Virginia Lawyers Weekly VA Lawyers Weekly
Where a subcontractor sued an employer after the employer refused to intervene in a dispute between the subcontractor and general contractor, the employer’s motion to dismiss was granted. The subcontractor failed to identify a single provision of statute or federal regulation that vested the employer with the authority to reinstate a subcontractor that has been terminated by a contractor.
Background
This is a dispute concerning a subcontractor agreement between PRIDE Industries and VersAbility Resources Inc. The subcontract provided that PRIDE would perform certain work at Naval Base San Diego under a contract that VersAbility had been awarded pursuant to the AbilityOne program. VersAbility terminated its contract with PRIDE on March 21, 2022.
PRIDE alleges that it then asked the AbilityOne Commission and SourceAmerica to intervene in PRIDE’s dispute with VersAbility to prevent VersAbility from terminating PRIDE’s subcontract with VersAbility. But the AbilityOne Commission and SourceAmerica declined to intervene.
PRIDE has sued VersAbility, the AbilityOne Commission and SourceAmerica. This matter is now before the court on each of the defendants’ motions to dismiss.
SourceAmerica’s motion
SourceAmerica’s motion to dismiss must be granted. This is so because (i) the Administrative Procedure Act, or APA, claims asserted by PRIDE against SourceAmerica cannot go forward because SourceAmerica is not an agency subject to the APA and (ii) the state-law claims are barred by SourceAmerica’s sovereign immunity as a contractor.
AbilityOne defendants’ motion
The AbilityOne defendants argue that PRIDE has not satisfied the standing requirement because PRIDE has not demonstrated, among other things, that its injury is likely to be redressed by a favorable judicial decision. This is so because PRIDE has not identified a single provision of statute or federal regulation that vests the AbilityOne Commission with the authority to reinstate a subcontractor that has been terminated by a contractor, as PRIDE alleges happened here.
PRIDE’s citation to 41 C.F.R. § 51-3.4 is unavailing because that section provides only that, if there are two or more nonprofits designated as the primary contractors for a project, the central nonprofit entity shall split the work amongst those primary contractors “in a fair and equitable manner.” That regulation does not allow the AbilityOne Commission to interfere with contract disputes of the sort alleged here, and, in any event, PRIDE was only a sub-contractor; VersAbility was the primary contractor.
PRIDE’s reliance on an operating memorandum by the AbilityOne Commission is similarly unavailing. Accordingly, the AbilityOne defendants’ motion to dismiss must be granted.
VersAbility’s motion
VersAbility first argues that the federal enclave doctrine bars four of the claims asserted against it. Naval Base San Diego became a federal enclave on Feb. 23, 1922. Thus all of PRIDE’s claims asserting a violation of a state law that did not exist on Feb. 23, 1922 are barred, so long as the conduct underlying the claim occurred at Naval Base San Diego.
The court finds that the events underlying each of PRIDE’s claims focused on activity at Naval Base San Diego. The court finds that the federal enclave doctrine bars the claims for breach of the duty of good faith and fair dealing, unjust enrichment and violation of California’s unfair competition law, because each of these claims did not exist on Feb. 23, 1922. However the claim for tortious interference with prospective economic advantage has been recognized in California at least since 1919, and is thus not barred by the federal enclave doctrine.
The court also finds that the tortious interference claim pleads sufficient facts to avoid dismissal at this stage. VersAbility’s arguments that PRIDE has not sufficiently stated a claim for conspiracy to injure under California law also fail at this stage.
Finally, VersAbility argues that the statute of frauds bars PRIDE’s claims for breach of contract and promissory estoppel. But statute of frauds is an affirmative defense. And it is well established that such affirmative defenses may serve as a basis to dismiss a complaint only if all the facts necessary to establish the defense are clear from the plaintiff’s pleadings. Here, however, all of the facts necessary to establish a statute of frauds defense are not apparent from the complaint.
SourceAmerica’s motion to dismiss granted. AbilityOne defendants’ motion to dismiss granted. VersAbility’s motion to dismiss granted in part, denied in part.
PRIDE Industries v. VersAbility Resources Inc., Case No. 1:22-cv-1062, April 24, 2023. EDVA at Alexandria (Ellis). VLW 023-3-224. 18 pp.
