Hawley v. @home Builders, LLC

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NEW YORK

__________________________________________

LUCAS HAWLEY,

d/b/a PRO BUILT CONSTRUCTION,

Plaintiff,

v.

DECISION AND ORDER

@HOME BUILDERS LLC, 6:19-CV-06353-MAT

Defendant.

__________________________________________

INTRODUCTION

Plaintiff Lucas Hawley, d/b/a Pro Built Construction

(hereinafter, “Plaintiff”), brings this action against defendant

@Home Builders LLC (hereinafter, “Defendant”), alleging breach of

contract and unjust enrichment. Docket No. 1-2 at 9-11. Presently

before the Court is Defendant’s motion to dismiss Plaintiff’s

complaint, pursuant to Rules 12(b)(5) and (b)(6) of the Federal

Rules of Civil Procedure. Docket No. 4. For the reasons set forth

below, Defendant’s motion is granted.

BACKGROUND

The following facts are taken from the allegations contained

in Plaintiff’s complaint (Docket No. 1-2 at 9-11). On March 12,

2014, Plaintiff and Defendant entered into a written contract,

whereby Plaintiff was to perform work as a subcontractor at

premises known as the “Hammocks at Millcreek,” located in Erie,

Pennsylvania. Id. at 9, ¶ 4. Defendant agreed to pay Plaintiff

for all work performed. Id. at ¶ 5. Plaintiff completed all of

the required work “in a quality and workmanlike fashion,” and

Defendant was issued a certificate of occupancy. Id. at 9-10, ¶ 6.

Defendant paid Plaintiff the contractually agreed upon amount, but

withheld $14,048.36, or ten percent of the payment. Id. at 10,

¶ 7. Despite Plaintiff’s demands for payment in full, Defendant

refused to pay the $14,048.36 withheld from the contract. Id. at

¶ 8.

Plaintiff further alleges that Defendant asked him to perform

additional work on Buildings 100 and 200, as well as the pool

house, at the “Hammocks at Millcreek.” Id. at ¶ 10. The parties

agreed that Defendant would pay Plaintiff the amounts of

$15,500.00, $11,025.00, and $40,000.00 for this work. Id. at ¶ 11.

Although Plaintiff completed this work “in a quality and

workmanlike manner,” Defendant refused to pay Plaintiff for the

supplemental work. Id. at ¶¶ 12-13. Plaintiff demands payment in

the amount of $80,573.36, plus interest and costs of suit. Id. at

10-11, ¶¶ 14, 16. Plaintiff has attached copies of the

aforementioned contracts for both the original and supplemental

work. Id. at 13-20.1

1

The copy of the original contract attached to Plaintiff’s complaint is

missing pages from the “TERMS AND CONDITIONS” section. See Docket No. 1-2 at 13-

16. The complete contract is attached to the Declaration of David Riedman,

submitted in support of Defendant’s motion to dismiss. See Docket No. 4-1 at 4-

10.

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PROCEDURAL HISTORY

On March 2, 2018, Plaintiff filed a Praecipe for Writ of

Summons in the Court of Common Pleas of Erie County, Pennsylvania,

which was issued by the Clerk of Records the same day. See Docket

No. 1-2 at 3, 4. Defendant contends that Plaintiff mailed its

attorney a copy of the Writ of Summons, but Defendant was never

properly served with the Writ. Docket No. 1 at ¶¶ 4-6. On

April 3, 2018, Plaintiff filed an “Important Notice,” informing

Defendant that it was in default, as it failed to enter a written

appearance and answer the allegations against it.2 See Docket

No. 1-2 at 5. On July 6, 2018, Defendant filed a Praecipe for

Entry of Appearance in the Court of Common Pleas of Erie County,

Pennsylvania. Id. at 6.

Almost one year after he last took action on his case, on

March 6, 2019, Plaintiff filed his complaint, alleging causes of

action for breach of contract and unjust enrichment. Id. at 9-11.

Plaintiff also filed a Notice to Defend, informing Defendant that

it had been sued in court and the steps Defendant may take to

defend against the claims in the complaint. Id. at 8. Defendant

contends that the complaint was not properly served on it, as

2

As noted by Defendant, Plaintiff’s filing the Important Notice, informing

Defendant that it was in default for failing to appear and answer the allegations

against it, was procedurally improper, as Plaintiff had not filed his complaint

at that time. See Docket No. 5 at 8.

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required by the Pennsylvania Rules of Civil Procedure. Docket

No. 1 at ¶¶ 8, 9.

On April 4, 2019, Defendant filed a Notice of Removal, seeking

to remove the case to the United States District Court for the

Western District of Pennsylvania. Docket No. 1. Defendant alleged

that removal was proper pursuant to 28 U.S.C. § 1332(a), as

complete diversity exists between the parties and the amount in

controversy exceeds $75,000. See id. at ¶¶ 13-17. Thereafter, on

April 11, 2019, Defendant filed the instant motion to dismiss,

seeking dismissal of Plaintiff’s claims or, in the alternative,

transfer of the case to the United States District Court for the

Western District of New York. See Docket No. 4. Plaintiff filed

a response to Defendant’s motion on May 7, 2019. Docket No. 7. On

May 7, 2019, the Court entered an order granting Defendant’s motion

in part, based on the parties’ consent to transfer the case to the

Western District of New York, consistent with the choice of venue

provision in the contract. Docket No. 8. The Court declined to

consider Defendant’s remaining arguments in support of its motion

to dismiss. Id.

On May 14, 2019, the case was transferred to the Western

District of New York. Docket No. 9. The Court set additional

response and reply deadlines of November 1, 2019, and November 8,

2019, for Defendant’s motion to dismiss. Neither party filed

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additional papers. The motion is now ready for a decision. See

Docket No. 14.

DISCUSSION

I. Standard

To withstand a Rule 12(b)(6) motion to dismiss, the complaint

must plead facts sufficient “to state a claim for relief that is

plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007). “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.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility

standard is not akin to a ‘probability requirement,’ but it asks

for more than a sheer possibility that a defendant has acted

unlawfully.” Id. Thus, “[w]here a complaint pleads facts that are

merely consistent with a defendant’s liability, it stops short of

the line between possibility and plausibility of entitlement to

relief.” Id. (internal citations and quotation marks omitted).

Determining whether a complaint meets the plausibility standard is

“context-specific” and requires that the court “draw on its

judicial experience and common sense.” Id. at 679.

II. Plaintiff’s Claims are Barred by the Statute of Limitations.

Defendant argues that dismissal of Plaintiff’s complaint is

warranted because (1) Plaintiff’s claims are barred by

Pennsylvania’s four-year statute of limitations for his claims, and

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(2) Plaintiff failed to properly serve Defendant with the Writ of

Summons or the complaint. See Docket Nos. 4 & 5. With regard to

its statute of limitations argument, Defendant contends that while

Plaintiff filed the Praecipe for Writ of Summons within the four-

year statute of limitations, he did not file his complaint until

after the statute had expired, and the Writ did not toll the

statute of limitations. Docket No. 4 at ¶ 2. With regard to the

service of process argument, Defendant contends that because

Plaintiff never effectuated service of process on Defendant, his

complaint should be dismissed pursuant to Fed. R. Civ. P. 12(b)(5),

or the Court should require Plaintiff to perfect service of process

on Defendant to prevent dismissal of the complaint. Id. at ¶ 3.

A. Choice of Law

Defendant contends that although the contract between the

parties contains a general choice of law provision providing that

New York law shall apply to the interpretation and enforcement of

the contract, the choice of law provision does not expressly apply

to the statute of limitations applicable to claims under the

contract. See Docket No. 5 at 6; see also Docket No. 4-1 at 10,

¶ 39 (“The laws of the State of New York shall govern as to the

interpretation, validity, enforcement, and effect of this

Subcontract.”). Plaintiff does not appear to contest that

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Pennsylvania’s statute of limitations applies in this instance.

See Docket No. 7.

“[A] federal court exercising diversity jurisdiction must

apply the choice-of-law rules of the state in which that court

sits. . . .” Liberty Synergistics Inc. v. Microflo Ltd., 718 F.3d

138, 151 (2d Cir. 2013). “Procedural issues such as statutes of

limitation are governed by New York law. . . . This does not,

however, necessarily result in the application of the New York

statute of limitations.” Jakobovits v. PHL Variable Insurance Co.,

No. 17-cv-3527-ARR-RER, 2018 WL 2291311, at *5 (E.D.N.Y. May 18,

2018) (internal citations omitted). “[I]n its borrowing statute,

§ 202, New York law . . . provides that ‘when a nonresident

plaintiff sues upon a cause of action that arose outside of

New York, the court must apply the shorter limitations period . .

. of either: (1) New York; or (2) the state where the cause of

action accrued.’” Muto v. CBS Corp., 668 F.3d 53, 57 (2d Cir.

2012) (quoting Stuart v. American Cyanamid Co., 158 F.3d 622, 627

(2d Cir. 1998)); see also C.P.L.R. § 202 (“An action based upon a

cause of action accruing without the state cannot be commenced

after the expiration of the time limited by the laws of either the

state or the place without the state where the cause of action

accrued, except that where the cause of action accrued in favor of

a resident of the state the time limited by the laws of the state

shall apply.”). “In other words, another state’s statute of

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limitations will apply if (1) the cause of action accrued out of

state in favor of a nonresident and (2) that state’s statute of

limitations is shorter than New York’s.” Jakobovits, 2018 WL

2291311, at *5.

Pursuant to N.Y. C.P.L.R. § 213(2), a claim for breach of

contract must be filed within six years of when the claim accrues.

Under New York’s six-year statute of limitations, Plaintiff’s

claims would be timely. However, application of New York’s

borrowing statute is appropriate in this instance. Plaintiff is a

non-resident (see Docket No. 1-2 at 9, ¶ 1), his claims accrued in

Pennsylvania, and Pennsylvania’s statute of limitations for breach

of contract claims is shorter than New York’s statute of

limitations. Indeed, Plaintiff originally filed his complaint in

Pennsylvania. Plaintiff likewise alleges that the work performed

pursuant to the contract was performed in Erie, Pennsylvania. See

Docket No. 1-2 at ¶ 4. Further, Plaintiff alleges that Defendant

breached the contract “and is liable for all damages and remedies

available under the laws of the Commonwealth of Pennsylvania.” Id.

at ¶ 9; see also id. at ¶ 14 (“Plaintiff is entitled to all damage

and remedies available under Pennsylvania law for breach of

contract.”). Accordingly, Pennsylvania’s four-year statute of

limitations applies to Plaintiff’s claims.

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B. Plaintiff’s Claims are Barred by the Statute of

Limitations

“Whether a complaint is timely filed within the limitations

period is a matter of law for the court to determine.” Frost v.

Zeff, Nos. 827 EDA 2015, 829 EDA 2015, 2015 WL 8552111, at *7 (Pa.

Super. Dec. 11, 2015) (internal quotations and citation omitted).

Pennsylvania applies a four-year statute of limitations for claims

based on breach of contract and unjust enrichment. See 42 Pa.C.S.

§ 5525(a); see also Allegheny Intermediate Unit v. East Allegheny

School District, 203 A.3d 371, 377 (Pa. Cmwlth. 2019) (“In

Pennsylvania, a breach of contract action must be commenced within

four years.”); Sevast v. Kakouras, 915 A.2d 1147, 1153 (Pa. 2007)

(“The cause of action which Appellee brought before the court is

based upon a theory of unjust enrichment. According to statute,

there is a four-year statute of limitations for such causes of

action.”) (citing 42 Pa.C.S. § 5525(a)(4) and Cole v. Lawrence, 701

A.2d 987, 989 (Pa. Super. Ct. 1997) (stating plaintiff’s claim for

unjust enrichment, an action based on a contract implied at law, is

subject to a four-year statute of limitations)).

“Typically, the statute of limitations starts running on the

date of the injury or the conduct causing the injury.” Raucci v.

Candy & Toy Factory, 145 F. Supp.3d 440, 448 (E.D. Pa. 2015)

(citing Morgan v. Petroleum Products Equipment Co., 92 A.3d 823,

828 (Pa. Super. 2014)). For breach of contract claims, the statute

“begins to run on the date of the breach.” Allegheny Intermediate

Unit, 203 A.3d at 377; see also Raucci, 145 F. Supp. 3d at 449

(“The four-year statute of limitations applicable to claims for

failure to make payments due under a contract does not start to run

until the payment is due.”).

The statute of limitations for Plaintiff’s claims began to run

when Defendant allegedly breached the contract by failing to tender

payment in full. While Plaintiff alleges that he entered into the

contract with Defendant on March 12, 2014 (see Docket No. 1-2 at 9,

¶ 4), the complaint does not specify the dates on which Defendant

failed to tender payment. However, according to Exhibit C attached

to Plaintiff’s complaint, Plaintiff’s “extra additional work” was

“100%” complete as of July 23, 2014. See Docket No. 1-2 at 19.

Based on this date, Plaintiff had to file his complaint by July 23,

2018. However, Plaintiff’s complaint was not filed until March 6,

2019, well beyond of the statute of limitations.

In Plaintiff’s response to Defendant’s motion to dismiss, he

asserts that his case was “commenced by filing a Writ of Summons in

the Erie County Court of Common Pleas on March 2, 2018[.]” Docket

No. 7 at 2, ¶ 1. To the extent Plaintiff argues that the statute

of limitations was tolled by his filing the Writ of Summons, the

Court disagrees in this instance. Pursuant to Pennsylvania law,

“[o]nce an action is commenced by writ of summons or complaint the

statute of limitations is tolled only if the plaintiff then makes

a good faith effort to effectuate service.” Englert v. Fazio

Mechanical Services, Inc., 932 A.2d 122, 124 (Pa. Super. 2007)

(emphasis added). Thus, “the filing of a complaint or a writ of

summons shall remain effective to commence an action only if the

plaintiff then refrains from a course of conduct which serves to

stall in its tracks the legal machinery he has just set in motion.”

Collura v. Peoples Neighborhood Bank, No. 2019 MDA 2018, 2019 WL

4234277, at *3 (Pa. Super. Sept. 6, 2019) (internal quotations and

citations omitted); Heckman v. Sanchez, No. 1229 C.D. 2014, 2015 WL

5314523, at *3 (Pa. Cmwlth. Mar. 11, 2015) (“Even though the Writ

of Summons was filed within the limitations period, Heckman’s

failure to make a good-faith effort to serve Sanchez and the

Township Board with the writ did not toll the statute of

limitations and the trial court did not err in granting summary

judgment and dismissing the Complaint with prejudice on that

basis.”).

The record before the Court shows that Plaintiff filed the

Writ of Summons on March 2, 2018. See Docket No. 1-2 at 3. Other

than filing the “Important Notice” dated April 3, 2018 (see Docket

No. 1-2 at 5), Plaintiff did not take any additional action on his

case until March 6, 2019, when he filed his complaint and notice to

defend (see Docket No. 1-2 at 8, 9-11). As referenced above, in

its Notice of Removal, Defendant explains that on or about

April 23, 2018, Plaintiff’s counsel mailed a letter to defense

counsel, enclosing a copy of the Writ of Summons, and indicating

that a complaint would be filed shortly. Docket No. 1 at ¶ 4. In

response, on April 26, 2018, defense counsel informed Plaintiff’s

counsel that the Writ of Summons was never served on @Home, that

counsel for @Home did not have authority to accept service on its

behalf, and that if and when a complaint was filed, it would need

to be properly served on @Home. Id. at ¶ 5. On July 6, 2018,

defense counsel served an entry of appearance in the state court

action. Id. at ¶ 6. No further activity occurred until March

2019, when Plaintiff filed his complaint. These events - i.e., the

fact that defense counsel was aware of the Writ - do not change the

Court’s analysis. See Collura, 2019 WL 4234277, at *4 (while the

Supreme Court of Pennsylvania has adopted a “flexible approach” to

the good faith determination, dismissal for improper service is

appropriate, despite defendant’s knowledge of the action, where

“counsel informed appellants that he was not authorized to accept

service of process on behalf of lenders,” and “[a]fter that,

appellants did nothing until March 31, 2017, at which time they

filed a praecipe to reinstate the complaint,” but “[b]y that time

. . . the statute of limitations had expired.”). Plaintiff’s

counsel’s failure to take any additional effort to serve the Writ,

even after being informed that his service was not effective, does

not rise to the level of a “good faith effort.”

Further, the docket of the state court action reflects the

same sequence of events. See Docket No. 4-2 at 3. Defendant has

filed the declaration of David Riedman, the President and Chief

Executive Officer of @Home Builders, stating that it “has no record

that it ever received by certified mail, or was otherwise served

with, a copy of the Writ of Summons issued by the Court of Common

Pleas of Erie County[.]” Docket No. 4-1 at ¶ 3. Further, the

docket from the state court action does not include a certificate

of service, demonstrating that Defendant received a copy of the

Writ of Summons. See Docket No. 4-2 at 3. Despite the fact that

“it is the plaintiff’s burden to demonstrate that his efforts at

service were reasonable,” see Collura, 2019 WL 4234277, at *3,

Plaintiff does not contest that he did not attempt to timely serve

the Writ of Summons, nor does he offer an explanation as to why he

failed to take additional action on his case. Rather, Plaintiff

asserts that “[s]ervice was perfected pursuant to Pa.R.C.P. 401 via

Certified Mail which was accepted by a duly authorized agent of

Defendant on March 14, 2019.” Docket No. 7 at 2, ¶ 1. Plaintiff’s

approximately one-year delay in attempting to perfect service on

Defendant does not constitute a good faith effort to serve

Defendant with the Writ issued in March 2018, such that Plaintiff’s

actions would work to toll the statute of limitations period.

CONCLUSION

For the foregoing reasons, Defendant’s motion to dismiss for

failure to state a claim is granted, and Plaintiff’s complaint is

dismissed with prejudice in its entirety. The Clerk of Court is

directed to close this case.

ALL OF THE ABOVE IS SO ORDERED.

S/Michael A. Telesca

MICHAEL A. TELESCA

United States District Judge

Dated: February 10, 2020

Rochester, New York