MEMORANDUM AND ORDER
JULIE A. ROBINSON, District Judge.
This action is presently before the court upon the following motions: third-party defendant Materials Management, Inc.'s motion to dismiss BSC Steel, Inc.'s third-party complaint; and (2) plaintiff/counterclaim defendant W&W Steel, LLC and third-party defendant Liberty Mutual Insurance Company's motion to dismiss BSC Steel, LLC's second amended counterclaim Counts I, II, IV, V, VI, VII, VIII, IX, X and XI. Having carefully reviewed the arguments of the parties, the court is now prepared to rule.
This case arises out of the construction of the Irwin Army Community Hospital located on Fort Riley, Kansas. Balfour-Walton Joint Venture (BWJV) served as the general contractor on the project. BWJV subcontracted a portion of the work to W & W Steel, LLC. W&W agreed to perform the steel erection of the general contract work on the project. W&W then subcontracted some of its work to Materials Management, Inc. (MMI). MMI then entered into a contract with BSC Steel, LLC for the steel erection. Liberty Mutual Insurance Company issued a payment bond in connection with the subcontract between Balfour-Walton and W&W.
W&W filed its complaint in this case on November 8, 2011 against BSC and Jay Patel. BSC and Patel filed its answer on January 13, 2012. Along with its answer, BSC also filed a counterclaim against W&W and third-party claims against Marcus Salazar, MMI and Liberty Mutual. W&W and Liberty Mutual filed a motion to dismiss on February 24, 2012. Salazar and MMI each filed a motion to dismiss on March 30, 2012. MMI also filed its answer on March 30, 2012. On April 6, 2012, BSC sought to amend its counterclaims and third-party complaint. On May 18, 2012, Magistrate Judge Sebelius granted in part and denied in part BSC's motion to amend. BSC eventually filed an amended answer with amended counterclaims and amended third-party complaint on June 12, 2012. MMI, W&W and Liberty Mutual filed the instant motions to dismiss on June 26, 2012. On December 17, 2012, the court denied the earlier motions to dismiss filed by MMI, W&W and Liberty Mutual. In that order, the court noted that it would consider the arguments raised by MMI in that motion on Counts I, VIII and IX in determining MMI's later filed motion to dismiss.
The amended counterclaims and amended third-party complaint filed by BSC contain eleven counts. The eleven counts are as follows: (I) Alter Ego-counterclaim against W&W and a third-party claim against MMI; (II) Breach of Contract as Third-Party Beneficiary-counterclaim against W&W; (III) Breach of Contract-third-party claim against MMI; (IV) Negligent Misrepresentation-counterclaim against W&W and third-party claim against MMI; (V) Quantum Meruit/Unjust Enrichment-counterclaim against W&W; (VI) Promissory Estoppel-counterclaim against W&W; (VII) Suit on Bond-third-party claim against Liberty Mutual; (VIII) Kansas Fairness in Public Construction Contract Act-counterclaim against W&W and third-party claims against MMI and Liberty Mutual; (IX) Federal Prompt Payment Act-counterclaim against W&W and third-party claims against MMI and Liberty Mutual; (X) Fraudulent Misrepresentation-counterclaim against W&W; and (XI) Kansas Fairness in Private Construction Contract Act-counterclaim against W&W and third-party claims against MMI and Liberty Mutual.
In its motion to dismiss, MMI contends that Counts IV and XI of BSC's amended third-party complaint should be dismissed for failure to state a claim upon which relief can be granted. MMI further argues that Counts I, VIII and IX of BSC's original complaint should also be dismissed for failure to state a claim upon which relief can be granted.
W&W and Liberty Mutual seek to dismiss most of the claims asserted by BSC. They contend that Counts I, II, IV, V, VI, VII, VIII, IX, X and XI fail to state claims upon which relief can be granted. W&W and Liberty Mutual raise essentially the same arguments as those asserted by MMI concerning Counts I, IV, VIII, IX and XI. The court will address those arguments with the contentions asserted by MMI. W&W and Liberty Mutual contend that BSC's claim of quantum meruit and unjust enrichment in Count V must be dismissed because BSC has failed to allege that it expected to get paid by W&W. W&W and Liberty Mutual further contend that BSC's claim of promissory estoppel in Count VI must be dismissed because the oral promises alleged do not constitute a valid and enforceable contract. Liberty Mutual then argues BSC's claim based upon the payment bond in Count VII must be dismissed because BSC has failed to state a claim against W&W. Thus, since none of the claims in the second amended counterclaims state a claim against W&W, then BSC cannot assert a claim of derivative liability against it. Lastly, W&W and Liberty Mutual contend that BSC's claim of fraudulent misrepresentations in Count X must be dismissed because BSC has failed to meet the pleading requirements of Fed.R.Civ.P. 9(b).
The court will dismiss a cause of action for failure to state a claim only when the factual allegations fail to "state a claim to relief that is plausible on its face, " Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570 (2007), or when an issue of law is dispositive. Neitzke v. Williams , 490 U.S. 319, 326 (1989). The complaint need not contain detailed factual allegations, but a plaintiff's obligation to provide the grounds of entitlement to relief requires more than labels and conclusions; a formulaic recitation of the elements of a cause of action will not do. Bell Atlantic , 550 U.S. at 555. The court must accept the facts alleged in the complaint as true, even if doubtful in fact, id. at 556, and view all reasonable inferences from those facts in favor of the plaintiff, Tal v. Hogan , 453 F.3d 1244, 1252 (10th Cir. 2006). Viewed as such, the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic , 550 U.S. at 555 (citations omitted). The issue in resolving a motion such as this is "not whether [the] plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims." Swierkiewicz v. Sorema N.A. , 534 U.S. 506, 511 (2002) (quoting Scheuer v. Rhodes , 416 U.S. 232, 236 (1974)).
A. Count I
In Count I of its second amended counterclaims against W&W, BSC alleges that W&W is the alter ego of MMI with regard to the contract that BSC entered into with MMI. Therefore, BSC asserts that (1) the MMI corporate form should be disregarded; (2) the MMI-BSC subcontract should be disregarded and collapsed into the W&W-MMI contract; and (3) BSC should be deemed the subcontractor of that W&W-MMI contract.
MMI contends that BSC has failed to allege sufficient facts that would support the legal conclusion that MMI is the alter ego of W&W. MMI argues that BSC has failed to allege facts showing that MMI and W&W were functioning as "a single entity." Specifically, MMI points out that BSC has not alleged that MMI shares officers, office space, or other resources with W&W. They further note that BSC has not alleged any of the traditional indica of alter ego status such as common ownership, common control, financial dependence, undercapitalization, shared payment of losses, salaries and expenses, the absence of an independent business existence, and the absence of independently owned assets.
W&W argues that BSC has failed to allege the necessary factors for the application of the alter ego theory. W&W suggests that close project oversight by W&W of BSC and MMI does not suffice to trigger the alter ego doctrine so that a party's corporate form can be disregarded. W&W also contends that BSC has failed to alleged that it suffered any specific harm or injustice from the alleged domination of MMI by W&W.
BSC contends that facts alleged in the complaint are sufficient for the court to find that it is plausible that MMI is the alter ego of W&W. BSC points to the following alleged facts: (1) MMI is not a corporate entity but rather a trade name under which Marcus Salazar and/or Mortgage Management, Inc. does business; (2) MMI was an undercapitalized entity that W&W used and controlled to enter into a subcontract with BSC; (3) MMI did not have sufficient funds or resources to carry out the terms of the MMI-BSC subcontract; (4) W&W performed all of MMI's responsibilities under the subcontract including negotiating with BSC on the scope or price of the work, scheduling and managing BSC's work, discussing with BSC the design deficiencies or others, receiving and reviewing BSC's daily logs and reports, reviewing and submitting BSC's pay applications to BWJV, paying BSC directly, and communicating with BWJV regarding all aspects of the steel fabrication and erection at the project. BSC suggests that W&W used MMI as a facade for W&W's operations because it needed the services of a company that could be reported as a minority-owned business. BSC suggests that MMI was used by W&W to promote injustice and fraud upon it, suggesting that W&W now seeks to use the MMI-BSC subcontract as a sword for recovery from BSC while simultaneously using the MMI-BSC subcontract as shield to insulate W&W from BSC's claim for payment it is owed. BSC argues that the key factor is the level of control evidenced by the actual relationship of the parties and the mere existence or nonexistence of formal stock ownership is not necessarily conclusive.
The concept that one corporation can be found to be the alter ego of another corporation is well-settled in Kansas law:
The fiction of separate corporate identities of two corporations will not be extended to permit one of the corporations to evade its just obligations; to promote fraud, illegality, or injustice; or to defend crime. Under circumstances where the corporate entity is disregarded, the parent corporation may be held liable for the acts of the subsidiary.... The courts will disregard the fiction of a separate legal entity when there is such domination of finances, policy, and practices that the controlled corporation has no separate mind, will, or existence of its own and is but a business conduit for its principal.
Dean Operations, Inc. v. One Seventy Assocs. , 257 Kan. 676, 896 P.2d 1012, 1016 (1995).
In determining alter ego status, ten factors have identified as useful guidelines:
(1) whether the parent corporation owns all or a majority of the capital stock of the subsidiary; (2) whether the corporations have common directors or officers; (3) whether the parent corporation finances the subsidiary; (4) whether the parent corporation subscribed to all of the capital stock of the subsidiary or otherwise causes its incorporation; (5) whether the subsidiary has grossly inadequate capital; (6) whether the parent corporation pays the salaries or expenses or losses of the subsidiary; (7) whether the subsidiary has substantially no business except with the parent corporation, or no assets except those conveyed to it by the parent corporation; (8) whether in the papers of the parent corporation, and in the statements of its officers, the subsidiary is referred to as such or as a department or division; (9) whether the directors or executives of the subsidiary do not act independently in the interest of the subsidiary but take direction from the parent corporation; and (10) whether the formal legal requirements of the subsidiary as a separate and independent corporation are not observed.
Id., 896 P.2d at 1017.
No single factor is conclusive in determining whether to apply the alter ego doctrine. Id. at 1018. In order to arrive at a determination that one corporation is the alter ego of another, it must be shown that allowing the legal fiction of separate corporate structures results in an injustice. Id.
In assessing this issue, the court is only concerned with whether BSC has provided adequate allegations for the application of the alter ego doctrine. In its counterclaim and third-party complaint, BSC alleges in pertinent part that: (1) BSC submitted a bid to W&W to erect all steel for the project; (2) BSC ultimately agreed with W&W to perform the work for a sum of $3, 997, 800 plus extra of $62, 029; (3) BSC had no contact with MMI up to this point; (4) BSC then received a contract from W&W that provided that BSC would be contracting with MMI, rather than W&W; (5) after objection by BSC, W&W informed BSC that MMI would be the contractor in the BSC subcontract; (6) BSC was assured by W&W that it would be paid and its right to make a bond claim in the event of non-payment would not be impaired or affected if W&W was allowed to issue joint checks to BSC and MMI; (7) upon information and belief, W&W knew MMI was undercapitalized; (8) the BSC subcontract was prepared by W&W; (9) BSC raised certain concerns about the subcontract and those concerns were addressed by W&W; (10) MMI holds itself out as a Hispanic minority-owned small business; (11) upon information and belief, MMI does not bid against W&W for jobs and has no assets to pay the subcontractors with which W&W instructs MMI to enter contracts with except for the funds made available by W&W; (12) MMI and W&W purportedly signed a subcontract agreement in the amount of $4, 084, 829, which is only $25, 000 more than the BSC subcontract amount; (13) the MMI/W&W subcontract was a sham and had no legal purpose; (14) upon information and belief, the MMI/W&W subcontract was put in place for the purpose of (a) claiming minority status under the federal law, (b) using MMI as a facade for the operation of W&W, (c) positioning BSC so that it could not make a payment bond claim under the Miller Act, and (d) deceiving BSC into believing that W&W was entering into an arms-length transaction with MMI; (15) prior to and during the work on the project, BSC dealt with W&W in all aspects of the work while MMI was not involved in any of the matters; and (16) following its work on the project, BSC dealt with W&W about payment for its work and W&W responded to BSC's inquiries. Based upon these factual allegations, BSC contends that W&W and MMI acted as one, single entity because (1) W&W controlled and directed all aspects of BSC's work on the project; (2) MMI exerted no control over BSC with respect to the work on the project; and (3) W&W dominated MMI to such an extent that W&W should be regarded as the contractor and BSC should be regarded as the subcontractor under the MMI/W&W subcontract.
The court believes that BSC has adequately stated a claim for application of the alter ego doctrine. The various allegations made by BSC are sufficient to suggest that MMI is the alter ego of W&W. The application of the various factors noted above do not all point in one direction. Nevertheless, the alleged facts show that the policy and practices of the two corporations were such that MMI had "no separate mind, will, or existence of its own and is but a business conduit for its principal." The court is aware that the use of the alter ego doctrine to pierce the corporate veil is to be exercised reluctantly and cautiously. Pemco, Inc. v. Kansas Dept. of Revenue , 258 Kan. 717, 907 P.2d 863, 867 (1995). Whether the doctrine should be applied here must be based upon a consideration of the facts. Commerce Bank, N.A. v. Liebau-Woodall & Assocs. L.P. , 28 Kan.App.2d 674, 20 P.3d 88, 94 (2001). At this point, the court must deny this portion of the motions to dismiss filed by MMI and W&W.
B. Count II
In Count II, BSC alleges that, because W&W has third-party beneficiary status in relation to the MMI-BSC subcontract, W&W is also burdened with all of the duties and obligations of MMI to BSC under the MMI-BSC subcontract in the event of MMI's breach.
W&W contends that BSC's claim of breach of contract as a third-party beneficiary fails to state a claim upon which relief can be granted. W&W suggests that, although the Kansas courts have not addressed the legal issue framed by BSC in Count II, Kansas would follow the numerous other courts and jurisdictions that have addressed the issue and find that W&W's third-party beneficiary status under the MMI-BSC ...