The United States of America v. Visionary Construction, Inc. et al

1
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
THE UNITED STATES OF AMERICA
FOR THE USE AND BENEFIT OF
GECON CONSTRUCTION
INCORPORATED,
Plaintiff,
v.
VISIONARY CONSTRUCTION, INC.
D/B/A VISIONARY SERVICES, et al.
Defendant.
Civil No. 25-1044 (RAM) (MBA)
REPORT AND RECOMMENDATION
Plaintiff United States of America for the use and benefit of Gecon Construction Incorporated
(“Gecon”) brought this civil action against Visionary Construction, Inc. (“Visionary”) and the Great
Midwest Insurance Company (“Great Midwest”) alleging, among others, violations of the Miller Act,
40 U.S.C. §§ 3131-3134. (ECF No. 23). Gecon seeks compensation for the expenses incurred in the
labor, management, and materials for the projects “2017 PR FS Hurricane Irma (Trails) Repair
Project” and “Rehabilitations of La Mina and Big Tree Trail” (“the Projects”) as well as its fees, lost
profits, and damages. (Id.). Gecon also asserted a cause of action for breach of contract and, in the
alternative, equitable estoppel and unjust enrichment. (Id. at 8). Great Midwest moved to dismiss for
failure to state a claim upon which relief could be granted under Federal Rule of Civil Procedure
12(b)(6). (ECF No. 28). Gecon then filed the First Amended Complaint and opposed Great Midwest’s
Motion to Dismiss arguing that it was moot. (ECF Nos. 23, 24). U.S. District Judge María Antongiorgi-
Jordán emitted an order finding Surety’s Motion to Dismiss moot. (ECF No. 25). Great Midwest then
filed a Motion to Dismiss the First Amended Complaint pursuant to Federal Rule of Civil Procedure
12(b)(6). (ECF No. 28). Gecon opposed. (ECF No. 33). Great Midwest replied to Gecon’s response
in opposition. (ECF No. 43). U.S. District Judge María Antongiorgi-Jordán referred the motion to
Case 3:25-cv-01044-RAM-MBA Document 57 Filed 01/09/26 Page 1 of 9

2
dismiss to me for a Report and Recommendation. (ECF No. 29). The case was later transferred to the
docket of U.S. District Judge Raúl M. Arias-Marxuach. (ECF No. 47).
For the reasons set forth below, I recommend the motion to dismiss be GRANTED in part
and DENIED in part.
BACKGROUND1
Co-defendant Visionary is the prime contractor for the Projects and furnished a performance
and payment bond from co-defendant Great Midwest for the Projects. (ECF No. 23 ¶¶ 7-8). Gecon
and Visionary entered into a Third-Party Subcontract Agreement (“the Subcontract”) with an effective
date of December 28, 2023, making Visionary a first-tier subcontractor. (Id. ¶ 11). Under the
Subcontract, the parties agreed that Gecon would manage and supervise the Projects. (Id.). Pursuant
to its obligations, Gecon incurred expenses including, but not limited to, labor, materials, supervision,
and the hiring of subcontractors. (Id. ¶ 13). On January 26, 2024, Visionary summarily terminated the
Subcontract without prior notice or cause and in violation of the Subcontract. (Id. ¶ 14). Gecon has
yet to be paid by Visionary for its “incurred expenses for labor, materials, management, supervision,
subcontract coordination, and other related expenses related to the management and performance of
the Projects.” (Id. ¶ 18). Gecon was also not paid for the promised “two-week draws towards its overall
fee” or its share of the net profits (Id. ¶¶ 19-20). In addition, Visionary caused Gecon damages in the
form of attorneys fees when it had to nullify Visionary’s credit card payment reversals “[a]s part of
Visionary’s unauthorized and illegitimate termination of Gecon.” (Id. ¶¶ 21, 23).
Gecon brought suit claiming the Miller Act allows it “to recover 50% of the net profit of the
Projects as its fee . . ., which the Plaintiff estimates to be $1,141,651.62” and “its expenses incurred
on the Project.” (ECF No. 23 ¶¶ 25-26). Or, in the alternative, “a reasonable amount or expenses
incurred in labor, materials, management, supervision, and subcontractor coordination, and other
expenses related to the management and performance of the Projects . . . including but without
limitation to the two (2) initial two-week draws towards Gecon’s overall fee for its management and
supervision services under the Subcontract, each in the amount of $65,000” jointly and severally from
1 For purposes of the Great Midwest’s motion to dismiss, the facts are taken from Gecon’s Amended
Complaint, ECF No. 23, and are presumed to be true.
Case 3:25-cv-01044-RAM-MBA Document 57 Filed 01/09/26 Page 2 of 9

3
Visionary and Great Midwest.2 (Id. ¶ 27).
STANDARD OF REVIEW
To survive a motion to dismiss at the pleading stage, “an adequate complaint must provide
fair notice to the defendants and state a facially plausible legal claim.” Ocasio-Hernández v. Fortuño-Burset,
640 F.3d 1, 12 (1st Cir. 2011). In evaluating a motion to dismiss, the court first sorts out and discards
any “‘legal conclusions couched as fact’ or ‘threadbare recitals of the elements of a cause of action.’”
Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)) (alteration marks omitted). The remaining
“[n]on-conclusory factual allegations” are fully credited, “even if seemingly incredible.” Id. Taken
together, they must “state a plausible, not a merely conceivable, case for relief.” Id. At the same time,
courts must not “forecast a plaintiff’s likelihood of success on the merits.” Id. Essentially, “[w]here a
complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line
between possibility and plausibility of ‘entitlement to relief.’” Ashcroft v. Iqbal, 556 U.S. 662, 678.
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557). The Court’s evaluation of the allegations and
determination of plausible entitlement for relief must be irrespective of the credibility or improbability
of said facts and the likelihood of the Plaintiff’s success on the merits. Ocasio-Hernández, 640 F.3d at
12-13. Finally, when “a complaint’s factual allegations are expressly linked to—and admittedly
dependent upon—a document (the authenticity of which is not challenged), that document effectively
merges into the pleadings and the trial court can review it in deciding a motion to dismiss under Rule
12(b)(6).” Beddall v. State St. Bank & Tr. Co., 137 F.3d 12, 17 (1st Cir. 1998).
ANALYSIS
Great Midwest’s motion to dismiss is premised on its position that the amended complaint
still fails to state a valid claim for relief. As to the Miller Act, it contends that Gecon “does not seek
payment for work and materials supplied in the execution of a federal construction contract.” (ECF
No. 43 at 1). Instead, Great Midwest claims that Gecon “seeks contractual damages for Visionary’s
breach of contract when it failed to pay the plaintiff its part of a profit-sharing agreement.” (Id.). Great
Midwest then takes a kitchen sink approach to the remaining claims, arguing they are waived, meritless,
2 Great Midwest filed a crossclaim against Visionary and two of its officers. (ECF No. 34).
Case 3:25-cv-01044-RAM-MBA Document 57 Filed 01/09/26 Page 3 of 9

4
and unsupported. (ECF No. 28). Ultimately, Great Midwest seeks dismissal of the complaint in its
entirety without a further opportunity to amend. (Id.). For its part, Gecon disagrees with Great
Midwest’s arguments, but asks in the alternative for leave to amend the complaint. (ECF No. 33).
Upon review of the parties’ filings, I agree that Gecon, in part, raises a valid claim under the Miller
Act against Great Midwest. However, Gecon’s remaining allegations fail to state valid claims for relief
against Great Midwest. Therefore, I recommend that Great Midwest’s motion to dismiss be granted
in part and denied in part. I address each claim in turn.
A. The Miller Act claim
Insofar as Gecon seeks compensation for expenses regarding labor and materials it expended
for the Projects, it raises a valid claim for relief under the Miller Act. The Miller Act’s purpose is “to
protect persons supplying labor and material for the construction of federal public buildings in lieu of
the protection they might receive under state statutes with respect to the construction of nonfederal
buildings.” United States ex. Rel. Sherman v. Carter, 353 U.S. 210, 216-17 (1957). To that end, the Miller
Act requires, among others, that “[b]efore any contract of more than $100,000 is awarded for the
construction, alteration, or repair of any public building or public work of the Federal Government, a
person must furnish to the Government . . . a payment bond with the surety satisfactory to the officer
for the protection of all persons supplying labor and material in carrying out the work.” 40 U.S.C.
§ 3131(b)(2); United State ex rel. Water Works Supply Corp. v. George Hyman Constr. Co., 131 F.3d 28, 31
(1st Cir. 1997). The Miller Act then gives a right to sue to “[e]very person that has furnished labor or
material in carrying out work provided for in a contract for which a payment bond is furnished . . .
that has not been paid in full within 90 days.” 40 U.S.C. § 3131(b)(2).
Here, the allegations provided by Gecon state a claim for which relief could be granted under
the Miller Act. Co-defendant Visionary is the prime contractor for the Projects and furnished the
payment and performance bonds for which Great Midwest is the surety. (ECF No. 23 ¶¶ 7-8). Gecon
and 	Visionary 	entered 	into 	the 	Subcontract 	which 	established 	that 	Gecon 	would 	provide
“management and supervision” to Visionary for the Projects. (Id. ¶ 11). Per the Subcontract, Visionary
promised to “reimbursed Gecon for expenses it incurred on the Projects.” (Id. ¶ 12(f); ECF No. 23-1
at 2). Gecon “promptly began performing its obligations under the Subcontract,” and incurred
Case 3:25-cv-01044-RAM-MBA Document 57 Filed 01/09/26 Page 4 of 9

5
“expenses for labor, materials, subcontractors, management, supervision, subcontractor coordination,
and other expenses related to the management and performance of the Projects.” (ECF No. 23 ¶ 13).
Gecon and a second-tier subcontractor continued supplying labor and performing work at the Projects
even after the Subcontract was terminated on January 26, 2024. (Id. ¶¶ 14-16). On that day, “Gecon’s
superintendent Chad Caldwell was performing services for and on behalf of Gecon overseeing the
work under the Subcontract being performed by Gecon’s second-tier subcontractor.” (Id. ¶ 15). Thus,
the amended complaint sufficiently alleges that Gecon provided labor and materials for which it has
yet to be paid. (Id. ¶ 18). Not only did Gecon place its superintendent on site confirming labor, but
the amended complaint also includes factual allegations in support of its expenses allegations.
Specifically, Gecon alleges that Visionary also “reversed the charges on several credit card payments
made to Gecon,” which were “pass-through payments to Gecon’s subcontractor.” (Id. ¶ 21). These
allegations are sufficient to plausibly establish a cause of action. See Ocasio-Hernández, 640 F.3d at 12
(“[A]n adequate complaint must provide fair notice to the defendants and state a facially plausible legal
claim.”). To the extent they are not, the Court agrees that leave to amend should be granted. See Fed.
R. Civ. P. 15(a)(2) (“The court should freely give leave when justice so requires.”).
Great Midwest’s contention that Gecon failed to allege a “liquid, due, and payable debt” is of
no moment. (ECF No. 28 at 7). In support, Great Midwest relies on Tilsor, S.A. v. Oracle Caribbean, Inc.
No. 19-1875 (PAD), 2022 WL 20814952 (D.P.R. Sept. 30, 2022), and quotes part of the Subcontract
to the effect that “Visionary agrees to pay Gecon after receiving payment from the Government after
invoicing every two weeks per Supplemental Specifications as set forth by the original Government
contract.” (ECF No. 28 at 7). They then argue that “Visionary’s alleged debt to plaintiff is not liquid,
due, and payable until plaintiff can show that: (i) it invoiced Visionary pursuant to the terms and
conditions of paragraph eight of the Agreement, and (ii) Visionary was paid by the Government for
those invoices.” (Id.). Great Midwest’s argument fails for numerous reasons. First, Tilsor was decided
on summary judgment, which entails a different standard than here. Second, the cited portion of the
Subcontract deals with the “Division of Profit” and not with compensation for any expenses incurred
in. (ECF No. 23-1 ¶ 8). Third, even if applicable, a “pay-when-paid” clause does not bar the
subcontractor from filing a claim for payment under the Miller Act. See United States ex rel. J.H. Lynch
Case 3:25-cv-01044-RAM-MBA Document 57 Filed 01/09/26 Page 5 of 9

6
& Sons v. Travellers Cas. & Surety Co. of Am., 783 F. Supp. 2d 294, 298 (D.R.I. 2011) (collecting cases)
(“It is well established that a pay-when-paid clause in the circumstances at bar does not foreclose a
subcontractor’s right to bring suit for payment under the Miller Act against a general contractor and
its surety.”).
However, Great Midwest is correct that some of Gecon’s claim fall outside of the Miller Act.
To begin with, Gecon does not cite to any portion of the Miller Act’s language, or any other for that
matter, authorizing it to recover damages and/or lost profits from Great Midwest based on Visionary’s
contractual breach.3 As it so happens, Great Midwest argues, with caselaw, that it cannot. See Arthur
N. Olive Co., 297 F.2d at 72 (“While the subcontractor may assuredly institute an independent action
against the contractor for the unrealized profits stemming from the breach, the courts are uniform in
holding that such an action may not be maintained against the surety on the contractor’s bond under
the Miller Act.”); United States use of Moran Towing Corp. v. Hartford Acci. & Indem. Co., 204 F. Supp. 353,
356 (D.R.I. 1962) (“[I]t is generally held that a subcontractor has no remedy against the surety on a
Miller Act bond for the recovery of damages caused by the negligence of the prime contractor, the
principal on such a bond. Similarly, while a subcontractor may undoubtedly maintain an action against
the prime contractor for loss of profits caused by the latter’s breach of his contract, the courts hold
3 Gecon’s isolated reliance on United States ex rel. Metric Elec., Inc. v. Enviroserve, Inc., 301 F. Supp. 2d 56
(D. Mass. 2003) falls short of what Gecon sets out to establish. True, Enviroserve does quote First
Circuit language that “[o]ut-of-pocket expense is not the limit of the fair value of labor and materials.”
Id. (quoting Arthur N. Olive Co. v. United States ex rel. Marino, 297 F.2d 70, 73 (1st Cir. 1961)). But that
quote follows a more limited explanation of the applicable caselaw: “The First Circuit has established
that a subcontractor making a claim on a Miller Act bond can recover, in addition to actual labor and
material, overhead and profit, but only that which is attributable to work that has been performed.” Enviroserve,
Inc., 301 F. Supp. 2d at 69 (emphasis added). Ultimately, the Court in Enviroserve, Inc. held that the
plaintiff was able to recover “the full value of labor and materials requested.” Id. If more were needed,
the First Circuit’s language comes from a case where the plaintiff “merely sought recovery on the basis
of the labor and materials which were actually furnished in the construction of the projects here at
issue.” Arthur N. Olive Co., 297 F.2d at 72. In remanding, the First Circuit highlighted that the plaintiff
“was allowed to recover not only for the labor and materials supplied but also for the profit on the
labor and materials which he did not supply because of the supervening breach.” Id. Still, because the
plaintiff had furnished “extras” that had been requested, the First Circuit expressed that “in this
situation the subcontractor should be allowed to recover a reasonable profit on the extras thus
furnished.” Id. at 73. Nothing expressed here is inconsistent with either case.
Case 3:25-cv-01044-RAM-MBA Document 57 Filed 01/09/26 Page 6 of 9

7
that he may not maintain such an action against the surety on the prime contractor’s bond furnished
under the Miller Act.”) (citations omitted); United States use of Pertun Constr. Co. v. Harvesters Group, Inc.,
918 F.2d 915, 917 (11th Cir. 1990) (“[A] liberal construction does not mean that the Miller Act
establishes an unlimited basis for recovery; courts have held that the Miller Act surety is not liable for
damages caused by the prime contractor’s breach of contract.”). Thus, Gecon cannot seek to recover
under the Miller Act any loss profits from Great Midwest or damages resulting from Visionary’s
breach of the Subcontract. But, as stated above, Gecon can proceed against Great Midwest “for the
value of labor and materials furnished.” Hartford Acci. & Indem. Co., 204 F. Supp. at 356. As a result,
the Court recommends the Motion to Dismiss be DENIED in regard to the Miller Act claim. That
being said, Gecon can only recover from Great Midwest for labor and materials actually furnished.4
B. The alternative breach of contract and equitable estoppel and unjust enrichment
claims
Neither of Gecon’s alternative, seemingly local law claims5 for breach of contract or equitable
estoppel can prosper against Great Midwest. In its second cause of action, Gecon seeks to recover
from both Visionary and Great Midwest for Visionary’s breach of the Subcontract. (ECF No. 23 ¶
29). As an alternative third cause of action, to the extent the Subcontract is deemed void, Gecon seeks
to “equitably estopp” both defendants “from denying that Plaintiff is due the damages set forth” and
prevent the defendants’ “unjust enrichment.” (Id. ¶¶ 31-33). But Gecon fails to set out any facts to
support either claim against Great Midwest.
First, it is unclear how Gecon could have a breach of contract claim against Great Midwest,
which is not a party to the Subcontract. And in that Subcontract both Gecon and Visionary agreed to
waive any and all claims for damages “whether in tort (including negligence), contract, or otherwise .
. .of any character arising as a result of this agreement.” (ECF No. 23-1 at 5). Whether or not that
mutual waiver is enforceable is beside the point, as again, Great Midwest is not a party to the
Subcontract. In turn, Great Midwest’s payment bond’s conditions discuss payment “for furnishing
4 The Court agrees with Great Midwest that as it relates to these other damages, leave to amend the
complaint would be futile as they are not recoverable under law.
5 Gecon doesn’t cite to any law.
Case 3:25-cv-01044-RAM-MBA Document 57 Filed 01/09/26 Page 7 of 9

8
labor, material or both.” (ECF No. 28-1). Gecon suggests that the Court interpret this language as
“dictated by the Miller Act.” (ECF No. 33 at 13). But, as explained above, the Miller Act is consistent
with that language. And because leave to amend this claim would be futile,6 the Court recommends
that Great Midwest’s motion to dismiss the breach of contract claim be GRANTED.
Gecon’s alternative equitable estoppel and unjust enrichment claims fare no better. The Court
agrees with Great Midwest that “[s]ince there are no factual allegations in support of plaintiff’s
conclusory allegation[s], the court has nothing to analyze.” (ECF No. 28 at 9). Moreover, as discussed
above, the Amended Complaint’s factual allegations do state a claim for relief under the Miller Act,
which provides a remedy to Gecon and curtails any unjust enrichment by Great Midwest. And, under
the facts of this case, leave to amend would be futile. Therefore, the Court recommends that Great
Midwest’s motion to dismiss the equitable estoppel and unjust enrichment claim be GRANTED.
CONCLUSION
For the foregoing reasons, I recommend Great Midwest’s motion to dismiss be GRANTED
in part and DENIED in part.
This report and recommendation is filed pursuant to 28 U.S.C. § 636(b)(1)(B) and Rule 72(d)
of the Local Rules of this Court. Any objections to the same must be specific and must be filed with
the Clerk of Court within fourteen days of its receipt. Failure to file timely and specific objections to
the report and recommendation is a waiver of the right to appellate review. See Thomas v. Arn, 474 U.S.
140, 155 (1985); Davet v. Maccorone, 973 F.2d 22, 30-31 (1st Cir. 1992); Paterson-Leitch Co. v. Mass. Mun.
Wholesale Elec. Co., 840 F.2d 985 (1st Cir. 1988); Borden v. Sec’y of Health & Human Servs., 836 F.2d 4, 6
(1st Cir. 1987).
6 In arguing it should be granted leave to amend the complaint again, Gecon only discusses its Miller
Act claim. (ECF No. 33 at 16-17). Moreover, when Gecon first sought leave to amend its initial
complaint, it purported to resolve any deficits as to its First and Third causes of action, clarifying that
the Third was an alternative claim in the event the Subcontract was deemed void. (ECF No. 24 at 2).
Thus, at no point has Gecon put forth any arguments or facts that would defeat the apparent futility
of granting leave to amend.
Case 3:25-cv-01044-RAM-MBA Document 57 Filed 01/09/26 Page 8 of 9

9
IT IS SO RECOMMENDED.
In San Juan, Puerto Rico this January 9, 2026.
s/ Mariana E. Bauzá-Almonte
MARIANA E. BAUZÁ-ALMONTE
United States Magistrate Judge
Case 3:25-cv-01044-RAM-MBA Document 57 Filed 01/09/26 Page 9 of 9