Garland Dollar General LLC v. Reeves Devlopment LLC et al

Filing 81

Memorandum Opinion and Order. 67 MOTION to Dismiss In Response To Reeves Development, LLC's First Amended Third-Party Claim Against R-Delta Engineers, Inc. filed by R-Delta Engineers, Inc. is denied without prejudice as premature and 77 First MOTION for Leave to File Amended Complaint filed by Garland Dollar General LLC is granted. (Ordered by Chief Judge Sidney A Fitzwater on 5/17/2010) (Chief Judge Sidney A Fitzwater)

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION GARLAND DOLLAR GENERAL LLC, § § Plaintiff, § § Civil Action No. 3:09-CV-0707-D VS. § § REEVES DEVELOPMENT, LLC, § et al., § § Defendants. § MEMORANDUM OPINION AND ORDER R-Delta Engineers, Inc. ("R-Delta") moves to dismiss the first amended third-party complaint of third-party plaintiff Reeves Development, LLC ("Reeves Development").1 Plaintiff Garland

Dollar, LLC ("Garland Dollar") moves for leave to file a first amended complaint. The court denies R-Delta's motion to dismiss

without prejudice as premature, and it grants Garland Dollar's motion for leave to file a first amended complaint. I Garland Dollar operates a Dollar General retail store in Garland, Texas. facility In 2007 Garland Dollar purchased a retail store by Reeves Development. Garland Dollar

constructed

discovered that design or construction flaws had allowed moisture

The court granted Reeves Development's motion to file its first amended third party complaint on April 12, 2010, after RDelta filed its motion. Reeves Development had not yet filed the first amended third party complaint on the date R-Delta filed its motion to dismiss, nor has it as yet filed the first amended third party complaint.

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to infiltrate the building and that the building's foundation had moved. Garland Dollar sued Reeves Development in state court,

alleging claims for breach of contract, negligence, and breach of warranty. Reeves Development removed the case to this court.

Several months after the case was removed, Reeves Development obtained leave to file a third-party action against several thirdparty defendants, including R-Delta. services firm whom Reeves R-Delta is an engineering retained to perform a

Development

drainage study for the land on which the store was built, provide engineering plans for the store, and otherwise assist in the store's construction. In its third-party complaint, Reeves

Development asserted claims against R-Delta for breach of contract, negligence, and breach of express warranty. Reeves Development

essentially alleged that R-Delta provided poor quality engineering services that resulted in Reeves Development's potential liability to Garland Dollar, and it sought contribution for any amount it was required to pay to Garland Dollar. R-Delta responded to Reeves Development's third-party action by filing motions to dismiss under Fed. R. Civ. P. 12(b)(1) and (6). In its Rule 12(b)(6) motion, R-Delta maintained that

contribution was a remedy only available in tort and that Reeves Development's claims for contribution must be dismissed as a matter of law. Reeves Development thereafter sought leave to file a first amended third-party complaint against R-Delta. -2The court granted

that motion after R-Delta filed the instant motion to dismiss. Reeves Development has not yet filed the pleading.2 Garland Dollar moves for leave to file a first amended complaint. It essentially seeks to add as defendants the thirdRandy Goodloe

party defendants whom Reeves Development has sued.

("Goodloe"), presently a third-party defendant, opposes the motion, contending that Garland Dollar's proposed first amended complaint is not supported by an affidavit that complies with Tex. Civ. Prac. & Rem. Code Ann. § 150.002(a) (Vernon 2009). Section 150.002(a)

requires, inter alia, that in any action for damages arising out of the provision of professional services by a licensed or registered professional, affidavit of the a plaintiff third-party must file with the complaint or an

licensed

architect

licensed

professional engineer who meets certain statutory qualifications.3 Subject to its motion to dismiss, R-Delta also moved for leave to file a first amended answer to Reeves Development's first amended third-party complaint. The court granted that motion on April 12, 2010, and it entered a corrected order on May 17, 2010. Because Reeves Development has not yet filed the first amended third-party complaint, R-Delta can defer filing the first amended answer, despite the deadlines set out in the orders of April 12, 2010 and May 17, 2010, until 14 days after Reeves Development files the first amended third-party complaint.
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Section 150.002(b) provides: The affidavit shall set forth specifically for each theory of recovery for which damages are sought, the negligence, if any, or other action, error, or omission of the licensed or registered professional in providing the professional service, including any error or omission in providing advice, judgment, -3-

II A R-Delta's motion to dismiss is denied without prejudice as premature because Reeves Development had not yet obtained leave to file (nor filed) its first amended third-party complaint as of the date R-Delta filed its motion to dismiss. B Because Reeves Development will presumably file its first amended third-party complaint, and because R-Delta's motion to dismiss appears meritorious, the court will address the motion so that when Reeves Development files the amended pleading, it can address the defects discussed in this memorandum opinion and order. Under Rule 8(a)(2), a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." While "the pleadings standard Rule 8 announces does not

require `detailed factual allegations,'" it demands more than "`labels and conclusions.'" Ashcroft v. Iqbal, ____ U.S. ___, 129

S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550

opinion, or a similar professional skill claimed to exist and the factual basis for each such claim. The third-party licensed architect, licensed professional engineer, registered landscape architect, or registered professional land surveyor shall be licensed or registered in this state and actively engaged in the practice of architecture, engineering, or surveying. -4-

U.S. 544, 555 (2007)).

And "`a formulaic recitation of the Id. (quoting Twombly,

elements of a cause of action will not do.'" 550 U.S. at 555).

In deciding a Rule 12(b)(6) motion, "[t]he `court accepts all well-pleaded facts as true viewing them in the light most favorable to the plaintiff.'" In re Katrina Canal Breaches Litig., 495 F.3d

191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)). To

survive the motion, a plaintiff must plead enough facts "to state a claim to relief that is plausible on its face." U.S. at 570. Twombly, 550

"A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. "The plausibility standard is not akin

to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id.; see also

Twombly, 550 U.S. at 555 ("Factual allegations must be enough to raise a right to relief above the speculative level[.]"). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not `shown'-that the pleader is entitled to relief." Iqbal, 129 S.Ct. at 1950 (quoting Rule 8(a)(2)) (alteration omitted).

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C R-Delta characterizes Reeves Development's claim as one for common law indemnity. Except in certain circumstances not

pertinent here, no common law right to indemnity exists in Texas. See Interstate Contracting Corp. v. City of Dallas, Tex., 2000 WL 1281198, at *4 (N.D. Tex. Sept. 8, 2000) (Lynn, J.) (citing B & B Auto Supply, Sandpit & Trucking Co. v. Cent. Freight Lines, 603 S.W.2d 814 (Tex. 1980)). Reeves Development labels the claim as

one for "Breach of Contract." Proposed Am. 3d-Party Compl. 4. The theory under which Reeves Development seeks relief, however, is unclear. It alleges that [Reeves Development] and [R-Delta] entered into a valid and enforceable contract. The contract provided that [R-Delta] would prepare detailed engineering plans from which [Reeves Development] would rely upon to construct the building. Further, [R-Delta] agreed to perform a drainage study before construction of the building. [Reeves Development] fully performed its contractual obligations by paying [R-Delta] for the goods and services. [R-Delta] breached the contract by providing improper engineering plans and a drainage study which allowed moisture to infiltrate the building and foundation and cause damage. Accordingly, [Reeves Development] seeks common law indemnity from [R-Delta] to defend against [Garland Dollar's] claims. Id. at 4, ¶ 4.01. Reeves Development seeks "damages based on Id. at 4, ¶ 5.01.

common law indemnity" and attorney's fees.

To establish a claim for breach of contract under Texas law, Reeves Development must prove (1) the existence of a valid

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contract,

(2)

that

Reeves

Development

performed

or

tendered

performance of its duties under the contract, (3) R-Delta breached the contract, and (4) Reeves Development suffered damages as a result of the breach. See, e.g., Lewis v. Bank of Am. NA, 343 F.3d 540, 545 (5th Cir. 2003). Reeves Development has failed to allege Although it avers that

that it was injured by R-Delta's breach.

the building was damaged by the movement of the foundation and the infiltration of moisture, it has not alleged that these occurrences caused it harm. Further, Reeves Development cannot bring a contribution claim framed as an action for breach of contract. In Interstate

Contracting a contractor sued a city for additional expenses that the contractor had incurred due to alleged inaccuracies in

engineering plans. The city, in turn, brought a breach of contract claim against the firm that had provided the plans. Interstate

Contracting, 2000 WL 1281198, at *2. In its third-party complaint, the city alleged that, if an adverse judgment were rendered against it, the court should render judgment against the engineering firm and for the city in the amount of the damages the city incurred. Id. at *4. Judge Lynn held that because the city made its entire

claim contingent on the contractor's recovery against it, the claim was actually one for indemnity, which was not available under Texas law. Id.

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By alleging that it seeks "common law indemnity" and "damages based on common law indemnity," Reeves Development appears to make its recovery contingent on Garland Dollar's obtaining a recovery. While Reeves Development's ultimate liability to Garland Dollar may affect the damages it incurred as a result of R-Delta's alleged breach of contract, Reeves Development has failed to plead that it has actually suffered damages. Accordingly, when filing its first

amended third-party complaint, Reeves Development must, if it can, rectify this deficiency; otherwise, the claim will be subject to dismissal for failure to state a claim on which relief can be granted. III The court turns next to Garland Dollar's motion for leave to amend. A "It is settled that the grant of leave to amend the pleadings pursuant to Rule 15(a) is within the discretion of the trial court." Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. "The court should freely give leave when justice Granting leave to amend, however,

321, 330 (1971). so requires."

Rule 15(a)(2).

"is by no means automatic."

Wimm v. Jack Eckerd Corp., 3 F.3d 137,

139 (5th Cir. 1993) (quoting Addington v. Farmer's Elevator Mut. Ins. Co., 650 F.2d 663, 666 (5th Cir. Unit A July 1981)). The

court may consider factors such as undue delay, bad faith or -8-

dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment. v. Davis, 371 U.S. 178, 182 (1962)). Id. (citing Foman

When, as here, a party files

a motion for leave to amend by the court-ordered deadline,4 there is a "presumption of timeliness." Poly-Am., Inc. v. Serrot Int'l

Inc., 2002 WL 206454, at *1 (N.D. Tex. Feb.7, 2002) (Fitzwater, J.). B Garland Dollar's proposed first amended complaint merely adds negligence and breach of warranty claims against defendants who are already parties to this lawsuit as third-party defendants. Garland Dollar's proposed first amended complaint alleges essentially the same facts that Reeves Development asserts in its third-party action. Through Reeves Development's claims, the third-party

defendants are already aware of the basic nature of Garland Dollar's claims and of their alleged role in the construction of the property now owned by Garland Dollar. Subject to the

discussion set out infra in § III(C), there is no apparent reason to deny Garland Dollar's motion.

The court's July 13, 2009 scheduling order established April 1, 2010 as the deadline for a party to file a motion to amend the pleadings. -9-

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C Garland Dollar pleads state-law claims, and Reeves Development removed the lawsuit to this court based on diversity jurisdiction. Under 28 U.S.C. § 1447(e), "[i]f after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to State court." Diversity jurisdiction See 28 U.S.C.

depends on complete diversity of the parties.

§ 1332(a)(1); Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978) ("[D]iversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff." (emphasis in original)). Because it is not apparent from the proposed first amended complaint that Garland Dollar and any newly-joined defendant are citizens of the same state, the court will allow Garland Dollar to join these defendants. But Garland Dollar must adequately plead For example, in the proposed first

diversity of citizenship.

amended complaint, Garland Dollar alleges that it is a Washington limited defendant liability Houma corporation, Dollar that Reeves LLC Development Texas and

Texas

Partners

are

limited

liability companies, and that Goodloe is a "non-resident of Texas." Proposed 1st Am. Compl. 3. But "the citizenship of a LLC is Harvey v. Grey

determined by the citizenship of all its members."

Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008) (collecting - 10 -

cases).

And alleging that a party is not a citizen of a particular It is

state does not properly allege the party's citizenship.

improper to allege diversity of citizenship without distinctly and affirmatively alleging the citizenship of each party. Getty Oil

Corp., Div. of Texaco, Inc. v. Ins. Co. of N. Am., 841 F.2d 1254, 1259 (5th Cir. 1988) (holding that allegation that defendant was not citizen of particular states did not establish citizenship for diversity purposes). must be alleged "[T]he basis upon which jurisdiction depends and distinctly and cannot be

affirmatively

established argumentatively or by mere inference."

Id. (citing

Ill. Gulf Cent. R.R. Co. v. Pargas, Inc., 706 F.2d 633, 636 & n.2 (5th Cir. 1983)). adherence. Id. The rules are straightforward and demand strict

Accordingly, when Garland Dollar files its first amended complaint, it must properly plead its own citizenship and the citizenship of each defendant (including defendants who are

currently third-party defendants) so that the court can ensure that this case need not be remanded under 28 U.S.C. § 1447(e) once Garland Dollar amends to join these defendants. D Garland Dollar must also file with its first amended complaint an affidavit that complies with Tex. Civ. Prac. & Rem. Code Ann. § 150.002.

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*

*

*

R-Delta's March 5, 2010 motion to dismiss is denied as premature, and Garland Dollar's March 31, 2010 motion for leave to file a first amended complaint is granted. file the first amended Garland Dollar must or on

complaint----electronically

paper----within 14 days of the date this memorandum opinion and order is filed. SO ORDERED. May 17, 2010.

_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE

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