Americon Group, Inc. et al v. Marco Contractors, Inc. et al

Filing 104

ORDER Denying Defendants' 96 Motion to Dismiss Claims of Plaintiff Garr Electric. Signed by District Judge Matthew F. Leitman. (HMon)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
AMERICON GROUP, INC., et al.,
Plaintiffs,

Case No. 14-cv-10785
Hon. Matthew F. Leitman

v.
MARCO CONTRACTORS, INC., et al.,
Defendants.
__________________________________________________________________/

ORDER DENYING DEFENDANTS’ MOTION TO DISMISS
CLAIMS OF PLAINTIFF GARR ELECTIC (ECF #96)

Defendant Marco Contractors, Inc. (“Marco”) is a general contractor. In
2013, Marco entered into a Construction Agreement with GMRI, Inc. (“GMRI”).
The Construction Agreement called for Marco to perform certain construction work
on two Red Lobster restaurants owned by GMRI in Michigan (the “Work”). (See
Third-Party Compl. at ¶9, ECF #34 at Pg. ID 743.) Marco entered into subcontracts
with Plaintiffs Americon Group, Inc. (“Americon”), Garr Electric, Inc. (“Garr”), and
Detroit Spectrum Painters, Inc. (“Spectrum”). (See Sec. Am. Compl. at ¶¶ 9-13, ECF
#30 at Pg. ID 578-80.) Under the subcontracts, each of the Plaintiffs agreed to
perform a portion of the Work. (See id.)

After Marco and Plaintiffs began

performing the Work, GMRI dismissed Marco from the Red Lobster projects,
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replaced Marco with another general contractor, and refused to fully pay Marco for
the portion of the Work that had been completed. (See Third-Party Compl. at ¶¶ 1315, ECF #34 at Pg. ID 744.) Marco then declined to pay Plaintiffs under the
subcontracts. (See Sec. Am. Compl. at ¶19, ECF #30 at Pg. ID 581.)
In 2014, Plaintiffs brought this action against Marco and Old Republic
Insurance Company. Plaintiffs allege, among other things, that Marco breached the
subcontracts by failing to pay them for the portion of the Work they performed.
Americon seeks $127,740.00 in damages (see id. at Pg. ID 591), Garr seeks
$33,365.83 in damages (see id. at Pg. ID 592), and Spectrum (which has been
dismissed pursuant to a stipulation) sought $67,850.00 in damages. (See id.) Marco
now moves to dismiss Garr’s claims for lack of subject matter jurisdiction. (See ECF
#96.) The motion is DENIED.
As Marco acknowledges, this Court has subject matter jurisdiction over the
claims by Americon pursuant to 28 U.S.C. § 1332(a) because there is complete
diversity of citizenship between Americon and Marco and because Americon seeks
more than $75,000 in damages. However, Garr’s claim does not reach the $75,000
threshold for diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). The question
presented by Marco’s motion is whether the Court has supplemental jurisdiction
over Garr’s claims pursuant to 28 U.S.C. § 1367(a) (“Section 1367(a)”). It does.

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In relevant part, Section 1367(a) provides that a district court has
“supplemental jurisdiction over all other claims that are so related to claims in the
action within such original jurisdiction that they form part of the same case or
controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a)
“Claims form part of the same case or controversy when they ‘derive from a common
nucleus of operative facts,’” Blakely v. U.S., 276 F.3d 853, 861 (6th Cir. 2002)
(quoting Ahearn v. Charter Township of Bloomfield, 100 F.3d 451, 454-55 (6th Cir.
1996)), or when they “revolve around a central fact pattern.” White v. County of
Newberry, 985 F.2d 168, 172 (4th Cir. 1993).1 “‘A loose factual connection between
claims is sufficient.’” Askew v. Metropolitan Property and Casualty Ins. Co., 217
F.Supp.3d 982, 985 (E.D. Mich. 2016) (quoting Ammerman v. Sween, 54 F.3d 423,
424 (7th Cir. 1995)).2
Marco’s own submissions to the Court establish that there is a meaningful
factual connection between Americon’s claims (over which the Court admittedly has
original jurisdiction) and Garr’s claims. Indeed, Marco has taken the position that
the two sets of claims arose from a single act/omission: GMRI’s wrongful failure to

1

The Sixth Circuit cited White with approval in Blakely. See Blakely, 276 F.3d at
861.
2
See also Blakely, 276 F.3d at 862 (citing with approval a Seventh Circuit decision
holding that only loose factual connection is necessary to satisfy Section 1367(a));
13D Charles A. Wright and Arthur R. Miller, et al., Fed. Prac. & Proc. Juris. §
3567.1 (3d ed. 2008) (“In practice, § 1367(a) requires only that the jurisdictioninvoking claim and the supplemental claim have some loose factual connection.”). 
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pay Marco for successful completion of the Work. Marco took this position in the
Third-Party Complaint it filed against GMRI (ECF #34) and in its memorandum in
support of its motion seeking permission to file that pleading (ECF #29). In the
Third-Party Complaint, Marco alleged that it and its subcontractors (including
Americon and Garr) “completed” and “fully performed” the “Work” and that GMRI
then wrongfully “refused” to pay for the Work. (Third-Party Compl. at ¶¶ 14, 17,
ECF #34 at Pg. ID 744.) And in the memorandum in support of its motion for leave
to file the Third-Party Complaint, Marco explained that the “sole reason for [its]
failure to compensate” Americon and Garr was GMRI’s “willful failure to
compensate Marco” for the Work. (ECF #29 at Pg. ID 418; emphasis added). These
statements by Marco demonstrate Marco’s view that the claims for non-payment by
Americon and Garr revolve (at least in large part) around the same factual predicate
– GMRI’s wrongful failure to pay Marco for the Work.3
And there are other important factual connections between the two claims.
Garr and Americon worked on the same construction project at the same Red
Lobster. The subcontracts between Marco and Americon, on one hand, and Marco

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As the Court has previously indicated, if the Court concludes that Marco violated
the terms of the Court’s Order dated March 12, 2015 (ECF #59), the Court may
preclude Marco from relying upon the “pay-when-paid” provisions of its
subcontracts with Americon and Garr as defenses to the claims by those two
Plaintiffs.
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and Garr, on the other hand, are nearly identical in form. Finally, Americon and
Garr worked on the Red Lobster project at around the same time and both took
direction from Marco. Under all of these circumstances (and in light of Marco’s
own assertions described above), there is a sufficient factual connection between
Americon’s claims and Garr’s claims such that the Court has supplemental
jurisdiction over Garr’s claims.
Marco counters that Garr’s claims cannot form part of the same case or
controversy as Americon’s claims because the two sets of claims arise out of
“separate contract[s] with Marco, and those contracts form the basis of” the
respective claims. (Mot. to Dismiss, ECF #80 at Pg. ID 1251.) But claims may form
part of the same case or controversy even where they arise out of separate contracts
involving different parties. See, e.g., Tuttobene v. The Assurance Group, Inc., 2012
WL 2871848, at ** 5-6 (M.D. Tenn. July 12, 2012) (holding that breach of contract
claims by different independent contractors against same defendant formed part of
the same case or controversy even though each independent contractor had separate
contract with defendant); Doran v. Bondy, 2005 WL 1907252, at *11 (W.D Mich.
Feb. 18, 2005) (holding that claims by different plaintiffs against same defendant
formed part of same case or controversy even though each plaintiff had separate
contract with defendant); Askew, 217 F.Supp.3d at 985 (holding that single
plaintiff’s claims against different insurance carriers under different policies for
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different types of coverage formed part of same case or controversy where claims
arose from same accident). For the reasons explained above, the claims by Americon
and Garr form part of the same case or controversy even though the claims are
brought under separate contracts.4
Because the claims by Americon and Garr form part of the same case or
controversy, the Court may exercise supplemental jurisdiction over Garr’s claims
even though Garr seeks less than $75,000 in damages. See Exxon Mobil Corp. v.
Allapattah Serv., Inc., 545 U.S. 546, 558-59 (2005). The Court chooses to exercise
jurisdiction over and to adjudicate Garr’s claims in this action because doing so will
best serve judicial economy, convenience, and fairness. See Gamel v. City of
Cincinnati, 625 F.3d 949, 951 (6th Cir. 2010) (identifying the factors that a district
court should consider in determining whether to hear claims falling within its
supplemental jurisdiction). Many of the witnesses will be the same. Much of the
testimony will overlap. And the two sets of claims share the same overall subject

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More recent filings by Marco suggest that Marco may attempt to excuse its failure
to pay Americon and Garr on the ground that those entities failed to satisfactorily
perform their portions of the Work. But that change in defense by Marco cannot
erase Marco’s earlier contention that the claims by Americon and Garr arise out of
the same act/omission – GMRI’s refusal to pay. Moreover, the Court is
independently persuaded that Marco’s failure to pay Americon and Garr did initially
arise, at least in part, out GMRI’s refusal to pay Marco and that GMRI’s conduct
provides an important common link between the claims of Americon and Garr.
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matter. Accordingly, the Court exercises its discretion to hear Garr’s claims in this
action.
Marco’s motion to dismiss Garr’s claims is DENIED.
IT IS SO ORDERED.
s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
Dated: July 9, 2018

I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on July 9, 2018, by electronic means and/or ordinary mail.
s/Holly A. Monda
Case Manager
[phone]

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