J&A Concrete Corp. v. Dobco, Inc., ET AL.

Background

Dobco contracted with the New York City Department of Design and Construction to provide general-contractor services for a police-station project. Dobco then subcontracted certain concrete work to J&A Concrete Corp. for $3.9 million. The subcontract required J&A to obtain a performance bond for Dobco’s benefit. Arch Insurance Company issued that bond, and J&A and its indemnitors signed an indemnity agreement requiring them to reimburse Arch if Dobco successfully made a bond claim.

J&A later told Dobco that it was terminating the subcontract because, in J&A’s view, Dobco had failed to pay for work. J&A stopped working, Dobco terminated the subcontract, and Dobco made a claim on the bond. Arch and Dobco later settled that claim for $3.9 million. The settlement reserved Arch’s rights concerning J&A’s dispute over whether Dobco properly terminated the subcontract. In a separate 2025 settlement, J&A and its indemnitors agreed to pay Arch $3.75 million to resolve their indemnity obligations, and Arch assigned them its rights against Dobco.

The court had previously set October 31, 2022, as the deadline to seek permission to amend the pleadings. After the 2025 settlement with Arch, J&A and its indemnitors moved to add two claims against Dobco: unjust enrichment and breach of contract/recoupment. The court’s earlier summary-judgment ruling had granted Dobco summary judgment dismissing J&A’s existing breach-of-contract and equitable claims, granted Dobco summary judgment on liability for its counterclaims, denied J&A’s summary-judgment motion, and denied Dobco summary judgment on its declaratory-judgment counterclaim.

The Parties’ Arguments

Dobco argued that the amendment should be denied because the J&A Parties did not act diligently before the amendment deadline, because adding claims after discovery and summary judgment would unfairly prejudice Dobco, and because both proposed claims were futile. A proposed amendment is futile when the new claim could not legally succeed.

The J&A Parties argued that their new claims did not arise until they entered the 2025 settlement with Arch. They asserted that Dobco received more from Arch than it spent completing J&A’s work and that the difference was an improper windfall. They also argued that Arch’s assignment gave them the right to seek recoupment of that difference.

Court’s Analysis

Good cause. Because the amendment deadline had passed, the J&A Parties had to show good cause under Federal Rule of Civil Procedure 16(b)(4). The court found good cause. It concluded that the unjust-enrichment claim did not become ripe until the J&A Parties paid Arch under the 2025 settlement, because before then they did not have a claim for money Arch had allegedly paid Dobco in excess of completion costs. The proposed recoupment claim belonged to Arch until the assignment, so the J&A Parties could not have asserted it earlier. The court also found that they sought permission to amend promptly after the assignment.

Prejudice. The court rejected Dobco’s argument that the amendment would cause undue prejudice. Although discovery had closed and the case was approaching trial, most evidence concerning the cost of completing the subcontract was already in the record. The court found that any additional discovery concerning the Arch-J&A settlement would be limited and that the new claims arose from the original transaction.

Unjust enrichment. Under New York law, unjust enrichment generally requires a benefit to the defendant, at the plaintiff’s expense, and circumstances making restitution required by fairness. The court held that the proposed claim was futile because the indemnity agreement governed the J&A Parties’ responsibility for Arch’s settlement payment. That agreement gave Arch the exclusive right to decide whether to pay or settle bond claims and required the J&A Parties to indemnify Arch for losses up to the bond’s $3.9 million amount. Arch exercised that authority when it settled with Dobco. Because the indemnity agreement governed the disputed payment, the J&A Parties could not use an unjust-enrichment claim against Dobco to recover that money.

Breach of contract/recoupment. The court also held that the proposed recoupment claim was futile. The Arch-Dobco settlement reserved rights concerning whether Dobco’s termination of the subcontract was proper. The court read that language narrowly: it reserved rights about the lawfulness of the termination, not a general right to challenge whether the amount Dobco received exceeded the cost of completing J&A’s work. Because the J&A Parties received their rights through Arch, they could acquire no greater rights than Arch possessed. The court therefore concluded that the assignment did not permit the J&A Parties to seek recoupment based solely on an alleged overpayment.

Disposition

The court denied the J&A Parties’ motion to amend. It directed the Clerk to close the motion. The opinion did not state that the motion was denied with prejudice or without prejudice.