United States District Court, E.D. North Carolina, Western Division
CERTAIN INTERESTED UNDERWRITERS SUBSCRIBING TO POLICY NO. B1262P20017013, Plaintiff,
AMERICAN REALTY ADVISORS; SVF WESTON LAKESIDE, LLC; AND DOES 1-25, INCLUSIVE, Defendants. SVF WESTON LAKESIDE, LLC; and AMERICAN REALTY ADVISORS, Plaintiff,
CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON,
W. FLANAGAN UNITED STATES DISTRICT JUDGE
cases involving interpretation of an insurance contract
underwriting three water-damaged apartment buildings located
in Cary, North Carolina, come before the court on motion by
Certain Interested Underwriters Subscribing to Policy No.
B1262P20017013 (“Underwriters”) to consolidate
both cases and to designate the first case captioned above as
lead for purposes of case management as to common issues,
pursuant to Federal Rule of Civil Procedure 42(a). SVF Weston
Lakeside, LLC and American Realty Advisors (“ARA
parties”) do not oppose the motion, but they request
that the second case be designated as lead or, in the
alternative, that the cases be allowed to maintain their
separate characters should the first be designated as lead.
For the reasons that follow, the motion to consolidate is
granted, case number 5:16-CV-940-FL is designated as lead
case, and both cases shall maintain their separate characters
for substantive purposes.
about December 4, 2013, the ARA parties discovered water
leaking into a vacant tenant space at one of their apartment
buildings. Thereafter, the ARA parties discovered at least 27
additional instances of water intrusion caused by
construction defects. Accordingly, the ARA parties filed a
claim pursuant to an insurance contract purchased from
Underwriters, which claim the ARA parties assert Underwriters
denied in part.
the alleged decision to deny in part coverage for the ARA
parties' losses, Underwriters filed the first case
September 21, 2016, in the Superior Court for Wake County,
North Carolina, seeking declaratory judgment as to the scope
of its liability under the policy, and the ARA parties
removed the action to this court December 9, 2016. On October
14, 2016, the ARA parties filed the second case in the U.S.
District Court for the Central District of California,
seeking damages for breach of contract, breach of the
covenant of good faith and fair dealing, and declaratory
judgment as to the scope of Underwriters' liability. On
December 30, 2016, the ARA parties moved to dismiss or stay,
or, in the alternative, transfer the first case to the
Central District of California, but, where the second case
was transferred to this district February 9, 2017, the ARA
parties' motion was denied by text order entered February
27, 2017. With both cases pending in the same district,
Underwriters' motion to consolidate followed.
actions before the court involve a common question of law or
fact, the court may . . . join for hearing or trial any or
all matters at issue in the actions; . . . consolidate the
actions; or . . . issue any other orders to avoid unnecessary
cost or delay.” Fed.R.Civ.P. 42(a). In ruling on a
motion to consolidate the “critical question” is
whether the case presents “specific risks of prejudice
and possible confusion” and, if so, the magnitude of
those risks relative to the “risk of inconsistent
adjudications on common factual and legal issues, the burden
on parties, witnesses and available judicial resources posed
by multiple lawsuits, the length of time required to conclude
multiple suits as against a single one, and the relative
expense to all concerned of the single-trial, multiple-trial
alternatives.” Arnold v. E. Air Lines, Inc., 681 F.2d
186, 193 (4th Cir. 1982), reh'g granted and rev'd on
other grounds, 712 F.2d 899 (4th Cir. 1983) (en banc).
instant matter, the pleadings disclose and the parties agree
that the cases constitute mirror images of one another.
See Volvo Const. Equipment North America, Inc. v. CLM
Equipment Co., Inc. 386 F.3d 581, 600 (4th Cir. 2004)
(discussing mirror image claims consolidated in a single
forum). Accordingly, there appears no risk of prejudice or
possible confusion resulting from consolidation, and there
exists a significant risk that adjudicating the cases
separately could result in inconsistent adjudication on
identical issues; unnecessary burden on the parties,
witnesses, and the court; waste of time; and unjustified
additional expense. See Arnold, 681 F.2d at 193.
Thus, consolidation is warranted here. However, where
“consolidation is permitted as a matter of convenience
and economy in administration, but does not merge the suits
into a single cause, or change the rights of the parties,
” the two actions shall retain their separate character
and consolidation shall not be construed as affecting the
parties' substantive rights. Intown Properties
Management, Inc. v. Wheaton Van Lines, Inc., 271 F.3d
164, 168 (4th Cir. 2001) (quoting Johnson v. Manhattan
Ry. Co., 289 U.S. 479, 496-97 (1933)).
each party requests to proceed in the position of
“plaintiff, ” with Underwriters contending that,
as first-filer, it is entitled that designation, while SVF
Weston contends the opposite on the ground that it, as owner
of damaged property, is the natural plaintiff. The court need
not address this abstract issue at this juncture where the
parties have identified no substantive issue that turns on
its resolution. Instead, for the limited purpose of pre-trial
case management, the court designates Underwriters as
plaintiff where it is the first filer.
foregoing reasons, the court GRANTS Underwriters's motion
to consolidate and ORDERS that civil action No.
5:17-CV-74-FL, currently pending in the United States
District Court for the Eastern District of North Carolina, is
consolidated with the earlier-filed action, No.
5:16-CV-940-FL, bearing case caption Certain Interested
Underwriters Subscribing to Policy No. B1262P20017013 v.
American Realty Advisors, SVF Weston Lakeside, LLC, and DOES
1-25, Inclusive. Unless good cause be shown, all future
filings shall be docketed in this master file.
order regarding planning and scheduling will follow.