Bailey v. Markham
| Decision Date | 20 March 2020 |
| Docket Number | CIV 19-0519 JB\GBW |
| Citation | 611 F.Supp.3d 1177 |
| Parties | Brian BAILEY and Michelle Bailey, Plaintiffs, v. Steve MARKHAM; Luciano Barrientos; Voltaire Builders, LLC; Rick F. Atchinson; and Plumbsquare Construction, Inc., Defendants. |
| Court | U.S. District Court — District of New Mexico |
Kelly Mack Cassels, Ian D. McKelvy, Sanders, Bruin, Coll & Worley, P.A., Roswell, New Mexico, Attorneys for the Plaintiffs.
Walter Earl Steimel, Jr., Steimel Conner Law Group, Alexandria, Virginia --and-- Luke W. Ragsdale, Ragsdale Law Firm, Roswell, New Mexico, Attorneys for Defendants Steve Markham and Voltaire Builders, LLC.
Sean R. Calvert, Calvert Menicucci, P.C., Albuquerque, New Mexico, Attorneys for Defendants Rick F. Atchinson and Plumbsquare Construction, Inc.
James O. Browning, UNITED STATES DISTRICT COURT THIS MATTER comes before the Court on: (i) Defendant Rick F. Atchinson and Plumbsquare Construction, Inc.'s Motion to Dismiss for Failure to State a Claim, filed June 25, 2019 (Doc. 7)("Motion to Dismiss"); and (ii) the Plaintiffs' Motion to Remand the Case to State Court, filed July 26, 2019 (Doc. 17)("Motion to Remand"). The Court held a hearing on September 6, 2019. See Clerk's Minutes, filed September 6, 2019 (Doc. 36). The primary issues are: (i) whether the parties lack diversity in this case such that the case should be remanded to state court, because Defendants Rick F. Atchinson and Plumbsquare Construction, Inc. ("Plumbsquare Construction") and Plaintiffs Brian Bailey and Michelle Bailey (collectively, "the Baileys") are citizens of the State of New Mexico; (ii) whether remand is necessary, because there is a possibility that the Baileys will recover against Atchinson and Plumbsquare Construction, and thus the Baileys did not fraudulently join Atchinson and Plumbsquare Construction; and (iii) whether removal was proper, even though Defendant Luciano Barrientos did not consent to removal by Defendants Steve Markham and Voltaire Builders, Inc. ("Voltaire Builders"). The Court concludes that: (i) the parties lack diversity, because the Baileys, Atchinson, and Plumbsquare Construction are citizens of the same state and thus cannot establish complete diversity; (ii) Atchinson and Plumbsquare Construction have not established fraudulent joinder, because there is a reasonable basis to believe that the Baileys might be able to recover against Plumbsquare, and thus remand is necessary; and (iii) removal was proper, because although Barrientos did not consent to removal, the Baileys never served Barrientos. Because the Court concludes that it lacks subject-matter jurisdiction, the Court will remand the case to the Fifth Judicial District Court, County of Chaves, State of New Mexico, and will leave the Motion to Dismiss for the state court to decide.
The Baileys are New Mexico citizens. See Complaint ¶ 1, at 15. Markham and Voltaire Builders are Texas citizens. See Notice of Removal ¶¶ 14-15, at 5; Complaint ¶¶ 2, 4, at 15. The Baileys, Markham, and Voltaire Builders believe Atchinson and Plumbsquare Construction are New Mexico citizens. See Complaint ¶¶ 5-6, at 15-16; Notice of Removal ¶¶ 18-19, at 5.1 The Baileys, Markham, and Voltaire Builders believe Barrientos is a Texas citizen. See Complaint ¶ 3, at 15; Notice of Removal ¶ 16, at 4. The Complaint alleges five state-law counts: (i) breach of contract; (ii) restitution for unlicensed contracting; (iii) civil conspiracy; (iv) disregarding limited liability projections for Voltaire Builders; and (v) disregarding limited liability protections for Plumbsquare Construction. See Complaint ¶¶ 53-90, at 20-25.
The Baileys allege that "Markham and Barrientos, using Voltaire as their alter ego, have illegally contracted to provide contracting services in the State of New Mexico without a New Mexico contractor's license to several New Mexico residents." Complaint ¶ 7, at 16. The Baileys allege that they hired Markham to construct an addition to their home in Chaves County, New Mexico. See Complaint ¶ 14, at 16. According to the Baileys, "[o]n or about March 21, 2017 Markham prepared an Agreement for the agreed-upon work and transmitted it to Plaintiffs for execution by e-mail in the name of Voltaire." Complaint ¶ 16, at 16. The Baileys allege that Markham and Voltaire Builders started the construction project, and that the Baileys made several payments to Voltaire Builders. See Complaint ¶¶ 23-24, at 17. The Baileys claim that they also made payments to Barrientos, "who acted as foreman" on the construction project, and whom Markham said was a "partner in Voltaire and had full authority to act on Voltaire's behalf." Complaint ¶¶ 27-28, at 17. The Baileys allege that, when Markham refused to complete the construction project, the Baileys began looking for a new contractor and discovered that Markham and Voltaire Builders' "permit on the job had been applied for and issued in the name of Plumbsquare." Complaint ¶ 31, at 18. The Baileys allege that they had never heard of or met anyone purporting to work for Plumbsquare Construction, that Plumbsquare Construction is not a party to the construction agreement, and that Atchinson is Plumbsquare Construction's president and sole director. See Complaint ¶¶ 33, 40, at 18. The Baileys allege that they also learned that Markham, Barrientos, and Voltaire Builders lack a New Mexico contractor's license. See Complaint ¶¶ 36-38, at 18. The Baileys allege that "Atchinson caused Plumbsquare to allow Markham/Barrientos/Voltaire [to] make use of its license for some consideration to Markham so that Markham could skirt the laws of the State of New Mexico and provide contracting services without the required New Mexico licensure to the Plaintiffs." Complaint ¶ 41, at 18-19. The Baileys allege that they have paid $2,288,734.62 to Markham, Barrientos, and Voltaire Builders, and that they have hired other contractors to complete the construction project. See Complaint ¶¶ 42, 43, at 19.
The Baileys filed this case against Markham, Barrientos, Voltaire Builders, Atchinson, and Plumbsquare Construction, in the Fifth Judicial District Court, County of Chaves, State of New Mexico, on May 3, 2019. See Complaint at 15. The Baileys served the Complaint upon Voltaire Builders on May 6, 2019. See Notice of Removal ¶ 2, at 1; Affidavit of Service of Process at 77 (dated May 7, 2019), filed June 5, 2019 (Doc. 1)("Voltaire Builders Aff."). The Baileys served the Complaint upon Atchinson and Plumbsquare Construction on May 7, 2019. See Summons at 73 (dated May 3, 2019), filed June 5, 2019 (Doc. 1)("Atchinson Summons"); Summons at 75 (dated May 3, 2019), filed June 5, 2019 (Doc. 1)("Plumbsquare Construction Summons"). Markham "deemed himself served as of May 7, 2019." Notice of Removal ¶ 4, at 2. See Declaration of Steve Markham at 37 (dated June 5, 2019), filed June 5, 2019 (Doc. 1)("Markham Decl."). As for Barrientos, the Baileys admit that "there had been no formal service," because they could not locate Barrientos. Draft Transcript of Hearing at 2:20-21 (taken September 6, 2019)("Tr.")(McKelvy).2
Markham and Voltaire Builders filed the Notice of Removal on June 5, 2019. See Notice of Removal at 1. Markham and Voltaire Builders allege, in the Notice of Removal, that Atchinson and Plumbsquare Construction "were improperly and fraudulently joined." Notice of Removal ¶ 20, at 6. Markham and Voltaire Builders contend that "Plumbsquare and Atchinson are not required to join in or consent to the removal because they are not properly joined pursuant to [ 28 U.S.C. §] 1446(b)(2)(A)." Notice of Removal ¶ 37, at 12. Markham and Voltaire Builders also contend that "Barrientos is not required to join in or consent to removal as he has not yet been served." Notice of Removal ¶ 38, at 12. The Baileys argue that, although they did not serve the Complaint upon Barrientos, Markham and Voltaire Builders "entered a general appearance on behalf of" Barrientos by filing a notice in Fifth Judicial District Court, County of Chaves, State of New Mexico, that Markham and Voltaire Builders had filed a notice of removal. Motion to Remand at 11 (). The State Court Removal Notice designates Markham, Barrientos, and Voltaire Builders as the removing Defendants. See State Court Removal Notice at 1.
Atchinson and Plumbsquare Construction filed the Motion to Dismiss on June 25, 2019, and the Baileys filed the Motion to Remand on July 26, 2019. See Motion to Dismiss at 1; Motion to Remand at 1. Atchinson and Plumbsquare Construction state:
Given that the motion to dismiss will play a central role in whether there is diversity among the parties and potentially avoid further time for the parties and the court over the proper forum for this litigat5ion [sic], Plumbsquare would ask that it be resolved prior to any ruling on the motion for remand.
Defendant Rick F. Atchinson and Plumbsquare Construction, Inc.'s Response to Motion to Remand at 1, filed August 6, 2019 (Doc. 21)("Plumbsquare Remand Response"). The Baileys contend that "it is incorrect for Defendants to suggest the Court could consider and rule upon the Motion to Dismiss before or apart from its consideration of the Plaintiffs' Motion to Remand." Plaintiffs' Reply to Defendants' Opposition to Plaintiffs' Motion to Remand the Case to State Court at 4, filed August 28, 2019 (Doc. 30)("Remand Reply"). This section summarizes all of the arguments that the Baileys, Markham, Voltaire Builders, Atchinson, and Plumbsquare Construction make in the Motion to Remand, in the Motion to Dismiss, in subsequent briefings, and at the September 6, 2019, hearing.
In the Motion to Dismiss, Atchinson and Plumbsquare Construction move to dismiss all of the claims against...
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