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North American Roofing Services, Inc. v. BPP Retail Properties, LLC

United States District Court, W.D. North Carolina, Asheville Division

March 18, 2014




THIS MATTER is before the Court for resolution of the Defendant's Motions to Dismiss [Docs. 5, 7]; the Magistrate Judge's Memorandum and Recommendation regarding the disposition of such Motions [Doc. 34]; the Plaintiffs' Objections to the Findings of Fact, Conclusions of Law, and Recommendation [Doc. 35]; and the Defendant's Response in Opposition to Plaintiff's Objections to the Memorandum and Recommendation [Doc. 36].


The Plaintiffs North American Roofing Services, Inc. ("North American") and Carlisle Construction Materials Incorporated ("Carlisle") (collectively "Plaintiffs") brought this action on March 27, 2013 in Buncombe County Superior Court against the Defendant BPP Retail Properties, LLC ("BPP"), seeking a declaratory judgment that they are not obligated to replace the roofs of six properties located in Puerto Rico and are not subject to consequential damages stemming from roof leaks caused by a failure in the membrane covering the roofs of the six buildings. [Doc. 1-1]. The Plaintiffs further contend that six warranty agreements entered into between BPP and North American limit the damages that BPP may seek as a result of any leaks in the roof and constitute as BPP's sole legal remedy against North American. [Id.]. On April 25, 2013, BPP removed this action to this Court based on diversity jurisdiction. [Doc. 1].

BPP filed suit against the Plaintiffs and third party Carlisle Syntec Incorporated ("Carlisle Syntec") in the United States District Court for the District of Puerto Rico the day after the Plaintiffs brought their state court action. BPP asserted claims for negligence and breach of contract against North American and a products liability claim against the Plaintiffs and Carlisle Syntec. On May 6, 2013, BPP moved to dismiss Carlisle as a Plaintiff in this action and to either dismiss this action in its entirety or transfer it to the United States District Court for the District of Puerto Rico. [Docs. 5-8].

Pursuant to 28 U.S.C. § 636(b) and the Standing Orders of Designation of this Court, the Honorable Dennis L. Howell, United States Magistrate Judge, was designated to consider the Defendant's motions and to submit a recommendation regarding their disposition. On October 29, 2013, the Magistrate Judge entered a Memorandum and Recommendation in which he recommended that the Court should exercise its discretion and decline to issue a declaratory judgment in this case. [Doc. 34]. The Plaintiffs timely filed objections [Doc. 35], to which BPP has responded [Doc. 36].

Having been fully briefed, this matter is ripe for disposition.


The Federal Magistrate Act requires a district court to "make a de novo determination of those portions of the report or specific proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). In order "to preserve for appeal an issue in a magistrate judge's report, a party must object to the finding or recommendation on that issue with sufficient specificity so as reasonably to alert the district court of the true ground for the objection." United States v. Midgette , 478 F.3d 616, 622 (4th Cir. 2007). The Court is not required to review, under a de novo or any other standard, the factual or legal conclusions of the magistrate judge to which no objections have been raised. Thomas v. Arn , 474 U.S. 140, 150 (1985). Additionally, the Court need not conduct a de novo review where a party makes only "general and conclusory objections that do not direct the court to a specific error in the magistrate's proposed findings and recommendations." Orpiano v. Johnson , 687 F.2d 44, 47 (4th Cir. 1982).


The Plaintiffs commenced this action relying on the North Carolina Declaratory Judgment Act, which gives courts discretion in granting declaratory relief. N.C. Gen. Stat. § 1-257. The Court may deny declaratory relief where: "(1) the requested declaration will serve no useful purpose in clarifying or settling the legal relations at issue; or (2) the requested declaration will not terminate or afford relief from the uncertainty, insecurity, or controversy giving rise to the proceeding." Augur v. Augur , 356 N.C. 582, 588-89, 573 S.E.2d 125, 130 (2002).

As the Magistrate Judge aptly noted, judicial economy and efficiency favor proceedings that will settle all of the issues in an underlying controversy. Coca-Cola Bottling Co. Consol. v. Durham Coca-Cola Bottling Co. , 141 N.C.App. 569, 577, 541 S.E.2d 157, 163 (2000). Declaratory relief is particularly disfavored where "a separate suit has been filed, or is likely to be filed, that will more fully encompass the scope of the entire controversy." Id., 541 S.E.2d at 163.

First, the Plaintiffs argue that the Magistrate Judge erred in determining that the entire case and controversy between the parties will not be settled by this declaratory judgment action. [Doc. 35 at 4]. The Plaintiffs claim that the "piecemeal" litigation in this dispute springs from BPP's failure to abide by the forum selection clause, BPP's "attempt to improperly ignore the NARCO Warranties, " and BPP's filing of "unsubstantiated and untenable tort and contract claims." [Id. at 4]. Further, the Plaintiffs give numerous arguments regarding why they believe that BPP's claims will fail as a matter of law. [Doc. 35 at 4-7].

Contrary to the Plaintiffs' argument, the issuance of a declaratory judgment in this action would not completely resolve the entire underlying controversy between the ...

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