Richard Goettle, Inc. v. Kevitt Excavating, LLC

Background

The City of Minneapolis hired Kevitt Excavating, LLC to perform excavation work on a downtown Minneapolis construction project. Richard Goettle, Inc. later entered into a subcontract with Kevitt to perform drilling work. After delays and payment disputes involving Kevitt, the project construction manager, and Goettle, Goettle sued Kevitt and Granite Re, Inc., Kevitt’s payment-bond surety, in Ohio state court.

Kevitt filed an answer and asserted five counterclaims against Goettle: two for breach of contract, one for offset and setoff, one seeking equitable relief, and one seeking a declaratory judgment. The case was removed to federal court in Ohio and then transferred to the District of Minnesota. The opinion states that the subcontract was signed in January 2019 and notes that the complaint’s reference to January 2018 appeared to be a typographical error.

Legal Standard

Goettle moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a pleading does not state a legally sufficient claim for relief. At this stage, the court generally treats well-pleaded factual allegations as true and asks whether they plausibly support relief.

Breach of Contract: Counts I and II

Goettle argued that Kevitt’s contract counterclaims failed because Kevitt had not alleged damages. The court agreed that damages are an element of a breach-of-contract claim under Minnesota law. But the court concluded that Kevitt had plausibly alleged damages, including damages exceeding $500,000 on one claim and $75,000 on the other. Kevitt also alleged damages related to project delays, Goettle’s alleged failure to contribute meaningfully to negotiations and settlement with the City, and Goettle’s alleged refusal to honor defense and indemnity obligations.

The court therefore denied Goettle’s motion to dismiss Counterclaim Counts I and II.

Offset and Setoff: Count III

Kevitt alleged that it had contractual and common-law rights to offset amounts it believed Goettle owed against amounts Goettle claimed Kevitt owed. Goettle argued that offset could not be asserted as an independent counterclaim. The court found no legal rule preventing such a counterclaim and concluded that Kevitt’s allegations were sufficient at the pleading stage.

The court therefore denied Goettle’s motion to dismiss Counterclaim Count III.

Equitable Relief: Count IV

Kevitt sought an order requiring Goettle to defend and indemnify Kevitt for $412,500 allegedly withheld from Kevitt’s contract with the City, along with attorneys’ fees, expenses, and expert fees. Goettle argued that equitable relief was unavailable because a contract governed the parties’ relationship.

The court granted Goettle’s motion to dismiss Counterclaim Count IV. It reasoned that equitable relief is unavailable when an adequate legal remedy exists and the parties’ rights are governed by a valid contract. At the hearing, counsel for both parties confirmed that a valid contract existed.

Declaratory Judgment: Count V

Goettle argued that Kevitt’s declaratory-judgment counterclaim should be dismissed because no viable claim remained between the parties. The court rejected that argument because Kevitt’s breach-of-contract counterclaims survived dismissal. The court therefore denied Goettle’s motion to dismiss Counterclaim Count V.

Disposition

The order states that Goettle’s motion to dismiss is granted in part and denied in part. The motion is granted as to Kevitt’s Counterclaim Count IV and denied as to Counterclaim Counts I, II, III, and V.