McCarthy Improvement Company v. Blythe Development Co. et al
ORDER the 22 Joint Motion for Appointment of Master is DENIED. Signed by Magistrate Judge W. Carleton Metcalf on 9/16/2022. (maf)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
BLYTHE DEVELOPMENT CO.;
LIBERTY MUTUAL INSURANCE
WESTERN SURETY COMPANY,
Third Party Defendant )
This matter is before the Court on a Joint Motion for Appointment of
Master (the “Motion to Appoint,” Doc. 22).
On March 14, 2022, McCarthy Improvement Company (“MCI”) filed its
Complaint against Blythe Development Co. (“Blythe”) and Liberty Mutual
Insurance Company (“Liberty Mutual”). Doc. 1. MCI alleges that Blythe
contracted with the North Carolina Department of Transportation for a road
modification and reconstruction project (the “Project”) and that Liberty Mutual
issued a payment bond to secure the performance of Blythe’s payment
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obligations to its subcontractors on the Project. Subsequently, Blythe entered
a subcontract with MCI (the “Subcontract”) under which MCI would furnish
and install concrete paving for the Project. Doc. 1 at 2.
MCI alleges generally that Blythe subsequently postponed MCI’s start
date on the Project multiple times, that MCI accrued additional costs due to
the delays and MCI’s mobilization efforts, that Blythe refused to recognize
modifications to the work that Blythe had directed, and that Blythe has
refused to recognize MCI’s claims for the additional costs. Id. at 2-5.
On May 9, 2022, Liberty Mutual and Blythe answered the Complaint.
Doc. 11, 12. Blythe also asserted a counterclaim against MCI and a third-party
claim against Western Surety Company (“Western Surety”), which issued a
performance bond for MCI. Doc. 12.
On July 14, 2022, Western Surety and MCI filed answers to the thirdparty claim and counterclaim. Doc. 17, 18.
On August 4, 2022, the parties submitted a Report of Initial Attorneys
Conference (the “Report,” Doc. 20). In the Report, the parties set out proposed
pretrial deadlines but also stated that they jointly sought the appointment of
a special master pursuant to Rule 53(a)(1)(A) of the Federal Rules of Civil
Procedure. Doc. 20 at 3.
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On August 17, 2022, the parties filed the Motion to Appoint, as well as
the Affidavit of Jason B. James, the parties’ proposed special master. Docs. 22,
A hearing on the Motion to Appoint, as well as an initial pretrial
conference, was conducted on August 19, 2022. At the conclusion of the
hearing, the undersigned took the Motion to Appoint under advisement. The
parties later submitted a supplemental brief supporting the Motion to Appoint,
as well as a copy of the Subcontract. Docs. 25, 26.
Rule 53(a)(1) provides that “a court may appoint a master only to:”
(A) perform duties consented to by the parties;
(B) hold trial proceedings and make or recommend
findings of fact on issues to be decided without a jury
if appointment is warranted by:
(i) some exceptional condition; or
(ii) the need to perform an accounting or resolve
a difficult computation of damages; or
(C) address pretrial and posttrial matters that cannot
be effectively and timely addressed by an available
district judge or magistrate judge of the district.
A decision whether to appoint a special master is within a court’s sound
discretion. See Advisory Committee Notes, 2003 Amendments (“Subparagraph
(a)(1)(A) authorizes appointment of a master with the parties’ consent. Party
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consent does not require that the court make the appointment; the court
retains unfettered discretion to refuse appointment”).
Here, the parties contend that Mr. James has experience in construction
law disputes and that his appointment as a special master would be
appropriate because this case is “likely to involve certain issues unique to the
construction industry, such as critical path delay analysis, which are likely to
be presented through the use of various expert witnesses.” Doc. 22 at 2. The
parties additionally assert that, although the matter could be referred to
arbitration under an arbitration clause that appears in the Subcontract, they
“desire to have a Special Master appointed in light of the difficulties with
conducting certain discovery of subpoenas for the production of documents and
deposition testimony (from both in state and out-of-state witnesses).” Doc. 25
at 2. In short, the parties contend that the appointment of a special master
would provide the “best of all worlds” – where a special master with
construction dispute expertise and who is also vested with the authority of the
Court to enforce subpoenas would preside over an arbitration-like proceeding.
Doc. 25 at 6.
The Fourth Circuit has noted that “[p]arties to a private arbitration
agreement forego certain procedural rights attendant to formal litigation in
return for a more efficient and cost-effective resolution of their disputes.”
Comsat Corp. v. National Science Foundation, 190 F.3d 269, 276 (4th Cir.
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1999) (citing Burton v. Bush, 614 F.2d 389, 390–91 (4th Cir.1980) (“When
contracting parties stipulate that disputes will be submitted to arbitration,
they relinquish the right to certain procedural niceties which are normally
associated with a formal trial”)). Accordingly, a “hallmark of arbitration—and
a necessary precursor to its efficient operation—is a limited discovery process”
and an arbitrator’s subpoena power is generally “constrain[ed].” Comsat, 190
F.3d at 276. As noted by one court, discovery in an arbitration proceeding may
be compelled “against a non-party under ‘unusual circumstances’ and only
upon ‘a showing of special need or hardship.’” Robertson v. T-Mobile US, Inc.
No. RDB-19-2567, 2019 WL 5683455, at *2 (D. Md. Nov. 1, 2019) (quoting
Comsat, 190 F.3d at 276 and enforcing a subpoena duces tecum issued by the
arbitrator against a non-party to the arbitration proceeding based on the
petitioner’s demonstration that the information sought was integral to
petitioner’s claim and otherwise unavailable).
The undersigned acknowledges the parties’ concerns regarding possible
problems they may encounter conducting discovery but, respectfully, is not
persuaded that the appointment of a special master is necessary here.
As acknowledged by counsel during the August 19 hearing, while this
matter may present issues that are unique to the construction industry, the
case does not appear to be overly complex.
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Further, though the parties note that it is possible they will need to
enforce subpoenas to secure the testimony of out-of-state witnesses, it is not
clear that any of those witnesses will actually refuse to participate voluntarily
in the parties’ discovery efforts, should the matter be referred to arbitration.
Relatedly, as noted above, in the event a non-party were to object to
participating in arbitration, a mechanism exists for compelling the non-party’s
response, provided a sufficient showing is made.
Finally, the parties have not provided the Court with any specific
authorities that have approved of a special master acting in the manner they
Consequently, the undersigned concludes that the Motion to Appoint
should be denied and a Pretrial Order and Case Management Plan should be
entered. The parties may then proceed through litigation in the ordinary
course, including engaging in court-enforceable discovery, and on to trial before
the District Court. In the alternative, the parties remain free to request that
the matter be referred to arbitration, if appropriate.
Accordingly, the Joint Motion for Appointment of Master (Doc. 22) is
It is so ordered.
Signed: September 16, 2022
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