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Thyssenkrupp Elevator Corp. v. The Harlan Co.

United States District Court, E.D. Missouri, Eastern Division

April 18, 2019

THYSSENKRUPP ELEVATOR CORPORATION, Plaintiff/Counterclaim-Defendant,
v.
THE HARLAN COMPANY, Defendant/Counterclaim Plaintiff,
v.
FEDERAL INSURANCE COMPANY, Counterclaim-Defendant.

          MEMORANDUM AND ORDER

         This matter is before the Court on the following motions: Defendant The Harlan Company's (“Harlan”) motion to dismiss Counts I, II, and IV of the Complaint (Doc. No. 13); Harlan's motion to strike Count III of the Complaint (Doc. No. 25); and Plaintiff Thyssenkrupp Elevator Corporation's (“TKE”) motion to dismiss Counts I and II of the Counterclaim (Doc. No. 21). The motions are fully briefed and ready for disposition. For the reasons set forth below, all motions will be denied.

         I. Background

         This dispute arises out of a contract between Harlan and TKE, regarding elevator work and services to be performed on six MetroLink stations in the City of St. Louis (“the MetroLink project”). On or about April 11, 2017, Harlan entered into Subcontract SC-2017-16-001 (“Subcontract”) with TKE, and, on July 19, 2017, the parties entered into Amendment No. 1. (Doc. No. 1, Complaint (“Compl.”) at ¶8; Doc. No. 1-2, Amendment No. 1).

         TKE alleges in its Complaint that under the Subcontract, Harlan was responsible for scheduling and directing the work of its subcontractors, and TKE was responsible for demolishing, furnishing, and installing elevators and using materials that strictly complied with Harlan's drawings and specifications. (Compl. at ¶¶ 12-14). TKE was to receive payments on a monthly basis, subject to Harlan's rights of deduction or set off. (Id. at ¶¶ 17-18).

         The Subcontract contains provisions for termination of the Subcontract in the event Harlan determined that TKE failed to comply with its obligations. (Subcontract ¶ 19). The Subcontract provides:

(c) Subcontractor shall be liable to Contractor for all costs and expenses Contractor incurs as a result of any default by Subcontractor, including all costs of labor, supervision, materials, tools, equipment, services, overhead, travel, and legal and accounting fees resulting from such default. . . .

         Amendment No. 1 provides:

This amendment shall be made part of this Agreement. In the event of conflict with other articles, terms, conditions, or contract documents, this Amendment No. 1 shall be final. In no event shall Subcontractor be responsible for consequential, indirect, incidental, exemplary, special or liquidated damages.

(Doc. No. 1-2).

         TKE alleges that on July 20, 2018, Harlan circulated Change Order No. 3, citing TKE for $65, 625 in back charges due to a 120-day schedule delay. (Compl. at ¶ 20). TKE did not sign the change order. (Id. at ¶ 23). Harlan also made a formal claim for damages, identified as “Administration and Supervision” costs related to the schedule delay. (Id. at ¶¶ 23-24). On August 30, 2018, Harlan sent a Notice of Contract Termination under Section 19 of the Subcontract, citing TKE's failures to cure previously identified defaults. (Id. at ¶¶ 25, 27).

         TKE asserts two claims of breach of contract against Harlan. Specifically, TKE contends that Harlan breached the Subcontract and Agreement No. 1 when it failed to schedule, direct, and coordinate the work of TKE's sub-subcontractors, which resulted in the 120-day delay. TKE further claims that it completed or substantially completed performance of its work at certain MetroLink stations and that Harlan's execution of Change Order No. 3 and wrongful decision to terminate the Subcontract constituted breaches of the Subcontract. TKE seeks compensatory damages, lost profits, and attorneys' fees and costs, as well as a declaratory judgment stating that the damages Harlan demanded are consequential damages, which are expressly prohibited by Agreement No. 1. TKE also asserts a claim for quantum meruit, claiming that it is entitled to the reasonable value of the services it performed for Harlan for which Harlan had not yet paid.

         Harlan filed a counterclaim asserting breach of contract against TKE. (Doc. No. 16, “Counterclaim”). Specifically, Harlan alleges that TKE failed to timely submit its design and engineering or timely order the materials required to fulfill its obligations under the Subcontract, thus failing to install the elevators in the timely manner required by the Subcontract. (Id. at ¶15-17). Harlan claims that it sent several written notices to cure defaults related to deficiencies in TKE's work and commission of multiple material breaches of the Subcontract. (Id. at ¶¶ 21-28). Harlan seeks actual damages and a declaratory judgment that the damages suffered by Harlan are actual damages permitted under the Subcontract.

         Harlan also named as a defendant Federal Insurance Company and included a demand for surety against it. (Id. at ¶¶ 45-50). Harlan contends that Federal Insurance Company is required to make a payment to Harlan under the terms of the bond, and that Federal Insurance Company wrongfully failed to make such payment.[1]

         II. ...


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