the principal's
name. American West, 316 P.3d at 669. “Implied
authority refers to that authority which is necessary, usual,
and proper to accomplish or perform the express authority
delegated to the agent by the principal.” Id.
(quoting Bailey v. Ness, 708 P.2d 900, 902-03 (Idaho
1985)). Finally, apparent authority “is created when
the principal voluntarily places an agent in such a position
that a person of ordinary prudence, conversant with the
business usages and the nature of a particular business, is
justified in believing that the agent is acting pursuant to
existing authority.” Id. Although the
existence of an agency relationship is a question of fact,
the party claiming an agency relationship existed must still
adequately plead the grounds upon which an allegation of
authority rests. Id. at 670 (finding ...