United States District Court, M.D. North Carolina
WAYNE J. GRIFFIN ELECTRIC, INC., Plaintiff,
TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, et al., Defendants.
MEMORANDUM OPINION AND ORDER
L. PATRICK AULD, Magistrate Judge.
This case comes before the Court on Defendant Travelers' Motion to Realign Parties (Docket Entry 2) and Plaintiff's Motion to Remand (Docket Entry 15). For the reasons that follow, the Court will grant Defendant Travelers' Motion to Realign Parties and will deny Plaintiff's Motion to Remand.
Plaintiff's Complaint asserts a claim for breach of contract and seeks a declaratory judgment of Plaintiff's rights, as well as those of other insured parties, under a builders insurance policy issued by Defendant Travelers. (Docket Entry 6 at 6-7.) It contends that, in connection with the construction of the Guilford County Detention Center in Greensboro, North Carolina, Defendant Travelers issued a builders all risks policy to Defendants Guilford County, Balfour Beatty Construction, and D.H. Griffin Construction, as well as to any subcontractors, including Plaintiff. (Id. at 3; see also Docket Entry 6-1 (insurance policy).) The Complaint further alleges that Plaintiff, as an electrical subcontractor, incurred substantial additional costs to investigate and repair widespread damage to the facility's electrical conduit allegedly caused during concrete pours and drilling by one or more other subcontractors. (Docket Entry 6 at 3-5.)
According to the Complaint, on August 31, 2011, Plaintiff sent notice of its claimed losses to Defendants Balfour Beatty and D.H. Griffin and, at their request, provided supplemental documentation on September 19, 2011. (Id. at 5.) Defendants Balfour Beatty and D.H. Griffin allegedly failed to put Defendant Travelers on notice with regard to the claim, despite Plaintiff's request to that effect. (Id.) The Complaint further states that Plaintiff notified the insurance broker of the claimed loss on December 29, 2011, and Defendant Travelers denied coverage on March 9, 2012. (Id.; see also Docket Entry 16-3 at 1-3 (coverage denial letter).) The denial letter asserts that "the damages claimed by [Plaintiff] were caused by faulty planning, siting, design, specifications and/or workmanship[, ] all of which are expressly excluded under the policy." (Docket Entry 16-3 at 3.) It further contends that Plaintiff's alleged delay in reporting the loss "constitut[ed] a breach of the duty of timely reporting of a loss." (Id.)
Plaintiff (a citizen of Massachusetts) filed the instant action in North Carolina state court and named as Defendants Travelers (a citizen of Connecticut), Guilford County (a citizen of North Carolina), Balfour Beatty (a citizen of Delaware and Texas), and D.H. Griffin (a citizen of North Carolina). (Docket Entry 6 at 1-2.) Defendant Travelers then removed the action to this Court based on diversity of citizenship (Docket Entry 1), moved to realign parties (Docket Entry 2), and filed its Answer to Plaintiff's Complaint (Docket Entry 3).
The relevant statute bars removal "if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b)(2). Thus, the presence of Defendants Guilford County and D.H. Griffin, both citizens of North Carolina, would appear to preclude removal. However, Defendant Travelers' instant Motion asserts that Defendants Guilford County, Balfour Beatty, and D.H. Griffin constitute nominal parties who need not consent to removal and whose citizenship does not impact the diversity determination. (Docket Entry 3 at 4-5.) It additionally contends that the Court should realign Defendants Guilford County, Balfour Beatty, and D.H. Griffin as Plaintiffs on the grounds that "their interests are at odds with [Defendant] Travelers because they could be exposed to potential liability for property damages should the Travelers policy not afford the coverage [Plaintiff] seeks." (Docket Entry 2 at 2.)
Plaintiff responded in opposition and moved to remand to state court. (Docket Entry 15.) Defendant Travelers replied and responded in opposition to Plaintiff's Motion. (Docket Entry 22.) Plaintiff replied. (Docket Entry 24.) Defendants Guilford County, Balfour Beatty, and D.H. Griffin have not responded to either of the instant Motions. (See Docket Entries dated Oct. 3, 2013, to present.)
The party "who seek[s] to preserve removal, bear[s] the burden of establishing that the requirements for removal have been met. [It] do[es] so understanding that removal statutes, being in derogation of state sovereignty, are strictly construed, and all doubts will be resolved in favor of remand to state court." Canadian Am. Ass'n of Prof'l Baseball, Ltd. v. Ottawa Rapidz , 686 F.Supp.2d 579, 583 (M.D. N.C. 2010) (Schroeder, J.) (internal citations omitted); see also Barbour v. International Union , 640 F.3d 599, 605 (4th Cir. 2011) (en banc) ("Removal statutes, in particular, must be strictly construed, inasmuch as the removal of cases from state to federal court raises significant federalism concerns."), abrogated on other grounds by 28 U.S.C. § 1446(b)(2)(B). Therefore, Defendant Travelers, as the removing party, must demonstrate that this case belongs in federal court, either because the North Carolina Defendants qualify as nominal parties, because they constitute Plaintiffs rather than Defendants, or both.
The Fourth Circuit has recently addressed the standard for identifying nominal parties in the context of removal, stating that "[n]ominal means simply a party having no immediately apparent stake in the litigation either prior or subsequent to the act of removal. In other words, the key inquiry is whether the suit can be resolved without affecting the non-consenting nominal defendant in any reasonably foreseeable way." Hartford Fire Ins. Co. v. Harleysville Mut. Ins. Co. , 736 F.3d 255, 260 (4th Cir. 2013). In addition, this Court has recognized a "broad consensus concerning the type of situations which would be covered by the [nominal party] exception." Blue Mako, Inc. v. Minidis , 472 F.Supp.2d 690, 696 (M.D. N.C. 2007) (Tilley, J.). Examples of situations reflecting nominal parties "include one where the party was not involved in the activities charged in the complaint, [the party] ha[s] already settled with the plaintiff, [the party] ha[s] only been named as [a] John Doe defendant, or where there is no basis for imputing liability." Id.
Defendent Travelers' instant Motion contends that its co-Defendants "have no personal stake in litigation brought solely to determine the rights and obligations between Plaintiff  and [Defendant] Travelers. There are no counts asserted against any of them. There is no relief sought from any of them." (Docket Entry 22 at 3.) However, Plaintiff's Complaint specifically seeks "a declaratory judgment as to the obligations and liabilities of [Defendant] Travelers, as well as the rights and obligations, if any, of Defendants Guilford County, Balfour Beatty, and D.H. Griffin as potential insureds with respect to the Claimed Loss under the Builders Risk Policy." (Docket Entry 6 at 7 (emphasis added).) Although Plaintiff has not asserted counts against Defendants Guilford County, Balfour Beatty, and D.H. Griffin and does not seek relief directly from them in this action (see Docket Entry 6 at 6-8), Defendant Travelers has not shown that "the suit can be resolved without affecting the non-consenting nominal [D]efendant[s] in any reasonably foreseeable way, " Hartford Fire , 736 F.3d at 260.
Rather, Defendant Travelers, in arguing for the realignment of its co-Defendants, undermines its position that its co-Defendants have no interest in the suit:
[Plaintiff] specifically seeks a declaration that [Defendant] Travelers owes coverage to [Defendants] Guilford County, Balfour Beatty, and D. H. Griffin as well as to [Plaintiff]. Conversely, a declaration that [Defendant] Travelers does not provide the coverage sought might ultimately place the burden of liability upon [Defendants] Guilford County, ...