Dist. of Columbia ex rel. Dulles Plumbing Grp., Inc. v. Selective Ins. Co. of Am.
Decision Date | 07 October 2020 |
Docket Number | Civil Action No. 19-1824 (RDM) |
Citation | 495 F.Supp.3d 1 |
Parties | DISTRICT OF COLUMBIA FOR the USE OF DULLES PLUMBING GROUP, INC., et al., Plaintiffs, v. SELECTIVE INSURANCE COMPANY OF AMERICA, Defendant / Third-Party Plaintiff, v. Moseley Construction Group Inc., et al., Third-Party Defendant. |
Court | U.S. District Court — District of Columbia |
Adam Craig Harrison, Jeremy C.B. Wyatt, Harrison Law Group, Towson, MD, for Plaintiffs District of Columbia for the Use of Dulles Plumbing Group, Inc., Dulles Plumbing Group, Inc.
Todd M. Garland, Smith, Pachter, McWhorter PLC, Tysons Corner, VA, for Third-Party DefendantMoseley Construction Group, Inc.
Erin L. Webb, The Pels Law Firm LLC, Bethesda, MD, for Third-Party DefendantsJohnny D. Moseley, Alisa Moseley.
David Downing Gilliss, Pike & Gilliss, LLC, Towson, MD, for Defendant/Third-PartyPlaintiff.
RANDOLPH D. MOSS, United States District JudgeThis straightforward commercial dispute raises a novel issue of federal jurisdiction.PlaintiffDulles Plumbing Group, Inc.("Dulles") worked as a subcontractor on a construction project in the District of Columbia.Dulles did not receive full payment for that work.To recover the money owed, Dulles sued Selective Insurance Company of America ("Selective"), which acted as a surety on the project, in the Superior Court for the District of Columbia.Selective removed the case to this Court based on diversity of citizenship—Selective is incorporated and has its principal place of business in New Jersey, while Dulles is incorporated and has its principal place of business in Virginia.Selective then filed a third-party complaint against Moseley Construction Group, Inc.("Moseley"), the general contractor that hired Dulles to work on the project.Like Dulles, Moseley is incorporated and has its principal place of business in Virginia; it was diverse, however, for purposes of Selective's third-party complaint.The parties eventually entered into a three-way settlement agreement that called for Moseley to pay Dulles $175,000, but Moseley initially failed to pay the agreed-upon sum.After Dulles filed a motion to enforce the settlement agreement, however, Moseley paid the amount owed.The only remaining dispute before the Court is Dulles's claim for attorneys’ fees and interest against Moseley.Because Dulles and Moseley are both based in Virginia, the Court would not have diversity jurisdiction over a state-law action between those two parties.The question is whether the Court may nevertheless exercise supplemental jurisdiction to enforce the settlement agreement between Dulles and Moseley.For the following reasons, the Court concludes that it may not.Dulles's motion to enforce must therefore be DENIED .
This case arises from a public construction project in the District of Columbia.Dkt. 1-1at 4(Compl. ¶ 4).As a general contractor on the project, Moseley executed a payment bond with Selective, as surety, to "secure Moseley's payment obligations to its subcontractors" on the project.Id. at 4(Compl. ¶ 5).Under that agreement, "Selective obligated itself to pay the amounts that Moseley owes to its subcontractors on the [p]roject if Moseley itself refuses or is unable to pay."Id. at 5.On October 5, 2017, Moseley hired Dulles as a subcontractor to perform certain work on the project.Id. at 5(Compl. ¶ 6).Dulles completed its work on October 12, 2018.Id.(Compl. ¶ 7).After "Mosely failed and refused to pay Dulles" an alleged outstanding balance of $212,482, Dulles sued Selective in the Superior Court of the District of Columbia on June 7, 2019, asserting that Selective was "liable to Dulles for unpaid monies ... in connection with the [p]roject."Id. at 6(Compl. ¶¶ 14–15).
On June 21, 2019, Selective removed the case to this Court, invoking diversity jurisdiction.Dkt. 1at 1–2(citing28 U.S.C. § 1441 ).Dulles is a Virginia corporation; Selective is a New Jersey corporation.Id. at. 2.Selective filed its answer on July 8, 2019.Dkt. 10.A week later, Selective filed a third-party complaint against Moseley, as permitted by Federal Rule of Civil Procedure 14. Dkt. 12(3d Party Compl.).On the basis of an indemnity agreement between Moseley and Selective, Selective alleged that, "in the event that [it was] found liable to the Plaintiffs for any of the claims asserted against it" in Dulles's complaint, then Moseley is "obligated to reimburse and indemnify Selective for that loss, and for all costs and expenses, including interest, attorneys’ fees and consultant's fees, Selective incurs in connection with"the case.Id. at 3–4.Selective further alleged that its third-party claim fell within the Court's diversity jurisdiction, because it is a New Jersey corporation and Moseley is a Virginia corporation.Id. at 2.
After the Court stayed the case so the parties could negotiate a settlement, Minute Order (July 26, 2019), the parties executed a written settlement agreement "intended to resolve all of the payment-related disputes" in the case on September 19, 2020, Dkt. 30at 2.As part of the agreement, Moseley promised to pay Dulles $175,000, within one business day of Dulles providing certain paperwork.Dkt. 31-2at 2.The settlement also provided that if a party needed to bring legal action to enforce the agreement, then "the substantially prevailing Party shall be entitled to an award of reasonable attorneys’ fees and costs."Id. at 8.
Dulles alleges that it produced the required paperwork on Friday, September 20, 2019, making Moseley's $175,000 payment due on or before Monday, September 23, 2019.Dkt. 31-5at 3.But according to Dulles, Moseley refused to pay unless Dulles tendered a letter warrantying its work on the project, a condition not included in the settlement agreement.Id.The Court held a hearing on the alleged breach on November 7, 2019, at which Moseley admitted that payment was being conditioned on the warranty letter.Hrg.Tr. (Roughat 12–13).But Moseley asserted that another entity involved in the construction project, Fifth Street Partners, controlled the funds and was insisting on the letter.Id.Moseley also argued that the Court lacked jurisdiction to enforce the settlement.Id. at 7–10.Dulles responded that the Court had inherent authority to do so.Id. at 16.
Following the hearing, Dulles filed a motion to enforce the settlement agreement, seeking the principal owed of $175,000, attorneys’ fees as provided in the settlement agreement, and "sanctions" against Moseley, presumably in the form of interest, as permitted by D.C. law.Dkt. 31at 2;Dkt. 31-5at 1.Moseley opposed the motion, arguing that the Court lacked diversity jurisdiction over claims by Dulles (a Virginia company) against Moseley (a Virginia company) based on the settlement agreement.Dkt. 32at 11–13.Moseley also argued that it had not breached the settlement agreement.Id. at 18–21.Selective filed a brief as well, siding with Dulles on the jurisdictional question and requesting that the Court enforce the settlement against Moseley.Dkt. 33.
Months later, Dulles filed a notice alerting the Court that Moseley had paid the principal sum of $175,000, but that Moseley had "not paid [Dulles's] attorney's fees ... or any interest on the settlement amount."Dkt. 35at 2.Selective also filed a notice, explaining that because Dulles had "been paid in full for its work," Selective had "no further obligation to Dulles."Dkt. 36at 2.Selective therefore requested that the Court dismiss Dulles's claims against Selective.Id.Selective further argued that any additional damages that Dulles might seek against Moseley have "no bearing on Selective."Id.In a follow-up notice, Dulles acknowledged that following Moseley's payment of the principal, "Selective has no further liability under its bond" and Dulles's claims against Selective "may be dismissed with prejudice."Dkt. 37at 2.Finally, Moseley filed a post-payment notice as well, arguing that its payment of the principal rendered moot any attempt by Selective to enforce the settlement agreement.Dkt. 38at 3–5.
Briefing is now complete, and Dulles's motion to enforce is ripe for decision.
Federal courts are courts of limited subject-matter jurisdiction and "possess only that power authorized by [the]Constitution and statute."Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391(1994).Given "the nature and limits of the judicial power of the United States,"the Court must assess its jurisdiction "as a threshold matter" and may not decide the merits of a case without first addressing the issue of jurisdiction.Steel Co. v. Citizens for a Better Env't , 523 U.S. 83, 94–95, 118 S.Ct. 1003, 140 L.Ed.2d 210(1998)(quotingMansfield, C. & L.M.R. Co. v. Swan , 111 U.S. 379, 382, 4 S.Ct. 510, 28 L.Ed. 462(1884) ).The plaintiff bears the burden of establishing jurisdiction.Kokkonen , 511 U.S. at 377, 114 S.Ct. 1673.It is axiomatic that "subject matter jurisdiction may not be waived" and that "no action of the parties can confer subject-matter jurisdiction upon a federal court."NetworkIP, LLC v. F.C.C. , 548 F.3d 116, 120(D.C. Cir.2008)(internal quotations and citations omitted).
The Court's diversity jurisdiction extends to "all civil actions where the matter in controversy exceeds the sum or value of $75,000" and the dispute is between "citizens of different States."28 U.S.C. § 1332(a).Although Article III reaches further, 28 U.S.C. § 1332 requires complete diversity, which means that diversity jurisdiction extends to only those cases in which no plaintiff is a citizen of the same state as any defendant.SeeOwen Equip. & Erection Co. v. Kroger , 437 U.S. 365, 373–74, 98 S.Ct. 2396, 57 L.Ed.2d 274(1978).Diversity jurisdiction therefore "is lacking if there are any litigants from the same state on opposing sides."Saadeh v. Farouki , 107 F.3d 52, 55...
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