Certain Interested Underwriters Subscribing to Policy No. B1262PW00017013 v. American Realty Advisors, et al
ORDER granting 25 Motion to Consolidate Cases. This case is hereby consolidated with 5:17-CV-74-FL. Unless good cause be shown, all future filings shall be docketed in this master file. Signed by District Judge Louise Wood Flanagan on 4/10/2017. (Edwards, S.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
UNDERWRITERS SUBSCRIBING TO
POLICY NO. B1262P20017013,
AMERICAN REALTY ADVISORS; SVF
WESTON LAKESIDE, LLC; AND DOES
SVF WESTON LAKESIDE, LLC; and
AMERICAN REALTY ADVISORS,
CERTAIN UNDERWRITERS AT
LLOYD’S OF LONDON,1
The pleadings demonstrate and the parties do not dispute that “Certain Interested
Underwriters Subscribing to Policy No. B1262P20017013” and “Certain Underwriters at Lloyd’s
of London” constitute the same entity. (Compare DE 1-2 ¶ 9 in No. 5:16-CV-940-FL with DE 1 ¶
10 in No. 5:17-CV-74-FL (each describing the named party as subscribers to Policy No.
These cases involving interpretation of an insurance contract underwriting three waterdamaged 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.
On or 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.
After 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.
“If 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).
In the 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)).
Finally, 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.
For the 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-CV940-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.
Initial order regarding planning and scheduling will follow.
SO ORDERED, this the 10th day of April, 2017.
LOUISE W. FLANAGAN
United States District Judge
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