USA et al v. North American Specialty Insurance Company

Filing 10

MEMORANDUM OPINION. Signed by Honorable Harry F. Barnes on March 11, 2009. (cnn)

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF ARKANSAS EL DORADO DIVISION UNITED STATES OF AMERICA for the use and benefit of CENTURY READY MIX CORPORATION

PLAINTIFF

V S. NORTH AMERICAN SPECIALITY INSURANCE COMPANY

CASE NO. 08-1046

DEFENDANT M E M O R A N D U M OPINION

B efo re the Court is the Motion to Dismiss for Lack of Personal Jurisdiction and for Failure to J o in a Party by Defendant North American Speciality Insurance Company ("NASIC"). (Doc. 3). P lain tiff Century Ready Mix Corporation responded. (Doc. 6). The Court finds the matter ripe for c o n s id e r a t io n . BACKGROUND P laintiff was a subcontractor on a project to repair a post office in Crossett, Arkansas (" P r o ject"). SLG Contractors ("SLG") was the primary contractor on the Project. As required by the M iller Act, 40 U.S.C. section 3131 et seq, SLG obtained a payment bond to ensure the protection of th e United States and others who worked on the Project. This bond is numbered S9039939. (Complaint D oc. 1).The Bond names Washington International Insurance Company ("Washington International") as the surety for the Bond. (Doc. 3-1). Plaintiff delivered $24,521.77 worth of concrete to the Project job site. Plaintiff has been paid only $8,292.03 of this amount. Plaintiff filed this suit against Defendant claiming that it is liable to Plaintiff for the remaining am o u n t owed him from his performance on the Project, pursuant to the Bond. Defendant moves the C o u r t to dismiss this action because: 1) pursuant to Federal Rule of Civil Procedure 12(b)(2), the Court

d o e s not have personal jurisdiction over Defendant; and 2) pursuant to Federal Rule of Civil Procedure 1 2 (b )( 7 ), Plaintiff has failed to join an indispensable party as required by Federal Rule of Civil P roced ure 19. STANDARD OF REVIEW T o survive a motion to dismiss for lack of personal jurisdiction, the Plaintiff need only make a prima facie showing of personal jurisdiction over the Defendant. DigiTel Holdings, Inc. v. Proteg T elecom m s. (PTE), Ltd., 89 F.3d 519, 522 (8th Cir. 1996). In determining whether Plaintiff has made this prima facie showing of personal jurisdiction, the Court must view the evidence in the light most fav o rab le to the Plaintiff and resolve all factual conflicts in its favor. Id. The Court may consider m atters outside the pleadings during its consideration of personal jurisdiction. Stevens v. Redwing, 146 F .3d 538, 543 (8th Cir. 1998). In analyzing a 12(b)(7) motion to dismiss for failure to join an indispensable party under Rule 1 9 , the Court will accept all of the pleader's well-pleaded factual allegations as true, and will draw all reason able inferences in the pleader's favor. Rotec Industries., Inc. v. Aecon Group, Inc., 436 F . S u p p.2 d 931, 933 (N.D.Ill. 2006). The party seeking the dismissal bears the burden of proving the absen t party is indeed indispensable. Citizen Band Potawatomi Indian Tribe v. Collier, 17 F.3d 1292, 1 2 9 3 (10th Cir. 1994). The Court may consider materials other than the pleadings in determining w hether nonjoinder of a party warrants dismissal. Davis Cos. v. Emerald Casino, Inc., 268 F.3d 477, 4 8 0 , n.4 (7th Cir. 2001). The Court is hesitant to dismiss for failure to join an absent party, and in gen eral a dismissal will only be granted when the defect cannot be cured. Sever v. Glickman, 298 F .S up p.2 d 267, 275 (D.Conn. 2004).

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D IS C U S S IO N D efen d an t first argues that the Court does not have personal jurisdiction over it. Plaintiff asserts that the Miller Act gives the Court personal jurisdiction over the Defendant. The Court agrees. T h e Court may exercise personal jurisdiction over a defendant brining an action pursuant to a statute that provides an implicit grant of nationwide service of process. In re Federal Fountain, Inc., 165 F.3d 60 0, 601-02 (8th Cir. 1999). The Miller Act provides such an implicit grant. See Limerick v. T.F. Sch oles, Inc., 292 F.2d 195, 195-96 (10th Cir. 1961). Therefore, the Court finds that it has personal jurisdiction over Defendant pursuant to the Miller Act. Defendant also moves to dismiss Plaintiff's claim based on its failure to join an indispensable p ar ty under Rule 19. Fed. R. Civ. P. 12(b)(7). Defendant argues that complete relief under Rule 1 9 (a)(1 )(A ) cannot be given because Defendant is not the surety company named on the Bond. In sup po rt of this contention, Defendant attached the Bond to its Motion to Dismiss. The Bond names W ashington International as the surety. Plaintiff responds by claiming that Defendant has not proven it does not serve as surety for some other bond issued on the Project. F irst, the Court addresses Plaintiff's assertions that Defendant has not proven they did not ex e cu te some other bond on the Project. The flaw in this argument is that Plaintiff sued Defendant on the Bond specifically. Defendant has produced to the Court the Bond, on which Plaintiff basis this actio n , and Defendant is not the surety named on it. Because Plaintiff sued on this specific Bond, and n o t another, its argument regarding the Defendant's alleged failure to prove they did not execute some o the r bond is without merit. In analyzing Defendant's 12(b)(7) Motion to Dismiss, the Court must ask two questions: 1) w h eth er joinder of the absent party is required; and if so 2) whether the party is subject to service of 3

pro cess and can be joined without defeating the Court's jurisdiction. Fed. R. Civ. P. 19(a). Rule 19(a) s ta te s that a person who is subject to service of process and whose joinder will not deprive the court o f subject-matter jurisdiction must be joined as a party if: "(A) in that person's absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that d isp o sin g of the action in the person's absence may: (i) as a practical matter impair or impede the person's ability to protect the interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the i n t e r e s t. " Fed. R. Civ. P. 19(a)(1). The joining of Washington International is required under Rule 19(a) because the Court cannot accord complete relief among the existing parties. The Court cannot grant Plaintiff relief from Defendant because Defendant is not the named surety on the Bond. Therefore, Washington Internation al, as named surety on the Bond, is a required party under Rule 19. Because the Court determines that Washington International should be a party to this action, it may order joinder if Washington International is subject to service of process and if its presence will no t defeat the Court's subject matter jurisdiction. Fed. R. Civ. P. 19(a)(2). As stated above, the Miller A ct implicitly grants nationwide service. Washington International has listed an Illinois and Texas ad d ress on the Bond and thus, is subject to service of process under the Miller Act. (Doc. 3-1) F u r th erm o re, the case is not before the Court on diversity grounds, and the joinder of Washington In tern atio n al will not destroy the Court's subject matter jurisdiction over this action. The Court finds th at Washington International is a required party who should be joined in this action.

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C O N C L U S IO N W h ile the Court recognizes that Plaintiff has not named the proper Defendant in this action, it cannot dismiss Plaintiff's cause of action against Defendant NASIC based on the rules of procedure cited in its Motion to Dismiss. For the above reasons, Defendant NASIC's Motion to Dismiss is D E N IE D . The Court orders that Plaintiff serve process on Washington International as the appropriate defend ant in this action, pursuant to Federal Rule of Civil Procedure 19(a)(2). IT IS SO ORDERED, this 11th day of March, 2009.

/s/ Harry F. Barnes Hon. Harry F. Barnes U nited States District Judge

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