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Anchorage v. Integrated Concepts & Research Corp.

United States District Court, D. Alaska

March 4, 2014

ANCHORAGE, A Municipal Corporation, Plaintiff,
v.
INTEGRATED CONCEPTS AND RESEARCH CORPORATION; PND ENGINEERS, INC.; and CH2M HILL ALASKA, INC., Defendants

Page 1002

For Anchorage, a Municipal Corporation, Plaintiff: Donald G. Featherstun, LEAD ATTORNEY, PRO HAC VICE, Seyfarth Shaw LLP, San Francisco, CA; Robert P. Owens, LEAD ATTORNEY, Municipal Attorney's Office, Anchorage, AK; Bennett D. Greenberg, Jason N. Smith, PRO HAC VICE, Seyfarth Shaw LLP (DC), Washington, DC.

For Integrated Concepts and Research Corporation, Defendant: Adam W. Cook, David Karl Gross, Max D. Garner, LEAD ATTORNEYS, Birch Horton Bittner & Cherot, Anchorage, AK; Kurt J. Hamrock, Raymond B. Biagini, PRO HAC VICE, McKenna Long & Aldridge LLP, Washington, DC.

For PND Engineers, Inc., Defendant: Lisa M. Marchese, LEAD ATTORNEY, Dorsey & Whitney LLP (SEA), Seattle, WA; Bruce Eric Davison, Davison & Davison, Inc., Anchorage, AK; Jahna M. Lindemuth, Dorsey & Whitney, LLC, Anchorage, AK.

For CH2M Hill Alaska, Inc., Defendant: Todd Tyler Williams, William F. Cronin, LEAD ATTORNEYS, PRO HAC VICE, Corr Cronin Michelson Baumgardner & Preece LLP, Seattle, WA.

OPINION

Page 1003

ORDER DENYING MOTION TO DISMISS

Sharon L. Gleason, United States District Judge.

Before the Court at Docket 12 is a motion to dismiss filed by Defendant Integrated Concepts and Research Corporation (" ICRC" ) on April 17, 2013. At Docket 14, Defendant PND Engineers,

Page 1004

Inc. (" PND" ) joined the motion. Plaintiff Municipality of Anchorage (" MOA" ) opposed the motion, and ICRC timely replied.[1] On January 6, 2014, a few days before oral argument was scheduled, at Docket 70, Defendant CH2M Hill Alaska, Inc. (formerly known as VECO Alaska, Inc., and referred to within this Order as " VECO" ) also joined ICRC's motion to dismiss. Oral argument was held on January 9, 2014.[2] Shortly after, on January 15, 2014, MOA opposed VECO's joinder to the motion to dismiss, and VECO replied.[3] For the following reasons, the Court will deny the motion to dismiss.

FACTUAL BACKGROUND

The Complaint makes the following factual allegations:

The Port of Anchorage Intermodal Expansion Project (the " Project" ) was envisioned to be a multi-year infrastructure project that would replace deteriorated and outdated facilities, expand the Port's capacity, and increase the Port's ability to serve MOA, as well as the State of Alaska and U.S. military.[4] The Project was intended to be designed to account for the seismic risk posed by the Project's location in Anchorage, Alaska.[5]

In or about March 2003, MOA signed a Memorandum of Understanding (" MOU" ) with the Maritime Administration, a federal agency within the United States Department of Transportation (" MarAd" ), that delineated MOA and MarAd's responsibilities with respect to the Project's funding and administration.[6] MOA, as the Project owner, was to focus on programmatic needs.[7] MarAd was to provide specialized technical expertise, including the Project's design and construction.[8]

In May 2003, MarAd first contracted with Koniag Services Inc., and by novation in 2004 with ICRC (the " 2003 Contract" ), for ICRC to " among other things, provide program management, design-build and related procurement services" for the Project's administration, design, and construction.[9] The 2003 Contract included a Statement of Work, which described in broad terms ICRC's Project responsibilities, which included design responsibilities, as well as construction, management, and oversight responsibilities.[10] The Complaint alleges that " MOA relied upon MarAd to contract with, and oversee, ICRC's administration of the overall Project." [11] The Complaint also alleges that " [t]he 2003 Contract . . . made ICRC liable for all damages to persons or property occurring as a result of ICRC's fault or negligence." [12]

Page 1005

ICRC subcontracted with PND to assist in preparing " a bid-ready project design assembly for the North Waterfront project, preliminary engineering services, and separate bid-ready project design assemblies for follow-on construction projects." [13] The subcontract noted that PND's proprietary Open-Cell-Sheet-Pile Structure (" OCSP" ) had been selected for the Project.[14] PND subcontracted with VECO for technical support and technical reviews.[15] The Complaint alleges that " MOA relied upon ICRC (and its consultants and their sub-consultants) for . . . analysis and validation of the OCSP design recommended by ICRC." [16]

In July 2008, MarAd awarded another contract to ICRC (the " 2008 Contract" ) to continue performance of program management and design-build related to the Project.[17] The 2008 Contract expressly states that MOA and the Port are third-party beneficiaries to the contract.[18]

The Complaint contains detailed assertions that the work performed by ICRC, PND, and other subcontractors was plagued with a variety of problems.[19] Some of these problems are summarized in a " Suitability Study," issued in February 2013 by CH2M Hill, Alaska, Inc., which had been engaged by the United States Army Corps of Engineers through agreement with MarAd.[20] The Suitability Study " detail[ed] various deficiencies in the Project's administration, design, and construction" that the Complaint alleges are attributable to the Defendants.[21] MOA alleges that as of the time it filed its lawsuit, " the Project work [wa]s . . . on hold," and that " the completion date for the Project ha[d] been significantly pushed back." [22]

MOA's Complaint asserts six causes of action: (1) breach of contract by ICRC; (2) professional negligence by ICRC; (3) negligence by ICRC; (4) professional negligence by PND; (5) negligence by PND; and (6) professional negligence by VECO.[23] ICRC moves to dismiss this action on three alternative bases: (1) pursuant to Federal Rule of Civil Procedure 12(b)(1), asserting that ICRC is protected by derivative sovereign immunity; (2) with respect to the breach of contract claim, pursuant to Federal Rule of Civil Procedure 12(b)(6), asserting that MOA has failed to state a claim upon which relief can be granted because MOA was not an intended third-party beneficiary to the 2003 and 2008 Contracts between MarAd and ICRC; and (3) pursuant to Federal Rule of Civil Procedure 12(b)(7), asserting that MOA failed to join the United States, which ICRC asserts is an indispensible party.[24] As noted above, Defendants PND and VECO joined ICRC's motion.[25]

Page 1006

DISCUSSION

I. ICRC's Motion to Dismiss Pursuant to Rule 12(b)(1): Derivative Sovereign Immunity.

ICRC asserts that the Court should dismiss this action under principles of derivative sovereign immunity because ICRC did not exceed the scope of authority validly conferred upon it through the MarAd contracts.[26] MOA disagrees, asserting that ICRC's independent, negligent acts caused MOA's damages--not any ...


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