John S. Clark Co., Inc. v. Travelers Indem. Co. of Ill.

Decision Date16 August 2004
Docket NumberNo. CIV. 1:04CV00179.,CIV. 1:04CV00179.
Citation359 F.Supp.2d 429
PartiesJOHN S. CLARK COMPANY, INC., Plaintiff, v. TRAVELERS INDEMNITY COMPANY OF ILLINOIS; Ignacio Herrera, individually and d/b/a Herrera Masonry; Marina Herrera, individually and d/b/a Herrera Masonry; and Herrera Masonry, Inc., Defendants.
CourtU.S. District Court — Middle District of North Carolina

Steven Douglas Hedges, Gregory Todd Higgins, Benjamin Rushing Edwards, Nexsen Pruet Adams Kleemeier, PLLC, Greensboro, NC, for Plaintiff.

Richard T. Rice, Garth A. Gersten, Womble Carlyle Sandridge & Rice, Ann Cox Rowe, James Greer Welsh, Jr., Davis & Hamrick, L.L.P., Winston-Salem, NC, for Defendants.

MEMORANDUM OPINION

BULLOCK, District Judge.

Before the court are two motions to remand this civil action to the General Court of Justice, Superior Court Division, Guilford County, North Carolina, separately filed by John S. Clark Company, Inc. ("Plaintiff"), and by Ignacio Herrera, Marina Herrera, and Herrera Masonry, Inc. (collectively "the Herrera Defendants"). Plaintiff's motion to remand includes Plaintiff's request for an award of costs and attorney fees upon remand pursuant to 28 U.S.C. § 1447(c). Also before the court is Travelers Indemnity Company of Illinois' ("Travelers") motion to dismiss the Herrera Defendants pursuant to Federal Rules of Civil Procedure 19 and 21. For the following reasons, Plaintiff's motion to remand will be granted, the Herrera Defendants' motion to remand will be granted, and Plaintiff's request for an award of costs and attorney fees upon remand will be granted. As a result, Travelers' motion to dismiss the Herrera Defendants will be denied as moot.

FACTS

Plaintiff is a building contractor incorporated under the laws of a state other than North Carolina and registered to do business in North Carolina. Plaintiff maintains an office in Guilford County, North Carolina, and qualifies as a citizen of North Carolina for jurisdictional purposes. Ignacio Herrera and Marina Herrera are individuals whose domiciles and primary residences are located in North Carolina. Herrera Masonry, Inc., is a North Carolina corporation with its principal place of business in Forsyth County, North Carolina. Travelers is an insurance company incorporated under the laws of a state other than North Carolina with its principal place of business in Hartford, Connecticut.

This civil action arises from several construction problems that Plaintiff encountered during the construction of a Parish Life Center and other associated renovations of the Saint Therese Catholic Church in Mooresville, North Carolina ("the construction project"). Before Plaintiff began the construction project, Plaintiff obtained multiple layers of insurance to cover the construction project itself and Plaintiff's liabilities while working on the construction project, including a series of commercial general liability insurance policies that Travelers issued to Plaintiff with effective dates of January 1, 2000, through May 1, 2002 (collectively "the CGL Policies"). According to Plaintiff's complaint, the CGL Policies provided Plaintiff with coverage for property damage arising from work performed by subcontractors on Plaintiff's behalf as well as coverage for costs that Plaintiff might incur to repair or replace defective work during the construction project. (Compl.¶¶ 22-23, 27-31.)

On August 11, 2000, Plaintiff hired the Herrera Defendants as masonry subcontractors to perform work on the construction project pursuant to the terms and conditions of a written agreement between Plaintiff and the Herrera Defendants ("the Herrera Contract"). The Herrera Contract allegedly contained an agreement between Plaintiff and the Herrera Defendants in which the Herrera Defendants assumed responsibility "for assuring that [their] workmanship and material [were] in compliance with all local, state and/or federal codes." (Id. at ¶ 9.) According to Plaintiff's complaint, the Herrera Contract also contained the Herrera Defendants' warranty "against all deficiencies and defects in materials and/or workmanship" as well as the Herrera Defendants' promise to indemnify Plaintiff "from and against all claims, damages, loss and expenses ... arising out of or resulting from the performance of [their] work." (Id. at ¶¶ 11-12.)

On January 19, 2001, a portion of the construction project collapsed for a number of alleged reasons, including errors, omissions, and deficiencies in the Herrera Defendants' masonry. (Id. at ¶¶ 15-16.) Following the collapse on January 19, 2001, Plaintiff repaired and rebuilt the collapsed portion of the construction project. Plaintiff also corrected and repaired other portions of the construction project in which Plaintiff discovered structural defects "of a similar character to [the defects] contained in [the] walls which disintegrated on January 19, 2001." (Id. at ¶ 17.) According to Plaintiff's complaint, "[a]ll of the damages, errors, omissions and deficiencies, including, but not limited to those associated with the January 19, 2001 incident, have been rebuilt, repaired, corrected, or otherwise remedied." (Id. at ¶ 18.)

On January 19, 2004, Plaintiff filed this civil action in the General Court of Justice, Superior Court Division, Guilford County, North Carolina, demanding payment and indemnity from both Travelers and the Herrera Defendants for "losses and damages, including, but not limited to, property damage, loss of use, delay and acceleration damages, other charges assessed by the Owner and other actual, consequential, and special damages." (Id. at ¶ 20.) Plaintiff's complaint stated two claims against the Herrera Defendants for breach of contract and negligence based on the Herrera Defendants' alleged improper installation of rebar in certain sections of masonry, failure to install rebar in certain sections of masonry, failure to install grout in certain sections of masonry, and faulty workmanship, which Plaintiff apparently discovered throughout the construction project. (Id. at ¶ 14.) Plaintiff's complaint also stated three separate claims against Travelers for breach of contract, bad faith, and unfair and deceptive trade practices, in violation of North Carolina General Statute § 75-1.1 et seq., based on Travelers' alleged failure to investigate and pay Plaintiff's claims for costs that Plaintiff incurred to repair and rebuild the collapsed portion of the construction project and costs that Plaintiff incurred to repair portions of the construction project which contained structural defects but did not collapse.

On February 26, 2004, Travelers responded to Plaintiff's complaint by filing a notice of removal to this court pursuant to 28 U.S.C. §§ 1441 and 1446, which cited 28 U.S.C. § 1332 as the only basis for federal jurisdiction of the subject matter of this civil action. On March 22, 2004, the Herrera Defendants filed an answer to Plaintiff's complaint and a motion to remand this civil action to the General Court of Justice, Superior Court Division, Guilford County, North Carolina, for lack of subject matter jurisdiction. In their answer to Plaintiff's complaint, the Herrera Defendants denied the material allegations contained in Plaintiff's complaint and asserted several affirmative defenses to the allegations contained in Plaintiff's complaint, including the affirmative defense of contributory negligence. In support of their motion to remand, the Herrera Defendants contend that the court lacks jurisdiction of the subject matter of this civil action because "Plaintiff and the Herrera Defendants are all citizens of the State of North Carolina, [and] there is not complete diversity between the parties." (Herrera Defs.' Br. Supp. Mot. Remand at 3.)

On March 29, 2004, Plaintiff filed its own motion to remand this civil action to the General Court of Justice, Superior Court Division, Guilford County, North Carolina, pursuant to 28 U.S.C. § 1447(c). In support of its motion to remand, Plaintiff contends that the court lacks jurisdiction of the subject matter of this civil action because there is not complete diversity between Plaintiff and the Herrera Defendants. (See Pl.'s Br. Supp. Mot. Remand at 4.) Plaintiff also contends that remand is appropriate because Travelers' notice of removal is "defective on its face" as a result of the Herrera Defendants' failure to join in or otherwise consent to Travelers' removal of this civil action. (Id. at 10.)

On April 5, 2004, Travelers filed an answer to Plaintiff's complaint and a motion to dismiss the Herrera Defendants. In its answer to Plaintiff's complaint, Travelers denied the material allegations contained in Plaintiff's complaint and asserted several affirmative defenses to the allegations contained in Plaintiff's complaint. In support of its motion to dismiss and in opposition to Plaintiff's and the Herrera Defendants' motions to remand, Travelers contends that the court should disregard the Herrera Defendants for jurisdictional purposes and dismiss the Herrera Defendants because the Herrera Defendants do not qualify as necessary parties or proper parties to the controversy between Plaintiff and Travelers. (See Travelers' Corrected Br. Opp'n Mot. Remand at 1; see also Travelers' Mot. Dismiss at 1.) According to Travelers, the court should retain jurisdiction of Plaintiff's claims against Travelers and Plaintiff should pursue its separate claims against the Herrera Defendants in North Carolina state court. (See id.)

DISCUSSION

"Section 1441(a) of Title 28 permits a defendant to remove from state to federal court `any civil action brought in a State court of which the district courts of the United States have original jurisdiction.'" Triad Motorsports, LLC v. Pharbco Marketing Group, Inc., 104 F.Supp.2d 590, 593 (M.D.N.C.2000) (quoting 28 U.S.C. § 1441(a)). Federal courts have original jurisdiction of cases where the matter in controversy exceeds $75,000 and is between "`Citizens of different...

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