Skanska USA Building Inc. v. Regeneron Pharmaceuticals Inc.

Background

Skanska USA Building Inc. sued Regeneron Pharmaceuticals Inc. and later added Shawn’s Lawns Inc. (SLI) as a defendant. SLI asserted crossclaims against Regeneron for breach of an oral agreement and unjust enrichment. The crossclaims arose from construction work at Regeneron’s campus. SLI alleged that Skanska hired it under three subcontracts and that about $5,000,000 in retainage was being withheld in connection with those subcontracts.

SLI alleged that, while Regeneron and Skanska were negotiating the project’s closeout and the transfer of SLI’s work to a new construction manager, Regeneron asked SLI to propose continuing work directly under Regeneron. SLI submitted a proposal for additional work. According to SLI, Regeneron agreed to pay $437,402 for that work and the retainage, and directed SLI to perform the work. SLI performed it, was later paid $437,402 through the new construction manager, but alleged that Regeneron did not pay the retainage.

Leave to Amend

SLI filed a cross-motion for permission to amend its answer and crossclaims. Regeneron argued that SLI had already used its one amendment as of right and that its new pleading should be stricken because SLI filed it without permission or consent.

The court agreed that SLI needed the court’s permission to amend again. Applying the rule that permission to amend should generally be freely given when justice requires, the court granted SLI leave to amend. The court found that the amendment would not cause undue delay, would cause minimal prejudice to Regeneron, asserted the same two crossclaims, and was not made in bad faith or for an improper delaying purpose. The court treated SLI’s Second Amended Crossclaims as the pleading addressed by Regeneron’s motion to dismiss.

Motion to Dismiss the Oral-Agreement Claim

Regeneron moved to dismiss SLI’s claim that Regeneron breached an oral agreement to pay the retainage. Regeneron argued that SLI had not adequately alleged an agreement and that any promise by Regeneron to pay a debt owed by Skanska was unenforceable under New York’s Statute of Frauds, which generally requires certain promises to be in writing.

The court denied dismissal of this claim. It held that SLI had plausibly alleged an oral agreement by asserting that SLI offered to perform additional work in exchange for $437,402 and the retainage, that Regeneron agreed to those terms, and that Regeneron directed SLI to perform. SLI also alleged that it performed the work, received the $437,402, and was not paid the retainage.

The court also rejected dismissal based on the Statute of Frauds at this stage. Although the subcontract stated that Skanska owed SLI the retainage, the court accepted SLI’s allegation that Regeneron agreed to pay the retainage in exchange for SLI’s additional work. The court concluded that this alleged exchange supplied new consideration benefiting Regeneron and meant the alleged promise was not subject to the Statute of Frauds on the pleadings before the court. Regeneron could raise that defense later if discovery did not support SLI’s allegations.

Motion to Dismiss the Unjust-Enrichment Claim

SLI also claimed that Regeneron was unjustly enriched because it received the benefits of SLI’s additional work without paying SLI. Regeneron argued that SLI had been paid $437,402 for that work and therefore had not shown that Regeneron received a benefit at SLI’s expense.

The court granted dismissal of the unjust-enrichment claim. SLI alleged that it was not paid for the additional work, but its other allegations established that it had in fact received the $437,402 payment for that work. The court concluded that Regeneron’s alleged failure to pay the separate retainage did not show that Regeneron received the benefit of the additional work at SLI’s expense.

Disposition

Judge Philip M. Halpern granted SLI’s cross-motion for leave to amend. Regeneron’s motion to dismiss the crossclaims was granted in part and denied in part: it was denied as to SLI’s first crossclaim for breach of an oral agreement and granted as to SLI’s second crossclaim for unjust enrichment. The court directed the Clerk of Court to terminate the pending motion sequences at Documents 119 and 121.