Crum & Forster Specialty Insurance Company et al v. Ard Contracting, Inc. et al

Filing 30

ORDER granting 28 Motion for Joinder of Non-Party ; finding as moot 21 Motion to Dismiss. Plaintiffs are ordered to file an amended complaint and proposed summons to effectuate the joinder of Mirabella Owners' Association on or before 9/27/16. Ard Contracting is ordered to file an answer to the amended complaint by 10/11/16. Signed by Chief Judge William H. Steele on 9/19/2016. (cmj)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
CRUM & FORSTER SPECIALTY
INSURANCE COMPANY, et al.,
Plaintiffs,
v.
ARD CONTRACTING, INC.,
Defendant.

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CIVIL ACTION 16-0185-WS-M

ORDER
This matter comes before the Court on defendant’s Motion to Dismiss (doc. 21) and
plaintiffs’ Motion for Joinder of Non-Party (doc. 28). Both motions have been briefed and are
now ripe for disposition.
The procedural posture of this case is unusual. Plaintiffs, Crum & Forster Specialty
Insurance Company and First Mercury Insurance Company, initially brought this declaratory
judgment action against a pair of defendants, Ard Contracting, Inc. and Mirabella Owners’
Association, Inc. According to the pleadings, a dispute arose between Ard Contracting and
Mirabella over allegations of defective work by Ard Contracting in the construction of the
Mirabella Condominium in Perdido Key, Florida.1 On that basis, Mirabella filed suit against Ard
Contracting in the Circuit Court for Escambia County, Florida, in July 2014. Crum & Forster
and First Mercury had issued commercial general liability insurance policies to Ard Contracting
during the relevant time period. They brought this declaratory judgment action against Ard
Contracting and Mirabella seeking a declaration that the subject policies entitle Ard Contracting
to neither a defense nor indemnity in the Escambia County lawsuit.
Shortly after this declaratory judgment action commenced, Ard Contracting filed a
Motion to Dismiss (doc. 11) on the ground of improper venue, pursuant to Rule 12(b)(3),
1

In particular, Mirabella asserted that certain errors by Ard Contracting in
constructing columns and applying stucco had allowed water and moisture intrusion into the
building.

Fed.R.Civ.P. Ard Contracting reasoned that defendant Mirabella was a resident only of
Escambia County, Florida, thereby preventing venue from being appropriate in this District
Court pursuant to 28 U.S.C. § 1391(b)(1). Plaintiffs responded by filing a Notice of Dismissal
(doc. 14) wherein they dismissed without prejudice all claims against Mirabella pursuant to Rule
41(a)(1)(A)(i), Fed.R.Civ.P. Following the voluntary dismissal of Mirabella, the Court
concluded that venue over this action as between plaintiffs and Ard Contracting (now the lone
remaining defendant) was proper in this District Court pursuant to § 1391(b)(1). Via Order (doc.
22) dated August 12, 2016, the undersigned denied Ard Contracting’s Rule 12(b)(3) Motion.
Undaunted, Ard Contracting now pursues a second Motion to Dismiss (doc. 21), this time
for failure to join an indispensable party. Movant reasons that plaintiffs’ voluntary dismissal of
Mirabella to cure the venue deficiencies created a new, distinct defect warranting dismissal under
the Federal Rules of Civil Procedure. The gravamen of Ard Contracting’s present Motion is that
“[h]aving dismissed Mirabella from the lawsuit, the Insurers have dismissed an indispensable
party necessary for the suit to proceed, and so this entire action should be dismissed” pursuant to
Rule 19(b), Fed.R.Civ.P. (Doc. 21, at 11.) In Ard Contracting’s view, Mirabella is an
indispensable party within the meaning of Rule 19 because its status as a claimant against Ard
Contracting in the underlying action gives it an interest in the outcome of this insurance coverage
dispute as between plaintiffs and Ard Contracting. Defendant cites various case authorities in
support of this position.
In response, plaintiffs did not endeavor to make a showing that Mirabella is not an
indispensable party for Rule 19 purposes. Instead, plaintiffs filed a Motion for Joinder seeking
to add Mirabella as a party defendant, less than two months after voluntarily dismissing their
claims against that same entity. In support of their Motion for Joinder, plaintiffs rely on the
passage in Rule 19 providing that “[i]f a person has not been joined as required, the court must
order that the person be made a party.” Rule 19(a)(2), Fed.R.Civ.P. Only if a required party
cannot be joined should the court consider whether dismissal is appropriate.2 So, in other words,

2

See Molinos Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1344 (11th Cir.
2011) (“If they are required parties, but cannot be joined – i.e., because they are non-diverse –
Rule 19(b) provides a list of factors to determine whether, in equity and good conscience, the
action should proceed among the existing parties or should be dismissed.”) (citation and internal
quotation marks omitted); Focus on the Family v. Pinellas Suncoast Transit Authority, 344 F.3d
(Continued)
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plaintiffs do not dispute that Mirabella is a “required party” within the meaning of Rule 19(a),
but instead simply move to join Mirabella as a party defendant and thereby moot Ard
Contracting’s argument for dismissal under Rule 19(b).
The critical question, then, is whether Mirabella can be joined in this action and thereby
circumvent Ard Contracting’s Rule 19(b) Motion. Plaintiffs’ procedural justification for joinder
of Mirabella lies in Rule 4(k)(1)(B), Fed.R.Civ.P., which provides that serving a summons
establishes personal jurisdiction over a defendant “who is a party joined under Rule 14 or 19 and
is served within a judicial district of the United States and not more than 100 miles from where
the summons was issued.” Id.3 The practical effect of Rule 4(k)(1)(B) is that, as a general
proposition, if a party “has minimum contacts with the 100-mile bulge area, the district court in
the forum state gains personal jurisdiction over such party through service of process.”
Quinones v. Pennsylvania General Ins. Co., 804 F.2d 1167, 1174 (10th Cir. 1986).
Ard Contracting’s sole argument that Mirabella cannot be joined in this action, such that
dismissal is warranted pursuant to Rule 19(b), is that Rule 4(k)(1)(B) is inapplicable here. In
particular, Ard Contracting posits that Mirabella is located outside the 100-mile bulge area. This
contention is incorrect. The text of Rule 4(k)(1)(B) states clearly that it applies to a party joined
under Rule 19 that is served “not more than 100 miles from where the summons was issued.”
Any summons for Mirabella in this case would be issued in Mobile, Alabama, where the Clerk of
Court and Clerk’s Office are located. Plaintiffs’ filings reflect that both Mirabella’s principal
place of business and the address for its registered agent for service of process are located in
Pensacola, Florida. (Doc. 28, Exh. A.) Pensacola, Florida is less than 100 miles from Mobile,
Alabama, as the crow flies; therefore, Mirabella would be subject to the bulge provision of Rule

1263, 1280 (11th Cir. 2003) (“If the person should be joined but cannot be (because, for example,
joinder would divest the court of jurisdiction) then the court must inquire whether, applying the
factors enumerated in Rule 19(b), the litigation may continue.”) (citation omitted).
3

“The fundamental federal policy underlying the 100-mile bulge provision of [Rule
4(k)(1)(B)] is that the benefits that may be obtained from the disposition by a federal court of an
entire controversy far outweigh the burden of requiring an appearance in a federal court located
in a state other than his own, by an impleaded party properly served within the modest bulge area
around the forum.” Fitzgerald v. Wal-Mart Stores East, LP, 296 F.R.D. 392, 394 (D. Md. 2013)
(citations omitted).

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4(k)(1)(B) if it were served with process in this case. See generally Sprow v. Hartford Ins. Co.,
594 F.2d 412, 417-18 (5th Cir. 1979) (for purposes of measuring distance for the 100-mile bulge
provision, “[a] number of our courts have adopted the ‘as the crow flies’ mode of calculation …
and we elect to embrace it as the standard for this circuit”). Mirabella lies within the bulge, and
would therefore be subject to the jurisdictional provisions of Rule 4(k)(1)(B) upon service of
process.
In arguing otherwise, Ard Contracting insists that this is a Northern Division case, that
the 100-mile bulge should therefore be measured from the Northern Division courthouse in
Selma, Alabama, and that Pensacola, Florida is more than 100 miles from Selma. This
contention is unpersuasive for at least two critical reasons. First, this is a Southern Division
case, not a Northern Division case. The plaintiff filing a complaint selects the forum, both in
terms of district and division. The Complaint for Declaratory Judgment filed by plaintiffs on
May 2, 2016, plainly and unambiguously reflects that the case was filed “In the United States
District Court Southern District of Alabama Southern Division.” (Doc. 1, at 1.) There has been
no court order transferring this case from the Southern Division to the Northern Division
pursuant to 28 U.S.C. § 1404, which allows a district court to “transfer any civil action to any
other district or division where it might have been brought.” Id. (emphasis added). As such, this
case is now – and always has been – a Southern Division case.4
Second, even if this case were a Northern Division case, which it is not, Ard
Contracting’s argument would still falter because the 100-mile bulge is measured “from where
the summons was issued.” Rule 4(k)(1)(B). All summonses for Southern District of Alabama
4

In asserting otherwise, Ard Contracting indicates that the case number assigned
by the Clerk’s Office is “2:16-cv-00185,” with the “2” representing Northern Division. Ard
Contracting further points to the Preliminary Scheduling Order entered on July 7, 2016, which
specifies that “this is a Northern Division case.” (Doc. 12, ¶ 4.) Those discrepancies are the
product of a clerical error by the Clerk’s Office. When this civil file was opened, Clerk’s Office
personnel mistakenly designated this action as a Northern Division case. That mistake (which
has since been corrected) carried over into the “2” prefix on the case number and the reference to
the Northern Division in the Preliminary Scheduling Order. The Clerk of Court is not
empowered to overrule a plaintiff’s choice of forum. Plaintiffs having unambiguously indicated
in their Complaint that they were filing this action in the Southern Division, that is where the
case was filed, notwithstanding the Clerk’s inadvertent mislabeling of this action as a Northern
Division case at intake. The court file now properly reflects the case number as being Civil No.
1:16-cv-00185-WS-M, as it should have been from the start.

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cases are issued from the Clerk’s Office in Mobile, Alabama. There is no separate Clerk’s
Office in Selma, and no civil summonses are issued from that location. Even in Northern
Division cases, court is held in Mobile, Alabama, unless otherwise ordered by the Court in a
particular case. See General L.R. 77(a) (“Court for the Northern Division shall be held in Selma
when ordered by the Court in a particular case.”) (emphasis added). There has never been an
order entered in this case ordering that court will be held in Selma, Alabama; to the contrary, the
Preliminary Scheduling Order says precisely the opposite. (Doc. 12, ¶ 4 (“the trial will be held
in the federal Courthouse in Mobile, Alabama”).) Thus, any summons for Mirabella would be
issued by the Clerk’s Office in Mobile, which is less than 100 miles from Mirabella’s service
address in Pensacola, such that Rule 4(k)(1)(B) would apply, in any event.
The bottom line is straightforward: Plaintiffs have shown that Mirabella may be served
within 100 miles from where a summons would be issued in this case. As such, plaintiffs may
avail themselves of the 100-mile “bulge” provision of Rule 4(k)(1)(B) to establish personal
jurisdiction over Mirabella. This, in turn, means that Mirabella can be joined in this action for
purposes of Rule 19(b), Fed.R.Civ.P., and that dismissal for nonjoinder of that party is therefore
inappropriate.
In light of the foregoing, plaintiffs’ Motion for Joinder of Non-Party (doc. 28) is granted.
Plaintiffs are ordered, on or before September 27, 2016, to file an amended complaint and
proposed summons to effectuate the joinder of Mirabella Owners’ Association, Inc. Because the
purportedly indispensable party is now being joined as a party defendant, Ard Contracting’s
Motion to Dismiss for Failure to Join an Indispensable Party (doc. 21) is moot. Ard Contracting
is ordered to file an answer to the amended complaint on or before October 11, 2016.
DONE and ORDERED this 19th day of September, 2016.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

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