JSmith Civil, LLC v. Clancy & Theys Construction Co., Seaboard I, LLC, and Preston Ridge Holdings JV, LLC

Summary

The United States Bankruptcy Court for the Eastern District of North Carolina partially granted and partially denied defendants’ Rule 12(b)(6) motion to dismiss in an adversary proceeding involving construction-contract retainage, breach of contract, alternative quantum meruit and unjust enrichment claims, and disallowance of a bankruptcy claim. The court dismissed the § 542 turnover claim because the complaint did not plausibly allege a matured debt supported by an accounting, but allowed the breach-of-contract and alternative equitable claims to proceed. The court also held that the disallowance claim was timely under the deadline stated in the confirmation order and directed defendants to answer by April 1, 2026.

Holdings

1. The turnover claim was dismissed because the complaint did not plausibly allege a matured debt. Although it alleged accounts receivable that could constitute property of the bankruptcy estate, it did not provide progress-payment records or another method of accounting for the amounts claimed.
2. The breach-of-contract claim survived the motion to dismiss. The complaint plausibly alleged valid written contracts and a material breach based on defendants' failure to pay for construction services already rendered.
3. The quantum meruit and unjust enrichment claims survived because they were pleaded in the alternative and plausibly alleged that defendants received measurable construction benefits that were not conferred gratuitously.
4. The disallowance claim appeared timely because the Confirmation Order controlled over conflicting plan provisions and established a deadline two years after the petition date, September 19, 2025. The complaint was filed on that date.

Questions Presented

1. Whether the complaint plausibly stated a turnover claim under 11 U.S.C. § 542 for disputed construction-contract retainage without identifying a segregated fund or providing an accounting showing a matured debt.
2. Whether the complaint plausibly stated a North Carolina breach-of-contract claim by alleging valid written contracts and defendants' failure to pay for services rendered, despite the alleged noncompletion of the projects by plaintiff.
3. Whether alternative quantum meruit and unjust enrichment claims could proceed at the pleading stage despite the alleged existence of express contracts.
4. Whether the objection to Clancy & Theys Construction Co.'s proof of claim was timely under the Confirmation Order's two-year deadline measured from the petition date.

Disposition

other