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Sabre International Security v. Torres Advanced Enterprise Solutions, LLC
Citation: Not availableDocket: Civil Action No. 2011-0806
Court: District Court, District of Columbia; October 27, 2011; Federal District Court
Original Court Document: View Document
Sabre International Security ("Sabre"), a private Iraqi security firm, has filed a lawsuit against Torres Advanced Enterprise Solutions, Inc. ("Torres") for equitable relief and various claims including breach of contract and tortious interference. The case, Civil Action 11-806 (GK), is currently under consideration by the United States District Court for the District of Columbia. Sabre, which provides security services globally, won a U.S. Government contract (TWISS I Contract) to secure military installations in Iraq in 2007 and subsequently entered into a subcontractor agreement with Torres. Due to changes in U.S. Government policy requiring prime contractors to hold a Secret Level security clearance, Sabre, as a non-U.S. company, could not comply and thus entered into a novation on December 30, 2009, making Torres the prime contractor. Under this novation, two additional agreements were supposed to take effect upon government approval: a subcontract for security services and an equipment lease agreement. Sabre contends that it is entitled to pre-novation payment rates and claims Torres breached its obligations by failing to pay invoices and issue necessary orders post-novation. Additionally, Sabre and Torres entered a Teaming Agreement for bidding on another government contract (TWISS II Contract) in August 2009, where Torres was designated the prime contractor due to its holding of a Secret FCL, while Sabre served as the subcontractor based on its PSC License. The U.S. Government approved the novation on February 5, 2010.
The Sabre-Torres team successfully bid for a TWISS II Contract on August 25, 2009, and subsequently competed for multiple TWISS II Task Order Requests (TORs) issued by the Government for security services at military bases, securing several TORs through their proposals. Sabre filed a Complaint on April 29, 2011, followed by Torres's Motion for Dismissal and Partial Summary Judgment on May 27, 2011. Sabre opposed both motions on July 25 and July 26, 2011, respectively, and Torres replied on August 19, 2011.
The legal standard for a motion to dismiss under Rule 12(b)(6) requires a plaintiff to present enough factual allegations to support a plausible claim for relief, avoiding mere conclusory statements. Courts must accept all allegations as true and draw reasonable inferences in favor of the plaintiff. Additionally, under Federal Rule of Civil Procedure 56, summary judgment can only be granted if there are no genuine disputes regarding material facts, meaning that reasonable evidence could support a verdict for the non-moving party. A fact is considered material if it could influence the case's outcome based on applicable law.
Rule 56(c) requires summary judgment against a party that fails to demonstrate the existence of an essential element of their case, with the burden of proof at trial resting on that party. The Supreme Court clarifies that once the moving party meets its burden, the opposing party must do more than show mere doubt about material facts; if the evidence does not permit a rational fact-finder to rule for the nonmoving party, there is no genuine issue for trial. A simple factual dispute does not preclude summary judgment if there is no genuine issue of material fact. The judge's role at this stage is not to weigh evidence or determine truth but to identify whether a genuine issue for trial exists.
In the case at hand, Sabre's Complaint encompasses two categories of claims: the TWISS I claims, which allege Torres’ failure to pay invoices and issue Subtask Orders under the TWISS I Contract, and the TWISS II claims, involving breach of the Teaming Agreement, unjust enrichment, and tortious interference. Torres seeks dismissal and/or summary judgment of both claim sets under Rule 12(b)(6). Notably, Count 7 involves a claim for breach of the implied covenant of good faith regarding the Teaming Agreement, which Torres does not explicitly contest, rendering further examination unnecessary. Count 5 brings an unrelated breach of contract claim concerning unpaid security services in Iraq, to which Torres has not objected.
For the TWISS I claims, Sabre requests: (1) specific performance of various agreements by issuing TWISS I Subtask Orders and providing an accounting; (2) a declaration of rights under the agreements; and (3) a preliminary injunction against the destruction of TWISS I documents, alongside the appointment of an auditor to review Torres’ records related to the APA and outstanding payments to Sabre.
Torres seeks to dismiss Sabre's claims based on two arguments. First, Torres contends that Sabre lacks a contractual right to pre-novation payment rates under the Asset Purchase Agreement (APA), the APA Sabre Services Subcontract, and the APA Sabre Lease Agreement, asserting these documents do not support Sabre's claims (Torres MTD 12-17). Torres also points out that Sabre failed to allege that the subcontract and lease agreement were executed (Torres MTD 13-14). In contrast, Sabre argues that Torres's challenge is subject to an arbitration agreement within the APA and that the court should defer to arbitration. However, Sabre's request for equitable relief necessitates the court's determination of its entitlement to pre-novation payment rates, which contradicts its arbitration claim. Torres's failure to fully pay Sabre’s post-novation invoices is deemed a breach of the APA and related agreements. Sabre asserts that it can only achieve relief through specific performance of the contractual terms.
Regarding Torres's second argument, that Sabre cannot seek equitable relief due to having adequate legal remedies, Torres claims Sabre has not responded to this point concerning the TWISS I claims, effectively conceding the matter (CSX Transp. Inc v. Commercial Union Ins. Co., 82 F.3d 478, 482-83 (D.C. Cir. 1996); Maib v. FDIC, 771 F. Supp. 2d 14, 20 (D.D.C. 2011)). Consequently, the court grants Torres's motion to dismiss Counts 11-14, affirming that Sabre has an adequate remedy at law.
In the TWISS II Claims, Sabre seeks equitable relief in Count 1, specifically a constructive trust and injunctive relief, due to Torres' alleged failure to pay the full amount owed under the Teaming Agreement. Torres contests Count 1 by arguing that Sabre has an adequate legal remedy, thus negating the need for equitable relief. Torres maintains that Sabre's claims are primarily contract-based and, therefore, do not warrant such relief under D.C. law, which states that equitable remedies are not granted when an adequate legal remedy exists. Sabre counters that the requested equitable remedies are essential to address Torres' fiduciary violations and to ascertain the use of Sabre's funds.
The Court finds that if Sabre prevails on its breach of contract claim, it could receive adequate legal remedies, including monetary damages, thus dismissing the request for a constructive trust. Regarding the injunctive relief, the Court notes that Sabre has not sufficiently demonstrated the necessary criteria for obtaining such relief, nor has it pursued a prior motion for it. As a result, Count 1 is dismissed.
In Counts 1 and 2, Torres also argues for dismissal based on failure to state a claim. The distinction between express contracts, which have clearly stated terms, and implied-in-fact contracts, which arise from mutual understanding not explicitly articulated, is highlighted. The Court's evaluation is based on the alleged conduct and understanding of the parties involved.
To establish a claim for breach of an implied-in-fact contract, the plaintiff must show that services were performed under circumstances indicating (1) the recipient understood they were for him, not someone else, and (2) the services were expected to be compensated rather than rendered gratuitously. Torres contends that Sabre failed to allege that Torres accepted its bid for the TWISS II work, thus lacking an enforceable agreement regarding pricing. In response, Sabre claims it has adequately alleged the existence of such an agreement based on express or implied terms. Sabre asserts that between December 31, 2009, and September 25, 2010, the U.S. Government solicited pricing proposals for TWISS II from Torres, to which Sabre provided its scope and pricing. Sabre claims Torres included its pricing in proposals to the U.S. Government, leading to the awarding of fixed-price Task Orders for seven military bases. After receiving these Task Orders, Torres issued Notices to Proceed to Sabre, which Sabre interprets as an acceptance of its pricing, making Torres legally bound to compensate Sabre regardless of whether a subtask order was issued. Sabre commenced work based on these Notices, alleging Torres had full knowledge and consent of its actions. Sabre maintains that it has sufficiently demonstrated an implied-in-fact contract. Consequently, Torres' motion to dismiss Counts 1 and 2 is denied. Regarding summary judgment, Torres argues that no agreement was made on pricing terms for Sabre's invoices, asserting that the Notices to Proceed do not constitute an agreement, as they were issued by the U.S. Government and did not indicate Torres' acceptance of Sabre's proposed prices.
A genuine issue of material fact exists regarding the role of the Notices to Proceed in the parties' dealings, despite Torres’ description of them. Sabre CEO Sumeet Mehta asserts that Torres provided notifications to Sabre to commence work following the U.S. Government's directive, which Torres refers to as the "Notice to Proceed" in the Complaint. Torres contends that the lack of TWISS II Subtask Orders indicates that it did not accept Sabre’s pricing proposals. While it is agreed that Torres did not issue such orders as required by the Teaming Agreement, it remains disputed whether this absence signaled Sabre that Torres rejected the pricing. Consequently, the Court denies Torres’ motions to dismiss and for summary judgment on Counts 1 and 2.
In Counts 3 and 4, Sabre claims that Torres violated the Teaming Agreement by failing to convene the Management Committee after the Government indicated it would take adverse action due to delays and by unilaterally waiving the Team's right to dispute a $1.1 million penalty. Additionally, Sabre alleges that Torres did not adequately inform it of Government inquiries regarding Sabre's request for a $400,000 equitable adjustment, stemming from costs related to a Government stop work order. Torres argues that these counts should be dismissed due to a lack of proximate cause. However, Sabre contends that Torres’ actions directly impacted its ability to negotiate and succeed in its equitable adjustment claim, thereby establishing proximate cause. The Court denies Torres' motion to dismiss Counts 3 and 4.
In Count 6, Sabre seeks a declaration concerning its rights under the Teaming Agreement, which Torres claims was terminated on June 20, 2010, due to Sabre’s failure to respond to pricing inquiries. Sabre disputes this termination and asserts that there are genuine issues of material fact that prevent summary judgment on this matter.
A material dispute exists regarding the requirement of the Teaming Agreement for Torres to produce requested information, necessitating resolution to determine if the Agreement was terminated on June 20, 2010. Consequently, Torres’ motion for summary judgment on Count 6 is denied, as Torres has not sought a dismissal under Rule 12(b)(6).
In Count 8, Sabre claims unjust enrichment under D.C. law, which requires proof that the plaintiff conferred a benefit on the defendant, the defendant retained that benefit, and its retention is unjust. Torres argues that Sabre's complaint does not adequately allege that Sabre conferred a benefit related to specific Task Orders. However, Sabre asserts that Count 8 includes claims beyond the limited scope Torres identifies, covering all relevant TWISS II Task Orders. The complaint alleges Sabre is entitled to payment for work Torres procured for itself, violating the Teaming Agreement, including at Camp Shield, FOB Cruz-Morris, and FOB Gary Owen. The Court finds that Count 8 encompasses broader allegations, not restricted to the mentioned Task Orders, and that Sabre has sufficiently claimed that Torres unjustly retained benefits from these projects, leading to a denial of Torres' motion to dismiss Count 8.
In Count 9, Sabre alleges tortious interference with prospective economic advantage, requiring proof of a valid business relationship, expectancy, and the interferer's knowledge of this relationship.
To establish a claim for tortious interference with prospective economic advantage, a plaintiff must demonstrate: (1) intentional interference causing a breach or termination of a relationship or expectancy, (2) resultant damages, and (3) that the business expectancies are commercially reasonable and not grounded in existing contracts. In the case at hand, Sabre alleges that Torres failed to state a claim because: (1) expectations related to task orders issued before the June 20, 2010 termination were based on an existing contract, the Teaming Agreement; (2) any expectations regarding task orders issued after the termination were legally unreasonable; and (3) Sabre did not sufficiently show Torres had the intent to disrupt its economic expectations.
Sabre's claims focus on its expectations of future competition for U.S. Government contracts in the private security sector and collaboration with current suppliers. It contends that Torres concealed an internal decision to become a direct competitor, which interfered with Sabre's relationships with labor and logistical suppliers by withholding payments. The court finds that these allegations, taken as true for the motion to dismiss, indicate Torres had a strong intention to interfere with Sabre’s reasonable future expectations.
In Count 10, Sabre claims Torres tortiously interfered with its business relations, mirroring the elements required in Count 9. Torres argues that Sabre has not specifically identified the business relations affected by the interference. The court denies Torres’ motion to dismiss Count 9, while Count 10 remains under scrutiny for specificity in the allegations.
Sabre's Complaint includes detailed allegations of interference by Torres with Sabre's business relationships, specifically with Third Country National (TCN) labor suppliers in Africa. Sabre claims that Torres encouraged the Camp Shield logistics workforce to collectively terminate their contracts with Sabre, which were intended to provide qualified TCNs as TWISS II guards and logistical support. These allegations clearly identify the third parties involved, satisfying the requirements for a claim of tortious interference with business relations, as established in Williams v. Fed. Nat’l Mortg. Ass’n. Consequently, the Court denies Torres’ motion to dismiss Count 10. Torres did not seek summary judgment on this count. The Court grants Torres’ Motion to Dismiss and for Partial Summary Judgment concerning Counts 1 and 11 while denying it for all other counts. An accompanying Order will follow this Memorandum Opinion.